TZ@60: Why transport is key to economic growth

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Mwananchi Communications Limited

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Countries that fail to invest and put in place strategies to shore-up their services delivery will remain mere consumers of services from other countries

In fact, the advanced economies have already moved to the service industry, leaving behind less advanced economies in Africa and elsewhere. The Tanzanian economy is still largely characterised by the goods, but the service industry shows amazing potential. Data from the current account show that Tanzania’s service economy consists almost entirely of transport and travel. Travel is normally referred to as tourism, but the two are so closely linked that they are referred to interchangeably. In addition, travel and transport sectors are also tightly linked. In the year ending August 2021 Tanzania earned $2.4 billion from transport and travel, according to the monthly economic review of the Bank of Tanzania. The foreign currency inflows through transport and travel was only about 26 percent of total export receipts, but it used to be higher in the pre-pandemic period when it accounted for 40 percent of total foreign currency earnings. In the year ending August 2019, Tanzania earned $3.8 billion, which is equivalent to 41 percent of total earnings.

The potential of the transport and travel sector comes from the fact that in the current account it has a surplus of more than $1 billion compared to the deficit of more than $2 billion of the goods account. In other words while Tanzania imports more goods than it exports, it receives more money in the service sector that it pays to acquire services from outside. This would have been game-changing had the services sector been significantly higher than it currently is. But if Tanzania wants to join the world’s race toward supremacy in the service sector, the place to start with is the transport and logistics sector. This is the sector where Tanzania has a natural, God-given geographical advantage that cannot be taken away. But, to be able to benefit, Tanzania must plan well, using the right strategies. It will be unfortunate if Tanzania will sink billions of US dollars in developing infrastructure- estimates of investments in ongoing transport and utilities infrastructure projects is $19 billion - then sit back and watch land-locked countries reaping all the benefits. That has been the case in the past few years when prohibitive regulations were adopted that reduced the competitiveness of local players in the transport sector. Fortunately, President Samia Suluhu Hassan has made decisions and taken actions that have started to reverse the trend.

The matter of life and death as far as Tanzania’s marine transport is concerned is efficiency. The current multi-billion dollar investments in upgrading the ports will go down the drain unless a zealous and no nonsense strategy is created to ensure Tanzania ports are the most efficient in the region. The ports have, in most cases, been less efficient than ports in neighbouring countries. Some of the challenges that the government needs to take care of to increase efficiency include multiplicity of government agencies involved in the certification, verification and processing of goods that creates duplication, inefficiencies and opportunities for abuse of office; the presence of corrupt practices and extortion in some instances; and heavy terminal congestion due to over-administration and the poor intermodal interface with road and railway transport links, which has a knock-on effect on quayside and shipping operations. Others include lack of private sector consultation and involvement in decisions around port sector reform and planning; an over-zealous inspection regime and non-acceptance of the pre-declaration of the value of cargo by regulatory authorities.

TZ@60: Why transport is key to economic growth

What you need to know:

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