(August 2, 2012) — The East African nation of Tanzania has announced it will launch a sovereign wealth fund (SWF) to ring-fence revenue from its natural resources, and has joined a growing number on the continent to make the move.
In a televised address yesterday, President Jakaya Kikwete told Tanzanians that the government was exploring ways to manage the income and was particularly focusing on models that involved creating a SWF, Reuters initially reported.
“We want to learn from them by setting up our own fund to ensure we similarly benefit,” Kikwete said.
The move follows announcements from Nigeria, Gabon, and Ghana, the governments of which said they would launch SWFs to tap natural resource revenues to benefit citizens.
Gas is a major revenue stream for the country of over 43 million – in June international companies discovered massive reserves in the sea belonging to Tanzania. Revenue from gas rose by 10.2% in 2010, according to the country’s financial plan published by the Tanzanian government last month.
The document also claimed the country was the third largest producer of gold in Africa, and would rise up the global rankings after deposits having been discovered, but not yet mined.
Establishing a SWF would mean the country could use the income from natural resources to improve infrastructure and standard of living for its citizens, the president said in the televised address.
The financial plan admits the nation suffered from a poor electricity network, inefficient travel infrastructure, and a lack of skilled labour.
Tanzania already manages the National Social Security Fund, which is the largest public investment fund in the country. The fund is paid into by citizens and is worth around $1.3 billion, according to domestic reports.