Under the leadership of John Magufuli, the long-standing ruling party, the CCM, retains a firm grip on power. This month has seen Tanzania’s government in the spotlight for stalling a multi-billion-dollar deal by suggesting that it may renegotiate contracts with investors in the natural gas sector. Resource nationalism has become increasingly prevalent in Tanzania over the past years, prompting the government to pressure foreign multinational companies by tightening its regulatory environment. The Tanzanian government will likely continue attempting to extract additional profits from its natural resources, as President Magufuli and the CCM party are unlikely to back down on their hard-line stances before they come up for re-election in 2020.
This is a positive move as the deal will benefit more Tanzanians than international companies. But the positive outlook faces downside risks, the growing private sector is concerned about the contracts uncertainty and increased domestic arrears that could derail the government’s fiscal consolidation and harm the private sector. However, expectations need to be well managed given significant uncertainties facing the industry including price movements, technological development in the oil and gas industry and concerns over profitability of the proposed liquid natural gas plant.
