Tanzania Gets $1 Billion Loan to Curb Corruption and Improve Transport

Tanzanian President John Magufuli speaks at his swearing in ceremony.
Tanzanian President John Magufuli at his swearing in ceremony in Dar es Salaam, November 5, 2015. The African Development Bank has approved a $1.1 billion loan to assist Tanzania in fighting corruption and improving infrastructure. Daniel Hayduk/AFP/Getty Images

Tanzania will receive a $1.1 billion loan package from the African Development Bank as the country seeks to crack down on public sector corruption and improve infrastructure.

The East African country recorded strong economic growth of 7 percent in 2014, but much of the population still lives in poverty. President John Magufuli has launched a crackdown on corruption and lavish spending since his election in October 2015, firing dozens of port officials in December 2015 after thousands of containers disappeared without taxes being paid on them and forcing new government officials to publicly sign a pledge of integrity before entering office.

The Bank said on Thursday that the loan would "address the most pressing constraints to economic transformation and improving public sector governance to ensure value for money in public spending." The credit line will be used primarily to support the transport and energy sectors in Tanzania, which has recently discovered huge natural gas deposits totaling an estimated 57 trillion cubic feet. The Tanzanian central bank estimated that its annual economic growth would be boosted by 2 percentage points if a facility was constructed to extract and process the reserves, according to Reuters. Many of the reserves lie in deep-sea offshore blocks south of the country.

Magufuli has tightened the purse strings on public spending since coming to power. He announced in December 2015 that his cabinet would consist of 19 ministries, 11 less than the previous government, and has also suspended all foreign travel by government officials except himself, the vice president and the prime minister, telling ministers they should instead "go to the villages" to learn about the Tanzanian people's problems. The president's cost-cutting measures—which also reportedly included slashing the budget for the state dinner to mark the opening of parliament by more than 90 percent—sparked a hashtag, #WhatWouldMagufuliDo, with Tanzanians sharing their own novel ideas for saving money on social media.

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Despite its impressive economic growth, living standards are still poor for many in Tanzania. The country was ranked 151st out of 188 countries in the U.N.'s 2015 Human Development Index, a global barometer of living standards. More than a third of the population live below the income poverty line, according to the U.S. government's aid agency.

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Tanzania Gets $1 Billion Loan to Curb Corruption and Improve Transport | Business