Download Evident contribution of the Private sector in the country`s economy

Tanzania Private Sector Foundation
Presentation to DPG Main
By TPSF Executive Director
Godfrey Simbeye
Dar es Salaam - May 27th, 2014
1
Agenda
1
Evident contribution of the Private sector in the
country’s economy
2
Stipulation of the Vision of the Vision 2025 and the
National Development Agenda
3
Role of Government in Facilitating the Private Sector
4
Enterprise Development and Role of TPSF
5
Role of DP’s and Way forward
Evident contribution of the Private sector in the country’s
economy
For over past 10 years, the private sector in Tanzania has played its natural role of
stimulating this country’s economy.
Since the Government’s divestiture in 1990s, the private sector has played a huge
role in not only pushing for economic reforms, but also in actual contribution in
projects and investments in various sectors
The private sector has made tremendous investments and impact on various
sectors that include transportation, power and energy, financial services,
agribusiness, mining, manufacturing, tourism, etc.
Today, we celebrate the economic growth of 7%, largely contributed by the
growing private sector in Tanzania
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Private sector
contribution
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No. of banks in
TZ
1,362,559
Total employed in the
formal sector
(63.1% in the private
sector)
No. of
insurance
companies in in
TZ
22
Number of private
universities in TZ
USD 11 billion
Mobile
transactions in
2012
2678
Number of
primary &
secondary
schools
3
Evident contribution of the Private sector in the
country’s economy
With only two (3) banks, namely Twiga Bancorp, Tanzania Postal Bank (TPB) and TIB, wholly
owned by the government, and owning shares in other few banks, the contribution of
government banks wouldn’t have given such a tremendous contribution to the growth of
financial sector in the country, with more 50 banks now, owning more than USD 10 billion of
assets, bank lending is more than USD 5 billion to the private sector, which is roughly more than
15% of the GDP.
EcoEnergy Africa AB is investing
over USD 500 million (TZS 800
billion) into a sugarcane plantation
and a factory producing sugar,
ethanol, and power in Bagamoyo.
Public financing needs are
estimated at USD 1.7 billion
(about 5% of GDP) annually to
address infrastructure
challenges.
SACGOT corridor anchors 110
million Euros agricultural
investment in Tea
TZ needs of private sector USD
4.13 billion (TZS6.5 trillion)
investments to improve Tanzania’s
central transport corridor –
1,591km connecting Tanzania,
Burundi, Rwanda, DR Congo, and
Uganda.
Tanzania Petroleum
Development Corporation
(TPDC) expects gas reserves
to reach 200 trillion cubic
feet until 2017.
Tanzania to
commercialize Gas
by 2020
All these
need
the
private
sector
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Stipulation of the Vision of the Vision 2025 and the
National Development Agenda
The Tanzania Development Vision 2025 state clearly the role and contribution of the
private sector in economic transformation of this country.
The question is no longer whether the Government and Development Partners
should engage with the Private Sector, BUT rather the issue is ‘HOW’ to ‘ENGAGE’
Tanzania 2025 Development Vision: Achievable?
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Stipulation of the Vision of the Vision 2025 and the National Development Agenda
⌂ Under Section 3.3 of the Vision, such a resilient economy is expected to have the
following characteristics:
“a diversified and semi-industrialized economy with a substantial industrial sector
comparable to typical middle-income countries…;
a growth rate of 8% per annum and more than 10% after 2016-2025;
an adequate level of physical infrastructure needed to cope with the requirements
of the Vision in all sectors; and
an active and competitive player in the regional and world markets, with the
capacity to articulate and promote national interests and to adjust quickly to
regional and global market shifts”.
⌂ All of the above anticipates the contribution of the private sector in production of
goods and delivery of services, in so doing the private sector will to a great extent
promote economic growth hence compliment initiatives to alleviate poverty
⌂ Real life examples happening in Tanzania
 A case in education sector and health sectors (efficiency of the private sector
delivery compared to public sector)
Have we considered all the implications? This refers to the beneficial conditions
attached to the business that at the end of the day is profit making. As such the
Government could earn revenues through taxes
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Stipulation of the Vision of the Vision 2025 and the National Development Agenda
Role of FDI’s in building capacity of the local private sector
FDI influences growth by raising total factor productivity and, more generally, the efficiency
of resource use in the recipient economy.
This works through three channels:
the linkages between FDI and foreign trade flows,
the spill-over and other externalities vis-à-vis the host country business sector
e.g. Technology transfers are an important aspect of Multinational National
Enterprises(MNE) presence, particularly through vertical linkages
the direct impact on structural factors in the host economy
MNEs generally are found to provide technical assistance, training and other
information to raise the quality of the suppliers’ products, modernising/upgrading
production facilities etc
FDI is crucial for economic development but is not enough on its own.
Public and private actors must work together to create an enabling environment to ensure
knowledge transfer and foster economic growth.
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Role of the Government in Facilitating the Private Sector
The Government Role as a facilitator to achieve TDV2025
Promotion of pro-growth macroeconomic stability,
Ensure Government responsiveness and speed of making
decisions
Promoting a conducive business environment
aggressive investment promotion
proper land use planning
ensuring environmental sustainability,
good political and economic governance,
property rights management.
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Are we doing better?
A
Despite all these contributions made by the private sector, more still
needs to be done to unlock and develop the potentials that this country
offers
Tanzania is staged to become one of the gas economies in Africa, attracting billions
B of investments crucial for transforming the socio-economic landscape of the
country. But achieving this blessing, the role of private sector is not only crucial but
also inevitable.
Access to power is still below 30%
Less than 17% of Tanzanians have access to formal financial services
 less than 5% of Tanzanians are able to reach the university level
C Despite Tanzania being the second on the list with natural attractions after Brazil,
we still have less 1 million tourists a year
More than 30% of post-harvests goes into waste
 28.2% of Tanzanians live in poverty (Household Budget Survey)
D
E
All these require a crucial and active role of the private sector to make a potential
transformation, that will not only bring desirable returns, but also improve the
socio-economic conditions of the people.
But the private sector is diverse, many players, both domestic international, small
and large, sector by sector, this is where the role of TPSF is paramount in organizing
them and act as an advocate for a better business environment for them to operate
Tanzania has
about 46.5
Trillion Cubic
Feet of Gas
discoveries
25.8m
Mobile
users in
Tanzania
241
hospitals
in TZ
(2012)
145
Tanzania’s
rank in WB
doing business
report in 2014
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Enterprise Development and the Role of TPSF and other PSO’s
Unlocking these economic potentials, and facilitating the role or private sector in playing the crucial role,
TPSF is positioned to act not only as a link but also as an enabler for the ideal business environment, with
pushing for the right policies in place. This is not a NEW or rather an ALIEN role for TPSF to play, we have
done it before, we are doing it, and we are positioned to do even more given the SUPPORT of DP’s.
For the enterprise development and growth of Private Sector in Tanzania, TPSF has succeeded in doing the
following;
The implementation of Business Development Gateway, which was a huge success. Establishment of TECC
Lobbying and advocacy for a number of policies and government programmes which were dwindling the
role of private sector. KILIMO KWANZA etc
Participation in “Big Results Now” programme
Local content policy
And now TPSF is preparing other ambitious programmes which help transform the private sector,
some of which include
 Continued advocacy for meaningful locals participation in the economy
 Fighting corruption in the private sector through Business Action Against Corruption
 Enterprise Growth and Creation Monitoring Programme
 Association for Private Equity and Venture Capital in Tanzania
Skills development and Youth empowerment
Role of TPSF in
enterprise growth
in TZ
Annual sales of
enterprises
supported by TPSF
MGP increased
from TZS 4.4b to
8.9b
Capital of these
enterprises
supported by
TPSF grew from
TZS 3b to 7b
Assets of these
enterprises
grew from TZS
12.5 to TZS 17b
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How can we achieve broad-based economic
growth?
TPSF believes that Enterprise Development is the key ingredient to Broad –based
Economic Growth and Poverty Alleviation
Promotion of enterprises in particular the MSMEs in augmenting resources
mobilization base in the country
HOW
The role of innovation in addressing challenges in productivity and
competitiveness
The relations between large corporations and SMEs
Evaluation policies: assessment and impact
Some success stories of innovation
Barriers and difficulties for innovation and competitiveness in SMEs
Key factors to take into consideration in the design of innovation
Empowerment Programmes for local SME’s as a source of sustainable job supply,
economic shocks stability and political stability.
Formalization and firm level competitiveness
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Role of DPs
We believe that enabling the private sector to
become the engine of growth in this economy,
multilateral partners need to work and compliment
each other.
Technical
support
Funding
support
These include the Government, TPSF, Development
Partners, and the private sector players.
DPs
DPs have been making tremendous and
commendable contributions for the development
of private sector in this country.
We believe, DP’s direct support to local private
sector can make the private sector an engine for
growth and bring about necessary changes for the
lives of the people of Tanzania.
Tanzania to receive TZS 6
billion from Japan for
Agricultural development
Lobbying
and
advocacy
Program
partnerships
Tanzanian Railway
Receiving USD 300
Million Funding From
WB
The German Government is
funding a USD 27 Million
Power Line in Tanzania that
will provide access to
electricity for 32,500
households in rural areas
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THANK
YOU
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