How the dream for a port in Bagamoyo became elusive

Dar es Salaam. The dream to develop what would be Africa’s largest deep water port with an annual capacity of 20 million containers hangs in the balance, following President John Magufuli’s stance against its establishment.

The President on Friday expressed his strongest opposition yet to the proposed Bagamoyo Special Economic Zone, a humongous 3000 hectares port and industrial city north of Dar es Salaam.

The government earlier billed the $10 billion (Sh23 trillion) project as a key engine to Tanzania’s industrial transformation and was signed in 2013 between Presidents, Xi Jinping of China and Jakaya Kikwete in Dar.

By rejecting what he sees as unacceptable terms, President Magufuli has dimmed hopes for its implementation, which now leaves the ball squarely on China should it want to relook the said terms of engagement.

China, which rolled out the ambitious ‘Belt and Road Initiative’, eyed the Bagamoyo investment for a global trade strategy based on the ancient Silk Road trading route.

The initiative aims to link trade across Asia, Africa and Europe by combining new and older projects such as Tazara in the case of Tanzania, and includes improved soft and hard infrastructure, and even cultural ties.

Tanzania is yet to sign as a participating country in the multi-billion dollar Belt and Road plan, but Beijing always hoped its soft ties with Dar was enough to push through the investment.

President Magufuli’s stance thus brings a new challenge and reveals underlying competing national interests against China’s drive to influence or control new global business frontiers.

Dr Magufuli is keen to insulate Tanzania against the economic scramble of the super powers, and has declared that his administration will embrace partners ready to engage in a win-win situation.

It was therefore going to be a tough sell to raise Bagamoyo project above the agenda to chart the Tanzania’s own development path, even amid arguement by certain quarters in the country that the project carried huge benefits.

According to the President, allowing the Bagamoyo initiative to progress would halt expansion of other ports and grant unduly long tax breaks for would be investors in the special economic zone. The government has also argued that it would also lose some sovereignty in the management of the project.

The President suggested corruption may have been involved in the government’s payment of billions of shillings as compensation for local residents to create room.

“This project has very difficult conditions. They are exploitative and awkward. We can’t allow it,’’ said president Magufuli who was speaking about the beleaguered project for the first time.

The project was to be implemented by the government of Tanzania in partnership with China Mercant Holding International and Oman’s State Government Reserve Fund (SGRF).

“In fact, the investors wanted to tie our hands in developing Tanga port, which is very crucial for the oil pipeline from Uganda and others in Mtwara and Kilwa. These are our oldest ports,’’ said the President.

The World Bank is financing the expansion of the Dar es Salaam and Mtwara ports among other infrastructure projects.

Sources have in the past indicated that the World Bank was not keen on the Bagamoyo investment, arguing Tanzania could invest in a project that could become a white elephant in future. However, it is not known if this position has had any effect on the government’s approach.

In May, Tanzania Ports Authority (TPA) director general Deusdedit Kakoko told The Citizen that China and its partners wanted the government guarantee that they would be compensated for any losses incurred during implementation of the project.

According to Mr Kakoko, it was odd that the developers sought tax exemptions on the grounds there was insufficient cargo in the country. “If the country has insufficient cargo, why do they seriously consider Tanzania for investment in railways and ports?”

Mr Kakoko said investigations by the government established that the investors planned to control the port and railway transportation with an eye on copper from Zambia and cargo destined to the Democratic Republic of Congo (DRC).

“While controlling all this, tax calculations and audits were set to be undertaken in China. This would have been possible because they would be controlling all cargo, ports and logistics,” he said, adding that they also asked for waiver of lands tax, workers compensation tax, skills development levy, customs duty and value added tax (VAT).

Yesterday, opposition leader Zitto Kabwe said President Magufuli was opposed to the project from the beginning. “The conditions he is saying is just diversionary,” said Mr Kabwe, adding that the project would put Tanzania in the world maritime map.

Separately, Speaker Job Ndugai who has publicly expressed support for the Bagamoyo project and challenged the government to roll it out, yesterday backtracked.

“We didn’t have information about the stringent conditions that were attached to the project, as was explained by the President,” he said.