Africa Water, Sanitation & Hygiene 2014 Sept - Oct Vol. 9 No.5 | Page 25

Water Supply
access sanitation services”, says Chacha.

Tanzania Overview

Water stewardship
Tanzania is also a pilot country for so-called water
stewardship approaches that involve the wider business
community. A high-profile champion of the approach
is the Water Futures Partnership (WFP), a cross-sector
alliance that counts GIZ, environmental charity WWF and
global brewer SAB Miller among its founding members.
“Companies are seeing that they are beginning to face
complex water risks that they can’t manage on site, like
groundwater pollution across the city affecting many
businesses and communities”, says Robin Farrington, a
water stewardship adviser at GIZ.

Economic Overview: Performance and Outlook
In 2012 and into 2013, the Tanzanian economy expanded
at an annualized rate of approximately 7%. A World Bank/
KPMG survey in November 2013 showed that 55% of the business
managers of the top 100 mid-sized companies in Tanzania feel that
the economy is performing better in 2013 than in 2012, while 26%
feel it is the same compared to 21% who said that it is now worse
than in 2012.
The main drivers of Tanzania’s rapid economic growth
continue to be a small number of fast growing, capital
intensive sectors, particularly the communications, financial
services, construction, manufacturing and retail trade
sectors. The service sector, driven by the expansion of transport,
communications, retail trade and financial services, recorded the
highest rate of annual growth in 2012, at 8.0%. By contrast, labor
intensive sectors, particularly the agricultural sector, in which
approximately 80% of households are primarily engaged, recorded
an average annual growth rate of only 4.2%. Similar trends, with
higher rates of growth recorded by the less labor intensive sectors,
were observed across the board during the first two quarters of
2013.
The inflation rate continued to decline in 2013, reaching a rate
of 6.3% by October 2013. At the end of 2011, the inflation rate
had reached almost 20%. This steady and significant decline has
been the result of a combination of the implementation of stricter
monetary policy and a decline in food and energy prices. As a result,
Tanzania’s rate of inflation is now roughly equivalent to that of
neighboring Uganda and Kenya. The decline has also contributed
to the stabilization of the real exchange rate, which appreciated by
almost 20% in 2011/12 as the result of the large inflation differential
between Tanzania and its trade partners. This stabilization of the
real exchange rate also has positive implications for exporters.
The most significant transformative factor on the economy is
the large natural gas reserves that were recently discovered.
If managed well, these gas reserves have the potential to transform
Tanzania’s economic future. While the most significant impacts of
this discovery on the local economy will not be felt for at least seven
to ten years, when exploitation will start at full scale, the discovery
will nonetheless drive increased economic activity during the
construction phase. In the long term, the magnitude and timing of
the impact of the discovery remain uncertain. Careful management
of the revenues derived from the newly discovered natural resources
will be required to ensure the optimal use of these revenues and to
achieve inclusiveness.
In the meantime, if Tanzania is to follow the example of
successful emerging countries, it will need to improve policy
aspects in the areas of human development (Tanzania is
currently ranked 152nd out of 182 countries on the HDI index); its
business environment (134th out of 185 countries); and government
effectiveness (135th out of 212 countries). For the last two
indicators, Tanzania’s ranking has deteriorated over recent years.
The Tanzanian Government has implemented a relatively
tight monetary policy to reduce monetary expansion and
has increased guiding interest rates. While this helped to
reduce inflation, it resulted nevertheless in increases to the cost
of credit, imposing increased burdens on borrowers and thereby
negatively impacting the expansion of the real economy. However,
the magnitude of this negative impact may not be dramatic, as the
ratio of total credit to GDP was only 24.8% in 2012, compared to
a figure of more than 130% in emerging counties such as Thailand
and Malaysia.
Source: World Bank Last Updated: Apr 09, 2014

An illustrative case in point is the Southern Agricultural
Growth Corridor of Tanzania (SAGCOT), a vital foodgrowing region. A substantial coalition of government
agencies, charities and corporations, including brands such
as Nestlé, Olam and Bayer, is working to promote a more
sustainable approach to farming in the area. Among other
interventions, the SAGCOT alliance plans to implement
eight major irrigation schemes across the area’s three
principal water basins.
For its part, WFP is engaged at a smaller scale. In
conjunction with a range of local partners, it recently
embarked on a €192,000 (£153,000) project to restore the
polluted Mlalakua River, located in the north of Dar Es
Salaam.
“It’s early days for the public-private partnership concept
in Tanzania, but it’s vital because we all know that donorfunded projects are evolving into something different
these days”, says Tania Hamilton, director at Nabaki
Afrika, a local construction firm and (along with South
African bottling company Coca-Cola Sabco) one of the
project’s key corporate sponsors.
Hamilton concedes that progress has so far been slow.
Public awareness remains a big problem. After decades of
dumping waste into the river, local residents fail to see it
as an issue, she states. Lack of trust between business and
government represents an obstacle too, as does lack of
manpower and expertise on the