How Samia’s economic diplomacy has borne fruit in just two years

Dar es Salaam. The past two years have witnessed a resounding U-turn in the handling of Tanzania’s international relations that has put emphasis on economic diplomacy.

From the handling of the measures to control the spread of the Covid-19 pandemic to trips to various countries within East Africa and beyond, President Samia Suluhu Hassan has left no stone unturned in the execution of her economic diplomacy agenda.

The Covid-19 pandemic came at a time when relations between Tanzania and some of its development partners were already tattered, so much so that in April 2019, the country was criticised by the International Monetary Fund (IMF) for unpredictable economic policies and unrealistic statistics in a report that the John Magufuli administration blocked from publication. President Hassan ascended to power at a time when Tanzania was being regarded as the ‘odd one out’ in the region and beyond due to its handling of the Covid-19 pandemic.

The differences in steps being taken by countries in East Africa to stem further spread of the coronavirus were so vivid that in May 2020, Kenya decided to close its border with Tanzania after it was established that some of the cases it [Kenya] had registered had actually crossed the border.

That unprecedented move in the over two-decade-long history of the East African Community came as Kenya said it had blocked 78 truck drivers from Tanzania from entering the country. At that time, Tanzania was a Covid-19 denier.

The official government position at that time was that Tanzania was free from Covid-19, with the then president, the late John Magufuli, openly expressing doubt about the safety of masks and vaccines. But having ascended to the presidency on March 19, 2021, President Hassan announced a change in approach to the Covid-19 pandemic to send a message to Tanzania’s trading and development partners that the country was no longer the ‘odd one out’.

President Hassan announced that Tanzania would have to reevaluate its stance on Covid-19 and announced in June 2021 that a total of $470 million would be required to roll out the vaccination programme. And the results have been vivid and almost immediate. The IMF executive board approved in September 2021 a total of $567.25 million (about Sh1.3 trillion) in interest-free loans under its Rapid Credit Facility and Rapid Financing Instrument for Tanzania’s balance of payment needs emanating from the outbreak of the Covid-19 pandemic.

During the period, the President has held talks with various development partners, including with the IMF Director General Kristalina Georvieva during their meeting at Chamwino State House in Dodoma, about the Fund’s continued support for Tanzania on the implementation of its flagship projects, including the Standard Gauge Railway (SGR) and the 2,115 megawatt Julius Nyerere Hydroelectricity Power Project.

And, in July 2022, the IMF’s executive board approved a $1.046 billion, 40-month Extended Credit Facility loan arrangement for Tanzania, with an immediate disbursement of about $151.7 million. The IMF said in a statement that the financing package would assist Tanzania’s economic recovery, address spillover from Russia’s invasion of Ukraine, help preserve macroeconomic stability, and support structural reforms. And now, it is apparently on the back of such a cordial relationship that just last month (February 2023), the IMF exuded its optimism over Tanzania’s economic growth prospects, saying a number of sectors have shown some recovery signs in 2022. In a statement released after the completion of a mission from the IMF, which had been in Tanzania since February 8, 2023, to conduct the first review of the country’s forty-month programme under the Extended Credit Facility (ECF)-supported programme, the team also exuded confidence in efforts by President Samia Suluhu Hassan’s administration to strengthen economic recovery after the global Covid-19 pandemic.

The statement, issued by the team leader, Charalambos Tsangarides, urges the government to continue to safeguard the economy from spillovers of the war in Ukraine.

Similarly, in September 2021, President Hassan held bilateral meetings with World Bank Group President David Malpass in New York, the United States, where they discussed Tanzania’s efforts to mitigate the impacts of Covid-19 pandemic, accelerate vaccinations, the country’s business environment, and reforms being undertaken to facilitate private sector-led growth.

A number of exchanges have taken place since then, including the one on May 20, 2022, when the World Bank announced that Tanzania would receive a $550 million (Sh1.27 trillion) loan from the World Bank’s International Development Association (IDA) to unlock the country’s critical road and airport bottlenecks.

And just on Wednesday, February 28, 2023, the World Bank and Tanzania signed a total of $579.93 million in aid to finance maternal and child health as well as water programmes.

Much as the money comes as loans, it should also be noted that concessional ones make much more sense than commercial ones that the country had become accustomed to in the recent past. In an effort to improve relations with neighbouring countries, President Hassan visited three countries within the region.

She went to Uganda and held talks with her Ugandan counterpart, Yoweri Museveni, where the Host Government Agreement (HGA) for the 1,443-kilometre East African Crude Oil Pipeline (EACOP) project—which will run from Kabaale, Hoima District in Uganda, to the Chongoleani Peninsula in Tanga, Tanzania—was signed.

With strained relations between Tanzania and Kenya, emanating from the countries’ different approaches to tackling the Covid-19 pandemic and some mistrusts, Kenyan authorities banned maize imports from Tanzania and Uganda in April 2021, citing a high level of aflatoxin above the required minimum of 10 parts per billion. But accompanied by a delegation of members of the Tanzanian business community, President Hassan made a two-day state visit to Kenya in May 2021, which was focused on improving trade relations between the two countries. Data released in August 2021 showed that Tanzania’s maize exports to Kenya had jumped by more than six times to 118,329 bags in May after President Hassan’s visit, which saw Nairobi lift a ban.

Information released by Kenya’s Agriculture ministry said in August 2021 that Tanzania’s export volumes rose from 16,137 bags in April to a monthly record of 118,329 in May after President Hassan and her Kenyan counterpart Uhuru Kenyatta reached a bilateral deal to abolish the restrictions that Nairobi had imposed on Tanzanian maize.

President Hassan also visited the European Commission (EC) headquarters in Brussels, Belgium, in February of last year (2022), where, during a meeting with the President of the EC, Ersula Von der Leyen revealed that Tanzania will receive 425 million euros (about Sh1.15 trillion) over a period of three years to fund projects related to strengthening digitization, promoting gender equality, and green cities.

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

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, the EU cited 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 in 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.

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.

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 Expo Dubai 2020 (which took place this year). President Hassan also met with Sheikh Mohamed bin Zayed, the Crown Prince of Abu Dhabi.

Following the meetings, the governments and private companies of the two countries signed 36 Memorandums of Understanding for a total investment of more than $7.49 billion and an estimated 200,000 new jobs over a four-year period, benefiting sectors such as 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 is currently building an integrated industrial park at Kigamboni in Dar es Salaam as part of the arrangement. Trip to the US generates $1 billion in investments. A meeting between President Hassan and US Vice President Kamala Harris on April 15 saw the two leaders pledge strong ties between the two nations.

During the tour, various US companies pledged almost $1 billion dollars in investments to Tanzania.