What is at stake in the EU-TZ diplomatic tiff?

What you need to know:

  • In its short statement published on its website, the EU delegation to Tanzania said it was regretful of the deterioration of the human rights and rule of law situation in the country

Dar es Salaam. There is widespread concern about the future of various multi-million dollar projects affecting thousands of Tanzanians, and a significant number of companies, should the European Union concludes negatively on the broad review it is intending to carry out on its strained relationship with Dar es Salaam.

Thousands of Tanzanians are currently beneficiaries of various projects wholesomely or jointly funded by the EU, and these include major investments in agriculture, energy and climate.

Other projects cover issues related to governance and development; civil society organisations and business associations; organisations promoting business as well as employment.

Should the EU conclude its review unfavourably, it also risks a multitude of its business and investment interests currently up and running in the country’s various sectors.

The 28-member states political and economic union this week expressed its intention to relook its relations with Tanzania on broad basis, hours after having recalled its head of delegation to Tanzania, Ambassador Roeland van de Geer, to Brussels.

The statement noted that the EU was regretful of the “deterioration of the human rights and rule of law situation in the country without shading more light on the issue”.

National Indicative Programme

Tanzania-EU relations build on the National Indicative Programme (NIP) signed by the two in June 2014, which provided a road map of EU support to Tanzania for the period 2014-2020.

At the heart of these relations are three sectors, which contribute to the achievement of the strategic objectives of the EU-Tanzanian cooperation, and that are coherent with both Tanzania’s national development strategies and the EU Agenda for Change. These sectors are good governance and development, energy and sustainable agriculture.

Upon the signing of the NIP in 2014, the EU allocated a total of 626 million euros (Sh1.6 trillion) for funding of the various projects in the aforementioned areas.

Good governance and development would be allocated a 46.5 per cent of the total fund, which is equal to 291 million euros (Sh764.6 billion). This would focus on domestic revenue mobilisation, budget transparency, reinforcement of domestic accountability as well as continuing efforts to reduce poverty through investment in social services and productive capacities.

Energy on the other hand would take 29 per cent of the fund which is equivalent to 180 million euros (Sh472.9 billion) to contribute to increased energy access and security and the strengthening of Tanzania’s role in the regional energy markets through support to the core reforms in the electricity sector.

Sustainable agriculture takes 22 per cent of the fund, which equals 140 million euros (Sh140 million). The fund would be used to generate agriculture wealth, through linking farmers to markets and value chains. It also seeks to improve food and nutrition security through improved access, availability, and use of food and enhance management of natural resources and ecosystem services for sustainable agriculture development and climate adaptation.

Out of the total funding, 0.5 per cent, which is equivalent to 3 million euro (Sh7.8 billion), would fund measures in favour of civil society while the other remaining 2 per cent which is an equivalent to 12 million euros (Sh31.5 billion) would fund various support measures.

Massive transformations

With only about two years for the programme to come to an end, the National Indicative Programme (NIP) agreed between the EU and Tanzania has been able to bring about several transformations to people’s lives.

Currently, a total of 2,832 farmers across Kikombo and Idifu wards in Dodoma have access to improved seeds aiming at building resilience to draught in cropping season thanks to the Eco-Village Adaptation to Climate Change in Central Tanzania. The EU allocated 1.5 million euros (Sh4.2 billion) into the project.

The project encompasses the EU eco-village approach, and strives to increase and diversify incomes, and strengthen resilience and reduce vulnerability to climate change. The eight targeted communities are located in a semi-arid landscape in Dodoma region.

With the project, which started in 2015 and expected to end in 2019, sixty Idifu farmers installed contour terraces for controlling soil erosion. The project has trained 15 youth on leather goods making. At the moment, the project seeks a completion of construction of vegetable leather tannery and leather goods making factory and production of vegetable leather tanned goods in Chamwino district.

EU also funds the 9.5 million euro Food Security and Nutrition in Tanzania, a World Food Programme project which aims at improving access to and use of nutritious food by women and children in Bahi and Chamwino Districts in Dodoma Region and Ikungi and Singida Rural Districts in Singida Region.

Among the beneficiaries of this project which started last year and expected to conclude in 2021 are pregnant and lactating women, children under the age of two and female-headed households.

In the end, it is expected that at least 30,000 beneficiaries benefit from food distribution, not less than 14,000 beneficiaries receive asset transfer and around 10,000 beneficiaries benefiting from Vicoba schemes.

EU investment interest in Tanzania

All these however seem to make Tanzania a darling to EU investors.

A recent report on European Investment to Tanzania shows that the EU countries contribute 68 per cent of the total Foreign Direct Investment (FDI) flows into the country, with the 2012 statistics indicating that the overall investments amounted to $1.2 billion.

The EU remains to be country’s largest trading partners, with exports and imports recorded in 2013 valued at $2 billion.

The report also established that Tanzania Revenue Authority (TRA) has rated the EU as ‘large taxpayers’ contributing $813 million in domestic taxes as per 2014, accounting to 25 per cent of levies paid by large taxpayers.

According to the report, there are currently about 1,000 EU companies operating in Dar es Salaam, Arusha and Zanzibar half of them originating from British. The companies have mainly invested in mining, financial services, energy, ICT and agricultural sectors.

Other areas at which the companies have invested include manufacturing, construction, power and energy, oil and gas, transportation and tourism.

Agricultural sector which employs over 75 per cent of the citizens enjoy proactive support of European firms across the entire value chains, with a total investment from 92 companies from 13 countries led by the UK and the Netherlands.