Sunday, April 19, 2015

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Gas Discoveries Give Hope to Tanzania's Faltering Economy

Despite optimistic predictions, many are sceptical that ordinary Tanzanians will benefit from the recent discoveries of major gas deposits.
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An economy at sea: Tanzania hopes offshore gas findings will boost the economy, but some remain doubtful. Photo by Kevin Harber.

Dar es Salaam, Tanzania:

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.

Growth is good?

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.

“Hotspot for exploration”

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.

Popular indifference

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.

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Yah Sarah most of you economist you have been making noise that this economy is growing but though iam an engineer to me things sound differently and the matter is Tanzania is Third in Gold Production but through your research did you know  how many ounce we produce per year?and how much  the goverment is getting as share and tax?then who is presenting the public interest on those mining companies?and by comparison do you think  these companies are   doing the same thing like in the other countries?.Sarah there was one thing verry interesting to me, as you know  we have Tanzanite only found in Tanzania and this gamestones their are  not consumable once you buy it  you stay with it!but supprisingly the goverment have decided for large scale mining without considering the demand and supply principles!to me i tought that we could opt for small scale mining to create a deficit in the market which will rise the price!and the goverment was to built an international gamestones and mineral market in Tanzania where by all of the world dealer will be  coming to satisfy their demand!.To narrow it to final point is the growth your making noise with it is infrastructure investment this companies they have spent it during the initial stage but it is not a real growth deriven by production even the sales is done outside the country so what is effect of this production do you think will have impact in our economy rather than the small penant salaries paid to indeginous leaving  a huge taken abroad!ok iam wishing you all da best if your still here in Tanzania you can find me to talk more my phone is +255717960761

It's an exciting exploration for sure. I only have one concern about Tanzania's way of doing things; People talk, ooohh yes they do!!! and the government listens, everybody listens. But the government doesn't realize the importance of taking action at that immediate moment when needed most: Procedure, bureaucracy and paperwork done by the government delays the pace of development finally reaching the targeted population. I have my eyes fixed on the planning commission/policy strategists that have to create a fast and direct income distribution for all the profit got from the extraction, processing and deals from the oil. There is no other concern greater than this apparently...that we should respect speed for what it is....responsible-confident leaders that are able to act spontaneously to these resources. Tanzanians understand they have resources, yes the country is rich!!! but transforming that riches-in-kind to well distributed income for the nation need regulation and control far greater than laws!!! it needs a win-win kind of business existance, and the win-win scenario should respect the order of benefiting Tanzania. So our greatest hope is on the policies the planning commission/ strategy boards make.Tanzania has a way!!! and the way is to being responsible and respecting speed.

3rd largest gold producer and yet one of the poorest economies...the irony!Corruption is the deciding factor in all this in my opinion, either get rid of it (starting with the highest level corrupt official) or we'll forever be an aid-dependant nation-shame on our selfish, self-serving leaders!