High hopes have almost been tangible across East African countries since the first ever U.S.-Africa Leaders Summit was held in August in Washington, D.C.
Tanzania, a long-term partner for the U.S. in the region, can consider itself a beneficiary of many of the decisions announced at the summit, as it will receive a significant volume of American investment in various sectors of its national economy.
The ideological background of U.S. involvement by means of investments and projects, mostly of private companies, is aimed at helping African nations to develop and become self-reliant, “and it is very well acceptable for the Tanzanian government,” said Social Anthropology Professor and Tanzania expert Dmitri Bondarenko. Bondarenko is deputy director of the Institute for African Studies in charge of research of the Russian Academy of Sciences in Moscow. He spoke with AFKInsider.
The unique part of the U.S.-Africa summit was the engagement of the business sector from both the U.S. and Africa with the full participation of heads of state and President Barack Obama himself, said Liberata Mulamula, Tanzanian ambassador to the U.S.
The summit also gave Tanzania the rare platform to promote its business and investment opportunities by organizing a country-specific business forum as a signature event.
The Doing Business in Tanzania forum attracted more than 500 participants from various U.S. businesses. The sectors that attracted many were agriculture, energy, infrastructure and tourism.
Following the summit, Tanzanian President Jakaya Kikwete visited Texas where he met President George W. Bush and Laura Bush and renewed their acquaintance. “He also had the opportunity to meet the major companies in the oil and gas industry in Houston Texas which showed great interest to do business in Tanzania in the sector through public-private partnership,” Mulamula told AFKInsider.
Some of the major Tanzanian sectors that easily attract foreign direct investment include agriculture — in need of modernization– the gas and oil industries, as well as health infrastructure and services. Tanzania has the great momentum to make use of the recently discovered fields off its shores.
Statoil and its co-venturer Exxon Mobil announced Oct. 14 that a new exploration, Giligiliani-1, has resulted in a new natural gas discovery of an additional 1.2 trillion cubic feet of natural gas, bringing the total volume up to approximately 21 trillion cubic feet of natural gas in block 2.
Tanzania needs to “keep up the momentum generated by the summit and to effectively follow up on the commitments made,” Ambassador Mulamula said. Tanzania is among the few countries of Africa selected as beneficiaries of such presidential initiatives as the Millennium Challenge Compact (MCC), which was created by the U.S. Congress in January 2004 with strong bipartisan support.
“These programs have helped Tanzania significantly in terms of development of the country’s infrastructure and implementing the rural electrification program,” the ambassador said.
Rural development is high on the political agenda for Tanzania.
“Despite its already large urban population, Africa is still more rural than it is urban,” said Susan Parnell and Ruwani Walawege in their recent book, “Africa’s Urban Revolution.”
Tanzania’s hope is to modernize agriculture — on which 75 percent of the population depends — and end extreme poverty at the same time, according to Mulamula. The country could achieve rural transformation and development and uplift the livelihoods of the majority of its population by increasing agricultural production via the transfer of technology and investment in such things as high-yield seeds, fertilizers, irrigation, and storage facilities. The goal is to help establish global value chain agro-based industries, promote small holder farmers and increase their incomes.
Besides agriculture, there is the problem of agricultural products processing. Although there are several new plants for processing dairy products, most processed food made of products available in Tanzania is imported, for example, from neighboring Kenya.
“I do not know if communities want to work together today,” Bondarenko told AFKInsider. “The experience of the ‘Ujamaa villages’ (collective farms) was unsuccessful economically and socially. I think people would be eager to cooperate but on the basis of mutual profit, without integration of many households into one. The projects proposed at the summit can be beneficial for Tanzanian agriculture if they cover all aspects: agricultural machinery, agricultural infrastructure, personnel training and building food processing enterprises.”
Developing the rural areas remains a huge challenge, said Goran Hyden, professor emeritus of political science and former director of the Center for African Studies, University of Florida.
“With the exception of some areas, agricultural productivity does not improve – or at least not fast enough,” Hyden said. “Despite efforts to give priority to small-scale agriculture, it does not transform itself into commercial enterprises. Agriculture remains subsistence-oriented and security comes before profit.
“This is a reason why so many African countries including Tanzania have allowed foreign companies to lease land for large-scale farming. It increases the productivity of the sector and expands the revenue basis in important ways.”
The U.S. realizes the economic and strategic value that Tanzania provides, Hyden said in an interview with AFKInsider. “It may not be the darling of the U.S. but President Kikwete has done his best to place his country on the map in the minds of American politicians and business people.”
Good leadership is needed to overcome the obstacles presented by the population at large, which still retains the belief from the days of Mwalimu Julius Nyerere, founding father of the Tanzanian state, that a foreign investor is there to exploit them.
“The challenge that Tanzania faces with foreign investments is on the ground – getting permits, potentially being asked to pay bribes,” Hayden said.
Concerning the perceived rivalry between China and the U.S. in Africa, “there is room for both and the competition may be good for African governments and countries as it was during the Cold War days when they could ‘pick and choose’,” Hayden said. “I believe that now they are not viewing China and the U.S. as two ‘camps’ since both are following capitalist principles. Rather they complement each other and expand the resource base into which they can tap.”
In all, there are good prospects for scaling up U.S. investments in Tanzania and promoting trade through Obama’s initiatives on Trade Africa and Power Africa, as well AGOA, the African Growth and Opportunity Act, if further renewed.
Tanzania seems committed to continue deepening cooperation with the U.S. As presidential elections are scheduled for October 2015, all parties involved hope stability will remain an important feature of bilateral ties.
Istvan Tarrosy is assistant professor of political science and director of the Africa Research Center at the University of Pecs, Hungary. He is Fulbright Alumnus (2013-2014) at the Center for African Studies, University of Florida. He is co-editor of “The African State in a Changing Global Context, Breakdowns and Transformations” (Berlin, 2010) and editor of “Afrika Tanulmanyok,” the Hungarian journal of African studies.