Investment Opportunities in Tanzania

Sylvia Morawetz, Principal, S.A.M. Solutions, and Director, The Empire Club of Canada; Chloe Castonguay, Senior Student, North Toronto Collegiate Institute; Rev. Canon Kimberley Beard, Senior Pastor, St. Paul's On-the-Hill Anglican Church, and Director, The Empire Club of Canada; Dr. Isa Odidi, President and CEO, IntelliPharmaCeutics Corp., and Board Member, Canadian Council on Africa (CCAfrica); His Excellency Mr. Andrew McAlister, High Commissioner of Canada to United Republic of Tanzania; Albert Sweetnam, Senior Vice-President and General Manager Infrastructure, SNC-Lavalin; His Excellency Mr. Ombeni Yohana Sefue, High Commissioner of the United Republic of Tanzania to Canada; Verity Craig, Principal, Hays Executive, and Director, The Empire Club of Canada; Johann Olav Koss, President and CEO, Right to Play; Nola Kianza, Vice-President, Ontario, Canadian Council on Africa (CCAfrica); and Robert Franklin, Director, Barrick Gold Corporation.

Introduction by John Niles

Past Presidents, Directors, Reverend Beard, honoured guests, and members of the Empire Club of Canada:

The history of Tanzania is filled with stories of struggle and strength, victory and peace.

It is a story of the very beginnings of humanity. For it is Tanzania that is believed to be the cradle of humankind based on the discovery in 1959 in the Olduvai Gorge by Dr. Louis Leakey of the remains of Homo habilis or handy man--estimated to be 1.75 million years old.

The history of Tanzania is therefore a long one and varied one--filled with Arab traders in the 700s, Portuguese explorers in the 15-1700s and later Germans in the 1900s.

After World War I, it was administered by Britain under a League of Nations mandate and later as a UN trust territory.

Tanganyika became independent on Dec. 9, 1961, and Zanzibar on Dec. 10, 1963. On April 26, 1964, the two nations merged into the United Republic of Tanganyika and Zanzibar. The name was changed to Tanzania six months later.

An invasion by Ugandan troops in Nov. 1978 was followed by a counterattack in Jan. 1979, in which 5,000 Tanzanian troops were joined by 3,000 Ugandan exiles opposed to President Idi Amin. Within a month, full-scale war developed. Tanzanian president Julius Nyerere kept troops in Uganda in open support of former Ugandan president Milton Obote until the national elections in Dec. 1980.

In Nov. 1985, Nyerere stepped down as president. Ali Hassan Mwinyi, his vice-president, succeeded him. Running unopposed, Mwinyi was elected president in October. Shortly thereafter plans were announced to study the benefits of instituting a multiparty democracy, and in Oct. 1995 the country's first multiparty elections since independence took place.

On Aug. 7, 1998, the U.S. embassy in Dar es Salaam was bombed by terrorists and 10 people were killed. The same day an even more devastating explosion destroyed the U.S. embassy in neighbouring Kenya.

During President Benjamin William Mkapa's 10 years in office (1995-2005) he sought to increase economic productivity while dealing with serious pollution problems and deforestation. With more than one million people infected with HIV, AIDS care and prevention have been major public health issues.

In 2005 presidential elections were held and then foreign minister Jakaya Kikwete of the (CCM) Party won with 80 per cent of the vote.

One year later in early 2006, Edward Lowassa was appointed Prime Minister of Tanzania. He was previously Minister of Water and Livestock, Minister of Human Settlement Development and Minister of Judiciary and Parliamentary Affairs.

Prime Minister Lowassa represents the riding of Monduli (Arusha region in northern Tanzania) in the Tanzanian Parliament.

President Kikwete has delegated the day-to-day responsibility of running the government to Prime Minister Lowassa, including monitoring the performance of Cabinet ministers. In this context, the Prime Minister has an extremely important and powerful role to fulfill. Will you please greet with me the Prime Minister of Tanzania.

As I'm sure you know Mr. Prime Minister, there is an old saying from Tanzania--specifically Zanzibar--that says, "When two elephants tussle, only the grass suffers." So to keep from causing any further undue suffering, ladies and gentleman, please welcome with me the Prime Minister of Tanzania.

Edward Lowassa

Chairperson, members of the business community, distinguished guests, ladies and gentlemen, I should like to begin by expressing my deep appreciation to the Canadian government, the Canada Council in Africa and the Empire Club for their support and the arrangements that they have made to make this business seminar on Tanzania possible and from what I see already successful as well.

I also wish to thank most sincerely all of you who are present here today for responding positively to our invitation. I was in Calgary two days ago where I delivered a keynote address at an international conference on natural resources and African economic development and the role of Canada in the 21st century.

Once again I thank the Canada Council on Africa first for organizing the timely conference and secondly for inviting my president, His Excellency Jakaya Mrisho Kikwete. Although circumstances conspired to keep him in Tanzania, the fact that he sent me to represent him speaks volumes about his admiration for this great country and its people. His gratitude for the positive relationship between our two countries and the hopes that he cherishes for a more robust partnership with the private sector in both countries plays a key role and a permanent role.

In Calgary I made a passionate appeal to governments in rich countries like Canada, to business and collateral governments, to work together to ensure that Africa's abundant natural resources not only contribute to their country's economic development but also that such rich resources should produce blessings not curses. The negotiations with the mining companies to review the contracts have delivered positive results. We are glad that Barrick Gold Tanzania and others have agreed to co-operate with the government to ensure that the mining sector is beneficial to both Tanzania and their companies. This a good situation in Tanzania as we continue to see increasing involvement of foreign companies in the exploration and ultimately the development of our abundant natural resources and natural gas reserves. For it is readily acknowledged that Tanzania is a highly prospective geological setting and geological formations extend over 800,000 square kilometres. Large areas of Tanzania contain geological formations known to be prolific in gold and base metals in other places such as Canada, Australia and East Africa. There are also rock formations similar to the geological development holding gold deposits in South America and West Africa. No wonder there's been a large increase in prospecting activities by companies, including several Canadian companies, in Tanzania.

Tanzania is already the third-largest producer of gold in Africa after South Africa and Ghana. Our aim is to become number one. We are number one in tanzanite and we also have minerals that can be developed on a commercial scale such as ruby, garnet, sapphire, copper, cobalt, tin, and so on. But Tanzania represents huge opportunities for investors in sectors other than mining--oil and gas. With the abundant wealth of unique tourism attractions including Mount Kilimanjaro, the Serengeti, the Selous, beaches and many others, the opportunities for investors and for tourists are enormous.

This morning the new director of the Tanzania Investment Centre made a presentation on investment opportunities in Tanzania. His presentation comprehensively highlighted investment opportunities in Tanzania by sectors. I appeal to those of you who were not present at the seminar this morning to get a copy of this presentation. But I want to underline some of the points he made in trying to convince you that Tanzania is the best choice as your next investment decision.

With regard to agriculture, we are aware of Canada's position as one of the greatest agricultural producers in the world. Your experience in commercial farming can be shared with Tanzania, which has more than 44 million hectares of arable land of which only a fraction has been fully developed so far. Tanzania provides ideal water, soil and climate conditions for a complete range of agricultural products. After a successful privatization program we have seen impressive progress in local and foreign private commercial scale farming in sisal, cotton and sugar cane.

Additionally Tanzania now targets crops that give us competitive advantage in the region. Some of the temperate highlands are ideal for European flowers and vegetables and tropical lowland zones are ideal for warm climate fruits and flowers. We are already establishing flower farms in the Kilimanjaro area and global demand for horticulture products has been growing in excess of 8 per cent annually. We can join hands to make profitable business in this area.

The government is investing in the kind of infrastructure that will facilitate investment in this sector. For example, we are constructing a new international airport in the southern part of Tanzania. When it opens later in 2007, the airport will unlock this part of Tanzania for investments in horticulture for the South African, Middle East and European markets.

We would also like to pursue power generation through bio-fuels. We have deposits of gold in the southern part of our country. It has been confirmed that we have 200 million metric tons of gold deposits. Currently there is no gold mine in the area but several studies have established the technical and economic viability of a mine with a working capacity of 1.5 million metric tons a year in this area. Furthermore, studies have also established the viability of a thermal power plant at a site that can supply 400 megawatts for the next 20 years.

We also want to invest in the exploitation of our abundant natural resources, natural gas among other things, for power generation. Currently, a Canadian company, Artumas Group, is developing energy products based on gas from Mnazi Bay. The project includes a gas-fired power plant and a regular transmission and distribution system. Many companies are also exploring for oil. With the continued rise in the global demand for fuel and the consequent upward pressure in oil prices, bio-fuels are increasingly becoming alternative fuel sources. In Tanzania with plenty of land for growing the relevant crops we are therefore keen to see foreign investments in crops for ethanol and welcome interested partners.

Chairperson, I could go on and on explaining Tanzania's attractions for investment in many more sectors from financial services to infrastructure, to real estate, to information and communication technology. After a wonderful lunch I will continue with a dialogue that will hopefully result in larger and more investment in Tanzania.

I want to encourage such a dialogue because I know that regardless of the reforms we have undertaken to create a conducive environment for private investment, we do not have the means to turn Tanzania into an investor's paradise overnight. But through dialogue we can get to know each other better to appreciate the efforts and circumstances of each side and to enrich each other with positive ideas and proposals to expand commercial relations between our two countries.

My friends, ladies and gentlemen, it is now over 15 years since my country embarked on major economic reforms marking a clear shift towards private-sector-led development and market-oriented economic management. Since then we have taken concerted actions aimed at creating an environment that will attract new investments and retain existing ones in Tanzania. We realize that important though they are, peace, political stability and unique social harmony, which my country has been engaged in since attaining independence in 1961, are in themselves not enough to attract investors. And abundant natural resources in the mining sector are also not enough. Other equally important factors include the following:

First, a social contract ensuring constant stability and market-based exchange and trade;

Second, an internationally competitive, transparent, predictable and stable legal framework;

Third, a development infrastructure;

And fourthly, an efficient and effective administrative machinery.

These reforms have been made possible and catalyzed by the prevalence of peace, stability and security during our 45 years of independence. Our commitment, our resolve and our success have been widely recognized. For instance, the World Bank report entitled "Doing Business in 2007--How to Reform" has placed Tanzania among the top-10 reformers in the world and second in Africa after Ghana.

Let me assure you that we have effected most of the required changes for a conducive investment climate in Tanzania as it is clear from the brochures, which were available to you, and the presentations and interactions that have been taking place here today. I ask you to have an open mind and to engage with the ministers and business people I have with me here today. All of this shows our government's resolve to keep on improving the investment climate through a constructive dialogue with the private sector in order to maintain a competitive edge in attracting private investments.

Chairperson, in conclusion let me answer the question why I think you should consider seriously investing in Tanzania.

First and foremost is the long experience of political and economic stability as well as peace and security that Tanzania continues to enjoy.

Secondly, market access. Tanzania has access to a market of almost 250 million people.

Thirdly, our unique geographic position makes us the unchallenged gateway to regular and international markets for the six land-locked countries of Rwanda, Burundi, Uganda, Zambia, Malawi, and Eastern Congo.

Fourthly, as stated earlier, Tanzania is richly endowed with natural resources ranging from minerals, arable land, forestry, sun, sea and sand and other tourist attractions to name but a few.

Fifth, Tanzania has attained all the major macroeconomic fundamentals including low inflation.

The political commitment to stay the course and to create a positive environment for private investment remains firm. Chairperson, ladies and gentlemen, I thank you for your kind attention and I look forward to meeting you in Tanzania.

Thank you so much.

The appreciation of the meeting was expressed by Verity Craig, Principal, Hays Executive, and Director, The Empire Club of Canada.