The Tanzania diesel generator market is expected to grow at a CAGR of more than 3.13% over the period of 2020-2025. Due to lack of grid electricity, off-grid electricity generation has become an important part of the country’s power generation, which heavily relies on diesel generators. This is expected to drive the market of diesel generator in the country. However, the increasing shift toward natural gas generators as an alternative to diesel generators in various end-use industries and increasing adoption of renewable energy sources for power generation are expected to restrain the growth of diesel generators in Tanzania, during the forecast period.
- The diesel generators with ratings less than or equal to 75 kVA is expected to hold the largest share in the Tanzania diesel generator market, in 2019, owing to the increasing demand from the telecom sector, commercial complexes, small restaurants, small-scale industries, and petrol stations.
- Innovations in the field of diesel generators have led to the development of hybrid diesel generators, which have been gaining popularity for application in various industries, including automotive, telecom, mining, and data centres, along with the service sector. This innovation is expected to create significant opportunities for the diesel generator industry in Tanzania.
- The establishment of SEZs and government’s infrastructure projects, such as railway and expansion of highways, are expected to further boost the demand for diesel generators in Tanzania, during the forecast period.
Key Market Trends
Increasing Demand from Industrial Sector to Drive the Market
- With the rapid expansion of wireless communication systems in Tanzania and the increasing socioeconomic benefits of mobile phone technology, the need for dependable and economical backup power has become a critical factor.
- Under the 2017/18 budget plans, the government of Tanzania has planned to allocate TZS 1.216 trillion toward the construction and maintenance of regional and district roads under the Road Fund, as well as road construction projects. The railway sector is expected to grow as a result of increased mining and quarrying activities, and investment in new lines. New developments such as the construction of the first phase of the Dar es Salaam – Mwanza – Kigoma Standard Gauge Railway that began in April 2016 is expected to benefit the country through reduced transit time within the regions covered, as well as increased options for modes of transport.
- As a result, the establishment of SEZs, such as the construction of Bagamoyo Special Economic Zone (SEZ) and the Bagamoyo Port (worth USD 10 billion), and the increasing infrastructure projects, such as railway and expansion of highways, are expected to further boost the demand for diesel generators, especially those with ratings between 75 kVA and 375 kVA in Tanzania during the forecast period.
- Under Vision 2025, the Government of Tanzania aims at having at least 40% of the GDP contributed by the manufacturing sector by 2025, for which efforts has been made to improve the manufacturing industry in order to achieve the target.
- Therefore, rapid industrialization in the country supported by the government’s targets and investments in different sectors are expected to boost the demand for diesel generators as a backup power source during the forecast period.
Specification with Less Than or Equal to 75 kVA to Dominate the Market
- The diesel generators with ratings less than or equal to 75 kVA is expected to account for the largest share in the Tanzania diesel generator market in 2019 owing to the increasing demand from the telecom sector, commercial complexes, small restaurants, small-scale industries, and petrol stations. The growth is expected to continue, led by investments in line with the stable public infrastructure spending and the higher foreign direct investment (FDI).
- Tanzania’s telecommunications sector remains critical to the development of all aspects of the country’s economy, and continues to witness increasing demand. The country is expected to witness growing mobile penetration and rising GDP per capita in the coming years, which in turn is expected to increase service spending. Therefore, the increasing growth in the telecommunications sector is expected to drive the demand for less than or equal to 75 kVA diesel generators in Tanzania during the forecast period.
- The Government of Tanzania promotes solar PV, hybrid diesel-PV and mini-hydro projects in rural areas, particularly focusing on schools, health centers and public buildings. During 2017-2018, the Tanzanian government was expected to allocate TZS 916.8 billion to the education, science and technology sector, to continue with the government initiative of building and renovating more schools and learning facilities in the country. This is expected to increase the demand for less than or equal to 75 kVA diesel generators. Furthermore, the country is seen as an attractive environment for mini-grid projects, which is expected to create tremendous demand for less than or equal to 75 kVA diesel generators.
- Over the years, the Tanzanian government has significantly promoted the development of SMEs in the country; under the Tanzania Development Vision (TDV) 2025, the government has highlighted SMEs as one of the important contributors to the country’s long-term development. Moreover, the government is working with the World Bank on a USD 150 million financial intermediary lending operation designed to increase access to finance for SMEs. These initiatives are expected to encourage the development of SMEs, which is expected to create immense opportunities for the growth of less than or equal to 75 kVA diesel generators in Tanzania during the forecast period.
- The combined effect of all these factors is expected to be a positive sign for high optimism for the increasing demand for Less Than or Equal to 75 kVA diesel generators among the industries in Tanzania.
The Tanzania diesel generator market is moderately fragmented. Some of the key players in this market include Masterpower Generator Industry and Trading Inc., African Power Machinery (TZ) Ltd, Aksa Power Generation Tanzania, Caterpillar Inc, and Phoenix Diesel Power Ltd. amongst others.
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