World Bank new loan rhymes well with changes in Third FYP strategy

08Jun 2021
The Guardian
World Bank new loan rhymes well with changes in Third FYP strategy

FINANCE and Planning minister Dr Mwigulu Nchemba at the weekend took time off to brief media representatives of new loan arrangements with the global lender, the World Bank, which reflects the restoration of confidence between the country’s authorities and global agencies.

He said the World Bank has approved 2,339.1bn/- in concessional loan to Tanzania for implementation of infrastructure, education and electrification projects. The funds are meant for the improvement of rural roads to enhance social opportunities, along with a project to strengthen the teaching and training environment in higher education institutions, where plenty of complaints have been heard over employability of graduates, etc.

The World Bank board first approved three concessional loans totaling 2.012trn/- to Tanzania towards development projects and on June 3, the Bretton Woods institution again approved another loan for 326.6bn/-, taking the loan tally to 2,339.1bn/-. Projects to be funded by the loans include the Higher Education for Economic Transformation Project (HEET) involving $425m, the Digital Tanzania Project (DTP) billed at $150m and the Zanzibar Energy Sector Transformation (ZESTA) project, billed at $142m.

The rural infrastructure, services and education (RISE) project will improve rural roads and provide about 35,000 income gain openings to rural dwellers. Community ability to maintain roads is being uplifted. 

While the work of upgrading infrastructure all over the country is taking the country to the next stage in its development capacity, when the furthest points in all regions can be reached rapidly by truck or phone, there are other lessons that the government is not putting to application. It is a decision by the government to expand space for the private sector to participate in the implementation of strategic projects to achieve the Third Five-Year Development Plan (2021/22-2025/26). The plan which takes off in the coming financial year a few weeks from now is being reviewed in its ‘ways and means’ aspect to that the government can improve or extend its social services reach, skipping overuse of revenues for fixed assets.

The minister dwelt on the project in an address to stakeholders from financial institutions discussing alternative financing of development projects, where Dr Nchemba said that evaluation conducted on the implementation of the Second National Development Plan showed little participation of the private sector.

Seeing that this harms ability ot the government to do what only the public authorities can do, Treasury has thus decided it should discuss with stakeholders on the best way to get private companies on board,. That is the pivotal element in discussions with the private sector for alternative ways to implement the projects.

The minister did well to underline that it was important to have alternative ways to enable implementation of big development projects so that it meets its objectives in a flexible manner, as budgetary limits tend to be severe, while access to bank loans for private firms is not under such trappings. Government financing of projects faces absolute limitation when it comes to passing a certain level of resources without threat to equally important social objectives unlike joint ventures. This was one reason for the downfall of classical socialism, as it was replete with hardware, from old technology factories to nuclear energy and weapons systems, while lagging behind dramatically in research and application virtually in all other fields. That sort of strategy leads to structural imbalances impairing social cohesion, so the government is avoiding it.

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