The new measures that the Fifth Phase Government is showing signs of strengthening fiscal management will be effective if complementary actions to improve the overall business environment for the private sector development are undertaken, a new World Bank report says.
The 8th Tanzania Economic Update report shows that while Tanzania’s growth is relatively high, it has not yet led to acceleration of job creation and poverty remains substantial with around 12 million people still under the poverty line and the majority of non-poor are only just above the poverty line.
“Tanzania needs to increase investments in infrastructure and human capital to further unlock its growth potential while enabling the private sector to create more jobs,” the World Bank Country Director, Ms Bella Bird, said.
Ms Bird said that this will not only have a stronger impact on poverty reduction but also consistent with the new government’s priorities and its commitment to the achievement of the country’s Vision 2025 goals.
According to the Update entitled ‘The road less travelled: Unleashing public private partnership in Tanzania’ it shows that with increasing fiscal challenges due to declining aid, low revenue mobilisation, high expenditure pressures for clearance of payment arrears and debt service, Tanzania needs to find alternative sources of financing its huge development needs.
The Vice-President, Ms Samia Suluhu Hassan, said in her keynote address that while the government has surpassed its revenue collection targets since December 2015, to make this success sustainable, there is a need to create a conducive business environment to foster private sector development and further improve tax collection.
Ms Hassan said that despite recent success in enhancing domestic revenue collection and spending efficiency, traditional instruments were clearly insufficient to fully finance the country’s huge development needs.
“It is therefore imperative that we identify and exploit alternative means of financing Tanzania’s economic development. Key among these is private sector financing, particularly through public private partnership (PPP) arrangements,” she explained.
She said that the Economic Update presents strong evidence to demonstrate that, if PPPs are carefully selected and appropriately implemented, they could play a powerful transformative role in alleviating the existing massive financing gap.
“As you know, PPPs are not new to Tanzania, but they have not yet achieved the hope for advances, investments or spending efficiencies. “This Update outlines important lessons for the way forward by drawing on the country’s rich experience with PPPs and global best practice, warning a point that they can only be successful if well selected, prepared and implemented,” she said.
A senior World Bank economist, Mr Emmanuel Mungunasi, giving an outlook of the country’s economy said that while the picture is encouraging, there is urgent need to improve the quality of infrastructure and social services like reliable electricity and high quality education.
A PPP specialist from the World Bank, Mr Jeffrey Delmon, said that the private sector was pivotal to the development of a nation and that PPP was a long term commitment like marriage that constantly needed to be worked on.
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