Economists’ advice to government as Tanzania welcomes 2024

Dar es Salaam. Economists have urged the government to expedite its proposed projects, especially in the energy sector, to buffer Tanzania’s economy from global geopolitical tensions and possible increase in fuel prices in the world market in 2024.

Tanzania is currently building a $2.9 billion Julius Nyerere hydropower dam expected to generate 2,115 megawatts and, at the same time, is in agreement with investors to develop the $30 billion liquefied natural gas (LNG) plant.

Experts painted a gloomy picture of the year 2023, saying that it was laden with economic doldrums caused by power outages and high fuel prices.

This comes even as the Bank of Tanzania (BoT) Monetary Policy Committee (MPC) recently said that the global economic outlook was relatively weak for most of 2023, largely due to geopolitical tensions, tighter financial conditions, and high energy prices.

The committee was, however, upbeat about Tanzania’s key economic indicators, which it described as favourable in the second half of the year.

The committee report indicated that despite the spillover effects of the global shocks, the economy’s performance was satisfactory and is expected to further improve in the subsequent year on account of the implementation of growth-enhancing policies and increased private sector investment

A senior lecturer at the Dar es Salaam University College of Education (DUCE) and a consultant, Dr Abel Kinyondo, said he

expects the Julius Nyerere Hydropower Project (JNHPP) to completely end power shortages once completed and starts generating power.

“Tanzanian expects that the power shortage will end to enable them to do business ,” he said.

The after-effects of the drought and maintenance of the dam have forced Tanzania to ration electricity since September as power shortages rocked the nation. Tanzania Electric Supply Company Limited (Tanesco) then said that the shortages would end by March 2024.

Dr Linyondo noted that it’s also important for the government to sign an LNG development agreement to enable the commencement of arrangements that would go on for at least three years. He hopes that the development of the project has the potential to create employment for jobless youth.

“Normally, the sector uses technology, but during the initial stages of its implementation, it will create employment for the youth,” he said. Tanzania is also preparing a new vision that will guide the nation’s development agenda towards 2050.

Dr Kinyondo said the team preparing Vision 2050 are expected to bring in implementable agenda to succeed. The year will also see Tanzania holding local government elections.

The opposition parties are pushing for reforms before the polls expected towards the end of the year. The government has already submitted bills for amendment and merging of some election-related laws but the opposition is still demanding for more reforms.

“2024 is an election year for local governments and Tanzanians should task all politicians and government leaders to make true their promises, enabling the country to progress further,” said economist Oscar Mkude.

He further said that Tanzania’s economy felt the heat from external pressures in 2023, including the geopolitical pressures as well as the covid -19 spillover, shortages dollar shortages, and the rise in fuel prices. It’s important for the government to look into its economic structure, including agricultural sector, for gross domestic product (GDP) to grow and empower those in the sector’s value chain. According to him, Tanzania has an opportunity to be an exporter of fertiliser through its gas production. Currently, Tanzania produces natural gas, which is mainly used for generating electricity.

“If the government speeds up the production of gas in the country, it can process fertiliser production for both local consumption and exports,” he said, adding that power can be generated using other sources, including water, wind, biofuels, and solar.

On investment deals entered by the Tanzania Investment Centre (TIC), Mr Mkude said that Tanzania has witnessed many of such deals, with a majority producing “no meaningful results.”

He asked the government to improve the facilitation of the investors by creating conducive investment environments that will expedite production, bring in revenues, and create jobs for Tanzanians.

Mr Mkude also said that Tanzania should brace for harder times if fuel prices continue to rise.

He said the situation may continue to adversely affect other sectors.

Research think tank Repoa’s executive director and senior researcher, Dr Donald Mmari, said the power shortage and rise in fuel prices contributed adversely to the country’s economy in the previous year.

He continued to say that the government should invest heavily in the gas sector in 2024 by putting up more compressed natural gas (CNG) points to lessen dependency on imported fuel.

“I’m optimistic that the government will start switching on some turbines in the JNHPP that would hopefully reduce, if not end, the power woes,” he said.

A senior lecturer at the University of Dar es Salaam’s finance department, Dr Tobias Swai, hoped that the Standard Gauge Railway (SGR) would start its operations in 2024 from Dar es Salaam to Morogoro and Dodoma.

The Kigongo-Busisi-Busisi that crosses Lake Victoria in the Mwanza region would stimulate the economy through the transportation of goods and services from Tanzania and neighbouring countries.

 “The financial sector is also expected to continue financing the private sector following a good investment-boosting trade,” he said.