LASTING APPEAL, STEADY PROGRESS

Tanzania 2015 | DIPLOMACY | INTERVIEW

TBY talks to HE Jakaya Kikwete, President of the United Republic of Tanzania, on Tanzania's appeal to foreign investment and developing resources for broader national benefit.

HE Jakaya Kikwete
BIOGRAPHY
HE Jakaya Kikwete was born in Msoga in the Bagamoyo district in 1950. He holds a Bachelor’s degree in Economics from the University of Dar es Salaam. He has a long history of political engagement, beginning during his years of education and continuing in a leadership capacity in the TANU and CCM parties. He is the fourth and incumbent President of Tanzania, and between 2008 and 2009 was also the Chairman of the African Union.

What are Tanzania's strategies to attract additional FDI in regions other than the country's traditional FDI sources of Europe and the US?

Let me first say that attracting investment, both local and foreign, is a major policy objective of the government of the United Republic of Tanzania. We are doing this because we believe in the efficacy and power of investment to promote growth and development for our country and our people. There is no growth without investment. There are no jobs without investment, and there is no development without investment. Let me hasten to say that we have put in place both investment policies and laws that are friendly and attractive to investors to make Tanzania their destination of choice. I am using the words “policies" and “laws" deliberately to underscore the fact that there are national investment policies and laws that cover all of these areas. Also, there are certain sectors that have specific policies, laws, and regulatory regimes, and this is due to the particular circumstances relating to those sectors or subsectors. Clearly, investment in oil and gas differs from investment in agriculture, tourism, or manufacturing. We are encouraging investors from all nations to come and do business with us. We neither have nations of preference, nor of disfavor. For historical reasons, Europe and the US have been our traditional sources of investment. Over the past two and a half decades we have witnessed major changes. Investors from other regions of the world such as Africa, the Gulf States, and Asia are becoming more proactive in investing in Tanzania. Investments from these regions have been increasing rapidly and catching up with the pioneers.

Tanzania's investment potential and business environment are being advanced, and the outcome has been far better than initially expected. Considerable interest has been shown by investors the world over. So far oil and gas, mining, agribusiness, manufacturing, tourism, housing, energy, and telecommunications and IT have been leading areas for attracting investments. As an investment destination of choice, it is important to note that our country has enjoyed uninterrupted peace and stability since Tanzania came into being over 50 years ago now. This has not been the case with several other African nations. We always pray and work for continuity, and we also want people to know that our membership of the East African Community (EAC) and the Southern African Development Community (SADC) represents huge market access which should be taken advantage of by investors. The 20 countries that comprise the two regional economic groups have a GDP of over $650 billion, a population of close to 400 million, and a sizeable middle class. Tanzania offers a market of 48 million people.

What policies are you implementing to develop Tanzania's industrial output, specifically in terms of higher quality and value-added products?

Seeing Tanzania become an industrialized nation has been a lifelong dream of its people and their leaders, before and after independence and the union between Tanganyika and Zanzibar. It is not a distant dream, as Tanzania has all it takes to become an industrial powerhouse in the region. There is a huge raw material base from agriculture, mining, forestry, marine products, and natural gas. The geography of our country presents an ideal position to make her become a regional industrial and commercial hub. As you know Tanzania borders eight countries of Kenya, Uganda, Rwanda, Burundi, DRC, Zambia, Malawi, Mozambique, the Comoros, and the Seychelles. Five of these are land-locked, and use Tanzanian ports, roads, and railways for their import and export business. As you may recall, in the year 2000, Tanzania announced its Tanzania Development Vision (TVD) 2025. The overarching objective was to develop Tanzania into a middle-income country by the year 2025. In 2010 we launched the Long Term Perspective Plan (2010–2015) to guide the implementation of Tanzania Development Vision 2025 for the remaining 15 years. The long-term plan was divided into three medium-term plans of five years each. It is important to note that the private sector is playing a more dominant role in Tanzania's drive to industrialization. Thanks to economic reforms, the private sector, instead of the state sector, became the engine of growth. The establishment of the Tanzania Investment Centre and the Export Processing Zones Authority has played an important role in what has been achieved to date. The future looks even brighter when the pipeline projects actually come to fruition. Much more will be realized, once the Mtwara and Bagamoyo Special Economic Zones become fully operational, over the coming few years. There are plans to establish Special Economic Zones in other parts of the country as well.

What lessons or examples has Tanzania learned to ensure that its vast mineral and natural gas wealth ultimately benefits the development of the entire country?

Indeed, we are cognizant of the fact that our national development is dependent on our natural resources, among other important factors. Fortunately, Tanzania is blessed with numerous minerals and substantial natural gas reserves. Tanzania has almost all minerals known to exist in the earth's crust, and some of these are present in large deposits. Since 2010 discoveries of sizeable gas deposits have been made and further discoveries are expected. This is putting Tanzania on the global map as one of the world's important sources of natural gas. Overall natural gas discoveries in Tanzania so far have reached 53.2 trillion cubic feet (tcf). Ensuring mineral and natural gas wealth benefits the development of the entire country is the essence of doing exploration and development of these resources. It begins with legislation, especially with regard to licensing and fiscal regimes. Fortunately, Tanzania has mining and petroleum development laws, which effectively take care of the interests and benefits of the country. Interests and benefits of investors have been taken care of as well. There is a win-win arrangement. Tanzania has come a long way. From time to time reviews of the mining policy, mining law, and regulations have been undertaken. Also, a number of other initiatives were undertaken. All these actions were meant to improve matters and ensure benefits to the country, investors and communities living around mining operations. During my administration we undertook reviews of the mining policy, mining law and regulations. Subsequently, in 2009 we came up with the New Mining Policy and in 2010 the new Mining Law was enacted. We also renegotiated Mining Development Agreements with certain companies to bring balance to both sides. We strengthened the mining audit, which saw companies pay corporate tax earlier than originally thought. We also became more proactive in engaging mining companies with regard to sourcing services locally so as to promote backward and forward linkages between the mining sector and other sectors of the national economy. New mining policy obligates mining companies to do more for their local communities. This way the local inhabitants also benefit and have a sense of participation. Thus far these initiatives have worked well for the country, as well as for investors, local communities, and the general population. Nonetheless, we have not ceased to seek ways of improving matters, and ours is always a work in progress. There are two scenarios with regard to natural gas development in Tanzania. The Songosongo and Mnazi Bay gas fields are fully owned by the state. The government funded exploration and discovery back in 1974 and 1981, respectively. It has entered into partnership with private companies for further development of the gas field and utilization. For this reason, proceeds from these gas fields benefitting the entire nation are assured. Fortunately, the terms of the partnership contract between the Tanzania Petroleum Development Corporation and Wentworth Resources Limited for Mnazi Bay, and Pan African Energy for Songosongo, serve that purpose. The huge gas reserves discovered offshore present the second scenario, and are the product of private investment. According to the terms of the Production Sharing Agreement between the government of Tanzania and these companies, the interests of our country and her people have been adequately addressed. Of course, we are aware of voices being raised about local content, both in terms of benefits to local communities and of the participation of indigenous Tanzanians in the gas value chain.

With 10 years left to the fulfillment of Vision 2025, how would you rate Tanzania's current progress toward becoming a semi-industrialized country?

In the year 2000, the Third Phase government under President Benjamin Mkapa unveiled the Tanzania Development Vision 2025 (TDV 2025). The ultimate objective of TDV 2025 is to develop Tanzania into a middle-income economy by the year 2025. By 2025 Tanzania will be characterized by the following: high-quality livelihoods; peace, stability, and unity; good governance; a well-educated and learning society; and a strong and competitive economy. Since then much work has been done to implement the objectives of TDV 2025 with significant progress registered. In 2010 we gave better focus and structure to the actual implementation of Vision 2025. And after a comprehensive review of Tanzania Development Vision 2025 documentation we developed the 15-year Long Term Perspective Plan. The latter was meant to be a more focused guide to the implementation of the Vision during the remaining 15 years. Implementation of the long-term perspective plan was divided into three Five Year Development Plans. We are now implementing the First Five Year Development Plan (2010/11 – 2015/16), the focus of which is on unleashing the country's latent potential. After that we will implement the second plan from 2016-17 to 2020-21, where the focus is on industrialization, and the third and final plan from 2021-22 to 2025-26, which will focus on rendering Tanzania competitive in every aspect. I am confident, also, that the target is attainable and that Tanzania will indeed become a semi-industrialized country. The implementation of the Second and Third Five-Year Development Plans will deliver on these three ambitious objectives that will be underwritten by the gas economy.