What’s Wrong with Tanzania’s Investment? Trillions in Projects, but Where Are the Jobs and Progress?

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The Tanzania Investment Centre (TIC) highlights impressive mega investments worth trillions, yet the average citizen wonders: where is the impact?

With the Investment projects, where are the jobs for the locals? True, some investments have been or are being implemented, but the snarling pace of project executions does not match the figures we have been bombarded with over the years.

My question is, where is the problem? Could the problem be TIC, the investors or both?

This troubling concern comes when some projects stagnate, and many legal suits are on an ominous uptick, leaving me with one disturbing question: What is happening?

This article will not target any specific project out of concern of accusations of bias. Still, it will offer an overview of what I perceive is the root cause of the highlighted nightmares.

I have many issues with the way foreign investors are being appraised.

I see some investors are not living up to the hype. I could be a conduit for merchants of speculation and hoarding some prime assets in Tanzania to sell majority shares to the real investors or provoking a government-initiated termination through non-performance on their part that will attract a damning legal suit.

Some approved investors do not have the money, expertise, or experience in the areas they boast about in their paper qualifications. TIC is left deciding what to believe and what not to!

There are no verifiable statutory benchmarks that can guide conduct during project evaluation and implementation, and we want only ceding opportunities to scammers to punish us in legal challenges costing us millions of dollars.

I say so because no investor is legally required to lodge with the Central Bank in Tanzania the equivalent of money the project will need for local inputs.

Loading the whole amount with the BoT is unnecessary since some of the money will go to capital investments, which are unavailable locally and need to be outsourced overseas.

That is understandable. Consider an analogy in which, in an auction of certain prime assets such as buildings or cars, the winner must deposit a significant portion of the money needed to buy the prized item.

Why not have a legal framework similar to that of investors? We need laws that will flush out bogus investors from serious ones through initial non-refundable hard cash deposits to the Central Bank from investors to signify seriousness and solemn commitment.

Also, read Are Tax Exemptions Double-Edged Swords for Domestic Revenue?

Red flags will be raised when investors fail to deposit at least 25% of the investment with the BoT within six months of approval. Failure to meet this criterion within the stipulated period should lead to automatic disqualification, and re-tendering should be ordered immediately.

What we have are some quacks purporting to be serious investors. Once their projects are armed with TIC project approvals, they brandish TIC greenlights to seek and secure credible investors for favours.

These channels are deceitful and fuel legal litigation, now weighing heavily against us in international arbitrations.

Some recent cases involve investors in a tug-of-war over investments with third parties unknown to TIC during project evaluation and certification.

Approved investors use TIC documents to lure serious investors, seeking loans and offering share diversification or other inducements. When potential partners pull out, lawsuits demanding hundreds of millions emerge, while the actual investment project remains neglected. The goal is extortion, not genuine project development.

TIC is guilty of failing to advise the government to draft laws to curb this illicit conduct, delaying project implementation for years and costing the nation unspecified yet significant losses on lost opportunities. Then, there is another nightmare worth some keen exploration.

While all projects have action plans, those plans are not legislated as mandatory. In some cases, we have lost hands down in international lawsuits due to drawbacks in our legislation.

What is missing in our legislation is also being exploited by bogus investors as an overriding factor in why we should cough up hundreds of millions of dollars in actual and punitive compensation.

In some specific cases, the bogus investors speciously claimed that our decision to terminate contractual obligations caused them immeasurable damage!

But we had to kick them out because the investors had not done anything for years.

Where are the laws that mandate action plans as contractual obligations that should be implemented without failure, or will the investor be deemed absconded?

We have no such legislation which allows quacks to hold on to projects for years without fear of legal consequences. This is a naked official condonation of the looting of national resources!

Another controversy arising from some of the defences raised by investors who dragged us to international arbitrators was that their interactions with third parties went sour. My question has always been, where is that stipulated in the agreement?

Most of these third parties were not inked in initial project pacts by their legal names and written commitments.

These third parties zoom in like a second thought and should not obligate our government to part even with a single cent, but we end up meekly conceding wrongdoing!

Is it a matter of ethical capitulation, upstairs emptiness, or both remain fuzzy?

Our own handpicked lawyers attend these international arbitration avenues as if they were not thoroughly prepared and, at times, advance personal ailments to pre-empt their inability to defend us, leaving me with one question.

Why do we stoop so low at international levels? We have many legal levers to pull, but for some unknown reason, we choose to play dumb, costing the nation millions of dollars.

Is it an intentional stratagem or an unsolicited blunder? We may never know.

Then there is another area that is beginning to rear its ugly hydra. It was once reported in Parliament that a coal miner who had been approved asked for favours after his approval went smoothly.

Some of those favours included permission to export raw coal as an investment to his home country! Surprisingly, the government claimed negotiations were still ongoing. What is there to negotiate?

Either the miner fulfils his part of the agreement, or he pulls out. The way the government hastily surrenders to such investors slaps us with a black eye.

While we hold all four aces in all such engagements, an instilled beggar mentality defrauds us at an hour of national reckoning.

Losing hundreds of millions of dollars in most legal challenges is the best thing ever happening to us. We love to be on the losing side, but for whose benefit is a riddle we ought to keep interrogating every time we are whiplashed with such traumatic news.

Unless the whole international investment legal regime is given a second look, we must wilfully concede as gospel truth what the former president Mzee Mwinyi once concluded about us:

“…Tanzania ni kichwa cha mwendawazimu ambacho kila mtu anajifunza kunyoa….”

Mzee Rukhsa might have his mind on local soccer’s dystopia, but the legal investment environment embodies this careful observation in full throttle.

Whenever news of a major loss in international legal challenges surfaces, it afflicts an average taxpayer’s tax compliance with butterflies.

Any reasonable taxpayer asks herself, “Are we being squeezed out financially to feed the mouths of bogus investors with their local perpetrators?” 

The answer is that we have no business enriching looters at our collective pain. Some foreign investors have reduced themselves to “shamba la bibi,” and our bureaucrats seem to be sleeping in their comfort zones—which they shouldn’t!