AFRICA RISK CONSULTING

Tanzania Monthly Briefing December 2020 Summary 4 December 2020 President (2015-present) outlines his priorities for his second and final term in office during the inauguration of parliament on 13 November following the resounding win of the ruling (CCM) in the October general election. While Magufuli has signalled further assistance for the private sector, his delay in appointing a full cabinet has further slowed government engagement. The protracted downturn in tourism globally is putting Tanzania’s economy, and its levels of foreign exchange reserves, under strain. Tanzania fares moderately compared to its regional neighbours in the Mo Ibrahim Foundation’s annual Ibrahim Index of African Governance (IIAG).

Magufuli’s second term off to a slow start President John Magufuli (2015-present) outlined his priorities for his second, and final, term in office at the inauguration of parliament on 13 November.1 Magufuli won the 28 October election with 84.4% of the popular vote, while the ruling Chama Cha Mapinduzi (CCM) party won an overwhelming majority in the National Assembly.2 Although there were significant concerns both within Tanzania and among international observers about the level of government interference in the polls,3 the National Electoral Commission (NEC) has upheld the results and the focus has now shifted to what Magufuli’s second term in office is likely to look like. During the inauguration speech, Magufuli vowed to continue to prosecute his broadly successful anti- corruption campaign, which has seen Tanzania rise from 119th place in 2014 to 96th place in 2019 in Germany-based non-governmental organisation Transparency International’s annual Corruption Perceptions Index during his time in office.4 Magufuli also committed to work further to see the country industrialise, with a focus on job creation and infrastructure, as well as commitment to ensure that the country’s key economic indicators remain stable. Magufuli noted that there has been much anecdotal concern about the strength of the country’s foreign exchange reserves.5 Magufuli made a number of popular commitments, promising that all of the country’s 12,280 villages would have electricity by 2025 and that the government will establish industrial clusters in each region, which will create eight million jobs. The president also committed to growing the mining sector, purchasing additional aeroplanes, continuing with construction of the standard gauge railway and the Hydropower Project, and commencing the Uganda-Tanzania crude oil pipeline. The president also made a strong commitment to assisting the country’s private sector, which did not feel much supported during Magufuli’s first term in power. As part of a bid to improve the country’s investment climate, Magufuli announced that the Tanzania Investment Centre (TIC) will now report directly to his office, rather than the prime minister’s office. This move has been positioned as an initiative to assist the private sector in navigating the country’s often complex bureaucracy, with the president noting:

1 , 13 Nov 2020 2 The Citizen, 30 Oct 2020 3 Associated Press, 30 Oct 2020 4 Transparency International, 2019 5 Daily News, 13 Nov 2020, The Citizen, 28 Nov 2020

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“I want any investor willing to inject finances to get all the necessary permits and certificates within [fourteen days] and for that reason I have decided to move the Tanzania Investment Centre (TIC) from the Prime Minister’s Office to the President’s Office so that I can personally deal with all those causing unnecessary delays.”6 It remains to be seen if and how this move will assist investors and potential investors, but the country’s private sector is eagerly accepting any signal of assistance. In order to maintain investments, however, Tanzania will need to demonstrate that it can provide policy predictability and a clear and transparent tax regime, both of which have not been clearly demonstrated over the past five years. The country will also need to navigate how it satisfies the needs of the private sector while increasing the country’s tax base – it may be difficult to achieve both in the short to mid-term, particularly as Covid-19 has significantly impacted the country’s tourism revenue – typically the country’s highest foreign exchange earner (see below). The next question is who will take the key roles in the cabinet. President Magufuli has been slow to announce his full cabinet. Parliament voted on 12 November to confirm that will retain his role of prime minister. Additionally, Magufuli announced that Professor Palamagamba Kabudi would remain minister for foreign affairs and East African cooperation and minister for finance and planning.7 However, the full cabinet is yet to be announced, with no indication as to when that may take place. Tanzania weathers Covid-19 better than neighbours Although Covid-19 has negatively affected Tanzania’s economy, the country has fared relatively better than its neighbours, which have taken on significant debt and may be facing recession. In November, the United Nations Commission for Africa predicted that despite Covid-19, Tanzania’s economy would continue to grow in 2020, whereas many other African nations are predicted to contract economically.8 However, restrictions on reporting statistics that are not approved by the government and the broader crackdown on media freedoms and civil society in Tanzania have made it hard to assess the true state of the economy.9 Tanzania’s main foreign exchange earners – mining and tourism – have faced different challenges during this period. Tanzania’s gold mining projects, and the revenue they generate for the government, have seen an uptick this year due to the global rise in gold prices, which is currently sitting at $1,800, close to 25% higher than just one year ago.10 Some of Tanzania’s largest gold producers, including Canada-headquartered Barrick Gold and South Africa-headquartered Anglo Gold Ashanti, are believed to be ramping up production, providing an increase in royalties for the government and profits for companies. In the exploration sector multiple gold projects are on the verge of moving into construction. There are also rumours of pending mergers and acquisitions, which will see the country further broaden its base for revenue collection as new projects start producing. The mining sector has not had an easy time under President Magufuli. However, its ability to continue producing and generating forex for the country during this period and the number of sizeable pre-construction projects should see the sector increase in importance in the government’s eyes during Magufuli’s second term in office. The pandemic has hit global tourism hard, and Tanzania’s tourism sector has been no exception, despite Magufuli’s business-as-usual approach to keep the economy going. Foreign exchange earnings from tourism in Tanzania are currently at a 10-year low, bringing in just $1.2 billion in 2020, compared to $2.4 billion in 2019.11 However, Tanzania is one of the few countries with virtually no

6 Velma Law, 17 Nov 2020 7 The Citizen, 13 Nov 2020 8 The Citizen, 25 Nov 2020 9 The Citizen, 25 Nov 2020 10 Gold Price, 2020 11 The Citizen, 3 Dec 2020

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restrictions on travellers who, in most instances, are able to enter the country without producing a negative Covid-19 test result, and are not required to isolate on arrival. In , where tourism is the largest industry, the government has attempted to provide tax relief to the sector, decreasing value added tax from 18% to 15% and dropping the hotel levy from 18% to 12%.12 In the past few weeks, Zanzibar has seen an increase in tourists, due in large part to thousands of Russian tourists now flying in on a direct flight from Moscow. 13 There are reports that Russian airline Royal Flight will seek to charter flights for residents of seven other Russian cities.14 An ongoing rise in cases across Europe and the onset of winter may see both Zanzibar and Tanzania more broadly benefit from the relaxed approach to imposing restrictions on incoming and outgoing tourists, thereby helping to fill any short-term foreign exchange shortages that the country may be facing. Mo Ibrahim Index 2020 Tanzania has slightly improved its ranking in the Mo Ibrahim Foundation’s annual Ibrahim Index of African Governance (IIAG), released on 16 November. The IIAG presents itself as “a tool that measures and monitors governance performance in African countries” and has been published annually since 2007.15 “The IIAG constitutes the most comprehensive dataset measuring African governance, providing specific scores and trends at African continental, regional, and national level, on a whole spectrum of thematic governance dimensions, from security to justice to rights and economic opportunity to health.”16 In the 2020 index Tanzania scored 53.0 out of 100 for overall governance, ranking the country 19th out of the 54 African countries surveyed. Its +0.2 trend over the past ten years indicates a slight positive trajectory in the governance indices. The index looks at four streams of governance: security and rule of law; participation, rights and inclusion; foundations for economic opportunity; and human development. Within these categories, Tanzania gained its strongest ranking, with a score of 57.8, for human development. Conversely, Tanzania scored poorly for participation, rights and inclusion, with a score of 45.5, ranking 29th out of the 54 countries surveyed, well below its overall average. Within this category, Tanzania received very poor ratings for matters including freedom of association and assembly, civil society space and personal liberties, all key freedoms that have been progressively chipped away at during Magufuli’s time in office. Compared to other countries in the (EAC) in the overall governance rankings, Tanzania ranked below Rwanda (11th) and Kenya (14th) but above Uganda (22nd), Burundi (44th) and South Sudan (53rd). The IIAG notes, however, that there is not sufficient data to provide South Sudan with a 10-year trend trajectory as the country was only formed in 2011. Overall the results produce a picture of some improvements and other missteps in terms of overall governance. The IIAG notes severe shortfalls in participation, rights and inclusion, with several indices noting a sharp decline in governance. The rankings have not received much attention within the Tanzanian press; with press freedoms in decline in Tanzania, as reflected in the report, this is not overly surprising.

12 PwC, August 2020 13 IDN, 6 Nov 2020 14 IDN, 6 Nov 2020 15 Mo Ibrahim Index, 2020 16 Mo Ibrahim Index, 2020

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Planner Dec 2020 (Tanzania) Swearing in of the new cabinet 9 Dec 2020 (Tanzania) Tanzania Independence Day (national holiday) Jan 2021 Dodoma (Tanzania) Parliament reconvenes Feb 2021 (Tanzania) Commencement of construction of Uganda-Tanzania oil pipeline Chronology 3 Dec 2020 (Tanzania) The Citizen. Tanzania’s foreign exchange earnings from tourism are at a 10-year low due to Covid-19; 2 Dec 2020 Dar es Salaam (Tanzania) The Citizen. The East African Business Council (EABC) calls for harmonisation of relations at the Rusomo border between Tanzania and Rwanda; 28 Nov 2020 Dar es Salaam (Tanzania) The Citizen. Opposition party Chadema expels 19 female members who went against party orders to accept special seat nominations in parliament; 27 Nov 2020 Nairobi (Kenya) The East African. Kenya-headquartered KCB Bank has signed a deal with United Kingdom-listed Atlas Mara to buy stakes in its Tanzanian and Rwandan banking units; 25 Nov 2020 Dar es Salaam (Tanzania) The Citizen. The United Nations Commission for Africa predicts that Tanzania’s economy will continue to grow this year, despite the Covid-19 pandemic; 24 Nov 2020 Dodoma (Tanzania) The Daily News. 19 special seat members of parliament from opposition party Chadema are sworn into parliament; 23 Nov 2020 Dar es Salaam (Tanzania) The Citizen. Tanzania and Mozambique will collaborate to fight against terrorist organisations operating near the border regions; 21 Nov 2020 Dar es Salaam (Tanzania) The Citizen. Tanzania’s ambassador to Belgium, Jestas Abuok Nyamanga, refutes claims on social media that the European Union (EU) is seeking to suspend aid and soft loans to Tanzania following the election; 21 Nov 2020 Dar es Salaam (Tanzania) The Daily News. The Dar es Salaam Stock Exchange (DSE) is now accessible by an online trading app; 20 Nov 2020 Zanzibar (Tanzania) The Citizen. Zanzibar’s President unveils his cabinet; 19 Nov 2020 Dar es Salaam (Tanzania) The Daily News. China Commercial Bank has been put into receivership by the Bank of Tanzania (BoT); 18 Nov 2020 Dar es Salaam (Tanzania) The East African. Opposition party ACT-Wazalendo and activist Maria Sarungi Tsehai have both written to the International Criminal Court (ICC) to request an independent investigation into the recent election; 17 Nov 2020 Dar es Salaam (Tanzania) The Citizen. The Kisutu Resident Magistrate’s Court hands Maxence Melo, chief executive officer of online blog Jamii Forums, a one-year suspended sentence for obstructing police officers by failing to divulge the names of the blog’s contributors; 16 Nov 2020 Dar es Salaam (Tanzania) The Citizen. Prime minister Kassim Majaliwa orders a probe into the increase in the price of cement in Tanzania, with a 50-kg bag increasing from TSh15,000 ($6.47) to TSh17,000 ($7.33) in just two months; 13 Nov 2020 Dar es Salaam (Tanzania) Daily News. Parliament elects Kassim Majaliwa as

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prime minister, as speaker and Tulia Ackson as deputy speaker; 13 Nov 2020 Dar es Salaam (Tanzania) Daily News. President John Magufuli appoints Professor Palamagamba Kabudi as minister of foreign affairs and East African cooperation and Dr Philip Mpango as minister for finance and planning; 13 Nov 2020 Dar es Salaam (Tanzania) The Citizen. Vodacom Tanzania appoints Justice Mihayo as its board chairman and Raisibe Morathi as a new board member; 10 Nov 2020 Dar es Salaam (Tanzania) The Citizen. The African Development Fund (ADF) approves $50m for Tanzania to assist its economy during Covid-19; 10 Nov 2020 Dar es Salaam (Tanzania) The East African. Opposition party Chadema’s presidential candidate, Tundu Lissu, departs for Belgium after losing the presidential race; 8 Nov 2020 Dar es Salaam (Tanzania) The East African. Opposition Chadema party member and former member of parliament for Arusha, has claimed asylum in Kenya after being arrested for organising protests to challenge the election results, while Chadema presidential candidate Tundu Lissu remains at the residence of the German ambassador; 8 Nov 2020 Dar es Salaam (Tanzania) The Citizen. Opposition party ACT-Wazalendo appeals to the Commonwealth and the African Union (AU) for support in challenging election irregularities.

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