Two East African countries, Tanzania and Uganda are considering prospects to expand their energy ties to stabilize their economies.
In East Africa, the energy sector is slowly but steadily rising with potential consumers surfacing their demand for natural gas and oil. The industry has depended on investors who have exploited the chances and brought revenues to the governments. Firms have pitched their tents on the sub-Saharan soil to take advantage of the opportunities in the sector.
Tanzania possesses a wealth of natural gas resource and the Government is keen on reaping huge benefits from its exports. The Parliament projects close to $5 billion in revenue annually, which is a massive amount for the country seeking to achieve a middle-income economy state. Meanwhile, Tanzania’s President John Pombe Magufuli has set plans to drive the nation to an industrialized state, keeping in mind infrastructure development projects to steer the nation’s growth.
However, poor infrastructure has hampered business dealings between partners and need for upgrades have proved to increase the operations cost. Tanzania is ready to build a natural gas pipeline to pump the energy resource to its neighbour. The investment opportunity will steer the bilateral relations and strengthen the energy sector. Industries will be able to harness this resourceful energy to capitalize on its potential to sustain their operations. It is a smart move to lure investors in both economies increasing Foreign Direct Investments (FDI).
The ease of doing business in Tanzania has paid off as it has remained to be the first recipient of FDI in East Africa for the last two years. By management and consolidation of Tanzania Investment Window, it offers a high probability to the nation to increase the investment. It has improved its investment ranking to the 7th best in Africa according to a report by RMB Bank. It has remained resilience despite taxes issues
The presence of liquefied natural gas in Tanzania has the capacity to bolster the economic prowess of the country and perform better in the economic index. $344 million new natural gas power plant was President Magufuli’s initiative to achieve the industrialized economy by 2025. Their challenge was an overreliance on hydropower to lead energy-driven firms which deteriorated the performance with prolonged droughts.
After agreeing on a deal to develop a crude oil pipeline to link the two states in 2016, more reformations to benefit the energy sector are underway. The oil and gas industry has been an attractive sector in the economy that has wooed international firms to enter the African market and tap into the unused resources. Kenya is banking on crude oil to fuel development in parts of its country and build a stronger economy.