The Roadmap to PPP Development

By Dr. Bravious Kahyoza, PhD, Senior Economist at TICGL

Something profound is unfolding in Tanzania’s public investment landscape—a recalibration of how the state and market cooperate, shaped by experience, necessity, and ambition. Over a decade ago, the country cautiously entered the terrain of Public-Private Partnerships (PPPs), guided by the 2009 National PPP Policy.

At the time, the idea of involving private capital in public infrastructure was still novel in many parts of Sub-Saharan Africa. For Tanzania, it was an experiment in pragmatism—a recognition that state resources alone could not meet the rising demand for roads, power, hospitals, and digital networks.

In 2010, this experiment took on legal form through the PPP Act, CAP 103. The Act created an initial governance structure under the Ministry of Finance, tasked with managing proposals and ensuring financial soundness.

But institutions, like infrastructure, require maintenance and sometimes reconstruction. What followed was a series of institutional tweaks that mirrored the learning curve of a country seeking efficiency, accountability, and investor confidence.

By 2014, the PPP Centre was shifted to the Prime Minister’s Office, ostensibly to improve coordination at the highest level of government.

Four years later, the decision was reversed. The Centre was returned to the Ministry of Finance and Planning, reuniting the PPP function with the fiscal and planning apparatus. These movements weren’t bureaucratic whims—they revealed the growing pains of a system trying to match policy design with practical governance.

Then came the breakthrough. The 2023 Amendment to the PPP Act represented a maturing of Tanzania’s institutional confidence.  Operational from July 14th, the revised law signaled that the country is not merely dabbling in PPPs—it is ready to lead in them. According to the Ministry of Finance, the reforms are aimed at accelerating project approval timelines, attracting capital, and strengthening oversight—a necessary trifecta in today’s competitive investment climate.

One of the most pivotal changes is the vetting of strategic project agreements by the Attorney General before final approval. In a region where legal disputes have stalled multi-million-dollar projects, this layer of scrutiny helps de-risk investments while safeguarding the public interest. Equally notable is the embedded requirement for prefeasibility studies to be integrated into the national budget cycle. This is a subtle but critical shift—it forces contracting authorities to think about infrastructure not as isolated projects but as components of a national economic strategy.

Timelines have also become non-negotiable. The PPP Centre must now process prefeasibility reports and procurement evaluations within thirty working days. In a country where procedural delays once discouraged credible investors, this is a welcome dose of predictability.

The financing architecture, too, has evolved. The revised Act clarifies the definition of public funding in PPPs to include fiscal liabilities, making transparent the government’s financial exposure. Furthermore, the introduction of Special Purpose Vehicles (SPVs) as a requirement before signing contracts professionalizes the process and ensures legal and financial ring-fencing of PPP projects—an approach aligned with international best practices, from South Africa to Singapore.

Importantly, the new law encourages dispute resolution through negotiation and arbitration, reflecting a nuanced understanding that adversarial approaches often derail partnership-based projects. The provision that makes the PPP Act legally superior to other conflicting laws further eliminates ambiguities that previously created policy inertia.

But these legal innovations are happening against a sobering macroeconomic backdrop. Across Sub-Saharan Africa, public debt has surged, tripling since 2010 and reaching $1.14 trillion by the end of 2022, according to the IMF (2024). The median public debt-to-GDP ratio in the region now stands at 57%.

Tanzania’s current debt position—TZS 96.88 trillion ($33.7 billion), equivalent to 45.7% of GDP—remains below regional averages, providing a degree of fiscal space. But as the IMF also warns, complacency is dangerous. Unsustainable debt has become a serious developmental bottleneck across the continent.

PPPs, in this context, are more than a procurement model—they are an existential strategy. They offer a pathway to unlock infrastructure without mortgaging the future. When properly designed, PPPs allow governments to benefit from private capital, technical know-how, and operational efficiency while retaining public control and accountability. According to the World Bank (2023), successful PPPs reduce costs, improve service delivery, and expand access to infrastructure, particularly in sectors where public financing alone falls short.

Yet the approach must be calibrated. Excessive reliance on PPPs can also backfire, particularly if risk-sharing mechanisms are poorly negotiated or if contingent liabilities are hidden from public scrutiny. Tanzania’s 2023 reforms attempt to strike this balance by embedding PPPs within the larger framework of fiscal responsibility and national planning. Looking forward, the role of PPPs becomes even more vital when viewed through the lens of Tanzania’s long-term development vision.

In 2000, the country embarked on Vision 2025 with a per capita GDP of $360. Two decades later, that figure has grown fourfold to approximately $1,500. Achieving the next leap—to $6,000 per capita by 2050—requires growing the economy to about $700 billion, more than double South Africa’s current GDP.

That kind of structural transformation demands more than good intentions—it demands world-class infrastructure, human capital, and industrial capacity.

Energy provides a clear example. Tanzania’s total electricity generation is less than 5,000 megawatts.

South Africa, with a comparable population, produces over 50,000 megawatts. To meet the ambitions of Vision 2050, Tanzania must increase its generation capacity twelvefold. Public funding alone cannot meet this demand. PPPs will be indispensable in closing this energy gap, not only for generation but for transmission and distribution as well.

Transportation is another critical frontier. With rising trade volumes across the East African region, the demand for efficient ports, railways, and road networks is surging. If Tanzania can position itself as a regional logistics hub, it will not only unlock economic value internally but also serve as a gateway for landlocked neighbors. This is where PPPs can deliver impact at scale, fast.

From my vantage point, as someone directly engaged in fiscal governance and investment policy, the journey of Tanzania’s PPP framework is more than a case study. It is a lived transformation, shaped by the hard lessons of underperformance and the bold ambition of national progress. The reforms of 2023 are not perfect, but they reflect an institutional maturity that is increasingly rare in the region.

What remains is the need for relentless follow-through. The right laws are in place. The challenge now is execution—building internal capacity, maintaining political will, and cultivating public trust. Investors are watching, and so are citizens.  If Tanzania can prove that PPPs deliver not only infrastructure but also inclusive growth, it will set a model for the continent.

The next decade will be decisive. With the right tools and the right mindset, Tanzania has the chance to turn partnerships into prosperity, bridging the infrastructure deficit while preserving its fiscal future. In doing so, it may just prove that public-private collaboration, when done right, is not a compromise but a strategic triumph.