Tanzania’s Investment Surge Thrives Despite Power Outages and Corruption Concerns.

By Adonis Byemelwa

Tanzania has experienced a remarkable surge in foreign direct investment (FDI), with investments more than tripling in the year ending January 2024 compared to the previous year. China, Mauritius, and India have emerged as key players in this investment boom, injecting significant capital into sectors such as industries, agriculture, and transportation.

According to a report released by the Tanzania Investment Centre (TIC), investments totaling Sh1.807 trillion were made in the year ending January, compared to Sh314.324 billion in January 2023. This surge in investment was attributed to an increase in the number of projects, rising from 23 in the previous year to 52 during the reporting period.

Foreign direct investment constituted a significant portion of the total investments, accounting for 51.92% of all investments made in January 2024. Notably, China, Mauritius, and India collectively invested Sh319.477 billion, underscoring their pivotal role in Tanzania's economic landscape.

"These investments from China, Mauritius, and India are crucial for Tanzania's economic development, as they contribute to job creation and infrastructure development," stated Dr. Balozi Morwa, an economic analyst from the Catholic University of Mbeya.

In recent developments, Tanzania's economic landscape has been under scrutiny as persistent challenges threaten to impede its progress despite an influx of foreign investment. Chief among these hurdles are chronic power outages and entrenched corruption, casting shadows over the country's investment climate.

Power outages have plagued Tanzania, disrupted business operations, and deterred potential investors. The country's heavy reliance on hydroelectric power generation, susceptible to fluctuations in rainfall and water levels, exacerbates the problem.

Aging infrastructure and insufficient investment in maintenance further compound the issue, leading to widespread disruptions, particularly during dry seasons. Industries such as manufacturing and mining, reliant on stable power supply, bear the brunt of these outages, resulting in substantial financial losses and hindering economic growth.

Meanwhile, corruption remains a pressing concern, permeating various sectors and eroding investor confidence. Despite efforts to combat corruption, it continues to undermine the rule of law and impede economic progress.

Transparency International consistently ranks Tanzania among countries with high levels of corruption, highlighting systemic issues such as lack of accountability, opaque procurement processes, and bureaucratic red tape. The prevalence of corruption creates an environment of uncertainty for investors, deterring foreign capital and hindering sustainable development.

Furthermore, there has been a concerning trend observed among foreign investors, particularly Chinese nationals, who have increasingly shifted from large-scale investments to engaging in petty trading activities. Major markets like Kariakoo in Dar es Salaam have seen a proliferation of Chinese traders, raising questions about the sustainability of the investment influx and its impact on local businesses.

Notwithstanding these challenges, stakeholders emphasize the need for concerted efforts to address infrastructure deficiencies, combat corruption, and ensure a conducive business environment to sustain Tanzania's investment momentum. Failure to tackle these obstacles risks undermining the country's economic prospects and hindering its ability to capitalize on the opportunities presented by foreign investment

In a resounding declaration, the Minister of State in the President’s Office, leading Planning and Investment Prof. Kitila Mkumbo, articulates with unwavering conviction: "A conducive business environment in Tanzania is not just desirable; it's imperative for our nation's sustainable growth and prosperity. We must ensure transparent regulations, efficient processes, and robust infrastructure to attract investments and foster innovation."

He advocates for streamlined bureaucratic processes, eradicating red tape that hampers business operations and stifles innovation. Prof. Mkumbo emphasizes the pressing need for robust infrastructure, laying the foundation for businesses to thrive and flourish across diverse sectors.

Additionally, he highlights the indispensable contribution of a skilled workforce, calling for investments in education and vocational training to meet the evolving demands of the market. Prof. Mkumbo advocates for an ongoing dialogue between the government and the private sector, fostering collaboration to overcome obstacles and seize emerging opportunities.

As of the latest data, Tanzania continues to attract foreign investment, with FDI inflows reaching approximately Sh2.5 trillion in the fiscal year 2023-2024. China remains the top investor, followed by Mauritius and India. These investments are expected to further drive economic growth and create employment opportunities in Tanzania.