Tanzania to become India’s second-biggest trading partner in Africa

There are many success stories in the India-Tanzania diplomatic engagement. For example, President Samia’s visit to India. State visits might not be new, but what was new in this visit was elevating the relationship between our two countries to that of a strategic partnership. India is Tanzania’s second strategic partner, and Tanzania is India’s fifth strategic partner on the entire African continent and the first in East Africa.

This strategic partnership goes beyond politics; it includes economic affairs, trade and investment, and development cooperation. It provides us with a framework under which we are going to discuss everything, and we will have a regular, high-level review mechanism to see that we are on the right trajectory.

Another success would be the inauguration of the India Institute of Technology (IIT) in Zanzibar. The government of India, for the first time, agreed to set up the campus outside India; the choice was the global south, and we found Zanzibar to be a suitable place. That in itself is a big political statement, which shows that we find this place special.

What is key in this strategic partnership, and how can it be sustained?

The reasons why this relationship was elevated are primarily because we felt that the ground was already set. For example, if we look at trade, two years ago our trade totalled $2 billion; last year we crossed the historic milestone of $6 billion. Going by the trend, this year we will cross $7 billion in bilateral trade.

Last year, Tanzania was India’s fourth-biggest African trading partner; this year, Tanzania is set to become India’s second-biggest trading partner in Africa after South Africa. Our relationship has now gone beyond government to government; the private sector is now linked to that.

Why did you decide to put a special focus on investing in Zanzibar, and why now?

The question of why now is linked to the policy of the Indian government. Over the years, we have invested in Tanzania in various fields, such as engineering and the medical space. IIT is a different game. We all know that global technology CEOs and CEOs of Fortune 500 companies all come from IIT. So we decided to take IIT outside of India; Africa felt like a natural choice. One of the reasons we chose Zanzibar was the proactiveness of the government. They agreed to host it, and within no time they provided us with a campus; in three months, the campus was retrofitted into an IIT-standard campus. This is unthinkable in any part of the world. I will remember this in my diplomatic career as commendable leadership by the President of Zanzibar. On July 5, we signed the MoU; in October, we had students on campus; and on November 6, we inaugurated. This remains a case study for me. Probably, if I write a book, I will title it ‘How leadership can make things happen’.

It is projected that trade between Tanzania and India will soon exceed $7 billion annually from the current $6.4 billion. What are the critical trade areas between the two countries, and how can they be improved?

At the moment, 33 percent of Tanzania’s exports to India is gold; the rest are largely agricultural produce. Based on my travels to 24 regions in Tanzania, where I visited agriculture-rich regions such as Mbeya, Njombe, and Iringa, agricultural exports will grow as India’s population increases, as will the middle class and purchasing power. This will increase demand.

When we look at mining, a lot of Indian investment is coming into Tanzania’s mining sector. While it is less talked about, investment in areas such as coal, gold, and lithium is increasing. So the mining sector's exports, which are now limited to gold, will increase.

India remains Tanzania’s biggest export destination. There is also an opportunity with the proposed set-up of an industrial park; many more Indian investors will come and invest in Tanzania.

You recently cited logistical challenges in Tanzania as impediments to trade, which make agricultural produce such as avocados expensive for consumers. How much is Tanzania losing by failing to address this challenge?

It doesn’t require much analysis to conclude that Tanzania is missing out on opportunities. For example, I was at an avocado processing plant in Njombe, where they process avocados and export them to India through Mombasa. The other option is to use air cargo, which is very costly. However, using Mombasa Port is a long and expensive logistical process. We are now hearing about Dar es Salaam port being modernized. It should be modernized to the extent that it becomes global and has a smooth inflow and outflow of cargo. This would be a big boost for transit and bilateral trade.

Tanzania is moving in the right direction. The plan to develop the standard gauge railway, roads, and port will boost trade because all three are interlinked and will make Tanzania the main gateway for the East African region.

What key lessons can Tanzania learn from India to avoid being overwhelmed by the rising population growth that threatens access to social services?

We learned in our way that a large population can be both a liability and an asset. Our efforts over the years have been to use available resources to skill our people and to convert our demographic dividend as the youngest country into a lasting asset. We realized that without skilling the youth and providing them with a culture of entrepreneurship, you cannot gainfully employ everybody; no government can.

Despite the overall success of your mission here in Tanzania, what do you list as challenges that still need to be addressed?

Let me be candid on that. Even though a lot of initiatives that we started have materialized, there is still more potential for economic endeavours between our two countries. For example, we took the initiative for local currency trade and proposed using rupees and the Tanzanian shilling. We are yet to operationalize that to full strength. I have not seen the required enthusiasm from Tanzanian stakeholders. This is something I would advise my successor to work on.

The second area of immense opportunity is digital technology. India is far ahead in this area, and we would like to work with Tanzania on this. We might have started late, but there is still an opportunity that will change the way our corporations interact with each other.