Experts call for PPP reforms to unlock Tanzania's infrastructure potential

Dar es Salaam. Tanzania stands at a critical juncture in its development journey, with the Public-Private Partnership (PPP) model emerging as a game-changing approach to unlocking economic opportunities.

Experts have called for strategic interventions to fully harness the potential of PPPs, as discussed during the Impact Business Awards 2024 in Dar es Salaam on December 13.

The Director of International Trade and Economic Diplomacy at the Ministry of Foreign Affairs and East African Cooperation, Mr John Ulanga, painted an optimistic picture of Tanzania’s economic trajectory.

“For the past 25 years, we’ve achieved macroeconomic stability. Inflation is under control, and the GDP (Gross Domestic Product) growth rate is stable,” he said.

Highlighting sectors that have reaped significant benefits from private investment, such as mining, tourism, transportation, telecom, and banking, Mr Ulanga emphasised the message being sent to potential investors.

“Those who have invested in Tanzania have benefited. The evidence lies in the annual Tanzania Revenue Authority (TRA) list of top taxpayers—most are privatised parastatals or entirely private enterprises,” he noted.

Mr Ulanga pointed out that Tanzania’s strategic geographic location provides an edge. “Investors here don’t just access Tanzanian markets, but also those in the East African Community (EAC) and Southern African Development Community (SADC),” he said.

However, he underscored the untapped potential in infrastructure, stating, “We still lack private sector investment in critical areas like road and railway development. The absence of toll roads in our country highlights missed opportunities for efficiency and revenue growth.”

The road to realising PPP success is not without hurdles, the panel moderator David Tarimo, a member of the Presidential Tax Reform Commission, noted that Tanzania’s PPP landscape has faced persistent challenges despite the country’s ambitious Vision 2050 agenda.

A Planning Commission member, Mr Ami Mpungwe, highlighted systemic issues that had hindered PPP acceleration.

“The first challenge is our national savings rate, which is only 15 percent of GDP—far below the 30 percent required to generate sufficient capital,” Mr Mpungwe explained, stressing the importance of Foreign Direct Investment (FDI) to fill the gap.

Mr Mpungwe also pointed to technological and human capital deficits. “We need advanced technology and skilled human capital to transform our resources into value. Without these, our ability to attract and sustain PPPs remains limited,” he said.

Trust issues between the public and private sectors further compound the problem.

“As long as we view private capital as exploitative, we will struggle to build the trust necessary for successful partnerships,” he added.

Former Controller and Auditor General Prof Mussa Assad echoed these sentiments, emphasising the need for financial transparency and collaboration.

“Market-based price discovery is crucial. The government lacks the market expertise that the private sector possesses, posing challenges in negotiating fair deals,” Prof Assad said.

Despite these challenges, Tanzania has significant opportunities to leverage PPPs for development.

The Tanzania Investment Centre (TIC) is making efforts to attract private capital, with the Director of Investment Promotion at TIC, Mr John Mnali, outlining key priority sectors.

“We are focusing on agriculture, mining, and fisheries, emphasising value addition,” Mr Mnali said.

“For instance, we aim to attract investors who can process raw crops and minerals domestically before export,” he added.

He explained that the government is also prioritising tourism, energy, ICT, and infrastructure. TIC’s efforts are already bearing fruit.

“In 2021, we registered 256 projects creating 53,000 jobs. By 2023, this number had risen to 526 projects. As of November this year, we’ve registered 812 projects projected to create over 204,000 jobs,” Mr Mnali revealed.

Mr Ulanga stressed the importance of private sector participation in infrastructure development.

“Increasing efficiency in transport infrastructure through private investment will boost revenue and enhance competitiveness,” he said.

For Tanzania to unlock the full potential of PPPs, experts agree on the need for a paradigm shift.

Mr Mpungwe urged a national conversation about private sector-driven growth.

“We need clear policies, fiscal regimes, and regulatory frameworks that attract private capital,” he said.

Prof Assad emphasised capacity building within government institutions to bridge the knowledge gap.

“Experience and benchmarking are critical. With time, trust between the public and private sectors will grow, leading to mutually beneficial outcomes,” he noted.

As Tanzania embarks on its Vision 2050 journey, embracing PPPs could provide the boost needed to accelerate development.

However, success hinges on addressing challenges, fostering trust, and creating a conducive environment for private investment.