THE economy of Tanzania is set for a major boost through the four-year National Grid Stabilization and rural electrification projects to be undertaken countrywide as the country aims at attaining middle-income economy by 2025.
Through the National Grid Stabilization project, the government plans to spend 1.7tri/- during the first year of its implementation and a total of 4.42tri/- during the next four years as well as additional 385bn/- for rural electrification projects across the country.
Reacting to the development during telephone interviews with ‘Daily News’ yesterday, economic analysts said the projects will ensure reliability of power supply and processing of agricultural produce in rural areas.
A seasoned economist and former Executive Director of Economic and Social Research Foundation (ESRF), Dr Bohela Lunogelo, was of a view that the initiatives will play a crucial role in creating jobs and establishment of agro-processing industries.
“The projects are in line with Tanzania National Development Vision 2025, which aims at making Tanzania an industrialised economy. The vision can only be attained through reliable and affordable power supply,” Dr Lunogelo stated.
The economist noted further that since the initiatives will create jobs for young people in rural areas they will as well address rural-urban migration.
For his part, an economist and lecturer at University of Dar es Salaam (UDSM), Prof Humphrey Moshi, said the projects will attract more investors through reduction of production costs which are caused by frequent power outages.
The power projects provide an opportunity for an industrialised economy as stipulated in the Third Five-Year Development Plan 2020/2021-2025/2026, which is part of Tanzania National Development Vision 2025, he remarked.
Prof Moshi was optimistic that that implementation of the projects in addition to the ongoing construction of Julius Nyerere Hydropower Project (JNHPP) along Rufiji River will provide the country with reliable and affordable electricity.
“Such projects will also provide power to facilitate irrigation farming and eventually improve household incomes,” he observed.
The Executive Director of an economic think-tank, REPOA, Dr Donald Mmari, pointed to the fact that frequent power disruptions have been a major challenge facing investors in the country.
“Implementation of the projects will, hence, be a big boost to the economy since they will stabilise the national grid and address frequent disruption of power supply,” he noted.
The Head of Research and Financial Analytics at Alpha Capital, Mr Imani Muhingo, said the envisaged projects to stabilise electricity supply is very important in supporting industrialisation.
“We know power is the back bone of industrialisation. Last year, cement production from Tanga Cement was disrupted by power cuts, limiting value to shareholders.
“Moreover, stable power supply shall lift the import burden of generators and fuel to power generators,” he commented.
A renowned economist-cum- investment banker, Dr Hildebrand Shayo, national grid stabilisation and enhanced power connection will have huge economic impact to Tanzania.
“Many people do not realise this but from an economic point of view, stabilisation of the national grid offers significant direct economic benefits although in some cases require significant economic and financial outlays.
“Initiative taken will also potentially bring many indirect economic benefits. In fact, what Tanzania has witnessed of signing of the contracts when completed will allow optimum use of available resources,” he remarked.
Dr Shayo pointed out that the projects will be instrumental in achieving reductions in the operation costs of electricity generation, increasing capacity margin and conversely reducing the need for investment in peak capacity.
“This from an economic point of view will also have impact on rates to the customer’s advantage since improved electricity reliability will foster an increase in quality of service and reduction in power interruptions.
“The power disruptions often lead to production losses in the commercial and industrial sectors and thus affecting average manufacturing costs and finally, the national gross domestic product (GDP),” he said.
Commenting on the same, the President of Tanzania Association of Accountants (TAA), Godvictor Lyimo, was upbeat that the power projects will uplift the agriculture sector through agro-processing.
“Agriculture is the backbone of our economy and its contribution to the GDP is immense. We hope that the initiatives will enable the sector to be mechanised and eventually enhance productivity.
“Improved production in the agriculture sector will thus stabilise food inflations and enable the country to earn additional forex through exports of surplus agricultural produce.
“The multiplier effects of the electricity projects are endless since they will enable value addition of farm products in rural areas,” he stated.
Mr Lyimo was also of a view that reduction of rural-urban migration will reduce pressure on infrastructure and provision of social services in urban areas since establishment of industries in rural areas will create jobs and retains people in those areas.
