Following what local media described as a ‘fruitful’ business call between German Chancellor Angela Merkel and Tanzania President John Magufuli, economic ties between the East African nation and its former colonial master are expected to grow.
An official presidential communique to the media said Germany will in invest in the construction of what is to become Africa’s largest fertilizer plant.
Such an investment is in line with Tanzania’s bid to industrialize and move from a low-income state to a middle-income economy by 2025.
Tanzania’s national Vision 2020 prioritizes modernization of agriculture through processing of agro-products as the vehicle to drive economic growth and foster social development.
Already the country’s economy is growing at an unprecedented 7 per cent annually and is projected to only get higher.
The statement from the Directorate of Presidential Communications of the State House said President John Magufuli is intent on improving the country’s investment policies to attract increased foreign investment.
According to a UNCTAD 2018 World Investment Report, Tanzania’s current FDI stock is estimated at USD 20.3 billion which represents 39 per cent of its GDP. This makes Tanzania among one of the most preferred destinations for foreign investment in Africa.
The report says in 2017 the inflow reached USD 1.18 billion (2.3 per cent of GDP), down by 13 per cent compared to the previous year but the country is still among the 10 biggest recipients of FDI in Africa. At the moment, the top 5 providers of FDI into Tanzania are South Africa, the UK, Kenya, Canada, and China. With improved economic relations, Germany is expected to get into that short list of the top investor in Tanzania.
The mining sector, the oil and gas industry, as well as the primary agricultural products sector (coffee, cashew nuts and tobacco) draw most FDI.
However, it did not give details about the fertiliser company, but The Citizen understands that some Germany firms are among a consortium of investors that plan a multibillion-dollar fertiliser factory in the country.
Movers and Shakers: Tanzania’s Top FDI Sources
The World Bank’s 2019 Doing Business Report places Tanzania at number 144th compared to some 190 countries. This is a lower ranking compared to the year before when it ranked Tanzania at number137. China is Tanzania’s second-largest source of Foreign Direct Investment (FDI).
Tanzania Investment Center (TIC), the country’s lead investment agency and to date has registered some 724 Chinese companies. It leading investment city is the commercial port city of Dar es Salaam.
Dar is one of Africa’s megacities and in East Africa, it comes second only to Nairobi in attracting Foreign Direct Investment (FDI), this according to the UN’s ‘The states of African Cities 2003-2018’ report. It ranked Dar number 14th of 42 African cities on having received FDIs amounting USD 3.4billion.