It’s slow going for businesses aiming to tackle Tanzania’s water problems
By Oliver Balch
The semi-arid country has diminishing groundwaterand a lack of safe water access. New public-privatepartnerships are springing up, but a lack of trust andpublic awareness mean pace is slow.
Tanzania’s water problems are only too obvious. Over onethird of East Africa’s largest country is semi-arid. Withfew rivers and diminishing levels of clean groundwater,48% of its 45 million citizens lack access to safe water.The consequent productivity losses, health costs andpremature deaths (an estimated 26,000 Tanzanians die ofdiarrhoeal disease every year) are put at £206m – around1% of the country’s total GDP.
Less obvious is what can be done about it. It’s not thatTanzania has ignored the problem. The country undertooka major reform of its water sector in 2002 and currentlyboasts a comprehensive strategy aimed at deliveringuniversal access to safe water by 2025.
The 2002 reforms opened the door to greater involvementof the private sector in the day-to-day business of waterdelivery. A host of new local utilities have cropped up as aresult. Tanzania’s water sector has also become the focusof foreign donor support. German state aid agency Giz,for example, recently helped with the setting up of anindependent regulator for the water sector.It’s slow going for businesses aiming to tackleTanzania’s water problems
Private sector partnerships
A number of innovativecross-sector partnershipsare also emerging that mightprovide Tanzania’s policymakers with inspiration.German utility HamburgWasser, for instance, iscurrently working with thecountry’s water and sanitationauthorities to improve waterinfrastructure and servicesin Dar Es Salaam, Tanzania’slargest city.
Private sector involvementisn’t just restricted towater companies however.Swedish retailer H&M, forinstance, has just embarkedon a £811,000 project withUK charity WaterAid. Thethree-year programme aims to improve water provisionand sanitation facilities in 36 schools in the rural Manyaradistrict. As well as immediate assistance, H&M hopes theintervention will influence government thinking aboutwater-related issues in schools.
In a separate initiative, WaterAid is also helping toestablish a for-profit model for resolving sewerageproblems. The project, which operates in Dar Es Salaam,sees small enterprises remove human waste from pitlatrines in exchange for a small fee.
“So far there are five community based organisations thathave started the programme and we have seen a successin terms of the reduction in diseases and the urban poorbeing able to access sanitation services”, says ChristinaChacha, spokesperson for WaterAid in Tanzania.
WaterAid offers local entrepreneurs loan finance to buythe equipment required for collecting and disposing of thelatrine waste. The charity also operates a revolving fundthat can be used as collateral for loans from participatinglocal finance providers, such as the Kenya CommercialBank.
“If the private sector thinks it can make money fromthis … then, if we should ever decide to leave, then thisservice can still be sustainable and the urban poor can still access sanitation services”, says Chacha.
Tanzania is also a pilot country for so-called waterstewardship approaches that involve the wider businesscommunity. A high-profile champion of the approachis the Water Futures Partnership (WFP), a cross-sectoralliance that counts GIZ, environmental charity WWF andglobal brewer SAB Miller among its founding members.“Companies are seeing that they are beginning to facecomplex water risks that they can’t manage on site, likegroundwater pollution across the city affecting manybusinesses and communities”, says Robin Farrington, awater stewardship adviser at GIZ.
An illustrative case in point is the Southern AgriculturalGrowth Corridor of Tanzania (SAGCOT), a vital foodgrowingregion. A substantial coalition of governmentagencies, charities and corporations, including brands suchas Nestlé, Olam and Bayer, is working to promote a moresustainable approach to farming in the area. Among otherinterventions, the SAGCOT alliance plans to implementeight major irrigation schemes across the area’s threeprincipal water basins.
For its part, WFP is engaged at a smaller scale. Inconjunction with a range of local partners, it recentlyembarked on a €192,000 (£153,000) project to restore thepolluted Mlalakua River, located in the north of Dar EsSalaam.
“It’s early days for the public-private partnership conceptin Tanzania, but it’s vital because we all know that donorfundedprojects are evolving into something differentthese days”, says Tania Hamilton, director at NabakiAfrika, a local construction firm and (along with SouthAfrican bottling company Coca-Cola Sabco) one of theproject’s key corporate sponsors.
Hamilton concedes that progress has so far been slow.Public awareness remains a big problem. After decades ofdumping waste into the river, local residents fail to see itas an issue, she states. Lack of trust between business andgovernment represents an obstacle too, as does lack ofmanpower and expertise on the part of water authorities.Other challenges to public-private partnerships includethe pace at which they occur. For companies used to quickresults, it can seem slow, Farrington observes: “When youbegin to bring together a diversity of stakeholder arounda very public good like water, you have to understandthat it takes time and must respect in a wide variety ofperspectives, interests and mandates.”
It will require new thinking and fresh approaches toachieve the country’s 2025 target of universal access. Withthe government facing a host of other public servicedemands, it will require progressive intervention by theprivate sector too. As Hamilton concludes: “Unless wewant to be surrounded by dead rivers, we [as businesses]have got to get involved.”
Economic Overview: Performance and Outlook
In 2012 and into 2013, the Tanzanian economy expandedat an annualized rate of approximately 7%. A World Bank/KPMG survey in November 2013 showed that 55% of the businessmanagers of the top 100 mid-sized companies in Tanzania feel thatthe economy is performing better in 2013 than in 2012, while 26%feel it is the same compared to 21% who said that it is now worsethan in 2012.
The main drivers of Tanzania’s rapid economic growthcontinue to be a small number of fast growing, capitalintensive sectors, particularly the communications, financialservices, construction, manufacturing and retail tradesectors. The service sector, driven by the expansion of transport,communications, retail trade and financial services, recorded thehighest rate of annual growth in 2012, at 8.0%. By contrast, laborintensive sectors, particularly the agricultural sector, in whichapproximately 80% of households are primarily engaged, recordedan average annual growth rate of only 4.2%. Similar trends, withhigher rates of growth recorded by the less labor intensive sectors,were observed across the board during the first two quarters of2013.
The inflation rate continued to decline in 2013, reaching a rateof 6.3% by October 2013. At the end of 2011, the inflation ratehad reached almost 20%. This steady and significant decline hasbeen the result of a combination of the implementation of strictermonetary policy and a decline in food and energy prices. As a result,Tanzania’s rate of inflation is now roughly equivalent to that ofneighboring Uganda and Kenya. The decline has also contributedto the stabilization of the real exchange rate, which appreciated byalmost 20% in 2011/12 as the result of the large inflation differentialbetween Tanzania and its trade partners. This stabilization of thereal exchange rate also has positive implications for exporters.
The most significant transformative factor on the economy isthe large natural gas reserves that were recently discovered.If managed well, these gas reserves have the potential to transformTanzania’s economic future. While the most significant impacts ofthis discovery on the local economy will not be felt for at least sevento ten years, when exploitation will start at full scale, the discoverywill nonetheless drive increased economic activity during theconstruction phase. In the long term, the magnitude and timing ofthe impact of the discovery remain uncertain. Careful managementof the revenues derived from the newly discovered natural resourceswill be required to ensure the optimal use of these revenues and toachieve inclusiveness.
In the meantime, if Tanzania is to follow the example ofsuccessful emerging countries, it will need to improve policyaspects in the areas of human development (Tanzania iscurrently ranked 152nd out of 182 countries on the HDI index); itsbusiness environment (134th out of 185 countries); and governmenteffectiveness (135th out of 212 countries). For the last twoindicators, Tanzania’s ranking has deteriorated over recent years.
The Tanzanian Government has implemented a relativelytight monetary policy to reduce monetary expansion andhas increased guiding interest rates. While this helped toreduce inflation, it resulted nevertheless in increases to the costof credit, imposing increased burdens on borrowers and therebynegatively impacting the expansion of the real economy. However,the magnitude of this negative impact may not be dramatic, as theratio of total credit to GDP was only 24.8% in 2012, compared toa figure of more than 130% in emerging counties such as Thailandand Malaysia.
Source: World Bank Last Updated: Apr 09, 2014