Tanzania report 11 2007

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TANZANIA

Tanzania Tourist Board

SPECIAL ADVERTISING SECTION

Tanzania

A land of opportunity

Having built up a solid relationship for more than 40 years, China and Tanzania are now working to strengthen trading and investment links even further.

C

hina and Tanzania’s “all weather friendship” as China’s Premier Wen Jiabao has termed it, began in 1964, when President Julius Nyerere, Tanzania’s President at the time, visited Chairman Mao—a controversial move considering China was isolated from the West. As Tanzania’s current President Jakaya Kikwete, says: “Tanzania was a friend of the West, but Nyerere saw the visit as an assertion of a newly independent nation’s right to choose its friends. It was not instead of, but as well as. We later came to be understood, and benefited from this relationship. We worked together in the liberation struggles, and continue to do so in our economic struggles.”

The focus, however, has shifted. From a donor/recipient relationship, the two nations are now embarking on an economic partnership of joint ventures and direct investment. The TAZARA railway, linking Tanzania to Zambia, and the Tanzania-China Friendship Textile Company are two notable examples of mutually beneficial ventures, and China has also been involved in a number of construction and engineering projects.

have a small amount of natural gas. So we are trying to develop all of these sectors.”

Tanzania offers as many opportunities as it does reasons to invest there. Rich in minerals and precious stones, and with some of the most fertile and under-used land in Africa, it is also politically Jakaya Kikwete, President of Tanzania

stable, transparent, it has a strong economy, and it is committed to a win-win situation for investors and its 34.4 million people.

Kikwete says: “We are Africa’s third largest gold producer, after South Africa and Ghana, but we can increase even more by opening mines. Every mineral found in the earth’s crust is here. Tanzanite, for example, is a unique and beautiful stone. We also have industrial minerals, such as iron ore, coal, nickel and cobalt. One of our coalmines was built with Chinese assistance, and we are producing coal for the

“We are a country in search of investment, and China is looking to invest. ” Jakaya Kikwete, President of Tanzania

“We are a country in search of investment,” says Kikwete, “and China is looking to invest—to the tune of US$600 million.”

Trade between the two nations is now close to US$400 million, which is good, Kikwete explains, because Tanzania is looking for new markets. “We have also been getting technical assistance from China,” he continues. “They have been training our students and sending us doctors. So the structure of our relationship has changed.

“China has been active in manufacturing and industry, but not yet in mining. They are interested in oil, which we don’t have, but we do

paper and cement industries. We have another deposit of 400 million tons elsewhere.”

Having been more or less dependent on hydro-powered electricity as its main energy source, the government was forced to rethink its energy strategy recently after suffering three droughts in as many years. Kikwete says: “We need to diversify our sources, so we are looking to scale up to natural gas.”

In a recent World Bank report, Tanzania made the top ten for reforms to ease doing business out of 175 economies. The Kikwete

Solid investment opportunity

Zanzibar Ports Corporation invites potential partners to help develop a new cargo port through Public Private Partnership, Joint Venture or through donations from foreign organizations, as part of an ongoing efficiency drive.

Zanzibar Ports Corporation P.O. Box 263, Zanzibar, Tanzania Tel: +255 24 223 20 17 Fax: +255 24 223 28 59

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administration is committed to seeing the country become a diversified and progressive economy, with a substantial industrial sector, by 2025.

In order to make “Vision 2025” a reality, Kikwete is striving to make Tanzania a success in terms of political and economic reforms, in growth and development, and in sustainable progress, driven by market-friendly policies and a pro-active private sector.

“I am confident that we have an investment regime as competitive as any in the world,” says the President. “The investor will be sure to make money and benefit from being here, in the same way the government will be assured of getting revenues from the investment.

“We want Chinese processing companies to come and base themselves here.”

Basil Pesambili Mramba, Minister of Industry, Trade and Marketing

Investors do not only have to look at the tax and revenue incentives, however, but the political stability we have, the strong performance of our macro-economy, and our resources.

“We have some 44 million hectares of uncultivated, arable land. We have large quantities of mineral resources, and raw materials for manufacturing. We have access to some large markets: some 120 million in the East African Community, and a further 214 million in the Southern African Development Community (SADC). We have a sizeable, educated population and therefore a good labor force. In addition, the Tanzanian people are very welcoming. When you combine all of this, you have a very attractive investment proposition.”

Tanzania’s move to a free market economy over recent years has led it to become one of sub-Saharan Africa’s best performers, with growth averaging 5.8% each year since 2000. As Minister of Industry, Trade

and Marketing, Basil Pesambili Mramba explains, the country has entered a new phase of attracting foreign investors. He says: “More than 300 mostly industrial enterprises have been successfully privatized, but now we are in the more important stages of privatization, which is attracting investment.

“As the President mentions, we have access to East Africa and SADC, and now we are even playing a part in World Trade Organization discussions on economic partnerships. There are other markets, such as the U.S., through the African Growth and Opportunity Act, and recently China opened its market even further, allowing us to export 442 items there quota- and duty-free.

“The challenge now is raising productivity levels. We are not producing enough for these markets, so we need help with industrialization. We have to earn our own foreign exchange, create our own employment and export our own commodities.

“For example, Tanzania only exports 10% of its cotton. So we want the Chinese to process our cotton because they have a interest in that.

This would then form the basis for further expansion. The other area of interest is leather. We produce some 2.2 million skins per annum. And yet, as with cotton, the Chinese import the raw commodity. So we want Chinese processing companies to come and base themselves here. We must provide them with all the advantages and the labor force that we can offer. We process only a third of our tea, and the same is true for cashew nuts, coffee and so on. So we want them to start with agroprocessing and then move on to mining and tourism etc. Also, there are not enough beds here in Tanzania for the tourists we receive and we don’t have the airplanes to lift tourists in and out of our country.

“The key to all this is for the initial investments to be sound and beneficial to all parties to make sure that the future of our relationship is guaranteed.”

The National Development Corporation (NDC) is playing a leading role in Tanzania’s industrialization by developing mega-projects in

Tour nature, naturally

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Unique crafts like these are an important source of income for Tanzanians.

partnership with the private sector. A government-owned entity, the NDC is focused on projects that will lead to development in other industries, and smaller scale projects that will improve the economy.

Currently, the NDC’s main focus is in the areas of energy, coal and iron ore. The challenge, as ever, is raising the finance to capitalize all of these potentially lucrative ventures.

Gideon Nasari, the NDC’s managing director, says: “We have enormous iron ore deposits being developed. Once completed, we can begin extracting titanium-oxide and vanadium-pentoxide, and then extract the iron ore for the production of steel. Our goal is to get everything processed in Tanzania eventually. Mining will begin in a year or so, once we have found a partner.”

One particular project, at Linganga, is part of the Southern African Development Community’s Spatial Development Initiatives (SDIs) mandated exclusively to the NDC by the government. The SDIs comprise the Mtwara, Central and Tanga Development Corridors and include power generation and transmission, as well as transport structure. Nasari expands on these initiatives. He says: “For the coal mines, we intend to build a “mine mouth” power plant of 200MW which will be upgraded to 400MW. We will then build a transmission line from the power station to connect it to the national grid, which will allow us to supply energy to various consumers with Tanzania and outside.

“To alleviate the congestion at Dar es Salaam port, we have another plan to construct a railway line in the south that will connect Malawi, Zambia and DRC to the Mtwara Port. We are still looking for a codeveloper to help finance the 800km railway. We have the flexibility to provide favorable terms, such as mining concessions or a shareholding arrangement, depending on the extent of the partner’s involvement.”

TANZANIA

with product development, so that we can achieve our export potential.

It will take investment and hard work to rectify this, but we are capable of producing a lot more.”

With around half a million visitors, the Dar es Salaam International Trade Fair is the key event in BET’s annual calendar, and is a mechanism developed by BET for Tanzania producers to see what others are doing, thus giving them an incentive to raise their own standards. “At this fair, people can see the benefits and the potential for partnerships and joint ventures. Sometimes, the Tanzania people are not aggressive enough to chase down potential investors and initiate contracts and business deals. We need to make them aware that the world market exists and could be of great benefit to them. The Chinese come here with a lot of companies, they have a lot of good things to sell, and they are doing very well in pushing us ahead.”

Putting the correct fiscal incentives in place to facilitate this increased output is one of the aims of the Ministry of Finance. It recently launched its “second-generation” financial sector reform that aims to widen access to financial services for local citizens, and improve the conditions for investors, by improving the environment for credit, commercial banking and other services. “Our aim is to create favorable legal parameters and a good climate for banks so that they, and other financial institutions, can provide adequate services for their clients,” says Gray Mgonja, Permanent Secretary in the Ministry of Finance. “For example, should your investment and operations fail for whatever reason, it will be possible to retrieve certain parts of the original investment.”

The Ministry is also making sure financial institutions realize their niche areas by supporting the development of small and medium size companies. “This will help us create a strong middle class,” says Mgonja. “In most countries, as many as 60% of jobs are created

by SMEs.” The Bank of Tanzania (BOT), meanwhile, continues to put

SOLID INVESTMENT One of Africa’s fastest growing economies invites foreign investment The primary objective of the Bank shall be to formulate and implement monetary policy, directed to the economic objective of maintaining price stability, conducive to a balanced and sustainable growth of the national economy of Tanzania. In other words, it is the primary responsibility of the Bank to establish conditions conducive to Price Stability over time.

Tipping the balance of trade As Nasari notes, these projects are the key to Tanzania’s sustainability.

He says: “The balance of trade has not been in our favor for quite a while. The revamped infrastructure, like this railway line, will finally give us the tools needed to become more independent and competitive because we can export finished goods to other countries.”

The Board of External Trade (BET) also works to redress the balance, by establishing global business partners through the organization of international and specialized trade fairs, exhibitions, product and market research development missions, buyer-seller meetings and contact marketing programs. Ramadhan Hashim Khalfan, directorgeneral of the BET, says: “One of our major problems is low production. Our industrial base is very weak, so while you can go out and market something, get a bulk order, often you find you do not have the capacity or the know-how to fulfil that order. Also, the little that we do produce is not of the best quality. We therefore have to start

Bank of Tanzania 10 Mirambo Street, P.O. BOX 2939, Dar es Salaam, Tanzania.

Tel: +255 22 2110945-7; +255 22 2110950/2 Fax: +255 22 221 4075; +255 22 211 2573 info@hq.bot-tz.org www.bot-tz.org

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SPECIAL ADVERTISING SECTION macroeconomic stability at the top of its priorities. “We ensure there is minimum risk in terms of transfers so that investors feel secure enough that they can convert their shilling profits Benno Ndulu, First Deputy Governor, Bank of Tanzania

into their own currency,” says Benno Ndulu, BOT’s first deputy governor. “BOT have significantly reduced transfer risk by removing foreign exchange constraints of past financial regimes. We also work to improve the operations of the financial sector. Both access to credit and the ability to obtain timely credit are very important to a smoothrunning business environment.

“The vibrant banking system you see now is essentially a result of our drive to open up our financial sector to the private sector.

This opens the door for foreign banks to come to Tanzania.

Furthermore, capital markets now provide a diversified instrument of the financial sector so our citizens can have access to more products than savings deposits.”

The Tanzania Investment Bank Ltd. (TIB) is one entity that has shifted its focus from creating profits to creating credit opportunities, and it is currently introducing the concept of long-term corporate bonds to help businesses borrow over a ten-year term. TIB also helps businesses focus on specific markets and develop business plans for local entrepreneurs.

For investors, Ndulu recommends infrastructural investments for the highest returns. He says: “Whether it is energy, transport or communications, the infrastructure in this country is one of the biggest constraints to growth,” he says. “As a result, Tanzania has made it very clear that infrastructure is the next hurdle it wants to tackle. I believe China has the expertise and resources for that purpose. Chinese contractors have been winning a lot of contracts here because they are

cost-effective, they deliver on time, and their quality remains high.”

A “low volume,high revenue” tourism itinerary Tanzania’s tourism sector has seen exponential growth in the last ten years, which has caused both local and international interest. There has also been an influx of world-renowned brands—a significant claim for an African country, and one that can be attributed to its unique tourism advantages. The security of the country has obviously played a major part in this as well.

Tanzania is the only country in the world to have allocated more than 25% of its total to wildlife parks and game reserves and it is extremely committed to protecting its unique biodiversity and excellent beaches. The “exclusivity” factor means it markets its significant tourist attractions to high revenue customers, and in particular, the Chinese. “I believe there are now 40 million Chinese who travel abroad,” says Jumanne Abdallah Maghembe, Minister for Natural Resources and Tourism. “It is important that we tap into that.

“Also, the Chinese would like to go to a country where they will get the most from their dollars, and Tanzania can promise high value for money. In just one visit, you can climb Mount Kilimanjaro, Africa’s largest free-standing mountain, visit the Serengeti National Park and see the movement of about two million animals as they embark on their annual migration, and just to the south of there, one may visit the Ngorongoro Crater, known as the “Mountain of God” by the Masai because it is still erupting.”

The Minister is encouraging the construction of five-star hotels within Tanzania’s 14 national parks. “This would be a very lucrative opportunity,” he says, “because occupancy rates are around 90% throughout the year.”

Peter Mwenguo, managing director of the Tanzania Tourist Board is delighted that after three years of work by the Tanzanian government, Tanzania is now an accredited destination for Chinese tourists. “We

TRA invites you to invest in Tanzania

TIB - China’s partner for growth

As it moves closer to becoming a modern tax administration, the Tanzania Revenue Authority is implementing new measures to make Tanzania more investor-friendly than ever.

By applying private sector priniciples, the dynamic organization has been able to increase revenue collections year on year since it was set up in 1995, and undertakes regular reviews to improve efficiency. Commissioner general Harry Kitillya says: “We are looking ahead to the next five years, and while our vision to modernize remains the same, our mission is to automate more of our business processes, so that everything can be done by technology. This will leave our human resources free to focus on strategy development.”

The TRA has done away with all non-transparent processes to facilitate easy monitoring, evaluation and intervention, and close up any loopholes for tax evasion. “A number of our systems are now computerized, which has allowed us to set up service level standards for customers,” says Kitillya.

Chinese investors will be more than happy with Tanzania’s business climate, Kitillya says: “We have the Tanzania Investment Center which finds specific incentives for investors. We also have special economic and exports processing zones. Our incentives for mining are some of the best, and have been extended for the exploration of petroleum and gas. Finally, Tanzania is stable socially and economically, and investments are guaranteed under international agreements.”

Tanzania Investment Bank Ltd. is the name to trust for superior products and services. Our mission is to become the leader in development financing whilst providing specialized banking services, thus catalyzing the economic development of Tanzania.

We offer credit facilities to corporate clients in the form of long, medium and short-term working capital, and have formed longstanding relationships with companies across all sectors of the Tanzanian economy.

Rather than being motivated only by

Tanzania Revenue Authority Sokoine Drive P.O. Box 11491, Dar es Salaam, Tanzania Tel:+255 22-211 64 53 Fax:+255 22-21211 18 14 www.tra.go.tz

W. A. Mlaki, Managing Director

profit, we aim at building long-term relationships that will enrich the economy and help Tanzania become globally competitive. We do not just give loans, we go a step further by offering technical support and business advice.

We would like to invite China to join us in the facilitation of a variety of joint ventures, and we look forward to a long-standing relationship that will be mutually beneficial.

To be able to play a meaningful development financing role, TIB requires developmental funds (appropriately priced and for the requisite tenures). For a brighter tomorrow, we invite Chinese investors to join us today!

Tanzania Investment Bank Ltd. Consolidated Holding Corporation Building Samora Avenua / Zanaki Street, P.O. Box 9373, Dar es Salaam, Tanzania Tel:+255 22-2111708 Fax :+255 22-2113438 md@tb.co.tz www.tib.co.tz

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TANZANIA

have set up a strategy to tap into that market so both Chinese and Tanzanians reap the benefits,” he says.

There are challenges that must be overcome however. “One problem we have is that there are Jumanne Abdallah Maghembe, Minister for Natural Resources and Tourism

no direct flights between the two countries,” says Mwenguo. “We do, however, have many airlines that connect us, such as Emirates, Qatar Airways and Ethiopian Airlines. Last year, our aviation department signed an agreement with Air China to bring direct flights from China in the near future.”

Challenges also exist in the small number of hotel beds available, and the language. Mwenguo says: “We are encouraging the private sector to make language training part of their programs. By improving these areas, we can give our visitors more value for their money.”

Mwenguo reiterates the “low volume, high revenue” philosophy.

“We have less tourism than our neighbors Kenya, for example, yet we produce more revenue. To continue this success, we need to make sure we can deliver a sustainable product and protect our attractions. We have seven world heritage sites, for example. This being the case, we have to be cautious on the types of investments going into the national parks, although we can be more lenient in the cities, where we are relaxing regulations for investors.

“We also have to think about the infrastructure. At the moment, it is limited, but as the facilities develop, we foresee an even greater number of tourists coming here.”

“Cultural tourism directly affects the economic wellbeing of our people.”

Peter Mwenguo, MD, Tanzania Tourist Board

Mwenguo notes how growth in cultural tourism has developed in recent years. He says: “In 2006, we had more than 34,000 visitors to our 24 cultural sites. This movement directly affects the economic wellbeing of our people. Everyone is involved in activities and participates in the returned revenue, such as providing modest accommodation, food, and crafts to buy.” The Tanzania Tourist Board expects tourism numbers to have climbed to a million a year by 2010.

Tanzania’s 14 national parks are run by Tanzania National Parks (TANAPA), which works alongside investors, as well as tourists, to preserve these special environments. “Kilimanjaro and the Serengeti are icons,” says Gerald Bigurube, TANAPA’s director-general, “and these alone set us apart as a destination. The competitive edge for us is to keep these and other areas special. If we make the parks cheaper to visit, we will increase the numbers of visitors, but that will degrade the area and stop the people coming.”

It is a tricky balance to maintain however. Tourism provides valuable revenue to support ongoing conservation, research, education and livelihoods for the local population, and helps generate awareness of conservation issues on an international level. Bigurube maintains that the loss of these areas would be global catastrophe and that TANAPA’s duty, from when it was set up in the 1960s, is to keep the places as pristine as possible.

With this in mind, TANAPA monitors potential investors very carefully. Bigurube says: “Anyone who wishes to construct Andrew John Chenge, Minister for Infrastructure Development

accommodations in our parks must adhere to our high minimum standards and we provide a guiding document to help them do this. We have a mechanism of giving out plots of land for

Tea fields in Bukoba, Tanzania - kageratea@kageratea.co.tz

accommodation facilities—they have to be extremely high-class and they must blend in with the environment to give the visitors a good experience. They must not facilitate crowding.

“The food given to customers must be top of the range. This is the best way for the country to benefit and for visitors to know that when they come to Tanzania, they will enjoy their stay. They will eat well, be safe and they do not have to worry about diseases. This is all very important to people traveling from distant lands.”

In terms of the Chinese market, Bigurube is keen to hear from capable investors that can build the type of accommodation facilities and services that will appeal to the Asian market.

However, before any of the other sectors can develop fully, Tanzania’s physical infrastructure must improve, and the government, in collaboration with donors, is currently increasing investment in roads, telecoms, water and sewage services, while modernizing marine, port and air services. It is also crucial to develop networks that can link the plethora of natural resources to the cities and ports. To encourage investment, the government allows 100% foreign ownership on any infrastructural venture, and will offer preferential access to precious resources for any investors willing to invest in the infrastructure connecting them.

Andrew John Chenge, Minister for Infrastructure Development, notes how most of the mineral wealth is in the south, so is focusing primarily on the Mtwara Corridor. He says: “We are also using Tanzania’s strategic position to reach the maximum benefit of trade and business. To do this, we have to increase investment in railways,

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SPECIAL ADVERTISING SECTION roads and sea ports.” The Minister welcomes Chinese contractors and technology to help in all areas, citing the TAZARA railway as a key example of how well Sino-Tanzanian projects can work.

Ephraim Mgawe, Director-General, Tanzania Ports Authority

Ephraim Mgawe, director-general of the Tanzania Ports Authority (TPA), echoes the Minster’s views. The TPA, which owns the ports at Dar es Salaam, Tanga and Mtwara, and all of Tanzania’s lake ports, is in an excellent position to make Tanzania a hub for the region. Mgawe says: “Mtwara is strategically located to serve Northern Mozambique and Malawi, and has many minerals and resources which can be exploited. Dar es

“We are in an excellent position to make Tanzania a maritime hub for the region.”

Ephraim Mgawe, DG, Tanzania Ports Authority

Salaam serves Rwanda, Burundi and the domestic market. We have various lake ports which link the Eastern Congo, while Tanga is wellpositioned to serve Uganda.”

The TPA took over from the Tanzania Harbors Authority in 2005, and is focusing on a number of expansion projects, the main ones being to develop the infrastructure at Tanga and Mtwara to ease congestion at Dar es Salaam, where traffic is increasing at 15% a year. There are also plans for a new port. “We have had a general problem with port capacity,” Mgawe explains. “As such, we are planning to build a new port in Bagamoyo to ease congestion at Dar, and we plan to combine the facilities of both ports in five years’ time. We will need to connect

the railway line from Dar to Bagamoyo, but once this is completed, our customers will be able put their vessels in either port and be connected to the same infrastructural lines within the mainland.

“We have also acquired 20 acres of land next to Dar port on which we can build more terminals. We are still analyzing the plot for the best way to use space. Our initial estimates indicate that we can triple the existing capacity of the port, as well as increase our productivity levels.

“We have other projects in the pipeline, all of which require heavy investment. We would like private investors to join us in joint ventures and help the ports realize their true potential.”

The TPA is also looking at productivity, the environment and tariffs at Dar es Salaam in closer detail so it compete even better with Mombasa. Mgawe says: “We privatized our container terminal in 2000, when productivity was between 10 and 12 moves per hour. Now it is almost double. Our daily capacity is now reaching 10,000 TEU, up from about 6,500. This dramatic growth is why we have been experiencing congestion in the past year.”

The introduction of the Emirates Shipping Line’s Africa Far-East Asia (AFA) service, which connects Dar es Salaam to major Chinese export facilities has gone a long way to improving Sino-Tanzania trading links. Mgawe says: “We are happy this line was introduced, because of the increased business potential of the regions. China is the world’s number one consumer of raw materials, and Tanzania has the resources to export to them. Past customers always wanted a more reliable line between the two countries, and the AFA satisfies this need.

“Business between China and Tanzania has been growing at around 3% per annum, thanks largely to imports of textiles and medicines to Tanzania, and exports of raw materials into China. In the future, I believe we will continue to form business partnerships in all sectors of the economy.”

Future partnerships will be facilitated by the Tanzania Investment Center, of which the TPA is registered, and, Mgawe hopes investors

By increasing our capacity you’ll increase your own

TPA is inviting private sector investors to expand port facilities and increase capacity. Partners will receive full cooperation from TPA. TPA is registered with the Tanzania Investment Center (TIC).

Tanzania Ports Authority One Bandari Road, Kurasini, PO BOX 9184, Dar es Salaam, Tanzania . Tel: + 255 22 2110401 prm@tanzaniaports.com www.tanzaniaports.com

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SPECIAL ADVERTISING SECTION will be tempted by the attractive incentives the government has laid down. He says: “Investors will be offered capital protection schemes, fiscal incentives and tax exemptions on imports related to a project.

The TPA is willing to negotiate with any investor or group on more specific terms and conditions.

“The current administration has pushed the idea of public-private partnerships very strongly, as we have many potentially lucrative opportunities, but lack the resources to tap them. We believe that by June 2008, the government will have set the framework and policy to coordinate these types of ventures. One major advantage the Chinese have is their low-cost, reliable technology. Time and time again, they have proven to be the best value, which is why they have been winning many of the concessions here. I welcome any Chinese companies that are interested in any of our projects.”

The Zanzibar Ports Corporation (ZPC), responsible for five ports in the Zanzibar and Pemba Island, is also in expansion mode. Thanks to European Union funding to the tune of some 31 million, the ZPC’s port at Malindi is undergoing a major reconstruction. The port currently handles more than 90% of Zanzibar’s trade, but has limited operational area and storage facilities. Mustafa Aboud Jumbe, the ZPC’s director general, says: “Our long-term plan is to build a completely new port to handle cargo traffic, and keep Malindi as a passenger port, for cruise liners who could then stop at Stonetown, a historic town protected under the UNESCO World Heritage program.

“A feasibility study done in 1999 estimated we would need around US$40 million for the basic cargo port infrastructure. We are therefore looking for financiers. We will present the terms and conditions to investors and make recommendations to the government on offers received. The new port will be operated through the private sector, and ZPC will not be engaged in its day-to-day operations.”

The Surface and Marine Transport Regulatory Authority (SUMATRA) will be overseeing each of these new infrastructural

TANZANIA

Dar es Salaam International Trade Fair. www.bet.co.tz

projects. As a multi-sector regulatory agency, they issue licenses for rail transport, port and shipping services, maritime safety and security, road transport and economic regulation.

Israel Sekirasa, SUMATRA’s director-general says: “We have a dual role of making sure that the services provided are acceptable and accessible to the general public, while making sure viable investors are protected and can make the necessary profits to be able to run their businesses effectively. Chinese investors can be assured that our current legal framework is conducive to their investment, and that it provides a clear mechanism for resolving any disputes.”

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SPECIAL ADVERTISING SECTION year. Having lost many of its routes and aircrafts, the airline is looking for investors to Peter Mgimba Executive Director, Kagera Tea

help with a planned turnaround.

David Mattaka, the CEO drafted in in February to help the airline take off again, says: “The government has given us a clean balance sheet, so we believe we have a bankable project from which we can raise capital. We have initiated talks to a number of financing houses, who have shown a keen interest in doing business with us, so we shouldn’t have any difficulty getting the funds for a new fleet. By the end of the year, we will be able at least to lease some new aircraft for the long-term.

“I have no doubt that the government will want to bring in strategic investors…the issue is at what point that will be. We want to be on equal terms with prospective partners. In contemporary aviation, business situations, alliances, code-share arrangements or strategic partnerships tend to work better if you have constructive negotiations, and this can only happen if there’s an equal footing. I would like to think that our strengths will help us down the road. We have some of the best pilots in the region, for example. We are also known to have the most courteous staff. With the right equipment, our committed staff and the patriotism behind Air Tanzania, we will get there sooner rather than later. Once this is in place, Air Tanzania will set the standard.”

As the next step , the company wants to revive its traditional destinations. “The market is definitely there,” says Mattaka.

“Tanzanians are traveling a lot more internationally and it is a huge market. From a tourism angle, it would definitely be viable to open up a direct route between China and Tanzania, or at least a code-share agreement in the short term. The Chinese are interested in coming to East Africa, and from a business point of view, there are many locals now doing

business in Asia, who are traveling via Dubai.

That route would not only be economically viable, but it would also help facilitate the Tanzanian businesses that have increased cooperation with Asia.”

Success on a micro-level Agriculture is currently Tanzania’s most important sector, providing a livelihood for 80% of the population, and making up just under 50% of the GDP. It is the primary source of food and raw materials, and a leading export sector. Moreover, it remains critical for achieving sustained growth, poverty reduction and rural development.

“Kilicafe is a provider organization and we hope to bring in more farmers in the future.” Adolph Kumburu, Executive Director, Association of Kilmanjaro Specialty Coffee Growers Smallholder farmers are responsible for 90% of all farm produce, and most of the arable land is under-used, due to archaic production systems. The irony is that Tanzania’s favorable climatic conditions provide enormous opportunities for large-scale commercial farming of various cash crops, such as coffee, cotton, tobacco, sisal, cashew nuts, sugar and pyrethrum.

With foreign direct investment into the sector at just 5% of the country’s total influx, land laws have been revised to allow foreign companies long-term leases of up to 99 years.

Minister for Agriculture, Stephen Masatu Wassira, speaks of a seven-year development program that has been introduced which will attempt to improve production. It will focus mainly on irrigation. He says: “The US$2.7 billion program will be supported by donor countries and will go to small and medium scale farmers to use as a gravity based system, rather than expensive pumps. The recent droughts have shown us we can no longer depend on rainfall. We need to give our farmers security.”

Wassira is keen to improve beneficiation.

He says: “Everything we export is raw and it is time we got away from that. We need to start processing our products and crops as a

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way of empowering our people economically.”

Several cooperatives have been set up that prove how Tanzanian reforms and investments are helping the people directly.

Kilicafe is the brand name of the specialty coffee sold by the Association of Kilimanjaro Specialty Coffee Growers, which is made up of about 8,000 smallhold farmers. It is Tanzania’s largest coffee farmer association, exporting to the U.S., Europe and Japan.

The Association’s main aim is to secure access to credit and strengthen links to better coffee markets. They have won a number of awards for quality. Adolph Kumburu, the Association’s executive director, says: “Our

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success stems from our growth. We had 10 groups in 2001 and today we have 117.

“Kilicafe is a provider organization and we hope to bring in more farmers in the future.

This kind of development ensures that farmers get relief in processing their coffee, by establishing washing stations, rather than them doing the job at home. This has liberated many families from the hard work involved in coffee preparation. We moved from zero washing stations in 2002, to 75 stations projected by the end of the year.

Again, before the association was formed, a farmer’s net income was about 500 shillings for every kg of coffee produced. At the end of this season, we closed with about 2,500 shillings per kg. On a company basis, Kilicafe used to sell US$34,700 worth of coffee every year. Today, we sell about US$3.4 million.”

There’s more good news on a microeconomic scale in the tea business. Tanzania is currently Africa’s fourth largest tea producer and hopes to grow the value in this industry as well as the coffee.

Kagera Tea currently produces 60% of its tea for export and is targeting European markets as well as the African region. Peter Mgimba, Kagera Tea’s executive director, says: “We have begun test phases for our products in the Eastern bloc, with the two biggest potential markets for us being China and Japan.” Kagera Tea’s competitive advantage is its special and distinctive aroma, which, Mgimba says, “helps it stand out from the crowd.” Mgimba believes that with the right processing and blending initiatives, the Tanzanian tea industry could quadruple in the coming years.

Tanzania offers China first refusal to participate in any of these sectors and looks forward to continuing a productive friendship.

Business Focus www.businessfocus.org.uk

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