The private sector in
Tanzania has become a source of employment by creating 1.5 million jobs which
is equivalent to 64.2% and reiterate as an engine for the country’s economy.
Speaking at the
International Venture Capital and Private Equity Financing Conference last week
in Dar es Salaam, the Vice President of Tanzania, Dr Mohammed Gharib Bilal said
that for a period between 1994-1995 the government divested about 150
enterprises out of 385, about 40% to private enterprises.
“This was done with
the government expecting the private sector to bring in more efficiency, more
production, more tax revenue, and most importantly more jobs for our people,”
he said.
He said that the government
sees a noticeable private sector investment in the financial sector where they
have more than 50 banks today and more than 2,000 primary and secondary schools
have been built by the private sector.
Dr Bilal added that
the Tanzanian economy is growing at an annual rate of 7% driven by many factors
and also including the private sector.
“Other encouraging
data include an increase in Foreign Direct Investment project which have
increased from 869 projects in 2012 to 957 project in 2013,”
“This indicates the
confidence that investors have in the economy both domestic and foreign
investors in Tanzania,” he added.
He further noted that
despite these encouraging pictures there are a number of challenges that they
have been experiencing for instance access to affordable and long term finance
has remained elusive.
Dr Bilal said that in
the year 2006, they passed the Banking and Financial Institutions Act which has
transformed the financial and the banking sector that led to the establishment of
more than 50 operating banks with (Tsh 10 trillion) worth of asset lending more
than (Tsh 5 trillion) to the private sector.
He explained further
that the government is aware that the lending to the private sector is more
than a number, they understand that is expensive, it is short –termed, and it
has become a burden to small and medium sized enterprises.
“With the interest
rate ranging between 18% to 25% charged on loans, it is of no doubt that we
cannot achieve the envisaged economic growth driven by the private sector if we
cannot find ways to lower these rates,” he clarified.
Dr Bilal called upon
private sector in Tanzania to join their efforts together and team up with
foreign investors to invest in the oil and gas industry while ensuring win to
win situation.
On his part, the
Chairman of the Tanzania Private Sector Foundation (TPSF), Dr Reginald Mengi
said that the focus of the forum is to create awareness about venture capital
and private equity and how these non banks sources of finance operate internationally
and in Tanzania.
He said venture
capital and private equity are mechanisms whereby private investors provide
finance to a company in exchange for shares in that company.
“it is a fact that
Tanzania’s economy continues to achieve sustained growth at a rate which is
above the global average,” he said.
Dr Mengi said that
the venture capital provide an opportunity for the Tanzanian private sector and
foreign investors to work together in a win-win situation where they both
benefit.
According to him,
February this year, the African Development Bank (AfDB) announces that it would
contribute $50million towards a fund of the US-based Carlyle Group which plans
to invest at least $500million in Sub Saharan Africa.
He said in the 15
months from January 2011 to March 2012, eight new funds focusing on East and
Southern Africa were launched; East Africa alone has 16 dedicated private
equity funds out of 53 active funds in the East and Southern Africa region.
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