Introduction

Tanzania is accelerating its economic transformation by leveraging Public-Private Partnerships (PPPs) as a key strategy for sustainable development. With a total development budget of TZS 54.575 trillion for 2021/22 to 2024/25, the government is focusing on infrastructure, energy, and social service projects. Notably, TZS 33.794 trillion of this budget is sourced domestically, showcasing Tanzania’s commitment to reducing reliance on external funding.

The PPP cost-sharing model, where the private sector contributes 80% while the government covers 20%, plays a pivotal role in financing major projects such as the Standard Gauge Railway (SGR), Julius Nyerere Hydropower Project, and rural electrification initiatives. These projects aim to create 10,000 jobs and add TZS 1 trillion annually to the economy, reinforcing Tanzania’s position as a regional economic hub.

Tanzania’s Development Budget and Key PPP Projects

The table below outlines the development budget allocations across fiscal years:

1. Infrastructure Projects

• Standard Gauge Railway (SGR): Enhancing regional trade and connectivity.
• Kigongo-Busisi Bridge & Road Networks: Reducing transport costs and boosting trade in the Lake Zone.
• Msalato International Airport: Supporting tourism and international business.

2. Energy Sector

• Julius Nyerere Hydropower Project (2,115 MW): A game-changer in energy stability.
• Rural Electrification Program: Targeting universal energy access.

3. Social Services

• Education Investments: Improving school infrastructure and student loans.
• Healthcare & Water Projects: Strengthening public health and clean water access.

4. Economic Development

• Agricultural Modernization: Expansion of irrigation and agribusiness.
• Dodoma City Development: Strengthening government operations and investment climate.

Economic Impact of PPPs

1. Job Creation:
   • PPP projects are projected to create 10,000 jobs, with 8,000 in the private sector and 2,000 in government-related roles.
2. Economic Growth:
   • Infrastructure development is expected to boost Tanzania’s economic output by TZS 1 trillion annually.
   • Trade efficiency could improve by 5%, enhancing Tanzania’s regional competitiveness.
3. Financial Efficiency:
   • Government capital savings of 80%, reducing reliance on state funding.
   • Private sector absorbs 80% of risks, ensuring cost-effective project implementation.
   • The Julius Nyerere Hydropower Project alone could generate TZS 31.725 billion annually, with a 15% efficiency increase expected from private-sector involvement.

Regional PPP Comparisons

Tanzania’s PPP model aligns with successful strategies in other African nations:

Success Factors in PPP Implementation

1. Clear Regulatory Framework:
   • Strengthening PPP laws and procurement processes ensures efficiency and investor confidence.
2. Risk Allocation:
   • Construction risk is managed by the private sector.
   • Political risk is absorbed by the government to maintain stability.
   • Market risk is shared to balance incentives and mitigate uncertainties.
3. Financial Structuring:
   • A 70:30 debt-to-equity ratio is common in PPPs.
   • Government-backed guarantees reduce investor risk.
   • Revenue-sharing mechanisms ensure sustainable returns for both public and private players.

Recommendations for Tanzania’s PPP Strategy

1. Optimize Cost-Sharing Models:
   • Maintain a 70-30 private-public cost-sharing structure to align with successful regional practices.
   • Focus on revenue-generating sectors like toll roads and renewable energy to enhance sustainability.
2. Prioritize Strategic Sectors:
   • Transportation: To boost trade efficiency.
   • Renewable Energy: To ensure sustainable power supply.
   • Technology & Digital Economy: To foster innovation and job creation.
   • Water & Sanitation: To enhance public health.
3. Strengthen Risk Mitigation Mechanisms:
   • Establish a dedicated PPP unit for project monitoring.
   • Standardize contracts and legal frameworks to attract investors.
   • Improve public awareness to gain community support for PPP projects.

Conclusion

Public-Private Partnerships are indispensable in Tanzania’s journey toward achieving Vision 2025. With infrastructure, energy, and social services at the core of PPP investments, Tanzania is reducing government financial burdens, improving public service delivery, and stimulating long-term economic growth.

By expanding PPPs into healthcare, education, and emerging industries, Tanzania can maximize economic resilience, enhance investor confidence, and create sustainable development pathways. With an annual economic output increase of TZS 1 trillion, Tanzania’s PPP-driven model positions the country as a leading economic hub in East Africa.

Introduction

Tanzania's labor market is undergoing a significant transformation, with a gradual shift from informal to formal employment. As of 2024, 28% of the workforce (10.17 million workers) is engaged in the formal sector, while 71.8% (25.95 million workers) remain in informal employment. This shift is expected to accelerate, with projections indicating that formal employment could reach 38% by 2030, enhancing economic stability, social protections, and tax revenues.

This report explores the dynamics between formal and informal employment, sectoral distributions, and policy recommendations to facilitate a balanced labor market transformation.

Employment Structure in Tanzania

The employment landscape in Tanzania is characterized by the following composition:

Formal Employment Breakdown

Within the formal sector:

• Private sector: 9.33 million workers (91.75%)
• Public sector: 839,213 workers (8.25%)

Formal sector employees contribute over TZS 27.64 trillion annually in tax revenue, which is crucial for funding public services and national development initiatives.

Informal Employment Sectors

Informal employment remains dominant, particularly in agriculture, trade, and manufacturing. The following table highlights the key informal employment sectors:

Regional Employment Patterns

Employment distribution varies significantly across Tanzania’s regions. Major urban centers, such as Dar es Salaam and Mwanza, exhibit a high concentration of informal employment. The following table presents employment distribution in the top ten regions:

Projected Employment Transformation (2024-2030)

By 2030, formal employment is expected to grow to 38% of the workforce (15.81 million workers), while informal employment declines to 62% (25.79 million workers). The sectoral growth projection includes:

Unemployment Trends and Forecast (2024-2030)

Tanzania's unemployment rate has declined from 9% in 2021 to 8.9% in 2022 and is expected to continue its downward trend to 8.1% by 2030.

Key Growth Drivers in Tanzania’s Employment Sector

1. Digital Transformation: E-commerce expansion, digital payment systems, and fintech innovations support business formalization and efficiency.
2. Infrastructure Development: Expansion of road networks, industrial parks, and urban development fosters new formal job opportunities.
3. Industrialization and Value Chain Development: Investments in agriculture, manufacturing, and tourism will support job creation and economic resilience.
4. Education and Skills Training: Aligning workforce skills with market demands will enhance employability in formal sectors.
5. Social Protection Expansion: Improved access to health insurance, pension schemes, and job security will encourage formal employment transitions.

Policy Recommendations for Sustainable Employment Growth

To support the transition towards a more formalized workforce, the following policies are recommended:

1. Facilitating Business Formalization: Simplifying business registration, tax compliance, and access to credit for SMEs.
2. Expanding Digital Infrastructure: Promoting digital literacy and online business opportunities to modernize traditional sectors.
3. Enhancing Labor Market Information Systems: Using data analytics to track employment trends and guide policy interventions.
4. Sector-Specific Support: Encouraging formalization in high-informal sectors like agriculture and trade through value chain integration.
5. Regional Investment Promotion: Encouraging decentralization of formal job opportunities to reduce reliance on urban centers.

Conclusion

Tanzania’s employment landscape is poised for transformation, with increasing formalization expected to improve economic stability, enhance worker protections, and boost government revenue. However, achieving a 38% formal employment rate by 2030 requires targeted policies, infrastructure investments, and skills development initiatives. Addressing the challenges of informal employment and fostering business-friendly environments will be crucial for achieving sustainable growth and a balanced labor market.

By leveraging technological advancements, improving education systems, and promoting public-private collaboration, Tanzania can build a resilient workforce capable of driving long-term national development.