Tanzania Infrastructure to Receive Majority of Budget Funds

According to a recent report in the Citizen Daily, the Tanzania infrastructure sector will likely receive the largest proportion of the country’s 2009/2010 budget as a result of a government planned initiative to direct the sector in the process of public investment.

The initiative, entitled the Medium-term Public Investment Plan (MPIP), has been designed to illustrate how to properly invest in areas that have potential to bring about economic gains for the country which, according to a Treasury document on ‘Guidelines for Preparation of Medium Term Plan (MTP) and Budget Framework for 2009/2010 – 2011/2012,’ primarily involves investment in infrastructure at this stage.

“In view of the present socio-economic situation, there is need to realign and refocus the development agenda in terms of Government intervention into priority areas, particularly investments in physical infrastructure that can accelerate economic growth,” reads the Treasury document.

Based on the MPIP, over the next five years, Tanzania construction and rehabilitation projects on new railways, roads and ports will begin to receive increased investment in order to transform the country into a transportation hub and international trade gateway.

In order to attract investors to the project, the plan involves generating and distributing low-cost energy and, in addition, will also help to lead the country in the development of a new irrigation structure in order to help it accomplish self-sufficiency in food.

The Citizen Daily reported that experts from the International Monetary Fund (IMF) have cited poor investments made by the Tanzania government in the sector as the reason for the current poor state and inadequacy of country’s infrastructure.

According to the infrastructure and technology working group of the Tanzania National Business Council (TNBC), in order to renovate the current state of the country’s infrastructure system, the country will require at least TZS 21.2 trillion, in order to both set up a national digital backbone and to invest in transport, power generation and transmission as well as setting up a national digital backbone.

Currently, approximately 10 to 20 percent of the country’s infrastructure expenditure is spent on capital investment and, according to the current 2009/2010 budget preparation documents, the government is aiming for revenue from public investments with the potential of generating at least TZS 1 trillion, or approximately one-seventh of the current TZS 7.22 trill budget.

According to one senior lecturer at the Mzumbe University, Dr. Honest Ngowi, who spoke with the Citizen Daily, in order to realistically fund the country’s projected budget for the upcoming year during the current global financial crisis, Tanzania will need to increase the efficiency and effectiveness of its domestic revenue collection at all levels.

“The crisis has greatly narrowed the tax base, and this has put the Government in an awkward position in financing its operations and undertaking development projects,” said Dr. Ngowi, “These are also making it very difficult for it to come up with realistic options to fund the forthcoming budget.”