Dar takes measures to boost private sector

THE Government of Tanzania, acting through its Ministry of Finance & Economic Affairs is in the process of taking measures intended to promote the development of the private sector in the country. This is in a bid to curb increasing global business competition. Reportedly, the proposed measures would financially empower stakeholders in the sector to increase production capacities to the required levels and enable them overcome stiff conditions in their day to day operations. Tanzania's private sector is faced with lots of challenges, including lack of funding. This has been a major contributor to the poor development of the sector in general, which employs over 80 per cent of the national workforce! Having realized the importance of the sector and its contribution to the national economy, the Government has pledged to create a conducive business environment, with the view to help the sector to grow. Apart from financially empowering the sector, the Government is formulating ways to create a conducive working environment so that they produce more for the benefit of the nation. Former Minister for Minister for Finance & Economic Affairs, Mustapha Mkulo, said in Dar es Salaam recently that many entrepreneurs fail to perform to the maximum due to lack of capital. Plans are under way by the government to help stakeholders borrow money from the African Development Bank (AfDB), said the Minister, adding that this would also strengthen Public-Private Partnership (PPP). The government, in collaboration with the Tanzania Private Sector Foundation (TPSF), has been organizing sensitization seminars with AfDB aimed at the stakeholders of Small and Medium Enterprises (SMEs). The workshops come at opportune time: the preparatory sessions for the coming business opportunity to be organized as a side event of AfDB's annual meeting scheduled to take place at Arusha at the end of May this year. The meeting will bring together many of the world's business leaders and financial stakeholders including government's finance ministers, governors of the central banks of 55 countries across Africa, and 11 presidents from the selected countries. The AfDB has 24 member countries. Its main objective is to finance ― together with bigger projects ― SMEs' development initiatives. Mkulo is the current chairman of the bank. Mkulo has urged the SMEs in the country to seek bigger loans from the bank to enable them run their daily business activities, asking private sector operators to make use of this opportunity as chairman of the member states. “It wouldn't be good if I approve credit facilities for stakeholders from other countries and leave out stakeholders of my own country,” he said, urging private sector stakeholders in Tanzania to come up with tangible projects. He also challenged the Tanzanian business community to come up with bankable projects to attract the AfDB into disbursing loans to entrepreneurs. “Tanzania's private sector should take this opportunities availed by the AfDB to realize their entrepreneurship dreams,” he stated. In the event, the Government has reassured the AfDB of its support for projects for which the public sector will request funding. In another development, TSPF has requested the Government to strengthen its commitment to financial sector reforms and to ensure that the business community has access to capital. According to resident representative of the AfDB, Ms. Tonia Kandiero, some of the work that the bank is doing in Tanzania is to set the background for sensitization seminar on the bank's activities in the country. Almost 99 per cent of the bank's current operations in Tanzania are focused on road transport, agriculture, water and sanitation, power, health and education, as well as general budget support. Currently, the bank has a portfolio of 16 projects with a total commitment of US$1 billion (Tsh1.6 trillion). Of these ongoing projects, the bank has only two private sector operations to the tune of US$14 million, namely: equity stake in Access Bank-Tanzania, and a 10-year non-revolving partial credit guarantee facility provided by CRDB Bank Ltd. Recognizing the existing imbalance between the public and private sector assistance to Tanzania, it is important to note that many of the public sector operations are directly helping to address some of the constraints facing the private sector in Tanzania: high transport costs, power shortages and lack of skilled labour.

Former Minister for Finance and Economic Affairs , an MP for Kilosa constituency, Hon. Mustapha Mkullo in one of the press conferences in Dar es Salaam, before the recent cabinet reshuffle. AfDB will support initiatives to address the shortages of skilled labour through a US$50 million project to take effect in 2013. The project will focus on skills improvement that will be driven by the needs and demand of the private sector. The project also will ensure that, the Vocational Education Tanzania Authority (VETA) and other relevant entities are better able and equipped to deal with emerging skills requirements in a timely manner. The private sector is now widely acknowledged as a key partner in development, including through establishing new enterprises, creating jobs, providing jobs and services, generating income and profits and contributing to public revenues which are crucial for increasing countries self-reliance and sustainable growth. Among the many issues that the private sector resolved was the decision to request the government to strengthen its commitment to the financial sector reforms and ensure the business community has access to capital which is pivotal to accelerated economic growth and will ensure that the private sector is indeed the engine of economic growth. There is a need for AfDB to promote its activities and private sector operations to be known to many Tanzanians, and TPSF to step up dialogue with the government in issues related to guarantees and long term financing strategies. TPSF has encouraged the Tanzanian business community to come up with a list of projects that can be eligible for AfDB funding. Human capital is one of the drivers of economic development which includes power, infrastructure, agriculture and manufacturing sector especially iron and steel as well as agro-processing industries. Meanwhile, The African Development Bank has approved US$250 million for road construction projects in Tanzania and Sierra Leone. Under the approval made by the Bank's Group Board in Tunis a fortnight ago, Tanzania will receive US$216 million loan to finance Phase Two of the country's road sector support project.