Power outages, water shortages and transport disruptions are costing Tanzanian firms up to $668 million in losses annually.
A new report, which is based on a the World Bank Group’s Sustainable Infrastructure Series, says that of this amount, power is responsible for losses of $216 million a year.
The report provides a detailed assessment of the cost of disruptions from natural and manmade hazards to firms and households around the world.
It says that disruptions to transport in Tanzania cause an average loss of $325 million, more than half of which is attributable to rain and floodwater.
Surprisingly, the two factors do not have such a significant impact on water supply disruptions costing up to $127 million in annual losses.
The report focuses on four main areas—power, water and sanitation, transport, and telecommunications—that it singles out as being vulnerable to natural hazards.
A pilot survey in Tanzania sampled 800 local firms representing a wide range of economic sectors. Among other things, it showed how disruptions caused by natural or manmade disasters can have grave consequences.
According to the report, human-caused disruptions coupled with natural hazards stretch budgets for public infrastructure, making Tanzania unattractive to investors.
The global risk assessment underlying the report indicated that power generation and transport infrastructure incur losses of $30 billion a year, on average, from natural hazards (about $15 billion each), with low- and middle-income countries shouldering about $18 billion of the total amount.
“The severity of natural disasters is usually measured by the asset losses they provoke. But the secondary consequences of direct asset losses on economic activities and output can often explain a large share of total disaster impacts, especially when infrastructure systems are affected,” it says.
Based on this premise, the report estimates that the total cost of a two-week blackout in, say, Los Angeles would be $2.8 billion (13 per cent of the total economic activity during that period) while in Tanzania, on average, a four-week disruption is 23 times costlier for households.
It concludes that worldwide, underfunding and poor maintenance are among key factors resulting in unreliable electricity grids, inadequate water and sanitation systems, and strained transport networks.