Tanzanian Economic Growth Slows as Electricity Output Drops

Growth in Tanzania, East Africa’s second-biggest economy, slowed to 6.5 percent in the fourth quarter as electricity output declined after a drought curbed hydropower generation, the National Bureau of Statistics said

The growth rate dropped from 6.7 percent in the same period a year earlier, the Dar es Salaam-based agency said in a statement on its website today. Electricity production contracted 1.7 percent, compared with growth of 9.7 percent previously, it said.

The lower growth rate was a result of “low water levels at the hydro dams and a decrease in electricity generated from gas due to the maintenance of gas turbines,” the bureau said.

The Tanzania Electric Supply Co. was forced to ration power last year because of reduced output, crimping growth in the country’s mining industry. Tanzania vies with Mali to be Africa’s third-biggest gold producer and is the world’s only known source of tanzanite, a blue gemstone.

The discovery of an estimated 12 trillion cubic feet of natural gas off Tanzania’s coast may help stabilize power supplies in the long term, said Yonoh Mtengule, chief economist at National Bank of Commerce Ltd., Absa Group Ltd.’s Tanzanian unit. In March, Tanesco, as the power utility is known, said it secured a $165 million loan from HSBC Holdings Plc to build a 100 megawatt gas-fired facility.

“Huge reserves of natural gas have been discovered in the country and this will boost generation of power at a cheaper cost,” Mtengule said in a phone interview today.

The mining and quarrying industry grew 1.2 percent in the fourth quarter, according to the statistics agency.

“The country has not had significant new investments in the mining sector, partly due to power blues,” Mtengule said. “Mining growth could decline going forward.”

Growth in construction accelerated to 8.1 percent in the fourth quarter from 1 percent previously, while the financial industry grew 13.3 percent, compared with 6 percent a year earlier, the statistics agency said. Manufacturing slowed to 6.6 percent from 9.9 percent, while transport and communication dropped to 10.8 percent from 17.2 percent, according to the statement.

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