DDC reaps big from Sh37bn revamp of Kariakoo facility

Dar es Salaam. A landmark Sh37 billion public-private partnership (PPP) has transformed the Dar es Salaam Development Corporation’s (DDC) Kariakoo facility into a modern commercial hub, marking a major shift in urban infrastructure development through collaborative financing.

Previously underutilised and yielding low returns, the revamped facility is now projected to generate Sh2.4 billion in annual revenue—six times more than the Sh400 million earned annually before the upgrade.

With the first of two phases completed, the initiative has been hailed as a successful model for PPP implementation in Tanzania.

Speaking to a local broadcaster, a University of Dar es Salaam lecturer, Dr David Rwehikiza, said the project is already delivering a significant socio-economic impact.

“The completion of the first phase has attracted 900 tenants into the Central Business District. If each employs five people, that’s 4,500 jobs created almost instantly. Swift project execution fuels economic momentum,” he said.

The Public-Private Partnership Centre (PPPC) executive director, Mr David Kafulika, highlighted the project's financial impact, saying DDC now collects Sh2.5 billion annually from the initiative, a six-fold increase from the Sh400 million previously garnered.

"This is an exemplary project. Other public institutions, including councils, municipalities, and government bodies with ample land, should emulate the DDC project to attract resources and build a robust economy," he said.

He identified car parking reserves, markets, and recreational centres as prime investment areas ripe for PPPs.

But, Dr Rwehikiza further noted that the Sh37 billion investment has transformed the area, enabling the private investor to collect Sh7.2 billion in annual revenue, thereby securing reliable income streams for DDC for years to come.

The 10-storey structure, once completed, saw all its stalls immediately leased due to competitive and community-friendly rates.

Beyond income generation, the project has introduced modern management practices, technology, and technical expertise, enhancing infrastructure delivery efficiency.

"These inputs have made execution faster and more cost-effective," Dr Rwehikiza explained, adding that such transformation would have been challenging with government funds alone.

He emphasised that PPPs provide public bodies with access to private capital while transferring risk and improving efficiency.

"In traditional procurement, the government bears most of the risk. Under PPPs, this is largely shifted to the private partner," he said.

Streamlined processes and local investor focus

The project's swift completion, attributed to advanced building technologies, underscores a key benefit of private sector involvement. PPPC's Chief Legal Officer, Mr Emmanuel Massawe, revealed the government's prioritisation of local investors, particularly for projects requiring less upfront capital.

"To build local capacity and reduce costs, domestic private players will be favoured. It's our responsibility to foster an enabling environment for them," he said.

Mr Massawe detailed the rigorous legal framework governing PPP projects, which begins with identifying a viable opportunity, followed by a pre-feasibility study to assess risks, costs, and benefits, noting that a detailed feasibility study then generates data for decision-making.

"Before implementation, all necessary permits are secured. The draft contract is reviewed by engineers, surveyors, contractors, and legal experts to ensure compliance with the PPP Act and balanced risk-sharing," he explained.

The draft then proceeds to the PPPC steering committee before final approval from the Attorney General."Only after thorough negotiations between the public institution, private investor and PPPC can the agreement be signed and implementation begin," he insisted.

He further clarified that the PPP Procurement Act differs from the Public Procurement Act by shifting financial and operational risks from the public to the private sector, promoting greater efficiency and reducing government expenditure.

Incentivising investment

Mr Kafulika also highlighted that the PPP Act allows investors to undertake projects through a soliciting approach, enabling them to prepare project documents after identifying investment opportunities. "They can undertake a direct negotiation approach (single source) or a special arrangement approach, mainly used for strategic arrangements," he stated.

He said under Regulation 11, investment processes involving less than $20 million (over Sh50 billion) can be concluded at the institutional or ministerial level without requiring PPPC board approval. Furthermore, he said the move aims to register and execute more such projects, contributing to Tanzania's economic growth ambitions.

Mr Kafulika concluded by listing key benefits of PPP projects, including tax exemptions, government guarantees, and tax incentives, designed to encourage both local and foreign investment.

The DDC Kariakoo transformation stands as a compelling case study on the power of public-private collaboration to deliver impactful urban development, spur economic activity, and ease the burden on public finances.