David Kafulila: Announce in TZ Matter

Tanzania is increasingly turning to Public-Private Partnership (PPP) models to finance its ambitious development agenda, driven by growing public demands and limitations of traditional tax revenues and borrowing. This strategic shift is underpinned by a robust and evolving legal framework, primarily the Public Private Partnership Act, Cap. 103, and its accompanying Regulations, which have undergone significant amendments to streamline processes, enhance investor confidence, and ensure effective project implementation. The Public Private Partnership Centre (PPPC) plays a pivotal role as a 'one-stop centre' for coordinating and facilitating these partnerships. This article explores the legal and institutional landscape governing PPPs in Tanzania, highlighting recent reforms, key benefits, and persistent challenges that legal practitioners must navigate.

Governments globally are grappling with escalating public demands for infrastructure and services, often outstripping the capacity of traditional financing mechanisms reliant solely on tax revenues and public borrowing. In response, many nations, including Tanzania, are actively exploring alternative funding models, with Public-Private Partnerships (PPPs) emerging as a critical solution. The Executive Director of the Public-Private Partnership Centre, David Kafulila, recently underscored this imperative, advocating for Tanzania to deepen its engagement with PPPs to bridge its development financing gaps.

This strategic pivot towards PPPs in Tanzania is not merely a policy preference but an arithmetic necessity, particularly in light of ambitious national development plans such as the Fourth Five-Year Development Plan (FYDP IV) and Vision 2050, which project a substantial portion of required investment from the private sector. The effective implementation of these partnerships hinges on a clear, predictable, and robust legal and institutional framework. This article delves into Tanzania’s journey in establishing such a framework, examining the evolution of its PPP legislation, the role of key institutions, and the practical implications for legal professionals involved in structuring and executing these complex projects.

Tanzania's commitment to PPPs is rooted in its National Public Private Partnership Policy of 2009, which laid the groundwork for a structured approach to public-private collaboration. This policy culminated in the enactment of the Public Private Partnership Act, No. 18 of 2010 (Cap. 103), which serves as the primary legislation governing PPPs in mainland Tanzania. The Act established an institutional framework initially comprising a PPP Coordination Unit and a PPP Finance Unit.

Significant amendments have since refined this framework. The Public Private Partnership (Amendment) Act of 2014 merged the two units into a single Public Private Partnership Centre (PPPC), positioning it as a 'one-stop centre' to streamline promotion and coordination of PPP projects. Further amendments in 2018 relocated the PPPC to the Ministry of Finance and Planning, consolidating oversight and management of the PPP program. The most recent Public Private Partnership (Amendment) Act No. 4 of 2023, alongside the Public Private Partnership (Amendment) Regulations, GN No. 838A of 2023, introduced further critical changes aimed at enhancing efficiency, investor confidence, and aligning PPPs with national development objectives.

The current Tanzanian PPP framework, particularly following the 2023 amendments, introduces several key features designed to attract private investment and ensure successful project delivery. A notable reform is the mandatory requirement for private parties to incorporate Special Purpose Vehicles (SPVs) to undertake projects, with public entities allowed to hold a minority shareholding not exceeding 25% under specific conditions. This mechanism aims to clarify risk allocation and facilitate project financing. The Act also provides for tax incentives, aligning benefits for qualified PPP projects with those offered under the Tanzania Investment Act, Cap. 38, thereby enhancing the attractiveness and viability of private investments.

Procurement processes have also been streamlined. While competitive bidding remains the general principle, the Minister responsible for PPPs now has the power to exempt solicited projects from this process under specific conditions, such as urgency, exclusive private party rights, or lack of reasonable alternatives, which is intended to expedite strategic projects. Furthermore, the dispute resolution mechanisms have been expanded, moving beyond the previous limitation to Tanzanian law and jurisdiction. Parties can now mutually agree to international arbitration, including under the International Centre for Settlement of Investment Disputes (ICSID) rules or relevant bilateral/multilateral investment treaties, significantly boosting investor confidence, especially for foreign investors.

Despite these advancements, challenges persist. Historical issues such as inadequate implementation capacity within government agencies, bureaucratic delays, and concerns over policy consistency have hindered PPP success. Unbalanced risk sharing, non-transparent procurement practices, and insufficient financial planning also pose risks to project sustainability. The PPPC, as the central facilitator, is tasked with addressing these challenges through technical assistance, capacity building, and managing the Public-Private Partnership Facilitation Fund, which supports project preparation activities.

Tanzania's PPP pipeline includes a diverse range of projects across sectors such as transport, energy, health, education, and water, with a significant number currently in feasibility study and concept note stages. The success of these projects is crucial for achieving national development goals, and the ongoing legal and institutional reforms demonstrate a clear intent to create a more conducive environment for private sector participation. However, continuous vigilance in addressing implementation gaps and ensuring robust governance will be paramount.

The Tanzanian government's renewed emphasis on PPP models signals a critical shift in its approach to financing national development projects. The comprehensive legal framework, anchored by the Public Private Partnership Act, Cap. 103, and its recent amendments, along with the central coordinating role of the Public Private Partnership Centre, provides a structured environment for private sector engagement. These reforms, particularly those relating to SPVs, investment incentives, and international dispute resolution, aim to foster a more attractive and predictable investment climate.

For legal practitioners, this evolving landscape presents both opportunities and complexities. Advising on PPP projects in Tanzania now requires a deep understanding of the amended Act and Regulations, meticulous due diligence in project structuring, careful negotiation of contractual terms, and expertise in navigating the expanded dispute resolution options. Practitioners must also remain abreast of ongoing policy developments, capacity-building initiatives by the PPPC, and the specific requirements for local content and corporate social responsibility. The success of Tanzania's ambitious development agenda through PPPs will largely depend on the effective collaboration between public and private sectors, underpinned by sound legal counsel and robust governance mechanisms.