Tanzania Economic Update The Road Less Traveled Unleashing Public Private Partnerships in Tanzania .......................... .... ....... .................. ........ ..... .... .. . .................. . ......... .............. ... ....... ..... ....... .... . .. .. . ..... ........ . ..... .... . .... . ................ .... . . .... ........ ...... . .. ..... ................ .......... . ..... . . ..................................... ........ ..................................... . . ............................................................ ................................................. . :::: ::::::::::::: ::::: ¡im•:m:¡¡¡ ¡¡¡¡! 11111 111¡¡¡;:;;,¡¡ ···: ilil!I lllllllllllllllllllllm!¡'.¡m¡;=;;;~=::¡¡:::· :::::::.::.:: :.. . mrnm1111111 :: .. ·::::: ::::: 1111 1111 :::: ::::: ::::::::::::::··· : H~~~ ¡¡mrni¡!i' m111rnrn¡, ·, ·· .. !l!¡:i¡!rn m11 1111 : ::..::L::. ~HHg::· . :::: 11!1 ::::: ·r· ·~:i~ : -:. ~r ii l!I 1111 ·. 1! ¡¡¡¡ http://www.worldbank.org/tanianla/economlcupdate @woRLD BANKGROUP The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ · Table of Contents Foreword.•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•..•.•.•v Abbrevlat1ons and acronyms................................................................ vll Acknowledgment .................................................................................... ix Executlve Summary ..................................................................................x PART 1: The State of the Economy ••..•••..•••..•••..•••..•••..•••..•••..•••..•••..•••..•••. 1 1.1 Recent Developments ............................................................................................... 3 1.1.1 Stable economlc performance In splte of fiscal challenges .............................. 4 1.1.2 Business envlronment remalns weak albelt tncreased credlt to private sector ............................................................................................................ 10 1.2 Outlook: Positive economic trajectory in a volatile externa! environment .... 17 1.2.1 Short- to medlum-term prospects........................................................................17 1.2.2 Externa! risk:s ............................................................................................................. 19 1.3 Financing development in Tanzania: Beyond business as usual.................... 22 PART 11: Making Publlc-Prlvate Partnershlps Dellver ....................... 25 2.1 Tanzania's lnfrastructure Challenge ..................................................................... 26 2.2 The role of the prívate sector in closing the infrastructure deficit: trends and lessons from the world and Tanzania .................................................................. 28 2.3 Have PPPs delivered?The evidence globally and in Tanzania ........................ 32 2.4 lmplementing a PPP framework that is fit-for-purpose................................... 34 2.4.1 Providing strategic direction and leadership to the PPP program ................. 37 2.4.2 lncreaslng competltlon and lmprovlng transparency ...................................... 38 2.4.3 Strengthening project identification, preparation and oversight...................42 2.4.4 Developing a robust funding and ñnancing framework for PPPs .................. 46 Statistical Annexes ................................................................................ 49 PACE http://www.worldbank.org/tanzanla/econom lcupd ate @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N List of Boxes Box 1: Shllllng depreclation was assoclated wlth hlgher domestlc inflatlon .................. 9 Box 2: The pulse of the economy ......................................................................................... 14 Box 3: Tanzania's major policy statements recognize the need for PPP ....................... 28 Box 4: Malayslan PPP Program Achievements (1983-2013) ........................................... 30 Box 5: PPPs can deliver benefits ...........................................................................................33 Box 6: Handling unsolicited proposals in a transparent way...........................................40 Box 7: Project Development Funds .......................................................................................43 Box 8: Approaches to managing contract renegotiations ...............................................45 Box 9: Local Govemment PPP ...............................................................................................46 Box 10: lndla's Viablllty Gap Fund .........................................................................................47 Box 11: Financing PPP .............................................................................................................48 List of Figures Figure 1: Tanzania: The fastest growing economy in EAC ................................................. 5 Figure 2: Tanzanla's sector growth rates In 2015 ................................................................. 5 Figure 3: Quarterly sector growth rates ................................................................................. 5 Figure 4: lnflation has declined in recent months ............................................................... 6 Figure 6: Nominal and real effective exchange rates have remalned stable .................. 7 Figure 6: The Shilling has stabilized after sharp depreciation in the first half of 2015 ... 7 Figure 7: Stable international reserves and current account deficit................................. 8 Figure 8: Stable trade flows but slgnlficant shlft In thelr composltlon (2015 annual changes) .......................................................................................... 10 Figure 9: Sustained low monetary growth since 2011 and falrly stable nominal and real lnterest rates ....................................................... 10 Figure 10: Composition of monetary growth (M3) has recently shifted towards credit growth to the private sector .....................................................11 Figure 11: Fiscal deficit under control(% of GDP) ............................................................ 13 Figure 12: Low and stagnant domestlc revenue and decllnlng ald (% of GOP) ......... 13 Figure 13: Sharp increase in arrears (% of GDP) ................................................................15 WGE http://www.worldbank.org/tanzanla/economlcupdate ¡¡ The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Figure 14: Steeply lncreaslng externa! non-concesslonal borrowlng and debt servlce... 15 Figure 15: The level of development spending (as a share of GDP) is low................... 23 Figure 16: The level of spending on physical capital investment is even lower........... 23 Figure 17: Total lnvestments wlth prlvate sector partlclpatlon In energy, telecoms, transport, and water by region, 2004-2014 (2014 US$ billions) ................. 29 List of Tables Table 1: Publlc expendlture and budget support trends (in percent of GDP) ............. 16 Table 2: Macroeconomic projections ................................................................................... 18 Table 3: lnfrastructure indicators, 2015 ............................................................................... 27 Table 4: Telecom, water, energy, transport projects 2000-2014 .................................... 32 Table 5: Sector-wise breakdown of PPP projects forTanzania and neighboring countries (in US$ million) ........................................................................................32 Table 6: EIU lnfrascope ratings ..............................................................................................35 Table 7: Award processes used for sorne recent PPPs In Tanzania................................ 39 Table 8: Appraisal studies for PPPs ......................................................................................44 PACE http://www.worldbank.org/tanzanla/econom lcupd ate ¡¡¡ @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N WGE http://www.worldbank.org/tanzanla/economlcupdate iv The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ = Foreword The eighth Tanzania Economic Update the Govemment needs to create a more • is a sequel to the seventh edition, which conducive business environment. • addressed issues related to financing • economlc development by enhanclng Wlth Tanzanla's masslve development the collection of tax revenues. Over the needs, it finds itself at a critica! juncture, • past decade, Tanzania has achieved a with domestic revenues barely sufficient • high rate of economlc growth and has to cover the Government's recurrent • reduced the incidence of poverty. However, expenditures; aid inflows declining; and approxímately 12 míllion people still live on externa! commercial loans becoming • less than TZS 1,300 per day and a large increasingly expensive and less accessible. • proportion of Tanzania's rapidly growing Thus, to bridge the massive financing gap, • populatlon stlll does not have adequate the Government needs to ldentlfy alternatlve access to basic infrastructure and social sources of finance. Potential options • services. Thus, investments in infrastructure include increasing the level of domestic • and human capital are crltlcally lmportant revenue collectlon; engaglng In addltlonal • in order to unlock Tanzania's latent borrowing; improving spending efficiency; economic potential and to accelerate and utílizíng private sector financing. The • economic growth and poverty reduction. new administration is taking sweeping • However, with limited available resources, measures to increase revenue mobilization; lnvestments need to be carefully prlorltlzed to lmprove efficlency In publlc spendlng; and and fully funded. With job creation being to reduce corruption. These measures are • the most immediate avenue to promote already beginning to yield positive results. • pro-poor growth, productlve employment However, any further slgnlficant lncrease opportunities need to be generated for the in the level of commercial borrowing estimated 800,000 people entering the and payment arrears, without addítional • labor market every year. In this process, the strengthening of the fiscal policy stance • private sector, which employs more than 95 and without the identification of the means percent of the workforce, should take the to lower borrowlng costs, Is likely to ralse drivers seat. To foster private sector growth, concerns over the sustainability of debt PACE http://www.worldbank.org/tanzanla/econom lcupd ate V @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N and fiscal accounts. Thus. prívate sector Tanzania has significant experiences with financing, including through carefully PPPs, although these have so far produced selected, appropriately implemented public mixed results. However, combined with the private partnerships (PPPs), is the most as lessons learnt from global best practice, yet underutlllzed source of financlng. these experlences provlde a strong basls on which to implement a successful PPP The 2030 Agenda for Sustainable program. The key lessons include the Development Goals (SDGs) strongly followlng: (1) PPPs are not a panacea and emphasizes the role of the prívate sector do not necessarily work well in all sectors. in the development process. Private sector PPP projects should be carefully selected financing and investment are identified on the basis of their financia! viability and as the most significant potential source of attractiveness to the private sector; (ii) addltlonal fundlng requlred to facllltate the selected projects need to be prepared well, achievement of the SDGs. lf appropriately with the appropriate allocation of financia! selected and implemented, PPP projects and human resources, including access to can make a sfgnlficant contrlbutlon towards expert advlce; (111) projects that are awarded mobilizing financing to help address on a non-competitive and non-transparent the significant ínfrastructure and social basis are less likely to succeed, with global services gap; towards delivering projects good practice suggesting that investors on time and within budget to a greater should be selected through competitive extent than In the case of publlc projects; procedures; (iv) a hlgh level of commltment and towards delivering higher quality from the highest levels of government services than could be achieved through is key to ensuring the success of a PPP publidy managed projects. In fact, global program. On the other hand, unwarranted experience shows that countries that have government interference and micro- implemented successful PPP programs, management is likely to lead to failure; and including India, Mexico, Chile and Brazil, (v) well-designed, well-resourced training are able to raíse finance for 25-30 percent programs and public outreach campaigns of thelr lnvestment needs from the prlvate play a vital role In building awareness and sector through PPPs, while at the same forging consensus amongst government time achieving a significantly higher level staff, prívate investors, financiers, and the of servlce quallty and efficlency galns. Thls broader publlc regardlng the role and value Economic Update shows that PPPs could of PPPs and the best means to implement play a useful role in financing Tanzania's them. economic development. However, it also shows that this will only be achieved if Bellalird PPPs are well-deslgned and approprlately Country Director for Tanzania, Malawi, implemented. Burundi and Somalla WGE http://www.worldbank.org/tanzanla/economlcupdate vi The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Abbreviations and acronyms BoT Bank of Tanzania BRN Blg Results Now CCM Chama Cha Mapinduzi CYN Chinese Yuan DAWAf>CO Dar es Salaam Water and Sewerage Corporation DBSA Development Bank of Southern Afñca DFID Department for lnternational Development DNP Department of National Planning EAC East African Community EU European Union EUR Euro FDI Forelgn Dlrect lnvestment FYDP Flve-Year Development Plan GDP Cross Domestlc Product GoT Government of Tanzania GTZ German Technical Cooperation Agency ICTSI lnternational Container Terminal Services IDA lnternational Development Association IMF lnternational Monetary Fund INR lndian Rupee IPTL lndependent Power Tanzania Ltd KES Kenyan Shilling KIA Killmanjaro lnternatlonal Alrport KPMG Klynveld Peat Marwlck Goerdeler LGA Local Government Authorlty LNG Llquefied Natural Gas MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umasikini Tanzania MoF Ministry of Finance MoU Memorandum of Understanding NGOs Non-governmental organization OECD Organisation for Economic Co-operation and Development PO-RALG President's Office Regional and Local Government PPI Publíc Pñvate lnfrastructure PPIAF Publíc-Private lnfrastructure Advísory Facílity ppp Publlc-Prlvate Partnershlp PSPF Publlc Servlce Penslon Fund RAHCO Reli Assets Holding Company REA Rural Electrlficatlon Agency PACE http://www.worldbank.org/tanzanla/econom lcupd ate vii @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N RITES Rail India Technlcal and Economlc Servlce SDG Sustalnable Development Goals SMR Statutory Mínimum Reserve TANESCO Tanzania Electric Supply Company TDV Tanzania Development Vision TICTS Tanzania lnternational Container Terminal Services TNBC Tanzania National Business Council TRL Tanzania Railways Limited TSH Tanzanian Shilling TTCL Tanzania Telecommunications Company Limited TZS Tanzanlan Shllllng UDA-RT Usafirl Dar es Salaam Rapld Translt UK Unlted Klngdom UKAWA Umoja Wa Katlba Ya Wananchl us United States USAID United States Agency for lntemational Development USD United States Dollar VAT Value Added Tax WGE http://www.worldbank.org/tanzanla/economlcupdate viii The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ · Acknowledgment The eighth edition of the Tanzania IMF Tanzania team, led by Herve Joly. : Economic Update series was prepared • by Emmanuel Mungunasl (Part 1) and The team recelved guldance from Albert • Jeffrey Delmon (Part 11), under the overall Zeufack, Clive Harris, and Bella Bird. lrfan supervision of Yutaka Yoshino. The Kortschak provided editing assistance, • authors are partlcularly grateful for the while Justlna Kajange, Grace Mayalla, • contributions of Fiseha H. Gebregziabher, Deliwe Ziyendammanja and Loy Nabeta • Zarau W. Klbwe, Fernanda R. Nunez, managed the deslgnlng and prlntlng of • Zichao Wei; and for comments from the report. PACE http://www.worldbank.org/tanzanla/econom lcupd ate ix Executive Summary • Tanzania successfully conducted its dependence on aid. While the Government : general elections in October 2015. As should strengthen measures to improve • a result of these elections, Dr. John P. tax collection, these measures should • Magufuli, the candidate from the ruling be implemented in a business-friendly • party, Chama Cha Mapinduzi (CCM; "Party way, especially through streamlining the : of the Revolution"), was declared the multiple taxes and levies, particularly in • fifth president of the United Republic of the agriculture and tourism sectors. • Tanzania. Part 1: The State of the Economy • Upon its inauguration in November • 2015, the new administration quickly The Tanzanian economy has grown at • launched sweeping measures to improve an average annual rate of around 6-7 • tax collection; to reduce non-priority percent for more than a decade. The rate : expenditures; and to curb corruption. of inflation has declined since January • Recent efforts to reduce tax evasion and 2016, although it trended upwards in the • tax exemptions have met with a significant preceding few months due to increases • degree of success, with monthly tax in domestic food prices and the lagged • revenue collections surpassing the targets impacts of the sharp depreciation of the • in every month since December 2015. Tanzanian Shilling during the first half • In addition, the President's strong anti- of 2015. However, the Shilling stabilized • corruption stance has led to the dismissal in the second half of 2015, with the real • of several senior government officials. exchange rate now clase to the equilibrium level. The current account deficit has also • In his first dialogue with the prívate sector, improved, standing at around 8.7 percent • President Magufuli called on the private of GDP in 2014/15. The level of aid inflows • sector to cooperate and make the required declined during 2014/15, although this • tax payments. He noted the importance was offset by increases in FDI and externa! • of a stronger partnership between the non-concessional borrowing, maintaining • Government and the prívate sector to the overall balance of payments in a stable boost tax collection and thus to reduce position. PAGE http ://www. wo rldba nk.o rg/tanzan ia/economi e update. X The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Despite achieving a high rate of GDP), while the sítuation of other parastatal economic growth and poverty reductíon, entities, such as REA and DAWASCO, approximately 12 million Tanzanians remains unclear. The skyrocketing cost still live on less than TZS 1,300 per day, of debt service creates additional fiscal the natlonal poverty llne. In addltlon, a challenges, wlth debt servlce currently significant proportion of the population consuming approximately 25 percent of are just above the poverty line and are domestic revenues. vulnerable to falling back lnto poverty in the event of economic shocks. So far, While economic performance has economic growth has been primarily dríven remained strong in the recent past, the new by non-labor-intensive sectors. Thus. the administration comes into power in the expansion of these sectors has had only context of increasingly significant externa! a llmlted lmpact on Job creatlon, wlth rlsk:s. These rlsks lnclude Chlna's economlc poverty reduction having been achieved slowdown; the decline in commodity mainly through increased returns on prices; volatile global financia! markets; margtnally productlve economlc actlvltles. and a further decline In ald lnflows. The Thus, there is still a pressing need to persístent decline in oil prices has delayed generate a greater number of productive investment decisions related to the employment opportunities for Tanzania's development of Tanzania's liquefied natural rapidly expanding workforce. gas (LNG), which will potentially result in a reductlon In the huge FDI that Is expected Over the past four years, Tanzania's fiscal to flow to the gas sector beginning in 2017. deficit has declined steadily, from 6.8 In addition, given the growing pressure percent of GDP In 2011 /12 to 3.3 percent In on European countrles to dtvert thelr ald 2014/15. However, this reduction has mainly budgets towards addressing the European been achieved through the imposítion of refugee crisis, aid flows to Tanzania might painful cuts to development expenditures decline even further in the foreseeable and through the accumulation of a high future. lt is vital that policymakers carefully level of arrears. As of June 2015, the monitor and manage these developments. Government had accumulated arrears to a value of approximately TZS 5 trillion (6 In the medium term, the economy is percent of GDP) wlth suppliers and penslon projected to expand at a rate of around 7 funds. lncluding arrears with suppliers. the percent over the next two years. assuming fiscal deficit in 2014/15 increased to 4.5-5.0 no major shocks, while the rate of inflation percent of GDP. In addition, TANESCO has is projected to decline to about 5 percent. accumulated a significant level of arrears, The current account balance is expected to the value of whlch Is estlmated to reach further lmprove lf oll prlces remaln low and approximately TZS 1 trillion (1.2 percent of exports continue to improve. The value of PACE http://www.worldbank.org/tanzanla/econom lcupd ate xi @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6. 8 TH ED 1T1 o N gross international reserves is projected to limited availability of publíc resources to remain stable, at approximately 4 months finance development, investments need to of import coverage. The fiscal deficit is be carefully prioritized and fully resourced. expected to decline to approximately The private sector should play a much more 4.2 percent of GDP In 2015/16 and to 3 slgnlficant role In acceleratlng economlc percent in 2016/17, following further ñscal growth and creating jobs. However, for consolidation. this to occur, constraints to prívate sector growth need to be resolved. Thls requlres However, a business-as-usual approach significant improvements in the business makes the achievement of the goals of environment, whích in turn will involve accelerated growth and further poverty expanding access to affordable finance; reduction less likely. An average annual expanding access to reliable infrastructure, rate of growth of 6-7 percent Is estlmated such as power supply and good road to have only reduced the poverty rate from and railway networks; and improving the 46 percent in 2012 to 41 percent in 2015, education and training system to produce based on the US$ 1.90 per day global skllled workers In arder to promote poverty line. Therefore, maintaining the productive activities. status quo may not be enough to achieve rapid poverty reduction. With job creation In a fiscal environment in which domestic being the most immediate means to revenues are only sufficient to meet the promote pro-poor growth, the creatlon of a Government's recurrent expendltures and signiñcantly greater number of productive in which aid meets only a small proportion employment opportunities is of paramount of the financing gap, it is necessary to lmportance to productlvely absorb the ldentlfy alternatlve means of iinanctng estimated 800,000 people who enter the Tanzania's huge development needs. There labor market each year. are severa! means by whích this may be achieved. such as increasing the collection lnvestments in infrastructure and human of domestic revenue; increasing efficiency capital are crltlcally lmportant lf Tanzania In spendlng; lncreased borrowlng; and is to unleash its economic potential and to tapping into prívate sector financing. The generate a greater number of productive Government is already implementing jobs while lncreastng the productlvlty sweeptng measures to tmprove revenue of its domestic industries. To facilitate mobilization and to improve spending rapid poverty reduction, it is also vital efficíency. Signíficant additional borrowing, to modernize the agricultura! sector; to without further ñscal consolidation and expand health, education, and water without the means to lower borrowing servlces; and to extend the coverage of costs, would result In slgnlficant lncreases productive safety nets. However, given the to debt stock and debt service costs, raising WGE http://www.worldbank.org/tanzanla/economlcupdate xii The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ concerns over debt and fiscal sustainability. economies. Countries with successful PPP lnternational experience suggests that it programs include India, Mexico, Chile and is worth seriously considering the so far Brazil, which mobilize finance for 25-30 underutilized financing options involving percent of their investment needs from the prlvate sector, especlally publlc the prlvate sector, prlmarlly through PPPs. prívate partnerships (PPPs). Thus, the Global experience clearly shows that current edition of the Economic Update well-designed and properly implemented focuses on the potentlal of PPPs to finance PPPs can make slgnlficant economlc development. This is a sequel to the contributions. Privately-managed seventh Economic Update, which focused infrastructure services have been shown on improving tax revenue collection. to facilítate the delivery of 12-29 percent more connections per worker to services Part 2: Maldng PPPs dellver such as power and water; the achlevement of bill collection ratios that are 85 percent Tanzania's infrastructure and social services higher than in the case of publicly managed deficits are already massive and projected projects; and to reduce distrlbutlon losses to lncrease lnto the future. As noted In by as muchas 41 percent.1 Part l. traditional ñnancíng instruments are clearly insufficient to bridge the Tanzania has both a comprehensive profound gap between exlstlng public framework for, and slgnlficant experlence resources and financing requirements. with, PPPs. However. much still needs to By leveraglng synergy between the be done to ensure thelr approprlate and public and prívate sectors, PPPs can effective implementatíon. The hístory mobilize addítional sources of finance to of PPPs in Tanzania provides a series fund the development of vltally needed of excellent lessons learned whlch, infrastructure; to deliver on budget and on combined with best practices from other time to a greater extent than in the case countries, provide a useful roadmap of publicly financed projects; and to dellver to facilltate the changes necessary to higher quality services than in the case of implement a successful PPP program. publicly managed projects. Tanzanla's own Some of these key lessons are brlefly polícy documents ídentify PPP as a key díscussed below. instrument to attract new investment and 1. Select well: Careful analysis is needed to deliver lnfrastructure more efficlently. to verlfy that a project Is llkely to be The prívate sector plays an ímportant feasible; to be attractive to the private role in financing and delivering public sector; and to provide value for money. servlces In many developlng and emerglng PPPs are not a panacea and many projects 1 World Bank, PPP Reference Cuide (2015}. PACE http://www.worldbank.org/tanzanla/econom lcupd ate xiii @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6. 8 TH ED 1T1 o N are not suitable to be implemented as are selected, the necessary financia! and PPPs. In particular, there are problems that human resources should be assigned PPPs cannot solve. For example, by itself, to carefully prepare projects through the establishment of a PPP will not reform budget allocations and other funding a sector wlth substantlal governance and sources. In the past, the Government pricing problems. Where such problems has relied excessively on studies and exist. it is necessary for the Government to analysis provided by investors and other dlligently lmplement sector reforms as part governments, desplte the potentlal for of the process of establishing PPP projects. conflicts of interest. Global good practice indicates the importance of independent 2. PPP frameworlc Global good feasibility studies and transaction advice practice clearly lndlcates that a sound from independent and highly experienced institutional and regulatory framework is advlsers to ldentlfy lnvestors and critica! for the success of PPP programs. financiers and to assist in the oversight of Accordingly, the Government should implementation. give serious consideration to the means by whlch lt mlght strengthen lts central 4. Compete: Best practlce PPP programs PPP institutions. The PPP Centre needs adopt open, transparent, competitive to be properly established, with the bidding. Competition brings the best out of approprlate resources. lt should be headed prlvate lnvestors and helps to ensure that by senior CEO, with strong private and the Government achieves value for money. government experlence, and preferably lt also protects agalnst perceptlons of with significant experience in the financia! corruption and bias that may result in the sector. The PPP Centre should report to case of direct negotiations and unsolicited a central government mlnlstry that has proposals. Thus, direct negotlatlons and the power and authority to challenge unsolicited proposals should be permitted line ministries and to ensure compliance only in the most limited of circumstances, wlth the PPP framework. The Mlnlstry of when thls Is the only feasible approach. Finance (MoF) PPP team and the Local The PPP Act mandates this approach, and Government Authorlty (LGA) PPP Node lt should be lmplemented accordlngly. need to have full-time, dedicated staff 5. Use pub/le support care{ully: Global with the appropriate skills and access to good practice indicates the need to allocate externa! experts to support the contractlng sufficlent financia! and human resources authorities; to mobilize project funding; to assess, approve, and monitor public and to ensure high-quality project delivery. liabilities associated with PPP. Tanzania 3. Prepare wefl: Successful PPP programs needs to adopt and apply a pollcy for the allocate appropriate resources necessary provision of Government financia! support for project preparation. Once projects for PPP, including awarding guarantees WGE http://www.worldbank.org/tanzanla/economlcupdate xiv The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ and deciding which projects wíll receive staff to select the appropríate projects such support. for PPP and to implement those projects well. An awareness campaign should be 6. Troin them up: Finally, a solid training implemented to ensure that the public program and publlc outreach campalgn understands the value and rlsks assoclated plays an important role in enabling with PPP. In addition, it is necessary to government staff, local governments and strengthen the local financia! sector to the publlc to understand the ratlonale for develop the skllls and lnstruments needed PPPs. Traíning will enable Government to support PPP. PACE http://www.worldbank.org/tanzanla/econom lcupd ate XV @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N WGE http://www.worldbank.org/tanzanla/economlcupdate xvi @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Part 1: The State of the Economy Key Messages • Tanzania contlnues to record a strong economlc performance. However, about 12 million of its citizens still live in dire poverty, with a significant portien of the non- poor population living just above the poverty line and therefore vulnerable to falling back into poverty in the case of economic shocks. • More and better infrastructure and human capital investment is key to unlocking Tanzania's economic potential and to creating a greater number of jobs in high- productlvlty sectors. However, glven slgnlficant financlng constralnts, whlch left FYDP prlorltles (includlng the BRN projects) underfunded by about 50 percent untll 2014/15, investments need to be carefully prioritized and fully funded if they are to facilitate the achievement of these goals. • The new administration is taking sweeping measures to improve tax collection; to contain public spending; and to curb corruption. However. measures to improve tax collection should be implemented in a business-friendly manner and accompanied by the measures to streamllne multlple taxes and levles, partlcularly In the agrlcultural and tourlsm sectors. • There are sorne slgns of lncreased business optlmlsm regardlng the future of the economy. The Government needs to capltallze on thls by creatlng a more conduclve business environment, which is critical to prívate sector growth and job creation. • The stock of domestic payment arrears remains unsustainably high, with progress towards clearing these arrears remaining slow. To restore the confidence of suppliers and pension funds, and the prívate sector more generally, these arrears need to be cleared as a matter of urgency. • Tanzania's debt levels have increased significantly, with debt service consuming about 25 percent of domestic revenues. To ensure fiscal and debt sustainability, the authorltles should monitor these debt levels closely. • Whlle Tanzanla's short to medlum term prospects remaln posltlve, the economy faces a number of lncreaslngly slgnlficant externa! rlsks, lncludlng Chlna's economlc slowdown, falling commodity prices. volatile global financia! markets, and decline in aid flows. These need to be carefully monitored and appropriately managed. http://www.worldbank.org/tanzanla/economlcupdate 2 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ 1.1 Recent Developments including the Tanzania Ports Authority (TPA); the Tanzania Revenue Authority In October 2015, Tanzania successfully (TRA); and the Prevention and Combating conducted its general electlons. As a of Corruption Bureau (PCCB). result of these electlons, Dr. John P. Magufulf, the candtdate from the rulfng The Presfdent has called on the prtvate party, the Chama Cha Mapinduzi (CCM. sector to cooperate with the authorities "Party of the Revoluttonº), was declared and to comply wlth the requlrements the fifth presldent of the Unlted Republic to pay taxes. In hls first dialogue wlth of Tanzania. The CCM, the ruling party the private sector. through the Tanzania for the last 40 years, won a parliamentary National Business Council (TNBC), the majorlty, although the opposltlon partles Presldent emphaslzed the lmportance under the UKAWA coalition increased of establishing a stronger partnership thelr number of seats In the Parllament. between the Government and the prlvate Following the peaceful conclusion of the sector, particularly as a means to improve elections, a new administration has been tax collection and thus reduce Tanzania's formed, wlth the slze of the cablnet scaled dependence on forelgn ald. He encouraged The President down to half of its size under the previous businesspeople to cooperate with the has called on the administration. authorities and to pay all required taxes, private sector to warning that stern legal measures would The new administration is taldng cooperate with be taken against tax evaders. However. sweeping measures to strengthen fiscal the authorltles efforts to strengthen tax collectlon should management and to curb corruptlon. and to comply be implemented in a manner that does not Upon hls lnauguration In November 2015, wlththe adversely impactthe businessenvironment, the President quickly implemented a requirements to wlth an ongolng dialogue wlth the business serles of measures to cut non-prlorlty paytaxes. community being helpful to ensure this. In expenditures, including expenditures addition, multiple taxes and levies should related to foreign trips by government be streamlined to lmprove efficlency and officlals, conferences, and celebratlons. to reduce transaction costs for the prívate The new administration has taken bold sector, partlcularly In the agrlcultural and measures to crack down on tax evasion, tourism sectors. wlth these measures resultlng In conslstent over-performance in tax revenue The new admlnlstratlon has lndlcated collectlon durlng the first four months lts commltment to the achievement of of this administration. As a result of the accelerated economic growth and to President's strong anti-corruption stance, the dellvery of quallty social servlces. a number of senior officlals were dlsmlssed Thls Is In line wlth the new development during his first 100 days in office, including agenda that promotes the structural heads and board members of key agencies, transformation of the Tanzanian PACE http://www.worldbank.org/tanzanla/econom lcupd ate 3 @¡ TANZANIA ECONOMIC UPDATE MAY 2016, STH EDITION economy into a semi-industrialized one general decline in aid flows. partly due to and that accelerates progress towards potential impact of the refugee crisis in the achievement of the goals defined Europe. In addition, Tanzania continues to by the Tanzania Development Vision face significant fiscal challenges, including (TDV) 2025. To achleve these goals, the high leve! of domestlc payment the Government's priorities include: the arrears; low levels of revenue mobilization; development of infrastructure to facilitate and massive financing needs for accelerated growth; the creatlon of a lnfrastructure and social servlces dellvery. significantly greater number of productive The first section of Part 1of this Economic job opportunltles; and the delivery of high Update discusses recent macroeconomíc quality social services. The development trends and their maln drivers, while the Tanzanla's economy of both transportation infrastructure, second section presents the economic has grown at 7 lncludlng the Dar es Salaam port, central outlook, lncludlng an analysis of externa! percent in 2015, the railway, roads; and energy infrastructure, risks. Finally, the third section discusses fastest In the EAC. including both generation and distribution why a business-as-usual approach is facllltles, are top prlorltles. In the area of lnsufflclent to facllltate the achlevement social servlces, top priorities include the of rapid poverty reduction, pointing to provision of 11 years of free schooling; the the need for alternative financing sources delivery of high quality health services; to complement the low level of available and provision of clean and safe water public resources. supplfes In both rural and urban areas. 1.1.1 Stable economlc performance The administration has already begun to in splte of fiscal challenges implement its free education policy, with the disbursement of the flrst tranche of The Tanzanlan economy contlnues to TZS 180 billlon to schools in January 2016 be the fastest growlng among the EAC to compensate them for the abolitíon of countries, with a rate of economic school fees. The President has also dírected growth of 7 percent In 2015 (see that a portian of the funds al located for the Figure 1 ). Thls falrly hlgh rate of growth parllamentary lnauguratlon ceremony be was primarily driven by rapidly growing reallocated for the purchase of additional sectors such as hotels and restaurants; hospital beds at the Muhimbili Natíonal constructlon; flnance; and trade, which Hospital. were also the key drivers of growth However, the new admlnlstratlon comes In 2014. Desplte earller concerns, low into power in the context of significant rainfalls in 2015 had no significant impact global economlc challenges. These on economic growth. From the demand lnclude challenges related to the economlc side, real GDP growth was prlmarlly slowdown In China; low commodity prices; driven by a signiflcant expansion in public volatile global financia! markets; and a consumption; prívate consumption; and PACE http://www.worldbank.org/tanzanla/economlcupdate 4 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ prívate investment. Unlike the case in 2014, lower oil import bills. However, Tanzania's publíc consumptíon made a signifícant low level of public investment (about 7 positive contribution to growth in 2015, percent of GDP in recent years) implies with this phenomenon possibly related to lacking potential crowding-in effect on the electlon cycle. The contrlbutlon from prlvate lnvestment, whlch would have net exports also increased, largely due to contributed more to economic growth. Figure 1: Tanzania: The futert growlng economy 1n EA.C _...___ - Figure 2: Tanzanla's sedor growth rates 1n 2015 9.0% 8.0% -- --·-ni-- - - ~ 7.0% 8.0% 5.0% -- --ni-- --ni- - - ~- ...... ~ -_ 4.0% PliM: 811'imll!lll:Nlb!W1111Dlt'.a ~ 3.0% 2.0% "'11'WI ltMl:fl• _.. .... ..,,.,... "°*..... 1.0% ~.Qllt º·º" .__.___ Alllt.I Unlike the case In 2014. publlc 2011 2012 2013 Source: MoF and World Bank 2014 2015 - --- Source: NBS .._ _ Tttdlnl Ion ..... " 2'I. ft ... ft 10I Uf, M!i consumption made a signiflcant Whllethe agrtcultural sectorexpertenced F1gun1 3: Quarterly sador growth ratas posltlve continuous slow growth in 2015. there 10% U'4 contribution was a surge In manufadurlng and retal! K l .2014Q4 ~ 1,.ll)f&Q4 tO'll to growth In "' 1 2015, with thls phenomenon trade (see Figure 3). In particular, agro- processing (food, beverages. and tobacco) 7" "' S!(, 1 4.2'1. ~1 and basic metal industries (construction 4!!. 3.1!(, posslbly related to li 3" materials) experienced strong growth. In 2" the election cycle. the fourth quarter of 2015, the agricultura! l!f. 1 sector reglstered a sllghtly lower rate of °" ~~ ~~~ ll'dllC!y ~ growth, mainly due to a decline in the Source: MoF and World Bank. production of majar crops as a result of unfavorable weather condltlons. In By contrast, the rate of growth In the non- contrast. the manufacturing sector grew manufacturing industrial sector declined at the remarkable rate of about 8 percent slightly in 2015. However, the míning sub- in the fourth quarter of 2015, with this sector grew ata rate of approximately 11 growth being primarily driven by lower fuel percent in the fourth quarter of 2015, costs; the lncreased flow of credlt; and an compared to the rate of 7 percent In the increase in the volume of regional trade. corresponding quarter in 2014. This was PACE http://www.worldbank.org/tanzanla/econom lcupd ate 5 @¡ TANZANIA ECONOMIC UPDATE MAY 2016, grH EDITION mainly due to lncreased gold production. the case of economic shocks. The poverty resulting from drastically reduced fuel rate fell from 34 percent in 2007 to 28 costs. In the final quarter of 2015, the percent in 2012.2 Nonetheless, with the construction industry experienced a country's high rate of population growth, slgnlficant decline ln growth. the proportlon of people livlng below the poverty line remains roughly the same Desplte hlgh economlc growth and as in 2007. In addition, if the proportion a reductlon In the poverty rate over Is calculated uslng the new US$ 1.90 per the past decade, about 12 mllllon day global poverty Une, the poverty rate Tanzanlans contlnue to Uve on less than increases to 46 percent In 2012. Based on TZS 1,300 per day. This high number is this measure, Tanzania ranks in ninth place Desplte hlgh partly due to Tanzania's rapid population in terms of the number of its population economic growth, growth. In addltlon to those llvlng In llvlng In poverty on a global scale. Whlle about 12 million poverty, a signiñcant proportion of the estimates indicate that the poverty rate people llve on less population llve just around the poverty declined to about 41 percent in 2015, it is than TZS 1,300 per Une. Those just above the llne are hlghly unarguable that a hlgh proportlon of the day, whlle many vulnerable to falling back into poverty in population remaíns poor. others are just above the poverty line. Figure 4: lnftatlon has decllned In recent months 32 27 22 11! 17 12 7 2 ¡..........,...........,......,............~~~.-.-.............-..-...,......,............~~~.-.-............,.....,......-.-...--.-~~~,....,,..,...........,......,.._¡..,..., 2012 2013 2014 2015 2018 - Headlh• hlllltlon - -Food hfta11Dn - En1111Y1nd Fu1l htlll11Dn Sourc:e: NBS. The rate of lnflatfon has decllned slnce of lnflatlon had reached 6.8 percent In January 2016, although lt trended December 2015, mainly dueto increases upwards durlng the second half of 2015, in domestic food prices and the lagged largely due to increases in domestic impacts of the sharp depreciation of the food prlces (see Figure 4 ). The rate Tanzanian Shilling, particularly during the 2 Ustng the Nattonal Poverty Une of about 0.6 dollar (TZS 1,300) per day. PACE http://www.worldbank.org/tanzanla/economlcupdate 6 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ first half of 2015. However, the rate has prices have played a role in dampening the been declining slowly over the past few effects of the increases in the domestic months, standing at 5.4 percent in March food prices and of the depreciation in the 2016. The rate of food inflation increased value of the currency, thus playing a key conslstently between January 2015 and role In malntalnlng lnflatlon In the slngle- January 2016, largely due to increases digit range. Analysis shows that the sharp in domestic food prices resulting from depreciation in the value of the Shilling a shortfall In the supply of majar food exerted upward pressure on the rate of crops, particularly rice and maize. Prudent inflation, which was offset by the decline monetary policy and the decline in energy in global fuel and food prices (see Box 1). Figure 5: The Shilling has stabilized Figure 6: Nominal and real after sharp depreciation in the effective exchange rates haw first half of 2015 remainecl stable 11C.O 1lLO 12'.0 @ 11l.O • 110.0 The shilling has a 111.0 ' 1111.0 IU now stablllzed IOJ after a significant IU +--r~~~~~~~~~~~ • • • • - • o • • • • • • • • • • i l ! j ¡ ki ~ j } i í i l 11 ¡ depreciation in the first half of 2015. Source: IMF, World Bank. BoT - ·--- ----- Source: IMF, World Bank. BoT The Shllling appears to have stabilized, to the Euro In November 2015, followed followlng a slgnlficant depreclatlon by an equally significant depreciation in relative to most major currencles durtng December 2015. The recent stability has thefirst half of 2015 (see Figures 5 and 6). been achieved through a tightening of The Shilling depreciated by approximately monetary policy, supported by increases 25 percent In the first half of 2015, largely In the value of export earnlngs, especlally due to the strength of the US dallar; the since August 2015. The real effective high level ofliquidity in the banking system; exchange rate is now close to equilibrium. and seasonally low export earnlngs. The from a somewhat overvalued startlng polnt. rapid depreciation was exacerbated by delays in the mobílization of externa! Tanzanfa's balance of payments program financing. However. the value improved during the second half of 2015. of the Shilling has remained fairly stable Thls lmprovement was largely due to the relatlve to the US dollar slnce August 2015, good performance of exports and to the despite a significant appreciation relative reduced import bill resulting from the PACE http://www.worldbank.org/tanzanla/econom lcupd ate 7 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N decline In oll prlces. The current account February 2016, nearly half of the value deficit declined to a value of approxímately recorded in February 2015. The value of 8.7 percent of GDP in 2014/15, down gross international reserves stood at US$ from 10.7 percent in 2013/14 (see Figure 4.2 billion at the end of February 2016, 7). Thls reflects an lncrease In the value equlvalent to approxlmately 4 months of of exports of goods and services, driven projected imports of goods and services, primaríly by an increase in manufacturing excluding the portion financed by FDI. and servlces exports, and a decrease In The current account balance Is expected imports of goods and services, mainly to continue to improve in 2015/16 if due to a decline in the oíl import bill (see oil prices remaín low, given that oil Figure 8). The current account deficit accounts for about 30 percent of the total amounted to a value of US$ 2.8 billion in import bill. Figure 7: Stable intematfonal reserves and current account deficit 14.0 4.5 4.0 12.0 3.5 1 ,.. 10.0 3.0 l.. 8.0 "' ~ !!¡ 2.5 ~ 8. .§ 'O ~ 6.0 2.0 1.5 .. o 4.0 2.0 1.0 1 0.5 o.o o.o 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 - Cul!'ent ac:ccunt deflclt {% of GDP) ......Gross reserves (months of lmports cul!'ent year) Aid and private Source: IMF, BoT capital flow are nolongerthe Ald and prlvate capltal lnflows, whlch borrowing constituted important sources major services of were the major sources of financlng for of capltal lnflows, FDI experlenced a lower financing balance of the balance of payments deficit, have rate of growth while public external non- payment. reversed thelr trends in recent years. concessional borrowing experienced a partly refledlng lncreased volatility In negatlve rate of growth over thls perlod. global financia! markets. Aid contributed Specifically, over the period from 2013/14 to around 25 percent of the total value of to 2014/15, the value of FDI increased by capital inflows in 2014/15, a decline from only 2 percent, while the value of public the figure of about 35 percent recorded externa! non-concessional borrowing In 2013/14. Slmllarly, although both FDI decllned by 32 percent, malnly due to and public external non-concessional higher borrowing costs. Tighter global http://www.worldbank.org/tanzanla/economlcupdate 8 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ financia! conditions and falling commodity value of FDI flows, which have been largely prices (particularly in the cases of oil and directed towards the extractive and mining gold) have contributed to the decline in the sectors. lox 1: Shllllng depreclatlon wu usoclated wlth hlgher domestlc lnflatlon Over the past year. the value of the Shilling has depreciated significantly, mainly dueto increases in the value of the US dollar. As already noted. the rate of inflation has been slowly increasing in recent months. Was the depreciation in the value of the Shilling associated with these higher rates of inflation? Although the increases in the rate have not been dramatic, it does not necessarily Current account follow that nominal depreciation has not hadan inflationary impact. Rather, it appears stability has been that the relatively low increases are the result of a confluence of counteracting factors, achleved, partly with the deflationary impact of the fall in oíl prices mitigating the ínflationary impact of through trade the depreclatlon In the value of the currency. Uslng Tanzanlan data, emplrlcal analysls shows that hlgher rates of nominal depreclatlon are assoclated wlth lncreases In the diversification. rate of lnflatlon. Speclfically, lt Is estlmated that a 1.0 percent depreclatlon In the nominal effectlve exchange rate results In an lncrease of 0.58 percent to the rate of inflation. By contrast, a 1 percent decline in global oil prices results in a decline in the domestic rate of inflation of approximately 0.2 percent, while a 1 percent decline in the rate of food inflation results in a decline in the overall domestic rate of inflation of approximately 0.5 percent. Thus, while a significant depreciation in the value of the Shilling had an inflationary impact, most of this impact has been offset by lower global oíl and food prices. This suggests that a possible concurrence of a bounce back in global commodity prices and further depreciation in the value of the Shilling might induce an inflationary spiral. Source: Haile (2016) 'Global shock:s and their impact on the Tanzanian economy.' The lncreasfng dlverslflcatlon of transport equipment. In addition, to sorne Tanzanta•s trade has played a role in extent, the shlft In the composltlon of trade stabilizingthecurrentaccount (see Figure value is explained by the fall in the global 8). In terms of exports, a larger portion price of commoditíes such as oíl, gold and of Tanzanla's forelgn exchange earnlngs other tradltlonal agrlcultural products. are now generated from non-traditional Specifically, the value of traditional exports exports, with manufacturing and tourism declined by about 6 percent in the period exports maklng the most slgnlflcant from February 2015 to February 2016, contribution to the improvements. The while the value of non-traditional exports lncreased dlverslflcatlon of exports Is lncreased by approxlmately 10 percent. partly associated with an intensification of Over the aforementioned period, there regional integration. In terms of imports, was a decrease in the value of imports a greater share of forelgn currency Is now of oll by around 25 percent, of food by a being channeled towards the import of negligible 0.3 percent, and of fertilizer capital goods, such as machinery and by about 20 percent. By contrast, there PACE http://www.worldbank.org/tanzanla/econom lcupd ate 9 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N was an increase in imports of buildings percent. Overall. lower global commodity and constructíon materials by around 2.6 prices have had a net positíve impact on percent and of machinery by around 14 the economy. Figure 8: Stllble trade flows but slgnlficant shlft In thelr composttlon (2015 annual changes) Overall, lower SS% 24% 25% global commodity 30% 111% 20% 2S% prfces have had a 21)% 15% net positive lmpad 1S% 10% 10% 5'.4 on the economy. 5% 0% 0% -5% J -5% -10% "" ·10% -15% J 8 ·15% i i ~ ~0% "" ::J :! j -2511. .221(, Source: IMF. BoT Note: 'Other' exports include: edible vegitables. oil seeds, cereals, cocoa. raw hides and skins. woods Ffgure 9: Sust:afned low monetary growth slnce 2011 and falrly stable nominal and real lnterest rates ~~~1;~-~¡~~~1~~~1~~~~~; ·e~ ·e~ ·e~ ·e~ •cQ2Lc p ·~'==;='s''''' ~C4~¿c~~LC~2~C~ ~~~ ~~~ ~~~ ~~~ ~~~~~~~ ~~~~f ~~~~~~~~~~ - M3 growth (12-mth pe1t:111ntchange) - Rllaloverall landing iltrates •••• Nomriallendrig lntrates{averag•) Source: BoT 1.1.2 Business environment remains accelerated somewhat from 13.6 percent weak albeit lncreased credit to In the flrst quarter to approxlmately 17 private sector percent in the fourth quarter (see Figure 9). The hígher rate of growth was maínly In 2015, the annual rate of growth of due to an lncrease In the value of the extended broad money supply (M3) has banking system's net foreign assets and remalned relatlvely stable. However, ít has to the increase in the value of credit http://www.worldbank.org/tanzanla/economlcupdate 10 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ to the prívate sector. Monetary policy percent (year-on-year) in February 2016, remained tight, as reflected by the decline from about 10 percent at the same point in the growth of reserve money to about 7 in 2015. Figure 10: Composltlon of monetary growth (M3) has recently shlfted tow•rds credlt growth to the prlvate sedor 100% 80% S7% g 80% o ~~ 41" iI! 40% 49'K ....,,,,,_. l ___.,... 20K 20% -1316 -Netfore~n all88te -cteditlo govemment - ()edlto nongovemmeruector Source: BoT However. the composition of monetary to the private sector, contrasting sharply growth has shlft:ed recently, wlth an with the crowding out effect of government lncreaslng proportion of prfvate sector borrowlng In the first half of 2015. credit and a decreasing proportion of government sector credft (see Figure The cost of credlt to the prfvate sector 10). A close scrutlny of the data shows has been falrly stable. fluctuatlng withln that the relatively stable growth in M3 was a relatlvely narrow band of 9.5 percent the outcome of an increase in the share of to 12 percent In 2015. A combination Credlt growth has net foreign assets and credit to the private of stagnant nominal interest rates and shifted in favour sector, and a considerable decrease in the the low rate of inflation has led to a fairly of prlvate sector. rate of growth of credlt to the Government. stable movement In real lnterest rates. Thls The rate of growth for credit to the private contrasts with the significant increase in real sector held steady at 25 percent in the overall lending rates during the preceding fourth quarter of 2015, compared to few years (see Figure 9). Real lnterest rates around 21 percent for the same period in have declined gradually in recent months, 2014. However, over the same period, the due to slowly rising inflation rates. Despite rate of growth for credit to the government the significant fluctuations in monetary declined substantially from 60 percent to growth, nominal lending rates have been about 10 percent. Thls appears to have far less responslve, a phenomenon noted In ushered in a higher rate of growth in credit many developing countries. PACE http://www.worldbank.org/tanzanla/econom lcupd ate 11 @¡ TANZANIA ECONOMIC UPDATE MAY 2016, grH EDITION Desplte the lncreased avallabfllty of even by generally low SSA standards. Far credlt, prlvate sector development contlnues example, the average level of productivity of to be constnJined by the non-conclucive Tanzanian firms is only 67 percent of that of their business envlronment In particular, private Kenyan counterparts and 22 percent of that of sector growth Is constralned by weak market thelr South Afrlcan counterparts. Slgntficant institutions and the poor business dimate, infrastructure bottlenecks, particularly in the characterized by multilevel state interventions power and transport sectors, also constrain that result ln hlgh transactlon costs and buslnesses. In addltlon, prlvate business segmented markets. Tanzania continues to activities are constrained by the multitude of lag behind nelghboring countries in terms of taxes and other charges (such as the agriculture improving its business environment. The cost cess). and by a range of cumbersome and non- of doing business remains high, with Tanzania transparent procedures that add significantly to ranking In the 139th place out of 189 countrles the cost of dolng business. according to an assessment included in the There exists a significant potential to achieve Doing Business 2016 report. Although severa! productfvlty lmprovements through the lnltlatlves have been launched to lmprove the development of a more conducive business business environment. including the Business cllmate. For instance, a benchmarking exercise Environment Strengthening in Tanzania (BEST) shows that an increase in the proportion and the Big Results Now (BRN) Business of firms wlth access to bank credft from Environment Lab, so far their impact has 23 percent (Tanzania's current level) to 60 been llmtted. Wlth more than 95 percent of percent (correspondlng to the median level Tanzania's workforce employed in the private Weak business in the enterprise survey) would increase sector, this sector should be empowered to play environment the productivity of Tanzanian firms by 4.3 a more slgnlficant role In generatlng productlve constralnts prtvate percent. The crftfcal elements for crowdlng-ln jobs for the 800,000 new entrants to the labor sector development. prívate sector involvement lnclude expanding market each year. access to affordable finance; providing reliable Access to finance and electrlctty stand out lnfrastructure to promete productlve actlvltfes, as the most slgnlficant constralnts to dolng including reliable power supplies and good business In Tanzania. Accordlng to the 2013 road networks; and developlng an lmproved World Banlc Enterprise Survey, access to education and trainíng system to produce finance was considered the most significant skilled workers. State interventions must be constralnt by more than 40 percent of small far less dlstortlonary and should be governed businesses responding to the survey, while 25 by a transparent and predictable set of rules. percent identified access to electricity as the In general, intemational good practice shows most slgnlficant constralnt. The non-conduclve that a more conduclve business envlronment business environment negatively affects the is a more effective means of facilitating strong productlvlty and competltlveness of Tanzanlan prlvate sector growth than the provlslon of tax firms, which record a low level of productivity incentives. PACE http://www.worldbank.org/tanzanla/economlcupdate 12 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ The new admlnlstratlon has recognlzed the 1.1.3 Significant fiscal challenges need to lmprove the business envlronment in the manner described above. In particular, The Government c:ontinued to maintain the Government's expressed commitment low levels of fiscal deficlt In 2014/15. to developlng road and rall networks; to wlth the value of thls deficit standing boosting electricity generation capacities; at 3.3 percent of GDP (see Figure 11). and to expanding quality education, are However, if the value of the Government's expected to fac!lltate lncreased prlvate sector accumulated arrears to suppllers Is lncluded growth. In addition, President Magufuli's in this figure, it increases to around 4.5-5 Presldent administration has explicitly recognized percent of GDP. Shortfalls in the collection Magufuli's the vital role of the private sector in the of domestic revenue and externa! non- admlnlstratlon development process. This appears to have concessional borrowing have forced hu expllcltly led to lncreased optfmlsm amongst business the Government to lmplement a range recognized the managers from Tanzania's top 100 mid-sized of fiscal adjustments, including cuts to vital role of the companies (see Box 2). In December 2015, non-priority recurrent expenditures; the private sector in more than 50 percent of surveyed managers delayed lmplementatlon of development the development stated that they expected the performance projects; and the accumulation of additional process. of the economy to improve, compared to 32 arrears with suppliers and pension funds. percent who expressed the same sentiment in In 2014/15, the authorities missed their December 2014. Similarly, in December 2015, domestic revenue collection target by about approxlmately 52 percent of these managers 0.3 percent of GDP, due to the low level stated that they expected their businesses to of collection of VAT and income taxes. In perform better in 2016 than in the previous addition, the authorities missed their target year, a slgnlficantly hlg her proportlon than the for externa! non-concesslonal borrowlng by 37 percent who expressed similar sentiments about 1 percent of GDP. dueto the high cost in December 2014. of borrowing. Figure 11: Fiscal deficit under control Figure 12: Low and stagnant domestic (4KiofGDP) revenue and declin1ng aid ("9 of GDP) 1ft 1S!I 4'11 4K 49' 49' .... 1°" ~ a'll "' "" .,, 41'11 711 7" ~ el! ~ el! 2'11 ~"' ~ 1111111 4'!1. 411 1'11 "' 2" 01' 1 1 1 1 1 1 t 1 1 l °" " .. .. "' 1 ll0\1112 1 .ao1111a 1 201ai14 1 llOl • The rate for those expecting the same performance decllned from 31 percent to 25 percent over the same perlod. l llmff I W- Source: KPMG/World Bank, November 2013 - May 2015. WGE http://www.worldbank.org/tanzanla/economlcupdate 14 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ In particular. a major proportlon of these A notable example is the Education for expendlture cuts has lnvolved expendlture Results project, which is intended to on the development of economic improve the quality of basic education lnfrastructure and the social servlces. This through the provision of capitation grants. has resulted In the overall executlon rate However, lmplementatlon has slowed due of the budget standing at only 85 percent to lack of counterpart funding, with similar in 2014/15, leading to a significant decline cases in a number of other sectors. This In development expendltures, wlth thls has been partlcularly the case wlth hlgh- expenditure sinking to 4.4 percent of GDP, impact infrastructure investment projects the lowest level in the last ten years. At the such as the Kinyerezi 11 power plant, which same time, the implementation of donor only commenced in March 2016, three years funded programs that require counterpart after the contract was signed with main fundlng from the Government has slowed. lenders due to lack: of counterpart fundlng. Figure 13: Sharp increue in Figure 14:Steeplyincreuingextem1lnon- arrears (" of GDP) conce1sion1I horrowing and deht service - 3.5 "°" :n 3.0 Recent efforts to 2.6 s 2.1 2.0 improve revenue 2.0 311. 16'4 moblllzatlon have 1 ili 1. 1.$ 11!\I, 1.0 started to yleld O.$ "' positiva results. o.o 2012113 2Dl3/14 1 3l1<111S O!I 20111111 2011112 3ll211S • TllllllP!lilodlllt(llof ~~ ~... ~" ~"' ~>.¡ ó.#' A~ A-~ ~....... ~"" ~f· ~~ ~~ tf1' tf1' ,¡' .y .y ti'~ ti>" "' ~"l. • Cllflltal spendlng (estlrnated) 1S0Jm1nt spendlng (eetlmated) Source: MoF and World Bank Source: MoF and World Bank PACE http://www.worldbank.org/tanzanla/econom lcupd ate 23 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N By lnternatlonal standards, the current without access to basic infrastructure level of development spendlng In services. Tanzania is low. Since the early 2010s, public expenditure on development Glven lts narrow fiscal space, the programs has reached an average annual Government needs to tap lnto prlvate value of only 6 percent of GDP (see Figure sector financing to alleviate these huge 15). The level of public expenditures on flnanclng gaps. The steep decline in physlcal capital lnvestment Is conslderably donor fundlng, comblned wlth low levels lower, hovering at around 1 percent of of domestic revenue and government GDP in recent years (see Figure 16). borrowing constraints, indicates a This is in stark contrast to the stated need to diversify financing sources. In objectives of the BRN initiative, which particular, the authorities should make mandates a slgnlflcantly hlgher level of unprecedented efforts to leverage prlvate capital spending. Tanzania's Five Year sector financing. Amongst other means, Development Plan (FYDP) recognizes the this will require them to unleash the masslve nature ofthe current development power of PPPs, as mandated by the FYDP. PPPs can provide financing gaps. For example, the financing lt should be emphasized that PPPs have additional finance, requirement for priority sectors for the significant potential not only to provide tmprove efflclency period from 2011/12 to 2015/16 was additional finance, but to facilitate the in investments and estimated at TZS 43 trillion.11 However, achievement of significantly higher potentially create the total actual value of development levels of efflclency In lnvestments and Jobs. expenditures stood at about TZS 22 potentially to create a large number of trillion, approximately half of the total productive, well-paying jobs for Tanzanian flnanclng requlrement. As a result, many cltlzens. In thls fashlon, they may play a investments in infrastructure prioritized significant role in facilitating a reduction under the FYDP and the BRN were either in poverty and promoting equitable underfunded or not implemented at all. growth, which will provide a solid basis This has constrained economic growth for the achievement of a prosperous and and left a vast number of Tanzanlans harmonlous soclety lnto the future. 11 However. these figures are llk.ely to represent upper-bound estlmates and should be taken as lndlcatlve of actual financlng requlrements. The fundlng gaps need t:o be dlscussed keeplng thls caveat In mlnd. WGE http://www.worldbank.org/tanzanla/economlcupdate 24 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Part 11: Making Public-Private Partnerships Deliver Key messages • Existing public resourcesareclearly insuflicientto meet Tanzania's huge development needs. The increased use of prívate finance, through PPPs, can help alleviate the financing gaps. This approach is mandated by the 2030 Agenda for Sustainable Development Goals. • PPP can serve as a powerful tool to facilitate the development and improve the quality of infrastructure in Tanzania. However, they can only serve this purpose if the Government demonstrates a high level of commitment to implementing such partnerships in a coordinated manner, with the careful selection and full preparation of projects. • PPP projects involve complex commercial and financia! structures. Thus, their preparatlon, negotlatlon and lmplementatlon requlres expert advlce from experlenced advlsers. Tanzania needs to hlre hlghly quallfied expert advlsers to prepare and dellver hlgh-quallty PPP projects. The PPP Centre, the Mlnlstry of Flnance PPP team and the Local Govemment Authorlty PPP Node need to have the appropriate human and financia! resources to ensure the delivery of viable, sustainable PPP projects. • PPP partners need to be selected through competitive processes. Competition is vital to ensuring that the Govemment receives the best price, terrns. technology and partner for each project. The use of direct negotiations. unsolicited proposals and government-to-government MOUs should be adopted in only the most limited of circumstances and, when utilized, subjected to intense scrutiny. 2.1 Tanzania's lnfrastructure Challenge of this infrastructure is as poor as or worse than that of many of its neighbors. Tanzania Is challenged by a significant Although none of the Usted countrles lnfrastructure defictt. wfth the level of performs well in the area of logistics, access to and qualtty of lts lnfrastructure Tanzania's level of access to basic services lnsufficlent to facllitate the rate of such as electrlclty, water and sanltatlon economlc growth to whlch lt aspires. As lags behind the other countries, and its • Table 3 below shows. Tanzanfa's level of number of Internet users Is much lower. access to infrastructure and the quality The World Economic Forum (WEF) rates http://www.worldbank.org/tanzanla/economlcupdate 26 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @¡ Tanzania's infrastructure as worse than 2030 Agenda for Sustainable Development Zambia's and Uganda's and substantíally Goals (SDGs). Prívate finance and investment worse than Kenya's and Rwanda's in terms have been recognlzed as the most stgnlficant of its impact on competitíveness. potential source of additional funding required to facilítate the achievement of the Tanzanta•s lnfrastructure needs are masslve and are pro)ected to tncrease tntothefuture. SDGs.12 The use of these alternatlve sources is all the more important in a context in which As noted prevlously. there Is a profound the global development commun!ty Is belng financíng gap between existing public resources and financlng requ!rements. Th!s affected by a paradigm shift in financing development. This shift is characterized Private investment gap will not be bridged through the exclusive by a move away from reliance on officlal lsthemost use of tradítional instruments. Hence, there stgnificant potential Is a clear need far the Govemment to utillze aid towards the use of broader sources of finance, especially those involving a higher source of additional alternative financing instruments, particularly prívate sectorfinance, which is in line with the level of prívate sector participation. fundlng requlred to facilitate the achlevement Table 3: lnfrutrudure lndlcaton, 2015 of the Sustalnable Tanzania Kenya Rwanda Uganda Zambia Development Goals. WEF Global Competitive lndex lnfra- 3.27 3.14 2.26 2.28 2.67 structure Score Access to electricity (percent 15.3 23 18 18.2 22.1 popula-tion) Electrlc power consumptlon (kWh 159.7 N/A N/A 571.3 98.8 percaplta) lmproved water sources (percent 55.6 63.2 N/A N/A 65.4 populatlon) lmproved sanitation facilities 15.6 30.1 61.6 19.1 43.9 (percent population) Mobile Cellular Subscriptions (per 62.8 73.8 64.0 52.4 67.3 100 people) Internet users (per 100 people) 4.9 43.4 10.6 17.7 17.3 Loglstlcs performance lndex (1 to 5) 2.32 2.4 2.32 2.35 2.31 Source: Ali data is from World Development lndicators 2015 except for the Global Competitive lndex that Is produced by the WEF (2014-2015) (http://reports.weforum.org/global-competltlveness- report-2014-2015/ ) Note: Thls table only report on the lnfrastructure pillar of the Global competltlve lndex. The score ranges from 1 (very low) to 7 (very high). The Logistics Performance lnde.x includes qualíty oftrade and transport related infrastructure (e.g. ports, railroads, roads, informatíon technology) on arating ranging from 1 (very low) to 5 (very hlgh). i2 See 'INorld Bank and IMF (2015). PACE http://www.worldbank.org/tanzanla/econom lcupd ate 27 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N lf the Government adopts a business- and operating inefficiencies. Of these as-usual approach. lt wlll be unable factors, inefficiencies in the management to bridge the infrastructure gap. The and operation of state-owned utilities and challenge facing Tanzania is similar to that infrastructure providers accounted for faced by many other Afrlcan countrles. In around US$ 6 bllllon a year. 2010, the World Bank's diagnostic study of infrastructure in Africa estimated that Sub- Tanzan1a•s own pollcy documents Saharan Afrlca (SSA) needed to spend US$ ldentify PPP as a key instrument to 93 billion ayearon infrastructure, of which attract new lnvestment and to dellver only US$45 billion is currently being met tnfrastructure servlces more efficlently. through existing sources. This represents Vision 2025; the 15-year Perspective Plan Slnce 1990, an a funding gap of US$ 48 billion. Around 35 (2010-2025); the First Five-Year Plan (2011- tncreasing number percent of the fundlng gap, or US$17 billion, 2016); MKUKUTA (2011-2015); and Blg of developing could be attributed to inefficiencies arising Results Now (2012-2015). all identify PPPs countrles have from poor governance; poor planning as important means to mobilize the large implemented of lnvestments; under-lnvestment In amounts offinanclng necessary to facllltate programs to attract maintenance; under-charging for services; infrastructure development (see Box 3). the prlvate sector to participate in Box 3: Tanzania'• maJor pollcy statements rec:ognlze the need for PPP the provlsion of Vlslon 2025 emphaslzes the lmportance of the allocatlon of publlc funds for strateglc tnfrastrudure investment and private sector financing for development investments. The 15 year services that Perspective Plan (2010-2025) prioritizes prívate investment in the context of PPP. The were prevlously Flrst Flve-Year Plan (2011-2016) recognlzes the fundamental role of the prlvate sector delivered by the in enabling the Government to allocate its funds to strategic projects to facilitate a pubUc sector. hlgher level of development. MKUKUTA 11 (2010-2015) identlfies PPPs as a means of increasing the level of stakeholder participation and of easing the financia! burden on the Government. Finally, the Big Results Now initiative of 2012prioritized capital lnvestments and ldentlfied PPP as a means to bridge the exlstlng financlng gap. 2.2 The role of the prlvate to the private sector to provide financing sector in closing the and to lmprove dellvery capabtllttes. infrastructure deficit: Slnce 1990, an lncreaslng number of trends and lessons from the world and Tanzania developing countries have implemented programs to attract the private sector to As a means of dosing the infrastructure partlclpate In the provlslon oflnfrastructure gap. an lncreasingly large number of services that were previously delivered countries around the world have turned by the public sector. This trend has been http://www.worldbank.org/tanzanla/economlcupdate 28 The World Bank Group Macroeconomics and Fiscal Management Global Practice Africa Region largely driven by the limited availability of proportion of these investments has been public resources to finance infrastructure in telecoms, with their value standing at development and, in many countries, to around US$ 840 billion. This is closely address the poor performance of publicly fallowed by investments in energy (U5$ 647 billion); transport {U5$ 382 billion); implemented and delivered infrastructure. and finally water (U5$ 49 billion). In Thus, the prívate sector now plays an regional terms, Latin America accounts important role in financing and delivering far slightly in excess of US$ 700 billion, public services in many developing or nearly 40 percent, of the total value of countries. Since 2000, the total value these investment commitments. This is of investment commitments in projects fallowed by South Asia (US$ 365 billion) involving private sector participation in and Europe/Central Asia (U5$ 347 billion). telecoms, energy, transport, water and The level of activity in SSA was much sanitation in emerging markets has been lower, although investment commitments in excess of US$ 1,900 billion. Breaking in this region still amounted to US$ 143 this down by sectors, the most significant billion. Figure 17: Total investments with private sector participation in energy, telecoms, transport, and water by region, 2004-2014 (2014 US$ billions) 500 4 50 400 ~ 350 1l 300 e ll. 250 200 .. 'O ~ .o E 150 ::J z Since 2000, 100 50 the total value N C') "V o of investment o N o N o N o N commitments in = EAS - ECA = LAG - M ENA = SAR - sSA - #ofProjects projects involving • AdJUSte d b y US C P I private sector Source: World Bank and PPIAF, PPI Project Database participation in telecoms, energy, The increasing tendency of PPPs enable the mobilization of transport, water governments to utilize PPP is linked additional sources of funding for and sanitation in with their aspirations to achieve higher infrastructure development. Charging emerging markets levels of efficiency in investment and users appropriately far services can has been in excess improvements in service delivery. In generate higher levels of revenue, and ofUS$1,900 the context of infrastructure funding it is often easier far this to be achieved billion. and service gaps, the reasons that if these services are managed and governments have chosen to utilize PPP operated by the prívate sector than by include a recognition that: the public sector. PAGE http://www.worldbank.org/tanzania/economicupdate 29 @ TANZANIA ECONOMIC UPDATE MAY 2016, 8'" EDITION • PPPs can allow expendltures related time frame. Thus, the PPP structure to the capital cost of lnfrastructure encourages the tlmely completion of assets to be spread over time. projects. Governments often face borrowing constralnts, posslbly due to prudent • PPPs can play a role In ensurlng that projects are approprfately public financia! management policies. maintained. Transferring performance As a result, it is sometimes the case that even commerclally viable risk to the private sector means that returns to lnvestment are infrastructure projects cannot be only realized lf the asset performs implemented by the public sector. Alternatlve financing from PPPs can according to contractual obligations, whlch ln turn provldes incentives far Governments often overcome this constraint. adequate maintenance. Transferring face borrowlng • PPPs can facllltate the lmproved constructlon rlsk means that the constraints, selection of projects. In order to Government should not bear the In particular attract prívate sector financing, burden ofany over-runs in construction dueto prudent assumptlons regardlng the vlabllrty of costs, resultlng In lmproved efficlency. publlc financlal the projects are subject to assessment management by the market of potential investors, • PPPs can play a role in facilitating policies. Alternative resultlng In lmproved selectlon. lnnovatlon. PPP contracts specify financlng from PPPs oblrgatlons to produce speclfic can help fill the • PPPs can facllltate more tlmely outputs, rather than prescribing financing gap. lmplementatfon of projects. Beca use inputs. This creates opportunities and prlvate sector operators typlcally do not Incentives for lnnovatlve approaches. recelve payment under a PPP contract The use of competltive procurement unttl the facillty Is avallable for use, they processes lncentlvlzes bldders to are hlghly motivated to ensure that the develop innovative solutions to meet project is completed within the defined contractual specifications Box ..: Malapian PPP Prograrn Achlewrnents (1913-2013) Under the Nlnth Malaysia Plan, the Malaysian Government officially mandated the lmplementation of publlc projects accordlng to the PPP, or Prlvate Flnance lnltlatlve (PFI), scheme. In 2009, a new unit was established under the Prime Minlster's Department to coordinate Prívatization and PPP projects, known as the Prlvatization and Private Flnance lnltlatlve Unlt. Under the Tenth Malaysla Plan. the Malayslan Government Is encouraglng the prlvate sector to rnvest In development projects, either through PPP or through the private sector's drrect lnvestment In the country's development program. PACE http://www.worldbank.org/tanzanla/economlcupdate 30 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Achlevements facilltated through the lmplementatlon of the natlonal prlvatlzatlon policy include the following: The development and provlslon of world class lnfrastructure facilities. lncludlng the North-South Highway; the Light Raíl Transit (LRT); the Tanjung Pelepas Port; and Kuala Lumpur lnternational Airport (KLIA) projects; The creation of successful and competitive local conglomerate companies. including the Tenaga Nasional Berhad (National Electricity Board) and Telekom Malaysia Berhad; The creation of prívate sector employment opportunities and the development of the capacities of the professional work force. especially amongst the Bumiputra; The energizing of Malaysia's capital markets through capital investments by the private sector in privatized Government projects. Since the introduction of the privatization program. in the period from 1983 to 2009, approximately 500 privatized projects were implemented throughout the country. The Malayslan Government has benefited through savings to capital expenditure amountlng to approximately RM 161 billion and to annual operational management expenditure amounting to approximately RM 7.79 billion (oran estimated RM 25 billion overa 25 year perlod). In addltlon. the Malayslan Government Is currently lmplementlng 52 additional projects which are in the construction stage. with the total estimated value of these projects standing at RM 62.7 billion (US$15.5 billion). Source: www.UKAS.gov.my Around the world, it is countries with the projects ranged between 0.4 percent and Over the past largest emerglng economles that have 0.7 percent of GDP in the period from 2005 15 years, the taken the lead in the lmplementation of to 2013. Thls Is slgnlficantly hlgher than largest emerging PPP programs. Over the past 15 years. the range for all emerging and developing markets, including the largest emerging markets, including economies, wíth the overall average value Brazfl. China, Brazil, China. India, Mexlco and Turkey, fluctuatlng between 0.2 percent and 0.4 India, Mexico have actively utilized PPPs. In addition to percent of GDP.13 Within Sub-Saharan and Turkey, have havlng large economles and therefore Afrlca, the telecommunlcatlons sector adlvely utlllzed the ability to develop sizeable, high-value accounted for approximately 75 percent PPPs. projects that are attractive to investors, of the value of investment commitments; they also have substantlal domestlc the energy sector for 15 percent; and the financing and construction capabilities. transport sector for 11 percent over the In these particular countries, the average same period. Unsurprisingly, the large value of such lnvestment commltments majorlty of this actlvlty in the reglon took in prívate energy, transport and water place in South Africa and Nigeria, the two 13 Non-tax revenues Include royaltles on mlnlng, a large varlety oflevles and other llcenses. PACE http://www.worldbank.org/tanzanla/econom lcupd ate 31 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N largest regional economies. with these two lnvestment In Tanzania has been heavlly countries together accounting for more concentrated fn the telecommunlcatlons than 50 percent of the total value of these sector. Tanzania recorded the fifth highest investment commitments (see Table 3). level of investment in the region, with the value of lnvestment commltments standing Table 4: Telecom. water. enervJ. at almost US$ 4.5 billion (see Table 4). transport projects 2000-20l4 However, activities have been concentrated Total lnvestment commltments In the telecommunlcatlon sector to a Country (USS blllions) far greater extent than in neighboring South Africa 39,067 countries (see Table 5). The value of Nigeria 37,892 investment commitments in Tanzania's Kenya 8.451 energy sector was significantly lower Ghana 6,959 than that recorded by Kenya and Uganda. Tanzania 4.476 On the other hand, Tanzania is the only Sudan 4,358 country to have recorded a significant level Uganda 4,146 of lnvestment In the transportatlon sector. Senegal 3.734 Over the past decade, the average value cote d'lvoire 3,536 of Tanzania's investment commitments in Cameroon 3,387 PPPs stood at 0.14 percent of GDP, which is Soun:e:PPIDatabase somewhat below the global average. Table 5: Sector-wise breakdown of PPP projects for Tanzania and neighboring countries (in US$ million) Tanzania recorded Telecom Energy Transport Water Total investment commltments the fifth highest Kenya 6,619 1,817 15 8,451 level of investment Rwanda 589 260 848 In the reglon, Tanzania 3,796 511 162 9 4,476 with the value Uganda 2,793 1,353 4,146 of investment Zambia 1,719 343 16 2,078 commitments Source: PPI Database standing at almost US$ 4.5 bllllon. 2.3 Have PPPs delivered? The This contribution can be measured in terms ev1dence globally and In of the tlmely dellvery of assets to budget. Tanzania Moreover. under the right conditions, it can be demonstrated that PPPs play a role Global experience suggests that PPPs In lmprovlng the quallty of servlce and can make a posltlve contrlbution the level of performance in terms of key to closlng the lnfrastructure gap. efficiency parameters (see Box 5). http://www.worldbank.org/tanzanla/economlcupdate 32 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Box 5: PPPs can deliver benefits Studies of successful PPP programs across the globe, primarily in developed countries, provlde a vlsion for the improved efficiencies that can be achieved. In Australia, PPPs were found to deliver projects on budget and on schedule more often than publicly procured projects, with only 30 percent of publicly procured projects being delivered on time and on budget, compared to 80 percent of PPP projects. In a survey of developed PPP programs. well-implemented PPP project facilitated a 29 percent higher number of residential electricity connections per worker than a publicly procured project; a 12 percent higher number of water connections; anda 19 percent higher number of In the period sanitation connections; 85 percent higher bill collection ratios in the case of electricity from2002to and SO percent higher in the case of water. They can also reduce distribution losses, 2004, Tanesco's wlth a 25 percent reductlon In the case of electrlclty anda 41 percent increase in hours revenues from of daily service for water. Based on an empirical analysis using time series data (1995- electrlclty sales 2006) in 32 LAC countries, Andres et al. (2013) conclude that there private sector morethan particlpation has a significant, positlve impact In terms of coverage, quallty of service doubledasa and labor productivity for the analyzed utilities. especially when regulation is strong. result of the Source: World Bank, Reference Cuide on Public Private Partnershíps (2015) adoption of new technologles and In Tanzania. there have been a number of project was commissioned, resulting in methodologies posltlve experlences rnvolvlng the prlvate cost savings of US$ 78 million compared underPPP. provlslon of lnfrastructure. As noted In to the 2001 appralsal, wlth the savlngs Table 4 above, since 2000, Tanzania has achieved through the use of a modiñed recorded investment commitments in procurement process. However, extensions the telecommunlcatlons sector to a total to the TANESCO and TICTS PPPs arguably value of almost US$ 4 billion. The incentive failed to deliver the e.xpected benefits. mechanism utílized in the first phase of the TANESCO Management Contract In addition. a number of other projects with Netgroup facilitated the delivery of have elther been termlnated early or clear benefits. In the perlad from 2002 falled to dellver the expeded benefits. to 2004. the value of revenues from A number of projects, including the City electricity sales more than doubled as a Water lease; the Kilimanjaro lnternational result of the adoptlon of new technologles Alrport; the TRL concesslon; and the and methodologies. In the ñrst five years Tanzania Telecommunications Company of the Tanzania lnternational Container Limited PPPs, were terminated early due Terminal (TICTS) PPP arrangement. the to differences between the Government volume of container throughput and and the private sector operators involved transshlpments doubled. In 2004, the In these projects. Thus, In total. almost 15 Songas gas supply and power generation percent of Tanzania's projects have been PACE http://www.worldbank.org/tanzanla/econom lcupd ate 33 @¡ TANZANIA ECONOMIC UPDATE MAY 2016, grH EDITION terminated early. This compares with the an increase to this level of three percent; global average of 3.7 percent far the period improvements to the quality of regulation 4 from 1990 to 2014.' A high level of early by one standard deviation are correlated terminations can increase perceptions of with an increase of four percent; and havíng poi ltlcal rlsk. Moszoro et al. (2014) find that one more project requlrlng court resolution far each project requiring court arbitration, dueto differences between the public and the level of prívate sector investment prívate parties is correlated with a decrease declines by 4 percent. Canceled projects can In the level of lnvestment of four percent. also increase perceptions of risks related to breaches of contract. According to the lt should be emphaslzed that PPPs are annual MIGA-EIU Political Risk Survey, 45 nota panacea and that many projects Government percent of surveyed investors in developing are not sultable to be lmplemented as needs to engage countrles named breach of contract as the PPPs. Careful analysls Is needed to verlfy in the diligent most important political risk they would that a project is likely to be feasible; that lmplementatlon of face in the next three years. In the same it is attractive to the prívate sector; and sedor reforms prior survey, 34 percent of the respondents that lt Is likely to provlde value far money. to or In parallel wlth stated that they had experienced financia! There are problems that PPPs alone cannot the implementatlon losses related to breach of contract in the salve. Far example, the establishment of a of PPP projects, preceding three years. PPP by itself will not achieve the reform lf these projects of a sector with substantial governance are to fac:Hltate 2A lmplementlng a PPP and prlclng problems. In such cases, framework that is fit-for- the achievement the Government needs to engage in purpose ofpositive the diligent implementatlon of sector transformation. Global and domestlc evtdence tndlcates reforms prior to ar In parallel wlth the that a strong lnstitutlonal and regulatory implementation of PPP projects, if these frameworklscrttlcaltoensurethegrowth projects are to facllitate the achievement of PPP markets. Moszoro et al (2014) of positive transformation. find that the level of prívate investment in lnfrastructure Is hlghly sensltlve to lssues PPPs can be more expenslve than publlcly related to corruption, rule of law, quality of procured projects if they are not selected regulations, and the frequency of disputes and lmplemented approprfately. PPPs In a sector. They find that a decline In the ultlmately only lncrease the fiscal envelope level of corruption by 10 percent is correlated for the development of ínfrastructure with an íncrease in the level of private if they result in lmproved efficiencies participation in infrastructure (PPI) of 15 and/or higher collection of revenues percent; improvements to the rule of law by compared to projects implemented one standard devlatlon are correlated wlth through publlc provlslon and financlng. 1 • World Bank (2015). PACE http://www.worldbank.org/tanzanla/economlcupdate 34 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ While PPPs can create value for money Tanzania has a robust legal and by facilitating better maintenance and lnstltuttonal framework for the the improved delivery of services, the establishment and implementation extent to which these irnprovements are of PPPs. The Governrnent approved a actually achleved depends heavlly on the PPP Pollcy In 2009, followlng whlch lt extent to which the Governrnent effectively prornulgated the PPP Act in 2010 and the contracts and procures PPP. lt is irnportant associated PPP Regulations in 2011. The that governments avold the temptatlon to PPP Flnance Unlt under the Mlnlstry of establish PPPs to finance infrastructure Finance and the PPP Coordination Unit without recording associated risks. in the Tanzania lnvestrnent Centre were This could have the effect of leading established in 2012. The Governrnent governrnents to accept a higher level of amended the PPP Act in Decernber 2014 fiscal cornrnltment and rlsk through the and approved new PPP Regulatlons In implernentation of PPPs than is consistent November 2015. The terms of these with prudent public financia! rnanagement. instruments replaced the PPP Finance Unit and the PPP Coordlnatlon Unlt wlth the Unnecessary or excessive renegotlatlons PPP Centre, although this center has yet to can undermlne the potentlal of PPP to be created or staffed. According to a recent generate value for money. Given the evaluation of PPP readiness undertaken by long-terrn nature of PPPs, the need for the Econornist lntelligence Unit (EIU) in sorne renegotiation is not surprising. In 2015 (see Table 6), whlle Tanzanla's PPP fact, sorne renegotlatlon rnay be beneficia! framework overall is well behind that of the both to the Governrnent and consurners. regional leader, South Africa, it was ranked lt is important However, in sorne cases, renegotiation fifth out of 15 countrles surveyed In Afrlca. that govemments may lead to a reductlon In the expected avoldthe benefits from PPPs. A 2014 report on the Table 6: EIU lnfnscope rat:lng1 temptation renegotiation of PPP contracts in Latin Rank Country Seore to establlsh Amerlca 15 shows that In the perlod from 1 South Afrlca 70.7 PPPs to finance 1990 to 2014, 68 percent of PPP projects 2 Morocco 51.8 infrastructure In Latln Amerlca were renegotlated, usually 3 Kenya 51.4 wlthout recordlng within the first few years of financia! 4 Egypt 51.0 associated risks. closure. lssues involving poor planning and 5 Tanzania 48.6 lack of effectlve contract monltorlng were 6 Cote D'lvoire 45.5 often responsible. To avoid and manage 7 Tunlsla 45.4 these íssues, projects must be designed to 8 Uganda 45.1 address confllct as lt arlses. Source: EIU 15 Guasch et al. (2014). PACE http://www.worldbank.org/tanzanla/econom lcupd ate 35 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Whlle Tanzania has a good PPP identify and implement the infrastructure framework. the challenge Is to actually projects that are best conducted as PPPs implement this framework so that PPPs and to ensure that these projects deliver fulfill thelr lntended purpose of closlng the expected benefits. These reforms are the lnfrastructure gap. The EIU lnfrascope as follows: report noted that: "The rules and • Providing strategic direction and procedures governing PPP selection and leadershlp to the PPP program: The declslon-maklng In Tanzania are clearly Government must provide strong delineated. but implementation is less than strategic direction and leadership to the peñect." Particular issues highlighted by PPP program. Amongst other measures, this report include the following: this should involve the establishment of The rules and • Project design is sometimes weakened strong and capable central PPP unit; procedures because of a failure to ensure that the • lncreaslng competltlon and lmprovlng governing PPP feaslbillty analysls for PPP projects Is transparency: The Government seledlon and sufficiently comprehensive; must ensure compliance with global decision-making in • There is no requirement for mandatory good practlce through the routlne Tanzania are clearly accounting and publication of use of competitive approaches to dellneated, but contlngent contractual llabilltles; procure PPPs. lt must also implement implementation is measures to lncrease the overall level less than peñect. • There is uneven treatment between of transparency related to PPP projects solicited and unsolicited bids. While and contracts; sollcited blds are subject to both a pre- feasibility study and a full feasibility • Strengthenlng project ldentlficatlon, study commissioned by the Contracting preparation and oversight: The Authorlty, unsoliclted blds generally rely Government must provide adequate resources for the purpose of ldentlfylng upon a feasibility study undertaken by the private-sector party; and and preparing PPPs. lt must also implement measures to improve • Govemment agencies have lnsufficlent contract management; and management and technical capacities to successfully facilitate negotiations • Clear and transparent approaches to related to PPPs, and the assoclated address funding and ñnancing issues: The Government must address funding procurement, implementation and administration of contracts. and financing lssues related to PPPs by developing and implementing clear and Tanzania must tmplement reforms In four transparent approaches to providing important areas if it is to develop and Government support to PPPs, includlng lmplement a PPP program that conforms working with domestic ñnancial to global good practice. lmplementlng institutíons to gradually develop local these reforms will enable Tanzania to currency financlng for PPPs. WGE http://www.worldbank.org/tanzanla/economlcupdate 36 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Each of these issues wíll be discussed in lnvolved In the process of monltoring the following sub-sections. the dellvery of PPP. Strategic decisions made at the highest level of government 2.4.1 Provfding strategic direction engender a sense of confidence amongst and leadership to the PPP program all stakeholders that the Government The Government should develop a will follow through on its commitments clear strategy to determine whlch and take responsibility far them. A clear infrastructure projects would be best message should be sent to all line mlnlstrles lmplemented as PPPs and to asslst llne that funds will not be allocated through agencies to lmplement these pro)ects. the Government budgets for projects Until the promulgation of the PPP Policy that would be better implemented with in 2009 and the PPP Act in 2010, there prívate financing. The Kenyan Government was no framework to facllitate the process has successfully adopted thls approach, of a coordinated Government review of creating strong momentum for its PPP projects. Even after this framework was program. The sectors usually considered to established, PPP projects have contlnued be most responslve to PPP lnclude energy, to be selected in an ad hoc manner. Often, airports and ports. However, the focus of projects are selected merely because an initiative to increase the appropriate the Government is unable to attract use of PPP should not be limited to these other forms of financing or because sectors. While high-level leadership is forelgn governments or lnvestors make vital, project prlorltlzatlon should not be proposals to the Government. This ad hoc a bureaucratically heavy process, under approach has made it difficult to ensure central control. Rather, there should be a A clear message conslstency and quality In lmplementatlon. clear emphasls on enabllng contractlng should be sent to lt also exposes investors to a high level of agencies and assisting them to identify all Hne mlnlstrles political risk and vulnerability to changing the projects most likely to succeed. The that funds will Government priorities. The lack of dear President's Office should make it clear that not be allocated political support also makes it difficult for appropriate projects should be developed throughthe regulators to support projects through through PPP and take measures to ensure Govemment appropriate tariff adjustments. that this occurs. lt should closely monitor budgetfor the implementation of each project, testing projects that Global good practlce lndlcates that the mllestones and helplng to overcome would be better highest levels of government should constraints as they arise. lmplemented wlth require llne mlnistries to deliver PPP private financing. where thls Is the approprlate format Global good practtce lndfcates that a for the implementatlon of the project. high level of commitment to reform In addltlon. the hlghest levels of plays a slgnlficant role In facllttatlng government should contlnue to be the successful lmplementatton of a PPP PACE http://www.worldbank.org/tanzanla/econom lcupd ate 37 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N lnltiatlve. In particular, the current high 2.4.2 lncreasing competition and level of Government payment arrears lmprovlng transparency undermines private sector confidence in Open. transparent. competltlve biddlng the Government, increasing the cost and Is a slgnlficant characterlstlc of good complexlty of projects as the prlvate sector practlce PPP programs. Global good seeks to protect itself against Government practíce clearly indicates the value of breach. Steps need to be taken to reduce competltlve processes for PPP projects, the accumulated arrears and to lmprove with this approach having been adopted the Government's level of compliance with by successful PPP programs around its contractual obligations. the world. Successful PPP programs implemented by the Republic of India and ThePPP The establishment of effectlve PPP most European natlons do not conslder Centre needs lnstltutions wlth the appropriate unsolicited proposals or direct negotiations to be properly capacities is critically important. The PPP except in extremely límited circumstances. establlshed, wlth Centre needs to be properly established, Competltlon helps to ensure that a project the appropriate wlth the approprlate resources and is appropriately vetted and that the resources and institutíonal framework. lt should be Government achleves value for money. tnstltuttonal headed by a senior CEO, with sígnificant lt also protects against perceptions of framework. government and private sector experience corruption and bias that may result in the (and preferably with significant experience case of dlrect negotlatlons and unsoliclted In the financia! sector), so that he or she proposals. is respected by both. The PPP Centre should report to a central government Tanzania has resorted to dlrect mlnlstry that has the power and authorlty negotlatlons to award PPPs slgniflcantly to challenge line minístríes and to ensure more frequently than the global compliance with the PPP framework. average. In the period from 2010 to The Ministry of Finance PPP team and 2014, on average amongst emerging the Local Government Authoríty (LGA) markets and developing economies, only PPP Nade need to have dedlcated staff 23 percent of PPPs for projects In the with the appropríate skills and access to energy, transport and water sectors were externa! experts to support the contractíng awarded through direct negotiations. authorltles; to moblllze project fundlng; The use of dlrect negotlatlons was most and to ensure high quality project delívery. frequent for projects in the energy sector, As an example of good practice, Kenya's but even for this sector, the number PPP Unit, based in the Ministry of Finance, of these projects accounted for only a has strong funding support, full-time third of the total. In Sub-Saharan Africa, staff, access to technlcal experts, and the only 20 percent of PPP projects in these support of the Minister and the President. sectors were awarded through a process http://www.worldbank.org/tanzanla/economlcupdate 38 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ of direct negotiation over the same program. In fact, on the basis of publicly period.16 Evídence suggests that Tanzania available data, only around half of recent has not consistently adopted competitive PPP projects were competitively procured processes in the implementation ofits PPP (see Table 7). Table 7: Award processes used for some recent PPPs In Tanzania Project Business-to- Govemment- Competltlve Numberof Business to-Govemment procurement bldders Songas - - X 2 UDA-RT X - - - TICTS - - X 2 IPTL - X - - Rlchmond/ X - - - Dowans TRL - - X 1 CityWater - - X 1 Aggreko X - - - KIA X ? Alstom X - Netgroup X 3 Source: World Bank The PPP Act mandates a competltlve level of cautlon also reflects concerns that approach. and it should be implemented abuse of bidding processes often results accordlngly. Where such an approach has in a single bid by eliminating competition Measuresto been formally adopted In Tanzania, lt has through the process. Thus, measures to restrictor often resulted in the submission of only a restrict or eliminate single bid scenarios ellmlnate single single bid, as, far example, in the case of the also help to reduce the rísk of abuse of bid scenarios also City Water lease and the Tanzania Rail Lines competitive processes. The PPP Technical help to reduce concession. This may have been because Committee should be established to act the risk of abuse tendered projects were not sufficlently well proactlvely to encourage and enable PPP; of competitiva prepared when taken to market. In many to provide guidance to line Ministries; processes. countries, such single bidder situations and to ensure that the right projects are are vlewed wlth extreme cautlon, often lmplemented. requiring bidding processes to be rerun to attract a higher level of competítion and Unsollcited proposals (USPs) can enable the implementation of measures to identify governments to benefit from innovative the issues that resulted in such a limited Ideas generated by the prlvate sector. market appetlte far the project. Thls hlgh However. they can also create new 16 See PPI Database and State of PPPs report. PACE http://www.worldbank.org/tanzanla/econom lcupd ate 39 @¡ TANZANIA ECONOMIC UPDATE MAY 2016, grH EDITION challenges and thus need to be managed exacerbatetheproblem.17 ltshouldbenoted wlth a hlgh level of transparency. that because USPs originate in the private Agencies in sorne countries receive a sector, they are outslde the public sector large number of USPs. Experience shows investment planning framework. Thus, it that these proposals often waste publlc Is necessary to establlsh a clear process officials' time, distracting govemments to assess USPs to ensure their consistency from their stated priorities and diverting with public sector priorlties and needs, lt is necessary llmlted financlal and human resources. The especlally when thelr assessment requlres to establlsh a problem Is often caused by the absence of public commitments. lt is also important to clear process to minlmum submission requirements to set a subject these USPs to competitive tension, assess Unsolicited threshold for the quality of a USP. Moreover, for the same reasons that a high level of proposals to ensure poor evaluation criteria may result in competition benefits all PPP projects. To their consistency USPs that may not be alrgned wlth the ensure the development of the approprlate with public sector Government's prioritles. Additionally, the approaches far handling such proposals, priorltles and dispersed submission of USPs and the easy Tanzanian policy makers could learn from needs, especially provlslon of benefits far USP proponents the approaches adopted by South Afrlca, whenthey (reimbursements or direct negotiation) Colombia and Peru (see Box 6). require publlc contributions. lox 6: Handling unsollcited proposals in a transparent way Studies of successful PPP programs across the globe, primarily in developed countries, provlde a vlslon for the lmproved efficlencles that can be achleved. In Australra, PPPs were found to deliver projects on budget and on schedule more often than publicly procured projects, with only 30 percent of publicly procured projects being delivered on time and on budget, compared to 80 percent of PPP projects. In a survey of developed PPP programs, well-lmplemented PPP project facilitated a 29 percent higher number of resldentlal electricity connections per worker than a publlcly procured project; a 12 percent hlgher number of water connectlons; and a 19 percent hlgher number of sanitation connections; 85 percent higher bill collection ratios In the case of electrlcity and 50 percent higher in the case of water. They can also reduce dístribution losses, wlth a 25 percent reductlon ln the case of electrlclty and a 41 percent lncrease In hours of dally service for water. Based on an empirical analysis using time series data (1995- 2006) in 32 LAC countries, Andres et al. (2013) conclude that there private sector partlclpatlon has a slgnlficant, posltlve lmpact ln terms of coverage, quallty of servlce and labor productivity for the analyzed utilities. especially when regulation is strong. Source: World Banlc, Reference Guíde on Publíc Prívate Partnershíps (2015) 17 World Banlc (2016). PACE http://www.worldbank.org/tanzanla/economlcupdate 40 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Faced wlth the need to address andthatappropriatelevelsoftransparency slgnlflcant tnfrastructure deflclts, and competition are achieved. The governments may be tempted to believe centralized management of USPs, under thatdfrect negotlatlons are a qufcker and a single agency or department, improves cheaper way of tmplementlng projects the ablllty to manage such proposals and than through a competitive process. to generate benefits from them.20 lt may be tempting for governments to There Is a growlng tendency for take what appears to be the path of least countries around the world to release resistance, adopting what seems like an more informatlon related to PPP economícal and easy approach. However, projects and contracts fnto the publlc global experience clearly demonstrates domaln. Thls tendency Is drlven by a that sole-sourcing, direct negotiations recognition that in the implementation and unsollclted proposals rarely work out of PPPs, transparency and full dlsclosure well over the longer term and are generally However. global result in improved governance; better not faster or cheaper to implement than experience clearly management of fiscal costs; and a projects lnvolvlng competltlve processes. demonstrates hlgher level of understandlng of the Also, lack of competition can create a thatsole- impact on service delivery. A high level potentially poisonous perception of bias sourcing, direct of transparency enables stakeholders or even corruption.18 Direct negotiations negottatlons to express thelr concerns, whlch In turn are not tested through a process of and unsolicited enables the Government to adjust PPP competltlon and therefore lt Is hard to proposals rarely projects to address these concerns and tell what price or terms are appropriate. work out well to present evidence to stakeholders In addition, they are especially vulnerable overthelonger and the broader public that project to future governments challenglng thelr termandare processes are belng lmplemented validity and wisdom.19 generally not properly. At the minimum, basic project faster or cheaper lt Is crucial for the publlc sector to play information and information related to to lmplement than a leadlng role In project development procurement processes; the Request projects involving to ensure the approprlate level of for Quotation (RFQ) documents; the competitiva competftlon durlng the procurement Request for Proposal (RFP) documents; processes. process. The Government should outline and information related to the provision clear procedures and processes for the of Government support should be fully management of USPs to ensure that the dlsclosed, as should the complete PPP Government leads project development contract. 18 Hodges and Dellacha (2016). 1 9 World Bank {2014). 20 World Bank {2016). PACE http://www.worldbank.org/tanzanla/econom lcupd ate 41 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Tanzania could increase the level of Peru, the regulatory framework expressly dlsclosure related to PPP projects. requires that PPPs that involve co-financing Tanzania's current regulatory framework with public resources must be certified as already mandates the publication of award viable, as must all other public investment notlces, but lt does not mandate the projects lmplemented In the context of publication of the complete PPP contract. the National Public lnvestment System. In Both Ghana and Kenya mandate higher Tanzania, the regulatory framework does levelsofdlsclosure regardlngthe publlcatlon not expllcltly requlre the assessment and of the PPP award than does Tanzania. For prioritization of PPPs within the broader example, in Kenya, the publication of the context of public investment planning. award notice must be accompanied by Tanzanla's current information related to: (i) the nature of PPP contracts often have slgnificant regulatory the project; (11) the scope of the project; ongolng financia! implfcatlons for framework already (iii) the successful bidder; (iv) the project governments. Therefore, these contracts mandates the cost at net present value; (v) the project must be assessed and managed publication of value and tarlff; and (vi) the duratlon of the approprfately. PPP contracts often involve award notlces, but project. The regulatory frameworks in both long-term payment commltments and lt does not mandate Colombia and Peru require the full PPP may be contingent on one or more risks. the publication of Contract to be published and included in This can create particular challenges far the complete PPP the public registries of PPPs. 21 public financia! management systems contract.. and institutions. which are generally 2.4.3 Strengthenlng project geared to the management of annual identificatfon, preparation and expendlture approprlatlons. For this reason, overslght specific approaches to the public financia! The PPP program should be drlven by the management of PPP are embedded In well- overall public investment management designed PPP frameworks. To ensure that program. PPPs are a means to implement projects implemented through PPPs are public lnfrastructure projects and to deliver affordable, both the Mlnlstry of Flnance and public services. As a consequence. a first the procuring authorities should participate step for a successful PPP is to identify PPP in the preparation of arrangements related projects wlthln the broader context of the to the lmplementatlon of these proJects. public investment management process. Tanzania's PPP framework mandates the ldeally, thls should take place wlthln a Mlnlstry of Flnance to provlde Input lnto the uniñed public investment management approval process based on its assessment framework. A number of countries explicitly of fiscal costs, but it does not provide it mandate thls In thelr PPP frameworks. In wlth the rlght of approval. A number of 21 World Bank (2015), Benchmarklng PPP Procurement WGE http://www.worldbank.org/tanzanla/economlcupdate 42 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ countries grant very specific roles to the the potential far conflict of interest. Global Ministry of Finance, including the right to good practice emphasizes the need to approve or reject a project. For example, develop independent feasibility studies Colombia's regulatory framework grants the and to seek transaction advice from Mlnlstry of Flnance the authorlty to approve hlghly experlenced, lndependent advlsers or reject the project's contingent liabilities to identify investors and financiers. befare the bidding process is launched These advisers should also play a role in and the authority to grant or wlthhold a overseelng lmplementatlon (see Box 7). In certificate of no-objection to the financia! Tanzania, the PPP Act and PPP Regulations conditíons and terms of the PPP contract. mandate the establishment of two PPP facilitation funds for such purposes. one A successful PPP program must allocate far central Government projects and the necessary resources to ensure the the other for local government projects. appropriate preparation of projects. Sufficient resources should be invested in Successful PPP programs allocate the these funds. Also, the PPP Centre and LGA approprlate financia! and human resources PPP Node need to have dedlcated staff wlth to prepare selected projects through the appropriate capacities and access to budget allocations and other sources of externa! experts to support the contractíng funding. In the past. Tanzania has relied authorities; to mobilize project funding; to on studies and analysis prepared by help agencies oversee consultants; and to lnvestors and other governments, desplte ensure hlgh quality project dellvery. Box 7: Project Development Funds Successful PPP Project development funds (PDFs) are commonly utlllzed by natlons lmplementlng PPP programs allocate to provide funds to conduct studies and to contract the services of advisers. The South the approprtate African PDF, which began operations on 21 October 2003, is one example of such a financial and fund. lt operates as a slngle-functlon tradlng entlty (public account) and was created human resources within the National Treasury. The funds disbursed may be recovered from the successful to prepare prívate party bidder when the PPP reaches financia! close, as a "success fee." This fee selected projects Is factored lnto the cost of conductlng the feasibillty study to avold undue affordabillty through budget constraints being imposed on the project. Bidders will price the success fee into their allocations and bids and will recover the costs through the payment mechanism used in that particular other sources of PPP. The PDF Is exposed to the full rlsk of the project not reachlng financia! closure. The fundlng. POF is capitalized both by the South African Government and by donor agencies. Source: www.ppp.gov.za Once a potentlal project has been for procurement as a PPP. Successful ldentifled. it Is necessary to determine PPP programs establish appraisal criteria. whether lt has the approprfate features with the project being requíred to satisfy PACE http://www.worldbank.org/tanzanla/econom lcupd ate 43 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N these criteria in order to be implemented potential PPP project must go through as a PPP. The assessment typically a structuring phase that includes the involves four main criteria: (i) the identification, assessment, and intended feasibility and economic viability of the allocation of the risks. Table 8 below project (includlng lts flnanclal vlabllity presents a llst of countrles and shows or bankability); (ii) the value for money which of these four criteria are legally of the PPP; (iii) fiscal responsibility; and mandated in the appraisal studies (lv) commerclal vlablllty. In additlon, any conducted by them. Table 8: Appnlsal studles for PPPs Rlsk In Tanzania, a Socio- Financia! Affordability Comparative Market identification, relatively high Economy economlc Vlabilltyor assessment assessment assessment assessment, proportion of impact bankability and allocatlon PPP projeds have Cameroon ,,/' ,,/' ,,/' ,,/' ,,/' ,,/' been subject to Colombia ,,/' ,,/' ,,/' ,,/' • ,,/' early termlnation Egypt, Arab ,/ ,/ X ,,/' ,/ ,/ compared to the Rep. global average. Ghana • ,,/' ,,/' ,,/' • ,/ Kenya ,/ ,/ ,,/' ,,/' ,/ ,/ Nigeria ,,/' ,,/' ,,/' ,,/' ,,/' ,/ Peru ,,/' ,,/' ,,/' ,,/' • ,/ South Afrlca ,,/' ,,/' ,/ ,/ ,,/' ,,/' Tanzania ,/ ,/ ,,/' ,,/' • ,/ Tunisia X X X X X X Source: Benchmartcing PPP Procurement 2015 The Tanzanlan Government should of mlnor lssues before they get out of hand invest the appropriate resources in and become major problems. At the same the systems necessary to ensure good time, Tanzania should learn from global c:ontract management and overslght. As experlence to avold the consequences noted earlier, in Tanzania, a relatively high of frequent renegotiation (see Box 8). proportion ofPPP projects have been subject Tanzania's regulatory framework does not to early termlnatlon compared to the global explicltly limlt or regulate changes In the average. lmproved systems of contract scope, the risk allocation or the investment management could enable the resolutlon plan/duratlon of the contract. WGE http://www.worldbank.org/tanzanla/economlcupdate 44 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Box 8: Approaches to managing contnct renegotiations In Kenya, the regulatory framework mandates that when a PPP project is amended, lt should continue to provlde value for money; be affordable; transfer the approprlate level of risk to the prívate party; ensure an efficient and effective provision of the service to the public and the protection; and facilitate the preservation of the environment. In South Afrlca, the Treasury wlll approve a material amendment only lf lt Is satlsfied that the PPP agreement. if so amended, will continue to provide: (i) value for money; (ii) affordability; and (iii) substantial technical, operational and financia! risk transfer to the prlvate party. In Colombia, by law. changes to the scope or the duratlon of a PPP contract may not involve an increase in the value of the contract by more than 20 percent. The regulatory framework does not specifically address limiting or regulating changes in the risk allocatlon of the PPP contract. In Peru, changes durlng the first three years of a PPP contract are limited to the following cases: (i) the correction of clerical errors; (ii) the requirements of allowed creditors related to the stage of financia! closing; and (iii) the accuracy of operatlonal lssues that lmpede the lmplementatlon of the contract. After that period, if an amendment involves an increase of more than 15 percent to the original cost of the project, the procuring entity should initiate a new procurement procedure. Source: World Bank, Benchmark!ng PPP Procurement. 2015 Well-deslgned, appropriately resourced Developing public awareness of these trafnlng programs and publfc outreach issues is an important means to ensure A well-designed campalgns can play an important hlgher levels of transparency, whlch In turn trafning program role In enabllng Government staff and is a significant characteristic of successful wlll enable the broader publlc to understand the PPP programs. The greater use of PPPs Govemment staff rationale for PPPs. Govemment staff, can facilitate positive transformation in to understand officials of local governments and their Tanzania's financia! sector, but only if the PPP; to select the agencies, prlvate sector operators and flnanclal sector develops the skllls and appropriate projects members of the broader public need instruments necessary to support the PPP for PPP; and to to understand how and why PPP can program. The responsibility for delivering implement selected be lmplemented as an effectlve tool a coordlnated and comprehenslve trainlng projects well. for certain types of project and the program for PPP should be allocated role they can play In meeting critica! between the PPP Centre, the LGA PPP infrastructure and service needs. A well- Node and the Ministry of Finance PPP designed training program will enable team, as appropriate. Box 9 describes Government staff to understand PPP; to some aspects of the successful LGA PPP select the appropriate projects for PPP; program. and the role of capacity building and to implement selected projects well. in facilitating this success. PACE http://www.worldbank.org/tanzanla/econom lcupd ate 45 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Box 9: Local Government PPP A stand-out in Tanzania's storied history of PPP is the Local Government PPP program. The PPP Regulatlons (2015) empower the PPP Node of the Local Government Department of the President's Office (PO-RALG) to oversee local government PPP and to act as the approval authority for small PPP (involving projects with a value of less than US$ 70 mllllon). The Local Government Authorlty (LGA) PPP Node was establlshed by the Permanent Secretary of the PO-RALG, with a Head, a Deputy Head and five members of staff. In the pilot phase, the LGA PPP Node has engaged with eight LGAs, providing training; revlewlng project proposals; ldentlfylng those projects wlth the greatest potentlal for implementation through PPPs; and helping the LGAs to develop concept notes for each The degree of of the identified projects. These efforts have already yielded positive results, with the support provlded ldentlficatlon of more than 60 potentlal PPP projects and the development of more than by the Govemment 28 concept notes. should as far as possible be The LGA PPP Node is supported by the World Bank; the Department for lnternational determlned by a Development of the UK; and the Public Prívate lnfrastructure Advisory Facility (PPIAF). competltive process Source: www.ppp.gov.za during bidding. 2.4.4 Developlng a robust fundlng assessment, approval, and structuring and and financlng framework for PPPs monltorlng of publlc llabllitles assoclated with PPP. The Ministry of Finance PPP The Government needs to develop team needs to have the necessary human and apply a policy for the provlsion of resources, lndudlng dedlcated staff wlth financia! support for PPP, with these the appropriate capacities and access to pollcfes covertng the awardlng of externa! experts to support the contracting guarantees and criteria to determine authorities; to review proposed projects; to whlch projects wlll recelve such support, advise on the most appropriate structure amongst other matters. Requests for for the provlslon of publlc support; and public support, including for extra- to monitor public liabilities to ensure budgetary funding allocations, guarantees high quality project delivery. The Kenyan and other fiscal commltments, need to Government malntalns lts PPP unlt In be assessed and managed quickly and the Ministry of Finance. with the specific efficíently. The degree of support provided functions of this unit including helping by the Government should as far as to structure competitive processes and possible be determined by a competitive to discuss public support, and its Debt process durlng biddlng. Sufficlent Management Office, to assess and monitor funding should be allocated to enable the fiscal liabilities. http://www.worldbank.org/tanzanla/economlcupdate 46 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @ Box 10: lndia's Viability Gap Fund In 2004, the Government of India launched the Scheme for Financia! Support of PPPs In lnfrastructure, now commonly known as the Viablllty Gap Fundlng (VGF) scheme. The VGF scheme provides up-front capital grants for projects at the construction stage. These grants may not exceed a value of 20 percent of the project cost and are disbursed only after the prívate company has made the requlred equlty contrlbutlon. Sponsorlng ministries or state governments may provide additional grants from their own budgets. but these may not exceed an additional 20 percent of the total project cost. The value of publlc capital provlded is ldentlfied through a competltlve process. wlth the level of public funding needed acting as a core bid criteria. lndia's Ministry of Finance administers the VGF scheme, which is separate from any funding provided to an implementing agency through the normal budgetary process. No economlc cost benefit assessments are performed, wlth the Government lnstead relying on sector regulation and competitive procurement processes to identify the need for a Government contribution. Source: www.ppplndladatabase.com Local fínancfal markets need to be the Bank of Tanzania with the Ministry of provlded wlth assistance to fund PPP Flnance's PPP team; the Tanzania Bankers' transactlons. partlcularly In the case of Association; and other key stakeholders to small projects that may be enttrelyfunded dlscuss constralnts to the development in local currency. Tanzania's domestic of a robust infrastructure for the PPP Tanzania's financia! markets have little experience finance market in Tanzania and to resolve domestlc financtal In the financlng of PPP transactlons (see these constralnts. The worklng group markets have little Box 11 ). Thus, it is important to provide should consider the establishment of experience in the training and support to enable domestic functions to generate public support financlng of PPP financia! lnstltutlons to adapt to the use of and to facllltate lntermedlatlon to enable transadions. these financing practices and instruments. Tanzanian financia! institutions to support A number of regulatory lssues may need to PPP. For example, thls could lnvolve the be addressed to amend internal practices establishment of mechanisms to allow to encourage these institutions to engage pension funds to finance PPP projects, In PPP financlng. An lnfrastructure finance wlthout exposlng them to rlsks lnconslstent working group could be established under with good pension fund governance. PACE http://www.worldbank.org/tanzanla/econom lcupd ate 47 @¡ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Box: 11: Financing PPP A well-designed PPP program could create important new opportunities for the Tanzanian financia! sector. Many PPP projects wlll lnvolve local currency debt, partlcularly long-term and fixed-rate debt. The domestic financia! markets of a number of countries have experienced significant development as a result of the mobilization of the financia! lnstruments needed to drlve a robust PPP program. Tanzanian commerclal and developments banks could play an lmportant role In originating projects and arranging debt. Pension and other institutional funds are well placed to support PPP, particularly in the refinancing of debt for PPP after construction is complete and once the rlsk profile of the project becomes more conslstent wlth the governance priorities of such funds. The Tanzania lnvestment Bank is already engaging in this space, working with local governments and pension funds to develop projects more akln to PPP models. Penslon funds are lnvestlng dlrectly In sorne projects. helplng to drive investment. but often without the efficiencies available from PPP and without the level of governance that pensions funds might otherwise require. PPP can help make these investments more efficient and provide a safer means for penslon funds and other lnstitutlonal lnvestors to engage in them. http://www.worldbank.org/tanzanla/economlcupdate 48 @ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Annex 1: Key Macroeconomic lndicators 2010-15 lndlcator unn 2010 2011 2012 2013 2014 2015 Populalicn {MainlandY2 Millions 43.6 44.8 44.9 46.1 47.4 48.8 Per c:apila lnoomeJ2 US$ 726 765 870 969 1028.8 968.8 GDP Growth/2 % 6.4 7.9 5.1 7.3 7.0 7.0 lnflation/2 (period average) % 7.2 12.7 16.0 7.9 6.0 5.6 Exchange Ra1812 (perlad average) TZSIUS$ 1,432.3 1,579.5 1,571.7 1,597.6 1658.1 2,002.8 Externa! Sector Exports - Good6 &Servíces (t.o.by1 Mil.U$$ 3,805 4,896 5,562 5,441 5517 5,618 lmports - Goods & Services {f.o.bV1 Mil.U$$ -6,596 -8,012 -10,615 -10,482 -11541 -10659 Current Account Balance/1 Mii.U$$ ·2,047 -2,215 -4,736 -4,290 -4746 -4,182 Balance of Pavments (Overal balanceV1 Mil.US$ 478 101 200 457 232 -100 RlreV! Reserves/1 Mil.US$ 3,483 3,610 3.7W 4,357 4634 4.285 Extemal Debt/1 (an %of GDP) 18 22 21 23 24 31 Fora91 Diract lnvestmenl/1 Mil.U$$ 991 1,009 1,574 1,836 1924 2,152 Monataiy Sector Average Depoa~ Rate/2 % 9.1 7.3 9.6 11.4 8.3 8.3 Average Lerdng Ra1812 % 13.8 13.9 13.9 14.1 13.9 13.9 Growth in P.bley Supply {M3)12 % 25.4 18.2 12.5 10.0 15.6 18.0 Gowmnnt Flnanc:e Tatal Dornestic Revenue/1 (as a% of GDP) 11.8 12.2 12.6 13.1 13.5 13.0 Tax Revenue/1 (86 a% of GDP) 11.1 11.2 11.6 12.0 12.4 11.7 Non-Tax Reveooa/1 (as a% of GDP) 0.6 0.9 1.0 1.0 1.2 1.3 Tatal Expendlturel1 (as a% of GDP) 20.0 19.1 19.1 18.8 18.6 17.3 ReQJrrent Expendi11Jre/1 'as a% ofGDP) 13.9 12.9 13.0 13.4 13.7 12.9 Development Expenditura/1 (as a% of GDP) 6.1 6.2 6.1 5.4 4.9 4.4 Gfl!nfg/1 (86 a% of GDP) 3.5 3.4 3.2 2.6 2.1 1.2 Fiscal Balance (after grantsV1 (as a% of GDP) -6.9 -4.8 -5.0 -3.6 -3.3 ·3.3 Note /1 Fiscal year is used, and it ends June 30th of the mentíoned year /2 Calendar year is used, and it ends in mentioned year December 31 st. Source: IMF and Tanzania Authorities (MoF. BoT. NBS,). http://www.worldbank.org/tanzanla/economlcupdate 50 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @¡ Annex 2: Real GDP growth rates 2009-2015 (percent) Economlc Actlvlty 20Cl9 2010 2011 2012 2013 2014 2015 Agr1C\llb.lrt and Flshlng 5.1 2.7 3.5 3.2 3.2 3A 3.5 Crops 5.5 3.7 4.8 4.2 3.5 4.0 3.4 Livestoclc 5.3 1.4 1.6 1.8 2.0 2.2 3.2 Forestry and Hunttng 5.1 3.4 3.3 3.5 4.7 5.1 5.2 Fishing 0.5 0.9 2.6 2.9 5.5 2.0 2.7 lndustry and constNction 3.3 9.1 12.0 4.0 9.5 1G.3 u Mining and quarrying 18.7 7.3 6.3 6.7 3.9 9.4 8.2 Manufacturing 4.7 8.9 6.9 4.1 6.5 6.8 6.9 Electricity 4.3 13.4 -4.3 3.3 13.0 9.3 9.3 Water 4.6 2.2 -1.2 2.8 2.7 3.7 3.7 Conslruction -3.8 10.3 22.9 3.2 14.6 14.1 11.9 Servlces 5.8 7J 8.4 7.2 7.1 7.2 7A Trade and repairs 2.7 10.0 11.3 3.8 4.5 10.0 10.0 Hotels and restaurants 6.9 10.7 4.4 4.2 12.2 12.5 12.6 Transport 1.0 3.7 4.1 6.7 2.8 2.2 2.2 Communications 26.6 24.4 8.6 22.2 13.3 8.0 8.0 Financia! intennediation 18.4 12.6 14.8 5.1 6.2 10.8 10.8 Real estate 1.8 1.8 1.9 2.0 2.1 2.2 1.4 Professional, sciena!ic &tectmical services 15.8 29.9 4.8 -5.8 5.4 0.5 3.0 Administrative and support service activities 0.4 8.6 5.1 23.8 12.2 6.0 0.1 Public administration &defem:e -0.7 -5.0 15.9 9.1 7.8 3.9 6.9 Education 9.2 6.4 5.6 7.4 4.3 4.8 4.9 Health 7.4 3.3 5.3 11.4 8.8 8.1 8.1 Arts 3.0 7.3 7.7 11.0 5.7 5.7 4.8 Other social and personal services 5.9 6.0 6.2 6.4 6.5 6.7 4.8 Activities of households as employers 2.7 2.7 2.7 2.7 2.7 2.7 11.0 FISIM 20.0 7.9 22.6 1.2 0.1 9.7 9.7 Nettaxes 12.8 3.8 12.1 0.4 14.2 7.7 9.7 TotalGDP 5A 6.4 7.9 5.1 7.3 7.0 7.0 Source: NBS, GoT PACE http://www.worldbank.org/tanzanla/econom lcupd ate 51 @ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Annex 3: Shares of economic activity in GDP (current market price) 2009-15 Economic Activity 2009 2010 2011 2012 2013 2014 2015 Agriculture and Fishing 27.24 26.31 25.23 24.n 23.83 23.03 22.26 Crops 13.76 13.41 13.03 12.91 12.46 12.11 11.70 Livestock 9.60 9.16 8.63 8.35 7.94 7.59 7.32 Forestry and Hunting 2.34 2.28 2.18 2.15 2.10 2.06 2.02 Fishing 1.54 1.46 1.39 1.36 1.33 1.27 1.22 lndustry and constn.iction 19.H 20.49 21.28 21.05 21.50 22.18 22.65 Mining and quarrying 3.36 3.39 3.34 3.39 3.28 3.36 3.39 Manufacturing 7.36 7.54 7.47 7.40 7.35 7.34 7.33 Electricity and water 1.75 1.77 1.59 1.56 1.57 1.57 1.57 Electricity 0.88 0.94 0.83 0.82 0.86 0.88 0.90 Water 0.87 0.83 0.76 0.74 0.71 0.69 0.67 Construclion 7.51 7.79 8.87 8.70 9.30 9.92 10.37 Services 46.97 47.60 47.81 48.76 48.69 48.80 48.94 Trade and repairs 9.72 10.04 10.36 10.23 9.96 10.24 10.53 Hotels and restaurants 5.75 5.99 5.79 5.74 6.00 6.31 6.64 Transport 1.69 1.65 1.59 1.61 1.55 t..48 1.41 Communications 2.93 3.42 3.44 4.01 4.23 4.27 4.31 Financia! intermediation 3.57 3.78 4.02 4.02 3.98 4.12 4.27 Real estate 5.56 5.33 5.03 4.88 4.65 4.44 4.20 Professional, scientific and technical activities 1.62 1.98 1.92 1.72 1.69 1.59 1.53 Administrative and support service activities 2.62 2.68 2.61 3.07 3.22 3.19 2.98 Public administration and Defence 6.81 6.08 6.53 6.78 6.81 6.62 6.61 Education 3.42 3.42 3.35 3.42 3.32 3.25 3.19 Human Health and social work activities 1.67 1.62 1.58 1.68 1.70 1.72 1.74 Arts, entertainment and recreation 0.34 0.34 0.34 0.36 0.35 0.35 0.34 Other social and personal services 0.96 0.95 0.94 0.95 0.94 0.94 0.92 Activities of households as employers 0.33 0.32 0.30 0.30 0.28 0.27 0.28 FISIM -1.42 -1.45 -1.64 -1.58 -1.48 -1.51 ·1.55 Nettaxes 7.23 7.05 7.33 7.00 7.45 7.50 7.69 TotalGDP 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: NBS http://www.worldbank.org/tanzanla/economlcupdate 52 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @¡ Annex 4: Fiscal framework as a percentage of GDP 2011M2 2012113 2013114 2014115 Budaa41 Actual Budaat Actual Budaat Actull Budaat Actual Total dom8Stlc revenue 12.2 12.7 13.8 12.9 15.6 13.5 14.3 13.0 Total expenditure 22.2 18.9 20.9 20.6 22.7 18.6 20.4 17.3 Overall deíteit before grant:a -10.0 -6.2 -7.1 -7.8 -7.0 -5.0 -6.1 -4.3 Grants 4.8 3.3 3.1 2.6 3.2 -2.1 2.6 1.2 OVerall defldt after grama -5.2 -3.6 -4.0 -5.0 -3.8 -3.3 -3.4 -3.3 OVerall prfmary belance -3.7 -2.1 -2.7 -3.7 -2.S -2.0 -1.9 -1.8 Flnanclng 5.2 3.6 4.0 5.0 3.8 3.3 3.4 3.3 Foreian (net) 4.2 3.0 5.5 3.9 3.8 3.0 3.2 3.1 Domeslic (nel) 0.7 0.6 -1.4 1.1 o.o 0.3 0.3 0.2 Source: Mlnlstry of Flnance, IMF and World Bank Annex 5: Balance of payments (percentage of GDP unless otherwise indicated) 2008/9 - 2014/15 2008/09 2009/10 2010/11 2011/12 2012113 2013114 2014115 1. CA balance (including tranafers) -7.6 -6.7 -6.8 -13.3 -10.5 -10.7 -8.7 Exports of Goods 11.7 12.4 15.1 15.6 12.9 11.9 -10.5 olwGold 3.3 4.9 5.5 6.4 4.5 3.6 2.6 lmport of Goods -22.3 -21.5 -24.6 -29.7 -25.0 -24.8 -22.3 Services { net) 0.6 0.5 0.5 0.2 1.3 1.7 2.0 Trade balance -10.0 -8.5 -9.1 -13.9 -10.8 -11.3 -10.5 lncome ( net) -1.0 -1.0 -0.8 -2.0 -1.3 -1.1 -1.4 Current transfers ( nat) 3.4 2.9 3.1 2.6 1.9 1.6 1.2 2. Capital and financia! account 8.3 8.9 8.7 11.8 11.7 11.3 8.9 Capital account 1.4 1.7 1.7 2.2 1.8 1.5 0.9 Financia! account 6.9 7.2 7.0 9.6 9.9 9.9 8.0 olw Diract investment 4.0 3.2 3.1 4.4 4.4 4.5 4.5 3. Ovaran balance 0.1 1.6 0.3 0.8 1.1 0.6 -0.2 Gross intemational reserves ( Mil USO} 2930 3483 3610 3797 4357 4643 4285 In months of imports (ctJrrent year) 4.5 5.0 4.3 3.5 4.1 4.0 4.1 Source: BoT, IMF and World Bank PACE http://www.worldbank.org/tanzanla/econom lcupd ate 53 TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Annex 6: Monthly imports of Goods and Services (US$ million) USDmn ___ Taáll-otOaoda...tleni- -ot-1'1.o.ILI ,. Oat 201S -Deo Jllll Flll lllJ 8112 11151 843 ... 11114 Jun J~ 884 1037 788 888 9S4 810 ~ 884 Ita Oot :114 382 28.1 311 255 2!11 282 280 248 275 272 'JJ(/ 33& ·- - DN Jllll ....., - 2015 - - •-• - · Junl Jul All•I - 1120 1281 1063 1200 1098 12!ia 991 1067 1165 1031 1060 1128 1135 1100 1351 110611105111361 979110191 1217113!7Cll 12291 10!9 888 1084 8741 ..... 8181 7881 8131 88711""""' 9l'e 788 ern 373 394 3111 3111 SS7 352 348 313 41158 3.2S m T 84 181 106 89 96 111 81 f1T 82 f1T 86 105 113 118 104 106 88 108 80 102 108 1242 108 78 Bllllcl111111and~ 74 11) 82 11C 71 72 10 88 72 81 85 91 85 108 100 96 81 91 71 67 62 1018 67 58 Mldiln11Y 118 11 11$ 111 80 11) 100 98 83 f1T 82 101 138 147 190 159 = 159 190 118 14$ 1m 150 141 hlMmldllll- Oll- 426 441 337 .... 379 300 4'JI ..... 431 343 ... '31 311 350 468 309 3n 252 m 409 2$1 279 37(1 3a3 326 40S 281 346 288 281 22.'i 28$ 212 711 281 .... 232 289 172 211 461 4108 323 3083 398 280 318 281 Flltlllln lllllultlW .......... 18 71 10 78 16 84 78 e 2 ea e o 2 o 3 26 e& 59 72 S1 ea 72 32 10 22 16 52 82 711 104 73 6 2 1 es es 53 6 9 49 9 129 ... 141 37 70 11 46 c-nw- 192 ,,.,, 181 ,.,.; 197 215 235 240 226 188 227 188 189 284 223 214 131 205 199 213 "492 252 171 r-i .,d lloodl1ll!lt 30 ee sa 54 44 S1 42 54 81 SS 45 ""' 52 63 40 45 63 34 'l'2 82 84 54 IW 20 40 Alloltlel'_r_ 162 1&! 1211 17!1 163 171 172 181 169 110 143 m 126 149 239 189 1ilj 142 143 134 168 1842 232 131 -ot..mc. m ""' 219 231 214 Z1! 203 2111 211 221 223 234 228 211 287 2S2 241 218 190 208 230 21'11 254 253 - 111111- F.....,. Ottltl' 112 10I 6 1 89 101 91 11) 7 8 6 88 101 61 83 ll5 Ull o 1 1 o 1 o 4 82 6 78 o 88 6 83 o 100 91 1 a 88 8 76 o 88 7 80 o 98 14 88 o 99 12 87 o 97 119 12 14 8S 104 o 2 97 IS 84 o 96 13 82 o o 97 9 66 84 94 a o o 16 78 76 107 1163 10 2 1:W 115 1023 8 101 14 94 o 88 14 1~ o TnMI 105 100 105 100 ti 90 73 88 78 98 113 103 t5 es 109 99 1~ 88 80 711 83 11112 117 134 Colllnim!ICllllD!llNMc9 3 3 3 4 3 4 4 4 4 3 2 1 1 1 2 4 2 3 6 6 3 ~ 4 8 ......."'...... CollltNdloft lllMclt ftlllllllll~- 1 $ 1 4 1 3 o D 1 1 1 o o 1 2 4 4 4 o 3 o 3 3 2 o o o 3 $ 3 o 1 o 2 $ 1 1 4 1 2 3 1 2 4 1 4 4 1 o o ! o 3 o o o 3 3 1 o o 3 2 13 44 8 o e 1 o s o ,,__and lmllnnl1llln ..W. 1 1 1 1 1 a 1 1 o 1 o 1 o 1 2 2 ! 2 o 1 1 13 .,.,, 1 o Ollllf lllllln-~- 13 12 11 13 15 10 33 24 25 25 14 17 18 12 21 22 20 2T 17 24 20 18 20 Source: BoT Annex 7: Monthly Exports of Goods and Services (US$ million) .,. UIDmn -o1- Totll- 18.4 28.1 10.11 19.S 8.2 13.9 1$.8 12.1 u -0.8 4.8 8.7 2.5 Mii' 19.0 25.7 9.7 17.4 a.o 15.0 1a.2 12.3 8.3 -0.7 4.8 9.1 2.8 ~ 18.7 26.3 8.6 162 9.1 16.4 18.8 12.8 9.3 -0.7 4.7 9.1 3.2 ....., 18.2 25.3 u 14.7 a.1 15.$ 17.5 13.2 8.7 -0.7 4.7 11.2 :u ..," .u 17.4 15.7 23.5 a>.8 5.9 4.7 14.8 12.6 a.o 8.7 15.1 16.o 17.8 16.1 13.1 10.8 11.7 18.0 -0.8 ·1.8 4.7 4.7 11.7 11.9 u 3.7 AlJQ 14.9 18.8 u 14.4 8.1) 14.4 16.0 11.8 20.4 .1.7 4.7 11.0 3.ll Aa.> 13.5 15.8 1.7 18.5 8.3 13.4 17.5 8.3 20.3 .1.7 4.7 11.3 3.0 Od 12.9 14.9 2.7 17.4 7.9 12.4 16.3 8.4 20.3 ·1.8 4.7 11.1 2.3 NoY 12.1 13.4 23 173 8A 12.0 16.1 8.0 21.3 .1.7 4.7 10.8 2.9 Dec 12.1 13.1 3.2 17.1 8.2 11.$ 15.T 8.1 218 .1.9 4.7 10.S u 2013-Jan 10.9 11.9 2.7 163 12 9.8 13.6 8.8 23.0 ·1.9 42 8.9 2.9 1'111> ID.4 12.D 2.S 183 e.1 1.1) 9.0 u 18.11 -0.4 2.1 :J.e M Mii' 9.8 11.1 1.3 20.4 5.1 .... u 5.0 17.4 .o.4 2.2 3.1 3.7 ~ 9.4 10.2 4.2 19.9 4.8 6.8 6.9 6.2 17.7 -0.8 22 3.6 3.2 ....., 8.3 8.0 7.S 19.0 4.4 5.3 $.5 4.9 18.D -0.7 2.2 3.S 3.0 ..," .u 7.8 7.8 7.1 15.4 14.4 4.0 5.2 55 4.8 15.0 .o.e -0.1 2.2 0.3 u 2.7 .... 7.6 11.7 8.0 1).6 7.6 9.0 14.3 3.8 3.6 6.2 6.2 6.9 4.9 6.9 4.9 12.0 10.8 o.o 2.4 2.4 0.2 0.7 2.9 S.pt 8.1 8.5 7.8 e.e 3.2 4.8 2.2 u 10A o.o 2.4 0.4 u Od 6.8 u 9.3 9.0 u 4.6 2.9 6.0 10.7 0.2 2.4 0.5 2.8 NoY 6.2 7.2 8.8 8.7 2.6 4.4 2.7 u 9.9 0.1 2.4 0.7 2.1 Dec 5.8 e.o u 10.2 2.3 u 2.2 4.0 7.8 0.5 2.4 1.0 1.$ 2014-Jan 8.0 8.0 8.9 14.9 2.0 3.9 1.7 4.1 7.1 G.6 6.9 0.8 1.8 F1ll> 6.0 u 9.0 13.3 u 3.5 1.S 4.8 7.1 o.s 5.3 1.2 2.0 Mii' 6.1 7.2 8.7 9.0 u 3.3 1.7 5.2 7.1 05 S.3 1.3 2.1 ~ 6.3 7.8 u 9.2 2.6 3.2 2.2 7.7 u 0.7 6.3 0.8 3.8 ....., u u ..,,. 8.5 8.4 8.7 8.1 23 2.7 M 11.3 2.4 2.2 3.1 2.1) 2.6 2.8 8.1 5.4 0.7 u 5.ll S.3 0.6 0.8 3.e 4.2 .u 6.6 8.1 2.4 11.7 2.1 2.8 2.4 u 4.7 1.1 6.1 0.6 3.9 AlJQ 8.7 u 2.1 10.3 2 2.4 2.7 u 4.8 1 f;.1 0.6 4 Aa.> 8.8 u 2 10.7 1.7 2.2 4.1 5.8 5 0.7 5.1 o.e 4.7 Od 5.9 7.1 1.6 10,8 15 2.7 3.6 55 5.4 0.7 5.1 0.7 4.8 NoY 6.8 7.0 UI 11.3 1.4 2.8 3.2 u 6.4 o.e 6.1 0.7 4A! Dec 4.8 5.7 0.5 T.8 1.2 3.2 3.5 5.3 5.5 0.4 $.1 o.e 4.5 2Dlfi.Jan 4.0 4.9 o.o 4.9 1.6 3.1 3.8 6.3 6.4 0.6 1.2 o.e 4.7 F1ll> 4.2 4.9 .u u 15 3.4 5.2 5.2 5.4 0.7 2.2 0.7 4.4 Mii' 4.3 5.9 -2.4 3.6 1.0 3.7 5.1 4.8 5.4 0.6 2.2 0.3 3.2 ~ 4.6 7.1 -2.3 0.8 0.3 3.8 6.3 1.8 u 0.8 3.3 0.3 2.1 ....., z.o a.e o.e u ..,,. S.3 a.1 8.$ 10.1 5.0 ·1.3 1.0 0.9 4.1 4.5 4.8 4.3 1.4 1.1 5.2 5.9 -0.1 3.5 3.3 0.9 1.5 u .u 6.4 4.6 .... 8.4 10.8 10.Z -0.6 o.e 0.2 0.2 1.6 1.9 S.3 6.6 5.2 1.6 1.8 3.4 2.8 .().2 .().4 3.3 :u 1.3 1.S 2.8 M l!llo 8.1 u 0.7 u 2.2 4.8 3.7 2.5 2.0 o.o 3.3 3.3 2.4 Od 6.8 10.2 -0.1 1.3 2.0 4.5 3.9 3.0 1.2 0.2 8.3 3.3 2.9 NoY 8.8 11.2 -0.2 ·1.7 2.4 4.6 4.4 ll.3 1.1 0.2 :u 3.2 3.ll Dec 8.8 11.1 1.0 .0,3 3.0 4.1 3.9 u 1.2 0.4 3.3 3.2 4.0 2016-Jan 8.6 10.7 1.3 1.1 3.6 4.8 4.3 4.0 1.7 0.6 u 3.8 4.4 F1ll> s.8 8.$ 2.0 o.a 3.1 45 2.8 3.9 1.8 0.4 3.8 u $.O Mii' 5.4 8.3 2.6 S.5 3.8 4.2 u 3.6 2.1 ·1.0 2.6 4.1 6.2 Source: BoT PACE http://www.worldbank.org/tanzanla/econom lcupd ate 55 @ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Annex 9: Monthly Food Crop Prices (Wholesale) Mantll· v.. J•12 Anlal'a #,500 .,.,_ Dlr• Salum 48.052 M. 40.500 Anllll'a .. Tanzania Shillings per 100kg Dar• Salllm 185,982 183,982 MlllV& 183,500 ANaha 84,038 .... Dar• Salaam 121.231 MlllV& 100,385 AnlllB 137,308 ..... D•• Sll•m 140,308 ....,. 1811,815 Aluaha 50.731 .,... -..hu111 Salaam 81.882 t.tleya . FeM2 41,1164 46,808 40,423 187,116 188,789 202,816 78,864 122,042 108,1146 11111,164 1311,11111 184,000 62,864 86,808 . ..... 2 45,281 46,923 40,2$1 185,714 202,038 206,000 82,679 108,182 125,000 140,000 136,815 13&,071 so.sao 57,482 70.000 Apr-12 51,727 51,m 39,909 194,G91 221,138 218,000 82,046 107,500 125,882 Ull,273 1311,812 110,812 50,809 SS,227 . u-12 58,885 83,308 46,1154 183,4112 179,231 182,308 80,848 108,4112 127,1192 111,3441 130,385 114,077 51,482 83,982 . J~12 51,7118 58,518 43,500 180,577 180,385 181,308 18,731 108,038 8S,077 134,423 1311,538 122,11154 82,882 88P77 50.000 . ... Al~12 84,000 80,1192 46,000 146,677 170,386 188,808 83,2t9 106,1164 84,308 11111,164 137,600 112,11112 80,789 89,038 Alla-12 53,200 80,250 46,750 148,000 143,350 190,250 78,850 85,000 82,050 111,250 141,300 128,500 58,250 71.CSO . s-12 54,188 80,000 50,417 155,2.08 152,CJ83 182,500 8S,875 88,187 102J92 108,887 145.1133 133,333 50,791 78AS8 . Oct-12 66,•1 86,192 62,760 180,000 173,864 188,600 74,848 100,000 114,428 141,731 136,417 62,164 77,308 . ~12 81,404 72,7118 58,115 162,308 183,2118 201,231 73,21111 102,115 103,1146 115,000 153,482 148,111111 50,482 85,385 . 0.12 87,708 80,045 85,583 172.SOO 188,.409 217.liOO 7t.S42 115,000 112,!00 117,SOO 118,818 151Mll 58,833 87,182 192,SOO J•13 70,0ll3 84,292 73,792 171,8 201,826 229,876 76,liOO 130,417 118,333 12111,2li0 180,417 180,792 64,712 81,642 . . Fe~13 Mar-13 Aor-13 71,333 89,875 87,11112 .,,. 90,187 78,909 71,000 72,708 72,138 170,833 180,208 174,187 181,042 187,273 158,818 197,250 182,875 127,384 76,875 78,187 85,227 125,908 127,500 127,727 110,000 113,333 114,091 107,2112 104,187 1211,455 1118,125 182,212 154,773 148,2112 127,500 113,1114 53,833 80,833 85,000 83,7!i0 85,125 85,250 . . u....13 55,308 72,8112 92,348 158,tm 146,385 128,864 84,848 124,583 115,000 117,281 151,928 110,000 68,125 85,862 100,000 J~13 47,222 82,111 44,333 133,889 144,444 130,278 83,811 119,444 113,811 114,446 11111,1133 104,1117 75,600 99,722 . Al~13 50,100 59,133 44,700 130,000 143,833 1211,333 85,187 101,833 105,833 110,11117 150,000 110,333 88,187 112,500 . -~ Alla-13 51,187 57,800 125,700 134,833 107,liOO 118,283 108,333 85,587 108,700 146,187 112.•1 88,833 87,833 185,000 S.13 61,133 67,fl/tn 47,1133 130,000 134,000 99,11187 76,187 128,000 92.600 114,81117 141,333 110,000 84,887 9U33 . Od-13 51,841 55,727 47,000 130,000 117,liOO 103,182 75,500 125,000 80,000 121,771 14111,5111 108,11114 138,227 88,545 . ~13 90,842 48,923 48.077 180,000 134,808 110,000 76,823 108,923 80,000 1:18,538 112,SOO 118,854 SS.385 87,538 . 084>13 61,909 62,818 46,8114 128,4Cll 140,000 109,091 78,8111 108,838 102,273 136,384 160,882 121,li4li 67,364 86,318 . J•14 50,250 54,792 44,625 1ll0,000 143,9511 114,167 80,W 108,750 105,000 132,125 151,4511 132,11111 112,333 119,187 . Fe~14 50,773 53.8114 4&.384 127,727 128,182 114,318 79.318 108,081 107POO 138.541 157,727 135POO eo.m 70,384 . Mar-14 48,76(1 67,76(1 47,8 130,000 148,042 128,760 78,887 118,642 110,000 148,871i 187,11111 13&POQ 68,417 70,364 . . ... Att.14 50,400 58,000 41,850 1ll0,000 143,825 138,000 77,800 115,825 113,500 138,500 114,2!!0 135,11111 57,000 72,375 -14 53,854 67,789 38,923 133,848 148,931 138,038 82,500 130,873 115,000 144,1115 171,211 134,854 59A82 72,S12 . J~14 48,192 54,812 44,flTT 121,231 134,823 121,731 81,423 129,808 111,923 132,500 174,812 132,500 54,808 n,395 . Al~14 45;al 48,700 40,384 135,000 131,4G 117,581 77,!118 123,045 108,581 127,81ii 157,G07 125.000 52,227 . All~14 40,468 42,398 34,968 127,083 123,760 107,292 73,!176 121,389 97,600 127,117 148,21111 116,Clllll 62,600 88,181 . -14 38,577 34,212 38,615 128,1146 123,173 104,423 75pr7 120,193 102,308 137,885 151,4.23 118,5311 54,348 118,538 . Od-14 38,250 35,107 38,714 131,011 131,1211 118,788 78,038 118,8S8 111,429 138,188 185,119 118,571 54,8&3 88,742 ~14 36,125 37,334 34,376 140,000 146,721 128,760 78,792 121,876 112,600 11i2,Dll3 18111,11411 123,121i 60,81117 86,m 084>14 35,712 38,452 33,538 143,1146 151,538 134,731 78,823 122,118 115,000 1411,423 115,111111 123,4112 48,808 59,308 . J•1S 38.521 38,138 sa:m 190,825 155.882 128,818 77.liOO 130,000 115,000 1Q.0113 187,500 127,2.73 53.792 57,'113 . Fe~16 36,600 37,444 32,826 160,000 182,118 138,376 77,000 146,111 116,000 1111,2611 171,333 181,2611 49,250 68,881 . Mar-15 40,187 41,850 32,000 158,250 179,500 143,333 83,833 140,750 115,000 151,4!!11 181,2!!0 122,51111 47,958 59,500 . Apr-15 52,809 52,6.18 38,t55 159,455 180,808 154,182 83,955 122.727 115,000 157MI 174,818 12UOO 50.855 84,545 . . U-16 J~15 Al~15 All~15 -.15 .... 62,6113 55,083 71Ali5 87,402 61,333 53,813 58,730 59,115 44,887 .., 44,887 42,238 48,878 176,000 178,333 171,887 170,000 189,345 175,411 159,470 1118,583 182,~ 182,8118 141,11187 138,833 134,792 138,187 133,854 78,876 78,833 77,500 77,848 77,273 120,417 110,000 120,833 117P80 113,250 117,(183 171,871i 127,500 174,117 101,538 131,887 97,611 1311,5411 88,798 138,81111 118,333 2115,625 175,411 115,llOO 171,Cl42 122,600 122,51111 117,DI 113,2511 127,51111 63,760 55,333 59,940 89,500 75,515 88,968 ao,ooo 78,488 75,148 87,1183 . . . . 58.872 Od-16 80,883 82.467 61,100 170,333 170,313 149,200 m• 111,200 97,600 146,08.1 1114,683 133,500 78,944 80,826 . ~15 66,731 67,325 57.2118 182,212 11D,194 151,125 77,500 118,120 102,500 170,1211 1118,1811 14.2,500 80,000 n,029 . 0.15 88,800 flfllYIT 81,G91 174,000 190,581 181,808 77,881 121.384 104.773 181.01111 184,773 14.2,500 78.910 79,742 . J•16 70,616 84,942 88,000 168,861 193,322 182,liOO 83,384 129,196 118,818 111111,208 Z01,Cll7 143,1112 88,642 88,276 . Fe•18 66,289 66,122 84,41i5 18',942 1114,083 182,500 11,917 134,880 122,273 145,11511 184,ID! 145.000 71,109 106,7!i8 . Mar-18 58,808 84.428 80,400 185,250 181,4a 171,000 75,887 124,484 125,000 131,817 183,558 157.000 74,733 108,873 . Source: Ministry of lndustry, Trade, and Marketing (MITM). Govemment of Tanzania http://www.worldbank.org/tanzanla/economlcupdate 56 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @¡ Annex 10: Average wholesale prices: Tanzania shillings per 100kg llfonfft.y..,. Jan-12 s... 132,641.S .... 44,259.4 Rlr;e 175,178.1 Round f'o6ftvN 67,193.2 Sotrlfrum 45,585.9 F•12 126,981.7 42,449.1 178,627.8 60,939.2 55,956.3 Mar-12 121,523.1 42,919.4 191,719.2 60,079.6 55,387.4 ADr-12 120,587.1 46,934.9 204,025.4 62,383.3 63,629.9 May-12 128,112.8 52,440.3 183,585.5 70,651.3 80,827.3 Jun-12 129,574.8 52,328.0 185,444.2 89,924.5 85,201.0 Jul-12 130,789.9 52,071.8 180,325.4 79,904.4 58,974.9 Au~12 128,322.8 50,311.1 158,089.2 89,914.8 57,378.6 Ser>12 126,923.2 54,291.1 163,317.9 67,353.8 61,793.2 Oet-12 123,121.1 54,879.9 163,039.9 67,434.9 53,238.6 Nov-12 135,724.2 85,340.6 176,828.6 96,841.5 85,089.4 De~12 139,487.8 72,880.4 185,619.9 85,499.2 75,584.3 Jan-13 144,225.0 78,740.0 188,418.0 82,023.3 75,278.5 Fe~13 138,129.4 n,393.4 182,480.2 76,785.4 85,059.5 Mar-13 128,420.9 72,966.3 175,430.1 88,324.3 88,903.2 Apr-13 124,975.2 88,273.4 159,200.1 84,973.3 82,143.4 Mav-13 123,689.8 55,949.3 139,257.6 65,567.1 93,086.6 Jun-13 127,741.7 49,486.3 131,541.7 65,769.5 85,444.4 Jul-13 125,467.5 50,113.3 128,382.4 67,660.5 105,733.3 Au~13 123,313.3 52,107.8 123,407.5 88,823.2 88,053.9 Ser>13 121,427.0 53,095.0 120,391.0 88,017.0 73,765.0 Oet-13 131,525.1 53,252.0 117,913.9 85,664.0 74,889.2 Nov-14 135,023.0 53,242.4 120,073.1 66,896.2 78,no.4 De~13 136,801.1 54,848.8 121,897.8 69,589.4 74,458.0 Jan-14 137,264.5 56,152.2 124,104.1 72,145.3 75,424.5 Fe~14 137,264.5 56,152.2 124,104.1 72,145.3 75,424.5 Mar-14 141,476.6 50,631.8 128,952.7 69,1n.1 70,264.0 ADr-14 138,798.2 49,970.1 135,418.1 87,985.9 68,285.4 May-14 141,788.7 48,110.8 134,285.8 89,550.7 74.421.2 Jun-14 139,048.S 48,098.8 123,059.8 82,664.0 69,972.3 Jul-14 130,471.S 44,931.7 118,844.3 63,838.5 84,965.8 Au~14 130,655.8 41,414.1 113,291.4 68,420.5 55,512.1 Ser>14 133,969.9 40,551.8 115,674.8 67,112.0 56,082.5 Oet-14 142,283.3 38,020.0 123,561.7 68,639.3 62,631.2 Nov-14 148,785.5 38,189.5 135,082.1 69,846.3 58,268.1 De~14 148,541.0 38,781.3 141,923.1 73,380.5 66,382.8 Jan-15 153,210.0 37,929.0 144,929.0 73,316.0 63,888.0 Fa~15 150,431.0 37,205.0 149,765.0 69,975.0 62,227.0 Mar-15 149,534.0 39,940.0 161,422.0 88,249.0 63,548.0 Apr-15 151,733.2 48,628.0 166,901.5 71,221.0 85,na.1 May-15 156,789.3 47,163.3 162,701.7 n,508.5 69,222.2 Jun-15 163,722.7 47,428.9 155,359.9 n,753.4 69,381.4 Jul-15 158,313.3 52,153.8 153,401.8 71,723.0 67,398.8 Au~15 158,477.3 58,310.0 158,170.5 73,095.8 78.477.5 Ser>15 158,241.3 58,839.9 181,727.1 70,011.2 69,547.8 Oet-15 184,538.8 58,009.3 170,588.5 79,483.4 78,588.1 Nov-15 174,862.7 63,403.9 178,844.3 87,658.8 73,399.1 De~15 172,862.5 85,103.5 178,237.1 82,790.7 81,638.1 Jan-16 173,501.3 67,044.9 178,803.4 78,980.5 85,906.5 Fe~16 171,919.0 67,316.0 184,137.0 n,635.o 92,338.0 Mar-16 158,487.4 64,208.9 178,886.3 n,352.7 91,720.8 Source: Minístry of lndustry, Trade, and Marketing (MITM), Govemment of Tanzania PACE http://www.worldbank.org/tanzanla/econom lcupd ate 57 TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N ,. - __ , . . . . . . . c.i. . . . . . . . . . ,... .... •• •• .- - ... 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'" .. .. .. .. .., '" ~· ..1 "' '" a1 ...... u ~· 61 T-~-· Soun:e: BoT Annex 12: Monetary Aggregates (2007/8- 2014/15) 2G07/08 2008/Cll 20D9/10 2110/11 2111M2 2112113 2113114 2114115 Monetarva M3aa%ofGOP 22.3 29.6 24.0 23.2 23.2 23.1 23.5 23.7 M2as%ofGDP 16.3 16.4 17.9 18.0 17.2 17.0 17.6 16.9 M3 arowth rate (%) 18.1 18.5 25.1 22.0 10.9 14.9 15.8 13.1 M2 grow1h rate (%) 26.5 19.5 26.2 19.4 12.7 14.8 17.7 8.0 Domeatlc c:redlt Total Domestk: credlt (% of GDP) 11.4 13.7 15.3 17.6 17.0 17.8 19.7 21.0 Total domestlc credlt growth ( %) 21.1 42.5 29.2 36.0 14.8 21.1 25.4 19.8 Prtvate Sector credlt { % of GOP> 10.8 11.6 13.5 14.2 14.2 14.4 15.4 16.6 Prívate Sector credit grow1h C%) 38.6 32.8 17.6 24.3 18.6 17.1 21.4 21.0 lnmrnt nas atructu.. Overall Tbllls rate { perlod average, %) 9.7 10.0 3.9 4.5 10.6 11.9 12.7 10.3 Average lending rete(%) 15.4 15.1 14.7 14.8 15.1 15.8 16.2 16.0 Averaae deaaait ratee%) 7.8 6.6 5.3 5.8 7.2 8.8 8.7 8.4 Source: BoT, IMF http://www.worldbank.org/tanzanla/economlcupdate 58 The World Bank Group Macroeconomlc1 and Flscal Management Globol Practico Afrlca Reglo• @¡ Annex 13: National debt developments PACE http://www.worldbank.org/tanzanla/econom lcupd ate 59 @ TANZANIA ECONOMIC UPDATE M Ay 2o1 6, 8 TH ED 1T1 o N Annex 14: Poverty by geographic regions Distribution Povarty Disbibution oftha Headcount ofthe Poor Populatlon HBS 2011/12 HBS 2011/12 HBS 2011/12 Baste Needs Povetty Llne/1 = TSh 36,482 Urban 15.5 15.9 28.8 Rural 33.3 84.1 71.2 Regions Urban 21.7 14.4 18.7 Rural 33.3 84.1 71.2 Dar es Salaam 4.1 1.5 10.1 Total 28.2 100.0 100.0 Food Poverty Line/1 = TSh 26,085 Urban 6.0 17.7 28.8 Rural 11.3 82.3 71.2 Reglons Urban 8.7 16.7 18.7 Rural 11.3 82.3 71.2 Dar es Salaam 1.0 1.0 10.1 Total 9.7 100.0 100.0 Source: NBS 1/ Monthly expenditure per adult http://www.worldbank.org/tanzanla/economlcupdate 60 • • •• • ••••••• •• •• •• •••••••••••••• • •••••••••••• • • • • • • •••••• • • • • • • • • • • • • • • • • • 1 •• • • • • • • •••••• • ••••••••••••••••••••• 1 •••••• • ••••••••••••••••••••••••••••••• 1 •••••• • • • • • • • ••••••••••••••••••••••••• 1 ••••••• • ••••••••••••••••••••••••••• 1 •• •••• • •••••••••••••••••••••••••••••• 1 •• •• • • • • •••••••••••••••••••••••••••••••• 1 •• ••• • • • •••••••••••••••••••••••••••••••• ••••••••••••••••••••••••••••••••••••••••• 1 1 • • • • ••••••••••••••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••••••••••••••••• 1 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••••••••••••• 1 • • • • • • • • • • • • • • • • • • • ••••• ••••••••••••• 1 ••••••• •••••••• ••••••• •••• • •••••••••••••• 1 •••••• • • • • • ••• • • • • • ••• • ••••••••••••• 1 ••••• • • ••••••••••••• • ••••• • ••••••••••••• • •••••••••••• 1 1 •••• •• •••••••••••• • •••••••••••• 1 ••••••• • ••••••••••••••••••••••• 1 ••••••••• ••••••••••••• • • ••••••••••••••••••••••• •••••••••••••••••••••••• 1 1 ••••••••••••••• ••••• • ••••••••••••••••••••••••• 1 ••••••••••••••••••••• • • • • • • • • • • • • • •••••••••••••• 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • •••••••• • ••••••••••••• 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••••••• • • • • • ••••• 1 ••••••••••••••••••••••••••••• •••••••• • • •••• 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ••••••••••• • ••• 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •••••••••• • • 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •••••••• ., • • 1 •••••••••••••••••••••••••••••••• • •••••• ., • • 1 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •••• • • 1 •••••••••••••••••••••••••••••••••• ••• ••••••••••••••••••••••••••••••••••• •••••••••••••••••••••••••••••••••• • ••••••••••••••••••••••••••••••••••••• ••••••••••••••••••••••••••••••••••• • •• •• ••••••••••••••••••••••••• • ••••••••••••••••••••• ••••••••••••••••••••• •••••••••••••• ••••• • • • • • • • • • • • • • • ••• ••••••••••••••••• •••••••••••••••• •••••••••••••••• •••••••••••••••• ••••••••••••••• ••••••••••••••• •••••••••••••••• • •••••••••••••••• • •••••••••••••••• • •• •••••••••••••• • •• ••••••••••••• •• •••••••••••• •• •••••••••••• •• •••••••••• • •••••••••• •••••••••• •••••••• ••••••• •••• @woRLDBANKGROUP http://www.worldbank.org/tanzanla/economicupdate