BY EDITOR
26th October 2014
It is not entirely certain he would have the time to visit China again in exactly one year from now, so he was likely to make sure that he gets good and done deals.
Efforts are one thing, and indeed the deals themselves, while the implementation environment is another.
In the past there was a deal to construct Terminal Three at the Julius Nyerere International Airport which fell through, and was a subject of plenty of recriminations afterwards.
The project did not entirely collapse but would have been the subject of interminable renegotiation, similar to the RITES railway concession with TRL, a DAWASCO operation franchise, the now litigated partial share sale of TTCL, and others.
The government almost always has a different set of prerogatives from investors; it takes shares and invests no cash, just goodwill…
There were a number of questions raised with regard to the Mnazi Bay-Kinyerezi pipeline construction agreement, as key donor agencies like the IMF and the World Bank were saying it was not sufficiently concessional.
That might be the case, but with natural gas prospects potential improving each passing day, the government can be understood if it has to hurry up with the deal, not wait for concessions from unknown investors. There is a new Bagamoyo port, Tanga port deepening projects.
One thing that administrators in the country are used to is to think that investors have loads of cash in briefcases and thus ministerial officials simply state their conditions, the first of which is to own 49 per cent shares.
In these days of an East African Common Market as an extended economic area with the European Union, such attitudes will ensure that Tanzania becomes a sphere of selling goods rather than investing.
The government should confine itself to collecting taxes, not seek shares; firms can find solutions to problems, not when government is a part of it.
With the signing of an accord for a free economic area with Europe, eliminating 80 per cent or so of customs duties over the next five years or so, it is vital that we take note of the comparative advantage that we have: cheap land and labour.
If the government shall let investors work instead of snooping into boardrooms and claim half the profit, many investors shall come around, purchase companies and build industries.
But if the habit continues, goods will be cheaper but capital won’t flow.
The deals that were signed in China include building a new city in a reserved area in Temeke district that forms an islet, a major road revamping of the district especially to connect and service the envisaged city, which is different from the Kigamboni project.
The latter seems somewhat stalled as reports of US companies being the leading stakeholders started to shake the wits out of some public officials who then rushed with denials.
It’s as if that in itself is something extremely wrong! There is also an aspect relating to electricity supply and rural electrification in general, where the procurement of power transformers seemed to be at stake, while another project seeks to transform Mlandizi into a new industrial hub.
It would help a great deal if there is a bank as intermediary instead of local governments, so peasants are paid at market prices for their land, and start other projects instead of flocking to sell water in the city centre.
It needs plenty of attitude changes to make sure that everybody wins in those investment deals, and not creating more poverty.
SOURCE: GUARDIAN ON SUNDAY
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