German ambassador urges Tanzania to tread carefully with SGHPS

03Oct 2018
Financial Times
German ambassador urges Tanzania to tread carefully with SGHPS
  • Germany’s ambassador to Tanzania, DR DETLEF WACHTER, sat down with Financial Times staff writer PETER NYANJE for a wide-ranging interview about trade and investment relations between Tanzania and Germany,
  • plus the government’s plan to develop a 2,100-megawatt hydropower station within the Selous Game Reserve which happens to be a world heritage site. Excerpts…

QUESTION: How would you describe the current status of Germany’s relations with the Tanzanian government?

ANSWER: I can describe that as a real success story. I came here one year ago and I did not expect our bilateral relations to be so deep and broad. I think Germany and Tanzania are cooperating in all walks of political, cultural and economic life.

First of all, our development cooperation is huge. Tanzania is one of our focal points when it comes to cooperation. We are having our next round of government negotiations, the next phase of our development cooperation beginning on October. Secondly, our cultural cooperation is close. We have Goethe Institute here, we have some academic exchange services here. We share history which dates back to colonial timed.

Then we have economic cooperation. That is something which I follow closely as ambassador. There is tourism which contributes considerably to the economic achievement of this country. We are talking about an upward trend of 2,000 to 3,000 tourists in a year. Tourism overall contributes up to 40 per cent of the Tanzanian GDP if I am not mistaken. So it is quite something to factor in.

I can also tell you that the interest of German companies in either doing business with Tanzania or investing in Tanzania is steadily on the rise. Since I have been here, we have had a number of high-ranking German business delegations to the country. We have been a big contribution to the Sabasaba fair where our pavilion was voted number one in the category of foreign investors. And we have opened an office of German business and industries here in Dar es Salaam, which serves as a federation of all German enterprises. Germany is a powerhouse economically, the biggest in Europe and fourth biggest economy worldwide. So if we open an office here, it means something… there is interest.

I talk to German businessmen every week who want to know more about the prospects of doing business with Tanzania, and I take that as a very positive signal.

Q: What is the latest trend of two-way trade between Germany and Tanzania?

A: There is room for improvement when it comes to trade between these two countries. Currently, Germany’s exports volume to Tanzania stand at 157 million euros, a 6.7 percent rise from 2016. But on the other hand, German imports from Tanzania are now just 118 million euros, unfortunately falling by 13 per cent compared to a year before. So the business surplus between Germany and Tanzania is at 38.8 million euros. I think we can do better.

Q: What should be improved to address this imbalance?

A: Let me address that problem from a general perspective. We applaud President John Magufuli, and we have always done so, for his straight development, cooperation and anti-corruption agenda. I think it was high time that a political leader in Africa tackled the issue of corruption upfront because this is one of biggest impediment to lasting economic growth.

His determination to turn Tanzania into a middle income nation by 2025 is also an ambitious goal. It comes with infrastructure projects such as a hydroelectric power plant in the Selous, the standard gauge railway, many more roads to be built in the country. That means he has to improve revenue bases… you have to have proper tax bases. We applaud that because it is important for the country development.

I mentioned earlier our development corporation which is very important, but in the long run - and this is something which the fifth phase government also keeps mentioning and I want to take that up to reinforce the message - in the long run this country will develop only if the private sector has a fair say in trying to bring this country forward.

In fact, our official development cooperation in Germany looks more and more at how can we promote, with our development aid, private initiatives to take risks to go to a promising but challenging market like Tanzania to do business. As I have told you, the interest of German entrepreneurs is there. But at the same time, I must be honest with you, they are little hesitant.

They look at investment atmosphere in this country. They see all the changes in agriculture, in petrochemicals, in construction, in infrastructure, tourism, big sectors. But at the same time, they have also seen bureaucracy sometimes which, I must be honest with you, is not keeping up with the pace it takes in order to really attract foreign direct investment in large numbers.

They (German entrepreneurs) are still complaining about delays and lack of preparedness in issuing of work permits, resident permits for foreign investors, and their personnel. We keep on hearing complaints about a not-so-great payment morale on the part of the public sector when German businesses and services are rendering their services here.

We understand that TRA needs to broaden the tax base. We sometimes hear complaints that TRA sends out tax bills at random, and we wonder what is the (legal) basis for all of this. And of course, we also have the mid-size government administration officials who act in a way that I would describe as detrimental to attracting more German investment.

These are little stories - I don’t say it is the entire Tanzanian administrative authority, not at all, just a tiny minority. But these things make headlines which spread around, and it is important that these shortcomings are addressed by both the government, its agencies and the potential investors. This is why we are in constant dialogue on how to improve this.

If these issues improve and the message gets around that Tanzania wholeheartedly embraces the idea of foreign direct investments, I am sure that the numbers which I have just shared with you will go up. Interest is right there, we only need to nail it down.

Q: Improving Tanzania’s manufacturing sector is key to improving Tanzania exports to Germany and the EU in general. But Tanzania alone cannot do this - it depends much on FDIs. What’s the trend of German investments in Tanzania?

A: Let me give a two-fold answer. First of all, officially from a German point of view, what we do is we support VETA in Dar es Salaam and its equivalent in Zanzibar. Because what we hear from the potential investors is always when they want to invest in Dar es Salaam or beyond, they find Tanzanians keen to work (they are a hardworking people), but lacking the skills.

So we are cooperating with VETA and its Zanzibar counterpart in order to provide a more educated, more skilled workforce for international investors. So far - getting to your second point - all German firms that are investing here, for example Heidelberg (the Twiga Cement brand), Knauf Gypsum (Tanzania Limited) just south of Dar es Salaam, and the big fertilizer plant that German and Danish companies want to jointly build in the Kilwa area…they all do their share in educating their workforces by themselves.

They say we need a fertilizer plant, so we will need hundreds and hundreds of skilled workers. We don’t find them in the market, but we employ them anyway. We give them training, we give them expertise, they work for us for five or ten years, afterwards they have a brighter future. So a skilled workforce is one.

Again, if German investors come here - and we have a number of big names coming back to Tanzania such as BASF petrochemicals company and another company dealing with power - if they keep coming back here and do successful business with Tanzania, they will be sending positive signals to many other investors worldwide, and I would describe that as our contribution to the competitiveness of manufacturing sector in this country. Invest here, train people, and tell the world that Tanzania is a good place to invest.

Q: In terms of aid, which is another form of development assistance, where do you stand?

A: We are cooperating in three and a half sectors. One is wildlife security, which does not sound interesting from an economic point of view. But if you look at how many tourists are attracted to national parks and game reserves, you will understand what economic significance wildlife security and preservation has in this country.

I have just came back from Iringa for meetings on the Ruaha National Park, where I talked to the regional commissioner, TANAPA, the wildlife authorities, and we want to do more because Ruaha is one of the most underrated game parks when it comes to tourism.

Another sector is water and sanitation in urban areas. You can imagine an investor who goes to, let’s say, Kigoma or Sumbawanga and doesn’t find fresh water in good provision. That investor will find it difficult to invest there.

We are also doing something for the health sector because without a healthy population, you don’t find a proper workforce.

And the half I mentioned is an obvious one; we have a great cooperation with Prof Mussa Assad, the Controller and Auditor General. We call it a good governance and financial programme. How ministries and government agencies spend public money is crucial.

Q: Are you satisfied with the way your aid is being utilized?

A: More or less yes. We have spent, since 1961, two billion euros, which is an incredible figure. This country is not where we wanted it to be, and where most Tanzanians wanted it to be. But to be honest, this country has come a long way.

Not all the projects we are cooperating on in this country are running as good as others. I don’t want to do a naming and shaming here, but it always depends on the quality.

But if we had not seen success in our cooperation here so far, we would not have continued. And I can tell you one more thing; we can pay as much development money in this country as we can and we can send as many experts here as we can, but if we didn’t find a great and determined people on the Tanzanian side, we would not have succeeded.

I think my saying that we have seen an overall successful cooperation speaks to the fact that we have Tanzanians who do tangle, and we will testify to this when our delegation for development cooperation comes to Tanzania at the beginning of October to sign the agreement for the next two years. That will be the signal to other donor countries that Germany is here to stay and continue to support our Tanzanian friends.

Q: There are some projects, such as the proposed hydro-power dam at Stiegler’s Gorge, that are opposed by conservationists. Since conservation is among Germany’s main focus areas in its development cooperation with Tanzania, what are your comments on this?

A: You have a good point because the Selous Game Reserve has been the focus of our development cooperation in the last 30 or 40 years. So we are looking with great interest what is going on there.

First of all I must say it is the legitimate decision of a national administration to decide on how to organize provision of energy for the country. It is not up to the German ambassador to tell the president what to do.

Having said that, it must be noted that environmental concerns have been expressed by a number of very important international organisations like the World Wildlife Fund and others. We have also noticed that the UNESCO World Heritage Committee has asked, and the Tanzanian side has agreed to undertake a strategic environmental impact assessment on what the consequences of the Stiegler's Gorge project would be to other industries which depend on the Rufiji River. What it means to wildlife conservation in the Selous? What it means to the people living downstream all the way to the Indian Ocean?

We will see what this SEA (strategic environmental assessment) says about the feasibility and consequences of the Stiegler’s Gorge project. But as I have said, it is a legitimate project by the Tanzania government. We would just very much hope that everything is done to take all factors into consideration, and the government is also looking at what are the ecological consequences of this project.