Looking East, West: Samia perfects Ruto’s game to attract trade, investment
Wednesday October 18 2023
President Samia Suluhu Hassan addresses business leaders and investors at an India-Tanzania business forum in New Delhi, India October 10, 2023. PHOTO | IKULU TANZANIA
Tanzanian President Samia Suluhu this week returned from a state visit to India with pledges to improve economic ties, completing a cycle of tours to her country’s biggest trading partners since she took over power in 2021.
President Samia’s diplomatic strategy of keeping and engaging friends in both the West and the East is mirroring William Ruto’s.
For Dodoma, Samia’s trip to New Delhi, her first as head of state, delivered an elevation: The two countries’ relations are now a “strategic partnership,” a diplomatic status where countries consider each other crucial for their foreign policies.
Indian Prime Minister Narendra Modi, after hosting the Tanzanian leader on Tuesday, said they had discussed “trade, commerce and people-to-people linkages.”
“Our nations have decided to work together to form a five-year roadmap in the defence sector. This will be beneficial for military training, maritime cooperation, capacity building and the defence industry,” Modi said.
Read: Tanzania’s radical shift under Samia
President Samia took the trip aiming to raise foreign direct investment into her country. In the end, she signed MoUs on easing trade transactions, industrial development, maritime security and defence.
“We have moved from registering $2 billion of FDI in 2020 to $5 billion in the year ending June 2023. We target $15 billion per year by the end of 2025,” she said at an India-Tanzania business forum.
Top investor
Since 1997, Tanzania has received over $3.87 billion of investments from India, with 675 projects and at least 61,000 jobs delivered, making India one of the top five investors in Tanzania, according to state data.
Now, President Samia wants more, and she pitched investment promotion agencies in mainland Tanzania and Zanzibar, targeting at least $3 billion of FDI from India per year by 2025.
She described India as part of her country’s “family,” given the historic ties that go back to pre-colonial days.
But India is just one of those big investors eyed by Tanzania.
In November 2022, Samia became the first head of state to meet with President Xi Jinping, shortly after the Chinese leader earned his third term in office.
They elevated their ties to a “comprehensive strategic partnership,” making Tanzania fourth in Africa to earn such elevation with Beijing, after Algeria, Mozambique and South Africa.
Samia also lobbied for more trade to re-balance the commerce between the two countries and earned duty-free access on at least one percent of tariffs that had been imposed on Tanzanian goods.
Read: Samia woos investors to Tanzania
Dodoma would later join in on the Belt and Road Initiative (BRI), a signal of Beijing’s intent to tap coastal countries as a gateway to East Africa’s hinterlands.
Before Tanzania, Kenya, Djibouti and Mozambique had been signed on the BRI, an ambitious programme by China to develop infrastructure meant to ease trade across the globe.
Ruto strategy
Tanzania has engaged China, India and the US in seeking to rebuild its economy post-Covid.
Kenya’s President Ruto has also perfected the art of playing the field, although he has lately been seen as a staunchier US ally than his peers.
President Ruto came to power in September 2022 at a time his country was facing criticism for bingeing on Chinese debt and facing the risk of default.
His strategy out of the debt trap? Seeking partners from the West, while keeping the Chinese happy. In fact, he is scheduled to travel to Beijing later this month to for a BRI meeting.
His dalliance with both sides, says an official briefing seen by The EastAfrican, is to ensure as many partners buy into his Bottom-Up economic policy. Part of that is to deliver – or seem to deliver – what investors from both sides want: Good governance and a promise to open up for investments.
Read: Kenya targets US investors with tax relief
“The President’s Foreign Policy Doctrine is informed by the fact that despite initiating economic reforms and improving the various foreign direct investment regulatory frameworks – aimed at encouraging commercial activities – Africa still lags other regions of the world when it comes to attraction and retention of FDI,” says an official brief shared by Kenya’s Ministry of Foreign and Diaspora Affairs.
“Although FDI inflow into Africa continues to increase, it is still less than five percent of the global FDI flow. Negative perceptions seem to harm the continent’s and the individual African countries’ ability to attract FDI, with two fundamental challenges often cited by foreign investors; the issues of transport and logistics infrastructure, and the rule of law.”
The Kenyan leader has said he may seek finances to build projects, but has also been asking for cheaper transparent credit, which he argues comes from reforming the credit markets.
“We do not want anything for free…we only want to pay commensurate with our national economies and have our collective resources controlled by a new organisation of equals,” he said in June at the Global Financial Pact Summit in Paris.
Yet Dr Ruto is expected to seek more financing from Beijing for the construction of a major linking highway to neighbouring Uganda, according to officials who spoke to The EastAfrican this week.
The Kenya National Chamber of Commerce and Industry (KNCCI) opened an office in Changsha, the capital of China’s central province of Hunan, in what it said was to tap into growing Sino-Kenyan trade ties.
Read:Kenya opens third embassy in Southeast Asia
“The office will play a critical role in facilitating trade and investment, attracting more investment, promoting visibility and awareness of Kenyan products,” said KNCCI President Erick Rutto.
The KNCCI office is supposed to link up some 600 companies involved in export-import business from China.
Easing business
In India, President Samia, who has also pitched ideas to Qatar and the United Arab Emirates, told business people that her country has established special desks for India with dedicated staff to prioritise and support investors.
“We have agreed to open new avenues of cooperation as well as scaling up our cooperation to a strategic partnership framework,” Samia said in a joint press briefing with Modi in the Indian capital.
Tanzania, she argued, has eased its business procedures, making it easy for investors to inject their capital in key and strategic investments areas, mostly in agriculture, industrial development, import and export trade and information technology.
Tanzania and India agreed to use their local currencies for direct transaction in trade, aiming to reduce the use of US dollars.
A joint statement released after discussions said that both leaders want to expand bilateral trade using local currencies.
Kenya has reached a similar deal.
The Reserve Bank of India cleared the way for trade using the Indian rupee and Tanzanian shilling by allowing authorised banks in India to open Special Rupee Vostro Accounts (SRVA) with Tanzanian banks for transactions. Tanzania’s National Microfinance Bank and National Bank of Commerce will be linked to the Indian banks to facilitate transactions by traders, the Indian High Commission said.