President John Magufuli is already walking his campaign talk to grow the national economy through increased investment. First, he has made an early appointment of two key ministers, Dr. Philip Mpango as Minister of Finance and Professor Palamagamba Kabudi as Minister of Foreign Affairs.
The appointments shed light on what is to come and are clearly meant to prepare the groundwork for his two priority development areas—economic growth and regional and international co-operation.
If the appointment of the two ministers is not evidence enough of what is to come, then moving the Tanzania Investment Centre (TIC) from the Prime Minister’s Office to the Office of the President should suffice.
The president’s two top second term priorities all rely heavily on the performance of the TIC, the umbrella body in charge of promoting investment in country. If you plan to grow the economy by increasing investment and private sector participation, it only makes sense to bolster the TIC and keep it under close watch.
Also Read: President Magufuli’s second term aims to drive economic development in Tanzania
Implications of the TIC move
During a speech he delivered when he swore into office the Prime Minister and the two named ministers, President Magufuli was clear that he wants to attract both foreign and local investments and to do that meant getting the TIC to execute its objectives to the fullest.
With a focus on industrial, agriculture, tourism, livestock and fishing development, the president pledged that his government will maintain an open door policy and foster private sector participation.
To do this, his administration will address all investment bottlenecks including ridding the country of nuisance taxes and killing of the bureaucratic process that slows down investment. Already, during his first term, the government scrapped some 168 taxes and levies.
With agriculture at the head of all investment priorities, the president plans to boost agricultural production along with export of horticultural products from $412 million to $779 million in the course of the next half decade.
Tanzania is open for business:
As part of the investment attraction offer, Tanzania has emphatically welcomed both local and foreign investment in the extractives industry. The welcome is across all subsectors ranging from mining of precious stones to oil and gas exploration.
In his own words, President Magufuli said “…I want them [foreign investors] to know that Tanzania is the best investment destination…we are open for business.”
However, the president said Tanzania is looking for a win-win investment situation and with that he cited the Acacia Gold saga saying the company was not above board but when the parent company, Barrick Gold came to the table, an amicable agreement was reached in which both investor and nation reap reasonable fruits.
In that deal, for example, Tanzania formed a government owned entity, Twiga Minerals Corporation, which is now entitled to 16 percent equity by law. Already, Twiga Minerals has made its maiden dividend payment of $40 million which is part of $250 million that is due to both the government and Barrick Gold.
Further still, moving on to small scale miners, the president called on local authorities to ease hurdles that hinder easy flow of business and trade. For example, he said there is no reason why gold from the DRC should not be allowed to be traded in the country.
In fact, the president would like to see more precious stones cut, polished and traded in Tanzania.
In the tourism and hospitality sector, a sector that was nearly completely thwarted by the global Covid-19 pandemic, President Magufuli has his eyes set on creating ranches for wild animals where tourists can visit.
The plan is part of his goal to more than double tourists’ visits to the country from 1.5 million to five million annually. Should the goal be achieved, revenue from the sector would shoot up from $2.6 billion to $6 billion by 2025.
Surviving Covid-19
When Covid-19 struck and borders closed, trade nearly all but collapsed. Africa’s Pulse, the World Bank’s regional economic update, warned that “…the crisis could spark the first recession in Sub-Saharan Africa in 25 years.”
The report projected a decline in regional growth, from 2.4% in 2019 to between -2.1 to -5.1% in 2020, but not for Tanzania.
“Tanzania is in a better position than many other countries in the region to respond to the crisis, given favorable commodity price changes as an oil importer and gold exporter, as well as fiscal space given its relatively low fiscal deficits and low risk of debt distress,” said William Battaile, World Bank Lead Economist.
However he suggested that, “…further economic measures can be considered to help protect viable businesses and prevent layoffs,” and Tanzania did just that.
The government rolled out an economic stimulus package to ensure banks stayed liquid and borrowing continued as usual. Granted the related fall in demand as borders closed affected production and hence borrowing but all in all, the Tanzanian economy was able to stay afloat thanks to its sound fiscal policies.
