Vice President Mpango issues new directives for stronger rural infrastructure

Dar es Salaam. Vice President Philip Mpango has issued four key directives aimed at increasing public awareness of financial and investment opportunities for Tanzanians to benefit from emerging prospects in the country’s economy.

The directives also include improving education on financial and investment matters, encouraging citizens to seize opportunities such as the Samia Infrastructure Bond, supporting innovation in road and bridge construction, and establishing early warning systems to safeguard the bond from potential disruptions.

Dr Mpango issued the directives on Friday, November 29, 2024, during the launch of the Samia Infrastructure Bond, a financial initiative designed to enhance rural infrastructure projects managed by the Tanzania Rural and Urban Roads Agency (TARURA).

The bond, coordinated by CRDB PLC, seeks to mobilize financial resources from various stakeholders to fund road and bridge construction projects in rural areas mostly hindered by the absence of funds.

In his address to the public, Dr Mpango emphasised that Tanzanians’ understanding of financial and investment matters remains relatively low, requiring urgent efforts to ensure they can benefit from the numerous opportunities available.

He cited studies by Finscope Tanzania conducted in 2017 and 2023, which revealed that Tanzanians allocate just 18 percent of their income toward investment opportunities, with the majority (80 percent) spent on essential needs like education, food, healthcare, and funerals.

“Therefore, I call upon the Ministry of State in the President’s Office (Regional Administration and Local Government, PO-RALG) and CRDB Bank to work together to provide public education on financial and investment issues so that citizens can benefit from emerging opportunities,” Dr Mpango said during the live broadcast event.

He also underscored that the Samia Infrastructure Bond represents an excellent investment opportunity, with an attractive 12 percent quarterly interest rate.

The minimum investment amounts to Sh500,000, with Dr Mpango describing it as affordable for many Tanzanians.

"An individual or group that invests Sh50 million will earn Sh1.5 million every three months, or Sh6 million annually," he explained, highlighting the bond as an important opportunity for both individuals and organisations.

He urged social security funds, insurance funds, savings and credit associations (VICOBA), companies, and individual citizens to invest in the bond.

Additionally, Dr Mpango called on TARURA to embrace technological innovations in road and bridge construction to improve quality and reduce costs.

He also recommended seeking alternative funding sources, such as low-interest loans provided through climate change financing and public-private partnerships for infrastructure development in rural areas.

“The Capital Market and Securities Authority (CMSA), the Bank of Tanzania (BoT), PO-RALG, and the Ministry of State in the President’s Office responsible for investment should design an early warning system to monitor and detect potential risks that could affect the bond’s performance,” Dr Mpango said.

He highlighted risks such as liquidity issues in the banking sector and stock market fluctuations, stressing the importance of ensuring value for money in infrastructure projects.

The Minister of State in the President’s Office (Regional Administration and Local Government), Mr Mohamed Mchengerwa, who welcomed the Vice President, explained that the bond was launched following the realisation that foreign companies were managing infrastructure projects worth as little as Sh3 billion to Sh5 billion.

This led to the study that explored how local contractors could be empowered to efficiently execute road projects and receive timely payments for their works.

The Deputy Minister for Works, Mr Godfrey Kasekenya, stated that the Contractors Registration Board (CRB) would continue developing the Contractors Assistance Fund (CAF) to help local contractors apply for large tenders in public-private partnership models.

“These efforts, along with the support from other stakeholders, will help create a favourable environment for Tanzanian contractors to efficiently implement government projects,” said Mr Kasekenya.

The Deputy Minister for Finance, Mr Hamad Hassan Chande, added that the government had increased the Works Ministry’s budget from Sh1.4 trillion in the previous fiscal year to Sh1.6 trillion in the 2024/25 fiscal year.

Funding for PO-RALG-related activities has also been increased from Sh826 billion to Sh841 billion.

CRDB Bank PLC Managing Director, Abdulmajid Nsekela, said the Bank has been making a significant contribution to the financial sector and boosting the country's economy, including participating in various investments and areas of empowerment by ensuring that strategic projects are carried out correctly.

He said CRDB Bank has been working closely with the government and its institutions, especially in strategic projects such as the construction of transport infrastructure, transportation, and energy projects among others.