Tanzania expects foreign direct investment to grow 10 percent this year from $13 billion in 2012 after China replaced the U.S. as the fourth-largest investor in the East African nation’s economy.
China, which was not among the top 10 investors in Tanzania in 2011, contributed $1.4 billion, ahead of the U.S. investment of $950 million, acting Tanzania Investment Center Executive Director Raymond Mbilinyi said in an interview in Dar es Salaam, the commercial capital.
“We also have new projects we expect to register in the course of the year in the sectors of agriculture and infrastructure,” he said yesterday.
Tanzania, East Africa’s second-biggest economy, in January hired Citigroup Inc. to help it secure a sovereign credit rating before its sells its first Eurobond. Tanzania vies with Mali to be Africa’s third-largest producer of gold, and has so far confirmed 33 trillion cubic feet of natural gas.
Sichuan Hongda Co., a Chinese Zinc producer, and Tanzania in September 2011 signed a $3 billion agreement to develop coal-mining and steel production projects, after beating 40 contestants for the tender including BHP Billiton Ltd., and Rio Tinto Group, according to Mbilinyi.
The Export-Import Bank of China loaned $1.2 billion to build a 500-kilometer (311-mile) gas pipeline from Mtwara to Dar es Salaam. Chinese investors are expected to start more projects this year in agriculture, infrastructure and manufacturing, Mbilinyi said. He declined to give further details.
The U.K. topped the country’s FDI list last year with $4.7 billion from companies including BG Group Plc and SABMiller Plc. India invested $1.8 billion while Kenya, where most multinational companies operating in East Africa are based, followed with $1.5 billion, Mbilinyi said.
Poor infrastructure has made Tanzania a high-cost business area, according to investors including African Barrick Gold Plc. The company, the biggest miner of the metal in Tanzania, on Feb. 13 said production would slow because of high operational costs including unreliable and inadequate electricity.
“It is true we have problems in infrastructure, which is not good for our investment climate, but we now want to turn these problems into opportunities,” Mbilinyi said.
Public-private partnerships “are going to be a common mode of investment henceforth. For instance, we will invite private companies to invest in road construction, where they can recoup from a road toll,” Mbilinyi said.