Under a concession system the state grants a franchise the right to finance, build, own, operate, and maintain a public infrastructure for a given period, and to charge users for that service. Concessions are normally stand-alone, single-purpose entities that are expected to finance themselves eventually, if not initially, without recourse to their shareholders. They are independent corporate entities run by a dedicated staff that seeks career advancement within the concession company. Invariably, the successful concession has been created because of a compelling economic need.
Tanzania has been one of the countries at the forefront of reforms inspired by the Road Management Initiative. This paper focuses on some of the main challenges that the country now faces in consolidating an institutional structure: setting up both the road fund and a new main road agency to carry the reform process forward and secure sustainable improvements in road sector performance. The paper is based on extensive fieldwork and stakeholder interviews carried out in 2001 as well as on a review of the major lessons emerging from past reform experience in Tanzania.