TZ-China relations ‘not on a free fall’

Tanzania and China have enjoyed relatively solid economic and political relations for many years now. But with the coming in of the fifth phase government at the end of 2015, talk was rife that the very foundation on which the bilateral ties were built could be shaken a little bit, considering the sweeping reforms President John Magufuli’s government embarked on.

Of particular interest was the deliberate effort by the new government to be more in-ward looking than depending too much on donor funding. Concerns were also raised from various quarters that with the apparent demands for ‘fairer’ and perfect deals from the Tanzanian authorities, China itself could be a focal point.

In this interview, Political Platform reporter Louis Kolumbia talks to Chinese ambassador to Tanzania, Dr Lu Youqing, who sheds light on these and other issues affecting relations between the two nations:

What’s the state of the China-Tanzania relations, especially after the fifth government assumed office in October 2015?

Tanzania and China continue to enjoy economic and political relations. The two countries enjoy a solid relationship. Our focus at the moment is to turn that friendship into a driving force to attract more investment and boost trade in ways that improve the economies of the two countries.

Former President Jakaya Kikwete maintained a personal relationship with his Chinese counterpart, President Xi Jinping. The decision by President Xi to make Tanzania his first African stop during his maiden foreign trip soon after assuming office reflected the sound friendship.

President John Magufuli maintained this good relationship after assuming office. President Xi became one of the first foreign leaders to send President Magufuli a congratulatory message after winning the October 2015 election.

And for the inauguration, President Xi sent a high-level delegation to stand in for him. Also, the Vice President, Ms Samia Suluhu Hassan, and former President Kikwete separately met and held high-profile discussions with President Xi on behalf of President Magufuli.

More so, in a letter to wish President Xi and the Chinese people good luck as they celebrated the Chinese New Year, President Magufuli thanked the government for assisting Tanzania in times of need. In his response, President Xi expressed the importance attached to the Tanzania-China relationship, and his willingness to work together with President Magufuli’s government to strengthen cooperation. In addition, he appreciated Dr Magufuli’s focus on domestic issues, especially the anti-corruption crackdown.

So, Tanzania and China are not just friends; we are comrades. We are brothers. A few countries can be described as China’s comrades. Tanzania is special.

The opposition in Tanzania has greatly criticised China’s support for the ruling party, Chama cha Mapinduzi (CCM), saying it undermines democracy in the country. What is your comment?

China’s foreign policy prohibits us from interfering in internal affairs of any country. However, the Communist Party of China (CPC)’s relationship with CCM spans over 50 years. The CPC has good relations with 600 other political parties in 190 countries across the world. Out of these, a third are ruling parties, while two thirds are opposition. This means the CPC actually cooperates with a significant number of opposition parties.

In Tanzania, I cooperate with opposition parties through the Tanzania Centre for Democracy (TCD). That is why Members of Parliaments from the Civic United Front (CUF) and Chadema were also invited to visit China. Comparatively, Tanzanian political parties have been doing great in terms of being able to peacefully and harmoniously co-exist for the sake of national interest.

The 2015 General Election serves as a good example. All political parties campaigned in a civilised way, abiding by the laws governing the country, and as a result maintaining peace and ensuring security.

Hopefully, the ruling party will grow stronger and stronger to properly run the government, and fulfill the commitments it made during election campaigns.

In the same manner, it is important for the opposition to grow stronger and stronger to effectively and efficiently supervise the government. This will help the country to implement its development strategies.

Generally, all political parties, as long as they are legally registered, are friends to the Chinese people. So, China is a friend to all political parties in the country.

What are your comments on the political situation in Zanzibar?

The Zanzibar issue, with regards to the 2015 General Election, is a real challenge. I know what you mean, that (the opposition) CUF has a different opinion about it. But the election has ended, and the results are out. Nevertheless, I believe they will find a better solution. It will be good for the economy, and tourism.

What is the current value of Chinese investment in Tanzania?

Investment and trade between the two countries have been growing. According to data from the Tanzania Investment Centre (TIC), it amounts to $6.62 billion, and there are 600 Chinese companies operating in the country. Data released in 2014 from Imara, a South African company, shows that Chinese investment had created 150,000 direct and 350,000 indirect jobs.

China has also been providing Tanzania with a large amount of concessional loans to implement key infrastructural projects, including the Mtwara-Dar es Salaam natural gas pipeline. A total of $1.3 billion was injected into the project. In Dar es Salaam, people are now using natural gas for domestic purposes, instead of charcoal. This has greatly helped in efforts to save the environment. Also, natural gas is used for power generation enabling the government to serve about $1 billion, which would be spent on buying heavy fuel (diesel) for power generation.

In addition, the Chinese government provided funds to build the National Optical Fiber Backbone Broadband, which upon completion will make Tanzania a country with the latest Information Communication Technology (ICT) infrastructure in Africa.

After President Magufuli assumed office, our investment has grown. You may have heard that I accompanied Prime Minister Kassim Majaliwa to inspect factories in Kilwa and Mkuranga. A ceramic factory that President Magufuli is expected to officially open next month has the latest technology, and a production capacity of up to 8,000 square kilometre of building material per day. In Tanga, China has invested $500 million in a cement factory, and the same amount has been invested in the construction of an industrial park in Buguruni that upon completion will attract investment projects worth $3 billion.

China, Tanzania and Zambia are reportedly working on revitalising the Tanzania Zambia Railway Authority (Tazara). What’s happening?

Tazara is the monument of the China-Africa friendship. Revitalisation of the project means signals a new era of cooperation. It means developing the railway of freedom and friendship to the railway of development and prosperity.

Rounds of discussion began in 2012, and have now reached significant levels of understanding. During his visit to Tanzania last year, Zambian President Edgar Lungu engaged in bilateral discussions with his Tanzanian counterpart, and the two resolved to carry out major management reforms aimed at market-based operations.

They also resolved to integrate functions of the ports with the railway and allow more goods to be transported by train to reduce costs. Finally, they agreed to build industries along the railway line, as well as promote mining, agriculture and tourism. These activities are key to the success of Tazara.

And China is committed to providing funds for the rehabilitation. We hope that a new operator will be chosen through fair competition. However, the two governments have shown interest in having a Chinese company as the operator of the future upgraded railway. Detailed discussions and negotiations have already been held by a team comprising members from the three countries.

I would like to inform you that a proposal on the Tazara rehabilitation was done, and the Chinese government has set aside funds to engineer the project. Tanzania and Zambia are now reviewing and amending laws on Tazara to accommodate changes as instructed by respective governments.

The three governments have reached consensus on the majority of areas; they are now working on a few pending issues with expectations that the final agreement would be reached as soon as possible.

A consortium of Turkish and Portuguese companies recently won the first tender for the Central Railway project. What would be China’s next move?

Good question. First of all, let me clarify what happened last year when a delegation from the Export and Import (Exim) Bank of China arrived in the country.

Exim Bank China signed a Memorandum of Understanding (MoU) with the Tanzanian government to jointly undertake a feasibility study of the project, and also committed itself to providing financial support upon establishing that the project was economically viable, and would contribute to social development.

It not like what has been reported, that money would be provided as a loan to implement the project. China fully understands the significance of the railway project to the country’s economy. The signing of the MoU between the two sides was to put the project on the right track towards implementation.

China has proven to be a reliable partner in developing the transport network in Tanzania, and is willing to fully support infrastructural development in the country. So, soon after the project is approved, we will encourage Chinese companies and financial institutions to be actively involved in the projects.

But Tazara will continue to have grants from China, while for the other lines, including the Central Railway, the means of funding will include loans that are mutually beneficial. The project should, therefore, be viable enough to allow the government to service the loan. All in all, there is huge potential for this project to boost revenue for the government – this is good for the people of Tanzania.

About the Central Railway upgrading and rehabilitation tender, covering Dar es Salaam and Morogoro, and being awarded to a consortium of Turkish and Portuguese companies, I understand that the contractor will be responsible for civil engineering, and not investment financing.

Companies from Europe, South Africa, Turkey, China and local companies took part in the tendering process; finally a consortium of Turkish and Portuguese companies was announced the winners. I personally congratulate the Turkish and Portuguese companies for winning the tender. There is no doubt that the tendering process was competitive.

Chinese companies told me that the process followed standard procedures in a very transparent manner. So, I would also like to congratulate the Tanzanian government. But, even after failing to win this particular tender, Chinese companies will continue taking part in future open tenders. We know there is still 900kms up for grabs. The Chinese government will encourage interested companies to fully prepare for future tenders.

A Chinese company is also working on the construction of the Bagamoyo Port alongside the Tanzanian government and Oman. What progress has been made so far?

There is a lot of interest from the Tanzanian government in the Bagamoyo Port, and the industrial projects to be constructed adjacent to it. The government has listed the project in its five-year development plan.

This project consists of two parts involving construction, modernisation of the port and development of the large area for the Special Economic Development Zone (SEDZ). The three sides have agreed on the construction and operation of the port. Currently, they are collectively designing the SEDZ.

However, there are disagreements. As far as I know, I am not quite sure, but the Chinese company wanted to develop the SEDZ in phases, proposing to develop 17 square kilometres first. On contrary, the government believes that the whole project could be developed at the same time.

So, they are still discussing. But I think implementing the masterplan in phases will satisfy the actual condition. This same company (China Merchants Holdings) implemented a similar project in China about 35 years ago, by building an industrial park first. The job was implemented in phases, first covering a total area of 11 square kilometres.

What I can also tell you is that 27 countries, including Djibout, Togo and the Democratic Republic of Congo have invited China Merchants Holdings to invest in the development of ports and industrial parks. The President of Togo, Faure Gnassingbe, travelled to Hong Kong to discuss with the company. However, I told my China Merchants Holdings colleagues to cherish the trust the Tanzanian government has put on them.

We are told that some Chinese companies have closed shop, and shifted to other countries. How many are these companies, and what are the reasons for the decision?

It is true. A few small-scale Chinese companies have left the country because of the new tax regime and labour policies. However, many others with even larger capacity are still arriving. The (Tanzanian) government is doing great in creating a better investment climate, by coming up with standardised tax collection measures and offering flexible policies on work permits. These incentives will, hopefully, attract more investors.

What is the future of Chinese investment in Tanzania?

Investment projects worth $9 billion are expected to be implemented. They are at different stages of discussions, therefore I won’t reveal them now.