editor
Tanzania has set its sights on a bold economic transformation, aiming to expand its economy to $700 billion—an ambitious leap from its current $85 billion.
But how will the country fund such a massive expansion without overburdening itself with debt?
Experts believe the answer lies in public-private partnerships (PPPs). These collaborations between the government and private sector could be the key to unlocking investment, boosting infrastructure development, and driving sustainable growth.
One of the strongest advocates for this approach is the Executive Director of the Public-Private Partnership Centre, who argues that depending solely on loans and taxes is not a realistic option. “When we engage the private sector, we not only attract capital but also increase tax revenue because these projects generate income,” he explained.
Beyond easing financial pressure on the government, PPPs bring efficiency and innovation, allowing Tanzania to tap into global expertise and modern technology. Many countries have successfully used this model to accelerate their economies, and Tanzania hopes to follow suit.
The need for alternative financing methods is becoming more urgent as Tanzania’s national debt continues to grow. Recent reports show that the country’s total debt reached Sh97.35 trillion in the 2023/24 financial year, a sharp increase from Sh82.25 trillion the previous year. External debt makes up the largest portion, standing at Sh65.40 trillion, while domestic debt accounts for Sh31.95 trillion.
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Despite these figures, economic analysts argue that Tanzania’s debt is still within manageable levels compared to neighboring countries. However, concerns remain about the long-term sustainability of relying on borrowing to fund large-scale projects.
This is where PPPs come in as a practical solution. By allowing the private sector to finance and operate key projects, the government can focus its resources on essential public services while still driving economic progress.
For this strategy to succeed, Tanzania will need to create an environment that attracts private investment. Clear policies, transparency in project execution, and fair incentives for investors will be crucial in making PPPs a sustainable solution.
