Proper use of gas revenue can improve economy, says expert

Dar es Salaam. Tanzania’s natural gas discoveries are not an automatic end to the country’s economic woes, an economist has warned.

Instead, Dr Honest Ngowi, an economics and business researcher at Mzumbe University’s Dar es Salaam Business School, urged policy makers to use revenues from the sector to diversify economic activities if the sector is to bring quick gains.

Experts say among 65 natural resource-rich countries in the world only four have used their resources for the betterment of the states. They are Botswana, Indonesia, Malaysia and Thailand.

“Investing in infrastructure is very crucial to improving the investment climate in the country. This will simplify the movement of goods and services hence improve economic development,” Dr Ngowi told a public forum of the Tanzania Country Level Knowledge Network. He said by investing in infrastructure like railways, roads, ports, airports and telecommunications the country would raise productivity by 40 per cent. “The more you exploit natural resources the poorer you become; so if Tanzania won’t use the revenue from oil and gas to invest in strategic positions the country will be poorer in coming decades.” Investing in human capital can also boost economic development.

According to Dr Ngowi, Tanzania’s labour force is characterised by low-skilled personnel who fail to compete effectively on the labour market. “Few studies have been conducted in the country. This is because of the poor investment in education. I urge the government to set part of the revenue for research and development.”

He said the country could not continue to depend on donors to fund research projects “because they come with their own agendas. But with your own money you can set your own agenda.”

Botswana has invested 5 per cent of its gross domestic product on education since the 1970s and its education is among the best in Africa. Botswana is rich in diamonds.

Dr Ngowi also urged Tanzania to invest in economic sectors such as tourism, agriculture, mining and agro-processing. “If you don’t use oil and gas to unlock other sectors you will experience economic hardships especially when oil and gas is depleted because all employment will end and there will be no more revenue, but if other sectors are well developed the country can get revenue.”

Economists say indigenous Tanzanians are only playing a marginal role in mining and the situation should change.