Perspectives on Magufuli’s Economic Infrastructure-heavy regime

Economics

Soft Infrastructure
Soft infrastructure is mainly related to telecommunication including the Internet and digitalization. Digital economy is the new normal especially among the millennials who are increasingly becoming digital natives. Soft infrastructure is seen in the context of the Fourth Industrial Revolution (FIR). The FIR includes Artificial Intelligent (AI), Internet of Things, robots, driverless vehicles and the like. Arguably, there is more value transacted via soft infrastructure than the hard one in today’s ever digitalizing world. For example, Covid-19 has led to kissing goodbye of brick and mortar institutions and physical meetings. Much as Tanzania has invested a lot in hard infrastructure in Magufuli’s tenure there have been arguably less seen and talked efforts in investments in soft infrastructure. Adequate investment in this space would include more quantity and quality of Internet including more speed and security and less cost.

Infrastructure P/PP
Public/Private Partnership (P/PP) involves a partnership between public authority and private party. The private party provides public goods or services and assumes financial, technical and operational risks. Cost of using the public goods or services can be borne exclusively by users and not taxpayers. Capital investment is made by the private sector on a contract with government to provide agreed services. The cost of providing the service is borne wholly or in part by the government. P/PPs can be undertaken as service contracts; management contracts; lease contracts; Build, Operate, Transfer (BOT) and Joint Ventures.
There has been rather limited huge infrastructure P/PPs in Tanzania. Reasons include newness and limited understanding of P/PP concept and its practice, rather young local private sector with limited capacities needed to undertake huge infrastructure P/PP projects, fear from failed P/PPs, limitations from the public sector including the involved bureaucratic procedures and many more. Infrastructure P/PP would unlock government resources tied in huge projects. They include finance and human resources that could be used in other areas while making use of private sector resources. Limited infrastructure P/PP is a lost opportunity to bridge infrastructure gap more quickly.

Local content
Local content is the incidence of domestic inputs such as capital, labour and intermediate products in value chains. It includes the share of employment and sales of goods and services locally supplied. It is the use of proportion of domestic components in production. In several huge infrastructure projects in Tanzania there is rather limited local content.
This is partly due to limited capacities of local firms. Local contents makes it possible for a country to enjoy quick wins through low hanging fruits emanating from trickle down effects of payments related to large projects.
Local supplies, contractors and subcontractors would use payments within the local economy thereby stimulating it more. They also provide a number of direct and indirect employments and associated benefits.

Perspectives on Magufuli’s Economic Infrastructure-heavy regime

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