Tanzania

The government of Tanzania, the African Development Bank (www.AfDB.org), and the French Development Agency (AFD) have signed agreements for two development project loans worth $300 million.

The funds will finance the construction of the 87.8-megawatt Kakono Hydropower Plant located in Kagera region in the northern part of Tanzania. The project also received a grant of EURO 36 million from the European Union.

Tanzania is dependent on hydropower and thermal power plants—mainly gas-fired—for its electricity supply. However, it has considerable untapped renewable energy potential to meet its rapid growth while taking a low-carbon path.

A coalition of development partners are financing the Kakono Hydropower Project, intended to increase renewable generation capacity and reduce hydrological risk via a dam located on a new watershed that is less affected by droughts.

The signing ceremony took place on the 15th of March 2023 in Dar es Salaam.

The Kakono Hydropower Plant is the result of close collaboration between the African Development Bank, Agence francaise de developpement, and the European Union.

These institutions are co-financing this project with a $ 161.47 million African Development Bank soft loan, a EURO 110 million soft loan from French Development Agency, and EURO 36 million grant from the European Union.

The Kakono Hydropower Project which will be implemented by Tanzania’s Electric Supply Company (TANESCO), will reduce greenhouse gas emissions by 216,065 metric tons per year, and comply with the best international environmental and social standards.

The project will serve 4 million people and increase the service coverage rate by around 7% of the population. It is expected to have a major impact on the economic development of this rapidly growing zone, which lies at the heart of the Great Lakes region.

This project will boost industrialization and spur economic growth in Tanzania and the neighbouring countries and will strengthen Tanzania’s leading position within the East African Community.

Alongside construction of the new hydropower plant, there will also be associated infrastructure built, including the upgrading of the existing Kyaka substation and a new 39-kilometer 220-kilovolt transmission line, and capacity building support for TANESCO.

Following the ceremony participants expressed their support for the project.

African Development Bank Country Manager for Tanzania Patricia Laverley observed that when completed, the Kakono Hydropower Plant would serve approximately four million people, small-medium enterprises, and mining companies in the northwestern part of the country.

She added: “The construction of the new power plant will help to improve TANESCO’s financial sustainability arising from the decommissioning of the diesel-based power plants in the Kagera Region. 

The economic benefits derived from the supply of affordable power will be immense. We can expect to see marked improvement in the quality of life for people in the Kagera region and in Tanzania more broadly.

These tremendous gains will contribute to building a more competitive economy in Tanzania, under the leadership of President Samia Suluhu Hassan.”

Ambassador Nabil Hajlaoui said: “We have heard President Samia Suluhu’s message. She aims to generate 5 gigawatts of electricity by 2025. France is ready to be part of this journey by investing in power generation and transmission projects to meet the rapidly growing electricity demand, while reducing the carbon intensity of its energy mix.”

 AFD Country Director Celine Robert noted: “We are delighted with the signing of this project, which is fully in line with international climate objectives and AFD’s strong commitments in that regard.

This investment will have major impact on economic development and on population well-being as the infrastructure will answer the power needs of 3 to 4 million people.

This signing represents an important milestone and confirms that the cooperation between Government and AFD is deepening.”

Tanzania on Wednesday March 15, signed a loan agreement with African Development Bank (AfDB) amounting to $161.47 million (about Sh374.9 billion) as part of the money for financing the Kagera-based Kakono Hydropower Project.

Alongside with the AfDB, the 87.8 MW project, whose total cost stands at over Sh700 billion, is also financed by the AFD—the French Development Agency, and European Union (EU).

Speaking during the signing ceremony, Finance and Planning minister Mwigulu Nchemba said yesterday’s new development came just a week after the government signed an agreement with the AFD on its portion amounting to 110 million euros (about Sh272.6 billion).

The remaining portion not signed out of the total project cost is the 35 million euros (Sh86.7 billion) grant from the EU to be administered by AFD.

“Following this important milestone, I request the grant arrangement between AFD and EU to be expedited in order to have the full package of financing ready for the project,” asserted Dr Nchemba.

He underscored that the overall development objective of the Kakono Hydropower Project is to increase on-grid energy production from least-cost renewable sources to address electricity deficits in north-western Tanzania.

The development of the project will displace the use of fossil fuels in the north-western corner of Tanzania in the Lake Zone, where costly diesel power generators are often brought online to either supplement the grid supply or improve the quality of supply to avoid prolonged blackouts and brownouts, he added.

According to Dr Nchemba, the project will be completed in five years. It will involve a construction of 87.8MW hydropower plant and other works including a primary school and a health centre in addition to a 28 km long asphalted access road integrated in the Project. This, he expounded, will culminate in the improvement in the living standard of the communities around there.

The project, he added, also involves the supply of evacuation facilities and implementation of the environmental and social management and monitoring plan The Kakono Hydropower Project is in line with the country’s Third Five Year Development Plan (FYDP III) and part of the broad agenda of the Sixth Phase Government.

The targeted goal is to build a competitive and industrial economy for Human Development through improving productive infrastructures, reliable access to energy, strengthening the business and investment enabling environment as well as education and training systems.

AfDB country manager for Tanzania Patricia Laverley said the Kakono Power Plant is set to increase energy production that will eventually address electricity deficit.

“It (the project) will help to improve the quality of electricity supply,” Dr Laverley exuded her optimism. This in turn, will help to build a competitive and industrial economy for human development through reliable access to energy.

AFD country director for Tanzania Céline Robert said the signing ceremony marks a new milestone in the important work and effort of the government to achieve its 2025 Vision for the energy sector.

“Through the construction of a hydropower plant of almost 88MW and its associated infrastructures, the project will significantly increase the renewable generation capacity of the country and contribute to the government’s aim to generate 5 gigawatt (GW) of electricity by 2025,” said Ms Robert.

She went on to add: “This new run-off-the river power station and the related improvement of the grid will foster economic development in the Kagera Region and will pave a way for the Tanzania-Uganda interconnector.”

She went further saying, upon its completion, the power plant will answer the needs of the equivalent of 3 to 4 million people.

At the same time, added Ms Robert, it will participate in the energy transition of the country by reducing carbon intensity of the power sector.

Delegation of the EU to Tanzania head of cooperation Cedric Merel said their Sh86.7 billion in grants contribution illustrates the EU deal and the Global Gateway which is its strategies to promote renewable energies and invest in key strategic infrastructures in partner countries.

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Going by the Bank of Tanzania’s Monthly Economic Review (MER), the national debt increased by Sh6.9 trillion in the 12 months ending January 2023.

Under the period under review, according to the central bank, the national debt jumped from $37.6 billion (Sh86.5 trillion) in January 2022 to $40.6 billion (Sh93.4 trillion) in January 2023.

 “The debt has reached the current level mainly on account of the utilisation of the overdraft facility,” reads part of the MER report.

However, the Head of Government Communication Unit and Spokesman, Ministry of Finance and Planning, Mr Benny Mwaipaja, said Tanzanians have nothing to worry about.

This is because, he said, the borrowed money is being injected into development projects that will ultimately yield lucrative returns for Tanzania in the near future.

It is obvious that the debt will continue to increase as Tanzania continues to undertake several major infrastructure projects, which are key to attracting investors upon their completion.

The projects include the Standard Gauge Railways, the Julius Nyerere Hydro-Power Dam, the expansion of the Dar es Salaam port, and the construction of the Bus Rapid Transit infrastructure in Dar es Salaam, to mention just a few.

“Tanzanians shouldn’t be concerned because the national debt is still manageable in the short, medium, and long terms. We will continue to borrow, but responsibly,” Mr Mwaipaja told The Citizen by phone yesterday.

He went on to add, “We will make sure that whatever we borrow, is used for the intended purposes.”

Echoing the government’s stance, an Economist from Mzumbe University, Prof Aurelia Kamuzora, said the current debt level should not worry Tanzanians, despite its increasing trend.

She explains that borrowing is okay as long the borrowed money is used to generate active capital.

“The debt being huge is not a problem; the problem is how we are using the borrowed money,” she asserted.

She added: “We need good evaluators who will advise the government on how to invest the borrowed money and how to get a return.”

Tanzania has access to financing, according to Prof. Kamuzora, because of the respect it has earned from development partners and multilateral institutions.

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Dar es Salaam. Tesla, the American multinational automotive, artificial intelligence and clean energy company, has signed an agreement under which it will purchase Anode Active Material (AAM) from Tanzania.

An AAM is the active material in negative electrodes.

This comes after Tesla signed a deal with a vertically integrated lithium-ion battery company, Magnis Energy Technologies Limited, and its Tanzanian subsidiaries Uranex Tanzania Limited (Uranex) and Magnis Technologies Tanzania Limited (MTT).

Magnis Energy Technologies Limited, which is listed on the Australian Securities Exchange, owns Uranex and MTT by 100 percent.

Uranex said in a statement yesterday that under the agreement worth an undisclosed amount, Tesla has agreed to purchase from Magnis Energy Technologies between 17,500 tonnes and 35,000 tonnes per annum of Anode Active Material (AAM) from February 2025 for three years.

Magnis Energy is developing a graphite mine in Tanzania where it plans to get “ultra-high purity natural flake graphite” from the operation.

“The deal arrives at a critical juncture for both companies. Tanzania as a country is set to benefit tremendously in terms of technology transfer, employment, among other aspects,” Uranex said.

Uranex is a subsidiary company fully owned by Magnis Energy Technologies Ltd of Australia and its Nachu Graphite Project is a renowned world-class graphite resource. Nachu Graphite Project is located near Ruangwa, in Lindi, Tanzania.

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Annual milk production has hit a record 3.4 billion litres as of last year from 2.5 billion litres in 2015, attaining production capacity of Kenya, which has the highest per capita milk consumption in sub-Saharan Africa, at 110 litres.

Milk production could significantly improve if Tanzania shifted focus to improved breeds. Currently there are slightly more than 1.26 million crossbreeds that contribute only 30 percent of the milk output.

Local livestock populations, mainly the shorthorn zebu cattle and small East African goats and sheep, account for the remaining 70 percent of milk production. But these have low milk production capacity that is aggravated by poor pastures/feeds and failure to observe recommended husbandry practices.

While milk production per animal (crossbreeds) has reached an average of 10 to 12 litres per cow per day, the report further revealed, the traditional short horn zebu cow is capable of producing only between 0.2 to two litres per animal per day.

“Cattle are the main milk producers, sharing over 90 percent of the total milk”, revealed a report from the ministry of Livestock Development and Fisheries.

It is estimated that 100 litres of milk provided at least four full time jobs while manure and traction supported agriculture.

The report was presented during the recent workshop held here on Recent Trends in Dairy Sector Development in East Africa.

“These and other achievements indicate positive growth of the dairy industry, now considered to be 2.3 percent,” the report reads in part.

It said that although milk obtained from other stocks of livestock – goats, sheep and camels – remain negligible, output from cows is promising.

Marketing and processing of milk has been boosted by establishment of milk collection centres at the major production zones.

Last year, over 64 million litres of the total output of 3.4 billion litres of the liquid food was collected in the 242 collection centres.

That was nearly double the 38 million litres that was sold through the milk collection centres, the report further stated.

The dairy sub sector growth has seen the increase of the processing plants across the country hitting 105 last year.

During 2022, at least a total of 212,000 litres produced daily were processed compared to 150,000 litres in 2005.

However, the dairy industry in Tanzania has been grappling with a host of challenges, notable among them low production.

The country, one of the leading in cattle population in Africa, is not self- sufficient in milk and dairy products for its 60 million human population.

The drawback, according to Mr George Masalya from the Tanzania Dairy Board has been compounded by low milk consumption.

Currently, it is estimated that the sub sector contributes only 2 percent of the nation’s total GDP and 30 percent of agricultural GDP.

Per capita milk consumption in Tanzania is estimated at 47 litres a year, behind neighbouring Kenya and Uganda which stand at 110 litres and 62 litres respectively.

This is also far below the 200 litres per capita per year as recommended by the United Nations Food and Agricultural Organization (FAO).

The Citizen

Tanzania’s Finance and Planning Minister Mwigulu Nchemba on Tuesday signed the share subscription agreement in Casablanca, Morocco, making Dar the 34th shareholder of the continental financier

Tanzania has become the fourth country in the region to be a shareholder of the Pan-African infrastructural financier Africa50, expanding the institution’s pool of investors to 34 and widening its access to capital for projects.

Tanzania’s Finance and Planning Minister Mwigulu Nchemba on Tuesday signed the share subscription agreement in Casablanca, Morocco, making Dar the 34th shareholder of the continental financier, joining — among others — Kenya, Rwanda and the Democratic Republic of Congo.

The institution is now owned by 31 African countries, the African Development Bank, the Central Bank of West African States, and Morocco’s central bank – the Bank Al-Maghrib.

Since its formation in 2012, Africa50 has financed 16 infrastructural projects worth about $5 billion in general, seven of which have been completed. It invests in all African countries although most of its projects are in shareholding nations.

In the region, it has invested in three projects in Kenya – a fixed internet company, a data centre, and a public-private partnership project for electricity transmission – and one project in Rwanda – an ICT techno park.

“Tanzania is keen on developing its infrastructure to support the economic development of the country and we are pleased to join Africa50 as a shareholder to leverage on their expertise to deliver the government’s priority infrastructure projects,” Dr Nchemba said.

“Africa50 is already executing transformational projects across the continent, and we are looking forward to working closely on some strategic projects in our country.”

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