BUSINESS & THE ECONOMY

by Ben Taylor

President Magufuli’s economic goals, and a charm offensive for investors
President Magufuli emphasised economic matters in his inaugural speech to parliament following his re-election in October. Over half the speech was devoted to economics, reflecting a new emphasis.

The President focussed on the need to manage the economy well so that the country attains higher economic growth, together with an emphasis on ensuring that growth benefits citizens. The aim is to achieve 8% growth, well above historic growth averages in sub-Saharan Africa of 4%, and above 5.5% growth projected for Tanzania in 2021.

Other goals listed by the President include the creation of eight million jobs, stabilisation of the shilling, keeping inflation in single figures, and reducing the interest rate.

The combination of two targets – 8% growth and 8 million jobs – was termed the 8-8 economic agenda by President Magufuli. The President also emphasised the importance of attracting both local and foreign investment in order to achieve these goals. As part of the new emphasis, the ministerial docket with responsibility for promoting investment and the Tanzania Investment Centre (TIC) have both been moved from the Prime Minister’s Office to the President’s Office.

Prof Kitila Mkumbo, the new Minister of State in the President’s Office (Investment), took this as his cue to launch a charm offensive to improve relations with existing investors, and to attract new investors. “It’s a new dawn for investors in Tanzania,” said the Minister. “We will continue to work closely with the private sector in promoting, facilitating, handling and developing investments in Tanzania. We recognise the private sector as an engine for economic growth and a valued and dependable partner in our endeavour to achieve the 8-8 agenda of economic growth and jobs creation.”

“We will seek to constantly and consistently engage and dialogue with members of the private sector and their member-based associations on how best to promote investment in Tanzania. We will openly and transparently listen to and welcome their ideas; and we will implement good and evidence-based ideas with a view to promoting investments in our country. In the same spirit, we express our commitment to continue working responsibly and in a friendly manner with development partners and like-minded civil society institutions in investments promotion and facilitation, fostering business enabling environment, as well as private sector development – and economic development in general.”

Prof Mkumbo tasked TIC to solve issues of nepotism and unnecessary delays when an investor wants to invest in Tanzania. He reiterated President Magufuli’s target that it should not take more than 14 days in enabling an investor to invest in Tanzania.

“We need to change our mindset. Officials working with investment facilitation institutions should not see themselves as bosses to investors, we should look at them as partners and your duty is to facilitate,” he said.

The Minister said the government’s key strategic approach for promoting investments in Tanzania will be based on implementing the Blueprint for Regulatory Reforms to Improve the Business Environment in Tanzania, which has been approved by the government. He promised to “embrace the use of the World Bank’s Ease of Doing Business Reports as one of the key feedback mechanisms on our progress,” aiming to raise Tanzania’s ranking in the World Bank’s Ease of Doing Business Index to at least 100.

Tanzania’s 2020 ranking on the index was 141, just below Zimbabwe. In comparison, Rwanda ranks 38th, Kenya 56th, Zambia 85th and Uganda 116th. Tanzania has never ranked higher than 127th.

“Additionally, we will put a sustainable feedback mechanism with investors and members of the business community so as to garner their views and assessments on how we are doing – and where government action is mostly needed,” said the Minister.

After several years of strained relations between government and business in Tanzania, the business community responded with cautious positivity to the President and Minister’s remarks.

Investors and business operators have complained in recent years that they have been compelled to deal with multiple regulatory bodies and other bureaucracies. This was compounded, in their view, by multiple taxes, inordinately high tax rates and lack of adequate information on investment opportunities, as well as unpredictability of extant policies and regulatory frameworks.

World Bank cautiously optimistic on Tanzania’s economic prospects in 2021
The World Bank has upgraded its projection for Tanzania’s economic growth this year, forecasting that growth would reach 5.5% in 2021, up from its earlier estimate of 2.5% for last year.

Tanzania’s real GDP had been growing at an average of 7% in the last decade. But the government lowered the projections for 2020 to 5.5% from the initial projection of 6.9% due to factors, including Covid-19, heavy rains that resulted in floods and destruction of transportation infrastructure, and delayed implementation of some projects.

Sectors like tourism were hard-hit by the pandemic as countries across the world introduced travel restrictions to control spread of the pandemic. At the same time, however, earnings from mining exports rose due to the rising price of gold in the world market during the pandemic.

Vodacom / Vodafone criticised for conspiring to undermine freedom of speech
Vodacom Tanzania, part of the Vodafone Group, a multinational company headquartered in Britain, has come in for criticism after allegations the company “caved to a government demand to filter and block messages containing certain terms associated with the country’s main opposition party”.

The issue arose when opposition supporters realised that some – but not all – of their text messages were not reaching their intended recipients. They noted that it appeared that messages containing the name of opposition Presidential candidate, Tundu Lissu, were being blocked.

Nic Cheeseman, Professor of Democracy at the University of Birmingham criticised both Vodacom Tanzania and the Vodafone Group for acquiescing in efforts to undermine credible elections. “Despite proudly proclaiming their commitment to promoting ‘inclusion for all’, ‘operating responsibly’ and contributing to the UN SDGs on their website, a Western company aided an authoritarian leader to undermine freedom of speech,” he wrote.

“Despite aiding and abetting an increasingly authoritarian government,” he added, “neither Vodacom Tanzania nor its parent group Vodafone Plc, has been forced to explain its behaviour. Perhaps even more tellingly, they have not even felt the need to apologise.”

“Instead, Vodacom Tanzania recently intensified its efforts to cosy up to the ruling party, appointing Thomas Mihayo –a known Magufuli ally, and a member of the National Electoral Commission (NEC) that just signed off on a flawed election – as its new Board Chairman.”

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