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The African Development Bank Group (AfDB) will support Tanzania’s economic transformation to inclusive and green growth with an indicative concessional resource assistance package estimated at over US $1.1 billion over a five-year period.
The support package is contained in the Bank’s 2016-2020 Country Strategy Paper (CSP) for Tanzania, which will guide the Bank’s operations in the country in the next five years. The CSP was approved by Bank’s Board of Directors on Wednesday, February 24, 2016 in Abidjan, Côte d’Ivoire.
While commending Tanzania’s robust GDP growth which has exceeded 6% since 2001, the Board said future assistance would address the most pressing constraints to economic transformation and improving public sector governance to ensure value for money in public spending.
Thus, the CSP is built on two complementary support pillars – infrastructure development for inclusive and green growth; and strengthening governance and accountability for improved competitiveness.
The first pillar emphasizes support to transport and energy to promote domestic and regional transport connectivity, and improve access to reliable, affordable and sustainable electricity; while the second pillar prioritizes strengthening of financial management and improving the enabling environment for private sector investment and finance for sustainable job creation.
“Investment interventions from the Bank’s private sector window will be complementary and aimed at improving enterprise access to finance, in particular businesses engaged in smallholder agriculture, agri-business and related value-chains. Non-lending operations will be targeted at providing capacity building, technical assistance and advisory services to improve domestic resources mobilization (DRM) and the negotiation of commercial transactions in the oil and gas sector,” according to the CSP papers presented to the Board.
In order to effectively consolidate the Bank’s contribution to Tanzania’s development, the CSP 2016-2020 introduces innovative infrastructure investments that aim at transforming operational regions into sustainable development corridors. It also mainstreams the Bank’s 2013-2022 Ten Year Strategy priorities such as inclusive and green growth, gender equality and empowerment. It aligns the strategy with the High 5 Priorities (Light up and power Africa, Feed Africa, Industrialise Africa, Integrate Africa and Improve the quality of life for Africans) and the country’s Social Development Goals (SDGs). Application of innovative financing instruments, such as local currency bonds and guarantees that can be used to de-risk lending to sectors like agriculture to augment African Development fund (ADF) and AfDB resources windows, also forms part of the package.
The CSP provides for a cumulative 2016-2020 indicative concessional resource envelope of US $1.1 billion (UA 791 million). Additional resources will be mobilized from the AfDB window, Africa Growing Together Fund, trust funds, renewable energy financing and co-financing with other partners.
The Bank Group’s portfolio in Tanzania comprised 29 operations with total net commitment of US $1.97 billion (UA 1,427.6 million) as of 30 November 2015. The portfolio consists of 15 public sector operations, 4 private sector operations and 10 multinational operations. Infrastructure (transport – 44%, energy – 5%, and water – 16%) accounted for 65% of the portfolio in value terms. Social sector accounted for 5%, agriculture 3%, multisector 4% and multinational operations 16% (79% of which are in energy and transport). Private sector operations accounted for 7% of the overall portfolio.
Board members underscored the need for Tanzanian authorities to ensure that the country’s high GDP growth delivers robust economic transformation, poverty reduction and improved livelihoods.