Analysts: Why Samia is right on proposed Bagamoyo Port

Wednesday June 30 2021
Port pic
By The Citizen Reporter

Dar es Salaam. President Samia Suluhu Hassan’s pronouncement that the government has restarted negotiations on reviving the $10 billion Bagamoyo Port Project has prompted debate on the matter, with some analysts saying it was the right thing to do.

The government signed a framework agreement in 2013 with China Merchants Holdings International (CMHI) and Oman’s State General Reserve Fund to build the port and a special economic zone as part of efforts to transform Tanzania into a trade and logistics hub in the region.

But the Fifth Phase administration of the late John Magufuli dismissed the project, saying it was exploitative and inappropriate.

However, chairing her maiden Tanzania National Business Council in Dar es Salaam recently, President Hassan – who ascended to the Presidency on March 19, 2021 following the death in office of Dr Magufuli on March 17, 2021 – said the Bagamoyo Port project should be implemented for the benefit of the country.

Analysts now say there had been a number of falsified statements during the past administration to justify the cancellation of the project.


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Mini Tiger

Those that spoke to The Citizen said yesterday that it was unfortunate that people had been debating the issue without taking trouble to understand how it all started and its entire scope.

“It’s not about the port alone. In fact, the port is just a very small fraction of a wider Bagamoyo Special Economic Zone (BSEZ) which started in 2004 as part of the Tanzania Mini Tiger Plan 2020,” said a source privy to the topic on condition of anonymity.

Placed under the Ministry of Industry and Trade, the Tanzania Mini Tiger Plan is an economic strategy aimed at fostering development in the country by increasing exports to the global market.


Master Plan

Contrary to widely-held assumption that the project was being advanced by foreign nations, the Bagamoyo Port Project is the brainchild of the Tanzania Ports Authority (TPA) through its Tanzania Port Development Master Plan which runs from 2009 to 2028.

Even before the arrival of China and Oman, TPA had contracted the Germany-based Hamburg Port Consulting to conduct feasibility study on the project. That was followed by a feasibility study by the Ministry of Industry and Trade – through CowiConsult - that sought to link the port project with the entire BSEZ.

Later, the CMHI and Oman’s State General Reserve Fund joined forces and applied for investment in the BSEZ and Bagamoyo Port.

“Plus other local and foreign players, including the South Korea – through its Science and Technology Policy Institute which sought to invest in the Bagamoyo High Technology Park – the whole project would include 760 factories that would create 270,000 jobs in its first phase,” a source said, dismissing grounds advanced by those opposing the project.

They say investors in the project were unable to respond to some of the “gravely false statements” by those against it (the project) because they (the statements) were being put forward by senior government officials who they would not want to engage into tussles with.


No debt

Contrary to widely-held assumptions that the project would actually see Tanzania getting into massive debt, the proponents say actually money would be brought in by investors under an agreement on how it would be recouped.

The point that Bagamoyo Port would also prevent the government from developing Dar es Salaam is rejected by proponents of the project on the grounds that going by The Tanzania Port Development Master Plan 2009-2028, the two ports (Dar es Salaam and Bagamoyo) would simply complement each other.


4th generation

The former (Bagamoyo), which was meant to be ready by 2023, would specifically be built to target 4th Generation Shipbuilding Technology and therefore, not in any way a competitor for the latter (Dar es Salaam).

The concession period of 33 or 99 years, analysts say, was subject to Tanzania’s own laws and that it would be a subject of negotiations between the government and the port developers in line with how long it would take to recoup the $10 billion to be invested in the project and the global standard practice.

Sources privy to the project say in as far as ports development were concerned, the standard practice was that an investor gets between 25 to 40 years to recoup his investment depending on the amount being invested.

In fact, a 50-year period was arrived at to be the right time for investors to recoup their investment in the rail link between the UK and France.

ACT-Wazalendo party leader Zitto Kabwe shared similar sentiments, saying by cancelling the BSEZ, Tanzania was simply losing its international reputation to its strategic partners like China and Oman.

“The Bagamoyo project was a very important venture for the Chinese President’s idea of a ‘Belt and Road Initiative’. The failure of this project indicated a diplomatic weakness of our country, which is costly for the development of our country,” he says.

He is of the view that the Bagamoyo project would bring all the African cargo here in Tanzania for the Standard Gauge Railway (SGR) line to get business and thus get the benefits of investment.

Renowned economist, Prof Samuel Wangwe, said what Tanzanian negotiators needed was to know what value addition the country wanted by developing Bagamoyo Port.

“It’s about ensuring that the development of the port complements the Dar es Salaam port,” he said. Business expert and economist, Dr Donath Olomi, said the Bagamoyo port is of paramount importance in making the country’s economy competitive.

“When you have a huge ship, costs per unit go down and so does transportation costs….We need a port that attends to large vessels to up our competitiveness going forward,” Dr Olomi told The Citizen, trashing assumptions that the Bagamoyo Port would ‘kill’ Dar es Salaam port.

He said going by the Integrated Industrial Development Strategy (2011-2025), in 2030, the Dar es Salaam port will reach its expansion limit.


Lamu and Mombasa

“Kenya is constructing the Lamu port, but they are not afraid that it will ‘kill’ the Mombasa port…Dar es Salaam port will be there attending to ships that currently dock there. It is just a matter of negotiating wisely so that finally, we can ink a contract that creates a win-win situation,” he said.


Misinformation

In April 2020, as soon as reports went out Tanzania had cancelled the project, Cheng Wang, who is a civil servant at The Ministry of Commerce of the People’s Republic of China, provided another perspective via a thread of eleven tweets.

He stated the $10 billion was the final investment amount invested by various investors and operators, trashing claims that there was a $10 billion deal on the port project from China alone.

The Bagamoyo port project is a tri government project between China Merchant Group and State General Reserve Fund (SGRF), Oman and Tanzania.

According to him, SGRF had no less than 10 per cent share in the project, and hence, the company was required to make investment equivalent to its share. Though he highlighted no objections with the cancellation of the project, but the amount of misinformation and manipulation associated with the project was ridiculous.