Tanzania Transport Sector Report

The Tanzania transport sector plays a crucial role in the growth of the Tanzanian economy; it facilitates domestic and international trade, contributes to national integration, and provides access to jobs, health, education and other essential facilities.

The transport system’s effectiveness, appropriateness and adequacy contribute a great deal to the successful implementation of socioeconomic activities, the lowering of domestic production costs through timely delivery, and the enhancement of the economies of scale in the production process and creating economic opportunities.

The economic opportunities include: ease of market access, strengthening of competition, promotion of trade and export, tourism and foreign investment contribution to government revenue and generation of a large number of employment opportunities.

In the past five years, the transport sector in Tanzania has helped to integrate market- strengthening competition, increase access to farming techniques, promote trade, tourism, and foreign investment, and has contributed to the government revenue.

The Tanzania transport sector’s growth and performance have continued to improve due to both government efforts and private sector investment in road rehabilitation, expansion of telecommunications services, modernization of port services, and improvement in marine, railway and air transport services.

This growth, however, should have been ahead of the overall economic performance (with a GDP growth of 6.9% in 2005 and an expected 7.9% by 2008), in order to avoid a situation where it could obstruct other sectors which demand transport services.

The Tanzania Transport Sub-Sectors

The current transport system consists of roads, railways, air, water and pipeline modes.

In this report on infrastructure development in Tanzania, the last two are not included.

The Tanzania Railway Transport Sub-sector

Tanzania’s railways have a total track length of 3,676km, which are operated by two railway systems: the Tanzania Railway Corporation (TRC) for 2,706 km and Tanzania-Zambia Railway (TAZARA) for 970 km.

Both companies are up for privatization.

The Tanzania Railway Corporation (TRC) has two lines, for a total of 2,706 km.

The central line runs from Dar es Salaam to Tabora, providing freight cargo transportation to the west of the country as well as to the land-locked countries of Uganda, Burundi, Rwanda and the eastern part of the Democratic Republic of Congo.

The other line runs from Ruvu northward to Korogwe and then branches to Tanga port on the Indian Ocean; another branch runs northwest to Moshi and connects to the Kenya railway system.

The second railway system is the Tanzania – Zambia Railway Authority (TAZARA). This is a two-country joint railway system.

TAZARA links the port of Dar es Salaam with Zambia and also handles freight cargo for the countries of Malawi, Zambia, Zimbabwe and Democratic Republic of Congo.

The Railway system is in very poor condition, particularly the TRC network.

It has faced several important infrastructural problems, as well as stiff competition from road transport and the poor performance of the economies of the neighboring landlocked countries.

This has led to a deterioration of its network assets and capability to provide a reliable and constant service.

As Mr. Israel Sekirasa, Director General of the Surface and Marine Regulatory Authority (SUMATRA) explains: “The state of our railways is pathetic.

{xtypo_quote_right}Substantial resources are required to invest in the railways to tap the great economic potential of Great Lakes region traffic.{/xtypo_quote_right}Substantial resources are required to invest in the railways to tap the great economic potential of Great Lakes region traffic.

More resources are being spent on the development of roads.

However if we are going to explore coal and iron, those commodities cannot be feasibly moved on the road transportation systems.

They should ideally be transported on the railroad system.”

Within such a framework, the government has realized the importance of bringing in the private sector, while keeping the railway infrastructure in public ownership, through public/private sector partnerships wherever possible.

This is why the Tanzania Railway Corporation (TRC) was to be handed over in 2006 to a group of strategic investors, the Rites Consortium of India.

However, the 25-year Tanzanian Railways concession has been delayed and further consultation between the parties is taking place.

At the same time, the government is seeking the support of development partners, particularly through its new Transport Sector Investment Programme (TSIP), and by speeding up the reform process for TAZARA, which includes the concession of operations in order to enhance performance efficiency.

The Tanzania Air Transport Sub-sector

The aviation industry in Tanzania has been steadily growing, with an average growth rate of 9% annually. This is greater than the average 4% growth rate of the global aviation industry.

Kilimanjaro-Airport-Tanzania
Kilimanjaro International Airport (KIA)


Notwithstanding these achievements, the air transport sector has not been able to achieve its desired goals in the five years of its existence.

This has been mainly due to inadequate airport facilities, planning and management.

According to Eng. John Kijazi, Permanent Secretary of the Ministry of Infrastructure Development, the Civil Aviation Master Plan (CAMP) in place does not accommodate the changes in policy framework that have taken place nationally, regionally and internationally.

Tanzania Airports

Tanzania has four international airports in Dar es Salaam, Zanzibar, Kilimanjaro, and, more recently, Mwanza.

In addition, there are aerodromes and airstrips spread throughout the country.

The Tanzania Airports Authority (TAA) distinguishes them as follows:
• Strategic airports: Arusha, Lake Manyara, Mafia and Ngara.
• Major Domestic airports: Mtwara, Dodoma, Kigoma, Tabora, Mbeya, Songwe, Songea, Lindi, Shinyanga, Musoma, Bukoba, Sumbawanga, Tanga and Lake Manyara.
• Small airports.
The airports and aerodromes in Tanzania are owned, managed and operated by different entities.

The Tanzania Airport Authority owns, manages, operates and develops 62 airports, including Dar es Salaam and Mwanza International airports.

Zanzibar International Airport is being managed by The Revolutionary Government of Zanzibar.

Kilimanjaro International Airport was leased to a private operator, the Kilimanjaro Airport Development Company (KADCO) in 1998, and was the first publicly-operated infrastructure to be privatized through negotiation between the government and prospective investors.

“We believe the Kilimanjaro international Airport is the getaway to the northern zone of the tourism industry in Tanzania so we want to be at the real best for the tourism sector.

{xtypo_quote_right}We would like to develop Kilimanjaro International Airport as a modern Airport city in the example of Dubai{/xtypo_quote_right}We would like to develop Kilimanjaro International Airport as a modern Airport city in the example of Dubai and I believe we can do it,” explains Mr. Arnold Kilewo, KADCO’s Chairman.

However, the conditions of basic airport infrastructures, such as runways, aprons and taxiways remain very poor for most of the airports in Tanzania.

With exception of the international airports and eight major regional airports, which have asphalt surfaces (some in poor condition) the rest of airports have gravel and grass runways.

As a result, they are safely accessible only during dry seasons.

Furthermore, only the international airports have airfield ground lighting systems that allow for 24-hour airport operations.

During the last five years, however, the government of Tanzania, through the Tanzania Airports Authority (TAA) and the Tanzania Civil Aviation Authority (TCAA), has implemented a number of development projects which were designed to further modernize the airports.

As Mrs. Margaret Munyagi, Director General of the Tanzania Civil Aviation Authority proudly states: “We ensure that the airlines and the operators comply as much as possible with the requirements of the standards provided by the International Civil Aviation Organisation (ICAO) [and] we can receive flights over the country from all over the world.

I think it is a very big achievement because there are so many other countries that have not even been able to achieve the minimum compliance with the International Civil Aviation Organisation standards.”

At the same time, the Tanzania Airport Authority is also looking for greater involvement of the private sector in the further development of airports in Tanzania, while still avoiding direct privatization.

As Eng. Prosper Tesha, Director General of the Tanzania Airports Authority explains, “The way we are looking at the involvement of the private sector at the moment is by […] Public Private Partnerships (PPPs). {xtypo_quote_right}The way we are looking at the involvement of the private sector at the moment is by […] Public Private Partnerships (PPPs).{/xtypo_quote_right}

This is what we see as our way forward because in such partnerships there is a part to be done by us and a part by the private sector.”

Different forms of Public Private Partnerships are being considered, along with the transport modal investments that will be required to ensure that the roles and responsibilities, as well as the shares of risks, of each party are well defined and the financial rewards have been appropriately realized.

The different forms of Public Private Partnerships to be applied in the implementation of the Transport Sector Investment Programme (TSIP) are: service contract and/or management contract between the government and the service operator, leasing of assets, joint venture between private sector and the government, Build Operate Transfer (BOT), Concessions, Build Operate Own (BOO) and divestiture.

Although the involvement of the private sector is crucial, it remains clear through the vision of both the public and the private sector that the government still needs to take the leading role.

According to Mr. Munyagi, “investing in the required infrastructures in airports like the runways that hinder the development of the industry is expensive and for now it may not be possible to get private investors to lead in this.”

Mr. Alfonse Kioko, Managing Director and Chief Executive Officer of Precision Air makes it even clearer by adding, “I think the government has to take the leading role because they own some of these infrastructures [and] when it comes to private investments, these have to be given some incentives but in a regulated manner.”

Tanzania Air Carriers

The national airline, Air Tanzania Company Limited (ATCL) is the major provider of domestic air travel linking all major towns in the country.

Private companies have also started operating, and the number of registered airways and charter companies in the country has been increasing year after year.

This has led to a very competitive sub-sector whereby, as Mr. Alfonse Kioko, Managing Director and Chief Executive Officer of Precision Air explains, “Even though we have seen many new players coming to the market, we have also seen others exiting the market because they could not cope with the competition.”

A clear example of this is the weak performance of Air Tanzania, which, after an unsuccessful privatization with South African Airways, has recently being bought back by the government of Tanzania.

As a consequence, Precision Air, which was first designated by the Tanzania Civil Aviation Authority as the second national carrier in Tanzania, is now the leading national airline in the country.

Accordingly Precision Air is now focused on further expansion internationally.

It is unclear, however, how this development strategy will fit in with Kenya Airways, often referred to as the best airline in Africa, with 49% ownership in the company and in code sharing.

“The growth we have experienced in the last four years is tremendous and by expanding we can’t remain a regional carrier forever; […] we should be able to spread the wings to other destinations. {xtypo_quote_right}The growth we have experienced in the last four years is tremendous{/xtypo_quote_right}

This does not mean we will stop supporting our partner and the other way around.

Also apart from Kenya Airways we work closely with other airlines; in this business you can’t avoid that,” clarified Mr. Kioko.

At the same time, some believe that the government will try again to sustain its own national carrier, instead of allowing Precision Air to take the leading role.

As Mr. Kilewo, Kilimanjaro Airport Development Company Chairman comments, “I believe Precision Air, rather than Air Tanzania, should be strengthened because this private airline acts today as the Tanzanian national carrier.

Unfortunately I think [the government is] going to try to establish a Tanzanian national airline again.”

However, the inadequate infrastructure and the associated costs not only jeopardize the competitiveness of operators and their capacity to remain profitable, but eventually result in high fares for the end user when compared to neighboring countries, such as Kenya.

As Mrs. Margaret Munyagi, Director General of the Tanzania Civil Aviation Authority explains, “Here economies of scale play an important role.

We realize in fact that for the fares to come down, one of the solutions is to increase the air traffic. {xtypo_quote_right}For the fares to come down, one of the solutions is to increase the air traffic. That is why we are working very closely with the promotion and marketing of our country so that we get more flights coming.{/xtypo_quote_right}

That is why we are working very closely with the promotion and marketing of our country so that we get more flights coming.”

Results are coming already as Qatar airways, one of the fastest growing airlines in the world, has recently started cargo sales and operations in Tanzania.

At the same time, the Tanzania Airport Authority continues to receive expressions of interest from many other international carriers.

Tanzania Ground Handling

Ground handling in Tanzania is characterized by monopolies, whereby Dar es Salaam and Kilimanjaro International Airport are served only by Swissport (previously known as Dahaco) and Zanzibar international Airport is served by the Zanzibar Aviation Services and Travel Trade (ZAT).

Such monopolies leave many operators frustrated and unsatisfied. As Mr. Kilewo, Kilimanjaro Airport Development Company Chairman explains: “There is no point continuing granting monopoly when we know that many of our clients, the airlines, are complaining about the services received and particularly their cost.

If we look at what happened in the mobile phone sector in Tanzania few years ago, although some argued at the time that there was no room for several operators, the demand for mobile lines has been much higher than expected and the price for the consumers has been going down dramatically.”

The monopoly in mainland Tanzania is due to end in 2007, and other companies are preparing themselves to enter the market and generate competition in the airports.

As Mr. Alfonse Kioko, Managing Director and Chief Executive Officer of Precision Air spells out: “When such monopoly is due to end in 2007, even at Precision Air we are ready to start our own ground handling company, that as a matter of fact has already been registered. {xtypo_quote_right}When [the ground handling] monopoly is due to end in 2007, even at Precision Air we are ready to start our own ground handling company, that as a matter of fact has already been registered.{/xtypo_quote_right}

The truth of the matter is that there should be free competition.

Let the best companies win the customer.”

However, Mr. Gaudence K. Temu, Chief Executive Officer of Swissport Tanzania, warns about such an expected increase in the number of handling companies by stating that: “if you look at the airport facilities today they are old, outdated and inadequate, making handling, specifically during peak hours, particularly difficult.

I wonder what will happen when a second operator is introduced.

I don’t see how this will happen without jeopardizing the safety of aircrafts and passengers.

So, we are trying to impress on the government these requirements.

Certainly we have to continue delivery and meet the expectations of the customers.

For this we are currently investing as we have already heavily invested, in ground support equipment [and] carriers will be able to assess who is able to deliver, and who is not.”

The Tanzania Road Transport Sub-sector

The geography of Tanzania, including its size, diversity and dispersion, give roads a special position in the integration of the national economy.

In particular, roads serve rural areas, where the majority of the people live, more effectively than any other mode of transport.

The current Tanzania Road Network length is about 85,000 km, which includes trunk and regional roads (35,000 km) managed by the Tanzania National Roads Agency (TANROADS), and the urban, district and feeder roads with a total of 50,000 km, managed by Local Government Authorities (LGA).

There are also some unclassified roads, such as those managed by the Tanzania National Parks Authority (TANAPA), and by the Mining Companies and village authorities; their total length is not readily available.

As roads are essential in Tanzania for growth, poverty reduction, and promotion of trade, about ten years ago the government realized that the road network was becoming a bottleneck.

Accordingly, in the last years the government instituted a number of reforms and, in collaboration with Development Partners, it has gradually invested in the transport sector, and particularly in the road sub-sector, which has markedly improved the condition of roads.

For example, the proportion of roads in poor condition decreased from 49% in 2000 to 16% in December 2005, and during the same period overloading was reduced from 40% to fewer than 5% of all vehicles weighed.

At the same time, the private sector has become more involved in the execution of maintenance work, with outsourcing increasing from 92% in 2001 to 99% in 2005; this has contributed significantly toward poverty reduction.

However, the road national network remains inadequate, as it is faced with lack of sufficient funds for rehabilitation, upgrading and for routine maintenance, combined with increased traffic.

As Mr. Fred Addo Abedi, TANROADS Chief Executive explains, “We need to increase the length of the paved network up to an optimum level where we would have a good balance between paved and unpaved roads. {xtypo_quote_right}We need to increase the length of the paved network up to an optimum level where we would have a good balance between paved and unpaved roads.{/xtypo_quote_right}

That is why it is even necessary to ensure that investments are made prudently so that we build, then upgrade the roads to between standard or become paved.

We have to look at the economic impact so that this can support economic growth which in turn generates more money, which can then be used for its maintenance.”

For this reason, the ongoing 10-year development program has been integrated into the Transport Sector Investment Program (TSIP).

The 10-year sector development, that started around 2002, aims for the entire country’s road network to become paved (or at least all those roads which are paramount to economic development), ideally by 2025.

As in other sub-sectors of transport, roads development tends not to be particularly attractive for private capital investment, and hence it is usually sustained by either government funds or by international donors.

“What countries try to do is to find the roads that would be profitable for the private sector, and let them out through various schemes, such as Build Operate Transfer (BOT), while the government looks after the other roads, which are still necessary,” explains Mr. Abedi.

The Tanzania Marine Transport Sub-sector

Tanzania maritime transport revolves around its major sea ports, which are Dar es Salaam, Tanga and Mtwara, all managed and operated by Tanzania Ports Authority (TPA).

The inland water transport, with ports in Lakes Victoria, Tanganyika and Nyasa, is managed by Marine Service Company.

Smaller ports are Kilwa, Lindi, Mafia, Pangani and Bagamoyo.

Dar es Salaam is the principle port of Tanzania, and is recognized as one of Africa’s most productive ports.

It is a major sea outlet for the Republic of Zambia, Burundi, Malawi, Rwanda, Uganda, Zimbabwe, and eastern parts of the Democratic Republic of the Congo.

The port also serves as a convenient freight linkage to the Middle and Far East, Europe, Australia and America.

The marine transport sub-sector as a whole, however, remains characterized by poor performance.

This stems from inadequate port handling facilities, low human resources capacity to adequately manage the maritime transport and increased competition from the Maputo corridor.

For these reasons, the government, through the Tanzania Ports Authority (TPA), has implemented a number of development projects which were designed to further modernize the ports by providing additional cargo handling equipment, as well as improving and upgrading infrastructural facilities.

Notwithstanding the investment made in the past five years, the Tanzania Ports Authority is still faced with several challenges in making the ports of Tanzania more efficient.

In particular, the Dar es Salaam Port is still characterized by a low handling capacity for containers, due to lack of space, the impossibility of handling ships of PANAMAX size, inadequate transport services from other modes and inadequate human resources capacity to adequately manage the maritime transport.

The Tanzania Development Corridors

Development of transport corridors has been one of the main strategies adopted by the Government of Tanzania to facilitate trade.

Tanzania serves as a transit country for the import and export of Malawi, Zambia, DR Congo, Burundi, Rwanda and Uganda, using the port of Dar es Salaam.

The main rail and road connections in Tanzania are, therefore, in an east-west direction, linking the ports with the hinterlands of those neighboring countries.

Tanzania is devoting much attention to the corridor concept in its development policy by concentrating efforts in the Mtwara Corridor, Dar-es-Salaam Corridor, Central Corridor and the Tanga Corridor.

The major challenge is to link import, export and transit traffic from and to neighboring countries with transport development efforts, making Tanzania a natural regional hub.

The Tanzania Transport Sector Investment Programme (TSIP)

Tanzania has implemented a number of transport development and maintenance programs and reforms aimed at enhancing the provision of an efficient, cost-effective and safe transport system in the country.

Among these reforms is the establishment of transport regulatory authorities and the transforming of government departments into semi-autonomous agencies.

The reforms also include increasing private sector participation in the transport sector through concession, management contracts and/or outright sale of parastatals.

Notwithstanding all these efforts, the transport sector continues to be plagued by high-cost and low-quality services.

This has various causes, including the existence of a high backlog of infrastructure maintenance and rehabilitation, and inadequate capacity caused by a low level of investment.

In view of these characteristics, the Ministry of Infrastructure Development (MID) has decided to put in place a Transport Sector Investment Programme (TSIP) for developing the transport sector in an effective manner.

The Transport Sector Investment Programme is intended to implement the National Transport Policy aspirations, as guided by targets of the Tanzania Development Vision 2025, the National Strategy for Growth and Reduction of Poverty (NSGRP), the Millennium Development Goals (MDGs) and other national and regional long-term development strategies.

In essence, it is an engine to implement the National Transport Policy (NTP) formulated in 2003 and other national policies geared to improve the well-being of the people.

The main objective of the program is to ensure the development in a way that enables the sector to contribute effectively to the growth of the national economy by helping other sectors to attain their aspirations and to eventually achieve the eradication of poverty.

The Transport Sector Investment Programme is due to be implemented in two phases, with the first phase expected to take place between 2006-07 and 2010-11 and the second phase between 2011-12 and 2016-17.

The Tanzania Transport Sector Investment Programme Financing

In the last five years, the Government of Tanzania, in collaboration with development partners, has gradually invested in the transport sector, particularly the road sub-sector which has markedly improved the condition of roads.

Railway, port and airport authorities have instead been using their internally-generated funds for capital expenditures, with minimum support from the government and donor community, because most of their operations were earmarked for privatization.

To achieve the transport sector physical infrastructure development, maintenance and institutional development programs set in the First Phase of the Transport Sector Investment Programme (2006/07-2010/11), a cost of about US$ 5,586.5 million has been estimated, out of which US$ 1,256.0 million or 22.5% has already been committed or secured.

Therefore, the identified funding gap in this programmed is about US$ 4,330.5, or about 77.5%.

The financing gap will be bridged by government revenues, donor assistance, loans from financial institutions and the private sector.

Private Sector Opportunities within the Tanzania Transport Sector

The focus of government is to attract as many private investors as possible during the implementation of the Transport Sector Investment Programme, through public private partnerships (PPPs) in areas where the private sector can easily invest alone or in partnership with the public sector.

Different forms of Public Private Partnerships are being considered, along with the transport modal investments that will be encouraged.

These are: service contract and/or management contract between the government and the service operator, leasing of assets, joint venture between the private sector and the government, Build Operate Transfer (BOT), Concessions, Build Operate Own (BOO) or divestiture.

Investment opportunities are available in:
• Road infrastructure, through construction of roads which were seen as sustaining financial feasibility (i.e. through BOT).
• Building of bridges and or fixed/mobile ferries; charging of tolls for the well-travelled roads.
• Construction of airports and fixing of some airports/ports facilities under Build Operate Transfer. The airport projects include those on the airside as well as those on the landside.
• Establishment of commuter city bus transport companies; Partnership among private operators to create medium-size commercial fleet operators.
• Provision of infrastructure facilities for major cities like Dar es Salaam. The facilities may include parking facilities, bus bays and shelters, etc.

In order to enable Public Private Partnerships to become a dynamic issue in the transport infrastructure in Tanzania, various strategies are being undertaken, including the process of preparing an institutional framework, as well as formulating policy and technical guidelines under Tanzania’s public procurement framework.

Under these Public Private Partnerships modalities, it is expected that more investors will be encouraged to put more resources in the transport development projects, through partnership with the public sector.{xtypo_quote_right}There is room for both the donors [that] are supplementing 40% of our national budget and the private sector.{/xtypo_quote_right}

Ultimately, private capital and donors’ help will complement each other.

As Hon. Basil Pesambili Mramba, the first appointed Minister of Infrastructure Development and now Minister of Industry, Trade and Marketing clarifies: “There is room for both the donors [that] are supplementing 40% of our national budget and the private sector.

There is so much to do and very little done.”