Why China has become leading foreign investor in Tanzania

TIC executive director Geoffrey Mwambe. Photo |File

Dar es Salaam. China has leapfrogged its Western peers to become the largest foreign investor in Tanzania, thanks to the aggressiveness of its people in searching for new markets outside the world’s most populous country.

Eight years ago, China was sixth among countries with the largest investments in Tanzania behind the UK, the US, South Africa and Kenya.

But latest figures by the Tanzania Investment Centre (TIC) show that China had moved into second place in 2012 before taking the top slot a few years ago.

Cumulative figures for the period between 1990 and 2017 show that China is leading with investments worth $5.963 billion.

The UK came second with investments valued at $5.54 billion while the US, Mauritius and India completed the top five list with investments worth $4.7 billion, $4.308 billion and $2.2 billion, respectively.

TIC executive director Geoffrey Mwambe told The Citizen that the trend explains a tendency by Chinese nationals to aggressively look for new investment opportunities outside their country.

“The Chinese have a tendency to invest in diverse sectors. They are in infrastructure development, agriculture, manufacturing and even the small and medium enterprises (SMEs), among other sectors,” he said.

In a speech delivered in November 2012 in Dar es Salaam during the inauguration of the construction of the $1.225 billion natural gas pipeline project, the former Chinese ambassador to Tanzania, Dr Lu Youqing, said Tanzania remains one of the key focus areas for the Asian nation. Available data show that in 2014 alone, Tanzania accounted for 16.3 per cent of China’s foreign direct investment (FDI) to Africa.

Tanzania’s ambassador to China, Mr Mbelwa Kairuki, said a number of promotional initiatives have been conducted by the East African nation in the world’s second largest economy during the past few years.

“It’s been hectic during the past years,” he said, detailing a number of meetings that took place in the last few years.

Mr Kairuki, who has been Tanzania’s ambassador to China since 2016, said in conjunction with TIC, the Export Processing Zones Authority (EPZA), members of the business community in Tanzania as well as with past and present top government leaders in both countries, a lot of work had been done with regard to promoting Tanzania in China as a preferred investment destination.

These initiatives could have been boosted further by those which focus primarily on Tanzania and other East African nations for China’s Africa economic strategy.

A Chinese official, Mr Cao Jiachang, who served as the deputy director general of the department of West Asian and African Affairs in the ministry of Commerce of China, told African journalists who visited the Asian nation in 2015 that his country had selected Tanzania as a pilot country for its China-Africa economic cooperation along with Kenya and Ethiopia.

Tanzania in the same year announced that over 100 Chinese investors had shown interest in establishing businesses in the country as part of a five-year programme backed by the China Africa Development Fund (CADFund). Mr Mwambe concurred with Mr Kairuki, saying promotional efforts by the TIC may also have had an impact.

“We conducted several exhibitions in China aimed at attracting the Chinese business community to come and invest in Tanzania. Our commitment to provide requisite incentives to foreign investors has helped to attract many investors,” he said.