A PARTNERSHIP BEYOND AID

Tanzania 2014 | DIPLOMACY | GUEST SPEAKER

Heikki Eidsvoll Holmås, Minister of International Development for Norway, on the development of relations between the two countries and the achievements of Tanzania since independence.

Heikki Eidsvoll Holmås
BIOGRAPHY
Heikki Eidsvoll Holmås graduated in 1999 from the Norwegian School of Economics and Business Administration with a degree in economics and business administration, and previously studied economics and law and the University of Oslo and the University of Bergen. He held numerous positions in Norway’s Socialist Left Party, including party chair in Oslo, as well as chairing and participating in committees on Finance and Local Government, before being appointed Minister of International Development in March of 2012.

Heikki Eidsvoll Holmås, Minister of International Development for Norway, on the development of relations between the two countries and the achievements of Tanzania since independence.

Tanzania's vision is to become a middle-income country and reduce its aid dependence significantly by 2025. Until recently, few economists considered this possible. But that was before oil companies found large quantities of gas off the coast of the country. Today, Tanzania looks set to become a gas economy. And while gas revenues will not immediately be generated, Tanzania's prospects of a future without aid are now brighter. Norway will support Tanzania in its efforts to reach this goal, and make sure that the income from the natural resources benefits all people of Tanzania.

It is likely that gas alone will lead to a doubling or even tripling of foreign investment in Tanzania over the next five to 10 years. Once gas production is fully developed, depending on gas prices and production costs, tax revenues could be two to four times higher than total development assistance to the country. But let us not forget that Tanzania remains a poor country. More than seven out of 10 people live below the poverty line of $1.25 per day.

Norway and Tanzania have enjoyed close relations ever since Tanzania gained independence. Relations have been built at all levels, from the level of the respective heads of state—the King of Norway and the President of the United Republic of Tanzania—to the thousands of individuals from both countries with a unique story to tell.

“ Tanzania has been a haven of peace, and has supported its neighboring countries during their struggles for independence. "

Despite ups and downs, Tanzania has achieved much since independence, socially and economically: life expectancy has risen from 43 to 58 years; people earn twice as much (enhancing purchasing power); at the time of independence, eight out of 10 people were illiterate. Today, those numbers have reveresed; at the time of independence, only six out of 20 children attended primary school. Today, 19 out of 20 children do so; the infant mortality rate has been reduced by about 70%; tax revenues have increased from about 11% to 18% of GDP over the past 10 years; and economic growth has remained at 6%-7% over the past decade, despite the global financial crisis.

Recent developments indicate that our partnership is set to change more rapidly over the coming years. This good news confirms that Tanzania is among the five fastest-growing economies in the world. High rates of economic growth, combined with systematic government efforts to increase domestic revenues, have enabled Tanzania to reduce its dependency on foreign aid, whereby the share of the state budget funded by aid has been halved over the past five years. Similarly, levels of investment, both foreign and national, have increased, reflecting the economic opportunities in Tanzania.

For many years, Tanzania has been a haven of peace, and has supported its neighboring countries during their struggles for independence. The founding father and first President of the Republic Mwalimu Julius Kambarage Nyerere and his successors embarked with great vigor and resolve on a process of nation building and reconciliation that has few parallels in Africa. The social cohesion that resulted is still apparent in Tanzania today. Any asset, however, must be protected, and at times reviewed in order to endure. This is a challenge we all face. In today's Tanzania, harmony is jeopardized by growing economic disparities, greater religious tension, and issues of ethnicity in politics. Combating poverty is still of fundamental importance to ensure continued stability and peace.

Several major Norwegian companies have seen the opportunities available in the continent, and have established a presence in Tanzania. Many more companies, primarily in the petroleum, energy, agriculture, and tourism sectors, are about to follow suit. Statoil, Norway's national oil company has made major discoveries of commercially viable gas reserves off Tanzania's shores. Many Norwegian companies are expected to make strategic investments in various sectors in Tanzania in the future, to include the new gas economy.

Norway will continue to cooperate with Tanzania over the coming years and help enhance domestic revenue mobilization through the sound management of renewable and non-renewable resources. We will also provide support in addressing the challenges Tanzania faces in safeguarding global common goods and services.