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October 20, 2012

Evicted by Chinese investment

By Beibei Yin

On his one and a half hour motorcycle commute to work, Magnus Malisa passes  Kipawa in the west of Dar es Salaam in Tanzania twice a day. In his memory, Kipawa used to be a lively neighbourhood where his and 1290 other families had lived for most of their lives. The area has now been completely demolished and fenced in. A painted sign on the fence suggests  a Chinese company is to build a terminal building as part of the Tanzanian capital’s airport extension projects.

However there is no sign of construction in Kipawa almost two years after the community was evicted. The area is now a deserted field where wild papayas ripen and street boys hang out in the surprisingly idyllic setting in what is supposed to be a construction site.

Most former Kipawa residents were relocated 36 kilometres further west where they do not have access to electricity, clean water, roads and schools.

“The eviction at Kipawa was announced 13 years before it happened.  The government had enough time to prepare a proper relocation plan. Yet, we were thrown into a bush after our homes were torn down within a few days,” said Magnus Malisa.

As a leader of a group of discontented Kipawa residents, Malisa was once jailed for protesting against the eviction. He said the government was only paying half of what the residents really deserved. More than 480 families refused to agree with the proposed compensation package as the evaluation was based on an obsolete Land Acquisition Act of 1967. Nevertheless on February 5th 2010, the eviction was carried out suddenly with tear gas bombs; 333 buildings were demolished within 2 days and many people became homeless overnight.

Like many other Kipawa residents, Eric had to prioritise when he built his new house with a compensation of 6million Tanzanian Shillings(2,400British Pounds). His budget only allowed him to roof one room that now accommodates the family of eight and most of their belongings. By the dim candle light, Eric said the family get by living without electricity, but clean water remains a luxury. The only available resource of water is a muddy ground well dug by the locals. Machines to drill and pump clean underground water cost at least 10 million Tsh(4,000British Pounds).

Though being forced to live elsewhere, the Kipawa residents may not see changes in the empty fields that used to be their home in the near future. The Tanzanian government admitted the investment for its airport projects is not yet in place.

The Kipawa community was relocated to a bush area with no clean water

Suleiman Suleiman, the managing director of Tanzanian Airport Authority said the talk with the Chinese investor has broken off and the terminal project is currently suspended till new investment comes in. Three days after the Guardian contacted the authority for more information, the signs bearing the name of the Chinese company on the fence were painted over.

It all looked a rather different story four years ago when Sam Po flew his private jet into Tanzania in March 2007. Mr. Po represents the ‘No.88 Queensway Group’, a group of companies registered at that address in Hongkong. His visit was well received by high ranking Tanzanian officials as he offered to upgrade the capital airport and to revive Air Tanzania, the troubled national flaf carrier airline.

Little was known about the cards that Sam Po’s held in his hands for Tanzania. But at least the companies he controls appeared to do no small business: Building a new terminal alone is estimated to cost no less than 300million US Dollars(193million British Pounds). Sam Po has promised six other projects to upgrade the airport according to the Memorandum of Understanding obtained by The Guardian.

A few months after signing the MOU, China Sonangol International Holding (a key company in the Queensway Group)was granted licenses to explore two oil fields in the Lake Rukwa basin in south western Tanzania. Zitto Kabwe, a member of the Tanzanian Parliament says it is not a coincidence that China Sonangol got the area with the best oil prospects in Tanzania.

China Sonangol is certainly not an ordinary private company. A recent investigation by The Economist  finds almost all of China’s imports of oil from Angola—worth more than $20 billion in 2010 alone—come from China Sonangol.

As the boss of the Queensway Group,  Sam Po finds his way to key decision makers where he does business. He first met the Angolan President when he was studying at a military school in the former Soviet Union and later sold arms to his guerrilla army. Sam Po travelled to Angola in 2004 and consolidated the relation by setting up China Sonangol together with the national oil company.  In China, Sam Po co-founded New Bright International (through his partner Veronica Fung) with Luo Fangping, daughter of a Chinese General. New Bright now controls over 60 companies in the Queensway Group, including China Sonangol and China International Fund(CIF).

On back of the Angolan oil contracts, the CIF received loans from Chinese state-owned banks. Some of the funds were then used to secure infrastructure projects in Angola, which was desperate for reconstruction after the 27-year civil war. The company has won most key construction projects in the country, such as the construction of 215,500 low-income social houses, an industrial zone with seventy factories, an international airport, 2,680 kilometres of railway tracks and 1,500 kilometres of interprovincial roads.

‘Sam Po could get projects other Chinese companies could not get’, said sources who worked on the construction projects in Angola, ‘ his companies do not have expertise in construction, but it is not difficult to find sub-contractors in China who either lack overseas experience or funds to start a project.’

But the CIF’s subcontractors would soon find themselves trapped in projects short of financing: the bidding price turned out to be far too low to cover cost and payments were usually delayed. Some of them were even told to receive only thirty percent of the agreed payment half way through.  As a result, most construction projects halted. The international airport of Luanda for instance, it was scheduled to open in 2010 but till today, only part of the foundation has been finished.

It was a similar story in Tanzania: Four years later, not even the design of the terminal has been finalised. A Beijing-based construction company designed part of the extension projects in 2008. A lady who works for the company told The Guardian: ‘The contract with CIF has been terminated.  We only received part of the payment. After a while, we just did not hear many updates about the projects in Tanzania.’

This coincides with what Suleiman, head of the Tanzanian Airport Authority has told the Guardian: ‘At some point, we just did not hear from CIF anymore.’

A decision by the Tanzanian Parliament may explain the retreat of the Chinese investor and the silence on the planned construction in Kipawa.  Zitto Kabwe, the member of theTanzanian Paliament called for an inquiry which later found China Sonangol has been granted oil concession outside normal procedure in 2009.The Paliament forced the authorities to withdraw the licenses gifted to the Chinese company.

But Kabwe said he was concerned ‘how Tanzanians will have to pay back the Chinese’. The nearly bankrupt national airline Air Tanzania just pulled itself back to business using the 21million US Dollars(13.5million British Pounds) from China Sonangol. ‘The Chinese investors has left behind two airplanes which we are using,’ says Paul Chizi, CEO of the Air Tanzania. The VIP terminal of Dar es Salaam airport that received Prince Charles in November was  also constructed free of charge by the Chinese company, estimated to cost 6million US Dollars(3.9million British Pounds).

1,290 families in Kipawa have been evicted for China Sonangol’s intended investment in the land which had been home for them for many years. No one can guarantee a similar story will not happen again somewhere else in Tanzania. An official at the Tanzanian Airport Authority suggested ‘talk with the Chinese has not completely failed but now it’s up to the higher level to decide’. cccc

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