LNG PROJECT SET TO INCREASE TANZANIA’S GDP BY OVER $7BN PER YEAR AND CONTRIBUTE OVER $2BN IN GOVERNMENT REVENUES

Minister for Energy, Hon. January Makamba (left) receiving Stanbic Bank's independent macroeconomic study on the Tanzania Liquefied Natural Gas (LNG) project from the bank CEO, Kevin Wingfield (centre) during the reports launch event today in Dar es Salaam. In Tanzania, this report is the first of its kind, and will help policymakers, investors, the public and other stakeholders in the energy sector to understand the economic impacts of the implementation of the LNG project. Looking on is Manzi Rwegasira (right), Head of Corporate and Investment banking.

• LNG Project set to increase Tanzania’s GDP by over $7bn per year and contribute over $2bn in government revenues 

Dar es Salaam, 26th October 2022 - Stanbic Bank Tanzania (a subsidiary of Standard Bank Group) released an independent macroeconomic study on the Tanzania Liquefied Natural Gas (LNG) project. The study is the latest in a series of macroeconomic reports examining the socio-economic impact of major energy projects on countries on the continent and their people. A previous study looked at Mozambique’s economy and the potential impact of its LNG projects.

The report was launched in Dar es Salaam at an event attended by Honourable January Makamba, Minister for Energy of the United Republic of Tanzania, senior government officials and representatives from the Ministry of Energy; representatives from the Tanzanian private sector, industry experts, civil society and other stakeholders.

According to the Bank’s analysis, Tanzania could expect to see significant economic benefits from the LNG project. It is believed that, upon completion, Tanzania LNG will be the largest energy project in Africa’s history in terms of capital investment. It would increase Tanzania’s Gross Domestic Product (GDP) by $7 billion per annum. By comparison, Tanzania’s GDP in 2020 was $62 billion according to the World Bank (WB).

The magnitude of the economic impact is correlated with the expected future price of LNG. The Bank has therefore modelled for different future price scenarios, starting with $5.50 MMBTU as a baseline and rising to $12.00 MMBTU as an upside case.

Some of the key findings of the report, include: GDP increase of between $7 to 15 billion per year representing a transformational economic impact, Between 270,000 to 600,000 direct and indirect national employment opportunities over the life of the project, Between $2 to 6 billion in fiscal contributions to the Government of Tanzania per year, Between $3 to 8 billion per annum in Balance of Payments contributions, Allowing Tanzania to develop multiple domestic gas and industrial projects that can help power the nation, Position Tanzania as a global energy player and creating new opportunities in the energy sector

The Guest of Honour, Minister for Energy, January Makamba applauded Stanbic Bank for launching the report saying the insights are critical in providing an overall understanding of the macro economic impact of the projects.

Commenting on the report, Stanbic Bank Tanzania CEO, Kevin Wingfield said: “We are delighted to provide crucial insights at a time when Tanzania envisages to become an industrialised nation. No doubt through the effective implementation of the LNG project we can boost industrialisation and promote the country's economic diversification. Our analysis shows that the project’s impact on the economy could be transformational; providing a significant boost to the fiscus with billions of US dollars in revenue, hundreds of direct job opportunities and thousands of indirect employment opportunities."

Manzi Rwegasira, Stanbic Bank Tanzania Executive Director, added: “The LNG project could not just lift the economic prospects of the country but it would go a long way in helping Tanzania with its energy transition to cleaner energy sources while simultaneously achieving its goal of industrialisation.”

The report, which was developed by the Bank with support and inputs from Conningarth Economists and Tanzania’s Research on Poverty Alleviation (REPOA) is the first independent study that looks at the macroeconomic benefits of the LNG project to Tanzania

The report underscores the importance of the government in taking a leading role in creating the appropriate commercial, fiscal and legal conditions to enable the timely development of the project and to ensure that it becomes and remains globally competitive.