Construction in Tanzania - Key Trends and Opportunities (H1 2021)

Although Tanzania’s economy slowed sharply in 2020, with estimated growth of just 1.0% (according to the IMF), the construction industry remained relatively strong, and expanded by 14% in real terms. In recent years, construction has been a major contributor to economic growth, with increased investments in infrastructure, such as the construction of railways, roads, and an airport, as well as spending on improving the provision of a wider and more reliable electricity network, the improvement of transportation services, and the increase in the extraction of minerals - especially gold and coal.

The government has also improved its fiscal position, benefiting from increased collection of taxes and improved efficiency in government operations. However, although there was a smooth succession following death of President John Magufuli in March 2021, the government’s handling of the Coronavirus (COVID-19) crisis has been ineffective, and new waves of infection could disrupt economic activity. Nevertheless, the publisher maintains a positive outlook for construction in Tanzania, as it expects the sector to grow on average by 7.6% between 2021-2025. Tanzania Development Vision 2025 is focused on supporting the private sector, industrialization, and job creation. It aims to improve the business climate by upgrading infrastructure, easing access to finance, and improving public resource management and administration.

In the short term, there is still a risk of a decline in project financing in light of the COVID-19 pandemic, which will slow the progress on some of the country’s flagship infrastructure projects, such as the cross-border SGR with Rwanda and the expansion of energy infrastructure, though the government is committed to implementing such projects. Over the medium to long term, the outlook is driven by the success in pushing ahead with major LNG projects.

In April 2021, the energy majors Shell (UK-Netherlands) and Equinor (Norway) urged the government to take immediate action to conclude talks on a planned LNG plant at Lindi. The government suspended talks with the foreign investors in 2019, in order to allow for a review of the production sharing agreement, but the new president, Samia Suluhu Hassan, reportedly stated in the swearing-in ceremony that there was a need to progress the LNG project.

In April 2021, the government announced that it is working on new strategy to encourage new investment in the country and put forward a plan to spend TZS245.7 billion (US$105.9 million) to improve the investment environment. Moreover, the government launched the third National Development Plan, under which it aims to spend TZS114.8 trillion (US$49.5 billion) during the period of 2021-2026. Of the total amount, TZS40.6 trillion (US$17.5 billion) will be sourced from the private sector, and TZS74.2 trillion (US$32.2 billion) will be secured from domestic sources. Through this, the government will prioritize the development of energy, railways, roads, bridges, marine and air transport during the period of 2021-2026.

In March 2021, the government adopted United Nations Road Safety Collaboration’s (UNRSC) 10 Step Plan for Safer Road Infrastructure, which is jointly funded by the United Nations Road Safety Fund (UNRSF) and the Global Road Safety Facility of the World Bank (GRSF). Through the 10 Step Plan for Safer Road Infrastructure, the government aims to meet the objectives of road safety, as well as Africa’s post-2020 Road Safety Strategy. For this, the government plans to expand and improve road quality in the coming years.

Additionally, in July 2020, the government signed an agreement with two Chinese companies to build 112.3km of Dodoma City Outer Dual Carriageway Ring Road with a total investment of TZS222.1 billion (US$95.7 million). The project will be developed by two Chinese firms - China Civil Engineering Construction Corporation (CCECC) and AVIC INTL Project Engineering Company - with CCECC constructing 52.3km of the road with an investment of TZS100.8 billion (US$43.5 million) within the next 39 months, and AVIC INTL Project Engineering Company constructing 60km of road with an investment of TZS120.9 billion (US$51.7 billion) over the next 43 months.

This report provides detailed market analysis, information, and insights into Tanzania’s construction industry, including:

• Tanzania’s construction industry's growth prospects by market, project type and construction activity
• Critical insight into the impact of industry trends and issues, as well as an analysis of key risks and opportunities in Tanzania’s construction industry
• Analysis of the mega-project pipeline, focusing on development stages and participants, in addition to listings of major projects in the pipeline.

Scope

This report provides a comprehensive analysis of the construction industry in Tanzania. It provides:

• Historical (2016-2020) and forecast (2021-2025) valuations of the construction industry in Tanzania, featuring details of key growth drivers.
• Segmentation by sector (commercial, industrial, infrastructure, energy and utilities, institutional and residential) and by sub-sector
• Analysis of the mega-project pipeline, including breakdowns by development stage across all sectors, and projected spending on projects in the existing pipeline.
• Listings of major projects, in addition to details of leading contractors and consultants

Reasons to Buy

• Identify and evaluate market opportunities using the publisher's standardized valuation and forecasting methodologies.
• Assess market growth potential at a micro-level with over 600 time-series data forecasts.
• Understand the latest industry and market trends.
• Formulate and validate strategy using the publisher's critical and actionable insight.
• Assess business risks, including cost, regulatory and competitive pressures.
• Evaluate competitive risk and success factors.