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.
