Ma­ga­fuli bull­dozes the re­gion

With a pres­i­dent cul­ti­vat­ing a no-non­sense rep­u­ta­tion and an econ­omy set to be su­per­charged, Tan­za­nia is mak­ing sure its voice is heard through­out the re­gion

The Africa Report - - CONTENTS - By Joseph Bu­rite in Kam­pala, Dar es Salaam and Nairobi

Al­though Dar es Salaam has gained a rep­u­ta­tion as a tricky cus­tomer in East Africa, it has star ted to play a more in­clu­sive game

You are on hol­i­day. Per­haps in Kenya’ s Ma asai Mara game re­serve. The thought oc­curs: How about cross­ing to the world-fa­mous Serengeti, on the Tan­za­nian side? Foiled ... The switch won’t be easy, re­quir­ing a five-hour de­tour, an­other visa and a new set of im­mi­gra­tion rules. For nearly four decades now, Tan­za­nia has main­tained a block­ade of Bol­o­gonja, a bor­der cross­ing be­tween the Maa­sai Mara and Serengeti. It claims ac­cess for mass tourism could harm the ecosys­tem of the world her- itage site, which “har­bours the largest re­main­ing un­al­tered an­i­mal mi­gra­tion in the world,” ac­cord­ing to the United Na­tions Ed­u­ca­tional, Sci­en­tific and Cul­tural Or­gan­i­sa­tion. But ever keen to do busi­ness and tap its tourism po­ten­tial, Kenya sees this dif­fer­ently. It ar­gues that its south­ern neigh­bour is out to make busi­ness un­sus­tain­able for Kenyan tour op­er­a­tors who ferry cu­ri­ous vis­i­tors ea­ger to wit­ness wilde­beests on the march. What you are wit­ness­ing are age-old ri­val­ries, so bit­ter they have de­fied a wave of eco­nomic in­te­gra­tion slowly sweep­ing across the con­ti­nent. And

they are just two of many re­gional dis­putes in­volv­ing Tan­za­nia that have earned the coun­try a rep­u­ta­tion as a spiky neigh­bour. Voic­ing a pop­u­lar view, Uganda’s min­is­ter for gen­eral du­ties Tars is Kab­w­e­gyere said in Fe­bru­ary on a tele­vi­sion talk show: “The po­lit­i­cal class in Tan­za­nia is not yet at­tuned to re­gional in­te­gra­tion.”

‘COALI­TION OF THE WILL­ING’

Dur­ing March 2016 talks with Kenya’s Pres­i­dent Uhuru Keny­atta, he and Tan­za­nia’s Pres­i­dent John Magu­fuli agreed to form a joint min­is­te­rial com­mis­sion to re­solve out­stand­ing is­sues re­lated to the Maa­sai Mara-serengeti con­flict. Yet Tan­za­nian for­eign min­is­ter Au­gus­tine Mahiga, who was se­lected to chair the com­mis­sion, has not held a meet­ing since. “Tan­za­nia is look­ing be­yond tra­di­tional tourism,” says Mahiga. Com­pound­ing this has been the ‘coali­tion of the will­ing’, the re­gional group­ing of Rwanda, Uganda and Kenya who have sought to fast-track projects in­clud­ing a stan­dard gauge rail­way link­ing Mom­basa, Nairobi, Kam­pala and Ki­gali; a sin­gle tourist visa; cross-bor­der move­ment of East African Com­mu­nity (EAC) na­tion­als; and elim­i­nat­ing roam- ing fees on mo­bile phone calls in the re­gion. In 2014, Kenya, Rwanda and Uganda formed the coali­tion, de­nounc­ing what they saw as the plod­ding lead­er­ship in Dar es Salaam. But is that per­cep­tion en­tirely cor­rect? While Tan­za­nia re­sisted pres­sure to join those ini­tia­tives, the coun­try at the same time lib­er­alised its cap­i­tal ac­count, per­mit­ting free move­ment of cap­i­tal across the re­gion well ahead of the bloc’s 2015 dead­line. It has also ne­go­ti­ated a cus­toms union with the Demo­cratic Re­pub­lic of Congo (DRC), in­creas­ing the chances of the for­mer Bel­gian colony join­ing

the EAC. This year, Tan­za­nia will open up fur­ther to the world as it seeks to at­tract more for­eign cap­i­tal, hav­ing “fi­nalised pro­vi­sions to guard against volatil­ity,” cen­tral bank gover­nor Benno Ndulu told re­porters late last year. The coun­try is also look­ing to al­low its pen­sion funds – which mo­bilise as much as $1bn in an­nual sav­ings – to in­vest across East Africa, ac­cord­ing to the sec­tor’s reg­u­la­tor. These re­gional ini­tia­tives have ac­cel­er­ated since Pres­i­dent John Magu­fuli took power in Oc­to­ber 2015. In March 2016, Magufu li and Uganda’ s Pres­i­dent Yo weri Mu­sev­eni agreed to build a $4bn crude pipe­line to pump Ugan­dan oil to the Tan­za­nian town of Tanga in­stead of us­ing Kenya’s Lamu port. The move saw France’s To­tal out­ma­noeu­vre Bri­tain’s Tul­low Oil, which pre­ferred the lat­ter.

RACE FOR THE HIN­TER­LAND

And Magu­fuli met Kenya’s Pres­i­dent Uhuru Keny­atta a day later, adroitly giv­ing back with one hand what he takes with the other. They launched a joint road project to con­nect the towns of Arusha and Voi via Taveta in Kenya, pro­vid­ing a quicker link for trans­porters be­tween Mom­basa and Rwanda com­pared to the route through Uganda. Magu­fuli also met with Rwanda’s Paul Kagame the fol­low­ing month to hash out plans for a stan­dard gauge rail­way line from Dar es Salaam to Rwanda – spark­ing a race for the hin­ter- land with the Kenyan line – and other deals to re­duce work per­mit fees, to al­low Rwan­dan lo­gis­ti­cal play­ers more ac­cess to the port of Dar es Salaam and to in­crease co­op­er­a­tion in the avi­a­tion sec­tor. In Oc­to­ber, joint oil ex­plo­ration deals cov­er­ing Lake Tan­ganyika were signed with the DRC’S Joseph Ka­bila. In Novem­ber, Magu­fuli and his Zambian coun­ter­part, Edgar Lungu, or­dered changes to the man­age­ment struc­tures at the strug­gling Tan­za­nia-zam­bia Rail­way. The two lead­ers also laid out plans to in­crease vol­umes by boost­ing op­er­a­tions at the Tazama re­fined oil pipe­line that serves Africa’s sec­ond­largest cop­per pro­ducer. On the se­cu­rity front, Magu­fuli has been less ac­tive, how­ever. His gov­ern­ment has tac­itly en­dorsed Pierre Nku­run­z­iza’s con­tro­ver­sial hold on power in neigh­bour­ing Bu­rundi by go­ing along with Tan­za­nia’s for­mer pres­i­dent Ben­jamin Mkapa, a fa­cil­i­ta­tor of peace talks, who has told the op­po­si­tion they must recog­nise the gov­ern­ment.

COURT­ING CHINA

But in South Su­dan where the United Na­tions warned in Fe­bru­ary of wor­ry­ing lev­els of fight­ing, Magu­fuli, the cur­rent chair­man of the EAC, has toed the re­gional line. The EAC backs the peace process un­der the In­ter­gov­ern­men­tal Au­thor ity on Devel­op­ment, part­ing ways with Magu­fuli’s pre­de­ces­sor Jakaya Kik­wete, who hosted talks in Arusha to rec­on­cile Pres­i­dent Salva Kiir and for­mer vice-pres­i­dent Riek Machar. And while the coun­tries of East Africa are get­ting a lot of at­ten­tion from in­ter­na­tional part­ners, Magu­fuli, nick­named ‘the bull­dozer’, has played host to one of the long­est lists of courtiers. That in­cludes In­dia’s Prime Min­is­ter Naren­dra Modi, Turkey’s Pres­i­dent Re­cep Tayyip Er­do­gan and China’s for­eign min­is­ter Wang Yi, who said 200 Chi­nese fac­to­ries are seek­ing to re­lo­cate to Tan­za­nia, with “which China shares strong his­tory”. Moses Ku­laba, ex­ec­u­tive di­rec­tor of the Dar es Salaam-based think­tank the Gov­er­nance and Eco­nomic Pol­icy Cen­tre, ex­plains : “Tan­za­nia is

at­tract­ing in­ter­est be­cause of its lo­ca­tion but also fu­ture po­ten­tial […] If you look at Tan­za­nia, 50 years from now you will still have things that can be ex­ploited by coun­tries like China, which are look­ing ahead.” This has re­sulted in ris­ing con­fi­dence – and the gov­ern­ment is now more will­ing than ever to chal­lenge neigh­bours. Last year, against Kenya’s des­per­ate wishes, Tan­za­nia forced a post­pone­ment of the sign­ing of the EAC’S eco­nomic part­ner­ship agree­ment with the Euro­pean Union, in­sist­ing it needed to eval­u­ate how the agree­ment im­pacts its new am­bi­tions for an in­dus­trial econ­omy. This fol­lowed ne­go­ti­a­tions that dragged for more than 14 years. “Con­trar y to the be­lief that Tan­za­nia is slow­ing down the process, some of the ques­tions it’ s rais­ing are valid. It might be true on the free move­ment of peo­ple, but some agree­ments – like po­lit­i­cal fed­er­a­tion – were rushed,” Ku­laba ar­gues. “Tan­za­nia is buy­ing time for coun­tries to think about the process.” For all of Magu­fuli’s at­tempts to reach out and shape a re­gion in which Tan­za­nia’s voice has been muted, there are some hur­dles to be cleared first. Graft, pol­icy choices and com­pet­i­tive­ness will re­main a drag on any de­sire to bull­doze East Africa. Fol­low­ing a rough patch spar­ring with in­dus­tri­al­ists like Aliko Dan­gote, busi­ness seems to value Magu­fuli’s cru­sade against cor­rup­tion, thanks to in­dict­ments of sev­eral of­fi­cials and ef­forts to curb re­source wastage with a tight fis­cal regime. Jim Kabeho, a di­rec­tor on the East African Busi­ness Coun­cil says : “He looks like a man we can work with […] You know, for us, if some­one is fight­ing cor­rup­tion, it’s very good.” But it is not just cor­rup­tion that is a prob­lem for the gov­ern­ment’s wider am­bi­tions. The ad­min­is­tra­tion’s fis­cal poli­cies, es­pe­cially on the tax­a­tion of ser­vices of­fered for tran­sit cargo, have been met with crit­i­cism be­cause they hurt re­gional traders.

PORT IN­EF­FI­CIEN­CIES

About 40% of Tan­za­nia’s es­ti­mated 23,000 trucks are idle, with some re­lo­cat­ing to Namibia’s Walvis Bay. The coun­try has lost 65% of Zam­bia’s cop­per ship­ments and 50% of Con­golese cargo, ac­cord­ing to es­ti­mates from the Tan­za­nia Pri­vate Sec­tor Foun­da­tion (TPSF). “We [Dar es Salaam port] are los­ing cus­tomers be­cause we are not com­pet­i­tive,” says Salum Shamte, TPSF’S deputy chair man. “We are un­com­pet­i­tive be­cause we in­sti­tuted value-added tax on aux­il­iary ser­vices,” he says in ref­er­ence to a levy slapped on cargo-clear­ing ser vices last year that also ap­plies to tran­sit cargo. “We should not tax tran­sit trade, pe­riod. We should not tax it at all,” says Shamte, whose busi­ness in­ter­ests in­clude one of Tan­za­nia’s largest sisal grow­ers. “Let us use tran­sit trade as a tool for com­pet­i­tive­ness, not just for rev­enue.”

Even as plans to tap re­gional busi­ness hinge on the har­bour, the port of Dar es Salaam is al­ready bogged down by in­ef­fi­ciency and is con­sis­tently out­matched by Mom­basa, Beira and Dur­ban. A re­port by Trade­mark East Africa, a trade fa­cil­i­ta­tion or­gan­i­sa­tion, found it to be the most ex­pen­sive for im­porters in the re­gion. The gov­ern­ment, in an ef­fort to re­vamp fa­cil­i­ties at the port, has sought to bor­row as much as $690m from the World Bank since 2015. The World Bank in­stead is plan­ning to re­lease money in phases in a bid to force Tan­za­nia to tighten up the nec­es­sary plan­ning for the project. Bella Bird, the World Bank’s coun­try di­rec­tor for Tan­za­nia tells The Africa Re­port: “The first phase is ex­pected to in­volve an In­ter­na­tional Devel­op­ment As­so­ci­a­tion credit of $345m, to­gether with a [UK] De­part­ment for In­ter­na­tional Devel­op­ment grant of $13m and a Tan­za­nia Ports Au­thor­ity con­tri­bu­tion of $63m.” Still, some of the port’s largest users are now sub­jects of con­stant sus­pi­cion by the new gov­ern­ment. It has ac­cused large im­porters of tax eva­sion and cor­rup­tion. The gov­ern­ment also wants to be sure that it is get­ting all of the rev­enue it is due from the min­ing sec­tor, which ac­counts for about 4% of gross do­mes­tic prod­uct and boasts giants like Aca­cia and An­gl­o­gold.

LNG PLANS STALLED

Other ar­eas of the econ­omy are also un­der pres­sure. Al­ready fall­ing way be­hind Mozam­bique in terms of gas devel­op­ment, Tan­za­nia’s long time­lines in the nascent en­ergy sec­tor have left po­ten­tial in­vestors frus­trated de­spite calls by Magu­fuli for works to go faster. Front-end engi­neer­ing and de­sign is well on sched­ule but fi­nal in­vest­ment de­ci­sions, while ea­gerly an­tic­i­pated, are un­likely to be made ear­lier than 2019. The gov­ern­ment ex­pects to com­mis­sion a planned liq­ue­fied nat­u­ral gas (LNG) plant in 2025. The lack of ad­min­is­tra­tive ca­pac­ity and other is­sues have slowed the sec­tor’s devel­op­ment. “At the mo­ment, we are just wait­ing for the in­vest­ment de­ci­sion ei­ther by Sta­toil and Shell jointly for the LNG plant, or as in­di­vid­ual pro­pos­als for the re­spec­tive projects,” says Gul­brand Wan­gen, di­rec­tor for midstream projects in Africa, Brazil and In­dia at Nor­we­gian En­ergy Part­ners. The in­dus­try lobby counts Sta­toil, a key player in Tan­za­nia, among its mem­bers. In Magu­fuli’s first days, many East Africans took to so­cial me­dia prais­ing Magu­fuli’s fru­gal ways and ef­forts against cor r up­tion, ask­ing #WhatWould­magu­fulido. Fresh into of­fice, the then-56-year-old re ceived ap-

The lack of ad­min­is­tra­tive ca­pac­ity has slowed the en­ergy sec­tor’s devel­op­ment

plause when he wore gloves and gum boots to join in clean­ing up a shabby Dar es Salaam mar­ket. But he would strug­gle to get such praise from neigh­bour­ing coun­tries to­day, as the old re­gional ri­val­ries and per­cep­tions re­main. Driv­ing across Nairobi on a sunny Thurs­day morn­ing, Stephen Mwangi, an Uber driver, asks if the cab-hail­ing ser­vice he works for ex­ists in Tan­za­nia. “Yes, since June,” I re­spond. “But is it as suc­cess­ful as in Nairobi? You know Magu­fuli is anti-busi­ness,” replies the driver.

KHALS/PAULKAGAME/FLICKR

John Magu­fuli, seen here with Rwanda’s Paul Kagame, is ea­ger to ne­go­ti­ate re­gional mega-projects

Pres­i­dent John Magu­fuli has been praised for his fru­gal ways and ef­forts against cor­rup­tion

A new crude pipe­line will pump oil from Uganda’s Lake Al­bert to the Tan­za­nian port of Tanga

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