MILLENNIUM CHALLENGE CORPORATION
September 18, 2007
Tanzania and Millennium Challenge Corporation: Building a Dynamic Partnership for Poverty Reduction through Economic Growth
The five-year, $698 million Millennium Challenge Corporation grant to the United Republic of Tanzania seeks to reduce poverty, stimulate economic growth, and increase household incomes through targeted infrastructure investments in transport, energy, and water.
Tanzania, comprised of the mainland and Zanzibar, is located in East Africa bordering the Indian Ocean and eight other African nations. Tanzania plays an important role in the region as an economic trade partner and stands out as a proponent of peace and security. In a region that has historically been divided by violent ethnic and religious conflict, Tanzania is a peaceful country with a religiously diverse population, abundant natural resources, and a distinct sense of national pride and identity. However, this stability has not translated into widespread economic prosperity, as nearly 36 percent of the mainland population and 49 percent of the Zanzibar population live below the national poverty line. An inadequate transportation network, an insufficient and unreliable supply of energy, and a shortage of clean and safe water are three key constraints to economic growth and private sector investment in Tanzania. The Millennium Challenge Compact with Tanzania is designed specifically to address each of these constraints.
Transport Sector Project ($373 million)
Transport infrastructure in Tanzania is inadequate to meet the needs of the country’s widely dispersed population. By rehabilitating a group of trunk roads on the mainland, the airport on Mafia Island, and selected rural roads on Zanzibar, the Transport Sector project aims to reduce travel times and transportation costs that will lead to increased economic opportunities. Moreover, improved roads help connect road users and communities with markets, schools, and health clinics. The components under this project include:
• The Mainland Trunk Roads activity will rehabilitate and upgrade three trunk roads on the mainland: (i) Tanga-Horohoro, a 68 km stretch of highway in northeast Tanzania connecting the seaport of Tanga with Horohoro at the Kenyan border that will ease transport of goods between Dar es Salaam and Kenya; (ii) Tunduma-Sumbawanga, a 224 km stretch of highway in western Tanzania, a fertile agricultural area, constituting the southernmost part of the Western Corridor and representing the only link between Dar es Salaam and Zambia; and (iii) two segment of the Mtwara Corridor, a 139 km stretch of highway in southwestern Tanzania, the westernmost part of the Southern Corridor that runs from the Indian Ocean of Mtwara to Mbamba Bay on Lake Nyasa. These two segments connect the capitals of two districts, Nantumbo and Mbinga, with Songea, the capital city of the Ruvuma region.
• The Zanzibar Rural Roads component will improve up to five rural roads on Pemba Island, totaling approximately 35 km.
• The project also includes funds for road maintenance to enhance Tanzania’s capacity to maintain its road network. This activity will support strategic maintenance planning and the management of routine and periodic maintenance of contracts.
• Mafia Island Airport activity will provide aviation and public safety related facilities at the airport on Mafia Island, which is located off the east coast of Tanzania. Due to the poor condition of the airport and lack of feasible alternative transportation options, this activity will keep the airport open and prevent the island’s 45,000 residents from being cut off from the mainland.
Energy Sector Project ($206 million)
Currently in Tanzania, industry, businesses, and households suffer from either a lack of energy services or unreliable service. Where electricity is available, the quality of supply is poor, and blackouts and other service interruptions are common. The Energy Sector project will improve electricity service and coverage in Tanzania through the addition of new power generation, transmission and distribution capacity, as well as through much needed reinforcement of the existing network. The project is expected to result in improved reliability and quality of electric power, and the extension of service to communities and businesses not currently served. The components of the Energy Sector project include:
• The Zanzibar Interconnector activity includes laying an approximately 40 km long, 100MW capacity submarine electric transmission cable from the mainland to Unguja Island, along the path of the existing submarine cable that is reaching its limits in both capacity and lifespan. To support the additional trans- mission capacity, the activity also includes the reinforcement of substations at either end of the cable, as well as the corresponding installation of supplementary transmission capacity along existing lines. This activity is expected to provide a reliable and non-polluting power supply to Unguja Island, the largest is- land in the Zanzibar archipelago, which is entirely dependent on power supply from the mainland. This will allow the island to continue to develop its potential as a high-value tourist destination, and will also improve the productivity and quality of life for the island’s population.
• The Malagarasi Hydropower and Kigoma Distribution activity includes the construction of a small run-of-river hydropower plant on the Malagarasi River at Igamba Falls, and the extension of a mini-grid system in the Kigoma region. Lack of access to reliable power has been one of the major constraints to investment in commercial and industrial operations in this region. This activity seeks to replace costly, inefficient, and polluting diesel power generation with affordable, reliable, and clean renewable small-scale hydropower. The expanded distribution system will also facilitate the electrification of rural villages and towns.
• The Distribution Systems Rehabilitation and Extension activity will rehabilitate the existing distribution infrastructure and a number of small distribution line extensions to unserved areas in six regions -- Mwanza, Tanga, Morogoro, Iringa, Dodoma, and Mbeya -- that were identified by the Government of Tanzania as priority areas for investment. This activity will address the growing demand and the corresponding strain on the network to deliver reliable and quality power to industrial and commercial users, as well as to households, in these regions.
Water Sector Project ($66 million)
Tanzania faces a serious shortage of access to clean and safe water, resulting in a high incidence of water-related disease, decreased workforce productivity, and a constraint for business growth. To address this issue, the Government of Tanzania in coordination with other stakeholders developed a 20-year program known as the Water Sector Development Program. The Water Sector Development program identifies all activities under the MCC-funded Water Sector project as priorities. Designed to increase the quantity and reliability of potable water for domestic and commercial use, the Water Sector project focuses on improving water supply infrastructure in the two cities of Dar es Salaam and Morogoro. By increasing the volume of water supply, the Water Sector project is expected to reduce the prevalence of water-related disease, to increase time available for productive activities such as education, and to promote greater investments in physical capital. The components of the Water Sector project include:
• Dar es Salaam, Tanzania’s largest city and commercial center, is experiencing a severe water crisis due to a shortage of water supply and poor water quality. The Lower Ruvu Plant Expansion activity will expand of the capacity of the Lower Ruvu water treatment plant from about 180 million liters per day to approximately 270 million liters per day.
• Currently, approximately 60 percent of Dar es Salaam water is lost due to physical leakages and commercial losses. The Non-Revenue Water activity aims to improve the system efficiencies of the Dar es Salaam Water and Sewerage Authority and Dar es Salaam Water and Sewerage Company to determine the locations and volumes of physical losses through leaks, and commercial losses as a result of deficiencies in billing and collection and theft. This activity will substantially reduce water resource waste and the need to develop new water sources through reduction of physical and commercial losses.
• The Morogoro Water Supply component seeks to improve the water supply in Morogoro, a city that, due to a growing population coupled with its aging water infrastructure, faces water supply deficiencies and increased health risks for its population. MCC assistance will be used to rehabilitate water intake and water treatment plants, and improve the existing distribution network.
Upon project completion, it is estimated that the program will directly or indirectly benefit approximately 4.8 million Tanzanians.
Millennium Challenge Corporation (MCC), a United States government corporation designed to work with some of the poorest countries in the world, is based on the principle that aid is most effective when it reinforces good governance, economic freedom, and investments in people that promote economic growth and elimination of extreme poverty.