19 July 2014

Tanzania: Chinese Investment in Export Zones a Welcome Idea

The Chinese Vice President, Mr. Li Yuanchao at Tooku Garments in Dar es Salaam recently during his tour of the factory at the Export Processing Zones Authority (EPZA). Second right is the Assistant General Manager of the factory, Mr Rigobert Massawe; the Minister for Industries and Trade, Dr Abdallah Kigoda (second left) and the EPZA Director General, Dr Adelhelm Meru .

One of the few institutions that the Chinese Vice president, Mr Li Yuanchao visited when in Tanzania recently was the Export Processing Zones Authority (EPZA).Mr Yuanchao and his delegation held talks with the EPZA management and staff and was briefed and shown some of the country's Export Processing Zones (EPZs) and Special Economic Zones (SEZs) projects.

A keen observer can guess why the Chinese leader chose to visit EPZA. Chinese regard EPZs and SEZs as central to development and therefore it was logical for them to visit the authority dealing with such areas when they toured Tanzania recently.

Experts tell us that SEZ and EPZ are very effective in Asia, Far East and Middle East and that countries like China, India, Malaysia, Thailand, Vietnam, Korea, Phillipines, have developed export-led economies through EPZ and SEZ concepts.

China for example, has, in the past 30 years, achieved phenomenal economic growth, an unprecedented development "miracle" in human history. China's gross domestic product (GDP) has been growing at an average annual rate of more than 9 per cent, and in 2010, it has surpassed that of Japan and become the world's secondlargest economy.

According to experts, although policy makers, business people, and scholars all over the world continue to debate these topics, it is clear that the numerous special economic zones (SEZs) and industrial clusters that emerged after the country's reforms are without doubt two important engines of China's remarkable development.

Talking during the tour, the EPZA Director General, Dr. Adelhelm Meru urged Chinese business community to invest in Tanzania's Export Processing Zones (EPZs) and Special Economic Zones (SEZs) that are readily available and awaiting strategic investors. "We welcome you to invest in these potential areas," he told the delegates.

Giving an example, he said that the government has already set aside a total of 22,000 hectares in Bagamoyo and that EPZA encourages investors from China to come and invest in the special processing zone area. "We envision this to become an industrial and trade centre," he said.

He noted that the government in collaboration with the private sector is about to start putting up necessary infrastructure in the designated area and said this was the best time for investors to come and implement their plans.

He said that the biggest port in the country and region will be built in the area and that this will change the outlook of Bagamoyo, elevating it to one of the biggest metropolitan centres thriving on businesses and industries.

Under the plan also, are the modern airport and railway line connecting the central line and TAZARA, all these in a bid to create conducive business environment. He said that his authority has earmarked EPZ/SEZ sites in 20 regions with 500 - 9000ha each in Tanzania and that investors are invited to develop basic infrastructures in the zones.

In recent weeks, EPZA entered into an agreement with the TIB Development Bank with a purpose of getting loans to develop infrastructures in areas owned by the Authority.

EPZA officials said that loans from TIB will help them develop and equip EPZA investment areas with vital infrastructures and therefore attracting investors.

They said that the move was a one important step ahead toward realising the institution's vision and mission and development of the country at large. Through such loans, EPZA's areas such as Bagamoyo, Mtwara, Kigoma, Tanga and others in 20 regions in Tanzania will be able to get infrastructures needed by both local and foreign investors.

In the Lake Zone for example, a total of 3,500 ha have been earmarked in Usagara and Nyangamango areas in Misungwi district, Mwanza region for EPZ and SEZ with plans to develop it as a modern industrial cum Commercial Township. A total of 1,000 ha have been earmarked in Kahama District, Shinyanga region.

1,360 ha have been earmarked in Bunda, Mara region. The area will be developed as a modern industrial cum Commercial Township. EPZA in collaboration with regional authorities continue to secure EPZ/SEZ sites in Kagera, Simiyu and Geita.

Dr Meru mentions SEZ/ EPZS benefits as including promotion of value addition, promotion of new technologies, promotion of cross border trade (exports), employment creation, revenue collection at district and municipal levels and income generation at household level among others.

So far, there is a proof that EPZ/SEZ investment can bring benefits to Africa and Tanzania in particular. For last year, EPZA had a target to get 300 million US dollars investment capital, but surpassed target and bring in the country a capital totalling USD 498 million up to December last year.

According to available information, the authority had planned to create 5,200 new employments last year and ended up doubling the target by creating 10,200 new employments through new investments that took place in the authority's areas. EPZA had earlier targeted to export products worth USD 100 million last year but surpassed targets as well and exported products worth USD 105 million. A total value of exports from industries under the authority has reached USD 700 million.

According to available statistics, the contribution of industrial sector to the country's Gross Domestic Product (GDP) rose from 9.6 per cent in 2010/2011 up to 9.9 per cent in 2011/2012. Direct employment within the sector rose from 115,022 in 2011 up to 120,840 in 2012.

The three-day forum was organised by TIC in collaboration with the China-Africa Business Council (CABC) and the Ministry of Foreign Affairs and International Cooperation. It was attended by representatives of over 100 Chinese companies and 120 Tanzanian companies.

TIC has so far registered 522 investment projects from China with a value of USD 2.4 billion which expects to create 77,335 employments for Tanzanians.

Efforts to attract more Chinese investors should be stepped up, as there are many areas with vast potentials. This will be one of the ways to ensure progress and probably enable the country attain its own 'miracle' in development.

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