How Samia drove economic diplomacy agenda in 2022

Dar es Salaam. The year 2022 will be remembered for the bold moves President Samia Suluhu Hassan and her administration made in a number of initiatives in order to implement the government’s economic diplomacy agenda.

The President made trips and held discussions with a number of leaders from various countries and organisations in an effort to boost Foreign Direct Investment (FDI) and increase Tanzania’s capacity to source funds to expedite the implementation of its strategic projects, including the Standard Gauge Railway (SGR) line, the Julius Nyerere Hydropower Project and construction of bridges and roads as well as water, education and health infrastructure among others.

Multilateral funding 

President Hassan’s candid discussions with multilateral institutions saw the International Monetary Fund (IMF) releasing an interest-free loan in September last year totaling $567.25 million for Tanzania’s balance of payment needs emanating from the outbreak of the Covid-19 pandemic.

In May 2022, the President appealed to the IMF for continued cooperation in supporting Tanzania’s production sectors that were affected by Covid-19.

The President urged the IMF Director General Kristalina Georvieva - during their meeting at Chamwino State House in Dodoma – for continued support in the implementation of its flagship projects including the SGR and the 2,115 Megawatts hydropower project.

In July, 2022, the IMF’s executive board approved a $1.04 billion, 40-month Extended Credit Facility loan arrangement for Tanzania, with an immediate disbursement of about $151.7 million.

The IMF said the financing package would assist Tanzania’s economic recovery, address spillovers from Russia-Ukraine war, help preserve macroeconomic stability and support structural reforms.

It was on that ground that the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) executive director Nebart Mwapwele said that despite the government’s efforts in creating an enabling business environment, 2022 was a struggle-filled year.

“Effects of the Russia-Ukraine war are still high due to the hiking of oil prices. Climate change, on the other hand, hits back as water scarcity and power shortages become part of normal life,” he told The Citizen.

However, Mr Mwapwele sees the light at the end of the tunnel as the government is working to revamp the private sector.

“We are expecting a more friendly business environment that will lead to growth in businesses and rise in investments as the country keeps on opening up,” he recounted.

As for the World Bank (WB), it was in September, 2021, that President Hassan held bilateral meetings with the Institution’s group president David Malpass in New York. During the meeting, they discussed Tanzania’s efforts to mitigate the impacts of Covid-19 pandemic, vaccinations and the country’s business environment and reforms being undertaken to facilitate private sector-led growth.

In May, 2022, the WB announced that Tanzania would receive a $550 million (Sh1.27 trillion) loan from the WB’s International Development Association (IDA) to unlock the country’s critical road and airport bottlenecks.

Crude oil pipeline, export trade boom

The improved relations between Tanzania and its peers within the East African Community (EAC) region saw a number of benefits for the countries in 2022.

Having effectively ironed out trade hostilities with Kenya last year, Tanzania’s exports to the country reached a record $118.6 million in the first quarter (January to March) of 2022, according to data released by the East African Business Council (EABC).

During the period Kenya exports to Tanzania were valued at $139.4 million.

Trade between Tanzania and Kenya has grown steadily in the past years, thanks to improved relations between the two countries amid ongoing elimination of non-tariff barriers.

Data from the Kenya National Bureau of Statistics shows that the value of Kenya’s exports to Tanzania jumped 43.39 percent to $376.6 million in 2021 compared to the previous year while Tanzania’s exports to Kenya grew 95.3 percent last year to nearly double to $449.9 million in 2020.

President Hassan went to Uganda last year and held talks with her Ugandan counterpart, Yoweri Museveni. It was during that time that the Host Government Agreement (HGA) for the tripartite East African Crude Oil Pipeline (EACOP) project was signed. Earlier in 2022, the Final Investment Decision agreement for the 1,443km EACOP from Kabaale, Hoima District in Uganda, to the Chongoleani Peninsula in Tanga, Tanzania, was reached.

Win EU’s approval gesture

President Hassan visited the European Commission (EC) headquarters in Brussels, Belgium in February, this year where, during a meeting with the President of the EC, Ersula Von der Leyen, she revealed that Tanzania will receive 425 million Euros (about Sh1.15 trillion) over a period three years to fund projects related to strengthening digitization, promoting gender equality and green cities.

Von der Leyen informed President Samia that Tanzania was one of the African countries that will benefit from the new EU-Africa: Global Gateway Investment Package of more than 150 billion Euros in support of Africa’s strong, inclusive, green, and digital recovery and transformation.

Upon returning from the trip to Belgium and France, President Hassan said in Dar es Salaam that apart from the 425 million Euros, Tanzania had secured a €178 million (Sh464.1 billion) concessional loan for the bus rapid transit (BRT) project from France.

She said while in France, an agreement for the refurbishment of Terminal 2 facilities at the Julius Nyerere International Airport in Dar es Salaam was signed.

Apart from securing funds for the development of airport facilities at Kigoma, Shinyanga and Pemba as well as for environmental projects in some urban centres, Tanzania was also to receive €450 million in Covid-19 relief funds from the European Union (EU).

Bullish EU investors

In March, 2022, the EU head of delegation to Tanzania, Mr Manfredo Fanti, revealed that investors in the 27-member European bloc were happy with initiatives that the East African nation was taking to improve its business climate, saying the move would foster Foreign Direct Investment (FDI) inflows.

In its 2022 EU Investment in Tanzania Report 2022, the EU said cumbersome administrative procedures, unfriendly labour laws, a harsh taxation system, red tape in acquiring land for investment, and uncertainty surrounding work and residence permits as factors behind a drop of its investment from 2015, with FDI inflows dropping by a third.

But with recent improvements, the report said in March, 2022 that investors were cautiously optimistic that statements by the president would be translated into tangible actions over the short to mid-term.

Going by the report, the EU’s exports to Tanzania were valued at €856 million (about Sh2.1 trillion) last year, while imports stood at €456 million (about Sh1.1 trillion).

Some 100 companies from the EU have invested in the country, creating an estimated 151,000 jobs, according to the report that was jointly prepared by the EU Delegation and the European Business Group (EUBG).

In May, 2022, the Ambassador of France to Tanzania Nabil Hajlaoui, said the French public and private commitment for Tanzania over the next five years will in total represent up to $4.2 billion (about Sh9.7 trillion) in investment.

During that period, a delegation of 40 French companies was in Tanzania, seeking deals in sectors ranging from transport, energy, water treatment, agro-food to health.

UAE, Egypt to inject $10bn

In February, 2022, President Hassan met with Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the United Arab Emirates (UAE) and Ruler of Dubai during the Expo Dubai 2020 (which took place this year). President Hassan also met with Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi. Following the meetings, the governments and private companies of the two countries signed 36 Memorandum of Understanding for a total investment of more than $7.49 billion and an estimated 200,000 new jobs over a four-year period, benefitting sectors of energy, agriculture, tourism, infrastructure and transport technology among others.

Following her late 2021 visit to Egypt, President Hassan secured a $3 billion (about Sh6.9 trillion) investment from Egypt-based Elsewedy Development Limited.

The Egyptian firm started building an integrated industrial park at Kigamboni in Dar es Salaam as part of the arrangement in early 2022.