President Jakaya Kikwete of Tanzania
Mood affecting other foreign investors as some begin to pack their bags and leave
The writing is clearly on the wall. All is not well in Tanzania. And most worryingly, all is not well with what has been the fastest growing economy in the region for a number of years now.
To give you a sign of the times, as I made a few inquiries before posting this article the Kenyan shilling rapidly continued creeping upwards and is now exchanging at an all time record of One Kenyan shilling to 17 Tanzania shillings. Up from shs Tshs 11 to the Kenyan shilling about a year ago. Signs are that the exchange rate is still rapidly heading northwards.
The Tanazinian shilling has also lost heavily against the dollar and other major world currencies. Some anlaysts fear that this could be partly due to capital flight. Something this infant and fast growing economy can ill afford at this time.
So what's the problem? Actually everything points at the recent change of leadership. The President who almost single-handedly brought more development in 10 years to Tanzania than had happened in all previous years put together, Benjamin William Mkapa completed his term and handed over power to President Jakaya Kikwete.
The new president has done everything to make the foreign investor in Tanzania very jittery indeed. There's been talk of reviewing mining contracts made with certain key investors. Now the latest is that there is a lot of complaints about hunting concessions in the country being dominated by foreigners. Actually these days you will see nothing else in local newspapers but complaints about foreigners.
It seems that already this has had a major impact on foreign investors in the country who were just beginning to recover from a crippling power rationing regime that had grounded virtually all the few industries currently in Tanzania for about a month.
Actually the truth is that the Tanzanian economy is controlled by foreign investors. That was Mkapa's strategy, which worked very well and now that Tanzanians are seeing signs of prosperity in their country for the first time, it seems they want their country back.
One local popular newspaper summed up the situation perfectly when it carried portraits of President Kikwete and former President Mkapa on the front page with their backs to each other. The paper clearly said that the two were as different as day and night. This is probably te most accurate comparison of the two men to appear in any news media in recent times.
Observers fear that the good work done by President Mkapa will be quickly undone by the new administration. The new government's top priority seems to be populist declarations which more stable and locally run economies like those of Kenya and Uganda would be much better placed to make.
The story with nationals of one of the largest foreign investors in this economy, Kenya is a rather extreme case. There are reports of at least two investors having their work permits quietly cancelled and being asked to leave the country and their heavy investments under the full control of their local Tanzanian partner. The quiet policy of not granting any new work permits to Kenyans seems not to have excluded the investors themselves.
The wazees in the Kibaki administration are too busy putting out local fires to address this situation. My source says, that judging by the number of complaints flooding the Kenyan Embassy In Dar-es-salaam, there is no way that word would not have reached the authorities in Nairobi by now.
Although the current situation has affected other foreign investors with some pulling out (the most recent case is the decision by South African Airways to withdraw from their partnership with Air Tanzania) it seems that Kenyan investors are the worst hit.
This is a dangerous President who seems to be vengeful unlike Mkapa who forgave his unfaithful wife. Although you claim all foreigners are affected, I suspect that this thing with Kenyans is a personal thing. Have you heard of the babu Seya/kikwete saga that happened long before he became president? Investigate and tell your readers the truth.
ReplyDeleteLet's be careful here that we do not look too vengeful in this blog ourselves and also that we do not turn this blog On Kenya into a Tanzanian blog (I'll lose thousands of my readers based in many other parts of the world if that happens).
ReplyDeleteHaving said that let me say I perfectly understand the emotions involved here and Kenyans based in Tanzania being upset about these latest developoments.
I already had the information that you mention but I was more interested in writing a balanced factual report.
President Mkapa is said to have forgiven his wife who had not only left him for another man but, had also sired a child with the man. Mkapa had no problems appointed that same man to his cabinet. This is the heart of reconcialition that you are saying is important for a true leader to have. On that point I agree with yo. There is even the example of Nelson Mandela.
However I do not think this applies to our case here.
The Babu Seya saga you mention keeps on cropping up in the media in Tanzania (according to my sources) and this is probably instigated by President Kikwete's political enemies. Babu Seya was a Congolese Musician who was based in Tanzania that got jailed for life on tramped up charges of sexually abusing minors. He was charged and jailed together with his three sons. People say that the man behind Babu Seya's woes was President Kikwete who had a bone to pick with him and decided to "fix him" in this way. In Tanzanian law, sexually abusing a minor attracts a life sentence.
One of the things about Tanzania is that there are no secrets and anything that is done in the darklest corner usually ends up in the often reliable rumour mills in that country.
In my opinion, this single incident cannot prove the President's alleged vengeful character.
My personal belief is that (to his credit) he is simply out to keep his election campaign promise and create job opportunities for Tanzanians, the problem with his approach is that at this rate he may find that he has less jobs to offer Tanzanians as investors leave and the rate of new ones coming, reduces. I would think that a campaign to transfer skills to Tanzanians would have yieleded more fruit in the long term.
However this guy seems to be in a terrible hurry. Let's just wait and see what happens, shall we?
Frank
ReplyDeleteI have read the article but the writer to a greater extent rush into conclusions that employ wrongly footed logical analysis instead of analytical approach.
Economic Recession
It goes without saying that the price of oil has tremendously gone up, this means that all transportations of people and goods are bound to be negatively affected with the rise in gasoline prices.
The drought that has gripped many parts of Tanzania also have a share of problems in this area.
Change of the system in Tanzania seeks to address problems which could not be addressed in the previous settings and the reporting relationships. But as a child grows up from infancy, it will take sometime to realise teh benefits of this change. Even when President Mkapa came in power, it took sometime for results of his efforts to be felt or realised.
Let's Give President Kikwete and his Government sometime to serve Tanzanians.
Foreigners
The wellbeing of its citizens is a paramount agenda of any nation in this earth.
It cannot cross anybody's mind that A foreigner (sometimes even coming as far as from far east Asia), comes to Africa just to sell Ice Creams, electrical appliances, flowers, become a bar-maid at a hotel, hairdresser at a salon or even become a messenger. This is what was the situation in Tanzania. While foreigners, particularly in rare professions and investments frontiers are welcome, it's being unjust to simply allow the influx of imported messengers and merchants in the name of investors.
Let's come to a point to reach a consenus that it is practically unjust to God and citizens of any nation to entertain importation of labour in non-productive sectors, non-rare profession jobs.
Investors moving away
There was a comment in the article about SAA pulling out from ATCL. The writer reversed the face of the coin. It was the Government of Tanzania that sought to terminate strategic partnership with SAA for the best interest of Tanzanians.
This also happens in matrimonial ceremonies. People get happily married, but when the fact unveils that they cannot get along well, clinging to unworkable matrimonial relationship is indeed the gravest mistake.
President Kikwete has served as the Minister for Foreign Affairs and International Relations for ten years, he is a seasoned Politician, economist and an experienced leader. He does not work alone, he works with the team of his assistants and advisors. Tanzanians are happy with the changes he is instituting, particularly those pertaining to immigration procedures. Let's give his Government sometime instead of judging it negatively by wave of ill feelings.
Whoever wrote the comment above must be a senior person in the Tanzanian government.
ReplyDeleteIt is evident that Tanzania is getting into a game that it is very new in, the world of skeptical international investors. This is very unfamiliar ground for a country that was previously socialist experimenting at all sorts of things, including ideology (Ujamaa) and language. Tanzanians have always been very sheltered, hence the current animosity towards foreign investors. The real world of business and investments is a tough unforgiving place.
I would like to highlight two things.
1) It is not humanly possible to persue a populist policy of the magnitude President Kikwete is persuing and continue to attract foreign investors. One will have to suffer and currently it is foreign investment. Just talk to the South Africans and other nationals who have invesed heavily in hunting and tourism in Tanzania.
Investors want to be able to run their businesses with high quality labor. The bitter truth is that Tanzanian locals are not yet ready to supply this at acceptable levels. English is a problem, nobody is in a hurry to get anything done and paper qualifications mean nothing if people cannot perform, this is the reality of business and this is what the immigration department in Tanzania will never understand in 100 years. Little wonder that the biggest problem facing foreign investors in Tanzania today is staffing. It is getting increasingly difficult for many investors to import the key staff they require to enable their businesses run smoothly and efficiently. Sooner or later something will have to give.
Maybe the country will be better off working more closely with the Chinese and forgetting this foreign investors thing, as this will allow them to do what they want, maintain their culture and way of doing things and keep Kiswahili as the main launguage without bothering too much about what foreigners or the international market reaaly wants.
2) The Tanzanian government should seriously think of hiring an international PR company to assist in its' communication strategy. Mark my words it will need these services in a big way very soon.
Lastly the Air Tanzania saga is a classic case of a foreign investor who got frustrated (My inside information on this is accurate). Just do a little research and you will find out the truth for yourself.
My main point is this, the time has come for Tanzania to decide what it wants. Foreign investors or local populist policies. Sorry, you can't have both.
Sorry I got this one pretty late but allow me to leave my 10cents worth of info.
ReplyDeleteI think both Kumekucha and some of the commenters here have things wrong. I hope to just provoke you to further thought on the idea, coz it is something that has been troubling me for a while yet very few people have come out to speak on the same, (Congratulations Kumekucha for taking the initiative).
First on the SAA saga. -There is more than meets the eye on the whole privatisation issue that took place during the time of Mkapa and whether or not Kikwete was satisfied with the proceedings is a whole debate on it's own. My take: Tanzanians got a raw deal, like they did on all institutions they chose to privatise. I worked for a firm that provided services to the Air Tanzania and I have seen it reduced from the national airline to the status of a branch office, of an airline headquatered in Jo'burg. And that includes any simple decision one can make.
This management style has cost them the airline which I believe is breathing it's last.
On the otherhand, The airline market has been unforgiving with Kenya Airways growing to dominate the East African routes plus the EA to Europe routes and the prescence of a local competitor (Precision airways) has seen it left out in the scramble for market share even for local routes.
Kikwete has every reason to be angry with the previous regime's handling of the airline.
On the issue of the economy and what is really going on. My take:
Tanzania despite what many may wishfully state, is still deeply entrenched in their socialist ways and Mkapa did very little to create an environment for free markets to thrive. A simple and straight frorward example is the public transport market in Dar es Salaam. The bus fare is currently fixed by SUMATRA and it had been pegged at 150Tshs for over 3 years despite the high inflation, increase in population and rising cost of fuel. Last year they raised it to 200 and I am yet to figure out what trick investors in this markets use to make profits, Clearly they should have let the elementary principles of demand and supply dictate the fare price and ensure they can tax the investors in the market. But the government in it's socialist mentality keeps intefering, This has made it hard for the local investor to start a business (Govt interference means lower profits and higher capex)that is why any shop you walk into in Dar sells Brookside milk from cows in Kenya, Confectioneries made in Kenya, Sweets and Biscuits and cakes baked and imported from South africa, Kenya or Asia. Kariakoo is full of Chinese small business men selling anything including pens and cutlery.
Latelly the dollar has depreciated against all currencies in the Africa except Tanzania and Zimbabwe. Why ?
Because the money supply in Tanzania is pegged against the dollar and the basket used to measure inflation in Tanzania is full of imports. Blame the Prado riding staff at BOT for cheap Latin American economic ideologies and the IMF for this. One has to wonder why this country with all it's natural resources cannot sustain itself.
My take on education:
The current breed of graduates leave ALOT to be desired. It is a wonder to find someone who can compose a formal letter in english on his/her graduation day, yet it is the business language in Tanzania. The education system needs reform and it doesnt take a rocket scientist to see that Tanzania will not be thinking of exporting any skilled labour in the next 10 years. Currently the local population risk being considered lazy but it is actually the high cost of living coupled with the high level of poverty and education that is to blame for their state. It is common to find an Indian immigrant who will work for 500 dollars in a professional position while a local will demand the same yet the employer will have to incur a high cost of retraining the local and getting him to adjust to the competitiveness that a capitalist society demands.
Kikwete has every reason to be frustrated but we all know he was a disciple of Nyerere, just hope and pray he doesnt go full blown with his protectionist ideologies as they could sink the country further.
/.
Anonymous says:
ReplyDeleteI have read the article but the writer to a greater extent rush into conclusions that employ wrongly footed logical analysis instead of analytical approach.
Economic Recession
Not exactly economic recession, but I will asssert what has been said in regard to capital outflow.
The monthly report from the Bank of Tanzania (http://www.bot-tz.org/Publications/publications_and_statistics.asp) states:
In March 2006, the total volume traded in the Inter-bank
Foreign Exchange Market (IFEM) increased substantially
to USD 87.4 million, from USD 35.5 million recorded in the
previous month. The development was partly on account
of the rise in corporate demand on foreign exchange.
On net basis, the Bank of Tanzania and non-banks sold
USD 64.3 million and USD 3.46 million, respectively, while
commercial banks purchased USD 67.76 million.
Clearly lots of cash leaving bank deposits and heading to the corporates, but you would expect the dollars to trickle down to the man on the street but they dont make it to the forex bureaus as demand for forex in the bureaus declines
During the month under review, the volume of foreign
exchange transactions conducted by Bureau de Change
system declined by 12.8 percent to USD 59.4 million from
the level transacted in the previous month, largely on
account of the decline in both sales and purchases. Sales
went down by 14.3 percent to USD 29.5 million, due to fall
in foreign exchange payments for education and medical
expenses, while purchases declined by 11.4 percent to
USD 29.9 million mainly on account of the decrease in
foreign exchange receipts from tourism.
The report is also insightful on matters regarding the current account deficit, international trade and the general sickness of the economy.
Ken, Thank you so much for some amazing info that I'm sure our readers will find very useful. Please get in touch with me via email: strongwallafrica at yahoo.com as soon as possible.
ReplyDeleteTANZANIA
ReplyDeleteDo you really want foreign investors?
Speaking at the Tanzania Investment Centre’s tenth anniversary in Dar es Salaam on 14TH September 2007, Tanzania Investment Centre’s Executive Director, Emmanuel Ole Naiko emphasised Tanzania’s commitment to foreign investors. He stated, ‘the centre is working hard to make sure that investors come into the country and invest for the benefit of the entire Tanzanian population and that a friendly investment environment has made TIC to be one of the best centres in the world’.
Mr. Ole Naiko stated that the TIC has managed to reduce unnecessary delays for an investor to approve his/her projects in Tanzania stating that ‘currently, it takes only two weeks for the project to be approved by the centre’.
Prime Minister Edward Lowassa underscored the need for collective efforts to promote opportunities in the agricultural sector stating ‘this sector remains an important sector for the country’s socio-economic development where investment was needed as there is no way we can get out of poverty without agriculture which is the engine for Tanzania’s economic prosperity’.
The above statements are seriously undermined by the treatment of British Investor Stewart Middleton stated by Dr. Juma Ngasongwa, (Minister for Investment, Empowerment and Planning) to be a bona fide investor in Tanzania’s agricultural sector (Daily News 2nd June 2006).
Stewart Middleton purchased an assignment of the Head Lease to Silverdale and Mbono Farms, (Hai district, Kilimanjaro region) from Moshi Hotelier Benjamin Mengi in May 2004. The assignment was lawful in all respects and had the written permission of the holders of the Right of Occupancy, the Kyeri, Shari and Uswa Mamba Co-operative Societies.
It is clear law under the Land Registration Ordinance that it is the responsibility of the Commissioner of Lands (appointed by the President) to rectify the Land Register to accurately reflect land holding. Four year’s on, the Commissioner of Lands persists in refusing to register the investor’s land tenure or afford the British Government a valid reason for not doing so. The TIC, is doing nothing to assist the investor.
In April 2005, Benjamin Mengi demanded the lease back on the basis that he had not been paid in full despite, signing a receipt that he had been. Mengi brought a civil action for the eviction of the investor from the farms, which was quashed by former High Court (Lands Division) Judge Hon Kileo in March 2006.
Since refusing to hand the lease back to Mengi, Mr. Middleton and his staff have been persistently arrested and imprisoned on complaints brought by Mengi all of which have been dropped by the Director of Public Prosecutions after his examination of the facts. Crops on Silverdale farm have been destroyed by Mengi’s cattle (which he refuses to remove) to the value of $30,000. The Regional Crime Officer in Moshi has stated that he is unable to arrest Mengi due to instructions from his ‘superiors’ in Dar es Salaam.
In early 2005, the TIC sent a delegation to Moshi to investigate matters and concluded that the British investor lawfully owned the Head Lease to Silverdale & Mbono Farms. However, TIC still refused to assist Mr. Middleton register his lease.
On the 7th and 8th December respectively, IPP Media’s newspapers the Guardian and Nipashe respectively, insinuated that Mr. Middleton was an unlawful investor in Tanzania and accused him of forging the lease to Silverdale & Mbono Farms. This sparked an angry response from the British government.
In a letter dated 8th December 2005 to Mr. Ole Naiko, former British High Commissioner to Tanzania His Excellency Andrew Pocock stated that he was concerned by the damaging statements made about the investor by TIC stating: -
‘ Mr Middleton did apply a while ago to be registered as an investor…..but was unable to proceed because of serious harassment by a Tanzanian businessman – Mr Benjamin Mengi – who is mentioned in the Guardian article……despite having acquired his farm in Moshi from Mr Mengi entirely legally, the latter’s activities have prevented Mr Middleton from registering his lease. Without this, he was not able to register as an investor. But a bona fide investor he is. He currently provides employment for 120 Tanzanians, and is trying to generate value-added exports for the Tanzanian economy. He is doing this in complete conformity to Tanzania’s laws, and in response to President Mkapa’s invitation to investors to come to Tanzania and generate growth, jobs, exports and skills. Moreover, he is doing this in the agriculture sector, which is, as you know, a particular priority for the Tanzanian Government’.
Instead of being helped, he has been harassed at every stage. Not only have attempts been made to seize his farm illegally, but those attempts have been assisted by the Moshi police and judiciary. Mr Middleton was falsely arrested…………details are inaccurately recorded in the 2 (IPP Media) articles – taken under armed police escort before a magistrate in Moshi, who clearly knew nothing about the case. No charge sheet was provided at his first hearing, and no comprehensible charge sheet has since been provided…the United Kingdom is both a major investor in Tanzania and its largest bilateral development partner. We are concerned to see Tanzania continue on the road to reform laid out by President Mkapa, with at its heart a diversified economy, led by the private sector. The TIC exists as part of those reforms, and to encourage that economic change. It is therefore doubly distressing to find a TIC regional office going public in such a negative way, in a case which does not reflect well on the rule of law in Moshi’.
As a bona fide investor in the agriculture sector, providing jobs and prosperity for Tanzanians, Mr. Middleton would appear to be a model investor based on Premier Lowassa and Mr Ole Naiko’s criteria. Despite this, Mr. Middleton’s crops and his commercial interests have been maliciously destroyed and he and his staff have been unjustifiably abused and ridiculed at the hands of the judiciary and police together with prominent national media outlets.
The treatment of the British investor sends worrying messages to the international community and potential investors in the country and hardly supports the claims that Tanzania is a safe and friendly country in which to invest.