Monday, September 15, 2014
Tanzania receives $565 mln financing to expand port
Posted on 13 Sep 2014
Tanzania signed a $565 million deal on Friday with the World Bank and other development partners to expand its main port of Dar es Salaam, part of plans to boost the east African nation's role as a regional trade hub.
Tanzania wants to lift capacity to 28 million tonnes a year by 2020 from the 14.6 million tonnes it handled in the financial year 2013/14. The World Bank said in May that inefficiencies at the port cost Tanzania and neighbours up to $2.6 billion a year.
The port, whose main rival is the bigger but also congested port of Mombasa in Kenya, acts as a trade gateway for landlocked states such as Zambia, Rwanda, Malawi, Burundi and Uganda, as well as the eastern region of Democratic Republic of the Congo.
World Bank Group managing director Sri Mulyani Indrawati advised Tanzania to invite private sector participation in major infrastructure projects, but said that should be done with transparency and with proper regulations in place.
"It's not only that all these investments should be done by the public sector -- inviting more private sector participation can provide more investments," she said at a news conference after the signing of the port financing agreement.
Tanzania's Transport Minister Harrison Mwakyembe said investments in infrastructure projects would have a direct impact on creating much-needed jobs and expanding trade in East Africa.
Cluster Competitiveness
The Tanzania Private Sector Foundation (TPSF) Cluster Competiveness Programme (CCP) is a three year program organized through the multi-donor trust fund managed by the World Bank with funding from DFID and DANIDA. The aim is to improve the competiveness of Tanzanian economy in food processing, horticulture, and tourism. The ultimate purpose of the Cluster Competitiveness Project is sustainable increased competitiveness of strategic clusters of Tanzanian private enterprises.
TPSF-CCP provides assistance through a combination of industry specific training, institutional capacity building of associations and universities, improved public private dialogue between government and industry, and grants targeted at industry gaps.
Competitiveness largely refers to the productivity a company, industry cluster, or an entire country achieves. This can be measured by the prices realized against the cost to produce – the higher the ratio, the more productive the company, industry, and/or country. A cluster is a group of companies and associated institutions working in a common industry, usually benefiting from being located in the same geographic region.
Highlights to Date
- Over 3,700 participants have received training or technical assistance. This includes competitiveness training delivered to 500 Stakeholders led by our subcontractor from the University of Dar es Salaam College of Engineering and Technology (COET).
- Developed a National Competitiveness Task Force (NCTF) Framework designed to institutionalize a national competitiveness building agenda.
- Managed the development of the first Tanzanian National Competitiveness Report (TNCR) designed to be a vital flag to rally various private sector stakeholders to support key programs and reforms to advance Tanzanian’s competitiveness. This was developed alongside a competitiveness toolkit enabling local institutions to sustain its continued annual release.
- Helped improve capacity of fourteen associations to serve their members and extend their services in line with stated member needs.
- Helped improve curricula and skills delivery at four universities which will benefit thousands of students, while bringing the universities/training institutions closer to the private sector.
- Piloted an exciting model of public-private dialogue (PPD) called competitiveness partnerships. TPSF-CCP PPD initiatives include: the Tanzania Mainland Tourism PPP Forum, the Zanzibar Competitiveness Forum, and with the Tanzania Dairy Board (TDB), each moving toward sustainable public private consensus building. With the TDB, TPSF-CCP wrote a policy brief to eliminate 7 redundant licensing & inspection registrations.
Sunday, September 14, 2014
KENYAN ENTREPRENEUR: 'TAKE ADVANTAGE OF CURRENT OPPORTUNITIES'
Macharia argues that life is not always smooth sailing, not even for those considered to have made it, but it is the bumps along the way that mould one to perform better in the next instance.
Aged 37, Macharia feels that Africa views its entrepreneurs and success in a skewed manner that needs to be turned around.
“We are all trying to become the next Facebook, which is indeed a story of innovative success, but we need to move away from the ‘copy and paste’ syndrome. What may work brilliantly in one continent and culture may not be directly transferable across the board.
“In Africa, when learning from successful case studies, one should ask the critical question; ‘Is the solution provided related to the problems that are affecting Africa today?’ We need to link African problems with innovation and create monetary value. Now that is business,” said Macharia in an interview with “How we made it in Africa”.
He argues that the concept of entrepreneurship in Africa has a lower acceptability profile compared to the Western world.
“In Africa, we are conditioned and socialised [into thinking] that the vision of success is to work for a large company, earn a pay cheque, be able to have a mortgage and go out to social places with our families. The concept of entrepreneurship, therefore, does not fit into this bracket and is viewed as alien,” explains Macharia.
“That is how we are indoctrinated from childhood and altering this perspective is a journey that has only just begun.”
Macharia opted out of pursuing his university degree in mathematics and physics. He would later study finance and take up an accounting position in an IT firm as his first job. It is this understanding of cash flows and finance that has been instrumental in his entrepreneurship journey.
According to Macharia, Africa needs policies that encourage entrepreneurs to capitalise on the continent’s opportunities.
“Tax regimes in Africa do not generally support entrepreneurship,” he notes. “The policies around intellectual property are weak and do not protect innovation.”
African capital markets, which he says are just beginning to strengthen, are not yet in a position to enable entrepreneurs to raise the much needed early funds, and limited exit strategies are also a cause for concern among private equity (PE) investors.
“PE investors can easily invest in what may seem as worthwhile businesses and then find that exiting becomes a very difficult task. This remains one of the ongoing areas of disquiet among potential investors. Our stock markets are also not mature enough in comparison with the worldwide playing field, especially in the technology sector to value technology assets,” he adds.
Macharia is also worried by the tendency among Africans to trust foreign ideals, businesses and entities first, a phenomenon that has weakened the positioning and growth of many African companies. This influence, he argues, can be attributed to the historical nature of external development.
“We need to begin consuming our own products and believing in our own local successes,” says Macharia.
Advice to entrepreneurs
In the face of all these challenges, passion is what keeps Macharia going.
“Passion is what keeps you grounded when all things fall apart. You need to be focused, hands-on and highly engaged in your business. You also need to understand the fundamentals of money, how it works and how you can make it work for you because it is a scarce commodity yet crucial to entrepreneurial success.”
In the face of all these challenges, passion is what keeps Macharia going.
“Passion is what keeps you grounded when all things fall apart. You need to be focused, hands-on and highly engaged in your business. You also need to understand the fundamentals of money, how it works and how you can make it work for you because it is a scarce commodity yet crucial to entrepreneurial success.”
He reckons that another mistake African entrepreneurs make is having tunnel vision — not thinking about the bigger picture and not playing in the global court.
“My vision has expanded on a radically global scale. I don’t sit down and think about Kenya only, as was previously the case. I have re-energised my passion and consider myself an African entrepreneur,” says Macharia.
Africa has plenty of innovative, like-minded entrepreneurs who, he says, need to start looking at the region as a whole and create partnerships to drive the African agenda globally. — howwemadeitinafrica.com
Top 5 Investment Opportunities in Tanzania
Here are my favorite sectors for Tanzania for all those new investors coming to town:
Telecom and ICT
The potential in telecom and ICT in Tanzania remains largely untapped. But the potential is too great to ignore and movement in the sector has already showed that the country is on the right track. The government has poured large amounts of capital and energy into the National Fiber Optic Cable network known as the National ICT Backbone (NICTBB). Following its connection to submarine fiber optic cable operators EASSy and SEACOM, bandwidth costs dropped more than 80 percent.
The expansion and upgrade of towers in Tanzania boosts mobile usage and leads to a drop in prices. Some experts estimate that mobile usage could match Kenya in the next five to seven years. But even with a growth in usage, there is more to be done to ensure that it adds the highest value to the economy. Mobile banking, for example, has not reached anywhere near its full potential in the Tanzanian market. The country is still very much unbanked with less than 20 percent having a formal bank account. Kenya’s ICT darling M-Pesa has more than 40,000 agents across Tanzania, a clear message about the growing opportunity in the country. More can be done, particularly with the development of local companies as well as with the expansion of other African companies into the country.
The sector will also benefit from government and non-governmental investment in educational programs, including laptop distribution, e-learning, and training centers. It is crazy, says Patrick, a local software developer, but finding Tanzanians experienced in software development, or at least with a strong understanding of the mobile market, is hard. “Local problems, local developers, local solutions will go far,” he adds, “but we do not get the same capital as Kenya.” That should change soon.
tanzania investing in africa electricity
Segera, Tanzania / Photo credit: Cesar Palomo
Energy (Excluding Oil & Gas)
Excluding oil & gas says nothing bad about a booming industry. But this sector is already seeing entry from the big international players and paying dividends through recent discoveries of gas reserves. The potential for lower oil and gas prices is there, says one government insider, but only time will tell.
Electricity prices are a different story. Prices can reach 27 to 29 cents per kilowatt-hour during peak hours in the capital, Dar es Salaam. Independent contractors produce great returns in a starving energy environment. Prices will drop, but at even half their price today, they will be attractive to international investors, says a former Blackstone executive, though understanding the dynamics of Tanzania’s regional politics can be a hurdle. But energy always involves politics in or outside of Africa. Tanzania simply offers higher returns at the moment.
Real Estate
The energy industry, and an overall growing interest in Tanzania, drives this sector. A short business stay in Dar es Salaam for $150 per night will feel like a steal. Buying property is also becoming a growing headache for locals as prices skyrocket. Foreign investors are growingly becoming interested by real estate plays in a market nowhere near its ceiling.
tanzania investing in africa real estate
Capri Point, Mwanza / Photo credit: Jonathan Stonehouse
Logistics & Warehousing
Tanzania’s roads and railways are not the best in the region, but the government is making an active effort to change that with the support of development finance institutions (DFIs). The African Development Bank (AfDB) recently approved a $232.5 million loan for a Tanzania-Kenya Road project. Roads and railways are the key to improving distribution and life in Tanzania and to broadening regional integration, says one ADB insider, but most East African governments cannot afford it without DFI money.
The growing improvement in roads and railways across East Africa opens opportunities for logistics in a country where urbanization stands at about 30 percent, and many farms operate at a significant distance from the ports in Dar es Salaam. Fuel and electricity prices have undermined logistics and warehousing generally in Africa, but the changing dynamics around these two factors in Tanzania in the near future should boost returns. Prices for both fuel and electricity should slowly starting decreasing with new investments in each sector. As they drop, manufacturing and industrials will grow, giving way to a demand for logistics and warehousing for a multitude of sectors.
Agribusiness
tanzania investing in africa agribusiness
Food consumption in Tanzania is a disturbing story. But it speaks to the great potential for the agribusiness sector. According to the United Nations Food & Agriculture Organization (FAO), 70 percent of caloric intake requirements of low and middle-income households are met by street food. Street vendors offer some of the best, juicy fruit in Africa, especially the pineapple, says Nala, a local financial advisor, but locals typically buy sodas and small candies. Nala is not wrong. Street vendors provided my nourishment while hopping from meeting to meeting.
As incomes increase and education improves, says Nala, we see a change in the diets of Tanzanians. Experts forecast sustained high GDP growth in Tanzania given the recent discovery of gas reserves and prospects for oil reserves. In the past three years, GDP per capita income has grown by 10 percent. Caloric intake during this time has increased accordingly, followed by a growing demand for vegetables, meat and dairy.
The demand has boosted prices and revenue. But Tanzania’s commercial-scale farming cannot keep up with growing demand. Tanzania is blessed with diverse climate zones, fertile land, and water to support its agriculture. Yet the amount of commercial-scale farms producing revenues greater than $200,000 in South Africa is approximately 500 times that of the amount found in Tanzania.
Chicken – at three times the price in the United States – provides great opportunity, especially as Tanzanians demand more white protein. Dairy consumption – at 42 liters per capita – is far below the recommended 200 liters per year. Dairy is not a staple in the Tanzanian diet, says Nala, but this was the same in other East African countries before national education programs were introduced and supported by governments and NGOs. Distribution of all these products should also improve with the arrival of Africa’s larger supermarket chains, all of whose representatives can be found lurking around Dar es Salaam from time to time.
A lot in Tanzania, in the end, is about potential. But investing in Africa in general is about buying into the big picture. It will not be a quick stroke of the paint brush but a few strokes could make a masterpiece.
Exclusive Interview with Founder and Managing Director Patrick Ngowi - Helvetic Solar Contractors
Ngowi launched Helvetic Solar Contractors with “humble beginnings” at the tender age of 22 and in just five years expanded it into the renewable energy solution provider of choice for the Tanzanian government and international clients, including the United Nations. Helvetic was also named the number one company in Tanzania’s Top 100 mid-sized companies of 2012.
“Helvetic is unique because we offer the best product in the region,” Ngowi told us, “No other team in Tanzania has the type of technicians and engineers Helvetic has.”
What is your idea of perfect happiness?
I believe that happiness is a state of being. For me, this state is achieved in numerous ways. I am most happy with my family. I value that. Our day-to-day work makes me incredibly happy; having satisfied clients, and being able to put a smile on my client’s face the first time they get solar power in some of the rural areas is remarkable.
What’s your greatest fear?
I fear God.
What turns you on creatively?
People and travel turns me on creatively. I have the pleasure of meeting so many people through all walks of life throughout my regular day. Up-and-coming Africans doing serious work in their relevant industries is inspiring. Traveling is mind blowing; the cultural, social and economic differences makes one get creative. Creativity remains a key element in business growth especially if one engaged in a rapidly changing industry like renewable energy.
Which words or phrases do you overuse?
‘Solar’ and ‘Going Green’. I strongly believe in installing solar power in places that haven’t had any form of power before. What makes it exciting is that I’m actively engaging in a green change – going green, and pioneering green movement in the region.
If you could have one superpower, what would it be and why?
I’m a realist; I believe in making myself better. In turn, I hope that in my own simple way, I make the world around me better. No superpower needed in achieving that.
What is the album or song that influences you the most?
That’s hard to say, I’m open minded and listen to any genre of music. I have a whole range of local and international songs and albums.
When and where were you happiest?
My family and work makes me happy every day.
If you were a mind reader, whose mind would you like to read?
I prefer not to ever read minds, too much goes on in them.
If you could travel to any point in time, which era would you visit?
Every era or point in time has its joys and pains. I live in the present and work towards the future.
What is your most marked characteristic?
Trustworthiness.
What do you most value in your friends?
Trustworthiness.
Who is your hero of fiction?
Captain Planet. I watched all the episodes while growing up.
Who are your heroes in real life?
My real life heroes are: our Father of the Nation, Mwalimu Julius Kambarage Nyerere; President H.E. Dr. Jakaya Mrisho Kikwete, his current leadership and government has led to the economic growth and stability of our country; Environmentalist and Nobel Prize Laureate Wangari Maathai, her great work with Green Belt Movement; My lovely parents, who raised me who, at present, runs the fastest growing solar supplies company in the region.
Where would you most like to live?
I like living in Tanzania. There is so much green, wildlife and beaches here. We have Zanzibar, Ngorongoro Crater, Serengeti, Mount Kilimanjaro and many more. I encourage more people to visit this beautiful country.
What is the trait you most deplore in yourself?
I’m way too punctual.
What is the trait you most deplore in others?
Not helping others in need.
How would you make the world a better place?
Encouraging my fellow youth of today to work harder and follow their dreams. One shouldn’t lose hope or slow down. Be creative and always think outside the box when met with challenges. Raise your bar.
What do you consider your greatest achievement?
Being able to provide much needed employment for my fellow citizens, and at the same time, lighting up some rural parts of Tanzania with solar power. As well as contributing towards Tanzania’s advance in renewable technology.
What do you regard as the lowest depth of misery?
I believe everything happens for a reason, even the lows. I change my mind to think positively. In life, there is so much we don’t have control over. We have to live positively.
What is your most treasured possession?
I avoid attachment to possessions because they can be taken away at the blink of an eye. I value people.
What’s your motto?
Enjoy life while making others smile.
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