As Tanzania pushes toward an ambitious long-term economic vision, policymakers, economists and private sector leaders are increasingly converging around one central idea: the country cannot achieve rapid growth without deeper collaboration between government and business.
Public–Private Partnerships (PPPs) are emerging as one of the most important instruments in that strategy, offering a pathway to mobilise private capital, technology and expertise to accelerate infrastructure development and economic transformation.
Recent discussions among policymakers and private sector leaders on aligning PPP into fourth development plan 2026/27- 2030/2031 held on Monday at the University of Dar es Salaam (UDSM) highlight both the promise and the challenges of expanding PPPs in Tanzania’s development agenda.
Dr Richard Mbunda, an economist, UDSM believes Tanzania’s economy could expand significantly in the coming years if the private sector becomes a central driver of development.
According to him, the country’s economy could grow from about $85 billion to $118 billion within the next five years, provided that investment accelerates and structural challenges are addressed.
Dr Mbunda argues that Tanzania’s rapidly growing urban population presents both challenges and opportunities.
Cities are struggling with water supply shortages, healthcare pressures, traffic congestion and waste management. Yet these problems, he says, should be seen not only as policy challenges but also as potential investment opportunities.
“Youth and innovators should be encouraged to see these challenges as opportunities,” he said, noting that many urban problems could be addressed through commercially viable projects.
He links investment opportunities to the interaction between human needs, human wants and market dynamics.
Human needs—such as water, sanitation and healthcare—often require government involvement because they are essential services.
Human wants, on the other hand, create commercial opportunities where private investors can generate profits by meeting market demand.
For example, transport is a basic need, but the demand for private vehicles or premium transport services reflects consumer preferences that can attract private investment.
Policy reforms seen as critical
Mwanahamis Hussein, Director of Research at the Tanzania Private Sector Foundation (TPSF), said Tanzania must strengthen the policy environment to unlock the full potential of private sector participation.
She emphasised that improvements in investment policies and business regulations should be driven by structured dialogue between the public and private sectors, beginning at district-level business councils and extending to national platforms.
“The private sector will continue promoting business opportunities while emphasising local content to increase Tanzanian participation,” she said.
However, she noted that access to capital remains a major constraint preventing many Tanzanians from participating in large investment projects.
Hussein also proposed the establishment of a PPP Development Board to oversee and guide PPP projects nationwide.
Although Tanzania already has a PPP Centre and planning institutions, she argued that an independent oversight body could strengthen accountability and provide clearer strategic direction.
“We believe such a board would help guide the PPP Centre and evaluate its performance more effectively,” she said.
Another key recommendation is the introduction of academic programmes focusing on PPP management to build a pool of professionals capable of designing and managing complex partnership projects, particularly at the local government level.
Despite strong policy rhetoric supporting PPPs, several practical challenges remain.
One of the biggest concerns for investors is delayed payments for services delivered under government contracts.
Hussein cited water supply projects as an example, where private contractors sometimes struggle to receive payments after completing project milestones.
Such delays, she said, discourage private sector participation in public service delivery.
Investors have also called for streamlining the approval process for PPP projects, arguing that the current system involves multiple bureaucratic steps that slow investment decisions.
Establishing a one-stop investment centre for PPP projects could significantly reduce processing time and improve investor confidence.
Government banking on PPP
For the government, expanding PPPs is not simply a policy preference but an economic necessity.
Professor Kitila Mkumbo, Minister of State in the President’s Office responsible for Planning and Investment, says Tanzania’s long-term economic ambitions will require massive financial resources.
The government’s development strategy estimates that about 477.7trn/- (approximately $183 billion) will be required to finance the country’s development priorities over the coming years.
Of this amount, about 70 percent is expected to come from the private sector, with roughly 374trn/- projected to be mobilised through PPP arrangements.
Prof Mkumbo said the government aims to use PPPs to attract capital, advanced technology and specialised expertise from private investors.
He also emphasised that the government intends to reduce direct involvement in activities that could be handled by the private sector.
“If something can be done by the private sector, it should not be done by the government,” he said.
Instead, the state will focus on areas where private investment is less likely, such as education, security, healthcare and core infrastructure development.
Pipeline of PPP projects expanding
David Kafulila, Executive Director of the PPP Centre, said Tanzania’s PPP framework has undergone significant transformation over the past decade.
He noted that although the PPP concept was introduced more than a decade ago, the country spent nearly 13 years without implementing major projects due to limited political commitment and institutional readiness.
Today, however, PPP projects worth about 8.5trn/- are underway.
Over the past five years alone, the government has identified around 100 PPP projects at different stages of development, including concept preparation, feasibility studies, procurement and contract negotiations.
Some ongoing PPP projects include the expansion of the Dar Rapid Transit (DART) system, mandatory vehicle inspection services, redevelopment of the Kariakoo market area, operations involving the TAZARA railway corridor, and the management of the Port of Dar es Salaam through partnerships involving Tanzania Ports Authority, DP World and Adani Group.
The government is also introducing measures to ensure that projects suitable for PPP structures are not procured through conventional government procurement methods.
Learning from past failures
The introduction of PPP legislation in Tanzania was partly a response to problematic agreements in earlier public–private deals.
Kafulila pointed to disputes involving companies such as City Water, IPTL, NetGroup Solutions and RITES, which exposed weaknesses in earlier contractual arrangements.
The PPP framework was therefore designed to enhance transparency, accountability and proper risk allocation between the public and private sectors.
Under the current system, PPP projects must pass through multiple layers of scrutiny, including sector ministries, the PPP Centre, the Attorney General and, for strategic projects, the Cabinet.
The Controller and Auditor General also plays a role in ensuring transparency in major agreements.
Balancing risks and incentives
Experts emphasise that successful PPP frameworks depend on balanced risk sharing between governments and investors.
In many infrastructure projects, governments may need to provide viability gap funding or financial support for projects that are socially important but not immediately profitable.
Tax incentives and other investment benefits can also play a role in attracting private investors to strategic sectors.
Ultimately, proponents argue that PPPs offer Tanzania one of the most viable pathways toward building a large, competitive economy.
Global experience suggests that countries typically take decades to reach trillion-dollar economic status. For instance, Japan took 13 years to move from a $100 billion economy to a trillion-dollar level, while countries such as Spain and Switzerland took between 30 and 40 years.
For Tanzania, reaching similar milestones will require sustained reforms, strong institutions and, above all, a deeper partnership between government and the private sector.
As policymakers and investors increasingly agree, the path to rapid economic transformation may depend less on government spending alone—and more on how effectively the country mobilises private capital to build the infrastructure and industries of the future.
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