TanzaniaInvest interviewed DR
Bohelo Lunogelo, Acting Director of Tanzania Economic and Social
Research Foundation (ESRF) and he shared insightful details on
Tanzania's economy, investing in Tanzania and the various developments
in Tanzania's growing sectors from the perspective of a think-tank.
TanzaniaInvest.com
: TanzaniaInvest.com : What was the view when creating the Tanzania
Economic and Social Research Foundation? What have been your greatest
achievements since establishment in 1994?
Dr. Bohela Lunogelo : ESRF was created
with a view of basically informing the government and also other
sectors. They need advice on what policies to pursue, how to implement
those policies, to follow up on and gain feedback on these policies.
With the private sector, initial challenges were trying to raise
awareness amongst local and international stakeholders of the business
opportunities in Tanzania.
Although we have not done much in
terms of building capacity, previously it was the Tanzanian Government
that was doing everything. Now we are shifting toward the private sector
being the engine of growth. As an institution we have created policies
that shape the conduct of Government, Private Sector and Civil Society.
We have been therefore, that we are the first Think-Tank in Tanzania to
be created.
We have been involved in designing
most of the sector policies you see. I think one of the areas I could
say with hindsight we could have done better were the focus areas for
attracting Foreign Direct Investment in Tanzania. At that time we were
too focused on the mining sector, which was needed, but if you now look
at the model and how revenue is shared, we could have been less focused
on this.
In terms of jobs. If we had directed
more focus on Agriculture for example, the multiplier effect is so huge.
Now interest and investment in Agriculture in Tanzania is renewed and
revived.
TI : Good economic growth will
spill over in terms of taxation from the corporates but eventually with
no spillover on the social economic framework. In your experience how
can FDI transform something concrete for most of the population in
Tanzania?
Dr.B.L : I think it is Mining, per
say, that could make it happen. I think it is important to polish the
initial contract. Globally, the scenario was based on good practice, you
can’t exceed 80% and so forth. So Tanzania has the reserves but it
needs to be developed at a reasonable pace. I think it is important to
encourage local participation in processing. Also to ensure as companies
come to Tanzania there could be local shareholders with them, to avoid a
company coming in and leaving very little to the economy.
I think International Capital is also
changing the way it looks at things. It is more progressive in thinking
unlike the old Capitalist. They are aware they also have some
responsibility to make sure we move as one. The globe is one village. So
I am happy that this philosophy is the realized philosophy of the new
leadership of the G8 and G20. It does not help the prosperity of one or
two countries in the world, while the rest of the world is suffering.
Interventions in Tanzania’s rural regions are will really benefit
people.
The most immediate sector is
Agriculture. The good thing about Agriculture in Tanzania is that it not
only benefits the local economy but also contributes to the wealth of
the world in terms of generation of food. It contributes greatly to
Asian markets. The other sector that is important is Tourism. Tourism
also indirectly and directly contributes to Tanzania Agriculture
industry. When tourist come in their thousands, they eat and buy local
foods. So the hotel Industry has the common vision of using local
products.
The value of domestic trade is that it
sends the right signals. Thus the quality and consistency must be
maintained. If the local economy cannot do it, then off course it will
be imported. So Tourism is a trigger for other markets. Also, In East
Africa there are increasingly more middle-income earners and they
generally demand quality products. Higher quality requires better
management, farming and better services.
TI : Please highlight the
investment opportunities in Tanzania in which foreign Capital can come ,
which farming product has the highest potential here?
Dr. B.L : Traditionally, if you are
targeting the international market, it has always been coffee, tea,
cashew nut, oil, and sunflower. Now there are also other demands such as
grain, rice and wheat. There are International Companies that have
invested in those. So there are several investment opportunities in
Tanzania; Tourism, Agriculture, Natural Resources and Infrastructure.
….there are several investment opportunities in Tanzania; Tourism, Agriculture, Natural Resources and Infrastructure.
The Chinese have already taken up some
spaces. There are other blocks such as natural gas and uranium that has
great potential for investment in Tanzania. We are negotiating with
Brazil to produce Hydro Power. Brazil has experience in that industry.
Tanzania is also involved in innovative fiber and chemicals research.
That is an area that investors can join in.
The other area that needs to be
modernized is the Timber Industry in Tanzania. We have soft timber and
right now it is the only source of timber. In relation to the
Construction Industry at the moment it is semi-processed and taken to
Dar es Salaam. It also is a significant source of Hydro.
TI : My understanding is that
Hydro is not adequate for this country. It also has a high cost of
maintenance. So I believe that the Tanzanian Government decided to shift
away from that?
Dr. B.L : That is the thinking. Some
analysts say that the problem with Hydropower generation is sustainable
management. The plan when we decided to develop Hydropower was that it
should be user holistic with a more integrated approach. We should not
just use water without minding where it comes from.
This was the master plan. We should
take care of the source of that water. The problem was poor policy
response to technical advise on how Hydro Power should operate. So it
was the mismanagement of the catchment area. The upstream was not there.
Sustainable energy and having alternative sources of energy is part of
the system.
TI : This is a key point Dr
Lunogelo, now everyone is going to be looking at Tanzania Oil and Gas
resources and what exactly is going to happen. Is the country going to
be “just another Nigeria”? Whereby the interest itself is successful but
the effect on the population is negative. Will Tanzania be able to
develop an industry in line with what you were referring; responsibility
and sustainability? Or will we see again some large oil and gas company
make their money, pay their tax but there will be no change.
Dr. B.L : The key question is, is the
country prepared? To me, I would say we are not prepared. We are not
prepared to immediately gain in a sustainable manner from the Discovery
of Gas in Tanzania. In terms of money power to effectively engage in the
gas industry we are not prepared. That is key. Is it our fault we are
not prepared? Yes and No.
The No part is ; for years we have
been engaging and commissioning unfortunately foreign companies, because
we were not within the capacity to do exploration. So the foreign
companies started looking for something useful. They reported back that
there was nothing to there but never left and kept exploring. So we were
not prepared when suddenly they said there was Gas. We had no time to
train experts so they outsourced everything.
No Tanzanians benefitted. The local
economy is not benefiting much. People are employed but in terms of
high-end expertise and service to that operation, it is not there. So
off course, we are now starting to train our people. Secondly, our
unpreparedness also comes in with the affiliated sectors that come in
with the gas sector. Production factors need to be configured, transport
sector need to develop and local capacity to service machinery must
improve. We also put in network system for domestic use of liquefied
natural gas.
So all of those systems will need to
change in order to benefit from the gas. Then off course the
Pharmaceutical Industry and Fertilizer Industry will need to be
developed. Basically there is some preparation. It will take time for
the gas to benefit the economy. There is some over-expectation right now
on the benefits to the economy. There is less awareness of what the
industry is really about.
TI : Tanzania has experienced a
revolution in ICT. Probably the most impressive example is the impact
of mobile money transfer. How do you see the Mobile Money Service
participating in 80% of Tanzania’s population that will now gain
inclusion in the financial system?
Dr. B.L : I think one of the lesser
known benefits of the mobile phone is the use of market information. The
price information transferred from urban to rural dwellers. For example
in the Lake Victory region; one of the notorious problems especially in
East Africa was the lack of information by those living in the small
islands whose livelihoods depend on fishing.
Now with mobile phones they are able
to communicate and exchange information. They now know prevailing market
prices. So we envision the mobile banking and communication will
greatly benefit people. As with enlisting people who wish to receive a
pension, one of the biggest challenges was reaching out to low-income contributors.
People will now be better linked to
services. So for money transactions it is going to be over and above
what we expected. These changes will make a difference in the
livelihoods of people. Commerce in Tanzania is now more enriching.
Commerce in Tanzania is now more enriching.
TI : To conclude our chat, in a few words what is Tanzania about?
Dr. B.L : I think for Tanzania it is
about taking advantage of the strategic geographical location of the
country. Tanzania borders 8 landlocked countries. The Tanzania port is
extremely significant. So for Investments in Tanzania, the country
offers a very strategic location for penetrating the markets in East
Africa.
There are opportunities in Tanzania. The policies are very friendly. There are good opportunities for investment in Tanzania.
With the discovery of Gas and so forth
we are reviving and improving our infrastructures and links to the
border countries. There is huge potential to improve human potential and
services. This is one of the sectors overlooked. Investing in Education
in Tanzania could be one of the most impactful, people have the ability
to pay for services but often need to look abroad instead of Tanzania.
All the sectors in Tanzania have great
potential. Tourism in Tanzania right now as we know is limitless. The
largest wildlife ecosystem in the World is in Tanzania but often people
talk about Kruger, South Africa. There are opportunities in Tanzania.
The policies are very friendly. There are good opportunities for
investment in Tanzania. |
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