by Roger Nellist

Tanzania generates first wind power

In June 2020, in an important first step for Tanzania, a wind farm in Mufindi District generated 0.8 MW of electricity in test production. The wind plant has been developed by the Rift Valley Energy Group (RVEG) and consists of three large wind turbines which, when fully commis­sioned, are expected to generate 2.4 MW that will ensure affordable power to 32 villages which are currently being supplied by the 4MW Mwenga Hydro Plant. The network is the first private large-scale rural power network in Tanzania and any surplus power is sold to TANESCO under a power purchase agreement.

A spokesman for RVEG said: “The facility will ensure the continued availability of affordable power to the rapidly growing number of rural customers within the network, throughout the year, specifically in the dry season when the available water for the Mwenga Hydro Plant is low…… Additionally, it will cater for further expansion of the rural electricity distribution network into those remaining areas of villages that are located near the rural network area, and are still unconnected”. RVEG offered a discount price of TSh 25,000 (about £9) until October for new customers to get connected.

Mineral Concentrate Exports resume
In May 2020, the government at last granted an export permit allowing 277 containers of gold and copper concentrate material to be released from Dar port for sale abroad by Twiga Minerals Corporation (TMC). The containers had been seized in 2017 following an order by President Magufuli prohibiting their export until unpaid taxes by Acacia Mining and other irregularities at Acacia’s three Tanzanian gold mines had been resolved.

Resolution of those issues came in the form of the suite of agreements that government negotiated with Acacia’s parent company, Barrick Gold. Those agreements were signed in January 2020 and put an end to the acrimonious dispute between the parties that had lasted for three years and significantly disrupted production at the mines. [The protracted saga has been reported in previous editions of TA]. The negotiated settlement has resulted in a radical restructuring of Acacia’s former gold mining operations -with the demise of Acacia, with Tanzania and Barrick becoming shareholders in the new joint venture company (TMC) and with the future economic benefits from mine production being shared (in as yet an unspecified manner).

The technical investigative committee that Magufuli established in 2017 to examine the value of the concentrates estimated that the 277 containers included minerals worth TSh 829 billion. That sum was very considerably more than the amounts declared by Acacia and the Tanzania Minerals Audit Agency.

In a statement Barrick also said that the shipping of some 1,600 containers of concentrate stockpiled from the Bulyanhulu and Buzwagi gold mines resumed in April.

Tanzania receives US$100 million from Barrick
At the end of May, in accordance with the terms of the negotiated settlement between government and Barrick Gold, Barrick paid $100 million (approx. TSh 230 billion) to Tanzania. It was the first tranche of the $300 million that the giant mining company agreed to pay to settle the long-running tax dispute between the parties. When presented with a representative cheque at a ceremony in Dodoma, the Minister for Finance and Planning, Dr Philip Mpango, said: “I congratulate Barrick for implementing our agreement and call upon other mining firms to emulate the move in ensuring a win-win situation”.

Tanzanite gemstone discoveries make latest billionaire
In June 2020, a small-scale miner Mr Saniniu Laizer from Simanjiru in Manyara Region sold two huge Tanzanite gemstones to the government and became Tanzania’s latest Shilling billionaire. With a combined weight of just over 14 kgs, they were valued at TSh 7.7 billion (about $3.4 million). Authorities confirmed that they were the biggest Tanzanites ever to be discovered. Mr Laizer was commended by both President Magufuli and Mines Minister Biteko, who signalled the importance of the small-scale mining sector in the country despite some detractors and that the discoveries proved that Tanzania did not have to be wholly dependent on foreign mining companies. Magufuli, speaking in a broadcast telephone call, said: “Laizer’s incident sends a signal that Tanzania is rich”.
Then Laizer’s luck struck for a third time. In early August, he announced he had discovered a third big Tanzanite stone weighing 6 kgs that was valued at about $2 million.

Tanzanites, which have a dark blue-violet colour, are one of the rarest gemstones on our planet. Remarkably, they are only to be found in Tanzania, where the law specifies that they must be sold to the government.

Williamson Diamond Mine sale?
The Williamson Diamond Mine at Mwadui is owned 25% by the Tanzanian government and 75% by UK-based Petra Diamonds (which also operates three diamond mines in South Africa). However, at the end of June Petra announced that it was facing mounting losses and debts because of depressed global markets, exacerbated by the Covid-19 pandemic (that had apparently caused the price of diamonds to drop from about $246 per carat before the coronavirus outbreak to $135 by March 2020). Petra therefore wished to divest its Tanzanian and South African assets and was also offering itself up for sale – as part of a strategic review of its commercial options.

However, Petra’s announcement seems to have taken the Tanzanian authorities by surprise. Government said it was not given prior notice of the announcement and would block the sale of the Williamson mine since it has a first right of refusal. In response, Petra said it had apologised for its oversight in not first communicating its sale announcement to the government, adding that it was considering all its options to determine what will be in the best interests of the company and its shareholders. Minerals Minister Biteko said government was dissatisfied with the manner in which Petra was going about resolving its problems.


by Ben Taylor

Tanzania formally attains Middle Income status

In July, the World Bank officially promoted Tanzania to the list of lower-middle income countries, recognising that the country has attained an annual per capita income of above USD $1,035. The World Bank calculation was based on economic data for 2019 and found that per capita GNI had increased from $1,020 in 2018 to $1,080 in 2019.

This is five years ahead of the official government target of achieving middle income status by 2025. According to William G. Battaile, the World Bank’s Lead Country Economist, “the upgrade is the product of the country’s strong economic performance of over 6% real gross domestic product (GDP) growth on average for the past decade”.

Tanzania joins 51 other countries on the lower-middle income list, including Kenya, Zambia, Nigeria, Ghana, Egypt and India, which includes countries with GNI per capita between $1,036 and $3,995.

Graduating to middle income status does not mean Tanzania will necessarily lose access to concessional financing from the World Bank. GNI per capita informs the decision on whether or not a country is eligible for loans from the World Bank’s concessional lending arm, but it is not the only indicator. Other factors, such as a country’s macroeconomic prospects, creditworthiness, risk of debt distress, vulnerability to shocks, institutional constraints, and levels of poverty and social indicators are also used to establish a country’s eligibility.

“I congratulate all my compatriots for this historic achievement. We had envisaged to achieve this status by 2025 but, with strong determination this has been possible in 2020,” wrote President Magufuli in a tweet.

Hassan Abbasi, the chief government spokesperson, explained that “discipline in financial expenditure and the prevailing peace and tranquillity also helped the country to earn the middle-income status.”

Economic data questioned
The Economist magazine published an article in July that questioned whether Tanzania’s economic data could be relied on. “The growth numbers do not stack up. From about 2017 several other indicators, from tax revenue to lending to the private sector, have slowed sharply. The IMF raised doubts last year when it said there were ‘serious weaknesses’ in the growth data. It pointed out that public-sector wages, lending to the private sector and imports were all falling while tax revenue was growing only weakly. The authors made it clear that the official 6.8% growth figure for 2017 was not credible. Publication of the report was blocked by the Tanzanian authorities. (The Economist has seen a copy.)

The IMF did later back down. It now reports Tanzania’s growth as 6.8% in 2017, 7% in 2018 and 6.3% in 2019.

However, The Economist notes that the IMF’s concerns have not disappeared. Performing their own analysis of official Government of Tanzania data, the magazine found several grounds to question official growth rates that have remained very steady at 6-7% in recent years. According to the magazine, tax revenue has shrunk in real terms, public-sector wages “crept up” by 2% in 2019, lending to the private sector by just 4%, the amount of money circulating edged up by only 2% in 2019, foreign direct investment has almost halved since 2013, exports and imports both fell between 2012 and 2018, and imports of machinery and construction equipment fell between 2015 and 2018.

“The growth numbers are out of line with almost everything else we are seeing out of Tanzania,” says Justin Sandefur of the Centre for Global Development, a think-tank.

The government says the economy will grow by 5.5% in 2020. That would, according to The Economist, “probably make Tanzania the best-performing economy in the world”. The IMF predicts 1.9%. [See below]

With the true impact of Coronavirus on Tanzania remains impossible to verify, the likely economic impact is also uncertain. The discrepancy between the IMF and government growth projections in part reflect this uncertainty.

The African Development Bank (AfDB), lowered its growth forecasts for Tanzania as a result of the pandemic, though only from 6.4% to 5.2%. In contrast, the bank reduced growth forecasts for other east African countries by a much greater extent: from 6% to 1.4% in Kenya, from 6.5% to 2.5% in Uganda, and from 3% to -5% in Burundi.

“Real GDP growth in Tanzania will benefit from increased prices of gold, a major national export,” said an AfDB the report. Gold prices have reached above $1,900 an ounce, up 50% from May 2019, with the precious metal benefitting from its ‘safe haven’ status as the coronavirus outbreak triggered global economy fears.

The price surge partly contributed to making gold Tanzania’s leading foreign exchange earner, overtaking tourism which has been hit hard by the Covid-19 global pandemic.

According to the Bank of Tanzania, gold export earnings increased by 47% to $2.5 billion in the year to 31 May 2020. This in part relates to the long-awaited resolution of the dispute between Acacia/Barrick and the government of Tanzania that had slowed production and exports from some of Tanzania’s biggest gold mines. (See Energy and Minerals section).

The Minister for Finance and Planning, Dr Philip Mpango has also argued that the government’s decision not to impose any form of lockdown in response to the Coronavirus pandemic will lessen the economic impact.

“The country’s decision to keep the economy open has offered a major relief to the private sector in terms of business resilience”, said Peter Mathuki, Executive Director of the East African Business Council.

A budget for complicated year, and for managing debt
With an election due in October and a global pandemic causing havoc to lives and livelihoods across the globe, government budget calculations have been even more complicated than ever this year.

Nevertheless, the main headline in the budget presented to parliament in June is that the government plans to spend 30% of the annual budget on debt payments – a total of TSh 10.5 trillion (approximately USD $4.5bn) over the next year. These figures represent a considerable increase over 2019, when budgeted debt payments totalled TSh 6.2 trillion, or 18.7% of the total budget.

The parliamentary budget committee acting chairman, Mr Mashimba Ndaki, said the committee’s opinion was that despite commendable efforts to service verified debts, payment should be expedited to avoid expensive penalties. “Servicing the debts will enable service providers to clear loans secured from financial institutions in order to provide services to the government. This is mostly important at these moments of Covid-19,” he said.

Beyond this headline, the budget continued to extend a package of measures aimed at promoting investment and spurring economic growth, building on a business environment improvement plan that began in FY-2019/20.

Under the theme “Stimulating the economy to safeguard livelihoods, jobs, businesses and industrial economy,” the government foresees a rise in spending and the budget will likely have a deficit of 2.6% of GDP in FY-2020/21. It is also projected that in FY-2020/21 tax revenues will account for 12.9% of GDP from 12.1% in FY-2019/20. These targets call for reforms to improve tax administration.

Reforms included in the budget include creating a business-friendly environment for taxpayers, enhancing the capacity of tax adjudication forums and improving the ability to enforce tax laws. These reforms are in part a response to a common complaint amongst businesspeople that some officials of the Tanzanian tax administration were treating businesses unfairly. They also include the abolishment or reduction of sixty (60) fees and levies that were charged by Ministries Departments, Agencies and Regulatory Authorities.

“The year 2019/20 is ending with unexpected circumstances resulting from the destruction of transport infrastructure caused by heavy rains/floods across the country as well as the Covid-19 pandemic. The government will allocate more resources to the health sector in order to fight against the Covid-19 and support other most affected sectors,” told Parliament.

Low income earners will have a reason to smile as Dr Mpango is raising the Pay-As-You-Earn threshold from TSh 170,000 to TSh 270,000 so as to give employees some disposable income. And savings groups will now only be required to pay income tax when their gross revenues exceed TSh 100 million per year, up from TSh 50 million.


by Ben Taylor

First cases of Covid-19 in Tanzania
[Editor’s note: As this is a fast-changing situation, the details provided here are likely to be somewhat out of date by the time this issue reaches readers. Nevertheless, every effort has been made to ensure the details were correct at the time of writing (April 24).]

The first recognised case of Covid-19 in Tanzania was recorded on March 16 in Arusha, a Tanzanian woman who had recently returned from Belgium. Two further cases were recorded two days later, one in Dar and the other in Zanzibar, both foreign nationals. Three more followed the day after that.

The government acted swiftly, closing all schools with immediate effect on March 17 and universities from the following day. Major sporting events were also suspended. A contact-tracing and testing system – designed with a potential Ebola outbreak in mind – was put in place.

Nevertheless, the number of cases crept upwards over the following days and weeks. The first death was recorded on March 31.

Initially, cases were limited to those having recently arrived in the country from countries where the outbreak was already more widespread. However, on April 9, the Minister of Health, Ummy Mwalimu announced that the first recorded case of local transmission had been detected around the start of the month.

At the time of writing, the number of recorded cases has begun to rise more quickly, reaching 284 cases and ten deaths as announced by the government on April 22, up from 32 cases ten days earlier.

As has been the case across much of the world, the government has struggled to find the right response to an unprecedented and overwhelmingly difficult situation.

Even before the first cases were recorded in Tanzania, the President and the Minister of Health had both begun urging Tanzanians to take precautions – handwashing with soap, social distancing where possible and refraining from handshakes.

Maalim Seif Sharif Hamad (left) and President Magufuli tap feet in greeting on March 3rd – photo State House

President Magufuli himself set a public example when meeting with opposition leader Maalim Seif Sharif Hamad (of ACT Wazalendo) on March 3: rather than shake hands, they tapped feet. The photo featured prominently in news coverage, and did much to raise public awareness of the virus.

On March 13, the President urged the media to dedicate time alongside their news coverage to educate the public about the virus.

More substantive policy measures, however, have been more piecemeal. After the closure of schools and universities, the next major policy response came on March 23, when it was announced that all international arrivals into Tanzania from Covid-19-affected countries would have to undergo 14 days quarantine in designated hotels (at their own cost). This prompted distress from many returning Tanzanian citizens, who complained that the designated hotels were tourist-class hotels at prices beyond anything they would usually pay.

Three weeks later, the Tanzania Civil Aviation Authority suspended all international commercial passenger flights to and from Tanzania until further notice, though in reality almost all such flights had already ceased operating due to restriction in other countries and measures taken by airlines for commercial reasons.

A faith-based response
The government also urged people to remain at home as much as possible, travel less on public transport and refrain from socialising. The message was somewhat undermined, however, by repeated public statements by the President and other national figures encouraging people to continue to attend their churches and mosques as normal, as the country needed their prayers.

The President, speaking while attending a Sunday service on March 22, said the virus was “satanic” and “it cannot survive in the body of Jesus. It will burn.”

This approach drew criticism both within and outside the country. Opposition leader, Zitto Kabwe, accused the government of “a lack of seriousness” and the President of being in “a state of denial.”

Nevertheless, the President doubled down on the message. Shortly before Easter he stated that “this is the time to build our faith and continue praying to God and not depending on facemasks. Don’t stop going to churches and mosques for prayers. I’m sure this is just a change of wind and it will go like others have gone.” And on April 16, the President called for three days of national prayer, saying God would protect Tanzanians from the virus.

Social distancing not in evidence at Palm Sunday mass in Full Gospel Bible Fellowship Church in Dar es Salaam

This earned the President a spot in a list of the “Notorious Nine” world leaders who “responded to the coronavirus with denial, duplicity and ineptitude,” compiled by a Canadian newspaper, the Globe and Mail. “Tanzania today remains the only country where the government has recommended church attendance as a way of combatting the virus,” the paper reported.

The Prime Minister, Kassim Majaliwa, has differed only a little in his stance. “Prayers in houses of worship are desirable,” he said, “but we also need to take necessary precautions.” He added, however, that as even wealthy countries have not been spared the pandemic, “it is time we sought divine intervention”.

On April 22, the President extended his advice a little beyond prayer
– to incorporate tradition medicine using steam inhalation. This, he said, was “scientifically very clear, because vapour is above 100 degrees centigrade and the virus will disintegrate,” before suggesting that concoctions made of Neem trees, onions and other ingredients could be beneficial, though without specifying whether as prevention or as treatment.

Scientists have concluded that this would have no positive effect, could cause burns and might make people more vulnerable to infection or to infections causing more severe problems. A Reuters fact check (not responding to President Magufuli, but to earlier online posts claiming steam inhalation as a cure), concluded that the idea was false, and indeed dangerous. Similarly, a BBC factcheck concluded that “any attempt to inhale steam at this temperature, would be extremely dangerous … and your lungs would certainly be irreparably damaged before reaching a temperature high enough to deactivate the virus.” Scientifically, it is very clear.

After making this suggestion, the president concluded that “we will beat Corona by working together, by putting an end to fear, by putting God first, and will beat Corona as we have been able to win other wars.”

No lockdown, “never”
The President has also shunned all calls for a lockdown. “Let us continue working hard to build our nation,” he said in mid-April. “Coronavirus is not and should not be a reason for us not working. Farmers should utilise the ongoing rains effectively, industrial owners should continue producing and I don’t expect any development project to stop.”

Some minimal social distancing measures were put in place. In addition to the closure of schools, universities and sporting events, this includes attempts to prevent overcrowding on public transport – no more passengers permitted than the number of seats – and some restrictions (later relaxed) on travel between Dar es Salaam and up-country locations. Many rural communities have put in place their own measures to fine or quarantine anyone arriving from Dar es Salaam – as many have done, recognising the lower risk associated with lower population densities and the possibility of growing your own food. The April 26 Union Day public celebrations have been cancelled, as has the Uhuru Torch race.

Opposition leaders say the country needs to take more urgent action to avoid potential disaster. Freeman Mbowe, the chairman of the largest opposition party, Chadema, posted on Twitter: “No lockdown because he (President Magufuli) wants to save the economy and his flagship infrastructure projects. The lives of our people cannot be repaired but the economy can! Lockdown or get locked out!”

The President has repeatedly resisted all such calls. On April 22, speaking in his hometown of Chato to security force leaders, he addressed the issue again: “There are those who have suggested that we lockdown Dar es Salaam. This is not possible,” he said. “Dar es Salaam is where we collect almost 80 per cent of the country’s revenue, we can continue taking measures to curb the virus but not by locking down Dar es Salaam. Never!”

At the time of writing, the truth is that social distancing has not become part of life for many in Dar es Salaam or other urban areas of Tanzania. Markets, public transport and bars remain crowded, as well as places of worship.

And the government faces some impossible choices in this regard. While a small number of Dar es Salaam residents – primarily those in middle class jobs – are able to work from home, the reality for many is that this would spell rapid and severe economic distress. Tanzania lacks the economic capacity to provide either direct financial assistance or food aid to the millions who would need it.

There is considerable debate about whether a lockdown might not be the best response in many African countries, where populations are both extremely young and financially vulnerable. Melissa Leach, the Director of the Institute for Development Studies (IDS) and James Fairhead, an environmental and medical anthropologist, both at the University of Sussex, have written that “the best policies for countries with young populations may not be lockdowns.”

Around 3% of Tanzania’s population is aged 65 or above, compared to around 18% in the UK and 20% in Italy.

“There may be better ways to save lives such as physically shielding and supporting the most vulnerable while allowing the wider population to gain immunity, whether through a vaccine when it arrives or by virtue of enough people catching and recovering from the virus itself,” they wrote. “Poor countries are much less able to cushion the potentially devastating economic impacts produced by lockdowns. This is if they are feasible in the first place. Effective lockdowns are near impossible in crowded low-income settlements that lack taps and sewers.”

“Today, some version of the lockdown has become most countries’ response to the Covid-19 pandemic. In years to come, we may look back on this moment as one in which an ideological practice emanating from older and wealthier countries was misguidedly “copy and pasted” by elites in younger and poorer societies, leading to marginal benefits in tackling the coronavirus but with the effect of increasing poverty and mortality among the poor.”

Nevertheless, most of Tanzania’s neighbours have opted for forms of lockdown that go well beyond anything being done in Tanzania. In Uganda, the country has been in strict lockdown since March 30. Movement is restricted, public gatherings are suspended and all but a small number of essential businesses are closed. This is enforced in Kampala and other urban centres by a heavy police presence on the streets. In Kenya, the government has not gone quite so far, though did introduce a nationwide 7pm-5am curfew and the closure of all bars and restaurants in late March, followed by a ban on movement in and out of Nairobi and other major urban centres in early April.

Health services
Much of Tanzania’s epidemic preparations have been with Ebola in mind, with contact tracing and testing and isolation of patients of a relatively small number of patients. It is not designed to cope with the large numbers of patients the current pandemic has seen around the world, nor with asymptomatic carriers.

The number of ventilators available is low (the precise number is unknown), stocks of protective equipment for health workers are minimal, even supplies of running water and electricity are unreliable in many hospitals. Five hundred ventilators were donated by Chinese entrepreneur, Jack Ma, on April 8, and several local business figures have donated masks, gowns and other equipment. Doctors have complained about a shortage of protective equipment.

Initially, all positive Covid-19 cases in Tanzania were being isolated in selected hospitals, including those with few or no symptoms. Since April 19, this is primarily the Amana Hospital in Ilala, Dar es Salaam. All other patients at the hospital were transferred elsewhere. Muhimbili National Hospital has been directed to refer all Covid-19 patients to Amana, and to focus exclusively on other medical needs. There have been some efforts to increase capacity at Amana and supply it with new equipment.

There have also been reports of unrest among patients in isolation at Amana. On April 24, it was reported that some patients had staged a breakout. Different reports stated this was either due to dissatisfaction at the poor standard of care being provided to more serious cases or due to frustration among patients with no symptoms that they were being kept for an unnecessarily long time against their will. Similar events were seen the same day in Nairobi, Kenya.

International support, and concern
Various donor agencies have pledged additional financial assistance to Tanzania to cope with the pandemic, though details in most cases are scarce. The government of Ireland responded very quickly, providing €1.5 million to support the national response seven days after the first case was announced. Tanzania has been promised part of a €1.2 billion package set up by the French government to support Covid-19-responses across Africa. The British government has pledged some direct support to Tanzania (“an initial” £2.7 million), but has put large amounts toward international efforts towards vaccine development (£544 million) and the work of international agencies (£200 million) including the World Health Organisation (WHO), UNICEF and the World Food Programme in combatting the pandemic. The EU has raised over €15 billion to support the global response, though this is likely to focus most on supporting economic mitigation and recovery. The US government has committed around $1.5m towards the Tanzanian response.

On April 22, President Magufuli thanked the World Bank for making loans available for financing the response, but suggested that the Bank should instead cancel debts owed by Tanzania and other developing countries. “Now is the right time for the World Bank, which has been touched by the crisis and has good intentions to assist us, to forgive part of the debts we owe, so that the money we are paying each month, and the interest, can be put towards responding to the Coronavirus crisis. This is my request, and I request also that other African countries should join in this call.

WHO Regional Director for Africa Matshidiso Moeti who also urged countries not to let Covid-19 eclipse other health issues.

On April 24, the WHO Regional Director for Africa Matshidiso Moeti said there were concerns about the rise of cases reported in Tanzania in the previous few days. “Certainly in Tanzania we have observed that physical distancing, including the prohibition of mass gatherings, took some time to happen and we believe that these might have been probable factors that led to a rapid increase in cases there.”

Uncertainty and trepidation
The coming months hold a high level of risk and uncertainty for the whole world, with every country facing its own unique challenges according to the local context – and a degree of luck. For Tanzania, it now seems unlikely that the outbreak will be contained, and therefore probable that the virus will spread rapidly in low income neighbourhoods of Dar es Salaam, as well as other towns and cities. It seems unlikely that health services will be able to respond effectively. And it seems likely that the economic consequences – lockdown or no lockdown – will be severe for many, with urban areas again likely to be hardest hit.

Lower population densities in rural areas may offer some protection – both reducing the chance of infections reaching rural communities and slowing the spread within such areas. In rural areas, households are also more likely to be able to produce a greater proportion of the food they need. The young age of the population may offer some protection, if fewer of those who contract the virus suffer severe symptoms, though this may also contribute to faster spread among asymptomatic carriers.

The truth is, however, that this situation is unprecedented in modern times. Nobody truly knows how it will play out, nor what the cost in lives will be, nor the impact on food security and the wider economy.


by Ben Taylor

Progress with financing for Standard Gauge Railway
The government has made further progress towards raising finance for work on upgrading the Central Line railway, after signing a loan agreement with Standard Chartered Bank Tanzania for $1.46 billion.

The money will go towards the estimated $14 billion cost of the project, which involves replacing the existing colonial-era line from Dar es Salaam to Dodoma and beyond with standard gauge track. Specifically, the Ministry of Finance and Planning said in a statement that the loan would fund the section from Dar to Matukupora, near Dodoma.

“Standard Chartered Tanzania acted as global co-ordinator, bookrunner and mandated lead arranger on the facility agreement that is the largest foreign currency financing raised by the ministry of finance to date,” the statement said, adding that most of the financing would come from Sweden’s and Denmark’s export credit agencies.

The loan repayments are spread over a 20-year timespan, but no details of interest rates were made public.

Road bridge brought down by floods

Kiegeya Bridge near Dumila destroyed by floods

Floods in early March brought down a major road bridge on the main road between Morogoro and Dodoma. This effectively left travellers and traders without a simple road connection between the country’s economic and political.

Following the collapse of the Kiegeya Bridge near Dumila, bus operators were forced to divert via Iringa to connect between Dodoma and Dar es Salaam and individual travellers had to pay higher ticket prices. Those transporting cargo by truck had to wait for a temporary bridge to be completed. This applied also to those connecting from Dar through Dodoma to other major towns including Singida, Tabora, Mwanza, Kigoma, Geita and Shinyanga, and to Rwanda and Burundi.

The Prime Minister, Kassim Majaliwa, while touring ongoing work to build a temporary replacement bridge, ordered that the acting manager for Tanzania Roads Agency (Tanroads) in Morogoro, Mr Godfrey Andalwisye, be removed from office. The Prime Minister felt that negligence by Tanroads engineers, failing to conduct routine checks on infrastructure, had contributed to the collapse of the bridge.

Mr Majaliwa asked Tanzania People’s Defence Forces (TPDF) and road engineers in Morogoro and Dodoma to join their forces and ensure that they find an alternative route so that vehicles can start passing the area as construction work on the bridge continues. A temporary crossing was brought into use a few days later.

Dar commuter rail route expansion proposed
The Tanzania Railway Corporation (TRC) has proposed expanding its network of commuter rail services in and around Dar es Salaam. Their plan involves the construction of six new lines, in addition to the three lines currently providing services to commuters on sections of the Central line and TAZARA line.

The proposed new lines would link Mikocheni-Ubungo-Tazara (route A), City Centre-airport (route B), Mwenge-Bagamoyo (route C), Pugu­Kibaha-Kunduchi (route D), Mtoni-Tabata-Ubungo-Mwenge (route E) and City Centre-Kigamboni via Nyerere Bridge (route F). A feasibility study a preliminary design were completed in December 2019, according to TRC.

TRC’s director of Corporate Planning and Investment, Ms Nzeyimana Dyegula, noted that rapid population growth in Dar es Salaam meant increasing need for commuter transport services.

“The annual population growth in Dar city is an average of 6.1%,” she explained, “with expectation of reaching around 10 million people come 2030 from current six million. The increasing population will also need transport.”

Approximately 6 million passengers (around 20,000 per day) used the existing commuter rail routes in Dar es Salaam in 2018.

Another legal and financial blow to Air Tanzania
Longstanding disputes between Tanzania and various international suppliers and financiers have caused multiple problems in recent years, hampering the revival of the Air Tanzania (ATCL) spearheaded by President Magufuli. The latest case came when a UK court ruled that ATCL will have to pay a Liberian company $30 million in compensation for an aborted aircraft leasing deal.

The case involved a 2013 aircraft-leasing deal from Willis Trading, signed by former ATCL managing director David Mattaka. UK High Court Judge Christopher Butcher ordered ATCL to pay the money plus interest that reportedly amounts to $10 million to the Liberian company.

Willis Trading went to court to enforce its claim after ATCL pulled out of the lease contract and subsequent compensation agreement in 2014. The government had challenged the deal which President Magufuli has publicly condemned.

Mr Mattaka was in March 2016 charged in court with abuse of office and abuse of position for signing the lease without complying with the relevant procurement legislation. The case is still pending in court in Tanzania.

The UK court rejected ATCL’s efforts to shrug off the debt by blaming its former CEO Mattaka.

The lease agreement stems from the Tanzanian government’s 2007 decision to expand and modernize the fleet of Air Tanzania which it partially owned then. The Ministry of Infrastructure Development gave permission to Mr Mattaka to lease aircraft as an interim measure until certain Airbus aircraft were available starting in 2011.

The agreement required the airline to pay $370,000 (TSh 851m) per
month for the used Airbus airplane. But work needed to be done on the plane, which operated flights only between May and December 2008 before being grounded again for additional maintenance work.

According to the judgement, after ATCL stopped paying for the lease, which resulted in a debt due to Wallis of more than $45 million, the parties reached a settlement in August 2013, in which the government agreed to pay $42 million (TSh 96.6bn). After making six payments up until October 2014, totalling more than $26 million (TSh 59.8bn), the government stopped making payments.

Previous cases have seen new or recently-purchased Air Tanzania aircraft impounded in Canada and South Africa following court decisions in favour of companies that have financial claims against the government of Tanzania.


by Roger Nellist

A resolution at last – Barrick acquires Acacia Mining
The long drawn out saga of Acacia Mining in Tanzania is at last drawing to a satisfactory close. Acacia was listed in the UK but 64% of its shares were owned by the Canadian mining giant Barrick Gold Corporation. Acacia operated three gold mines in Tanzania – at Bulhanyulu, North Mara and Buzwagi – but under the government of President Magufuli the firm was accused of wide-ranging irregularities, as we reported in earlier editions of Tanzanian Affairs. Last year Acacia was told in no uncertain terms to pack its bags and leave the country.

After high-level negotiations during 2018 and 2019 between the government and Barrick (in which Acacia was excluded) a Framework Agreement was concluded to resolve the politically and commercially explosive impasse. Under the terms of that agreement Barrick would acquire all of Acacia Mining and its assets and then establish a new joint-venture company in Tanzania to run those three gold mines in which government would assume a free 16% shareholding interest and play a direct role in running the operations. Among the other key terms, the economic benefits from the venture would be shared 50/50 between Tanzania and Barrick.

Barrick then sought to buy out Acacia’s minority (36%) shareholders and so become the 100% owner and controller of the former Acacia. Those negotiations took some months but on 17 September 2019, after certain legal processes were completed in Tanzania and in the UK, Barrick officially acquired the remaining Acacia shares in a deal that reportedly valued Acacia at $1.1 billion or more (a substantial improvement on Barrick’s initial offer of $787 million). Acacia Mining shares were immediately delisted and ceased to be tradeable on the London Stock Exchange and trading of them was suspended on the secondary Dar Stock Exchange too.

Tanzania and Barrick then moved quickly to establish their new joint-venture company. It is named Twiga Minerals Corporation (TMC) and was registered in Tanzania by mid-October. Its headquarters will be in Mwanza.

Apparently, though, there might have been some last-minute hiccups since by the end of the year no other details had been made public. Declining to explain why, the Ministry of Minerals did say that the ban on the export of mineral condensates still stood but confirmed that discussions were still ongoing. Commentators have speculated that two of the important matters yet to be fully resolved and holding up the overall new arrangement are the government’s insistence that gold smelting facilities should be established in Tanzania (so that the country can derive greater value-add from TMC’s gold mining operations) as well as the treatment of the former Acacia executives who were jailed last year for alleged money laundering, tax evasion and other crimes (see TA122 and TA124).

Temporary delay in LNG Project
In November 2019 the Tanzania Petroleum Development Corporation (TPDC) announced that the government’s negotiation of a Host Government Agreement (HGA) with the foreign oil companies that will develop the large Liquefied Natural Gas (LNG) project in Lindi had been temporarily suspended. The delay was to allow government to complete its ongoing review of existing Production Sharing Agreements (PSA), which was found to be necessary because some PSA issues apparently contradict or overlap with other contracts. It was not known when the review would be completed and the HGA negotiations could resume but the review was said to be at an advanced stage. However, official sources confirmed that the Ministry of Finance and Planning had already approved TSh 5.07 billion for compensating nearly 700 people who will have to move from the 2,077 hectares in Lindi Region where the LNG complex will be constructed. One of the partners in the project, Shell Tanzania, which also operates two of the offshore licences where large gas reserves have been discovered, said: “The HGA negotiations commenced in April [2019] and are currently on pause…. We are continuing to engage with the government and are supportive of the HGA process as it is an important step in agreeing the key commercial, technical and legal principles for the next phase of this important project”. It is reported that the other project partners, Equinor and Exxon-Mobil, have already invested in excess of US$2 billion in the other gas discovery licence. Equinor Tanzania recently clarified that the LNG project will take up to five years to construct once the HGA negotiations are concluded and should operate for at least 30 years.

More optimistic news on gas
Several government Ministers and officials spoke at the Oil and Gas Congress 2019 that was convened in early October in Dar es Salaam. At it the Minister of Energy, Medard Kalemani, announced that four new licence areas with expected high gas potential were available to the industry for exploration and drilling work. Adjacent to already proven gas reserve areas, they include Ruvu, Western Songo Songo and North Mnazi Bay. According to the Minister they have a gas potential of more than 5 trillion cubic feet (tcf). If proven, the new discoveries would raise Tanzania’s total gas reserves to almost 63 tcf. At the same Congress the Minister of State in the Prime Minister’s Office, Angellah Kairuki, announced that she would shortly be tabling in Parliament a new Investment Bill that would help create a more conducive business environment. Investors should also benefit from the provisions of an Action Facilitation Bill that will create a single law unit across government to implement regulatory reforms (rather than the current Ministry by Ministry differential approach to such matters).

Delegates at the Congress also heard from Charles Sangweni, the acting Director General of Tanzania’s Petroleum Upstream Regulatory Authority (PURA). He explained that the ongoing review of the 11 existing PSAs was to bring them into line with the provisions of the two new major natural resource Acts enacted in 2017. He told the oil industry delegates to expect that government would announce a fifth competitive bidding round for petroleum licenses in about two years’ time when, hopefully, global oil and gas prices would be stronger than now. He envisaged that more than 20 offshore and onshore blocks would then be open to tender from the local and international petroleum industry. The last such bidding round was in 2013. Separately, Sangweni told reporters that Tanzania’s deep offshore areas have higher potential for gas discoveries than onshore ones but that there is a big disparity in the cost of drilling a single well; offshore in deep water a well may cost $100 million whereas an onshore well would typically cost about $30 million. (For comparison, in the early 1980s when various oil consortia were drilling wells onshore Tanzania and at Songo Songo Island a single well cost in the order of $10 million). According to PURA, a total of 96 wells have been drilled in the search for oil and gas in Tanzania to date and 44 of them have made gas discoveries. The vast majority of the other 52 wells, which were dry, were located onshore.

Songas – its plans and contribution
Songas is the Tanzanian company that generates electricity from gas, primarily sourced from the Songo Songo reserves. In round percentage terms it is owned 29% by TPDC, 10% by TANESCO, 7% by TDFL and 54% by UK-based Globeleq. Songas currently generates 180 Megawatts of electricity (which is roughly one fifth of the total power supplied to Tanzania’s National Grid) but in September 2019 announced its intention, subject to regulatory approval by TANESCO, to increase its generation to 250 MW in support of the government’s industrialisation programmes.

That same month Songas paid as dividends TSh 6.6 billion to TPDC and 2.2 billion to TANESCO. The company’s Managing Director, Nigel Whittaker, announced that since 2012 Songas has paid almost TSh 122 billion as dividends to the government and its agencies as well as 139 billion in corporate tax. He added that since the start of its operations in 2004 Songas has saved Tanzania about TSh 11 trillion in displaced fossil fuel imports that would otherwise have been necessary for power generation in the country.

Other extractives news in brief
Over the last two decades Geita Gold Mines (GGM) has been mining gold using open cast surface techniques. However, to improve production and profitability it now needs to switch to tunnelling and other underground mining methods for which its workforce of about 350 people are ill-equipped. Government is insisting that GGM explain what will happen to its current workers, notwithstanding the fact that the switch to underground mining at Geita is predicted to yield some $230 million a year. GGM executives have responded telling government that, although the majority of its workers are likely to be laid off, the company has begun training about 150 in underground mining techniques.

In 2019 the Zanzibar government signed a PSA with RAK Gas, a petroleum company based in the UAE. The agreement provides for oil and gas exploration work to be undertaken in the Zanzibar-Pemba block and aerial and other pre-drilling surveys have so far been conducted. In September the Zanzibar President, Ali Mohamed Shein, visited the UAE and met with the management of the RAK Gas company to be briefed on the initial survey work. On his return to Zanzibar he was at pains to stress that his government was fully committed to the project saying that, contrary to rumours, it does not flout the Constitution.


by Ben Taylor

World Bank highlights poverty reduction
The Tanzania Mainland Poverty Assessment Report, published by the World Bank, found that the national poverty rate fell from 34.4% to 26.4% between 2007 and 2018. The report attributed the trend to gradual improvement in living conditions and human capital.

The report also noted, however, that this success is not unmitigated, as poverty was not reduced as much as the population grew. This resulted in an increase in the absolute number of poor people, with 14 million in 2018 living below the poverty line, up from 13 million people in 2007.

Nor has poverty reduction kept pace with economic growth, with the result that inequality has worsened. According to the report, this is due to the concentration of employment in slow-growing sectors and the slow transformation of the economy. Industry and services – with fewer, better educated workers – are growing faster than agriculture, driving the growth and transformation of the economy.

“Vulnerability is still high, with findings showing that for every four Tanzanians who moved out of poverty, three fell into it,” according to the report. “A large number of non-poor people living just above the poverty line are at risk of slipping below it.”

However, the report also noted that country’s strategy to diversify toward solar energy has started to pay off, particularly in rural areas, where 33 percent of households use solar energy for lighting compared to 14 percent in urban areas.

The findings prompted the World Bank to call for more attention for agriculture, which it says offers opportunities for accelerating poverty reduction.

“Since agriculture already accounts for a quarter of total GDP and two-thirds of jobs, enhanced agricultural growth must be part of the strategy to create more and better jobs and alleviate poverty,” said World Bank country director Bella Bird during the report’s unveiling.

The World Bank said Tanzania’s economy will grow by 5.8% in 2020, up from 5.6% forecast for 2019, and growth will rise to 6.1% in 2021. These forecasts are lower than the government’s official estimate of 7.1%.

International concern over national debt
The International Monetary Fund (IMF) and the Brooking Institute have separately expressed concern at rising public debt in East Africa, including Tanzania.

The IMF, in its regional economic outlook report for sub-Saharan Africa, highlighted surging public debt-to-GDP ratios for Uganda, Burundi, Kenya, Rwanda and Tanzania. “An over-reliance on commercial public debt exposes sovereign balance sheets to greater rollover and exchange rate risks,” said the report. “An increase in debt from domestic creditors could crowd out financing for private sector projects,” the report also noted.

According to Brookings, these countries are shifting away from official multilateral creditors to non-concessional, commercial debt with relatively higher interest rates and lower maturities. The trend is raising concerns around debt sustainability given the possibility of higher refinancing risks and foreign exchange risks.

The region’s economies have fallen into a financial fix as they attempt to fund persistent budget deficits and implement mega infrastructure projects. As a result, the economies have resorted to massive borrowing from both domestic and international markets.

Tanzania’s public debt stood at $36.78 billion in February 2019, according to the Bank of Tanzania, representing 37.7% of GDP.

The country’s Finance Minister, Philip Mpango, attributed the increase to new loans secured to fund infrastructure projects such as construction of the terminal III of the Julius Nyerere International Airport, power generation projects, and the construction of roads, bridges and the standard gauge railway line.

CRDB Bank secures green finance accreditation
CRDB Bank has been accredited by the United Nations Green Climate Fund (GCF) for the implementation of green financing in Tanzania. CRDB Bank becomes the 3rd commercial bank in Africa to obtain this accreditation, after Ecobank Ghana and Attijariwafa Bank of Morocco.

The objective of the Green Climate Fund is to “support projects, programmes, policies and other activities in developing countries using thematic funding windows”. It is intended that the Green Climate Fund be the centrepiece of efforts to raise Climate Finance under the UN Framework Convention on Climate Change (UNFCCC).

Accreditation followed an extensive due-diligence assessment, conducted by GCF to ascertain the bank’s preparedness in managing climate change programmes. It means CRDB Bank will be able to finance multiple large-scale projects with high impact to the social and economic development of Tanzania.

Tanzanian bureaucracy drove VW to Rwanda?
A former Minister, Charles Kitwanga, told parliament in November that Volkswagon, Europe’s biggest carmaker, decided to invest in Rwanda after attempts to set up a car assembly in Tanzania failed due to ‘deep­rooted bureaucracy.’

Mr Kitwanda urged the current administration to urgently address bureaucracy to attract more investors as the country gears for industri­alization. “The bureaucracy we have in our system is so bad,” he said. “VWs are now made in Rwanda, they were to be assembled here.”

Last year, Rwanda’s first domestically built car rolled off the assembly line at Volkswagen’s new factory in Kigali. Mr Kitwanga says he wasn’t happy with the fact that a neighbouring country was making strides with a business that should have been put up in Tanzania.

In the latest World Bank ‘Doing Business 2020’, Rwanda maintained its position as the leading country in East Africa on the ease of doing busi­ness. Tanzania came a distant 141 out of the 190 countries in the index.

Tigo-Zantel merger
A merger between Tigo Tanzania and Zantel was recently concluded. In a joint interview with Forbes Magazine, the directors of the two companies said customers had expressed concern about the merger and its benefits but were assured that due to the strong integration of the companies the customers will enjoy services of the highest quality.

They said the merger brings together the strengths of both companies as well as providing the best of both Mainland and island, urban and rural areas.

Tigo Tanzania Executive Director, Simon Karikari, said he believes that the merger will create the best cellular telecommunications sector in Tanzania now and in the future, adding that a market with such integrated companies will drive creativity.

Plea bargains encouraged for economic crimes
The Director of Public Prosecutions (DPP), Biswalo Mganga, has announced that the government has opened a special bank account to enable those who are accused of economic sabotage and have sought amnesty to return the money to the government. According to Mr Mganga, the account has been opened at the Bank of Tanzania following a government directive.

Mr Biswalo told reporters that people accused of economic sabotage related offences, who seek to be pardoned, will have to deposit the money to the account upon approval by the court.


by David Brewin

Food reserve steps in as food prices rise sharply
The National Food Reserve Authority (NFRA) released 3,000 tonnes of maize into the market in early January, in response to a rapid rise in food prices. Prior to the release, wholesale maize prices in Dar es Salaam had reached TSh 87,000 for a 100kg sack, compared to around TSh 50,000 twelve months earlier.

NFRA chief executive, Milton Lupa, told The Citizen that the decision to release thousands of tonnes of maize into the market was aimed at stabilising prices. “CPB (the Cereals and Other Produce Board) will also release maize flour into the market in Dar es Salaam,” he added.

A number of regions – including Dodoma, Tabora, Singida, Mara and Shinyanga – will be supplied with maize from NFRA’s storage facilities, while Dar es Salaam will receive maize flour from CPB.
Opposition politician, Zitto Kabwe had earlier decried the high food prices and accused the government of failing to set aside adequate funds for buying reserve food. “In October 2015 when the fifth phase government came into office, the country’s food reserves amounted to 253,000 tonnes. However, they have since declined to 55,000 tonnes, which is equivalent to one kilogramme for every Tanzanian,” said Mr Kabwe.

Mr Lupa said an evaluation by the Agriculture ministry showed that 25,000 tonnes of maize were needed to offset any shortage up to March, this year, and 35,000 tonnes to May, adding that NFRA expects to purchase 110,000 tonnes of maize in May and June, this year. He said NFRA will this week dispatch 7,000 tonnes of maize to Zimbabwe in line with an agreement to supply the country with 20,000 tonnes of the cereal.

Two months previous, in November, Agriculture Deputy Minister, Hussein Bashe, had said the government would use the grain reserve to ease food shortages but would otherwise leave market forces to determine how much consumers would pay for the commodities. “When maize prices were low, MPs blamed the government for banning exports at the expense of farmers. This time we have opened up and we will not intervene so that farmers can also benefit from the price increase,” said Mr Bashe, answering questions in Parliament.

“The government will not control prices but will promote more production, reduce production costs and create an enabling environment for competition which will regulate the prices,” he said.

World Bank report focusses on Agriculture
The World Bank’s latest Economic Update on Tanzania – titled ‘Realizing the Potential of Agriculture for Inclusive Growth and Poverty Reduction’ – paid particular attention to the country’s agriculture sector.

The agriculture sector provides livelihoods directly to around 55% of the population (and three quarters of the poor) and indirectly to a further 15% within related value chain functions such as traders, transporters and processors. The report also found that 368,000 new medium-scale farms established in Tanzania between 2008 and 2014 created 13 million days of additional work annually for hired workers.

The authors emphasise the importance of having supportive public policies and spending which attracts private investment, in order to catalyse a transformation in agriculture. “What we are seeing for example is that medium-sized farms grew from 23% of all farm land holdings in the country in 2008 to 35% in 2014; and these are in the 5–20 hectare (ha) range, compared to the typical smallholding of 1–2 ha, whose numbers are decreasing” said Holger Kray, World Bank Agriculture Practice Manager and co-author of the report.

“The current trends in agriculture offer a tremendous opportunity to catalyse private investment, both local and foreign, and raise the incomes of the poor,” said the World Bank Country Director for Tanzania, Ms Bella Bird. “For Tanzania to speed up the agricultural transformation process, it should increase the quality and pace of needed policy reforms to make a business environment for agriculture more profitable and predictable,” she noted, adding: “We congratulate the government of Tanzania for improving the environment for agribusiness, by implementing local and national fiscal reforms, including removal of over 100 agriculture fees and taxes and limiting the use of export bans; a huge step forward.” (The Citizen, Daily News)

Cashew payments for 2018/19 still incomplete as 2019/20 market is extended
The government has not quite yet completed payments to cashew nut farmers for their 2018/19 crop. “The government has paid TSh707 billion out of TSh723 billion required, therefore we are supposed to make the remaining payment of TSh16 billion,” said the Minister of Agriculture, Japhet Hasunga, in early January.

The Minister added that the government’s evaluation team was still assessing eligibility of unpaid farmers, noting that payment would be concluded after the exercise has been completed.

This followed a meeting between Prime Minister Kassim Majaliwa and cashew farmers from Ruangwa, Masasi and Tandahimba districts, after which the Prime Minister directed the ministry to conclude paying cashew farmers unpaid monies.

It also emerged that Tanzania has exported almost all the raw cashew nuts that were purchased by the government last season (213,000 tonnes out of the 225,000), according to the ministry of Agriculture. This earned $251.7 million (around TSh 580 billion), considerably less than the TSh 720 billion that the government’s chief spokesperson, Dr Hassan Abbas, said the government had spent in purchasing the nuts from farmers. It is also less than half the amount ($575 million) earned from the 2017/18 harvest, largely due to fluctuating global prices.

The ministry also said that over 4,800 tonnes were given to domestic processors, out of which over 800 tonnes have already been processed for export and domestic consumption. “We are looking for buyers of the remaining 4,000 tonnes. Some will be provided to local firms to strengthen the domestic processing capacity,” said Mr Hasunga.

Meanwhile, auctions for the 2019/20 crop of cashew nuts in Mtwara, Lindi and Ruvuma was extended by nine days to ensure that the entire crop is sold.

“This means that farmers remaining with unsold cashew nuts – and buyers who are willing to buy the crop – can continue to trade,” said the Minister, adding: “The government is aware that some farmers still have unsold stocks and they should, therefore, take advantage of the extended period.” Other regions with later harvest seasons, such as Coast, Tanga and other regions were not affected by the new deadline.

At the time of writing, 209,000 tonnes of raw cashews had been sold in the auctions, out of a projected total harvest of 290,000 tonnes in the 2019/20 farming season.

The Ministry is sticking to its promise not to interfere in raw cashew nut prices this year.


by Ben Taylor

Growth and growing pains for Air Tanzania

The fleet of aircraft operated by Air Tanzania (ATCL) continues to grow, with the arrival in December of a new Bombardier Q400. This is the eighth aircraft (two Boeing 787-8 Dreamliners, two Airbus A-220-300 and four Bombardier Q400s) to be purchased under the administration of President Magufuli, who has committed to reviving the national airline, with plans (and orders) in place to expand the fleet to eleven.

The plane’s arrival took place a day after President Magufuli had announced that the aircraft, which had previously been impounded in Canada in November had been released. The President did not give details of what was done that led to the release of the aircraft.

According to Foreign Affairs Minister, Palamagamba Kabudi, the seizure was because of a dispute between Tanzania and a South African farmer, Hermanus Steyn, “seeking compensation for a farm and other properties that was nationalized in the 1980s”. Mr Steyn had filed a claim in Canada.

This was the third seizure incident of an Air Tanzania aircraft, and the second in Canada. The third took place in August, when South African authorities impounded an Airbus 220-300 leased by Air Tanzania.

In October, ATCL indefinitely suspended flights to and from South Africa. The reason for the suspension was not disclosed, though it followed on from a temporary suspension that Minister of Works, Transport and Communication, Isack Kamwelwe, had described as being “due to xenophobic violence”. However, suspicions remain that the court action in South Africa may have played a role. The temporary suspension was put in place in September, the day after the impounded plane was released.

The Dar es Salaam-Johannesburg route was launched in June 2019, with ATCL operating four flights a week. The maiden flight on the route saw a delegation from the national carrier turned away at the Oliver Tambo International Airport, blamed on a “miscommunication” between the airport and immigration officials. Two Tanzanian Ministers, several ATCL officials and journalists were denied entry into the airport for a welcome ceremony.

Progress with rail revival
Tanzania Railway Corporation (TRC) started operating a new scheduled train from Dar es Salaam to Moshi via Tanga in December 2019, following successful trial trip one week earlier.

TRC is restarting the route after 25 years with trains that will have eight passenger wagons and the capacity to transport 700 passengers.

Earlier in 2019, freight services connecting Tanga and Moshi were restarted, with the hope of reducing heavy transport of cement on the trunk roads connecting Arusha and Moshi with the coast. The route was briefly suspended in October following rain damage.

At the launch event for the freight route, the Prime Minister indicated that the long-disused section of the line between Moshi and Arusha would also be restored. TRC has also reported that a feasibility study for extending the line as far as Musoma has been completed.

The upgrade of the Central Line to standard gauge (SGR) has also seen progress. TRC Director General, Mr Masanja Kadogosa, said the construction of the first SGR section from Dar es Salaam from Morogoro has reached 72% completion while the Morogoro to Dodoma section has reached 22%. TSh 2.1 billion from internal sources has financed this work.

New ship to be called “MV Mwanza Hapa Kazi Tu”
Minister of Works, Transport and Communication, Isack Kamwelwe, has announced that a new ship under construction in Mwanza is to be called MV Mwanza Hapa Kazi Tu.

The new ship, costing TSh 89 billion, will be 92.6 metres long, 17 metres wide and 11.2 metres high, with a carrying capacity of 1200 passengers and 400 tonnes of cargo. Upon completion it will be owned and operated by the government, plying the waters of Lake Victoria.

‘Hapa Kazi Tu’ is a slogan President John Magufuli used during 2015 presidential campaign. The slogan translates as Just work, nothing else.
The minister explained that there is an official government committee that devises names for government projects.

While on a campaign trail in 2015, President John Magufuli promised to build a new ship to replace MV Bukoba which was involved in a tragic accident 1996.

Looks don’t matter at Air Tanzania, says Minister
Deputy Minister of Works, Transport and Communication, Atastashta Nditiye sparked laughter in Parliament by stating that the government does not use beauty as a key criterion when hiring staff for Air Tanzania. He was responding to an MP calling on the airline to emulate other carriers by hiring staff with aesthetic qualities that attract clients to improve the airline’s visibility.

Nditiye explained there is a well laid down procedure that governs the hiring of staff at ATCL including that the applicant must be fluent in both Kiswahili and English and must have a certificate in either airport ground service or in-flight service. “Above all they must be of good conduct which has to be proven,” said Mr Nditiye.


by David Brewin

Climate-Smart Agricultural Solutions
The Netherlands Development Organisation is providing $43.68 million for a fund aimed at increasing food production using Climate-Smart Agricultural Solutions in Tanzania, Kenya, and Uganda.

Project Manager Joseph Muhangwa has explained that the beneficiaries will be smallholder farmers, farm input providers, small and medium business enterprises, agricultural service providers and cooperatives which deal in the value chain of pulses, oilseeds, potatoes, and cereals in the three countries. The money will mostly go directly to various businesses that meet the relevant criteria during the next five years. The support is designed for businesses that are too risky for financial institu­tions to support, but which meet the project’s expectations. The project manager has been quoted as saying that businesses benefiting from the project must demonstrate involvement of smallholder farmers and be climate-smart or environmentally-sustainable. They should also be all inclusive in terms of women and youth. Most importantly the ideas should be replicable.

The maximum amount available for any given business is $224,000 or 50% of the total business case cost. In Tanzania the beneficiaries will be agricultural entrepreneurs in Mbeya, Katavi, Njombe, Ruvuma, Arusha, Kilimanjaro, Dodoma, Singida, Tabora and Manyara regions.

The programme’s aim is to increase production and income for 300,000 farmers and improve business performance for 50 small and medium entrepreneurs and 30 cooperatives. The program analyses the climate risk of food value chains and business opportunities in the three coun­tries.

Livestock and leather
Tanzania’s huge livestock population provides the economy with not only meat, milk and associated products, but also raw hides and skins which are processed into leather.

In the East African region, Tanzania has the second largest herd of livestock (after Ethiopia) and produces 3.9 million bovine hides, 2.5 million goat skins and 2.3 million sheep skins each year. But thousands of tonnes of skins and hides apparently go to waste.

Two Italian companies have signed an agreement with the prisons department and the Public Service Social Security Fund to establish two leather factories in Moshi in the Kilimanjaro region. The companies will invest $24.5 million to construct the two leather factories, managed jointly with Karanga Leather Industries Company in Karanga prison. The factories, one for shoe-making and another for tanneries, will be constructed on 25 acres of land at the industrial area within Karanga Prison and are set to be completed in 16 months. The Italian companies will provide both finance and technology for production of quality leather products for export to Italy and other European countries. The plant is expected to produce 1.2 million pairs of shoes per year.

President Magufuli has also invited Egyptian investors to invest in livestock-based industries modelled on Egyptian technology.

The cashew nut marketing saga
Details were given in the last issue of Tanzania Affairs concerning the intervention by President Magufuli in the marketing of Tanzania’s valuable cashew nut crop to help growers. The search for processes came at a time when the Tanzania government was still holding a huge stock of cashew nuts, estimated at 200,000 tonnes, which it bought from farmers in November last year after it failed to secure foreign buyers. It seems that the Kenyan company, Indo Power Solutions, which agreed to buy 100,000 tonnes of cashews from Tanzania, took the Tanzania government for a ride in the $180 million deal after it surfaced that the company was not known to have transacted any deals worth more than $10m and was a trader of various commodities but not cashews.

Cashew nut sales on the international market dropped 63% to $196.5 million last year, compared to $529.6 million in the 2017 trading period. Recent figures show that exports fell from 329,000 tonnes in 2017 to 120,000 tonnes in 2018.

Cashew nut production during the 2017/2018 season stood at about 240,000 tonnes; out of which, some 213,000 tonnes were produced by the government. Some 90% of the cashew nuts are exported in their raw form owing to the country’s low processing capacity.

To increase local returns, Tanzania is looking for investors to add value on the nuts and process them into products such as cashew nut cheese or butter, sweets, fruit drinks or distilled liquor lubricants.

The government has set aside 540,000 ha of land for agricultural expansion and industrial development.

Banana research
More than 20 varieties of bananas are grown in Tanzania, although not all are suitable for human consumption. They are popular due to their non-seasonal nature and, apart from playing a key role in ensuring food availability all year round; the crop provides an annual income for households of about $1,500.

Furthermore, the banana plant trunk can be cut up for use as livestock feed, and its fibres can be used for fencing, making paper and crafting various works of art.

Late last year the Tanzania Agricultural Research Institute confirmed 16 new drought and disease resistant banana hybrid varieties in the banana producing regions of Mbeya, Kilimanjaro and Kagera.

Tanzania is also making plans for a new banana research centre. Belgium has pledged $1.29 million for a Centre of Excellence to be based at the Nelson Mandela African Institute of Science and Technology in Arusha.

Boosting rice output
Tanzania’s main food crops are maize, rice, sorghum, millet, legumes, nuts and other tubers, horticultural crops and coconuts, all produced largely by smallholder farmers.

Maize and rice are the most important staple food crops grown in most parts of the country. About two million farmers grow rice.

The Permanent Secretary in the Ministry of Agriculture, Matthew Mtingumwe, has announced a new 12-year plan to raise annual rice production from 2.2 million tonnes to 4.5 million tonnes. The strategy will be implemented between the government and with funding from the World Bank, Japan International Cooperation Agency and the African Development Bank.

Over the years crop production has been dropping partly due to low adoption of recommended agricultural production practices and lack of fertilisers. The 12-year plan to boost rice production can be viewed as a means of forestalling a food crisis in the region, with many African countries south of the Sahara counting below average rains and drought which has caused a sharp rise in cereal prices.

15 Coffee species facing extinction
According to botanist Aaron Davis writing in Nature, 15 species of coffee out of the 75 species grown in the East African coffee sector are threatened with extinction. Tanzania has been facing a dry season in many growing areas.

The Tanzania Coffee Board has estimated that about 450,000 families in Tanzania grow coffee. Arabica coffee accounts for more than half of the country’s production. It exports over 12,000 metric tons annually – mainly to Japan and Germany.

Poor agricultural practices among the mainly smallholder producers are causing the decline of Arabica and Robusta so that attention is very slowly being drawn back to wild coffee because of its tolerance of changes in the weather and resistance to pests and diseases. Robusta is becoming more popular because it resists coffee leaf rust in many locations, has higher productivity and lower market prices. It also has a high caffeine content.

The UN Environment Programme has identified improper land use, like slashing and burning, and the excessive use of chemicals as lead­ing causes of habitat and forest loss. In East Africa, commercial house construction has taken over even arable land that was initially used for farming. It is often straight, hard and termite resistance which makes it a favourite for use in minor construction. These, coupled with diseases, are causing growers to opt for wild coffee as it is a more attractive alter­native for the sustainability of coffee.

Game hunting blocks
Tanzania is introducing a new auction system for big game hunting blocks. The government says that this is aimed at emphasising trans­parency and curbing corruption in parts of the tourism industry. The Tanzania Wildlife Management Authority is auctioning off 26 hunting blocks for the first time. Eligible hunting companies will be allocated a maximum of five hunting blocks, each in different categories. Most of the hunting blocks are allocated within the 50 km² Selous game reserve ecosystem, a UNESCO World Heritage site known for its elephants, lions, zebras, black rhinos, giraffes and other species. Revenues from the tourism sector fetched $2.43 billion last year, up from $2.19 billion in 2017. Tourist arrivals totalled 1.49 million last year compared with 1.33 million a year ago. The government has said that it wants to bring in one million visitors a year by 2020.


by Ben Taylor

Parliament passes TSh 33 trillion annual budget
MPs overwhelmingly endorsed the TSh 33.1 trillion budget for the 2019/2020 Financial Year, a slight increase from 32.4 trillion in 2018/19. All CCM MPs endorsed the budget while the majority of opposition MPs voted against. Government expenditure is expected to reach 22.7% of GDP in 2019/20 estimates, up from 22.3% in 2018/19.

Of this amount, TSh 11.7 trillion is allocated for development projects. The minister said the development plan focuses on attaining 7.1% growth of Gross Domestic Product (GDP) in 2019 compared to 7.0% in 2018. The budget also aims to maintain inflation at between 3% and 4.5% and increase national revenue collection to 13.1% of GDP in the 2019/20 fis­cal year from this year’s 12.1%.

According to the Minister, Tanzania cemented its middle-income status last year by raising its per capita Gross Domestic Product (GDP) to $1,090, and noted that a strong year for agriculture had kept inflation down at 3.5%, the lowest level in 40 years.

Dr Mpango said the government seeks to put emphasis on the establish­ment and development of industries, especially those exploiting domes­tically produced raw materials. He said the focus will be on development of industrial clusters, Tanzania Automobiles Manufacturing Company Ltd (TAMCO) in Kibaha, Coast region, hide industry in Dodoma and special investment zones in Bunda, Dodoma and Benjamin William Mkapa in Dar es Salaam.

The budget also includes plans to spend TSh 9.7 trillion to service the public debt, which reached over TSh 51 trillion as of April, up from 49.9 trillion a year earlier. The Minister of Finance and Planning, Dr Philip Mpango, assured MPs that the debt remains manageable, according to the recent assessment by the ministry. He added that the present value of external debt against GDP is 22%, well below the allowable maxi­mum of 55%.

The Minister attributed the debt increase to the new loans that the coun­try acquired for execution of various development projects. These pro­jects include construction of Terminal III at Julius Nyerere International Airport (JNIA), upgrading the central railway to standard gauge, implementation of power projects as well as construction of roads and major bridges.

The Minister further announced that the country’s foreign reserve stood at US$ 4.4 billion, equivalent to 4.3 months of imports, as of April 2019. The amount exceeds the government target of four months’ worth of imports, according to Dr Mpango.

The budget also presented an opportunity for the government to refute claims by a section of MPs that business in the country was struggling due to poor business and investment climate. Dr Mpango and his Deputy Dr Ashatu Kijaji said the business environment in the country was superb and that more investors were willing to start businesses in Tanzania.

“Some MPs have been providing unrealistic statistics on business in the country, but the current statistics in the ministry show that businesses which are being shut are 16,252 while new businesses that are estab­lished are 147,817,” said Dr Kijaji. According to her, closing business was a normal practice worldwide and that some of the reasons for that were change of business, failure to compete with others, huge debts and accumulated taxes, among others.

As he presented the budget to parliament, Dr Mpango said the govern­ment was proposing to review 54 different fees and levies with a view to reduce and abolish some of them. “This is the first phase of implemen­tation of the blueprint for regulatory reforms to improve the business environment,” he said. The minister added that apart from the review of fees and levies, the review will also address the elimination of the existing duplication of responsibilities among the ministries, regulatory authorities and institutions.

Pauline Gekel (Babati, CCM) described it as “a special budget for Tanzanians”, that “has touched every mwananchi, poor, ordinary and big traders.”

Julius Karanga (Monduli, CCM) called it a win-win budget. “We hope people are going to receive it well because it is friendly budget that will help people generate income,” he said.

Opposition MPs were less positive, however. Acting Shadow Minister for Finance and Planning David Silinde said it was sad to see that 40% of the 2019/20 development budget had been directed to three projects namely Stiegler’s Gorge, the standard gauge railway and the revival of the Air Tanzania Company Limited (ATCL), instead of investing more on projects that touched directly on people’s lives.

He told the national assembly yesterday that despite the various changes in economic systems that the country has undergone, it has failed to remove the country and its people from abject poverty. He added that the government has failed to stick to its own five-year devel­opment plan, which states “that commercially viable projects should be left to the private sector, unless there is strong justification for doing otherwise”.

He said the opposition would have allocated 20% of the total budget to agriculture, 20% to education, 15% to industrial development and 10% to the water and health sectors respectively.

ACT Wazalendo leader Zitto Kabwe said the new budget is set more “to develop things rather than people” – infrastructure projects rather than public services. He also said that implementation of the budget is challenging because budgeted funds are not released in time or in full.

Beyond parliament, Honest Ngowi, an economist from the University of Mzumbe, cautioned against unrealistic budget that cannot achieve the intended revenue targets. “The government has collected only 87% of its revenue target in the current budget. And yet, it has increased projected collections to TSh 19 trillion in 2019/20,” he said. “The budget for 2019/20 is to a tune of TSh 33.1 trillion, more than what we can raise. It is so unrealistic, it would be good to use what we have.”

Tax authority chief demoted amid business complaints
In June, President John Magufuli unexpectedly sacked TRA commis­sioner general Charles Kicheere, and appointed Mr Edwin Mhede to head the tax agency. Mr Kicheere was demoted to the position of Regional Administrative Secretary of Njombe Region.

Sacked along him was the Trade and Industry minister, Mr Joseph Kakunda, who was replaced by Mr Innocent Bashungwa.

The move came a day after the president met with business leaders from various parts of the country. The hundreds of traders spent more than 10 hours at State House, complaining vehemently about the dif­ficulties they were facing doing business: an “unfair” taxation regime, “harassment” by security and regulatory agencies, “bureaucracy”, and “corruption” dominated cries from the traders.

The meeting echoed the apparent gloom among the business commu­nity that has persisted for some time now, even as the government was trying to restore confidence and push positive reforms.

Mr Kichere, who was at the meeting, found himself in a tight spot as TRA received most of the flak, roundly accused of harassing traders through over-estimation of taxes and threats. “Many of TRA workers who deal with tax do not know what they are doing. They have turned themselves into the law,” complained Francis Noni, a businessman from Kondoa District.
The President appointed Mr Edwin Mhede as the new head of the tax agency. Mr Mhede becomes the fifth Commissioner General to serve since the election of President Magufuli in October 2015.

“If the systems and institutions are functioning properly, then he (the president) wouldn’t have to convene such meetings,” said Prof Haji Semboja, a former lecturer at the University of Dar es Salaam. “The President is supposed to make sure the systems work so that he gets ample time and energy to implement major national programmes like the industrialisation drive,” he added.

Professor of economics, Honest Ngowi, says the causes of the mess that businessmen exposed before the president should be looked at beyond TRA and individual capabilities. “It is the question of the whole institu­tional and legal framework in creating a favourable business environ­ment and investment climate,” he said. “Issues of ethics, the fear of God, bribes and over-estimations of taxes go beyond TRA. If we don’t touch on the kernel of the matter we may keep on changing individuals a thousand times without results.”

Small fall in national poverty rate
The poverty rate dropped from 28.2% in 2011/12 to 26.4% in 2017/18, according to the latest survey by the National Bureau of Statistics (NBS). This was the headline finding of the government statistics agency’s lat­est Household Budget Survey. 14 million Tanzanians spend less than TSh 49,000 each a month, putting them below the official basic needs poverty line.

The report also concluded that TSh 161 billion is needed each month to enable the total population to meet life’s basic needs, the National Bureau of Statistics (NBS) says. The amount has increased from the TSh 103 billion estimated in 2011/12, partly due to inflation and partly to the country’s growing population.

Three out of ten (31%) rural dwellers live below the basic need poverty line compared to 16% of those living in urban areas. The rates had dropped from 33% in rural areas and 22% in urban areas in 2011/12.
Poverty remains most prevalent in Rukwa Region, where about 45% of its residents live below the accepted poverty line. Other areas with high poverty rates are Simiyu (39%), Lindi (38%), Geita (38%), Mwanza (35%) Kigoma (35%), Tabora (35%) and Singida (34%).

Aside from basic needs poverty, 8% of the Tanzanian population spends less than TSh 34,000 monthly. This means that they fall below the food poverty line.

The food poverty line increased from TSh 26,000 per month in 2011/12 to TSh 34,000 in 2017/18. The basic needs poverty increased from TSh 36,000 to TSh 49,000 per adult per month, in the same period.

Compared to the 2011/12 survey, there is a change in the distribution of poor people. The proportion of poor population in rural areas decreased from 84% in 2011/12 to 81% in 2017/18, while the proportion of the poor who live in Dar es Salaam doubled from 1.5% to 3.0%, and the propor­tion in other urban areas rose from 14% to 16%.

Harsh economic realities for female-headed households
An increasing number of families across Tanzania are now being headed by a woman, a recent national survey has revealed. According to the 2017/18 Household Budget Survey (HBS), the proportion of female-headed families increased from 25% in 2011/12 to 28%, having already increased from 18% in 1991/92.

The survey also found that poverty among such households has also jumped from 20% to 27%. Previously, female-headed households had been richer, on average, than male-headed households, but this no longer applies.
The Household Budget Survey was conducted by the National Bureau of Statistics (NBS), in partnership with the World Bank, UN Women, Unicef and Global Affairs Canada (GAC).

Ms Mwajuma Hamza, director of the Tanzania Women Chamber of Commerce, says development interventions should focus on ensuring equal opportunities for women and men in all sectors. “Tanzania needs to wisely carve a future where both women and men can thrive even in the event that one has to assume the responsibility of taking care of the family,” Ms Hamza said.

The Statistician General at NBS, Dr Albina Chuwa, said the rise in female-headed households is not peculiar to Tanzania, but a global trend that is most pronounced in Southern Africa. (The Citizen)

British High Commissioner shares concerns on the business climate
The British High Commissioner to Tanzania, Sarah Cooke, said in May that British investors yearned for policy predictability, less bureaucracy and faster approval of new investments or projects. Speaking at a Tanzania-Britain business dialogue forum in Dar es Salaam, she said there could be a severe lack of business confidence in Tanzania over the next few years if nothing is done to improve business environment predictability.

The event brought together government officials, British investors and UK government representatives to discuss the business environment in the country. The UK is the second biggest investor in Tanzania after China with investments valued at $5.64 billion (TSh12.9 trillion), accord­ing to Ms Cooke. “Investors plan for the long term,” she said. “They need to know the rules of the game will not change abruptly without consultation.”

However, the Minister of State in the Prime Minister’s Office (Investment), Ms Angellah Kairuki, said policy reforms were inevitable, and urged investors to be ready to adopt to policy changes so that they could make good decisions on investing in Tanzania.

“Changing policy has its challenges, and everybody should understand that the government’s intention is to strike an appropriate balance between the rights and obligations of investors,” she said. “We need to provide sufficient protection to foreign investors while at the same time ensuring that legal obligations are upheld.”

Over 900 British companies are operating in Tanzania, with the British High Commission stating that nearly 300,000 jobs were created in the past 15 years. British investors have invested in diverse sectors, includ­ing energy, infrastructure and construction, manufacturing, tourism, agriculture and agri-business, consumer goods, financial services and telecommunications. (The Citizen)