The impact of natural gas on economic growth in Tanzania

The study examined the impact of Natural Gas on Economic Growth in Tanzania specifically by determining the impact of generated natural gas revenue, natural gas FDI, natural gas foreign exchange reserves and imports on Tanzanian GDP.The study deployed econometrics tools to analyse data..Ordinary Least Square regression model was used. Further,it conducted the Augmented Dickey-Fuller (ADF) Unit root test to establish stationarity of variables studied. Model results show that there is positive and significant impact of gas revenue and gas FDI on economic growth. A unit change in gas revenue and gas FDI results to 42% and 35% increase in GDP respectively. The study suggest that the government should put more focus on its natural resource investment and fiscal policies, further more to ensure that there is continuous policy reviews to steer more revenues generation from the sector. The study calls upon for government initiatives to be embarked on the sector to ensure maximum fruits are leaped. The government has to involve different national stakeholders toward sector development. For example there is a need for different institutional investors to participate in the natural gas sector investment. The study findings will further add to the existing body of knowledge and be used as a milestone for further researches. Furthermore, There is a need to study the impact of natural gas sector on other areas that affect economic development and growth, for example to study microeconomic impacts of natural gas sector to individual aspects such as income level, overall living standard as well as poverty reduction. Another area of research is to analyse the relationship between gas foreign exchange reserves with other macroeconomic variables such as interest rate and exchange rate. Tanzania will soon join international natural resource markets, there is a need to analyse how Tanzania is prepared to meet oil and gas market dynamics. Furthermore there is a need to study proper mechanisms on how natural gas sector can be easily integrated with other non-gas sectors.