What Tanzania’s Public Investment Bill means for public entities

DODOMA: TANZANIA is preparing a sweeping rethink of how the state owns, manages and derives value from its vast portfolio of public investments, with a longanticipated Public Investment Bill at the centre of that shift, now scheduled for completion in the 2026/27 financial year.

Revealed in Parliament in Dodoma last week by the Minister of State in the President’s Office for Planning and Investment, Prof Kitila Mkumbo, while tabling his ministry’s 144.85bn/- budget for the 2026/27 financial year, the proposed law is framed less as a routine legislative update than as an effort to more clearly define the state’s role as owner, regulator and commercial actor.

For years, Tanzania’s public entities have combined public service delivery with revenue generation, a model that has evolved over time and informed ongoing reform efforts. While this dual role has, in some instances, presented coordination and alignment challenges, it has also generated valuable lessons for strengthening performance and oversight.

As Prof Mkumbo told Parliament, the proposed Bill seeks to build on this experience by introducing a “modern legal framework” for public investment management, aimed at enhancing coherence, efficiency and accountability across the portfolio.

At its core, he said, is a shift towards more coordinated oversight, with the Bill proposing the transformation of the OTR into a strengthened Public Investment Authority with an expanded legal mandate under a more unified national framework.

The reform would also harmonise overlapping legal and institutional arrangements to clarify responsibilities and improve coordination among oversight bodies. If implemented effectively, the reform is expected to improve coordination across public investments and enhance discipline in capital allocation, longstanding areas of focus in state investment management.

“Building on this shift, the government also plans to establish a Public Investment Fund to support capital mobilisation for state-owned enterprises without drawing directly from the Government Consolidated Fund,” Prof Mkumbo stressed. He added that the reform is also intended to strengthen merit-based leadership and improve accountability in the management of public entities.

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The Bill also ventures into one of the more sensitive areas of reform: governance. On this front, Prof Mkumbo indicated that competitive recruitment for chief executives and boards of directors will be introduced to enhance professionalism and accountability. Whether this marks a genuine departure from past practice will hinge on how rigorously the new rules are enforced.

Alongside tighter oversight, the government is proposing greater operational autonomy for commercially oriented stateowned enterprises. Prof Mkumbo emphasised that this is intended to enable such entities to operate more efficiently, reduce reliance on government support and strengthen competitiveness. At the same time, enhanced performance management systems will be introduced to ensure accountability and delivery of results.

This broader push to improve efficiency and performance within state-linked entities is also being extended to the investment environment, where the government is now focusing on regulatory and incentive reforms. On investment, he said the government will review the Special Economic Zones (SEZ) framework to enhance investment incentives and strengthen industrial competitiveness.

“In the 2026/27 financial year, the government will ensure the availability of sufficient investment-ready land through the identification of suitable areas, payment of compensation and development of supporting infrastructure,” he said.

He added that government will continue facilitating investors in Export Processing Zones, while also developing a targeted strategy to promote investment in vehicle assembly and manufacturing and strengthen exportoriented production.

“To improve access to investment information, the ministry will prepare a single compendium of investment incentives across sectors to make it easier for investors to access information in one place,” Prof Mkumbo asserted.

He emphasised that this is intended to enable such entities to operate more efficiently, reduce reliance on government support and strengthen competitiveness. At the same time, enhanced performance management systems will be introduced to ensure accountability and delivery of results

The scale of what is at stake is considerable. The OTR oversees 308 entities, with a combined investment value estimated at 92.3 tr/-. Of these, 91 operate on a commercial basis.

Despite their size, their contribution to national income has historically fallen short of potential, a gap the government now appears determined to close. Recent trends, however, suggest gradual improvement. Going by the projections presented by Prof Mkumbo, non-tax revenue collections are expected to rise to 1.79 tr/- in 2026/27, up from 1.69 tr/- in the 2025/26 financial year.

By March 2026, collections had already reached 773.37 bn/- , compared with 664.53bn/- in the same period a year earlier, an increase attributed to improved dividend performance and strengthened enforcement mechanisms. Yet revenue gains alone do not resolve deeper structural issues.

The government has, in parallel, embarked on a rationalisation programme aimed at improving institutional efficiency.

Prof Mkumbo told Parliament that this includes merging entities with overlapping mandates, dissolving those whose relevance has diminished, and strengthening those facing operational challenges.

Following a performance review conducted in 2023, some 14 public institutions were earmarked for merger and three for dissolution. Implementation has been gradual: three entities have since been dissolved and two merged, including the consolidation of the Tanzania Investment Centre and the Export Processing Zones Authority into the Tanzania Investment and Special Economic Zones Authority (TISEZA). Legal processes to complete the remaining mergers are ongoing.

Privatisation also remains part of the reform agenda, albeit cautiously applied. The government is currently advancing the privatisation of six re-vested industries, while also undertaking valuation of a range of assets from agricultural estates to industrial facilities to attract strategic investors and enhance productivity. The emphasis, officials suggest, is on maximising value rather than wholesale divestment.

Taken together, these measures point to a broader ambition articulated by Prof Mkumbo: increasing the contribution of public entities to the national economy, with a target of reaching up to 8 percent of GDP by 2050 in line with the country’s long-term development framework, Dira 2050.

Achieving that target will require more than legislative reform. It will depend on sustained political commitment, institutional discipline and consistent implementation, areas where similar reforms, both in Tanzania and elsewhere, have often encountered challenges.

The forthcoming Public Investment Bill is therefore best understood not as an endpoint, but as a foundation. It sets out the architecture for a more coherent and performance-driven approach to state investment. Whether that architecture translates into tangible economic returns will ultimately depend on execution.

For now, the direction of travel is clear: a state seeking not to retreat from the economy, but to play its role more deliberately and, it hopes, more effectively.

In its report on the proposed budget, the Parliamentary Committee on Administration, Constitution and Legal Affairs, presented by Ms Zena Katambo on behalf of the Chairperson, urged the government to expedite reforms on competitive recruitment for senior leadership in public entities. The Committee noted that Parliament had already been informed of the intention to recruit Chief Executive Officers and Board members through competitive processes, and stressed that such a system would enhance public value.

“It therefore recommended that the government move swiftly to operationalise the process, including publishing a clear list of state-owned entities that will be subject to competitive recruitment,” underscored Ms Katambo.

Prepared by the Office of the Treasury Registrar