World Bank Perspective: Private Sector Instrumental in Driving Tanzania’s Sustainable Development

The recent release of the Tanzania Economic Update, a biannual report published by the World Bank, provided insights into some of the economic developments the country has undergone over the last few years. With a GDP growth above the Sub Saharan average, quantified at 4.6% in 2022, Tanzania’s economy has clearly shown resilience and recorded a modest post-pandemic recovery. A number of key matters are a priority in the short- and medium-term to maintain the country’s economic status. These include strengthening capacity to further build resilience, supporting inclusive growth through the Private Sector, and enhancing the investment climate to boost both domestic and foreign investment.

In a discussion of the country’s investment climate and development outlook, members of the CEO Roundtable of Tanzania (CEOrt) and The World Bank Country Director Mr. Nathan Belete outlined recommendations for boosting business performance and maintaining national growth. This thought leadership session was one of the CEOrt’s monthly engagements for members which facilitate dialogue on various issues critical to Tanzania’s sustainable development. The discussion involved a panel discussion that included Mr. Belete, Ms Ilse Boshoff - Regional Director at KNAUF TANZANIA , Mr. Jose D. Moran - Tanzania Breweries Limited (TBL PLC) Managing Director, Mr. Theobald Sabi, FCCA - NBC Tanzania Managing Director and Mr. David Tarimo -  Country Senior Partner at PwC Tanzania and CEOrt Board Chairman. While the World Bank works predominantly with governments, Mr. Belete voiced his organisation’s belief in the business community, stating that developing countries, which have seen significant growth have moved forward with strong support from the Private Sector.

Tanzania’s GDP growth has been capital intensive thus not inclusive as the poverty rate has remained relatively stable. Traditional sectors of agriculture and tourism that employ the majority of the population are highly sensitive to global forces, and the sectors remain largely informal. Speaking on how the financial sector could increase investment to boost growth, Mr. Sabi called for policy interventions first to get more people into the formal sector of the economy. More than half of the players in Micro, Small & Medium Enterprises are believed to be informal. Some of the bottlenecks that could be removed to help formalise sectors include improving movement of money by making digital transactions easier to manage and therefore transform the heavily cash-based society we currently are.

Whilst the Private Sector is considered to be at the forefront of Tanzania’s development, the World Bank acknowledges that the Government plays a key role as an enabler, by building a conducive investment environment, improving efficiency of Government services, and ensuring the provision of basic social needs. Mentioning a few of the ways the World Bank lends its support, Mr. Belete listed implementing initiatives that help women thrive, increasing productivity and competitiveness to promote exports, facilitating access to markets and access to affordable finance. The organisation is also a knowledge bank, conducting research and producing reports applied by different stakeholders. Mr. Belete confirmed that the World Bank sees strong and high level commitment by the Tanzanian Government to support the Private Sector, and expects their engagement in this area to scale up as they prepare a new Country Partnership Framework.

Contributing to the dialogue on how to enhance competitiveness, Mr. Moran’s response demonstrated how important the Government’s enabling role is, citing incentives the brewery received that paved the way for the US$10 million investment in a TBL malting plant in Moshi that will be launching soon. When provided with the right incentives, businesses are apt to respond accordingly and further contribute to sustainable development. Furthermore, one of the areas business leaders agree could be an opportunity for collaboration with the Government to continue improving the investment climate is working closely with the Tanzania Investment Centre (TIC). As a fairly new investor in the market, Ms. Boshoff shared her experience, that while there has been a substantial improvement over the past 18 months in how TIC operates, close collaboration with them ensures that both businesses and the institution have more clarity on expectations with regards to governing policies and regulations. 

Commercially, Tanzania is strategically located to serve the region and is comparably well positioned financially to withstand global shocks. According to Mr. Sabi, banks are well capitalised, the quality of credit has improved over the last three years, and the country has a good amount of dollar reserves for imports. Nonetheless, the global outlook remains volatile and the international financial system is interconnected and complex, which may impact the inflow of foreign direct investments in the long term. As cautioned by Mr. Leonard Mususa , Founder - Iconic Properties Ltd., we need to be more aspirational as a country. While we may view things from a structural perspective and conclude we are in good standing compared to our regional peers, there is tremendous potential to drive down the cost of capital and aim for double-digit growth. Recommendations included closely monitoring economic fundamentals such as foreign reserves and inflation. In his remarks, CEOrt Chairman Mr. Tarimo called upon business leaders to do more to engage with the public sector, not only to share insights but also to gain knowledge and a deeper understanding of  the plans the Government has for the country’s development in order to meaningfully contribute.

The World Bank is confident in the commitment shown by Her Excellency President Samia Suluhu Hassan to develop the Private Sector, and believes an enabling environment, adaptive climate strategies and infrastructure development are key. The global institution has also increased its investment in the country by 300% because it believes in Tanzania’s potential. They are keen on collaborating with the Government to help promote Private Sector growth and have taken measures to do so, updating three core analytical products that will shape the World Bank’s engagement in Private Sector development in Tanzania. These updates include their systemic country diagnostics, country economic memorandum, and the biannual Tanzania Economic Update. Further support will target reforms to champion business growth, strengthening banks, building on public private partnerships, and revitalising the country’s potential to benefit from regional integration and trade.

The journey towards Tanzania’s prosperity continues. It is encouraging to witness the continued dedication of the sixth phase Government to grow investments supported by global partnerships. These committed efforts are bearing fruit - the latest data from the Tanzania Investment Centre reports Tanzania's investments value has risen to $8.6 billion in two years, a 173% increase. The Private Sector is committed to collaborating with the Public Sector to maintain this momentum, and the CEOrt will continue to facilitate cross-sector dialogue to realise that vision.

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