Foreign money pours into Tanzania despite global crunch

A local artisanal Tanzanite miner at Mererani in Arusha. The latest investment report ranks ‘Mining and Quarrying’ fifth in creating jobs for indigenous Tanzanians, despite the fact that these sectors are the largest recipients of foreign money. PHOTO | AFP 

By Alawi Masare, The Citizen

In Summary

• Mining stock of FDIs increased from $3.71 billion in 2008 to $4.12 billion in 2011 while that of manufacturing and electricity and gas jumped from $870.7 million to $1.52 billion and $3 million to $539.8 million respectively.

Dar es Salaam. The flow of foreign private investment (FPI) -- which comprises all other forms of investment -- to Tanzania increased at an annual average rate of 10.3 per cent between 2008 and 2011 despite shocks caused by the global financial crisis, a new Tanzania Investment Report reveals.

The inflows up-surged from the annual average of $7.75 billion to $10.39 billion in the same period pushed by high inflows of foreign direct investments (FDIs) in mining, manufacturing, electricity and gas projects as well as hospitality.

Mining stock of FDIs increased from $3.71 billion in 2008 to $4.12 billion in 2011 while that of manufacturing and electricity and gas jumped from $870.7 million to $1.52 billion and $3 million to $539.8 million respectively.

However, agriculture, which accounts for the largest share of Gross Domestic Product (GDP), recorded a lower level of FDIs compared to other traditional recipients despite growing from $202.3 million in 2008 to $400.5 million in 2011.

This is the fifth report in the series of the Tanzania Investment Reports since 2001.

“There is a need to add efforts in making agriculture more attractive to investors to boost the inflows. Such efforts include investment in rural infrastructure, irrigation schemes and rural electrification,” said Ms Natu Mwamba, deputy governor responsible for economic and financial policies.

The report shows that 72 per cent of the FDIs inflows to Tanzania came from South Africa (31.2 per cent), Canada (22.5 per cent) and the United Kingdom (19 per cent)

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“The respondent companies raised a concern over reliability of power supply and delays at ports but majority have confidence in Tanzania’s investment climate and plan to expand their businesses,” she added while briefing the findings of the report.

Out of the total respondents, 75.7 per cent indicated that they were planning to expand their business in Tanzania in the next three years, while 19.9 per cent would maintain the same level of investments.

Those who intended to reduce their businesses were 4.4 per cent.

“This is an indication of investors’ confidence in the country’s investment climate,” said Ms Mwamba.

Development in banking, telecommunications, immigration, air and inland transport services were perceived by the investors to have positive effects on their business operations at the time of the survey, the report shows.