How Tanzania plans to become regional economic powerhouse
Tanzania is at an advanced stage to link Dar Salaam and Mombasa with a natural gas pipeline in a bigger infrastructure plan to connect East, Central and Southern Africa.
The 600-kilometre pipeline from Dar es Salaam through Tanga to Mombasa is part of the larger cocktail of multibillion projects Tanzania is undertaking to strengthen its value proposition as the region’s economic hub.
Analysts at the South Africa-based Rand Merchant Bank (RMB) expect Tanzania to dethrone Kenya as East Africa’s dominant economy by 2030.
“Tanzania should just pip Kenya as East Africa’s biggest economy,” RMB said in their Where to Invest in Africa 2020 report.
With a gross domestic product (GDP) of $67 billion (Sh7.29 trillion) compared to Kenya’s $81 billion (Sh8.81 trillion), Tanzania is expected to grow by 2 per cent this year compared to Kenya’s 1 per cent, according to International Monetary Fund.
Tanzania has been growing at between 6 per cent and 7 per cent consistently for over a decade, while Kenya’s growth has averaged at 4 to 5 per cent in the same period.
President John Magufuli recently announced a deal with Uganda’s Yoweri Museveni to lay a pipeline that will pump Uganda’s oil from Hoima to the Indian Ocean port of Dar es Salaam for export.
The pipeline will also supply natural gas to Uganda from Tanzania. The project leaves Kenyans at a disadvantage given that a similar oil pipeline project with Uganda flopped, meaning that even if Kenya was to build its own, it would lack the economies of scale given Kenya’s low oil reserves.
East Africa’s second largest economy is also building a Chinese funded electric train that will open up central Africa through Rwanda to DRC.
The line will target electronic and machinery imports from Asia heading to central Africa while linking the cobalt, gold, aluminium and other minerals from DRC to the Indian Ocean for export.
The line will also connect Rwanda and Uganda’s coffee and tea to the export markets while also connecting the businesses in the three countries.
Kenya’s Standard Gauge Railway to Uganda stopped in Naivasha after funds ran out. Parliament through the transport committee has asked China to restructure the loan.
The Tanzania-Zambia Railway Authority (Tazara) rail line, is also being refurbished to bring copper and other minerals in Zambia to the port while connecting the larger Southern Africa to the East African market.
Having realised that Kenya produces the third most expensive electricity in Africa according to globalpetroleumprices.com, Magufuli is constructing a 2100MW hydropower plant on River Rufiji to attract manufacturing. That is nearly Kenya’s total power supply.
Tanzania’s natural gas reserves should help it produce the cheapest electricity in the region alongside its hydro power projects.
Kenya boasts a high proportion of renewable energy in its energy mix, most of it coming from geothermal wells and wind but that power is expensive and has been driving manufacturers out of the country.