Why PPP are central to $700 billion GDP target

“By increasing capital through coordinated public-private partnerships, we enhance tax capacity because these projects generate revenue,” he said.

He continued that these partnerships also help to reduce government expenditure that would otherwise be entirely borne by the state.

Leveraging private sector resources, efficiency, and technology can enable Tanzania to achieve sustainable growth—something that many nations around the world are beginning to realise.

According to the Controller and Auditor General (CAG), Charles Kichere, Tanzania’s national debt has risen significantly, reaching Sh 97.35 trillion in 2023/24, compared to Sh 82.25 trillion in 2022/23—an 18.36 per cent increase.

Furthermore, external debt accounts for Sh 65.40 trillion, while domestic debt stands at Sh 31.95 trillion. Despite these figures, Mr Kafulila remains optimistic that Tanzania’s debt levels are manageable when compared to other East African countries.

Mr Kafulila believes that PPPs present a sustainable alternative to financing large-scale infrastructure projects without over-relying on borrowing.

He has championed greater involvement of the private sector in public infrastructure projects, noting the benefits of modern technology, efficiency, and quicker project delivery. “Increasing private sector participation in public projects is vital, especially as we look to create a $700 billion economy,” he said.

He added: “Such an economy cannot be built on borrowing and taxes alone. Strategic partnerships are essential, as they inject much-needed capital into the economy.”

The PPPC currently oversees over 84 PPP projects, including the $340 million Kibaha-Chalinze road and a $1 billion ring road project. In September 2024, Kafulila led a delegation to India’s PPP Centre to learn from successful models, particularly in the aviation sector.

“This visit was part of efforts to leverage Tanzania’s strategic location as a gateway to Africa and to attract investment in the country’s aviation infrastructure,” he said.

Mr Kafulila also highlighted that, alongside PPPs, anti-corruption measures are crucial to saving public funds. He referred to recent audits by CAG Kichere, which revealed inefficient expenditures amounting to TSh 371.42 billion in 12 out of 217 state-owned enterprises.

The funds were used on activities that did not add value to the institutions. These inefficiencies, Kafulila noted, could be avoided through improved governance and accountability. “When you improve efficiency and accountability, you prevent losses that could have otherwise occurred. This is the reality we need to focus on as a nation,” he explained.

In addition to promoting PPPs, Kafulila underscored the importance of involving local companies in development projects. He argued that local participation not only boosts the economy but also ensures that the benefits stay within the country.

“When you build the economy using local partnerships, you inject capital into the economy because these partners are domestic. The money they earn stays in the country, unlike foreign investors who repatriate a significant portion of their earnings,” he said.

He also pointed out that, according to Tanzanian law, when evaluating companies for PPP projects, local firms are given priority over foreign ones. “This decision is not only for political reasons but also for economic reasons, as the revenue generated from these projects will circulate locally,” he said.

The need for PPPs, Kafulila explained, stems from Tanzania’s need to meet the demands of its citizens for essential services such as clean water, healthcare, education, and infrastructure.

These services, he noted, require substantial investment that cannot solely be funded by the government.

“Public-private partnerships help reduce the competition for government funds, allowing the government to focus on areas where private investment may not be attracted. For instance, investments in health, education, and social services for the most vulnerable populations,” he shared.

He noted that PPPs are long-term contracts between the government and the private sector to deliver projects or services that have mutual benefits for both parties.

The government engages the private sector through these agreements to fulfil its obligations without solely relying on public funds.

He also identified three key reasons for the government’s focus on PPPs: attracting private sector capital, leveraging technology and expertise from the private sector, and bringing in specialised management skills that are often more advanced in the private sector compared to the government.

“Why do we focus on public-private partnerships? There are three main reasons: we want to attract private sector capital to perform tasks traditionally handled by the government, to bring in technology because the private sector has advanced beyond what the government can achieve, and to bring in professional management skills,” he said.