Tanzania invests heavily in water infrastructure to meet 2030 targets

27 Jun 2024 by The Water Diplomat

In February 2021, the Africa Water Investment Programme (AIP) was adopted at the 34th Ordinary Session of the Assembly of Heads of State and Government of the African Union in Addis Ababa, Ethiopia, as part of the Priority Action Plan of the Programme for Infrastructure Development in Africa (PIDA).  The launch of this initiative was aimed at addressing the continent's existing gap in achieving Sustainable Development Goal 6 (SDG 6) on water and sanitation, through an initiative to mobilise investments of US$30 billion per year in the sector until 2030.

Tanzania has been working since last year on an investment drive, with its  Tanzania Water Investment Programme of U.S. $ 15.02 billion between 2023 and 2030. The funds will be allocated towards four priorities : 40% will go towards to social investments (enhancing access to drinking water and sanitation), 8% to institution-building and skills development, 32% to economic development and water resource management, and 20% to improving climate resilience and environmental sustainability.

At this stage, the Tanzanian government has committed to the mobilisation of 43% from internal sources, and is engaging with partners to find external financing for the remaining 57%.

Tanzania’s Vice-President, Philip Mpango, announced, the launch of the ‘mind the gap’ campaign – a reference to the existing gap in investments - at the 78th session of the UN General Assembly. Following on from this, the Tanga Urban Water Supply and Sanitation Authority, Tanzania's public water utility, announced the issue of green bonds to support the expansion of services and infrastructure. On February 22, 2024, green bonds were issued on the Dar Es Salaam stock exchange, and by May 15, 2024, the authority had officially reached 103% of its financial target, raising 53.12 billion Tanzanian shillings (around US $20.3 million – of which 65% from local investors and 35% from international investors). One of the wishes of the Tanzanian Ministry of Water and Irrigation is to strengthen and improve the capacity of its teams to develop bankable projects, ready for financing, and to mobilize climate funds. To this end, steps are being taken with the African Development Bank.

In this regard, AIP’s Director General Alex Simalabwi declared that "innovative financing mechanisms such as green bonds will be at the heart of AIP's approach to transforming investment prospects in Africa's water sector", recalling that foreign investors were appreciating the investment opportunities in infrastructure projects, having already US$ 550 billion in assets under management. Lastly, he estimates that nearly US$10 billion could be raised each year on the continent to invest in water-related infrastructure.

The National Water Fund has already created a loan window for water companies with favourable interest rates.

The Tanzanian government's efforts continue. Parliament has just approved a new water budget for the period from 2024-2025 which aims to  accelerate investment such that the country achieves 85% coverage of access to drinking water in rural areas and 95% in urban areas by 2025. This involves 247 water projects in urban areas and 1905 water projects in rural areas. In addition, 22 dam projects will be launched, 26 small and medium-sized dams and 45 larger dams are under construction. All diesel water pumps in the country will be replaced by electric pumps to ensure a reliable water supply all year round. Finally, the government is planning to drill 5 wells in each of the 25 districts of mainland Tanzania.