Tanzanian Affairs is a magazine with news and current affairs issued by the Britain-Tanzania Society. It is published three times a year. The views expressed or reported are those of the person concerned and do not necessarily represent the views of the Britain-Tanzania Society. All the information is copyright – please refer here for more details.
TA ISSUE 139
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Cover shows a train on the new SGR (Standard Gauge Railway) route linking Dar es Salaam and Dodoma – see Transport article
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TA ISSUE 138
Issue 138 cover featured President Ali Hassan Mwinyi who died on 29th Feb 2024
Floods hit Tanzania
60th Anniversary of Union Day
Obituary – President Ali Hassan Mywinyi
Reviews
A pdf of the issue can be downloaded here
FLOODS HIT TANZANIA
by Ben Taylor
President Samia at the rain affected Union Day celebrations in Dar-es-Salaam. Photo State House
A season of heavy rain has caused havoc – and over 150 deaths – across Tanzania. Speaking in late April, the Prime Minister Kassim Majaliwa said around 200,000 people and 50,000 households had been badly affected by the heavy rainfall. He warned that the rain could continue well into May.
“The heavy El Niño rains, accompanied by strong winds, floods, and landslides in various parts of the country, have caused significant damage,” he told parliament. “These include loss of life, destruction of crops, homes, citizens’ property, and infrastructure such as roads, bridges, and railways,” he added.
Similar devastation has been caused in Kenya as well, with 188 deaths reported.
To make matters worse, at the time of writing, a rare East African cyclone is anticipated for early May. “Hidaya Cyclone … is expected to dominate and affect the weather patterns in the country including heavy rain and strong winds in some regions near the Indian Ocean,” said the Tanzania Red Cross Society on X, formerly Twitter.
Hidaya, the equivalent of a Category 1 hurricane, is the first of its kind to develop in eastern Africa, according to the World Meteorological Organization. Wind speeds of up to 100mph are expected, as well as coastal storm surges and heavy rain. Kenyan authorities have issued mandatory evacuation orders for residents near 178 dams and water reservoirs.
Chris Fawkes of BBC weather explained that one of the biggest drivers of the rains is the Indian Ocean Dipole (IOD). The IOD – sometimes called the “Indian Niño” because of its similarity to its Pacific equivalent – refers to the difference in sea-surface temperatures in opposite parts of the Indian Ocean. When waters in the western Indian Ocean are much warmer than normal, this can bring heavier rain regardless of El Niño. However, this happens at the same time as an El Niño event, as was the case last year, the rains in East Africa can become extreme.
UNION DAY ANNIVERSARY
by Ben Taylor
The heavy rain affected celebrations marking 60 years since the union between Zanzibar and Tanganyika, held on April 26th at Uhuru Stadium in Dar es Salaam. Attendance was understandably low as the rain fell throughout the ceremony.
Military parades went ahead in the wet weather, while dignitaries sheltered in the covered sections of the stadium. Speaking at the event, President Samia Suluhu Hassan described how in 1964 the Presidents of Tanganyika and Zanzibar, Julius Nyerere and Abeid Karume respectively, were guided by wisdom, prudence, and courage in bringing Tanzanians together. She added that in was in this same spirit that leaders of all subsequent administrations have placed great importance on the Union.
On the social media platform X, formerly Twitter, she said that “The only gift we can give to the founders of this union is to protect and live up to their great vision. We are all witnesses to the significant progress we have made in the past 60 years.”
“We have every reason to continue to be proud of and protect this unique union that arose from our own decisions. In advancing it, we must implement the philosophy of reconciliation, tolerance, reform, and rebuilding our country to maintain peace and stability, essential pillars for the prosperity and resilience of our nation.”
Diplomatic messages of congratulations also flowed in. King Charles III sent a congratulatory message, which read: “Happy Union Day, Tanzania! Dear Madam President, on the special occasion of your national day, my wife and I would like to convey our warmest congratulations to your Excellency and the people of the United Republic of Tanzania, Charles R.”
The US Secretary of State, Antony Blinken, also congratulated Tanzania before adding: “We applaud Tanzania’s commitment to undertaking important reforms to strengthen democratic governance, increase transparency, and spur economic growth.”
The Chinese ambassador to Tanzania, Ms Chen Mingjian, said “May the friendship between China and Tanzania last forever.”
TRANSPORT
by Ben Taylor
All aboard the electric train trials
New electric TRC locomotive is offloaded in Dar-es-Salaam port
The Tanzania Railways Corporation (TRC) commenced its inaugural trial journey of the electric Standard Gauge Railway (SGR) train from Dar es Salaam to Morogoro on February 26, 2024, as part of the implementation of an order by the President Samia Suluhu Hassan. She directed that by July this year, SGR train services from Dar es Salaam to Dodoma should have begun.
Chief Government Spokesperson Mr Mobhare Matinyi spearheaded a group of journalists and editors from various media houses as they boarded the coaches to enjoy and have firsthand information on the historic trial. Departing from the Tanzanite Station in Dar es Salaam promptly at 10:30 am, the train arrived in Morogoro at 12:50 pm amid a wave of enthusiasm.
The test marks a significant step forward in Tanzania’s efforts to modernize its transportation infrastructure and boost connectivity across the nation. The new line replaces the aged and less efficient meter-gauge railway system established during the colonial East African Railways.
The South Korean-made train, coupled with the Turkish/Chinese-built railway line, is poised to significantly reduce travel times and facilitate the efficient movement of goods and people. It is anticipated to be capable of reaching speeds of up to 160km per hour.
As trials for the standard gauge railway (SGR) electric train continue, TRC has said the process of setting fares for the service is still underway. “We at TRC have finished our part where we have submitted to the Land Transport Regulatory Authority (LATRA) everything that is needed,” said TRC Director General, Masanja Kadogosa. He said he understood that LATRA had already engaged in meetings with stakeholders in Dar es Salaam and Dodoma.
The proposed fares by TRC from Dar es Salaam-Morogoro are for the third class TSh 24,794 per adult, and TSh 12,397 for kids between the ages of 4-12. For Economy Class fares, the same route was TSh 29,752 per adult and TSh 14,876 for kids. These fares are subject to approval by LATRA.
Later, in April, TRC announced the arrival of the first ever Electric Multiple Unit (EMU) trains at the Dar es Salaam port, marking a significant leap forward for the project. This initial set consists of five electric locomotives and three passenger cars.
TRC said they expect to receive a total of 10 EMU sets, with the remaining units arriving monthly until October 2024. Additionally, they have already received 65 passenger cars and 9 electric locomotives, further bolstering their fleet.
Each EMU train can accommodate up to 589 passengers. The new units have prioritized passenger comfort with amenities such as Wi-Fi, designated seating for passengers with special needs, air conditioning, and CCTV cameras for enhanced security.
Once commissioned for service, the SGR trains will cut the time between Dar and Morogoro to around two hours, down from the current four-hour journey by buses and five hours by train on the old railway.
The 300km Dar-Morogoro line is the first phase of the SGR project, which is expected to run up to Mwanza on the shores of Lake Victoria and Kigoma on the northeastern shores of Lake Tanganyika in five phases. There are plans to add connections to Rwanda, Burundi and the Democratic Republic of Congo as part of the East African Railway Master Plan.
Phase two of the SGR project runs from Morogoro to Makutupora, covering 422 kilometres. The line is being extended to Tabora, 294km away in phase three. The fourth phase will link Tabora to Isaka, a 130km line, where it will branch to Mwanza and Kigoma.
Brief dispute between air traffic authorities in Kenya and Tanzania
For a few days in late January, a spat between air traffic authorities in Kenya and Tanzania caused a minor diplomatic incident, and flights were suspended.
Kenya denied Tanzania’s request for cargo flights by its carrier, Air Tanzania Company Limited (ATCL), between Nairobi and third countries. In response the Tanzania Civil Aviation Authority (TCAA) suspended all Kenya Airways (KQ) passenger flights between Nairobi and Dar es Salaam, effective January 22, 2024.
The TCAA cited the Kenyan authorities’ refusal as a breach of Section 4 of the Memorandum of Understanding (MoU) on Air Services signed between the two nations in 2016. This section stipulates reciprocal treatment for airlines of both countries.
The TCAA suspension of KQ flights never came into force, however, as the situation was resolved by the intervention of government ministers, including Tanzania’s Minister of Foreign Affairs and East African Cooperation, January Makamba.
“I spoke to my Kenyan colleague @MusaliaMudavadi. We agree that restrictions on air travel between our countries and from either of our countries to a third country shouldn’t stand. With the relevant authorities, we’ve resolved to settle this issue,” said Mr Makamba on X (formerly Twitter).
Zanzibar roll-on, roll-off ferries planned
Zanzibar port expects to develop a special berth for loading and unloading vehicles in what’s referred to as Roll-on, Roll-off (Ro-Ro) ferries. President Hussein Mwinyi in January witnessed the signing of an agreement for the project, which will be implemented through Public Private Partnership (PPP).
Dr Mwinyi described the project as a landmark in marine transport under the blue economy, adding: “A major reform and development in transport is inevitable, especially to achieve our goals. Improved transportation systems in road, water, and air are required for our social and economic growth.”
The signing ceremony was also witnessed by several executives, Ministers, and The Netherlands Ambassador to Tanzania, Mr Wiebe de Boer. The Ambassador said that relations between his country and Zanzibar have been growing stronger, where so far already there are 15 companies including KLM partnering in tourism and transport industries.
On his part, Zanzibar Minister for Infrastructure, Communication and Transport, Dr Khalid Salum Mohamed, noted the project will improve services at the current Ferry Terminal, and address passenger congestion and safety risks.
Air Tanzania fleet growth continues at pace
The government has continued with its efforts to uplift Tanzania’s aviation sector with the arrival of a brand-new aircraft for Air Tanzania Company Limited (ATCL) in early March. The aircraft, a Boeing 737-9 Max with a capacity to carry 181 passengers, brings the number of the country’s airline fleet to 15. The airline is expected to add one more Boeing 787-8 Dreamliner to its fleet before the end of the year.
Speaking during the reception to welcome the new plane, Prime Minister Kassim Majaliwa underlined the government’s commitment on continuing to strengthen ATCL and the aviation sector as key catalysts for economic growth. “The aviation sector is very important for development of our country, as it guarantees economic advancement. Globally, development of the economy has been influenced by the presence of a stable transport system, which boosts investment, protect capital and strengthen communication among traders and other service providers” Mr Majaliwa said.
Mr Majaliwa added that the government is undertaking major renovation of the JNIA Terminal 2 (the former international terminal), which upon completion will be destined as ATCL terminal, to cater for the Eastern and Southern Africa markets. Furthermore, he said the government is undertaking various airport construction projects in other regions, including Dodoma, Kigoma and Shinyanga, saying the plan is to ensure most parts of the country are accessible through air transport.
ATCL’s Managing Director, Engineer Ladislaus Matindi noted that the addition in the number of planes to the country’s airline has inspired many customers to prefer flying than ever before. He said that in the 2022/2023 financial year, the company’s planes carried over one million passengers, compared to only 160,000 in 2016/2017 when the government began engineering its revival. He said the airline currently serves 81 per cent of the local market.
Later, at the end of March, Air Tanzania launched direct flights between Dar es Salaam and Dubai in the United Arab Emirates (UAE). “Starting today, March 31, 2024, direct flights to Dubai will operate four times per week with the brand new and ultra-modern aircraft, the Boeing 737 MAX 9,” said Eng. Matindi.
The Dubai route will be the seventh international route to be launched by Air Tanzania. Other regional and international routes that have been inaugurated by the airline are Nairobi, Bujumbura, Lubumbashi, Entebbe, Ndola (Zambia), Johannesburg (launched in 2021, now suspended), Comoros, Harare, and Guangzhou.
Air Tanzania financial challenges continue at pace
Air Tanzania’s losses surged by 61% to TSh 56.64 billion in 2022/23 (USD $21m), compared to TSh 35.2 billion ($13.5m) in the previous year, according to Controller and Auditor General (CAG) Charles Kichere.
“The loss widened despite the fact that the company received government grants worth TSh 31.55 billion to boost its operations,” said Mr Kichere who handed the annual audit reports to President Samia Suluhu Hassan at State House.
According to the Transport ministry’s annual budgets passed by Parliament from the 2016/17 financial year to date, the government has spent at least TSh 3.63 trillion ($1.4bn) in reviving the airline during the last eight years.
TAZARA improvements planned
The World Bank has approved USD$ 270 million (approx. TSh 690bn) finance to support improvements in transport and trade connectivity between Zambia and Tanzania, including to the Tanzania-Zambia Railway (TAZARA). The money will be used to rehabilitate a portion of the TAZARA in Zambia, develop a modern border post between Zambia and Tanzania and introduce other supporting infrastructure.
The Minister for Foreign Affairs and East African Cooperation, Mr January Makamba, said that the project was one of the agenda when President Samia Suluhu Hassan’s visit to Zambia last year. “This is a much-needed boost to Tanzania-Zambia transport and trade connectivity, which was part of agenda of visit by President Samia to Zambia last year. Thank you, excellences, for your leadership on this important matter,” Mr Makamba wrote on his official X (formerly Twitter) platform.
ENERGY & MINERALS
by Ben Taylor
Significant breakthrough in helium explorations
Helium One Global, the firm licensed for helium exploration in southwest Tanzania has discovered 4.7% helium concentrations at Rukwa Rift Basin. The company described the high concentrations as a big milestone towards achieving commerciality at the earliest opportunity.
“When performing the Basement Drilling Stem Testing (DST), high concentrations of helium began to flow to the surface,” read the statement from the company. The statement went on to add that the quantity of helium increases with depth.
Helium One Global’s Chief Executive Officer (CEO), Lorna Blaisse said that she was delighted with the findings. She added that she appreciated all collaborators including the Ministry of Minerals and the Mining Commission of Tanzania among others involved in bringing the project to the point of success.
Commenting on the findings, Assistant Commission in the Ministry of Minerals, Mr Francis Mihayo said the positive results from the exploration strengthen hope for helium extraction in Tanzania. He said the discovery of helium stands as the basis for further exploration, which will lead into a feasibility study and finally exploitation.
University of Dar es Salaam’s Head of School of Mines and Geosciences, Dr Elisante Mshiu, also the President of the Tanzania Geological Society (TGS), noted that concentration of 4.7% helium signals existence of huge volumes of the gas. “Concentration of 4.7 per cent is massive”, he said. He said further exploration will be undertaken at the area to estimate the actual volume of helium available, and expressed his optimism that Tanzania can become the global leading supplier of helium upon effective exploitation of the deposits.
Today, helium is produced primarily in just four countries including in the USA, Qatar, Algeria and Russia. It has multiple essential uses including in manufacturing of medical equipment.
Helium One Global holds prospecting licences totalling more than 2,965 square km across three distinct project areas which are Rukwa, Balangida, and Eyasi located within rift basins in the north and southwest of Tanzania.
The Company’s flagship Rukwa Project is located within the Rukwa Rift Basin covering 1,900 square km in the south-west.
First turbine at Nyerere Hydropower Plant (Stiegler’s Gorge) switched on
In February, Tanzania switched on the first turbine of a new hydroelectric plant at Steigler’s Gorge on the Rufiji river. This was announced by Doto Biteko, energy minister and deputy prime minister, while visiting the 2,115 megawatt (MW) Julius Nyerere Hydropower Plant (JNHPP). He said that the first turbine was now contributing up to 235 MW of power to the grid.
The project has been highly controversial. Before construction began in 2019, conservationists warned that building the dam could affect wildlife and their habitats as well as agricultural productivity. The site is located within the Selous Game Reserve, one of the largest protected areas in Africa, harbouring one of the most significant concentrations of animals including elephant, black rhino and cheetah and a large variety of habitats, according to United Nations agency UNESCO.
On the positive side, the plant is expected to provide a major boost to the country’s electricity generation capacity. Many areas have recently been suffering from extended power shortages, and load shedding has been estimated as costing between 5-7% of Tanzania’s GDP. Further, it will achieve this at a much lower cost than existing sources: an estimated 4.5 cents per kilowatt-hour.
Nevertheless, in addition to critics of the project’s impact on the environment and livelihoods, analysts have suggested that had the same level of investment gone into alternatives such as geothermal, solar and wind, the country could have generated double the output of JNHPP. It is impossible to make these calculations with any certainty, however, as little reliable information has been made public about the construction cost. The official price tag is USD $2.9 billion, but experts claim this is unrealistic. Competing estimates range from $3.9 billion to $9.8 billion.
LNG project delayed further
Negotiations for the development of Tanzania’s $42 billion liquefied natural gas export plant have been delayed by proposed government changes to a financial agreement reached last year, according to a government spokesperson and sources within the companies involved in the project.
The government and investors announced in May 2023 that they had completed negotiations on the project to unlock Tanzania’s vast offshore gas resources. The government said at the time that the cabinet would review the agreements the following month.
Energy Minister Doto Biteko told parliament in April 2024 that the attorney general and other government institutions had provided feedback on the deals and negotiations were expected to conclude during the 2024/25 fiscal year.
A source from one of the investors told Reuters news agency that the delay related to changes that Biteko proposed to the host government agreement after he became energy minister last August. Biteko also serves as deputy prime minister.
The source, who asked not to be identified, said Biteko and his team came back to investors with a “rather interesting amendment to the HGA which completely blew the project economics out of the water”. The source did not provide details but said that progressing on the project would be “definitely not quick” and that the minister’s talk of completing negotiations in the coming fiscal year was “optimistic”.
Meanwhile, “a source privy to the matter” told The Citizen newspaper that the government had concerns about several aspects of the proposed agreement. The source said the government was weighing a proposal by the companies that proceeds from the planned $42 billion project be banked in foreign financial institutions, as well as a proposal that the companies should be compensated by the government in case that natural gas prices drop in the international market in the future.
Contacted for comment by The Citizen, Biteko said that the government and companies were “still negotiating to find common ground.”
In March, the United States government warned Tanzania of a likely exodus of investors if delays continue. US Deputy Assistant Secretary of State, Joy Basu, told The EastAfrican newspaper that companies such as Exxon Mobil that have been pushing the deal with Tanzanian authorities had reached a point where they were now “willing to walk away.”
“There is LNG in lots of places around the world now, and for Tanzania the window for this particular investment is closing fast. Such windows do not remain open forever,” said Ms Basu whose portfolio in the Joe Biden administration includes overseeing economic and regional affairs in Sub-Saharan Africa.
Exxon Mobil, based in Houston, Texas, is one of several multinational firms that have stakes in the LNG project. Britain’s Shell and Norway’s Equinor, have been earmarked as joint main operators of the project, with Exxon Mobil, Pavilion Energy (Singapore), Medco Energi (Indonesia) and the state-owned Tanzania Petroleum Development Corporation (TPDC) as partners.
Barrick settles legal claims relating to North Mara gold mine
Barrick TZ Limited and North Mara Gold Mine Limited, local subsidiaries of Barrick Gold, announced in March that they have reached a settlement of the claims by Tanzanian residents against them in their UK legal action. They said that the settlement was reached “with no admission of liability on their part,” but provided no further details about the settlement’s content.
Fourteen Tanzanian citizens made claims against Barrick TZ and North Mara Gold Mine Limited for alleged human rights incidents between 2014 and September 2019. The Tanzanians alleged that the companies were legally responsible for deaths and injuries caused by the Tanzania police during security operations on or around the mine. The mine had a memorandum of understanding with the police for security under which it paid, housed and equipped the police.
Barrick TZ Limited and North Mara Gold Mine Limited denied the allegations.
The company’s decision to settle comes over four years after the proceedings were brought forward in the UK.
RAID, a UK-based NGO that exposes corporate wrongdoing, environmental harm, and human rights abuse, has repeatedly raised concerns about human rights violations at the North Mara mine.
In November 2022 it published findings showing the reported death toll at the North Mara mine had risen to at least 77, along with 304 wounded, by police responsible for mine security, most of which occurred after Barrick acquired the mine in 2006. This would rank the North Mara mine as one of the deadliest industrial mines in Africa in terms of security-related violence.
RAID Executive Director Anneke Van Woudenberg said after the settlement was announced that she “welcomes any settlement that brings relief to the claimants after so many years.”
Two further legal actions alleging killings and injuries by security forces at Barrick’s North Mara mine remain ongoing – one in the Canadian courts against Barrick Gold and one in the UK against London Bullion Market Association (LBMA). The latter case alleges that the LBMA is liable in respect of the deaths of two artisanal miners at the mine in July and December 2019 because it certifies gold from the mine as responsibly sourced and free from serious human rights abuses. The LBMA says the claim has no merit.
Zanzibar launches first oil and gas licensing round
The President of Zanzibar, Dr Hussein Ali Mwinyi, on March 20 commissioned the first round auction of oil and gas blocks to investors.
Dr Mwinyi said the government had reviewed the legal and contractual frameworks around oil and natural gas before launching the round, to attract investors into the hydrocarbon industry.
“We made the review to create a friendly investment environment in the oil and gas sector here in Zanzibar because companies need to invest in a safe place where they can be profitable,” he said.
The government of Zanzibar has embarked on the “blue economy” policy, which includes oil and gas among the main priority areas.
“The government believes that the blue economy has many opportunities to promote economic development plans that aim at reducing poverty and creating employment opportunities,” said President Mwinyi.
He said that the exploration activities for oil and gas in Zanzibar started in the 1950s with the British Petroleum (BP) Company, in collaboration with Shell, conducting detailed investigations and drilling two wells on both sides of Unguja and Pemba, which were completed in 1963. After the union of Tanganyika and Zanzibar in 1964, oil and gas exploration activities were under the government of the United Republic of Tanzania.
The Minister for Blue Economy and Fisheries in Zanzibar, Mr Shaaban Ali Othman, said the launch covered eight blocks out of the 12 existing blocks. “We are waiting for applications from investors for the eight blocks that are up for grabs in the next 10 years,” he said, welcoming investors.
He said both the laws governing the sector and the production sharing agreement (PSA) model were reviewed to facilitate investment.
The chief executive officer of the Zanzibar Petroleum Development Corporation (ZPDC), Mr Mikidadi Alli Rashid, said the investors will sign the PSA model with the minister and ZPDC to officially start oil and gas exploration and drilling.
He also urged residents to be patient, as oil and gas exploration and potential development take time. (The Citizen)
ECONOMICS
by Dr Hildebrand Shayo
Key indicators show Tanzania’s economy to be in a good position
President Samia’s improved economic diplomacy has helped Tanzania expand economically, diversify economically, and become more resilient. This has improved Tanzania’s standing with her trading partners and, if it continues, has the potential to propel Tanzania’s economic growth to new heights. The economic indicators suggest that Tanzania is a favourable choice as an investment destination and allow many investors to come and invest, which will in turn provide sources of taxes and sources of employment to young Tanzanians.
For the first quarter of 2024, inflation stayed constant at 3%. This stability is caused by a plentiful domestic food supply and lower import inflation brought about by a slowdown in global market pricing. Notably, core inflation, a significant factor influencing total inflation dynamics, rose from 3.2% to 3.7%, the highest level since February 2023. The primary cause of this outturn is the pass-through impact of changes in domestic energy costs.
Additional data analysis indicates that the country’s current inflation rate is within the intended range and in line with the standards established by the Southern African Development Community and the East African Community. The reduction of food prices is expected to maintain monthly bulleting inflation, which, looking at the data, is expected to stay constant and within the target range of 3-5% in the near and medium term, according to data analysis derived from the National Bureau of Statistics and Bank of Tanzania. However, OPEC+ continues to restrict oil production, and upside risk is still present in the case of geopolitical unrest and disruptions to the Red Sea supply.
Tanzania’s food inflation rate is still relatively low; however, it slightly increased to 1.8% in February 2024 from 1.5% the month before. This result is linked to a sufficient supply of food in the home markets and a decline in demand from nearby nations. The cost of staple food crops is likewise trending to decrease. The energy, fuel, and utilities inflation sub-group, which comprises fuel, charcoal, firewood, electricity, and water charges, among other items, recorded an increase in inflation to 7.2% from 6.6% in the preceding month. This performance emphasises how stable the domestic food market is, which supports stability in the economy.
Regarding money and credit, the amount of money in circulation and credit extended to the private sector have both demonstrated steady growth, which has helped Tanzania’s economy as a whole. The extended broad money supply (M3) rise was slightly higher in March at 13.1% compared to 12.8% the previous month. At 16.8%, the increase in private sector lending is vital but just slower than in the prior period. With a growth rate of 49.6%, credit to agricultural activities continues to record the fastest, followed by mining and quarrying. In the meantime, personal loans, which are mainly given to small and medium-sized firms and single proprietorships, continued to account for the majority of outstanding credit at 37.2%. Trade and agriculture came in second and third, respectively, at 13.6% and 10.2%. The sustained demand for loans indicates ongoing expansion in economic activities driven by favourable business conditions and supportive policies.
Regarding interest rates, the central bank rate (CBR) of 5.5% is still within a 200 basis point range for the 7-day interbank cash market rate. As a result, there has been no movement in the 7-day interest rate, which is currently sitting at 7.28% in February 2024, a slight increase from the 7.25% recorded in the previous month. Bank lending rates decreased in the first quarter of 2024; in February 2024, they averaged 15.44%, down from 15.96% in the same month in 2023. An improvement in credit risk, as shown by a decline in the percentage of non-performing loans falling below the Bank’s 5% threshold, is partially responsible for this dip.
Furthermore, in February 2023, the negotiated lending rates dropped from 13.75% to 13.40%. The average deposit rate, however, was relatively steady at 7.39% overall. Negotiated deposit rates did, however, somewhat rise from 9.37% to 9.52%. Between February 2023 and February 2024, the difference in one-year interest rates shrank even more, going from 8.07% points to 7.04% points.
Regarding the market for government securities, there is still a lot of interest in the government securities auctions. Up to this point, every auction has seen oversubscriptions, consistent with the market’s sufficient supply of shilling liquidity and reopening the previously issued Treasury bonds. Two Treasury bill auctions with a total tender size of TSh 164.2 billion will take place in Q1 2024 to support government funding and aid in price discovery. From 11.76% the previous month to 12.21% this month was the weighted average yield. In the meantime, TSh 148.8 billion and TSh 137.5 billion worth of 15- and 20-year Treasury bonds are being offered to meet government funding needs.
The combined bids for both auctions, which attracted oversubscription, totalled TSh 644.6 billion. The weighted average yield to maturity reached 13.66% and 15.83% for the 15- and 20-year Treasury bonds, respectively, from the rates registered in the previous auctions, and only bids totalling TSh 385.0 billion were accepted.
According to BOT figures for February 2024, domestic revenue from collections by the central and municipal governments was TSh 2,214.8 billion, or 92.8% of the monthly target. TSh 2,123.8 billion was the total revenue collected by the central government, of which TSh 1,817.8 billion came from tax collections and TSh 305.9 billion from non-tax sources. All main tax categories had lower revenue than expected, except income taxes, driven mainly by PAYE collections.
The government kept cutting back on spending while maintaining available resources. Preliminarily speaking, government spending in February 2024 was TSh 3,203.8 billion, of which TSh 2,289.2 billion and TSh 914.6 billion were for ongoing and development expenses, respectively.
Regarding the national debt, the stock rose 0.8% to US$ 44,963.4 million from its level the previous month. Both internal and foreign borrowing was blamed for the rise. Remarkably, 72.7% of the total stock was made up of external debt. The external debt the central government due was US$ 23,164.3 million, followed by public businesses (US$ 11.8 million). In February 2024, the federal government was disbursed US$ 79.3 million of the US$ 110.2 million in external debt. The total amount paid towards servicing external debt was US$ 59.3 million.
Comparing exports of goods and services to the same time in 2023, they increased by 14.7% to reach US$ 14,274 million. The primary drivers were revenue from tourism, traditional items, and minerals, particularly gold. Exports of conventional commodities totalled US$ 1,022.7 million, up from US$ 748.7 million the year before. The goods and services imported decreased to US$ 16,087.2 million from US$ 16,928.3 million in the previous year. Fertilisers, plastic products, and refined white petroleum products were the leading causes of the decline. On the other hand, there was a rise in the importation of machinery, industrial transport equipment, and passenger cars.
Tanzania’s credit rating marked upwards
The credit rating agency, Moody’s announced in March that it was upgrading the Government of Tanzania’s long-term issuer ratings to B1 from B2 and changing the outlook to stable.
“The upgrade to B1 reflects Tanzania’s track record of economic resilience throughout multiple external shocks in recent years, providing confidence in its shock absorption capacity going forward,” read the announcement. Tanzania, Moody’s said, is specifically credited for a diversified economic base and exports, stable debt burden and limited contingent liabilities. As such, Moody’s expect that the country’s continuation of conservative fiscal policy supports the rating at the B1 level.
“Moody’s is sending a message to the international community – which includes the lenders – that Tanzania is financially disciplined,” said economics professor, Semboja Haji. “It means that since, as a country, we use development funds for the intended purpose, then lenders should have faith in us. This is a message to the international community that there is stability, sustainability and predictability in Tanzania’s development strategy,” he said.
In its statement, Moody’s said Tanzania was taking tangible steps to improve institutional strength and foster an improving business environment. Although progress remains gradual and in the early stages, Moody’s says, initial signs of improvements in the business environment were materialising as evidenced through an increase in private sector lending and increasing investment, both foreign and domestic.
Banking: CRDB posts record profit in 2023
CRDB Bank’s net profit grew by 21% last year to demonstrate another strong financial performance of one Tanzania’s leading financial institutions. Unaudited financial results released in January indicated that profit after tax increased to TSh 424bn in 2023 up from TSh 353bn in 2022.
The full-year results showed that total assets saw a notable 14 per cent increase from TSh 11.6tri to TSh 13tri.
CRDB Group CEO and Managing Director, Abdulmajid Nsekela, said “the impressive financial results reflect our commitment to delivering value to our stakeholders.” He explained that delivery of the bank’s new medium-term strategy (2023 – 2027) has been a key catalyst for achieving the record-breaking performance, highlighting strategic investments in digital transformation that are yielding significant returns.
In the past year, CRDB significantly broadened its horizons by extending its reach into new territories, such as the Democratic Republic of Congo (DRC) and venturing into the insurance sector with the establishment of CRDB Insurance Company.
“CRDB is well-positioned for the future, and we remain committed to delivering value to our customers, shareholders, and the communities we serve,” Mr Nsekela said. (Daily News)
Economy grows, poverty persists
Tanzania is facing the challenge that strong economic growth is failing to translate into poverty reduction while at the same time grappling with rapid population growth. This is according to the World Bank, which launched the 20th edition of the Tanzania Economic Update in Dar es Salaam in March.
The latest data shows that 3 million Tanzanians fell into poverty during and after the Covid-19 pandemic. In 2018, around 14 million Tanzanians were living in poverty, but by December 2023, the number had risen to 17.3 million. Population projections suggest the number of people in Tanzania could reach around 140 million by 2050, driven by high birth rates. World Bank country director, Nathan Belete, said this surge could intensify demand for education and healthcare services beyond the economy’s capacity, and will lead to challenges in job creation.
Mr Belete added that Tanzania can nevertheless attain a demographic dividend, which is the potential economic growth that can take place when a country undergoes a rapid improvement in health outcomes accompanied by a decline in fertility.
This includes intensifying efforts to expand access and strengthen completion of secondary education for girls and scaling up family planning services.
“For Tanzania to benefit from demographic dividend, three preconditions need to be in place. The first is a rapid decline in mortality followed by a rapid decline in fertility. The second pre-condition is investment in human capital to create a healthy, well-educated and skilled labour force and lastly is the creation of good jobs and economic opportunities for this skilled labour force,” said World Bank human development leader Aneesa Arur.
Planning and Investment minister Kitila Mkumbo said at the launch that the government has prioritised youth-focused and rural-oriented policies, with human investment being at the centre of President Samia Suluhu Hassan’s agenda.
“Education remains key in terms of going forward as it correlates with low fertility rates. This goes hand in hand with family planning and reproductive health education,” he said.
Prof Mkumbo added that the government has also made education and rural economic transformation a top priority through revision and repositioning of the education policy and curriculum.
The World Bank also noted that while the economic outlook for Tanzania was broadly positive, several significant threats remained on the horizon. This includes the possibility of a global recession, faltering domestic reforms, and the effects of global heating on key sectors such as agriculture and tourism. (The Citizen)
TOURISM & ENVIRONMENTAL CONSERVATION
by James L.Laizer
World Bank tourism funding suspended, affecting southern circuit
Elephants in Nyerere National Park (photo Discover Gorillas)
Many Tanzanians received with sadness the news that the World Bank has potentially suspended financing intended to develop tourism in southern Tanzania. In September 2017, the World Bank launched the Resilient Natural Resource Management for Tourism and Growth (REGROW) project through a US$ 150 million loan to Tanzania, with $ 100m already received. The objective of this project is to improve management of natural resources and tourism assets in priority areas of southern Tanzania and to increase access to livelihood activities for targeted communities. REGROW focuses on four national parks in southern Tanzania: Mikumi, Nyerere (formerly part of the Selous Game Reserve), Ruaha, and the Udzungwa Mountains.
The project has been helping the Tanzanian government develop these parks to increase tourism in the ‘Southern Circuit’ of the country, which is currently less visited compared to the world-famous safari attractions of the Serengeti, Ngorongoro Crater, and Mount Kilimanjaro in the north. A key objective of the project was to develop new and improved tourism products to expand the Circuit. Across these four priority parks, the project sought to increase the number of annual visitors from 98,504 in 2017 to 135,000 by 2025. It had four key components: first, strengthen management and improve infrastructure in priority Protected Areas; second, strengthen alternative livelihoods for targeted communities in proximity to the priority Protected Areas; third to strengthen landscape management and infrastructure investments in and upstream of the Ruaha national park; and fourth, on project management, institutional strengthening, quality assurance and control, and monitoring and evaluation.
The World Bank has suspended financing after allegations of human rights violations captured global and local headlines, including in the UK BBC and Guardian. These allegations stem from claims by the US-based Oakland Institute, which alleges documented abuses by Tanzanian rangers against villagers accused of encroaching in the Ruaha national park.
“The World Bank is deeply concerned about the allegations of abuse and injustice related to the Resilient Natural Resources Management for Tourism and Growth (Regrow) project in Tanzania,” said a World Bank spokesperson. “We have recently received information that suggests breaches of our policies in the implementation of the Regrow project. We have therefore decided to suspend further disbursement of funds with immediate effect.”
In response, the Tanzanian government spokesperson Mobhare Matinyi stated that the Government of Tanzania does not violate the rights of its citizens and such allegations are baseless. The government has further denied any abuses, including forced evictions, in connection with the national park expansion project. Matinyi asserts that anyone relocated because of the project would be accorded all their rights.
Tanzania was due to receive a further $50m of the REGROW funding, which is now in jeopardy. This funding is deemed important for tourism development not only in the southern part of the country, but in Tanzania in general. Whilst the allegations must be investigated and acted upon if they are proven, many view that suspending such a project will negatively impact the targeted population economically, restrict ongoing infrastructure development, affect conservation of biodiversity, and delay improvement of tourism assets in the Tanzania southern circuit – a region that is already underinvested in.
Drones to be used for forest conservation work in Tanzania
The Tanzania Forest Agency (TFA) is expanding its conservation toolkit with the addition of drones to protect its dwindling woodlands, which face pressure from various sources. “Drone technology is important because it will help us cover large areas more efficiently, allowing us to focus our vehicle and motorcycle patrols strategically,” said Dos Santos Salayo, TFA’s commissioner for conservation. The agency also announced the deployment of four new vehicles and nearly 40 motorcycles to further bolster its forest protection efforts.
“We are committed to enhancing the sector by equipping it with the necessary tools and expertise to drive positive outcomes in forest conservation,” said Angellah Kairuki, Tanzania’s minister for Natural Resources and Tourism, during the equipment unveiling ceremony.
Kairuki emphasized the importance of investing in various defense technologies due to the vastness of forest areas, noting that relying solely on traditional ground patrols won’t suffice in addressing illegal activities within the reserves. She highlighted the advantages of drones for surveillance and monitoring over large and sometimes inaccessible terrains, enhancing the effectiveness of law enforcement efforts in protecting forest reserves. “The TFS should consider investing in technologies like satellite imagery to align with global standards,” she added.
Tanzania has 45.7 million hectares of forests, covering about 40% of the country. This represents a significant decline from 61% in 2000, according to the World Bank. Tanzania loses about 400,000 hectares of forest each year – twice the global average deforestation rate. The TFA drones will expand Tanzania’s capacity to track illegal activities in the forests and monitor less accessible areas, allowing for more effective patrol deployment, Kairuki said. This initiative builds on the country’s 2016 decision to use drones to monitor its Ngorogoro Conservation Area for poachers and to deter elephants from the protected area.
Tanzania joins other African nations like Ghana, Liberia, Madagascar, and Namibia in utilizing drones for forest monitoring. Kenya and Madagascar also employ drones for reforestation efforts. Additionally, drones can deploy sensors within forests to help monitor tree health.
Tanzania collaborates with the environmental NGO Trees for the Future as part of a consortium of African countries, mostly in East Africa. This partnership utilizes drones to evaluate tree coverage, aiding farmers in protecting the health of their farmland and preventing erosion. According to Kairuki, illegal charcoal and firewood collection, illegal mining, livestock grazing, and agriculture are major threats to Tanzania’s forests.
Tanzania’s Tourism Sector Sets Records
Tanzania’s tourism industry experienced a significant rebound last year, with tourist arrivals increasing by 24.3% to a record high of 1.8 million visitors, according to the Bank of Tanzania. Tourism remains Tanzania’s top foreign exchange earner, generating $3.37 billion in revenue in 2023. This success was followed by gold exports, which increased by seven percent to $3 billion, and transportation earnings, which surged by almost 30 percent to $2.4 billion. The Bank of Tanzania’s (BoT) monthly economic review for January indicates that service receipts reached $6,281m up from $4,762m the year ending December 2022. This growth was primarily driven by travel and transport receipts.
EDUCATION
by Ben Taylor
Phasing-in of new education policy underway
The start of the new school year in January saw the beginning of a gradual process to phase in the country’s new education and training policy.
This began with immediate implementation of the new policy for pre-primary, grade one, and grade three in primary schools, and the vocational training option for Form One students in secondary schools that meet the necessary requirements. Curriculum changes for upper secondary schools are scheduled to begin in July 2024. “Students in primary and secondary schools this year will complete their studies using the current curriculum. However, those joining Form One in 2024 will experience a dual curriculum scenario, with practical students following the improved curriculum while general education students continue with the existing one,” the circular noted.
The lower secondary education stage now has two streams: general education and vocational education. After completing the sixth grade in primary schools, students will take a national test and decide between general and practical secondary education when entering Form One.
“We have already started implementing the new education and training policy as well as new curricular in January 2024,” said the Minister of Education, Science and Technology Professor Adolph Mkenda. “There are huge changes that started for pre-primary, standard one to three for primary schools and form one for secondary schools,” he added.
“Logically it is a nightmare to start the whole changes at a go, which is why we have started gradually. We are quite optimistic it will transform the country’s education sector because its focus is competence and skills based,” he said.
He said 96 secondary schools are enlisted for vocational skills stream, of which 28 are government-owned schools and 68 are privately-owned. Speaking in Parliament in February, the Prime Minister, Kassim Majaliwa, stated that the new education policy and curriculum have gained the trust of the public, and will effectively address competence, vocational skills, and unemployment issues.
He explained that the curriculum and policy, whose implementation began in January 2024, will put an end to the perception that the government is the sole employer, since it will increase the number of skilled and competent graduates in various fields to meet national and global market demands.
“An evaluation shows that parents and stakeholders in the education sector are satisfied with the new reforms, especially regarding technical and vocational training,” said Mr Majaliwa. “These reforms aim to provide learners with skills and knowledge for self-employment.”
Concerns raised over increase in English-medium schools
A recent surge in converting public schools to English medium has sparked a fiery debate across Tanzania. While some see it as a strategic leap towards quality education, others fear it will widen socioeconomic disparities. As of April 2023, there were reported to be 42 government-owned English medium primary schools in the country.
Supporters believe the English medium education offers a better foundation and welcome the alternative, even if it means paying extra for transportation.
Critics raise concerns about the selective nature of these schools and argue that preferential treatment for English medium schools discriminates against taxpayers who deserve equal access to quality education.
Government English medium primary schools operate differently from those using Kiswahili as a medium of instruction. Parents typically pay TSh 10,000 to take entry forms from those schools, and their children go through interviews to establish if they qualify to join. When accepted, parents pay TSh 400,000 as an annual school fee for their children.
The arrangement and the overall environment and atmosphere are different at these schools. The Chanzo online newspaper visited three such schools in the Kinondoni district and observed various things that are uncommon at regular schools. They have school buses, for example. Their classrooms are clean and well-designed, making them more attractive.
The government has branded the development as “progressive,” aiming to give parents more options for their children’s education and change the status quo that only the private sector can offer English medium schools.
Head of primary education for Dodoma City Council, Prisca Myalla highlighted the aim of providing quality education and nurturing talent for national development. She sees these schools as models for parents willing to contribute more for their children’s English-medium education.
Long-time education commentator, Richard Mabala, was concerned that the transition to secondary schooling would present challenges if some children had been through primary schooling in English and others in Swahili.
“It is dangerous,” said Mr Mabala. “I mean, if I’m to write a book for Form I students now, I don’t know how to accomplish that task. Because if you target this group, you’ll lose the other, and vice versa.” He said that a teacher teaching that class will have difficulty balancing each student’s interests: he cannot go too fast because he’ll fail those from Kiswahili medium, and he cannot go too slow because he’ll bore those from English mediums.
Japhet Makongo, who has spent decades researching Tanzania’s education sector, said that in his view, the government is walking back on the guarantee of equal opportunities by erecting such a “discriminatory” arrangement.
However, many Tanzanian parents want their children to study at English medium schools, Theresia Evarist Kyara, who heads the early childhood and primary education department at the Kinondoni municipal council, told The Chanzo.
She said that were it not for the parents’ demands, the municipality would not have prioritised changing the schools to English mediums. Ms Kyara sees nothing wrong with the transformation.
Drop-out rates at “crisis levels”
The escalating dropout rates in Tanzanian classrooms, particularly in Standard Four (in primary schools) and Form Two (in secondary schools), have emerged as a critical concern among education stakeholders. At the heart of the debate is the impact of exams and the punitive measures associated with failing and repeating classes.
Official 2022 data revealed that 56,361 Standard Four students and 53,932 Form Two students dropped out of school. The classes coincide with national assessments, namely the Standard Four National Assessment (SFNA) and the Form Two National Assessment (FTNA).
“The pressure exerted by these exams often leads to anxiety and disengagement among students,” explains Dr Fatma Mwamba of the University of Dodoma. “The practice of compelling failed students to repeat a grade exacerbates the problem, pushing many to abandon their education altogether.”
In response, the Ministry of Education, Science, and Technology under Prof Adolf Mkenda, has announced the formation of a team of researchers tasked with investigating the root causes of the dropout phenomenon.
“Despite the free education policy, we are witnessing a concerning rise in dropout rates. We need to understand why,” he explained. Education policy consultant, Dr Jane Mdoe, emphasised the need to reevaluate the purpose and structure of national assessments. “The Standard Four and Form Two assessments should serve as tools for improvement, not punitive measures,” she contended, and called for a comprehensive review of the assessment framework to ensure its alignment with the objectives of inclusive and equitable education.
HEALTH
by Ben Taylor
Universal health insurance imminent
Preparations for the introduction of a universal and compulsory health insurance scheme are at an advanced stage, according to the Deputy Minister of Health and Social Welfare, Dr Godwin Mollel.
The law to govern the new insurance arrangements was enacted by parliament late in 2023 and signed by the President on November 10, 2023. However, it is up to the Minister to formally announce the date on which the implementation of the law will commence.
The Act aims to provide health insurance for all Tanzanian citizens, with special provisions for the financing of health care for the poor. It provides for reforms in regulation, governance, health service delivery and financing of health services to address the fragmentation of financing arrangements of existing health systems by combining the formal public health insurance and the Improved Community Health Funds (ICHF).
Under the new law, an equity fund will be established to subsidise premiums for low-income citizens and finance treatment for chronic diseases. This fund will be resourced through levies imposed on items such as carbonated drinks, alcoholic beverages and electronic transactions.
The Act stipulates the removal of exemptions previously granted in health care, compelling every Tanzanian to enrol in a health insurance scheme. Employers are now required to register their employees for health insurance within 30 days of employment commencement. Those who are in informal employment, are self-employed or unemployed are required to join a recognised community health fund.
In a sign perhaps of the difficulties associated with such a major shift in health policy, a dispute arose in late February between the largest government provider of health insurance, the National Health Insurance Fund (NHIF) and several major hospitals. NHIF issued a new schedule of prices that it would be willing to pay for specified services, prompting hospitals in the Association of Private Health Facilities Tanzania (APHFTA) and the Christian Social Service Commission (CSSC) to suspend provision of services to NHIF members.
APHFTA said the new rates were around 20-30% lower than before and presented the hospitals with an impossible situation. A source at the group told The Citizen newspaper that profit margins were previously around 10%, and with the new prices, facilities could face up to a 30% loss on some treatments.
Within days, however, the situation had been largely resolved, and provision of services to NHIF members resumed in most hospitals in early March.