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August 14, 2017

Policy Brief: Tanzania and China – New pragmatic dynamic borne of historical links

Of the six East African community countries, Tanzania has several advantages over its peers in engaging with China. It is well known that Tanzania forged perhaps the closest ties with China of any African country from its independence in the 1960s through the 1970s and 1980s to the present. From the iconic but loss-making Tazara Railway to countless reciprocal high level visits (Mwalimu Julius Nyerere visited China at least 12 times) and on to “friendship” projects in agriculture and small industries – all attest to an optimistic view on historical ties.

Strong historical ties

On the international stage, Tanzania’s leading of the push for the People’s Republic of China to take the UN seat over the Republic of China (Taiwan) in the early 1970s is often invoked as a historical point of camaraderie. One can throw in the fact that Tanzania has one of the biggest diplomatic chanceries in Beijing, on par with the South African one, as a demonstration of the close ties of yore. The chancery was donated by the Chinese government in the era of the affable Chinese premier, Zhou Enlai. All said, Tanzania’s turn to socialism under Nyerere ensured many joint projects in transport, maritime, agriculture, textiles, light industries and health sectors, many of which can be revived or form the basis for new deals. Comment has been made of the close relations that Nyerere forged with Chinese paramount leader, Mao Zedong. The common adage of China having a long memory is often used in the context of the humiliation that it suffered under semi-colonial rule from the mid-1840s. However, this long memory is also conducive to China’s respect for countries that helped it one way or another in the past. On the African continent, Tanzania is particularly a long-standing friend of China.

Tanzania, along with other Eastern African countries such as Kenya, Somalia and Djibouti possess historical contacts dating back to China’s Tang Dynasty (AD 618-907). In 2013, coins with Chinese features were discovered in Northern Australia. Archaeological research suggested that their origin was the ancient coal city state of Kilwa (Kilwa Kisiwani and Songo Mnara), which is known to have been in existence from the ninth century, reaching a peak in the thirteenth and fourteenth centuries. How can Tanzania profit from these historical linkages? One way is for it to emulate the archaeological work undertaken by Kenya and China in the coastal cities of Lamu and Malindi. This can be a source of soft power that can be mined for economic purposes. Indeed the soft power capital of the ancient contacts between China and Tanzania was re-enacted in 2010 when a Chinese “hospital ship” sailed into the port of Dar es Salaam after making a call at the Mombasa port. A re-enactment of the possible Indian Ocean route that ancient trade ships took from China to Kilwa can fire the imagination of Tanzanians and Chinese and provide an ideational raison d'etre for economic and political ties.

However, in recent times Tanzania has had less agreements with China than African nations such as Kenya and South Africa. It has been demonstrated that countries that have a repertoire of agreements with China benefit the most from relations. But just what are the advantages that Tanzania has over many of its peers not just in the East African region but also continentally with regards to China?

Standing out in the EAC

From an integrated regional perspective, China has been looking to structure multilateral deals with the East African Community (EAC)  bloc. Since 2012 China has sought to structure cooperation with Africa at the regional level to complement bilateral country-to-country relations. The Tanzanian city of Arusha is the EAC headquarters and Chinese ambassadors accredited to the EAC are also Chinese envoys to Tanzania. Although there were indications of China showing interest in the East African community in the late 1990s, official engagement with the EAC was rather muted until the 2011 China-EAC agreement signed by former Chinese commerce minister, Jiang Yaoping, and former EAC secretary general Richard Sezibera with former China EAC/Tanzania ambassador Liu Xinsheng attending. The long-serving and current Chinese ambassador, Lu Youqing, has maintained this pace with a slew of agreements and deals reached annually. Clearly Tanzania is on the frontline of the EAC multilaterally speaking as it has benefits that come with China using Arusha as the institution of entry into the region; there are also plans for an EAC-China free trade area.

Belt and  Road

A potential link between the past and the present is the Belt and Road Initiative which was launched by President Xi Jinping in 2013 and has now become one of the leading globalization projects. Tanzanian officials looking to tap into the US$1 trillion initiative can propose the historical sea routes leading to the Tanzanian coast as natural beachhead. This is essentially because the Belt and Road Initiative is inspired by the ancient “Maritime Silk Road” of which Tanzania was a part of. Coincidentally, President Xi made his maiden trip to Africa in 2013 and used the occasion to roll out the concept of the “Chinese dream”, which is folded into the Belt and Road Initiative. Symbolically, President Xi’s visit to Tanzania was his second trip outside of China after assuming leadership in 2012, his first trip having been to Russia. Equally symbolic is the fact that he officiated at the opening of the ultra-modern Julius Nyerere International Convention Centre (JNICC) on that occasion.

In the recent past, China’s footprint on the Tanzanian urban skyline has intensified with Chinese technology and finance responsible for a rising number of skyscrapers such as the US$700 million housing project constructed by the China Railway Jianchang Engineering Company and China Poly Group Corporation for the Tanzania National Housing Corporation in Masaki, Dar es Salaam. In March, Tanzania and China announced an agreement for the construction of a US$300,000 Ministry of Foreign Affairs building. If China’s entreaties toward Tanzania for involvement in the construction of new buildings in the capital, Dodoma, proceed, China will also have a footprint there.

So far the Kenyan port of Mombasa has been identified as the landing site of the Belt and Road Initiative in Africa. This is in part because of the completion of the China-funded-cum-constructed Mombasa-Nairobi Standard Gauge Railway. Interestingly, Tanzania’s own US$7.6 billion, 2,190km Central Standard Gauge Railway commencing from Dar es Salaam through Tabora, Mwanza (on the shores of Lake Victoria) to Kigoma and on into Rwanda and Burundi was commissioned in early 2017 but with part-funding and construction by a consortium of Turkish and Portuguese firms. This is interesting it is the first mega infrastructure project in Tanzania that China lost to competitors. Reportedly, EXIM Bank of China had also signed an agreement and had in fact constructed five kilometres with Chinese Foreign Minister Wangi Yi’s visit to Tanzania in January 2017 seen as aimed at canvassing President John Magufuli’s government for the tender. The high-level Chinese lobbying seems not to have borne fruit apparently because it had been irregularly awarded and, Magufuli has been particularly focused on reining in corruption. Could this be one of the reasons why Tanzania is not being listed as one of the Belt and Road Initiative’s host countries? Although there have been indications that Tanzania would be involved in the Belt and Road Initiative, maps indicating the sea and land routes leave out Tanzania.

While the Kenyan coast is held up as the landing site of ancient Chinese voyages, the history of the Kilwa ruins clearly shows that Tanzania too has historical links with China. Thus Tanzanian officials can step up to the plate and negotiate for explicit inclusion in the Belt and Road Initiative. A pathway in this direction would be the connection of China’s current interests in the on-again-off-again Bagamoyo Port (estimated at US$11 billion by some sources) to the Belt and Road Initiative (or indeed any of the other Tanzanian ports Dar es Salaam and Tanga). It is instructive that the initial agreement for the construction of the Bagamoyo port was signed by Presidents Xi and Jakaya Kikwete in 2013 – that is, as high-level as it can get. In a nutshell, it would appear that Kenyans have been more successful in lobbying to be part of the Belt and Road Initiative than Tanzanians have been.

Sitting on vast reserves

Another key advantage that Tanzania has over its East African counterparts is the view that it possesses the highest known deposits of minerals and hydrocarbons in the region. China has been engaged in a flurry of activity in the Tanzanian natural resources sector. This perhaps explains why the Chinese State Bureau of Surveying and Mapping chose Dar es Salaam as the site for natural resources surveying and mapping back in 2010.

Indeed Tanzania is heady with discoveries of offshore natural gas, what with a healthy balance of more than 28.74 trillion cubic feet (tcf) reserves of natural gas – revised upwards from10 trillion cubic feet (tcf) in 2011. The project was commissioned by former president Jakaya Kikwete in 2015 having been financed with a Chinese loan of US$1.25 billion according to sources. The natural gas in Songo Songo in southern Tanzania was first discovered way back in 1974 by Agip, now Italy’s ENI, but remained a low-key operation until Britain’s BG and Norway’s Statoil came on the scene to undertake offshore exploration with Chinese companies involved on onshore infrastructure building.

After ascertaining the commercial viability of the natural gas China expressed interest in developing processing plants in Mtwara (whose decaying port had been built in 1954 by the British); Songo Songo and Lindi in the southern coastal areas were followed by yet another deal for construction of a 532km pipeline to transport the natural gas from Mnazi Bay to the capital, Dar es Salaam, the latest transaction being an approximately US$1 billion deal signed in September 2012. At the self-same Mnazi Bay, Tanzania secured another loan of US$684 million for 300 Megawatt gas-powered electricity generation plant in late 2011 to be implemented by China National Machinery and Equipment Import & Export Corporation and German engineering group Siemens. This was only days after Tanzania and China had agreed a US$3 billion coal and iron mining deal in the Mchuchuma (coal) and Liganga (iron), both in close proximity to southern Tanzania. The funds were mostly committed by China Exim Bank on soft and long terms as well as joint ventures with China’s Sichuan Hongda Group (through a subsidiary, Tanzania China International Mineral Resources Limited) holding the Chinese stake while the National Development Corporation is the Tanzanian partner. By all accounts, the US$3 billion interlinked coal-iron mining deal – for which work commenced mid-2012 – is one of the biggest mining deals among China-East Africa deals in recent times.

However, the natural gas pipeline deal has been dogged by controversies as locals in southern Tanzania and in Mtwara in particular have been up in arms demanding that the natural gas be processed in Mtwara rather than being piped to Dar es Salam. For some Tanzanians the deals were perceived as unfair because the National Development Corporation would have a 20% share while the Sichuan Hongda Group would get the remaining 80% of the spoils. Social network sites witnessed a busy beehive of criticism with commentators wondering why the resource owner, Tanzania through the National Development Corporation, would accept a supposedly paltry 20% shareholding, while the foreign investor took close to three quarters of ownership.

Given the ups and downs of China’s presence in the Tanzanian economy, it would appear that a new pragmatic dynamic is emerging in which optimism borne of historical links is being tested by new realities especially under President John Magufuli’s austere leadership.

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