Un­der pres­sure Magu­fuli now courts Bei­jing

Li­cens­ing a Chi­nese Bank to op­er­ate in Dar sig­nals change of tact in funds mo­bil­i­sa­tion

The East African - - NEWS - By AL­LAN OLINGO

Tan­za­nia last week li­censed a sec­ond Chi­nese com­mer­cial bank as Pres­i­dent John Magu­fuli’s ad­min­is­tra­tion looks East for funds for mega in­fra­struc­ture projects.

The li­cens­ing of the China Dasheng Bank Ltd, and its sub­se­quent in­jec­tion of $40 mil­lion cap­i­tal, her­alded chang­ing for­tunes for the Chi­nese in Tan­za­nia, amid grow­ing ap­a­thy among Dar’s tra­di­tional lenders.

Speak­ing in South Africa last week, the World Bank Pres­i­dent Jim Yong Kim said he was per­turbed by the re­cent hap­pen­ings in Tan­za­nia, giv­ing the clear­est sig­nal that all was not well.

“Let me just be very blunt, we are very up­set about what's hap­pen­ing in Tan­za­nia,” Mr Kim said at a lecture at Wits Uni­ver­sity in Jo­han­nes­burg.

“There are some things that are hap­pen­ing that we are up­set with, and we have made our­selves clear, that we can­not tol­er­ate that,” he added.

Mr Kim’s state­ment seems to throw a cloud of doubt around fund­ing for Tan­za­nian projects. Twenty months ago, the World Bank an­nounced a $1.15 bil­lion four-year fa­cil­ity com- pris­ing loans and grants. The projects un­der this pro­gramme are in the trans­port sec­tor (rail­ways, roads), wa­ter, ed­u­ca­tion and en­ergy sec­tors. The fund­ing in­cluded $425 mil­lion for the sec­ond and third phases of the Dar es Salaam Bus Rapid Tran­sit, $305 mil­lion for ex­pan­sion of the port of Dar es Salaam, $60 mil­lion for the Ubungo interchange and $100 mil­lion for Dar es Salaam wa­ter sup­ply up­grade.

At the time, Tan­za­nia Pres­i­dent John Magu­fuli had shunned China, and can­celled their $7.6 bil­lion fund­ing of­fer for his coun­try’s stan­dard gauge rail­way cit­ing “eth­i­cal ir­reg­u­lar­i­ties” that had been “con­ve­niently ig­nored.”

Now, Pres­i­dent Magu­fuli has changed tune, prais­ing China’s fi­nanc­ing role of his coun­try’s in­fra­struc­ture mod­erni­sa­tion drive, and the sub­se­quent an­nounce­ment of China Dasheng Bank Ltd’s en­try, which is rais­ing the stakes as Tan­za­nia weighs its fi­nanc­ing op­tions.

“We pre­fer as­sis­tance from China, as Bei­jing im­poses fewer con­di­tions,” Pres­i­dent Magu­fuli said last week, af­ter fac­ing threats in re­cent weeks from West­ern donors to cut off aid in re­sponse to hu­man rights con­cerns.

“The thing that makes you happy about their aid is that it is not tied to any con­di­tions. When they de­cide to give you as­sis­tance, they just give you. As it is, my gov­ern­ment will con­tinue to de­velop and cul­ti­vate its good re­la­tion­ship with China. They have helped us in a lot of other ar­eas of de­vel­op­ment.”

Tan­za­nia is a sig­nif­i­cant ben­e­fi­ciary of EU de­vel­op­ment co-op­er­a­tion, mainly fi­nanced by the Eu­ro­pean De­vel­op­ment Fund, with the cur­rent cy­cle of 2014/2020 bud­get for $709.38 mil­lion, for Dar’s en­ergy, agri­cul­ture, health, gov­er­nance and se­cu­rity sec­tors now at stake.

The li­cens­ing of China Dasheng Bank Ltd makes it the sec­ond Chi­nese Bank to op­er­ate out of Dar es Salaam.

Ear­lier this month, Den­mark froze fund­ing to Tan­za­nia, an­nounced it was with­hold­ing $10 mil­lion worth of aid money over con­cerns about poli­cies that threaten gay peo­ple.

The Eu­ro­pean Union on the other hand has also launched a com­pre­hen­sive re­view of its poli­cies to­wards Tan­za­nia over con­cerns about rights abuses. It an­nounced that Dar gov­ern­ment pres­sure had led to the “forced de­par­ture” of its am­bas­sador.

The World Bank, on the other hand, put a planned $300 mil­lion loan for an ed­u­ca­tion project on hold, later an­nounc­ing that a cau­tious agree­ment had been reached to get the loan process back on track af­ter Tan­za­nia agreed to re­con­sider the leg­is­la­tion, which pro­hibits crit­i­cism of of­fi­cial statis­tics. Statis­tics Acts, which was passed by par­lia­ment in Septem­ber, im­poses heavy fines on peo­ple who chal­lenge the ac­cu­racy of of­fi­cial data re­leased by the gov­ern­ment. The World Bank ar­gued that the law was coun­ter­pro­duc­tive.

China Dasheng Bank Ltd en­try is now seen as Dar at­tempt to lure more cap­i­tal from Bei­jing and also make it easy for fund­ing and For­eign Di­rect In­vest­ment from China as the new bank seeks to be­come a big player in Ren­mbi clear­ance.

Pic­ture: File

Pres­i­dent John Magu­fuli (in blue suit) and se­nior gov­ern­ment of­fi­cials at the launch of the stan­dard gauge rail­way line in Dar es Salaam.

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.