Obama responds

BY STAFF WRITER

30th June 2013

US president Barrack Obama

 As Tanzanians await with bated breath the arrival of the world’s most powerful leader, Barrack Obama, tomorrow (Monday), the question that lingers in the minds of economist and trade experts is whether the US will succeed to outsmart its rival, China, which has so far gained a strong momentum in Dar es Salaam in terms of investments, loans and grants.

But on Saturday, Obama responded to his critics, urging Africans to ask more questions about the lop-sided deals they seal with some foreign investors, while dismissing talk of a Chinese and US scramble for influence on the continent.

As Obama lands in Dar on Monday, he will be greeted with mixed reactions; the majority of people here see him as a symbol of inspiration to the ‘Joshua’ generation, while a minority believe his tour is about taming growing Chinese influence in the country as well as marketing American business ventures.

Obama is the third US president to visit Tanzania over the past decade. The first US president to touch the Tanzanian soil was Bill Clinton who toured Arusha, while the second was George W. Bush who came to Tanzania in 2008 and spent four days here.

While Clinton introduced the Africa Growth Opportunity Act (AGOA), to expand US trade and investment with Sub-Saharan Africa, stimulate economic growth and to facilitate sub-Saharan Africa’s integration into the global economy, Tanzania unfortunately failed to exploit the opportunities to trade with the Americans.

But even after these historic visits by two US presidents in the past decade, China still managed to outsmart America in terms of trade and investment in Tanzania.

Obama on Saturday pledged support for the push to have the African Growth and Opportunity Act (Agoa) extended. Speaking during a media briefing at the Union Buildings in Pretoria, Obama said he supported moves to "improve" and "renew" Agoa.

Agoa -- which allows Southern African countries to ship certain products to the US tariff-free -- expires in 2015. Obama said he would first have to convince the US Congress, which had to approve the extension of the Act.

But asked by a journalist in Pretoria whether his tour in Africa was aimed at taming the growing Chinese influence as well as joining the race for the continent’s resources, Obama urged African nations to question whether those who come to invest in the country and its natural resources were seeking to benefit Africans, in terms of jobs and " adding value" to local economies, or were only out to enrich themselves and a few top leaders.

The US president urged Africans to ask more questions about the lop-sided deals they seal with some foreign investors, while dismissing talk of a Chinese and US scramble for influence on the continent.

During a landmark visit to the continent of his father's birth, Obama said yesterday in Pretoria, South Africa, that he welcomed renewed interest from larger emerging markets.

"I actually welcome the attention that Africa is receiving from countries like China and Brazil and India and Turkey."

But he urged African nations to make sure trade was not a one-way street.

"When we look at what other countries are doing in Africa, I think our only advice is … make sure it's a good deal for Africa.

"Somebody says they want to come build something here: Are they hiring African workers? Somebody says that we want to help you develop your natural resources: How much of the money is staying in Africa?

"I do think that it's important for Africans to make sure that these interactions are good for Africa.

"There has been a long history of extracting resources from Africa, you take raw materials, you send them to some place else where they get used processed, sometimes sold back to Africa.

"The profits stay there the jobs stay there and not much stays in Africa."

Obama offered up the United States as a more equitable partner which wanted African economies to grow into consumer powerhouses.

Strong economies would mean the United States would get "somebody to trade with, to sell iPods to, airplanes, all kinds of good stuff."

Obama’s visit comes just three months since the Chinese President Xi Jiping visited Tanzania in March, this year, in which about 19 deals were signed between Beijing and Dar es Salaam, including the multi-billion dollar modern port project to be constructed in Bagamoyo to service the Great Lakes region.

Scheduled for completion by 2017, the port at Bagamoyo -- northwest of Dar es Salaam -- will be able to handle 20 million containers a year or twenty times more cargo than the Dar es Salaam port, which can handle a maximum of 800,000 containers.

The port construction project will include the building of a new 34-kilometre road joining Bagamoyo to Mlandizi and 65 kilometres of railway connecting Bagamoyo to the Tanzania-Zambia Railway (TAZARA) and Central Railway line. The bilateral deals call for China to commit Sh 800 billion ($500 million) in 2013 for starting the port construction.

The new port also would transform Bagamoyo into an East African hub for Indian Ocean shipments to and from six of Tanzania's mostly landlocked neighbours, ease congestion at the Dar es Salaam port and make Tanzania's import-export sector more efficient, said Vincent Nyerere, a parliamentarian and businessman.

The neighbouring countries of Malawi, Zambia, Democratic Republic of Congo, Burundi, Rwanda and Uganda would like to export and import products via Tanzania, the shortest and most viable route to the Indian Ocean. But for now, these countries must do with the Kenyan port of Mombasa and the South African port of Durban, which are more distant and costly routes.

During Xi’s visit, Kikwete thanked Beijing for its decision to help Dar es Salaam improve its infrastructure and provide access to interest-free or low-interest loans, as long as the bilateral relationship serves "the interests of Tanzania".

Just two years ago, Beijing arranged a $1.3 billion loan to the Tanzanian government at an interest rates of just three percent to finance the construction of 524km Mtwara-Dar es Salaam gas pipeline. Traditionally, China has been a strong partner of Tanzania, dating back to the eras of Julius Nyerere and Mao Tse Tung.

Between 2000 and 2012 China financed a number of Projects in Tanzania such as: New Ultra Modern Stadium in Dar es Salaam; Construction of Mwalimu Nyerere Modern Conference Centre; Rehabilitation of Amani Stadium in Zanzibar; Dodoma Urban Water Rehabilitation and Chalinze Water Supply Projects; Construction of Dakawa Agricultural Technology Demonstration Center; Defense Cooperation; ICT Backbone Infrastructure Optic Fiber Project and many other Projects.

And Beijing is still determined to expand its wings through trade, loans, grants and investments in Tanzania, thanks to the recent discovery of natural gas as well as the available of coal in southern region.

While US relations with African countries comes with a string of conditions, such as human rights, democracy, good governance and many more, China’s approach is directly linked to trade and investment -- and doesn’t include any political conditions.

In terms of trade and investment, the United States has performed abysmally in Tanzania during the past decade, compared to what Beijing has traded with Dar es Salaam over the same period. For instance, according to data obtained by The Guardian on Sunday, Tanzania is currently ranked 136th trading partner with the US, valued at a paltry $316 million in total (two-way) goods trade during 2011. But during the same period, Tanzanian’s imports from China was estimated at over $1 billion.

Below is a glimpse of Tanzania-US trade:

Exports

Tanzania was ranked 121st among the largest export goods to the United States in 2011.

US goods exports to Tanzania in 2011 were valued at $258 million, up 57.7 percent ($94 million) from 2010, and up 474.7 percent from 2000. The top export categories (2-digit HS) in 2011 were: Machinery ($61 million), Cereals (wheat) ($53 million), Miscellaneous Textile Articles ($25 million), Rubber ($15 million), and Electrical Machinery ($13 million).

US exports of agricultural products to Tanzania totaled $67 million in 2011. Leading category is: Wheat ($53 million).

Imports

Tanzania was ranked 136th among the largest supplier of commodity imports in 2011.

US imports to Tanzania totaled $58 million in 2011, up 36 percent ($15 million) from 2010, and up 73.1percent from 2000.

The five largest import categories in 2011 were: Spices, Coffee, and Tea (coffee) ($29 million), Precious Stones (gemstones) ($9 million), Knit Apparel ($5 million), Lac and Vegetable Saps (pectates) ($5 million), and Edible Fruit and Nuts (cashew nuts) ($2 million).

US imports of agricultural products from Tanzania totaled $38 million in 2011. Leading category: Coffee (unroasted) ($28 million).

Trade Balance

The US good trade surplus with Tanzania was $200 million in 2011, a 65.4 percent increase ($79 million) over 2010.

Apart from aid channeled though Millennium Challenge Account, which amount to over $700 million, Tanzania-US trade and investment remained very low compared to China’s.

During President Obama’s visit to Tanzania, trade and investment, especially in the energy sector will top his agenda. Currently, the United States has financed a power project through a company owned by American, Paul Hink, Symbion Power Ltd.

The company purchased the Dowans plant at the cost of over $100 million. It has also sealed a deal with the Tanzanian government to build 400MW in Mtwara region in collaboration with General Electricity.

SOURCE: GUARDIAN ON SUNDAY