TanzaniaInvest conducted an exclusive interview with Mary Nagu, Minister of State Prime Minister’s Office for Investment and Empowerment. TanzaniaInvest and Ms. Nagu discussed the role of Foreign Direct Investment in Tanzania, the oil and gas industry, and Tanzania’s relations with China.
TanzaniaInvest: What is the role of foreign direct investment (FDI) in social and economic development within the 2025 vision for Tanzania?
Mary Nagu: When you look at Tanzania’s economy according to GDP and the social services index we are still a poor country with low savings.
Many people only have enough to meet their basic needs, and when basic needs are not met, savings are low. There is no investment without savings.
We also don’t have banks that are willing to loan so we look for FDI to fill in the gaps by generating income, and increasing GDP and jobs for youth.
Youth make up the bulk of Tanzania and they want to use their talents and abilities to do something, so we must create opportunities for them.
Being a poor country, the portion of our income going towards education is not enough, so we want FDI in order to generate income, increase economic growth, create employment and bring in technology to increase efficiency and productivity- these are important measures for developing a country.
On the other side of the coin, Tanzania is a very strategically located county in the East African community. We are also in SADC and COMMESA. Put the 3 regional blocks together and you have a population of 700 million people. We look for FDI but we also look for investors in and around Tanzania who would like to invest here.
Consider the lot of Tanzania’s natural resources– gas, oil, industrial minerals, and gemstones. We also have arable land and opportunities in agriculture.
{xtypo_quote_right}Consider the lot of Tanzania’s natural resources– gas, oil, industrial minerals, and gemstones. We also have arable land and opportunities in agriculture.{/xtypo_quote_right}
The Arabs don’t have land to grow food, but they have the petrol dollars and we need them to come and assist in extracting oil and invest in agribusiness so that Tanzania and the Arab countries can become self sufficient.
TI: What is the government doing to insure that you don’t follow the path of other African countries that have generated profits from oil and gas but the wealth is not shared among the general population?
MN: Our background is in command economy so traditionally Tanzanians share whatever they have, however little that is.
We don’t want lopsided growth. We want inclusive growth and we’ll be the last people to see to it that the wealth from gas and oil is a curse.
We want our natural resources to bring development and good life to all people. One way to do that is through sound policies and implementation.
When the flow of FDI comes to the country we have to guide it so that investment returns benefit our people.
TI: Can you give an example? As in, are foreign investors compelled to hire local workers?
{xtypo_quote_left}We don’t want lopsided growth. We want inclusive growth and we’ll be the last people to see to it that the wealth from gas and oil is a curse.{/xtypo_quote_left}
MN: We don’t force foreign investors to employ local people but we encourage them to do so and we try to create a conducive environment for them to employ Tanzanians who have the education and expertise that investors want.
I’m sure nobody wants to bring experts in form elsewhere if they can be found in the country. If the right environment exists investors won’t come from other countries with employees and neglect the youth here.
In order to have balanced and inclusive growth– with gas found in the south, for example– we will use profits to generate electricity and produce fertilizer because most Tanzanians work in the agriculture sector.
If we want grown to be inclusive we must develop agriculture. We have so many mines that are importing explosives from outside but we should be producing them here to create employment for our people.
So the wealth from gas must be used to develop sectors that will benefit most Tanzanians.
We want economic growth to be sustainable, and by it’s nature, gas is extracted and will be exhausted in years to come, so we need to develop infrastructure such as roads, railways, and airports that will open room for other ventures when the gas is finished.
TI: Is there a competitor to Tanzania?
MN: Some neighboring countries are competitors, but when it comes to natural resources we are luckier that any other country.
Take for example our resources that generate power. We have coal, gas, water, and uranium, as well as wind power and the potential of generating geothermal power.
So when it comes to natural resource endowment we have no competitors, however if it were only natural resources that bring development, then many countries would be developed.
What we need is the capitol to turn natural resources into usable products. This is what Africans are lacking- our ability to mobilize and organize ourselves in this arena.
TI: Before Tanzania used to address the West but now there is a shift to Asia. What can you say about that?
MN: The surplus money today is not in Western countries. All of us are going to China, India, Brazil and the Gulf for FDI to diversify sources of capitol.
Currently we are working with China more than ever, though China has been our friend for a long time. The #1 FDI investor in Tanzania is actually the UK.
We don’t need to change our policies, but we’ll be open to the countries who want to invest in our country.
For example when we wanted to build a gas pipe from Mtwara to Dar, the companies we approached found the project unviable, but when we approached the Chinese they were willing to work with us to build the pipe.
When we wanted to build a railway to the south when we were fighting apartheid, and again, the countries we asked for assistance found the project unviable.
{xtypo_quote_right}What we need is the capitol to turn natural resources into usable products. This is what Africans are lacking- our ability to mobilize and organize ourselves in this arena.{/xtypo_quote_right}
The Chinese however, saw it as a good opportunity and they came and build the railway. Today there are IMO, coal deposits and agriculture all along that railway making it very viable, even though it originally was not. The Chinese are forward thinking.
TI: What are the main challenges?
MN: When your population has no ability to invest there is a fear that they will be tossed aside and not participate in investment or the creation of the world.
For example, land grabbing is due to fear of the unknown. We have to sensitize those fears by educating and mobilizing people.
We lack the ability to come up with balanced contracts and we need to develop contracts that will benefit people.
Unfortunately as I mentioned before, we are not producing heavy machinery, which is a problem for us here.
However, we are also very lucky and must thank God for what we have in Tanzania. The fact that President Obama was here and showed support for investing in Tanzania will also help us attract investors.
TI: You mentioned that President Obama was here, I recently read that Japan has decided to make Tanzania the center for investment for Africa.
What do you think about Tanzania being in the spotlight? We are a strategically placed, peaceful country that is easy to do business with.
MN: When I did my research a while back, I learned that the economic growth rate that will alleviate poverty in Tanzania is 11%.
We are currently at 7% and it’s not enough, but when we complete our important infrastructure projects I see no reason why we won’t reach the 11% mark.
I insist that this growth be inclusive and that the profits we get from natural resources such as oil and gas are directed towards agriculture, education, health, and social services.
TI: So can we say Tanzania is the place to be in Africa?
MN: For sure. I have no doubt in my mind.
