By Olufemi Terry
The Board of Directors of the African Development Bank Group has approved a $107.8 million loan to Tanzania to bolster governance and industrial competitiveness and reinforce social inclusion.
The budget support loan will underwrite Tanzania’s Economic Competitiveness and Social Inclusion Programme (ECSIP), an initiative to drive Tanzania’s sustainable recovery from the effects of the Covid-19 pandemic and Russia’s invasion of Ukraine.
The program has three components: promote reforms that will enhance domestic resource mobilization and strengthen public expenditure and procurement systems; enhance the management of environmental resources and the investment climate; and improve social protections and livelihoods of vulnerable groups, including small and medium enterprises and women and youth.
Patricia Laverley, the Bank Group’s Tanzania country manager, said, “This operation will allow the bank to deepen policy dialogue with other development partners on domestic resource mobilization; public financial management reforms; strengthening anti-money laundering and counter-terrorist financing measures; industrial development and competitiveness; as well as strengthening social protection through reprioritization of public expenditures in Tanzania.”
Over the last ten years, the bank has supported the Tanzanian government to implement reforms that have made the country more attractive to business and investment. However, global economic headwinds threaten the country’s fiscal progress. Average growth—nearly 7% before the Covid-19 pandemic—is estimated to have slowed to 4.8% in 2022.
The program is expected to directly benefit several government ministries and entities, including the ministry of community development, gender, women and special groups, and the revenue and public procurement regulatory authorities. Businesses across mainland Tanzania and Zanzibar are expected to gain access to more investment opportunities to enable them to expand.
The ECSIP aligns with the bank’s Tanzania Country Strategy Paper 2021-2025 and Ten-Year Strategy, which runs through 2023. It also advances the bank’s Strategy for Economic Governance in Africa (2021-2025) and the Climate Change and Green Growth Action Plan (2021-2025)
As of 28 February 2023, the Bank’s portfolio in Tanzania comprised 21 sovereign and three non-sovereign operations with total commitments of $2.65 billion. Eighty-six percent of these operations are in the infrastructure sector, notably energy, transport and water and sanitation.