As a child growing up in Mtwara, I remember carrying jerrycans on weekends and walking all the way to the Ruvuma River in search of water. We would wash our school uniforms there before carrying the water home.
Access to water is therefore not an abstract policy issue to me. It is part of my childhood memories. So is life in Dar es Salaam, where, despite significant government investment in water infrastructure, it can still be common to wait one or even two weeks without a single drop running from the tap in low-income neighbourhoods like the one where I live. For many Tanzanians of my generation and social background, this is simply a familiar reality.
That is why I welcomed the government’s efforts to address Tanzania’s water challenges. But a recent headline in particular caught my attention. The front page of HabariLeo, No. 6734, published on Friday, July 17, 2026, carried the headline in Swahili “Tanzania Yaita PPP Uwekezaji wa Maji” which translates as “Tanzania Calls for PPP Investment in Water.”
This announcement raises an important question: Is the public-private partnership (PPP) model really the best way to finance Tanzania’s future in the water sector?
The answer deserves more scrutiny than the attractive narrative surrounding PPPs might suggest.
The promise, and the cost of private finance
The appeal of PPPs is easy to understand. The private sector appears to bring its own money into public projects, reducing the immediate burden on government and freeing public resources for other development priorities.
But the phrase “private money” can be misleading.
When a private company finances a PPP, it generally raises that capital from banks and other financial institutions. In many cases, the private company will borrow at a higher cost than the government could borrow directly. Investors also expect a return on their capital, which ultimately has to come from somewhere—usually government payments, user fees, tariffs, or a combination of these.
This is particularly important for a country such as Tanzania, where the affordability of essential services is a major concern.
READ MORE: David Kafulila Advocates for PPPs to Reduce Tanzania’s Reliance on Borrowing for Development
Research by Counter Balance examining 215 European Investment Bank-backed PPPs between 1990 and 2015 found that expected annual returns for investors were substantially higher in developing countries than in developed economies. The research reported typical returns of around 12 percent in developed countries, compared with more than 25 percent in the Global South.
If Tanzania attracts foreign investors to finance major water infrastructure, should we expect the cost of capital to be lower? And if investors require higher returns because Tanzania is considered a riskier market, who ultimately pays for those returns?
The answer matters because water is not a luxury product. It is a basic necessity.
A PPP can be financially viable on paper while still producing water that is too expensive for the people who need it most.
The renegotiation problem
There is another issue that deserves attention: PPP contracts do not always remain as they were originally signed.
David Hall, writing in 2015 and citing IMF staff research, noted that 55 percent of PPP contracts were renegotiated, on average just two years after signing. Of those renegotiations, 62 percent resulted in higher tariffs for users.
The experience of countries such as Chile and Colombia is even more striking. Hall reported that three-quarters or more of infrastructure PPPs in those countries had been renegotiated, with costs increasing substantially in some cases.
Of course, Tanzania is not Chile or Colombia. But that is precisely why these experiences should be studied rather than dismissed.
What happens when a water PPP encounters currency depreciation, higher borrowing costs, lower-than-expected revenues, construction delays or other unforeseen circumstances? Who carries the additional cost?
If the answer is ultimately the government or the consumer, then the claim that PPPs reduce the financial burden on the state becomes much less straightforward.
Tanzania has been here before
Perhaps the most important reason for caution is that Tanzania has already experimented with private participation in the water sector.
In 2003, the Dar es Salaam Water and Sewerage Authority (DAWASA) leased the management of the city’s water and sewerage system to City Water Services, a consortium involving Biwater of the United Kingdom, Gauff Engineers of Germany and the Tanzanian company Superdoll.
READ MORE: Kafulila Champions PPPs as Economists Urge Caution, Transparency in Implementation
The arrangement was supported by approximately US$160 million from the World Bank, the African Development Bank and the European Investment Bank. The World Bank’s financing was linked to the appointment of a private operator.
The contract was terminated by the government in 2005, only two years after it began. The dispute subsequently reached international arbitration. A London tribunal, drawing on evidence from the World Bank, found that water and sewerage services had deteriorated under City Water’s management.
Whatever lessons one draws from that episode, it should not simply be treated as a historical footnote. Tanzania is once again considering private participation in a sector that is fundamental to public health and human dignity.
A World Bank study of Sub-Saharan Africa covering 2007 to 2012 found that the public sector and aid agencies invested about US$2.5 billion annually in water and sanitation, while private-sector investment amounted to less than US$10 million per year.
India provides another revealing example. According to the same study, the government financed 99.6 percent of the US$22.3 billion invested in water and sanitation between 2007 and 2012.
If governments around the world have historically carried most of the financing burden for water infrastructure, perhaps the debate should be less about replacing public finance with private finance and more about finding the most efficient combination of public investment and development finance.
What exactly will the PPP do?
This question becomes even more important as Tanzania considers developing a national water grid.
Before celebrating the PPP model, the public deserves to know precisely where private partners are expected to participate.
Will they finance and construct new water sources? Will they build and operate treatment plants? Will they lay transmission pipelines? Will they maintain infrastructure? Will they collect revenue from consumers? Or will they be responsible for the entire chain?
These are not technical details that can be left to specialists alone. They determine who carries the risks, who controls the infrastructure and, ultimately, who pays.
Consider currency risk. If a foreign investor borrows in dollars or euros but earns revenue in Tanzanian shillings, what happens when the shilling depreciates sharply? Who bears that loss?
What happens when construction costs rise? What happens when projected water demand is lower than expected? What happens when the parties disagree over the contract? Will the government compensate the private partner? Will tariffs increase? Will taxpayers absorb the cost?
These questions concern what economists call contingent liabilities, the obligations that may not appear immediately in the government’s budget but can become public financial burdens later.
There is a fundamental reason why the water debate cannot be treated like an ordinary infrastructure investment.
People can postpone buying a car. They can choose not to travel. They can reduce their consumption of many goods when prices rise. They cannot simply stop needing water.
For millions of Tanzanians, especially low-income households, there is no meaningful substitute when the public water supply fails or becomes unaffordable. That makes the politics and economics of water fundamentally different from many other sectors.
My childhood experience in Mtwara taught me that water scarcity is not merely a development statistic. It determines whether a child can wash a school uniform, whether a family can maintain basic hygiene and whether a community can live with dignity.
Logic Malyangu is a recent university graduate and an active participant in social movements in Tanzania. He can be reached at logicafrica@outlook.com. The opinions expressed here are the writer’s own and do not necessarily reflect those of The Chanzo. If you are interested in publishing in this space, please contact our editors at editor@thechanzo.com.
