Dar es Salaam. The Public-Private Partnership Centre (PPPC) is urging Tanzania to broaden its public-private partnerships (PPPs) and enhance domestic tax revenues in light of a potential freeze on foreign aid from the United States.
Recently, the U.S. administration has signalled a suspension of foreign aid, primarily managed through its international assistance programs. This move is part of a comprehensive strategy to restructure U.S. foreign policy and utilize taxpayer funds effectively to further American interests.
The implications of this decision are significant across Africa, particularly in crucial sectors such as health and education in Tanzania. Programs aimed at eradicating polio and providing HIV/AIDS treatment have seen interruptions, putting millions of lives at risk.
During a recent live broadcast, the PPPC executive director highlighted that the adverse effects of the U.S. aid freeze could be alleviated by fostering stronger PPPs and improving domestic revenue collection. He emphasized that the U.S. wields considerable influence over global financial institutions, making shifts in its economic policy impactful worldwide.
The director noted that Tanzania’s dependency on foreign aid has been gradually decreasing since the early 2000s and stressed the necessity of further reducing this reliance. He proposed the expansion of PPPs as a vital strategy for bridging the funding gap.
“Encouraging more PPPs will attract private investment, decrease reliance on foreign aid, and allocate public funds to essential sectors such as healthcare, education, and water supply,” he stated. This approach, he argued, would also facilitate a more efficient use of domestic tax revenues.
For example, investing in critical infrastructure could lessen the need for U.S. aid previously designated for health and education initiatives. Greater private sector participation in project execution could similarly alleviate potential declines in global funding due to U.S. policy changes.
“Once companies invest in partnership with Tanzanian firms, the nation’s tax capacity will strengthen, thus increasing financial resources for vital sectors, including health and education,” he pointed out.
He stressed that Tanzania needs to pursue economic self-reliance by diversifying its income sources and investment avenues. This strategy aligns with the country’s National Development Vision 2050, which aims for the private sector to be the primary engine of economic growth.
To reach these goals, ambitious infrastructure and industrial projects, particularly in the energy sector, are crucial. “Tanzania must boost electricity generation from the current 5,000 megawatts to accommodate the demands of a growing populace and support an anticipated $700 billion economy by 2050,” he declared.
He underscored that this targeted economic growth would be approximately one and a half times the current economy of South Africa. However, he cautioned that substantial investment is needed for large-scale projects and that tax revenues and loans alone will not be adequate.
He cited examples from countries like France, the U.S., and the UK, where the private sector has successfully spearheaded major infrastructure projects, with the public sector ensuring regulatory oversight. “In the next 25 years, we aim for an 8 percent annual growth rate, with the private sector playing a key role in achieving this goal,” he concluded.
