NATURAL BOUNTY

Tanzania 2014 | DIPLOMACY | YEAR IN REVIEW

Long lauded as a country of untamed beauty and with a wildlife cadre that would make any safari goer weak at the knees, Tanzania is truly a pearl on the Indian Ocean.

Tanzania's GDP stands at $28 billion, with medium-term growth prospects of around 7% thanks to the possibility of gas exports—growth is expected to reach 6.9% in 2013, on the back of figures upward of 6% over the previous two years. While it may be a few years before the taps are turned on, hopes are high that not only will a nascent gas industry provide jobs, the transfer of know-how, and a solid addition to the country's export basket, it may also solve the country's endemic energy problems, giving a boost to the economy at large, especially in remote areas—in fact, ensuring the end of black outs in the long term may be what the economy needs if it is to push over the 10% growth barrier, a key milestone if poverty is to be eradicated and industry will firmly establish its place.

In recent years, encouraging job growth has also been a tough prospect. Employment stands at 10%, underemployment is high, and 75% of the workforce is still engaged in agricultural activities—indeed, just 5% of the population is at work in the industrial complex, with the remaining 20% engaged in services. Looking at GDP, however, an altogether different story emerges. Agriculture represents just 27.2% of GDP, mainly due to the sector's inability to consolidate in the face of weak rural infrastructure, services represent 47.5%, including a robust telecoms sector—Tanzanians can even enjoy 4G in Dar es Salaam—banking, and trade, while industry represents 25.3%, backed up by the construction, mining (coal and uranium offer up resource diversification opportunities) and manufacturing subsectors.


Moving forward, getting investors in the door is half the challenge for any developing economy, and one at which Tanzania has excelled. FDI grew 10% to $13 billion in 2012, with investors on a resource high across East Africa and moving in anticipation of the natural gas boom. By far the largest source of investment is the UK, which contributed $4.7 billion to the total in 2012, through multinationals such as BG Group, which is currently partnered with Ophir Energy in Blocks 1, 3, and 4. The British oil and gas giant will play a key role in the utilization of the country's natural resources, but is encouraging local government to play the long game. “Preparing for the impact this will have on the economy is challenging in terms of the influx of goods and the utilization of foreign exchange and how to avoid hyperinflation," said Derek Hudson, Regional Director of BG Group East Africa, in mid-2013. “We are guests here, and our advice to our hosts is to not go any faster," Hudson concluded.

On the services front, Tanzania passed the 1 million tourist arrivals mark in 2012, a figure up a whopping 24% on the previous year. The tourism sector also employs 2% of the population, while revenues were worth $1.7 billion in 2012 and are anticipated to reach $3.7 billion by 2015 as internal infrastructure opens up more regions of the country to deep-pocketed tourists. In terms of transport infrastructure, development is weighted toward the industrial matrix, with private-sector participation also required to boost the rural road network under the Rural Development Strategy, as well as ensure that the rail network can support a growing export sector as more and more goods, including gold, copper, petrochemicals, fertilizer, cement, and textiles steam toward the country's ports and onward to international markets, as well as the African interior. On the technology front, mobile payment options are beginning to open up rural areas to finance and the country remains smitten with the role technology can play in the economy following the Global 2013 Smart Partnership Dialogue, held in Tanzania in 2013, at which stakeholders from across the socioeconomic spectrum, both national and international, met to discuss the role of science and innovation.

Tanzania is now in a stage of preparation, with much to do to ensure that, once the gas begins to flow, it is of benefit to all. A robust investment framework and flexible regulations, however, could affirm Tanzania's status as an investor favorite and open the floodgates to the knowledge transfer that such a nascent economy so badly needs if it is to guarantee that wealth generation remains with the people, for the people.