Investing in Tanzania
The Financial Times proposes to publish this FT Report on 29 May 2023
We plan to include the following features (please note that this list is provisional):
Introduction: A Pragmatic Approach to Foreign Investment
The image of Tanzania as an investment destination, troubled for many years, has improved significantly since Samia Suluhu Hassan became president in 2021. Though these are early days, her government has gained a reputation for taking a pragmatic approach to foreign investment in sectors such as mining, agriculture and oil and gas. Long-stalled discussions with oil majors about exploiting the country’s large offshore gas reserves have been revived, though this is partly a consequence of the changed energy situation in Europe following Russia’s invasion of Ukraine. The country’s economy and population are both growing steadily, but not fast enough to create sufficient jobs and to eradicate lingering poverty. Still, Tanzania’s relative importance within east Africa is likely to grow, and its decisions on infrastructure and trade will have broader implications for the East African Community.
Interview with President Hassan
The FT profiles Tanzania’s first female president, the Zanzibari-born Samia Suluhu Hassan. What are her political origins, her policy leanings and what will be her likely impact on the country’s economic and political landscape?
Liquefied Natural Gas
Last year, Tanzania signed a framework agreement with Britain's Shell and Norway's Equinor that brings a long-stalled $30bn liquefied natural gas export terminal closer to reality. A final investment decision may be years away, but the war in Ukraine, developments in neighbouring Mozambique (both positive and negative), and Tanzania’s improved business climate has brought new momentum to discussions.
The Economy
Tanzania has grown steadily for many years, though it has often been regarded as less dynamic and entrepreneurial than its northern neighbour Kenya. Under former President John Magufuli it gained a reputation for being anti-business, though it is gradually shedding that image under the new administration. Still, despite growing at nearly 7 per cent a year since 2020 (much less in per capita terms), the economy remains predominantly rural with high levels of poverty and big gaps in wealth between the cities and the countryside. Manufacturing has struggled and the level of value-added in the economy is still too low.
Agriculture
Much of Tanzania’s farming remains largely subsistence but there are various initiatives and technology-led companies trying to make the agriculture sector more efficient. There are also efforts to extract more value from the country’s coffee and cashew exports. As the population grows and as food and fertiliser supply chains are disrupted, Tanzania’s ability to raise productivity in the farming sector will be crucial.
Mining
The sector makes up nearly half of the country’s exports, roughly $3.6bn, with a large part coming from gold — of which Tanzania is Africa’s fourth-largest producer. The mining industry underwent significant turmoil in the Magufuli years when miners, including Barrick Gold, were accused of underpaying taxes. Some stability has returned to a sector with more than 500 active licences and 40 minerals.
Tourism
In 2019, tourism was Tanzania’s largest foreign exchange earner, the second largest contributor to the gross domestic product, and the third-largest contributor to employment. In the Serengeti, Ngorongoro Crater and Zanzibar, it has world-class tourist attractions. But a recent World Bank report says there is huge untapped potential. The FT explores the sector, both from a tourists’ and a business perspective.
Zanzibar
Zanzibar, the semi-autonomous region of Tanzania, can set its own laws. It has a lower VAT rate than the mainland and more permissive laws to foreign ownership. Entrepreneurs are now collaborating with Zanzibar, ato draw up rules intended to make it a tech hub, attracting the likes of Google, and also banks to turn it into a new Dubai on the Indian Ocean.
Cultural Heritage
The Stone Town of Zanzibar, the whitewashed capital of the semi-autonomous region, is an outstanding example of a Swahili trading town, with Arab, Indian, and European influences. But the years have taken their toll. Now, the government is attracting investors, including the King of Morocco, to the UNESCO world heritage site in order to restore it. The FT logs progress.
Business Profile
The FT will interview one of the country’s leading business figures.
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