NUTS & BOLTS
Tanzania is aiming to improve its infrastructure, rein in spending, and strike a new deal with the private sector to ensure equitable growth.
If ever there were an East African tiger, Tanzania would be its embodiment: averaging 6-7% growth across the past decade and 7% in 2016 alone, it dwarfs many of its immediate neighbors and is beginning to rival the economic powerhouses to the west and south, as Nigeria slunk into recession in 2016 and South Africa grew at an anemic 0.2%.
While the absolute number of people living in poverty has sadly not shrunk, the country's rate has. And with 55.5 million people and growing, it is on the verge of overtaking South Africa (55.9 million) as the continent's fifth-most populous country, and not terribly far behind Kenya as the continent's 10th-largest economy.
Along with Ethiopia, Kenya, Ivory Coast, and Senegal, it is also one of the few countries expected to sustain high single-digit growth in 2017 and even through 2021. While much of this is due to the country's non-reliance on a single export-dominant commodity, it also has to do with widespread improvements to public infrastructure, cuts to superfluous spending, and vigorous efforts to rein in the deficit, which decreased from USD1.9 billion to USD1.5 billion between June 2016 and 2017, or 4.2% of GDP down to 3.1%. Inflation has also been kept at 5.2%, within a hair of the government's 5% target.
That said, a myriad of problems still persist. For starters, there has been a general malaise in response to President Magufuli's at times seemingly Jacobin approach to the private sector: elected in 2015, John “the Bulldozer" Magufuli has been quick to clamp down on any and all signs of fiduciary malfeasance. “Charging out of the blocks" toward a “country [that] didn't know what had hit it," in the words of one foreign investor, he has picked fights with major miners (Acacia Mining, Petra Diamonds) and international banks (Standard Chartered) that remind many of the country's decades of socialist rule.
That being said, it has not been without results. In October 2017, Barrick Gold, which owns Acacia, agreed to cede 16% of Acacia's three gold and copper mining operations in Tanzania and USD300 million in back taxes to resolve a six-month spat between the government and the London-based mining firm. While this still leaves USD190 billion in unresolved disputed tax bills, news of the deal pushed Acacia's shares up by 20%, which admittedly are still 60% shy of its pre-dispute value.
The Acacia decision was part of a new July law mandating mining firms to cede 16% of proceeds to the state, a bold move that is part of an aggressive strategy so far paying off. Despite understandable grumbling from the business community, the Tanzania Investment Centre registered 551 projects worth USD9.2 billion in the first six months after his inauguration, up more than 50% on the 458 projects worth USD5.7 billion in the six months prior to his election.
To bolster local economic activity and employment, Magufuli has also made it illegal to export unprocessed minerals. A month after slapping the USD190 billion fine on Acacia, a 15-year veteran in the country, the government seized USD15 million worth of diamonds from Williamson Diamonds, which initially plunged the parent company's shares by 28%, showing the government certainly means business.
Despite these squabbles, major infrastructure projects continue. A 1,400-km heated pipeline will, by 2020, carry oil from Uganda's famed Hoima fields to Tanzania's deepwater port at Tanga, a hugely important deal won out over Kenya. A 542-km Chinese-built pipeline from Mtwara in the south to country's economic capital of Dar es Salaam should do much to alleviate electricity shortages. Given that the country has inched up in business, labor, and monetary freedom, according to the conservative Heritage Foundation, and pulled forward a full 12 stops in the World Bank's Ease of Doing Business calculation from 144th to 132nd, there is still much reason to celebrate.
NUTS & BOLTS
TABLE OF CONTENTS
Guest Speaker
Hon. Patricia Scotland, Secretary General, Commonwealth of Nations
TBY talks to Hon. Patricia Scotland, Secretary General of the Commonwealth of Nations, on the advantages of being a member of the Commonwealth, the need to celebrate diversity, and Tanzania's war against corruption.
read articleGuest Speaker
Libérat Mfumukeko, Secretary-General, East African Community (EAC)
TBY talks to Libérat Mfumukeko, Secretary-General of the East African Community (EAC), on Tanzania's importance to the EAC, the major achievements of regional integration, and obstacles ahead of a monetary union.
read articleInterview
Raymond P. Mbilinyi, Executive Secretary , Tanzania National Business Council (TNBC)
TBY talks to Raymond P. Mbilinyi, Executive Secretary of Tanzania National Business Council (TNBC), on its work to support the private sector in the country, tackling challenges in the economy, and clamping down on corruption.
read articleReview: Banking
The Quest for Depth
If Tanzania is to meet its 2025 vision of attaining middle-income status, it will need to corral its bank-centric financial and capital markets for greater depth by extending participation and rendering credit more accessible to SMEs, women, and the young to spur economic growth.
read articleInterview
Dr. Baghayo A. Saqware, Commissioner , Insurance, Tanzania Insurance Regulatory Authority (TIRA)
TBY talks to Dr. Baghayo A. Saqware, Commissioner of Insurance, Tanzania Insurance Regulatory Authority (TIRA), on achieving universal healthcare coverage, the brilliance of microinsurance, and how to partner with public and private entities to increase the industry's penetration.
read articleReview
Legal Thunder
With the stepping down of Minister of Energy and Minerals Sospeter Muhongo in May 2017 over transparency issues and the introduction of three new laws that give the government the right to renegotiate or revoke existing mining and oil and gas rights, private players in the country are unsure of what future lies ahead. On the other hand, project-specific developments bode well for a sector in need of a breakthrough.
read articleInterview
Kapuulya Musomba, Managing Director, Tanzania Petroleum Development Company (TPDC)
TBY talks to Kapuulya Musomba, Acting Managing Director of Tanzania Petroleum Development Company (TPDC), on the planned expansion of the Mtwara-Dar es Salaam natural gas pipeline, entering northern industrial hubs, and empowering nascent industries.
read articleInterview
Marc Den Hartog, Managing Director, Shell/BG Tanzania
TBY talks to Marc Den Hartog, Managing Director of Shell/BG Tanzania, on the critical need for economies of scale, the importance of developing LNG for export, and why renewables must be taken into account in any long-term plan.
read articleInterview
Hon. Charles Mwijage, Minister, Industry, Trade and Investment
TBY talks to Hon. Charles Mwijage, Minister of Industry, Trade and Investment, on how to reach middle-income status, employing the private sector toward this end, and what sets the country apart from the rest of East Africa.
read articleFocus: Helium
Discoveries of Magna-tude
Despite being the second most common element in the universe, helium is in short supply on earth. With global reserves of the gas steadily dwindling, and demand steadily increasing, the discovery of a whopping 1.53 billion cbm of helium in underground chambers in Tanzania could not have come at a better moment.
read articleInterview
Gilliard W. Ngewe, Director General, Surface and Marine Transport Regulatory Agency (SUMATRA)
TBY talks to Gilliard W. Ngewe, Director General of Surface and Marine Transport Regulatory Agency (SUMATRA), on transportation budget allocation and cross-sector dialog and partnerships.
read articleInterview
Jared H. Zerbe, CEO, Tanzania International Container Terminal Services Limited (TICTS)
TBY talks to Jared H. Zerbe, CEO of Tanzania International Container Terminal Services Limited (TICTS), on regional trade flows and Tanzania's potential to take a leading role in orchestrating cargo movement.
read articleFocus: Tanzania Strategic Cities Project (TSCP)
East Africa’s “Geneva”
If Rome wasn't built in a day, it is not surprising that Tanzania's project to revamp eight of its largest cities is entering its eighth year of implementation. A release of further funds from the World Bank has given the project a new lease of life.
read articleReview
Lost in the Maize
Agriculture accounts for 30% of Tanzania's GDP, and the sector has experienced above-average output in recent years compared to the rest of the African continent. However, the sector's development is held back by poor rural farming practices and general infrastructure bottlenecks.
read articleInterview
Fred Kafeero, Tanzania Representative, Food and Agriculture Organization (FAO)
TBY talks to Fred Kafeero, Tanzania Representative of the Food and Agriculture Organization (FAO), on the organization's long-term support for Tanzania's development, recent initiatives in agriculture, and financing.
read articleFocus: 2020 Irrigation Target
Reap What You Sow
In 2006, the Tanzanian Ministry of Water and Irrigation set a target for Tanzania's agriculture sector: to irrigate 1 million ha of land by 2020. More than 10 years on and moving ever closer to the deadline, this target has not yet been met, though the first seeds are being sown.
read articleFocus: Southern Circuit Tourism
Hidden Gems
Tourism is frequently described as the jewel in Tanzania's economic crown. In 2016 alone, the industry contributed over USD2 billion in revenues. However, for at least three years, the government has expressed concern that tourism is not well distributed across the country.
read article
