A Review of the Impact of Reforms on Investment in Tanzania’s Power Sector

Abstract

This study investigates the impact of reforms on investment in Tanzania’s power sector. The data from 1989 to 2020 were collected and analyzed using the Autoregressive Distributed Lag Model (ARDL) and paired-sample t-tests. It was determined that, as a result of government sponsorship, capacity growth and electricity connectivity as a measure of investment had increased modestly after reforms. The results appear to contradict laissez-faire and privatization theories, which attributed the increase primarily to private investment. The liberalization law, competition, and commercialization as the reform policies were found to be statistically significant and positively affecting investment. Thus, regardless of ownership form, we recommend that the government prioritize these reform policies for improved investment in the sector. Second, to bridge the infrastructure deficit and ensure long-term secure supply, both the public and private sectors should be encouraged to make investments. The value of these findings extends beyond Tanzania to other countries that are struggling to formulate or reformulate their reform programs as it suggests that if prudently managed the public sector can as well improve investment.