22 April 2014

Tanzania: Foreign Direct Investment From China to Surge 50 Percent

Beijing — CHINA'S Foreign Direct Investments (FDIs) to Tanzania are expected to increase by 50 per cent this year, thanks to the energy and mining sectors.

The FDIs last year were expected to clock 2.0 billion US dollars and are projected to hit 3.0billion US dollars this year.

The Tanzania's Ambassador to China, Lt Gen (rtd) Abdulrahaman A. Shimbo told 'Business Standard' that Chinese firms areas of investment have been in energy, infrastructure, ICT, and mining industry.

"It is expected that not long Tanzania (As the results of FDIs) will be exporting Liquid Natural Gas (LNG), agriculture produce, minerals and industrial manufactured products," Amb Shimbo said.

The Ambassador said the FDIs would assist to bridge trade deficit between China and Tanzania, where last year was 3.7 billion US dollars in favour of Beijing.

Dar es Salaam's share was 600 million US dollars. "Tanzania is blessed with abundant natural resources which are about to be exploited together with the development of infrastructure," General Shimbo said.

Trade deficit between Tanzania and China in favour of China is natural when comparing the level of development, the market and industrial exports of China to the world market.

"Challenges to Tanzania economy and exports had been, poor agriculture, lack of agri-processing industry, energy, and poor infrastructure," General Shimbo said, adding "These development challenges are being addressed".

"The Tsinghua University, Dean of School of Economics and Management, Prof Li D. David says Beijing's FDIs to Dar es Salaam would also increased following the financial reforms measures which started to be implemented by China. "The reforms will have positive impact to Tanzania or in any other overseas country.

This will make Chinese companies more competitive (on acquiring financial products),"Prof Li said. The Prof, who is also the Director of Schwartzman School at Tsinghua University, said the financial reforms geared to limit China's the expansion of debt ratio to GDP even though it has yet to reach alarming stage.

"This reforms will have an important indication for Chinese companies and institutions investing abroad especially in African countries, the purpose is to improve china firms into modern market economy.

"These new financial reforms are like an athlete exercising in sport field to know the rule of the game, before entering an overseas (investment) competition. This will make them more competitive,"Prof Li said at a news conference organised by Ministry of Foreign Affairs.

The reforms' key pillars are to limit the debt level from increasing further by restructuring it to avoid default, unemployment and financial risks; privatisation--priority should be given the workers, private sector to retain profits for investments.

"Bad debts and non performing loans are like poison in the body and has to be removed," Prof Li said referring to the importance of the financial reforms to China economy.

In the recently days, Sino-Tanzania economic relations increase to result into Beijing to become one of the leading trading and investing partners in Dar es Salaam.

Efforts, according to Amb Shimbo, are already under way for more Tanzania agriculture products to enter the Chinese markets.

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