Change of Power in Tanzania: Preserve the Old and Dare the New
The latest political development of great importance in Tanzania was the election of Samia Suluhu Hassan in March 2021. She is the country’s first Muslim president and currently the only female head of state in all of Africa. “Mama Samia”, as she is commonly known, has pursued ambitious goals, such as the revitalization of the Tanzanian democracy or (like her predecessor John Magufuli) the fight against corruption. Global Bridges organized a video conference on what the future holds for Tanzania: How will “Mama Samia” deal with the political legacy of her rather autocratic predecessor? And as a Zanzibari Muslim, can she lead a largely Christian country without conflict between ethnic and religious communities? The guest-speakers were H.E. Ambassador Regine Heß from the German Embassy in Dar es Salaam, Tanzania and the CEO of Standard Chartered Bank Tanzania, Sanjay Rughani. The conference was moderated by Professor Dr. Edward G. Krubasik, former Siemens Central Board Member and ex-President of the German Physical Society.
The conference started with deputy executive chairwoman Dr. Claudia Winterstein, greeting all participants, explaining the significance of the topic and introducing the guest speakers as well as moderator. She also expressed her admiration for and interest in the work of the new president Samia Suluhu Hassan. She was followed by Professor Dr. Edward Krubasik, who invited the speakers to share their insights into Tanzanian development and politics.
As the first speaker, Ambassador Regine Heß highlighted the development of Tanzania, which was met with growing interest over the past few years. However, the government had many deficiencies and previously supported a socialist system with little freedom for the private sector. Foreign diplomats did not have as much importance as they do today, because ministers were afraid to meet foreigners and cooperation was generally restricted. Despite the closedness, the economy did well, and in October 2020 Magufuli was reelected in a questionable election by promising increased cooperation with, and regional integration of the more affluent Zanzibar. Magufuli passed away in March 2021. This was followed by two weeks of mourning and a smooth transition of power to the former Vice President Samia Suluhu Hassan. According to Ambassador Regine Heß, the Tanzanians did not fear the transition, since they were promised a future with more freedom and democracy, better private- and public sector cooperation, more transparency, as well as a governmental focus on the well-being of civil society. Moreover, “Mama Samia” wants to empower women, however, no changes in law have been made yet. She is facing tremendous difficulties and has to be careful not to lose the support within her party. On a side note, Ambassador Heß said that Covid impacted Tanzania not as much as the rest of the world and restrictions were based on free will, but since Magufuli passed away, “Mama Samia” organized a taskforce and increased cooperation with international organizations to get hold of more vaccines.
The moderator thanked Ambassador Heß and quickly moved on to the next question: The G7 states decided to shift the focus towards investments rather than continuing traditional aid. Which model is more suited to aiding Tanzania’s economic development?
Sanjay Rughani answered the question by giving a quick overview of the Tanzanian political and economic landscape. Tanzania’s dependency on China is limited, the debt-to-GDP ratio is quite low compared to other African countries. Rughani approved Ambassador Heß’ statement on increasing domestic and foreign investments instead of selective donor support. He also added that especially the UK, US and EU changed their investment strategies towards valuable and more sustainable investments. There is a notion of growing collaboration between the public sector, development partners and the private sector. Rughani also emphasized the privileged position of Tanzania: It has a geographically advantageous location, reliable infrastructure for transportation, immense, growing potential in the agricultural sector, great cultural and economic diversity within the country, huge mining reserves, and massive offshore gas deposits. Tanzania’s increase in human capital was described as a double-edged sword, because the rapidly growing population offers huge potential but also creates problems. Another high-potential sector is the steel industry: Up until now, Tanzania’s import of steel was enormous. The growing metalworking industry offers the chance to decrease dependency on steel imports. Domestic unity and relatively low rates of conflict will help pave the way towards a prosperous future.
After Rughani’s short overview of high potential industries, he continued his presentation by providing his personal views on the topic of this conference. He believes in gradual and sustainable change. The protection of Tanzania’s sovereignty has been one of the top priorities of the past, however, an economy closed to foreign investors will hinder successful growth. While Magufuli denied the existence of a pandemic, the new president is moving away from denial and creating an investor friendly economy. Rughani complimented the first successful months of “Mama Samia”, her dedication to issue new decrees, her objective of fostering further collaboration with development partners, better levels of governmental transparency, and her efforts to monetize the country’s resources with the help of the World Bank. Nevertheless, solving big challenges, in particular labor and migration, as well as skepticism within the private sector, will require good strategies. In addition, despite the fact that the tourist sector decreased drastically during the pandemic, mining exports almost doubled in the past year, and the Tanzanian economy grew by an average annual rate of 7% in the last decade. Better law enforcement and the fight against corruption will make it possible to invest more money into infrastructure, agriculture and the mining industry. The CEO of Standard Chartered Bank Tanzania participated in the budget committees conference to advise on governmental investment strategies. Key sectors requiring investments are infrastructure, transport, energy, healthcare, education, and the judicial system. He also noted that development partners have to show serious engagement in order to make this happen.
Professor Krubasik opened a round of questions from the audience which revolved around economic and political systems, different regions, and current conflicts in Tanzania. The first question considered the demographic policies of the president’s predecessor, who encouraged families to have many children, which could turn out to be problematic for the current economic and political system, and asks whether the new president explicitly wants to change this policy. The short answer by Rughani explained the difficulty of this question and revealed that there are currently other priorities.
The next question involved the supply of energy in Tanzania and whether the supply of energy is based on fossil fuels or renewable energies. Mr. Rughani clarified that Tanzania is restrained in energy supply: the demand is higher than the supply. Yet, the government is trying to enact large-scale infrastructural projects, such as the Nyere Hydrodam, to battle the shortage of energy supply. There are tremendous opportunities when investing into hydro-electric infrastructure because of the country’s natural resources. Moreover, first talks with the minister of energy were already successful, even though it is difficult to ignore the abundant reserves of coal. Another challenge for the government is to educate people on environmental matters. He also added that investments towards solar and wind energy are expensive and barely profitable, so the current priority is using gas, coal and other Tanzanian resources. Ambassador Heß partly disagreed with Rughani and highlighted the importance of getting everyone on the power grid. Therefore, she suggested connecting the remote areas to the power grid without having to create extensive distribution networks by using solar power. Sanjay Rughani defended his stance and called for the private sector to show more responsibility concerning energy production.
The topic development and trade policy in Tanzania, with regards to the EU and the newly established African Free Trade Area, also received much attention. Rughani offered some insight into the progress of the Tanzanian government and the current perspective. Tanzania is close to joining the free trade area and is in fact planning on ratifying the treaty soon. The increasing cooperation between the private sector and government ministers helps to realize the massive growth potential by creating harmony and making the movement of money easier. A prevalent issue among African states, are the high costs of moving money from one country to another, which can be reduced through cross-border digitization and the liberalization of trade. Rughani also referred to his earlier statement that Tanzania is trying to attract investors rather than donors. In addition, start-ups and think-tanks are on the rise, as well as promising fintech companies, that could help to achieve the ultimate objective, which is establishing a circular economy.
Dr. Winterstein wanted to know how the president wants to finance the fight against corruption, general progress in education and healthcare, and other sectors, and whether microcredits function successfully in Tanzania. Rughani quickly reminded the conference participants that “Mama Samia” has only been in office for less than three months and that it is difficult to already expect dramatic changes and decisions after such a short time period. He also added that the plan is to broaden the tax base and increase the access to microcredits by establishing a framework and moving away from restraining policies. Digitization and the establishment of an ICT ministry in November 2020 will help start-ups, which in turn are helping to realize the Tanzania’s huge growth potential.
The investment strategies into the Tanzanian economy emerged as a key topic of this conference. Ambassador Heß gave a quick overview on the operating principles, that is, how investments, for example with Germany, come into place. The foreign offices are responsible for “opening doors” and connecting investors with “people like Sanjay Rughani”. However, it is important to note that investments are not simply coming to Tanzania. For this, there are three pillars of export business assistance (Außenwirtschaftsförderung): embassies open doors, the chambers of commerce identify the needs of investors, and the organization of trade and investments researches industries with high potential for German investors. Many factors contribute to a successful foreign investment and it is easier said than done, according to her. Rughani argued that the best way to do business is to look for local partners who will help to navigate pitfalls and solve problems.
For both Ambassador Heß and Sanjay Rughani, the agricultural sector has immense potential and plays a major role in the Tanzanian economy. Both have had several meetings with the agricultural minister and are pushing for change towards a more profitable and commercial way of farming, in order to increase the overall output.
The conference came to an end with Rughani highlighting the significance of opening Tanzania up to foreign investors by increasing collaboration with the big powers China, Russia and the US. Claudia Winterstein concluded the conference by showing her appreciation to the guest speakers and the moderator. She said that it was great to hear about the short-term developments and the “striving-for-progress mentality”. She finished the conference by saying: “On our study trip to Tanzania next year, I hope we will meet you with many of our members”.