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Interview with Nathan Belete, World Bank Country Director for Malawi, Tanzania, Zambia, and Zimbabwe

Interview Nathan Belete World Bank Country Director Tanzania

In this exclusive interview with TanzaniaInvest, Nathan Belete, World Bank Country Director for Malawi, Tanzania, Zambia, and Zimbabwe, offers an insightful discussion on the World Bank’s extensive engagement in Tanzania.

Belete elaborates on the organization’s robust portfolio in the country, highlighting significant investments and technical assistance aimed at aligning with Tanzania’s development goals.

The interview also explores Tanzania’s economic outlook, detailing projected GDP growth, fiscal management, and the country’s strategic efforts to enhance its tax framework to foster economic growth. Belete underscores the importance of improving the business environment, particularly for SMEs, and outlines the World Bank’s initiatives to increase access to finance and streamline business processes.

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Additionally, Belete discusses Tanzania’s pivotal role in regional development, supported by the World Bank’s connectivity projects and energy infrastructure initiatives. He emphasizes the strategic importance of these efforts in fostering regional economic integration and development.

Looking ahead, Belete shares the World Bank’s strategic priorities for Tanzania over the next five years, which include poverty reduction, private sector-led job creation, human capital development, expanding energy access, and promoting digital infrastructure to drive sustainable growth and shared prosperity in the country.

Could you give us an overview of the World Bank’s involvement in Tanzania and its significance?

The World Bank partners with the Tanzanian government to advance sound development policies and investments that align with the country’s development goals. Most of our activities involve financing projects and providing technical assistance for policy formulation and institutional capacity building.

Currently, our portfolio in Tanzania is one of the largest globally, totaling approximately $9.6 billion across about 30 projects spanning various sectors. In the past two fiscal years alone, we have significantly increased our financing to Tanzania, surpassing $2 billion.

“Currently, our portfolio in Tanzania is one of the largest globally, totaling approximately $9.6 billion across about 30 projects spanning various sectors.”

Tanzania receives substantial funding from the World Bank due to several reasons.

First, the government’s implementation of sound economic policies deserves support. Second, there are significant financing needs across various sectors in the country. Third, Tanzania has shown positive traction in achieving developmental results with our funding.

Therefore, investing in Tanzania yields a high return on investment, making it one of the largest and most successful portfolios in Africa and possibly worldwide.

What metrics does the World Bank use to evaluate project performance in Tanzania?

A critical metric we use is the disbursement rate, which measures the rate at which funds are utilized in projects. Typically, our projects span five years, aiming for a disbursement rate of 20% annually to achieve full utilization by the end of the project.

The disbursement rate in Tanzania currently exceeds 30%, showcasing the government’s diligence in effectively utilizing its resources to achieve impactful results.

“The disbursement rate in Tanzania currently exceeds 30%, showcasing the government’s diligence in effectively utilizing its resources to achieve impactful results.”

For instance, in the energy sector, rural energy access rates in Tanzania are significantly lower compared to much of Africa. Our collaboration with the Rural Energy Agency (REA) through the Tanzania Rural Electrification Expansion Program (TREEP) has been exceptionally successful. As a result of this partnership, we have doubled our financing in just three years, enabling the connection of nearly 700,000 households to energy access.

Moving forward, we are committed to further supporting this initiative to enhance connectivity, as it brings a multitude of additional benefits.

How do you assess Tanzania’s economic soundness and outlook, particularly in terms of GDP growth and fiscal management?

In 2024, Tanzania is projected to achieve a GDP growth rate of 5.2%, up from 4.6% in 2023, and is on track to reach a long-term potential of 6%. Tanzania maintains a manageable overall debt at 44% of GDP, stronger reserves, and improved tax revenue collection in recent years, positioning it well among its regional peers.

“In 2024, Tanzania is projected to achieve a GDP growth rate of 5.2%, up from 4.6% in 2023, and is on track to reach a long-term potential of 6%.”

Despite these positive indicators, challenges such as foreign exchange fluctuations could impact foreign direct investment and business activities. We are closely collaborating with the government on this issue, alongside our colleagues at the IMF.

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However, Tanzania stands out compared to its neighbors due to its robust macroeconomic policies. Additionally, this past year saw an increase in tax revenue collection, a positive achievement considering Tanzania’s previous position relative to its peers.

How does the World Bank assess Tanzania’s tax framework and its capacity to foster economic growth?

An enabling tax framework is crucial for fostering private sector growth and investment. In our 19th Tanzania Economic Update of September published in 2023, we highlighted Tanzania’s progress in expanding tax collection efforts, as evidenced by the tax-to-GDP ratio increasing from 10% in 2004/05 to 11.8% in 2022/23.

This brings Tanzania’s tax revenue closer to levels typical of low-income countries (LICs), despite Tanzania currently being classified as a lower-middle-income country (LMIC). The relatively modest mobilization of domestic revenue underscores the need for further enhancements in tax collection to support increased public expenditure.

Ongoing modernization and simplification are essential in Tanzania to improve efficiency, transparency, and operational ease for businesses and investors. We are engaged in discussions with the Tanzanian government on modernizing and simplifying tax administration to facilitate clearer operational frameworks for businesses and investors.

To address policy and compliance gaps further and enhance revenue collection for improved public spending, we recommend several measures: boosting the productivity of progressive taxes, enhancing administrative capacities, improving budget implementation, prioritizing key sectors such as education, health, and social protection, reducing income inequality and poverty, and broadening the tax base to strengthen the distributive impacts of fiscal policy.

What steps is the World Bank taking to enhance Tanzania’s business environment and attract investment, particularly for SMEs?

Streamlining business processes and reducing transaction costs are critical for fostering a conducive investment climate in Tanzania. Efforts are underway, including the recent collaboration on the new Investment Act of 2022, which the World Bank supported through technical assistance.

Access to finance remains critical, especially for SMEs, enabling local businesses to expand and drive economic growth. Securing credit in Tanzania poses significant challenges due to its high cost and limited accessibility.

Could you elaborate on the World Bank’s initiatives to improve access to finance for small businesses in Tanzania?

The Government and the World Bank are in the final stages of initiating a new project to strengthen Tanzania’s financial sector, specifically targeting small and medium enterprises (SMEs). This project aims to increase credit accessibility, reduce collateral requirements, enhance reporting mechanisms, and expand digital infrastructure within the financial system.

“The Government and the World Bank are in the final stages of initiating a new project to strengthen Tanzania’s financial sector, specifically targeting small and medium enterprises (SMEs).”

Additionally, we are focusing on strengthening digital infrastructure to broaden the financial system’s reach and services. These efforts, coupled with the line of credit, will hopefully alleviate some of these challenges.

Meanwhile, our private sector arm, the International Finance Corporation (IFC), is actively supporting access to finance throughout the country, particularly in financial services, which constitutes a substantial portion of their portfolio.

What role does Tanzania play in regional development, and how is the World Bank supporting this role?

With its strategic geographic location, Tanzania serves as a crucial economic gateway in the East and Southern African region. Recognizing this regional significance, we are actively supporting Tanzania’s connectivity initiatives for ensuring access to markets across borders, whether in rail infrastructure or broader railway system improvements.

“With its strategic geographic location, Tanzania serves as a crucial economic gateway in the East and Southern African region. Recognizing this regional significance, we are actively supporting Tanzania’s connectivity initiatives.”

Recently, we approved the $200 million Second Tanzania Intermodal and Rail Development Project extending westward. Discussions are also underway for support to the Standard Gauge Railways (SGR).

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Additionally, we are enhancing the efficiency of the port of Dar es Salaam through physical investments and technical assistance.

Energy infrastructure is equally vital for the economy, particularly since Tanzania is part of both the Southern Africa Development Community (SADC) and the East Africa Community (EAC). We are engaged in regional energy projects such as the Tanzania-Zambia interconnector within the Southern African Power Pool and the Tanzania-Uganda interconnector within the East African Power Pool.

These initiatives present significant opportunities not only for Tanzania but also for neighboring countries like Burundi, the DRC, and Zambia, among others. By connecting to regional power pools, Tanzania can potentially access cheaper energy sources, thereby reducing energy costs for consumers locally. This strategic approach aims to enhance regional energy cooperation and economic integration across borders.

Successful initiatives in Tanzania, such as the One Stop Border (OSBP), serve as a replicable model for enhancing trade facilitation. These initiatives have significantly improved cross-border operations compared to traditional border crossings, demonstrating efficient trade facilitation and promoting regional economic integration.

Such successes inspire similar initiatives in other countries, fostering enhanced trade efficiency and economic cooperation across regions.

What are the World Bank’s strategic priorities for Tanzania in the next five years?

We just submitted our new strategy for Tanzania, the World Bank’s Country Partnership Framework for Tanzania (2025-2029) which emphasizes poverty reduction, shared prosperity, and sustainable development. Key priorities include fostering private sector-led job creation, enhancing human capital through improved education and vocational training, expanding energy access, promoting digital infrastructure, and addressing resilience, among other things.

“Our new strategy for Tanzania, the World Bank’s Country Partnership Framework for Tanzania (2025-2029), emphasizes poverty reduction, shared prosperity, and sustainable development. Key priorities include job creation, education and vocational training, expanding energy access, and promoting digital infrastructure.”

You have extensive professional experience in Africa, East Asia, and South Asia. What lessons can be drawn from your experience in these other regions and applied here?

During my time in East Asia, my work focused on rural development and agriculture, which I found to be deeply inspiring. I witnessed firsthand the remarkable work ethic of rural communities in pursuing their development goals. I was also impressed by their awareness of the importance of sustainable use of their natural resources.

Another aspect that greatly impressed me about East Asia’s economies was their focus on the provision of core public goods, such as financing crucial agricultural infrastructure. Large-scale irrigation projects are beyond the means of individual farmers and require significant public sector involvement and investment.

I believe this model of emphasizing the financing of public goods should be emulated and prioritized by our African governments. It’s also crucial to acknowledge the importance of managing resources sustainably, given the reality of climate change and its impact on our environment and future prospects.

Tanzania is endowed with vast resources that distinguish it from many other countries. Its extensive coastline, rich marine resources, diverse agroecological conditions, and natural wealth, including minerals, position it as a potential powerhouse in the sub-region and beyond.

“Tanzania is endowed with vast resources that distinguish it from many other countries. Its extensive coastline, rich marine resources, diverse agroecological conditions, and natural wealth, including minerals, position it as a potential powerhouse in the sub-region and beyond.”

The Tanzanian government has adopted strong policies in key sectors, prioritizing human capital development of its large youth population, and is focused on enhancing agricultural production and promoting the blue economy with an emphasis on sustainability.

There is also a clear commitment to fostering a robust private sector, evidenced by ongoing reforms and infrastructure improvements to support it. These policy fundamentals align well with the country’s development goals.

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