Gas likely to spur new boon

Prof Ndulu
The Tanzania economy is expected to grow faster than the average 7.2 per cent for the next five years that was predicted by the International Monetary Fund (IMF), the Bank of Tanzania (BoT) has said.

BoT Governor Prof Benno Ndulu attributed the growth to domestic natural gas investments, expected to hit about 30 billion US dollars.

“If we managed to raise just 20 per cent of the gas investments locally (about 6 million US dollars) that will have positive impact on GDP growth,” Prof Ndulu told the ‘Business Standard’ on the sidelines of the 22nd WEF in Addis Ababa.

However, he hesitated to give the actual growth figure as they were still analysing the investment package.

The Governor, a former World Bank senior staff, said the central bank was analysing variables that would assist local gas investments, including preparing supporting staff, supplying the necessary locally available goods and services - especially construction hardware.

A recent IMF report showed that Tanzania was among the top ten countries in the world whose GDP was expected to grow by over six per cent.

The report, which was quoted by Ernst & Young’s 2012 Attractiveness Survey shows that Tanzania economy will grow by an average 7.2 per cent behind Mozambique (7.7 per cent) and Ethiopia (8.1 per cent). The first two were China and India at 9.5 and 8.5 per cent respectively.

DRC Congo, Zambia, Ghana and Nigeria are behind Tanzania. Following the discovery of huge gas reserves, Prof Ndulu warned that international lenders might try to advance the country based on future gas revenues. “The best practice is to avoid mortgaging the country’s future as all proceeds could end up paying for debts contracted five years earlier,” the Governor said.

Ernst & Young’s head for Transaction Advisory Services for Eastern Africa, Mr Zemedeneh Negatu said political stability and openness were the key factors that put the country at the centre of global direct investments in the next five years. “But the story is not just about economic growth.

It is also about a longterm process of political, regulatory and social reform,” Mr Negatu, who is also Ethiopia’s Managing Partner, said. He said the report shows that the two biggest investment bottlenecks on the continent were political instability and corruption at about 90 per cent and 82 per cent respectively.

The number of Foreign Direct Investment (FDI) projects in Africa grew 27 per cent from 2010 to 2011 and have grown at a compound rate of close to 20 per cent since 2007.

“Bridging the infrastructure gap will be a key enabler of regional integration, growth and development. It also remains a key challenge, Nagatu said.

The Ernst & Young report shows that regional integration is critical to accelerated and sustainable growth.

“Creating larger markets with greater critical mass will not only enhance the African investment proposition, it is also the only way for Africa to compete effectively in the global economy,” the report indicates.
Source: The Daily News, ,reported by Abduel Elinaza
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