PEOPLE IN THE NEWS : Of the new TIC boss, JPM and EPA

Dar es Salaam. Geoffrey Mwambe, the newly appointed Tanzania Investment Centre (TIC) executive director, could very well be one of the brains behind President John Magufuli’s position on the Economic Partnership Agreements (EPA).

The two are dancing to the same tune on the grounds that there was no rush to sign the pact in as much as some aspects that could come back to haunt African countries, remain in place.

To what can be linked to as the commonness in their positions, in 2014, Mr Mwambe who has been the senior economist at the Bank of Tanzania (BoT) for 10 years, wrote an academic paper titled Analysis of the EPA between the East African Community (EAC) and the European Union (EU) in which he expounds views that are similar to those of President Magufuli.

Perhaps that is why Dr Magufuli on May 17 appointed him the new TIC boss, replacing Mr Clifford Tandari who has been transferred to the Morogoro Region as Administrative Secretary.

Former President Benjamin Mkapa is a high profile critic of EPA in Tanzania and has been considered as the main influence on President Magufuli. But the 42 year old Mwambe, who hails from the same district of Masasi as Mr Mkapa could as well be another influence on President Magufuli’s position the trade agreements.

Mr Mwambe who prior to his new appointment was the District Commissioner for Manyoni District in Singida Region, declined to say how he expertise on Epa has influenced President Magufuli, when The Citizen contacted him last week. He only said that he thinks there was no need to rush to sign the EAC-EU pact, calling for the review of the agreement whose negotiations were concluded in 2014.

President Magufuli is walking on the same line, citing four reasons as to why Tanzania was hesitant in inking the EPA.

Speaking at the extra-ordinary EAC Summit in Arusha last year President Magufuli cited the reasons as protection of local industries and farmers, balance of trade and revenue from imported goods.

The Citizen has learnt that as Trade, Investment and Productive sectors director in the ministry of East African, Regional and International Cooperation for a year, since May 2015, Mr Mwambe was the part of the EPA negotiating team tasked to oversee Tanzania’s interests in the discussions.

“Allowing the 28-member States of the EU free market access in exchange of tax-free exports from the EAC is feared would kill home-grown firms- which are only at their infancy,” noted, Mr Mwambe, a native of Masasi District, in Mtwara Region.

Mwambe, a father of three, maintains that before signing the pact, there is a need to address the problem of the huge deficit in trade between EAC and EU.

But what real seem to be the reason why Mr Mwambe, an Economics Master’s degree holder from the University of Dar es Salaam, could be the right person for the job is his argument that attracting both foreign and domestic could help the EAC bridge the huge trade deficit with the EU.

“The government should identify investment opportunities and put the necessary supporting infrastructure prior to attracting investors in order to reap maximum benefits,” Mr Mwambe, who was sworn in yesterday, said.

Both soft and hard infrastructure, according to him, should be improved through issuance of infrastructure bonds, establishment of earmarked revenue sources such as oil and gas sector, tourism, transit trade or attract public-private partnerships, and streamlining of tax exemption.

“Efforts should be doubled in development of capital and financial markets where capital can be sourced. Countrywide financial literacy should be strengthened and encourage participation of more small and medium enterprises (SMEs) and investors in the stock exchanges, to ensure more securities are issued and listed,” Mr Mwambe noted.

But Mr Mwambe also says that productive capacities need to be improved for the EAC countries produce more and cheap exports that are able to compete with non-EAC exporters who also enjoy EPA treatment in the EU market.

How EAC can improve investment climate

EAC countries should improve business environment to reduce costs of doing business if they want to attract more investments.

This should include lowering the cost of borrowing, trade facilitation, reducing bureaucracy, automation of important investment registration procedures, establish incentivized investment regime and simplified tax payment.

Adequate budget for investment in human capital should also be point of focus, to send high productivity, production efficiency and create conducive environment for private sector operations.

These efforts will help create more trade between EAC and EU as a result of implementing EPA than diverting away from them.

But the study is optimistic that these would be recovered through increased East African exports to Europe.

According to EAC secretariat and EU studies, EAC’s total exports to the world would increase by 1.1 per cent and imports by 0.9 per cent if the EAC-EU pact is implemented.

Currently, Europe is East Africa’s largest export destination, but in terms of imports, the EU ranks third after China and India.

President Magufuli’s position on EPA

President Magufuli is of the view that the trade agreement in its current form will have negative implications for the country’s industrialization strategy.

It should be remembered that with EPA, which was entered in October 2014, the EAC are opening up the local markets to competition from European products.

“This deal might adversely affect Tanzania’s industries and agriculture, through increased competition from EU,” Dr Magufuli points out.

Adding: “as Tanzanians we are very hesitant to sign the pact due to our industrialisation agenda.” and we don’t know how our industries can compete with EU industries given that our counterparts are being subsidized and get insurance for their products.”

This would in turn adversely affect balance of trade as the country continued to sell its raw materials to EU.