Tanzanian tycoon, Rostam Aziz, calls on international creditors to reduce rates for Africa

Dar es Salaam. Business magnate Rostam Azizi has urged international financial institutions to provide African nations with more favourable lending rates comparable to those extended to Europe, America and Asia.

Speaking at the Financial Times Africa Summit 2024 in London, Mr Aziz highlighted the need to end geographic bias in global lending practices, pointing to data that shows Africa’s lower debt default rate.

“Africa’s default rate is below two percent, compared to Europe’s five percent, Latin America’s 12 percent and the United States' 6 percent, according to a 2021 Moody’s report covering 800 companies worldwide.

"Despite this, we’re penalised with higher rates,” Mr Aziz said, according to a statement that was made available to the media in Dar es Salaam yesterday.

He urged G7 nations to implement policies requiring global banks to allocate specific loan quotas for Africa, emphasising the need for equitable and affordable access to funding at scale to address the continent's development needs.

He also pointed out mis-rating by rating agencies, noting discrepancies where countries such as the Philippines and Iraq receive lower interest rates than Botswana, despite Botswana’s investment-grade economy.

“This shows a misrepresentation of rates and pricing for Africa. We need urgent corrective actions,” he explained.

During his address, Mr Aziz underscored Africa's struggle to access loans with affordable rates and called for international organisations and financial institutions to end this geographic discrimination by setting interest rates on par with other world regions.

 DP World deal

Commenting on Tanzania’s recent agreement with DP World to manage the Port of Dar es Salaam, Mr Aziz reiterated that the deal was the best choice for the nation.

“Tanzania is in a strategic position geographically, with seven neighbouring countries relying on the Dar es Salaam port,” he said, noting that previous inefficiencies resulted in long wait times for ships, which increased costs for end consumers and strained the economy.

He said that the search for an operator with the necessary experience and regional interest led to DP World as the logical partner.

“When we looked around, DP World stood out as the best option based on merit. Our experience with Hutchison Ports in Hong Kong was not satisfactory, given the geographic distance and limited improvements.”

Mr Aziz added that with DP World, Tanzania can improve efficiency and alleviate logistic burdens from port inefficiencies.

In October last year, Tanzania signed agreements with Dubai state-owned ports operator DP World to operate part of the Dar es Salaam port for 30 years.

The government signed a Host Government Agreement (HGA) and lease and operation agreements with DP World to operate berths four to seven at the port.

 LNG caution

Mr Aziz also addressed Tanzania’s approach to potential LNG (Liquefied Natural Gas) projects, indicating that the country is cautious due to past challenges in the mining sector.

“In the past, we faced issues to the point where a company almost shut down operations. However, we reengaged and negotiated a beneficial framework with Barrick, which is now one of the largest taxpayers in Tanzania,” he said.

“We aim to replicate this successful framework in the LNG sector to ensure our economy and citizens benefit.”

According to Mr Aziz, the challenge Tanzania faces is ensuring local companies can participate fully, as much of the work currently goes to foreign entities due to capacity limitations.

“The change we need is to increase local participation from the construction phase onwards, so Tanzanian companies can truly benefit from these investments.”

The Financial Times Africa Summit brought together heads of state, central bank governors, UK ministers, IMF and World Bank representatives, and other global finance stakeholders.

In July last year (2023), Tanzania signed the initial HGA with energy majors Shell, Equinor and ExxonMobil for the country’s $42 billion (about 117 trillion) LNG development.

The HGA outlines the rights and obligations of the government and national oil company, as well as the conditions under which the onshore project will be developed and operated.