A digital artifact/resource about mobilizing private sector's role in financing for development in Tanzania.

1. PRIVATE SECTOR FINANCING
FOR DEVELOPMENT IN
TANZANIA
A PROPOSED SOLUTION FOR ENHANCING PRIVATE
SECTOR’S ROLE IN FINANCING FOR DEVELOPMENT IN
TANZANIA
December 9, 2015FFD MOOC 2015

2. TARGET AUDIENCE
General Public
Government Officials
Policy Makers
Banks
Private Sector Businesses (E.g. Multinational and local companies, SME’s)
International and National NGO’s
Multilateral Development Banks (MDB’s)
Colleagues and Peers
Philanthropists

3. INTRODUCTION
Tanzania, East Africa’s largest and most populous country (51,822,621; World
Data Atlas) has been a recipient of Official Development assistance (ODA) from
the World Bank Group, mostly from IDA (International Development Agency).
Apart from ODA, Public finance (Tax collections by Government) has also been
used to finance development projects in the country
However several Sub-Saharan Countries (Tanzania included) still mobilise less
than 17% of GDP in Tax revenues, implying that despite ODA assistance, the
Private sector actively needs to participate in the Financing for Development

4. PRIVATE SECTOR FINANCING
Private sector firms are risk/return oriented so the more the return and diversification,
the more likely private firms will invest
In Tanzania, with an ever growing number of private businesses, especially SME’s (Small
& Medium scale Enterprises), there is large potential for the private sector to contribute
much, much more towards Financing for development.

5. ISSUE AT HAND
The insufficiency of the private sector’s contribution towards financing for development
in Tanzania
How to mobilise the Private sector to not only contribute, but even play a bigger role in
funding of development projects

6. REASONS WHY GOVERNMENT OFFICIALS & OTHER
STAKEHOLDERS WOULD WANT TO HELP IN SOLVING
THE PROBLEM
More finances and funding of development projects made available through private
sector’s participation
Less reliance on ODA funds from the Multilateral Development Banks (MDB’s)
Enhanced Domestic Resource Mobilisation (DRM) with private sector empowering
other sectors of the economy
 Private sector’s contribution towards financing for development will help Tanzania
towards attaining the Millennium Development goals (MDG’s) as well as the newly set
Sustainable Development Goals (SDG’s) and ultimately give rise to overall economic
growth and development

7. OBSTACLES TO PRIVATE SECTOR
FINANCING IN TANZANIA
Lack of incentives to private sector towards financing development projects
Under-developed capital market: Tanzania merely joined the Equity market of the world
in the late 90’s with the Dar-es-Salaam Stock Exchange (DSE) which is still on the verge
of growing
Investment ‘climate’ infrastructure still not welcoming enough especially to the small
scale businesses

8. WAY FORWARD
As Jay Collins puts it “…Financial returns and social returns can co-exist”. So which way
forward to overcoming the obstacles towards Private Sector’s Contribution of Financing
for Development;
Public-Private Partnership highly required for enhancing private development finance
More policy guidance from the MDB’s and International Monetary Fund (IMF) towards
support of private development finance
Government should create better incentives as well as better investment climate for
private development financing

9. CONCLUSION
“The financing needed to implement the SDGs are huge and therefore will
require mobilizing additional private resources – domestic and international –
including foreign direct investment (FDI), international portfolio investment,
bank loans, capital markets, domestic financial markets, private transfers
(remittances) and private philanthropy.”