 Liberalising
the Transportation sector |
Transportation sector is the key player of Tanzania's economy, and in 1997/98 fiscal year it grew by 6.2 percent thereby increasing the sector's contribution to the economy from 5.2 to 5.3 percent. Currently, significant developments have already been made towards liberalising the sector to end the monolopoly by state run transport institutions such as Tanzania Railways Corporation (TRC), National Transport Corporation (NTC), Usafiri Dar es Salaam (UDA) and many others in freight service and passenger transportation activities.
For example, Tanzania Railways Corporation TRC, the largest state run transport authority with a fleet of engines and wagons on rail and ships on all the three main lakes of Tanzania (Lake Nyasa, Lake Victoria and Lake Tanganyika), is one of the parastatals awaiting to hand over its operations over to private sector operators by 2003.
Upcountry and long distance passenger transportation hitherto dominated by TRC's fleet of buses and trucks is also significantly being controlled by the private sector and the state run authority has been forced to re-design its business strategies. "Following a decline in operational performance during the 1980s, TRC conceived and implemented a number of major restructuring programmes. The restructuring process enabled TRC to increase tonnage carried to 1.36m tons in 1995 but again fell to 1.23m tons in 1996," The Honorable Ernest Nyanda, Minister of Communications and Transport noted. In 1998 TRC cargo tonnage dropped to a million tons and the consistent fall in cargo freighting is attributed to competition posed by a better performing private sector controlled road transport network.
The TRC's shipping services are also in trouble as an aged fleet of ships operating on Lakes Victoria, Tanganyika and Nyasa need millions of dollars to be rehabilitated or replaced altogether. The private sector has not responded positively to invitation in investing in lake services marine industry as has been the case along the eastern coastline where many private company speed boats such as those of Azam Marines, Sea Express, Sea Star Services and Flying Horse have taken the lead in passenger transportation.
Another state run transport institution is Tanzania Zambia Railways Authority (TAZARA), jointly owned by United Republic of Tanzania and Republic of Zambia. Built by the Chinese under a special loan agreement between 1970 and 1975, TAZARA has a network of lines covering a distance of 2,605kms from Dar es Salaam Port to Zambian border town of Kapilimposhi in comparison to TRC's 960kms network of lines country wide. The performance of the railway has been generally on decline since 1993. As a result, the two governments want the authority to be privatised. "The governments of Zambia and Tanzania are in consultation to look into the whole question of privatisation of TAZARA which, to start with, would involve a study to determine how best to approach the process," Minister Ernest Nyanda said.
| Maritime sub-sector reforms towards a private sector control are also going on, and apart from TRC, Tanzania Harbours Authority (THA) is directed towards privatisation. Cargo handling, storage and management mechanisms need massive private sector investment to turn performance around, especially if competition from South Africa and Kenya is to be kept at bay. Although a number of ships calling at THA ports of Tanga, Dar es Salaam and Mtwara increased by 23.9 percent from 4,618 in 1997 to 5,724 in 1998, cargo hauled through these ports declined by 9.1 percent from 4.4m tons to 4.0m tons mainly because some landlocked countries being served such as Rwanda, Burundi and Democratic Republic of Congo (DRC) are at war and so forth the production and economic activities are affected. The government of Tanzania has since embarked on privatisation of THA's operations, and six core units have already been identified for privatisation. Dar es Salaam Port container terminal has already been leased for 10 years at an annual fee of over 3m dollars to a consortium of two international companies and a local firm in May this year. The consortium operating the terminal for next 10 years comprises of International Container Terminal Services Inc., International Holdings Corporation and local firm, Vertex Financial Services Limited.
Domestic air transport was liberalised in 1992 whereby air fares and freight tariffs were left to be determined by market forces. In order to cater for the new market demands, early this year the government decided to turn Directorate of Civil Aviation into Tanzania Civil Aviation Authority (TCAA) and Directorate of Aerodromes into Tanzania Airports Authority (TAA) as its executive agencies to regulate the sector. The number of licensed air charter operators increased from 15 in 1992 to 26 by the end of 1999, and important private passenger airlines include such as Arusha based Precission Air, Dar es Salaam based Eagle Air, while the state run airline Air Tanzania Corporation (ATC) is on the verge of divestiture. "We have been told by the government that Air Tanzania will be privatised before the end of the fiscal year 2000/01. This means that it should be privatised by June 31st 2001," ATC Managing Director Emmanuel Kimaro said. He said that the national flag carrier formed in 1977 has a very good aviation record is still considered to be the favourite airline on the domestic market. In airport management, Kilimanjaro Airport Development Company (KADCO), a joint venture between Tanzania government and foreign investors, has taken over Kilimanjaro International Airport as a pilot project before such an exercise can be extended nation wide in the future.
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