In good news for one of the world’s poorest countries, the World Bank predicts that Tanzania’s economy will grow 7% in 2012/13 if the global economy recovers.
Major recently discovered gas deposits are expected to boost domestic growth in the medium-term, and further gas exploration is planned.
High inflation driven by rising food and fuel prices as well as chronic energy shortages dampened Tanzania’s economic growth last year. Inflation, at 19.7% in January, led to the deepening of popular discontent as people struggle to get by in a country long considered an island of stability.
Adam, a vendor in Dar es Salaam told Think Africa Press, “Here, things are getting really tough. All the prices keep rising, I think if it continues we will really have problems here.”
The government, predicts that inflation will have fallen down to single digits by June, a forecast echoed by the World Bank. However, this would rely on the global price of oil dropping and a global economic recovery.
The World Bank predicts that economic gains from recent discoveries of natural gas will eventually boost Tanzania’s domestic growth. Natural gas reserves are now estimated to be at more than 10 trillion cubic feet following a major discovery in the country's deep-water offshore region. On February 24, Norwegian oil firm Statoil announced that they had discovered at least 5 trillion cubic feet of gas, equivalent to approximately 891 million barrels of oil, in Zafarani.
The British company BG group also made a discovery in Tanzania last year, and last month announced appraisal work that showed the new offshore discoveries contained 3 trillion cubic feet of resources. Soon after, it was announced that the firm would be spending a further $500 million on gas exploration in Tanzania.
With large discoveries also having been made recently in neighbouring Mozambique by Italian and American firms, it seems that – as Tim Dodson, Statoil’s Executive Vice President for Exploration puts it – “East Africa is a hotspot for exploration”.
The race for East Africa’s gas reserves has begun, with the main markets expected to be those in the developing markets of Asia and particularly India.
While oil and gas companies as well as the Tanzanian government are getting excited about the country’s gas resources, many members of the public remain indifferent. “Maybe this time it will be different, but they have found uranium, they have found gold, they have found tanzanite. We are still poor,” said Laylet, a hotel worker from Arusha.
Other members of the public greeted the news with similar scepticism, arguing that gas finds might make the government richer but were unlikely to make their own lives any easier.
Indeed, Tanzania has long been a known mineral-rich country: it is the third-largest producer of gold on the continent after South Africa and Ghana, and also has reserves of uranium, diamonds, coal, iron, nickel, chrome, tin, coltan, platinum and tanzanite. While these minerals along with tourism have driven economic growth, many members of the public feel that they have not benefited. Inflation has outstripped growth, leading to frustration at perceived corruption.
Whether exploration uncovers yet more natural resources in Tanzania or the World Bank’s economic predictions come true, the real challenge is for economic growth to meaningfully improve the lives and livelihoods of Tanzanians.
Think Africa Press welcomes inquiries regarding the republication of its articles. If you would like to republish this or any other article for re-print, syndication or educational purposes, please contact: firstname.lastname@example.org