By ADAM IHUCHA-- The Chinese presence in the Tanzanian economy is growing
significantly as the eastern great economy intensifies its appetite for natural
resources to feed her hungry industries.
Statistics
of Tanzania Investment Center (TIC) shows, China's total direct investment in
Tanzania reached $700 million in 2011 and ranked the 6th among the foreign
investment resources.
In 2012, China
became Tanzania's 2nd largest investor with an overall direct investment of $1
billion, as it seeks closer trade ties with the natural resources rich country.
By the
end of June 2013, China's total direct investment in Tanzania was $2.17
billion, bolstering its presence in the second East African largest economy.
Beijing diplomat
to Tanzania, Lu Youqing says that Chinese government decided to host Brands of China African Showcase in
Tanzania annually since 2012.
“This is
the need of the fast growth of China-Africa trade relation, as well as the
recognition of Tanzania's special role and importance in China-Africa
relationship” says Ambassador Youqing.
The
eastern giant is not only the biggest foreign investor, but its investment is
mainly in the fields of road construction, railways, ports, gas pipeline, mega
buildings and electricity such as wind power farm.
More
recently Chinese also showed interest in agriculture, manufacturing industry
and logistics, which are high labor-intensive industries urgently needed by
Tanzania.
Therefore
China is the foreign investor, which creates the largest number of job
opportunities for Tanzania, and directly created 150,000 local job
opportunities.
As the
largest trade partner of Tanzania, the bilateral trade between China and
Tanzania was over $2.5 billion in 2012, official data shows.
Again, it
is estimated there are 350,000 locals who are engaging for the works related to
trade with China.
Open Data for International Development
(AidData) also shows that, Beijing has become Tanzania's largest single trading
partner — in 2012 it accounted for 15 percent of Dar's trade, valued at
$2.47-billion — and its second-largest source of investment.
Moreover, AidData reports that, between
2001 and 2011, mineral resources-rich Tanzania cashed-in $4.6 billion in
Chinese funding.
The multi-billion-dollars didn’t come
with the conditions of human rights and transparency, as it has always been the
case for majority Western donors.
More recently, Tanzania and
China clinched as many as 19 contracts reportedly worth billions of dollars.
These are the largest amounts of deals for Dar to ever offer any other global
economic superpowers.
The key component of the deals closed in
March 2013 is for the building of a multi-billion-dollars port at Bagamoyo
district in Coast region, northwest of Dar es Salaam.
Bankrolled by the China state-owned
Export-Import Bank (EXIM) at the tune of $10 billion, the dock is designed to be
largest and ultra-modern in African continent.
Details show
that the harbor
is anticipated to be ready by 2017 and will be able to handle 20 times more
cargo than Dar es Salaam port, the current major imports and exports gateway in
East African, competing with Mombasa dock.
Dar and China-state-run-firm, Merchants
Holdings (International) also contained the building of a 34km road between
Bagamoyo and Mlandizi, which will link the port to Tanzania's internal rail
network and the Tanzania-Zambia railway.
Opinions have it that the port would be
used partly as a doorway for Chinese operations in African countries where
Beijing seeks raw materials to feed her hungry industries.
More recently, Chinese also
showed a great interest in Tanzania’s oil, gas, coal, wildlife and agricultural
products, initially dominated by western economic giants like UK, Norway,
U.S.A.
The Chinese $1.2 billion soft loan for
a 523km line connecting Dar es Salaam and the Mtwara gas field was signed in
September 5 in 2012 between Tanzanian and the Exim Bank.
Details show that the loan has a
33-year maturity and a low 2 percent interest rate, but sources say that the
Chinese’s model of operandi is give-and-take.
Indeed China's state-owned Sichuan
Hongda Group won a $3 billion joint
venture agreement with Tanzania's National Development Corporation to exploit a
major iron-coal.
TIC
official, Raymond Mbilinyi says a Chinese Zinc producer, secured the deal,
after defeating 40 contestants for the tender including the world's largest
mining company, BHP Billiton Ltd.
(BHP) and Rio Tinto Group, an Anglo
Australian multinational mining and Petroleum Corporation.
Now the company owns the lion’s shares
with 80 percent in Liganga Iron Ore and 70 percent in Mchuchuma Coal complex
with a 100-year lifespan and a total value of $54.8 billion combined.
This is probably a living example of
Beijing model of using projects financing as bait to access natural resources.
It is an open secret that Beijing firms
get a lion share of Tanzania's civil engineering contracting market, with
available records shows that they occupy up to 90 percent of the works.
A local Civil Engineer Sem Kaaya says
that though chinese are dominant of the works, but their qualities of their
works are always wanting at the expense of Tanzania’s economy.
“Look at the newly state owned Mpingo
complex where the ministry of natural resources are housed in Dar Es salaam
built by Chinese, it’s a shame because it has huge cracks, though from the
distance the outlook is eye catching” Engineer Kaaya said.
Normally, he says, Chinese win tenders
because they lower their costs, but they compromise the quality of works.
According to him, even the roads
constructed by chinese are usually short lived due to the fact that they use
cheap materials to maximize profits.
On whether they transfer technology to
locals, Engineer Kaaya says if any it depends on personal initiatives.
Senior Lecturer at Institute of Finance
Management (IFM), Dr. Abdallah Saqware says that though the Chinese works could
be substandards, but that was the problem of Tanzania authority entrusted to
monitor the works.
“Chinese companies are not working
without close monitoring by our government, if they hand over shoddy works and
we receive them then that’s our problem. I suspect that would be our tender
specifications, otherwise there’s no way one can accept cheap works” Dr.
Saqware explained.
He, however, urged Tanzania to
negotiate a better trade deals with Chinese in order for local products to
access Sino niche market.
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