Songwe. Tanzania is beginning to redraw the line between what government should build and what business should finance, as the country moves to implement its ambitious Development Vision 2050 and pursue a $1 trillion economy by mid-century.
The debate came into sharp focus in Songwe this week, where senior government officials, regional leaders and economists argued that Tanzania cannot achieve its long-term economic ambitions if the government continues to finance projects that could be developed and operated profitably by the private sector.
At the centre of the discussion was a simple but far-reaching question: if a project can make money, why should taxpayers be the ones to build it?
Minister of State in the President’s Office, Planning and Investment, Prof Kitila Mkumbo put the question directly to investors during the Songwe Dira 2050 Forum, saying the government should concentrate its limited resources on areas where private capital is unlikely to go.
He used grain storage as an example.
“In Songwe, Ruvuma, Mbeya, Rukwa and Katavi, we have a lot of agricultural produce but we have nowhere to store it. The National Food Reserve Agency (NFRA) is overwhelmed. We have to be honest,” Prof Mkumbo said.
“But NFRA belongs to whom? It belongs to the government. Why can’t the private sector here collect capital, borrow money and build warehouses? This requires technology. Why are we waiting for the government?” he asked.
His argument goes beyond warehouses.
The minister said private investors should also look at opportunities in markets, bus terminals and other revenue-generating infrastructure instead of waiting for the Government to finance them.
“Instead of investors complaining, they should use the opportunity to borrow capital from financial institutions, build modern warehouses and do business,” he said.
The message marks an important shift in the conversation about development in Tanzania.
For decades, government has been expected to provide much of the infrastructure needed to unlock economic activity. But the scale of investment required under Vision 2050 means that model is increasingly difficult to sustain.
The government is now saying that public money should be concentrated on areas such as education, health, security and other services that are socially important but may not offer sufficient commercial returns to attract private investors.
The private sector, meanwhile, is being asked to take greater responsibility for infrastructure that can generate income.
A bigger role for business
The argument is consistent with the broader architecture of Vision 2050, which places the private sector at the centre of Tanzania's economic transformation.
Recent analysis of the Vision says achieving the $1 trillion target will require a substantial increase in private investment, alongside improvements in productivity, infrastructure, technology, logistics and human capital.
Prof Mkumbo has previously said the $1 trillion target itself was influenced by the private sector. Initial government projections had put the size of Tanzania's economy in 2050 at between $500 billion and $700 billion, before business leaders argued that sustained investment could support a more ambitious target.
The implication is now clear: businesses helped raise the ambition, and government expects them to help finance its achievement.
This is where public-private partnerships, or PPPs, become important.
Rather than government fully financing a project, a PPP can allow private investors to bring capital, technology and management expertise while sharing risks and responsibilities with the public sector.
But the Songwe discussion also showed that attracting private money is not simply a matter of asking investors to step forward.
The Government itself must change.
Songwe wants to turn its location into wealth
Songwe Regional Commissioner Jabir Makame said the region's economic potential could not be unlocked through government budgets alone.
Songwe sits on a major trade route connecting Tanzania with Zambia, Malawi, the Democratic Republic of Congo and other Southern African markets. It also has significant opportunities in agriculture and mining.
But geography by itself does not create prosperity.
Makame argued that the region needs private investment in productive infrastructure, modern markets and industries capable of processing local resources.
“The only way to bring about a rapid transformation without burdening citizens is to invite the private sector to invest through public-private partnerships in productive infrastructure, modern markets and small and medium-sized industries,” he said.
For Songwe, the ambition is to move beyond being a place where goods simply pass through.
A truck travelling through Tunduma may generate business for transporters, fuel stations and traders. But a warehouse, processing plant, logistics centre or manufacturing facility can create a much larger economic footprint.
It can create jobs, demand for local suppliers, tax revenue and opportunities for farmers and small businesses.
That is the difference between being a transit corridor and an economic corridor.
Kafulila: Songwe must stop being a transit economy
Economist David Kafulila believes that distinction is critical to Tanzania's broader economic ambitions.
Speaking at the forum, he said the country cannot reach a $1 trillion economy by continuing to approach development in the same way.
“If we are talking about a $1 trillion economy, we cannot continue thinking in the same way. We need a total turnaround in how we think, how we make decisions and how we implement development projects,” he said.
He said the region has a land area larger than Rwanda but an economy of less than $2 billion, compared with Rwanda's economy of about $17.3 billion.
The comparison, he argued, should force policymakers to ask why areas with significant natural and geographical advantages are not producing more economic value.
Songwe's biggest advantage is its position in regional trade.
Kafulila said more than 70 percent of transit cargo from the Port of Dar es Salaam passes through Tunduma and Isongole towards Zambia, Malawi, the DRC and other Southern African Development Community markets.
But moving cargo through the region is not enough.
“The opportunity is to turn Songwe from a transit corridor into a production and business centre,” he argued.
That would require investment in storage, processing, manufacturing and logistics.
Agriculture could provide another major source of growth.
Kafulila said Songwe has about 1.9 million hectares of land suitable for agriculture, but less than 30 percent is being utilised.
The opportunity, therefore, is not simply to produce more crops.
It is to build an economy around those crops.
A farmer producing maize, rice, coffee or other crops captures only part of the potential value. Processing, packaging, storage, transport and export can create additional economic activity and jobs.
This is where private investment becomes critical.
Government must become an enabler
But while the private sector is being asked to do more, the government is also being told to do something differently.
Deputy Minister in the President's Office for Regional Administration and Local Government, Dr Festo Dugange, told local authorities that they must stop seeing investors as people to be controlled and instead become facilitators of investment.
“It is very important that we begin by changing our mindset. As government officials, each of us has a role in bringing development, with the private sector working together with the government,” Dr Dugange said.
The message is particularly important at local government level.
A national policy can promise an investor a favourable business environment, but the actual experience of doing business often depends on local authorities.
Land, permits, planning approvals, local charges and administrative procedures can determine whether an investment project takes off or remains stuck in paperwork.
That makes local government reform part of the Vision 2050 investment agenda.
If the private sector is expected to finance more development, government institutions must become better at preparing projects, coordinating investors and reducing unnecessary delays.
The missing link: bankable projects
This is where the role of PPP becomes more complicated. A private investor will not finance a project simply because government says the project is important. The project must make financial sense.
It needs a clear revenue model, realistic demand projections, proper risk allocation, legal certainty and enough preparation for banks or investors to determine whether the expected return justifies the risk.
Dr Bravious Kahyoza, a PPP expert, has highlighted this dimension of the debate.
The challenge for Tanzania is therefore not only to identify thousands of potential projects, but to turn those opportunities into projects that can actually attract finance.
This distinction is crucial. A government may identify a modern market as a priority. But an investor needs to know who will use it, how much they will pay, how much it will cost to build and operate, how long it will take to recover the investment and what happens if demand is lower than expected.
The same applies to roads, bus terminals, warehouses, industrial parks and other infrastructure.
That is why PPP is not simply a mechanism for shifting construction costs from government to business.
It is a system for allocating responsibilities and risks between the two sides.
The numbers behind the strategy
The scale of the challenge explains why the government is pushing so hard for private investment.
The Fourth Five-Year Development Plan is expected to require about Sh477 trillion in financing over five years, with the private sector expected to provide about 70 percent of the investment.
That would make businesses the largest source of development capital under the plan.
The figure is significant because it changes the nature of the relationship between government and business.
The private sector is no longer being treated simply as a source of tax revenue or a partner in selected projects.
It is becoming a central financing engine for national development.
The approach is also consistent with President Samia Suluhu Hassan's recent call for the private sector to play a more decisive role in implementing Vision 2050. The President has described government as a facilitator while urging businesses to bring capital, technology, expertise and innovation.
The success of Vision 2050 may ultimately depend on getting that division of labour right: government providing the conditions for growth, and the private sector providing much of the capital needed to make that growth happen.
