SINGAPORE Cooperation Enterprise (SCE) and Surbana International Consultants have inked a contract to help the Tanzanian government draw up the master plans for Arusha City and Mwanza City, following six months of negotiations and due diligence.
The agreement was signed on Christmas Eve.
SCE is a government outfit formed to share Singapore's development experience with foreign governments.
Like many African cities, many informal settlements have sprung up in both Arusha City and Mwanza City, resulting in an urban sprawl where urban development spreads uncontrollably beyond the cities' edge. Both cities have not had their masterplans reviewed for the past 20-30 years.
Tanzania's economy relies mostly on agriculture as well as gold and exports of minerals, although recent major gas discoveries off the shores of Tanzania are set to build up liquefied natural gas (LNG) exports as another of its growth pillars.
In fact, Temasek's Pavilion Energy in 2013 paid US$1.3 billion for a 20 per cent stake in three gas blocks in offshore Tanzania. Temasek also owns 60 per cent of Surbana.
Louis Tay, Surbana's managing director for Africa and city management, said the benefits of a good masterplan are manifold in a rapidly developing country like Tanzania.
For one thing, it is an indication of a government's commitment to its nation; for another, it gives transparency to potential international investors - say, a manufacturer that wants to build a factory and needs to know what infrastructure will be built in the next few years.
When the master planning project is completed, a city gallery with physical models and exhibition panels will be set up to give locals and potential investors a glimpse of what the city will look like in the next 20-30 years.
Mr Tay said: "The plan is communicated in black and white. As an investor, you can get the government to lock down the investments based on that. In the past, without a masterplan, it's very difficult. Nobody knows what the next 5-10 years will bring. Developments spring up on an ad hoc basis, with no clear commercial basis as to why they are located in a particular area. A masterplan tries to avoid all these things."
This contract is urban consultancy Surbana's eighth in Africa, following earlier ones in Burundi, South Africa, Republic of Congo, Angola, Rwanda, Nigeria and Mauritius.
Currently, projects in Africa make up only 2 to 3 per cent of Surbana's revenue but this proportion is growing each year as it continues to seek out more opportunities on the continent. The consultancy said it expects to announce more deals in new territories this year together with SCE, away from sub-Saharan Africa where it has mostly been operating, and leaning towards central or west Africa.
Eventually, when it has reached a critical mass of projects in Africa, it may even set up an office there. For now, it works out of temporary offices. Mr Tay said it would be too "speculative" to set up a permanent office and locate people on the ground without a large-scale project.
"Right now most of our projects are planning. Planning is straightforward. You fly in, fly out and get the job done. When you get into planning downstream, like designing massive infrastructure or a township, where the period of engagement is longer and the demand on resources is heavier, if there is such a project, we will seriously consider setting up an office."
Surbana currently has offices in Singapore, Malaysia, China, India, Vietnam, Myanmar, Brunei and the United Arab Emirates.
Asked what will happen to the project if there is a change in government after Tanzania's general elections next October, SCE CEO Kong Wy Mun said the team has factored that into its calculation of risks, but doubts that it will bring too much inconvenience.
"We hope, by then, we would have done the bulk of the work. The key thing is that at least in the history of some of the better developed economies in Africa like Tanzania, even with a change of government, the civil service still functions. The powers are quite distinctly demarcated, so that outstanding projects will still continue unless the new government decides not to. Even if that happens, whatever work that has been done should still be accounted for."
Payments are also made progressively at various milestones rather than one lump sum at the end of the project's completion.