Roads, rail to drive Tanzania growth

Saturday June 16 2018

Road construction. NMG

Road construction. Tanzania has allocated 12.9 per cent of the total budget amounting to Tsh4.2 trillion ($2.1 billion) to the development of major infrastructure projects. PHOTO | NMG 

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Tanzania’s priorities in the 2018/2019 budget are its flagship infrastructure projects and creating a conducive environment for investment and business, especially in the agriculture sector.

In the budget presented last week on Thursday by Finance Minister Philip Mpango, the focus was on agriculture, infrastructure and industrialisation.

Dr Mpango is seeking to improve irrigation infrastructure, warehouses and markets, supply of inputs, dissemination of skills and development of the livestock and fisheries sub-sectors.

On industries, he is proposing to implement a recently developed blueprint for regulatory reforms to improve the business environment.

The budget also plans to prioritise social services such as clean water, free basic education, improved health facilities and supplies.

The finance minister has allocated funds to support electricity generation, construction of the standard gauge railway (SGR) and improving regional and rural road connectivity, air and marine transport.


The construction of the SGR, new trunk roads, revival of the ailing Air Tanzania Corporation, expansion of airports and ports also top the government’s agenda.

The government is allocating 12.9 per cent of the total budget amounting to Tsh4.2 trillion ($2.1 billion) to the development of major infrastructure projects aimed at making Tanzania a middle-income economy in the next seven years.

About Tsh1.4 trillion ($700 million) has been earmarked for the construction of the SGR between Dar es Salaam-Morogoro (300km) and Morogoro-Makutopora in the capital city of Dodoma (422km).This is significantly higher than the Tsh900 billion ($400 million) set aside in the 2017/2018 financial year.

The government has set aside Tsh215 billion ($200 million) for the construction of the Julius Nyerere International Airport Terminal 3 and carry out rehabilitation work at 12 other airports, including Kilimanjaro International airport, Songwe, Mwanza, Mtwara, Arusha, Kigoma, Tabora, Sumbawanga, Shinyanga and Bukoba.

Dr Mpango said that other priorities are the trunk roads to connect Tanzania to regional countries through internal road networks.

He said the government had set out five priority areas to implement in the 2018/2019 budget, which seek to catalyse economic growth.

Priority areas include the establishment of industries, promoting and sustaining the achieved gains in the education, health and other social services sectors; improving the business climate through rehabilitation of infrastructure, improving citizens’ access to financial services and core government functions.

President John Magufuli's administration is also seeking to increase and strengthen domestic revenue collection by pursuing the following policies: Continue to widen the tax base including formalisation of the informal sector and improving the investment environment to foster new sources of revenue; enable a conducive business environment through supportive infrastructure, tax incentives, consistent and predictable policy, land accessibility, legal and regulatory frameworks; implement the “Blueprint for Regulatory Reform to Improve Business Environment for Tanzania” for simplification of payment of taxes and elimination of bureaucracies; improve the relationship between the revenue authority and taxpayers.

Among the key tax highlights is the six-month tax amnesty from July to December 2018, which will see taxes declared under the amnesty getting full remission of interest and penalties.

Dr Mpango did not change the fixed tariffs on locally-produced non-petroleum excisable products such as alcohol, soft drinks and tobacco.

But, excise duty rates relating to imported non-petroleum products will increase by five per cent.

However, an Electronic Tax Stamp will replace the Paper Tax Stamp with effect from September this year, to enable the government to obtain production data from the manufacturers in real time.

On agriculture, he is proposing to amend the Local Government Finance Act, to require any corporate entity that produces agricultural crops without processing them in order to add value to pay cess.

Dr Mpango also opposed an exemption from Value Added Tax proposed on packaging material used by local manufacturers of pharmaceutical products; imported animal and poultry feed additives and sanitary pads.

The finance minister also received additional powers to exempt imports by a government entity or supplies to a government entity of goods or services to be used solely for the implementation of government projects funded by non-concessional loans.

--Additional reporting by Allan Olingo.