How Samia’s diplomatic agenda on economy paid off in 2023

Dar es Salaam. The year 2023 will go down memory lane as one when Tanzania made a salvo of economic and diplomatic moves never witnessed before.

In line with the goal of raising the value of Foreign Direct Investment (FDI) to the projected $15 billion per year by 2025, President and her aides, including experts and ministers, have signed major economic and trade deals on collaboration and partnerships in 2023.

Data from the Tanzania Investment Centre (TIC) show that from February to September 2023, Tanzania registered a total of 344 projects, valued at nearly $4.21 billion.

That includes $2.06 billion recorded during the first quarter of the fiscal year 2023/2024 from July to September and $1 billion recorded between April and June.

In February and March, the centre registered projects worth $339.2 million and $796.17 million, respectively.

According to a new report, titled The Doing Deals in Sub-Saharan Africa 2023, released by KPMG International, Tanzania remains the top investors’ choice for future opportunities and acquisitions.

In October of this year, the government and Dubai Port (DP) World inked a 30-year concession agreement that will see the latter invest over $250 million in upgrading the Dar es Salaam Port.

President Hassan witnessed the signing of the Host Government Agreement (HGA), the lease and operation of berths 4–7, and the joint operation of berths 0–3 between the Tanzania Ports Authority (TPA) and DP World for commercial and governmental activities at Chamwino State House in Dodoma.

During the signing, Tanzania was represented by the Minister for Transport, Prof Makame Mbarawa and TPA’s Director General, Mr Plasduce Mbossa, while DP World was represented by its Group Chairman and its CEO, Mr Sultan Ahmed Bin Sulayem.

Under the signed documents, DP World would potentially increase its investment to $1 billion during the concession period, alongside hinterland logistics projects.

Under the signed agreement, DP World will handle roll-on/roll-off bulk, general cargo, and containers to cater to future trade demand from Eastern and Southern Africa and connect the regions to global markets.

The Dubai-based firm will operate berths four to seven of the port and have user rights for berths zero to three.

According to Mr Mbossa, these new initiatives are expected to boost the number of served ships to 130 instead of the current 90, and the revenue collected by the Tanzania Revenue Authority (TRA) will be expected to rise from the current Sh7.8 trillion in the fiscal year 2021/22 to Sh26 trillion by the year 2032.

In 2023, President Hassan also made several state visits around the world, and the country received top diplomats and leaders of various countries.

Apparently, one of the key visits was that of US Vice President Kamala Harris, who said in Dar es Salaam that the administration of US President Joe Biden was committed to strengthening its relations with Tanzania.

“Today, we will discuss many topics; we have discussed a few already. But the topics we will continue to discuss include the issues of democracy and good governance, which you have raised. We will discuss and continue to discuss the issue of long-term economic growth for Tanzania, the climate crisis, and then regional and global challenges,” she said during a joint press briefing with President Hassan.

Tanzania also witnessed historic visits to the country by Romanian President Klaus Werner Iohannis, Indonesian President Joko Widodo, and the President of the Federal Republic of Germany, Mr Frank-Walter Steinmeier.

In its economic diplomacy route, Tanzania, through its Fair Competition Commission (FCC), became the second country to have signed a Memorandum of Understanding with the East African Community Competition Authority (EACCA).

The signed MoU aims at strengthening cooperation among member countries of the East African Community in the advancement of competition policy and law in the East African region.

LNG HGA

Beside the port deal and the visits, the year 2023 will also be remembered as one when Tanzania did what it failed to do for the past eight years or so.

The signing of the HGA with Shell and Equinor in July for the development of a multi-billion-dollar liquefied natural gas (LNG) project put the country on the world map for the planned development of energy projects.

When completed, the $42 billion project will produce about 25 trillion cubic feet of gas per day in three deep-water blocks.

While the fuel crisis poses a threat to pushing up the prices of basic services such as local transport, the Ministry of Energy and the representatives of the UAE-based Emirates National Oil Company Group (ENOC) signed a deal for the construction of a petroleum storage facility.

Tanzania’s Petroleum Upstream Regulatory Authority (Pura) and its Mozambican counterpart, the National Institute of Petroleum, are also in the final stages of signing a unitization agreement to co-develop a shared natural gas reservoir.

A successful bilateral discussion between Tanzania and Zambia resulted in the signing of a partnership for a new gas pipeline, which is expected to transmit liquefied natural gas from Tanzania to Zambia and is part of the expansion plans for the existing Tazama oil pipeline.

Mining

The country’s mining industry is highly important since it accounts for a significant share of the country’s export revenues. The government plans to have this sector sustain its 10 percent contribution to GDP by 2025.

On that note, key deals were finalised this year, including the signed framework agreements with three mining firms worth $667 million (about Sh1.54 trillion), as the sector aims to surpass its 10 percent target of contributing to the country’s economy.

Three Australian firms, namely Evolution Energy Minerals, Eco Graf Ltd, and Peak Rare Earths Ltd, inked joint venture agreements expected to put Tanzania on the map of suppliers of critical and strategic minerals.

Key policy changes

This year also saw the new Tanzania Investment Act No. 10 of 2022 (the New Act) being improved.

The Parliament on December 2, 2022 passed the new bill, after being published in the Government Gazette, repealing the Tanzania Investment Act No. 26 of 1997 (the Old Act).

One of the key changes in the new set of laws was the reduction in the minimum investment capital for locally-owned businesses from $100,000 to $50,000.

The new Act also contains additional requirements for investors under the Strategic or Major Investment category to qualify for incentives, including a minimum investment capital of $20,000,000 for Tanzanian investors and $50,000,000 for foreign investors.

In his statement, TIC executive director Gilead Teri said the government remains committed to undertaking business and investment reforms aimed at creating a more welcoming investment climate.

“TIC, as an investment policy advisor to the government, is actively participating in the ongoing review of various policies, legislation, and regulations with a view to addressing existing investment challenges that have at times acted as bottlenecks to our valued investors,” he stated in TIC’s recent quarterly report.