A recent conference in London successfully highlighted the vast investment opportunities now available in Tanzania.

In April, over 200 delegates attended the UK Tanzania Investment Forum in central London. The Tanzanian Government, represented by its Vice President, key ministers, central bank governor, investment centre and several major businesses, came to the UK for the purpose of engaging with the investment community from the UK, Ireland and mainland Europe. With over 800 km of coastline, access to six landlocked countries, the world famous Serengeti Plains, Zanzibar and Mount Kilimanjaro, the United Republic of Tanzania is both one of the most naturally stunning and best positioned developing markets in the region. In 2007, The Tanzania Investment Centre endorsed almost 600 projects, creating an estimated 70,000 jobs. Since 2002, foreign direct investment has increased by 1000% in the agricultural sector, 900% in tourism and 500% in manufacturing.

In her introductory speech, H.E. Mwanaidi Sinare Maajar, High Commissioner of Tanzania to the United Kingdom, made clear the message of the day. "Now is the time to invest in Tanzania."

"The theme of our Conference today is "Invest in Tanzania, a country of limitless opportunities", she said. "We have had Investors Conferences in the past. But today it is different in one important aspect. There is a good presence here of companies already established in Tanzania and who are also sponsors of the Conference."

Tanzania is both one of the most naturally stunning and best positioned developing markets in the region.

Referring to the speakers and chairs of the conference sessions, most of whom were from the private sector in Tanzania, the High Commissioner added, "In respect of those representing international companies in Tanzania I would like to say this. They went to Tanzania, they saw the opportunities, they are conquering the challenges and they came here to tell it all."

Tanzania’s Minister for Trade and Industry, Dr. Mary Nagu, welcomed delegates to the event while also officially launching the Tanzania Investment Report 2008.*

"This report highlights opportunities available to the private sector today," she said. The report offers a "critical and accurate" analysis of Tanzania, looking at the country’s economy and its emergence as the fastest growing economy in the region. Several sectors, including agriculture, energy and mining – 1500 prospective licenses have been granted in the last 10 years – offer investors enormous opportunities within the country.

The Minister cited the development of infrastructure, one of the key issues for the country’s development, as a golden opportunity as well as tourism and manufacturing.

The report, which also contains interviews with President Kikwete, the Governor of the Bank of Tanzania and people with first-hand knowledge of doing business in the country, details the business climate and the investment opportunities in Tanzania.

Many of Tanzania’s public sector enterprises have been earmarked for reform and cut across a number of sectors including transport, energy and communications, while the country’s impressive growth rate has had a positive impact on investor confidence.

Endowed with a bounty of mineral and agricultural resources, Tanzania has one of the best performing economies in sub-Saharan Africa. According to the IMF, "Sound policies have contributed to robust growth and moderate inflation, placing Tanzania among the leading successful reformers in Africa."

Tanzania’s newly appointed Central Bank Governor is Professor Benno Ndulu and, in his presentation, the former World Bank official highlighted the country’s fastest growing sectors.

"Mining and quarrying have grown at a rate of 15.9% and manufacturing at 8.2%," he said. "The construction sector has grown very rapidly at a rate of 11%, with transport and communications and the financial sector at 8% and 9.7% respectively."

The country has diversified further from its traditional export base. Non-traditional export earnings in 1998 made up 69% of export earnings but, by 2007, this had risen to 91.5%. The biggest contributor to this change has been tourism and today, manufactured products and transportation also exceed the earnings from traditional exports.

Through effective economic management, the country’s inflation rate has moved from 34% in 1994 to single digit levels for the past 9 years. Since 1995 there has been a ten-fold increase in foreign exchange reserves while interest rates have also dropped to single digits. A rapidly growing financial sector has seen growth from 2 banks to 34 banks and the introduction of modern payment systems.

"A major feature of our economy is the stability of the growth path," said the Governor. "In a bad year, we now still produce 4-5% growth because of the diversification of our economy."

Professor Ndulu highlighted three key areas of opportunity in Tanzania."There are opportunities for building on our rich natural resource base through agriculture, minerals, tourism and fisheries. We also offer an avenue for transit trade as Tanzania is a gateway to the Great Lakes Countries of DRC, Rwanda, Burundi, Malawi, Zambia and Uganda. Our agro industry also offers an area for value adding and export."

Tanzania is Africa’s third-largest gold producer after South Africa and Ghana, and the country has attracted investments worth US$2.5 billion from a number of mining corporations such as Barrick Gold of Canada and AngloGoldAshanti of South Africa.

Agriculture makes up 26% of the economy and despite the rapid growth of other sectors, plays a key part in the country’s development, employing over 80% of the rural population. The sector, largely dominated by subsistence farmers, offers huge potential for large-scale commercial farming through the introduction of modern farming techniques, technology and capital. Particularly attractive to investors, said the Governor, is the option of enhancing scale, productivity and value addition through outgrower schemes.

Tanzania’s energy sector offers opportunities in electricity generation, natural gas and oil. The Tanzanian Government has indicated its intention to deregulate the energy sector, allowing private competitors to challenge the state-owned company’s monopoly in order to connect more citizens to the benefits of electricity.

"There are opportunities for building on our rich natural resource base through agriculture, minerals, tourism and fisheries."

Tanzania’s energy needs also make solar energy another important area of investment, especially because only about 10% of an estimated 40 million people have access to electricity.

As a developing economy, Tanzania does face challenges despite its successes to date, said Professor Ndulu. Maintaining macroeconomic stability in the face of the rising costs of food and oil will prove a test, as will the ability to maintain exchange rate stability.

The country will also have to manage credit expansion while keeping a check on inflation. There has been an increase in savings mobilization through loan syndications and IPOs in the country but the Government will have to continue to widen the tax base to meet any gaps in financing.

One of Tanzania’s key stumbling blocks to rapid economic growth is the poor state of much of the infrastructure, from her roads and railways to her airports and ports. Investors have been encouraged by the Government to put their money into infrastructure, with a number of incentives available to help ventures get off the ground.

Seeing challenge as an opportunity was a theme echoed by Anne Barrington, the Irish Ambassador to Tanzania. In her address, the Ambassador pointed out that "one of the great challenges is getting the infrastructure Tanzania needs in place – and that is a great opportunity for the private sector."

The conference programme targeted the key sectors of Infrastructure Development, Mineral Exploration and Manufacturing, Tourism and Business Services and a number of specific investment projects were discussed in detail.

Organised by DMA (Developing Markets Associates), the successful Forum was followed by an evening reception and a one day Diaspora event for Tanzanian migrants living in the UK.

* Available free through www.dmassocs.com Images: Courtesy of DMA (www.dmassocs.com)