Why Tanzania attracts the European Investment Bank

Beyond signing the agreements, we also want to see action on the ground. So we are here to follow up.

This financing support has already reached over 10,000 beneficiaries, out of which over 3,000 are women-led enterprises and over 900 are blue-economy enterprises and co-operatives in Zanzibar.

How have the policies being implemented by the current administration enabled you to invest in the country?

We are getting a very positive message from the government. They want us to engage, and so does the European Union. So that is exactly what we are doing. We have specific teams that come and look at projects. We will have a team that will come and look at the Bus Rapid Transit (BRT) and see if we can support the next phases.

The aspiration is that Africa will one day become self-sufficient on many levels, including financially. Is this ever a factor in how EIB strategises its approach with developing countries when you extend credit to the public and private sectors?

Openness, education, infrastructure, and health are requisites for development and becoming self-sufficient. Cooperation between the EU, Tanzania, and other African countries is beneficial to all parties. We are not here to grab something and run away; we are here to have strong, long-lasting, and stable partnerships.

You signed €270 million for gender and blue economy programs in Tanzania in 2023 through CRDB, NMB, and KCB Bank. How do you ensure that this support trickles down to other SMEs who aren’t direct beneficiaries?

We work with our partners, in this case, local banks, to follow up on how the money is being used. We have agreed on specific themes, such as the gender aspect, blue economy, and social impact, and we follow up on that. We have so far reached over 10,000 small and medium-sized businesses and are looking to impact even more. Beyond monetary support, we also provide technical assistance so that local banks can support more SMEs.

 Unlocking funding for MSMEs continues to remain a challenge, particularly due to restrained regulatory elements despite being the economic lifeblood. Beyond engaging with banks, are there talks with the government in terms of improving the business environment for MSMEs so that your financial support can penetrate even further and be more effective?

 We are not a bank that goes into big policy discussions with the government; that is more of a role for the World Bank. However, all countries have a lot to do when it comes to improving the business environment.

SMEs are the backbone of the Tanzanian economy and the economies of many African countries. Helping them thrive is critical to strong GDP growth.

 Africa faces macroeconomic challenges, and Tanzania, like many other countries, uses fiscal measures to address the challenge. This then brings discontent. What more from a support approach can be done to address citizen discontent?

That is such a crucial issue. The whole world has gone through dramatic years recently. Covid-19 devastated economies in Europe, and Africa recorded many deaths. Then came the Russian invasion of Ukraine and the inflation shocks it sent through the world economy. It is not a surprise that people are stressed because everything has become more expensive. At the same time, governments have become constrained because they cannot borrow from international markets. After all, rates have become so high for them.

Banks like EIB and other multilateral banks play a very important role. When private markets are no longer conducive, we step in to support countries that need capital.

EIB Global was established in 2022 to provide more support to other countries beyond the EU. Has your vision been achieved?

We have been active in Africa since 1965, so we are an experienced partner here, but we wanted to be even better, hence the creation of EIB Global. One of the things we do more extensively now is form partnerships to have more impact.

The blue economy remains an important agenda for the Zanzibar government. However, fears of the depletion of marine resources are increasing. How are you supporting efforts to curb illegal marine activities to sustain the blue economy drive?

Sustainability is key to these environmentally and socially inclusive businesses. This is a dialogue we always have with our partners. A bank is not just an institution with a very big balance sheet; we also have competent people beyond banking, such as civil engineers, environmental experts, and health experts, who engage in conversations to see to it that the money comes to the best possible use.

 Some of the projects you have invested in in Tanzania include Bus Rapid Transit (BRT), and you’re also looking to partner in power supply through the Tanzania-Malawi power interconnector. These are some of the areas with great potential but also challenges. How will you address the challenges?

We have a team that is coming to look at what challenges the BRT is facing and have a conversation with the management to see how they deal with the challenges. At times, it might seem like we have a long process before we conclude, but it is important to do due diligence because we want to have safe ground on both sides of the table.

Power supply is a key issue in many countries. We are the EU climate bank, so our starting point is always climate; we look at how we can improve to adapt to climate change. So the interconnection between electricity producers in different countries becomes more important. We try to balance the system by using more renewable energy sources. The Tanzania-Malawi power project is a good example of that.