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November 13 | east africa investment | 666 views | 0 Comments

By Henry Lyimo |

MORE than seven billion US dollars have been committed by local and foreign venture capital and private equity funds for long term investment financing in Tanzania giving massive boost to prospects for transforming the country to an industrialised economy.

Pension funds have the largest share of the lot after committing four billion US dollars in the new investment drive that is set to empower the local private sector to own large-scale investments. “We have seven billion US dollars for investments under the venture capital and private equity.

This is the largest single investment commitment ever made in Tanzania,” the Chairman of the Tanzania Private Sector Foundation (TPSF), Dr Reginald Mengi, announced at the opening of a conference on venture capital and private equity investment financing in Dar es Salaam last week.

According to the Managing Director of Statera Capital, Mr David Ross, pension funds committed four billion US dollars in the new investment financing and the International Finance Corporation (IFC), a member of the World Bank has committed 3.2 billion US dollars.

The African Development Bank, Germany Development Bank (DEG) and AfricInvest have committed over one billion US dollars each. A local venture capital and private equity firm, Mkoba Fund has committed 300 million US dollars. Other companies have committed about 100 million US dollars.

Statera Capital is a strategic partner with TMS consultant and Tanzania Private Sector Foundation in Tanzania Venture Capital and Private Equity project.

Prospects are high among the venture capital and private equity stakeholders that the alternative investment financing will propel the country to become an economic power house in the sub- Saharan region.

The stakeholders believe that with the newly discovered wealth in natural gas resources in Lindi and Mtwara regions, macroeconomic performance and political stability, a stage has been set for Tanzania’s industrial revolution.

Dr Mengi, a successful local entrepreneur and a media magnate, said he and the business community in general foresaw a great future for Tanzania if development policies were properly implemented. “We have very good policies. The problem we don’t walk the talk. We do not have properly planned execution plans.

I believe if the policies are properly implemented Tanzania will become an economic powerhouse. Not tomorrow or next year but yesterday,” he said. Dr Mengi said the figure committed by venture capital and private equity funds will rise provided there are good viable projects to attract investment financing from the new industry.

“The seven billion US dollars may rise provided we have good and viable projects to absorb the funds. We should be confident with ourselves,” he told reporters later on the sidelines of the conference.

“We will be an economic powerhouseÉ we have what it takes to become an economic powerhouse.” Tanzania is currently the fast growing economy in the East African region after achieving a 7 per cent rate of growth last year.

The economy is projected to grow by 7.2 per cent this year and continue growing at an annual average of 7.7 per cent in the medium term.

The second largest economy in the East African region which is fourth largest gold producer in Africa after South Africa, Ghana and Mali — and the major tourist destination in the region is expected to reach a middle income status by 2025 on the back of the recent natural gas finds and coal resources.

The natural gas reserves estimated to reach 50.5 trillion cubic feet by latest figures, and coal reserves estimated to reach up to five billion tonnes, are expected to fuel the rapid expanding economy and turn the country to a major hydrocarbon exporter.

Stakeholders in the venture capital and private equity investment financing view that the new source of investment financing has a bright future in Tanzania provided the private sector wakes up to embrace the opportunity for capital financing.

“This is a mission to see industrial revolution taking place in Tanzania. This is the time for it to take off. Let’s go to industrialize this country as it is stated in the Vision 2025. It is possible,” said the Project Manager for Tanzania Venture Capital and Private Equity Project, Mr Sebastian Kingu.

Mr Kingu who researched on venture capital and private equity industry and the man behind the project to enhance the industry in the country told the ‘Business Standard’ that the venture capital and private equity industry would thrive in Tanzania if the private sector would be able to align their projects to the requirements of the new alternative investment financing arrangements.

He said it needs the private sector to prepare for the new investment financing industry and bring up big and viable projects to access the funds.

The government expressed commitment to support growth of venture capital and private equity investment financing as a means to empower Tanzanians to own large scale investments in the country.

In his opening remarks of the conference, the Vice-President, Dr Mohammed Gharib Bilal, said the government was welcoming initiatives to develop venture capital and private equity noting that the new alternative source of investment financing have the potential of turning Tanzania into an economic power house.

“The efforts to develop the private equity and venture capital as an alternative source of finance to our companies in Tanzania is warmly welcomed and unconditionally supported by the government,” he said.


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