Tanzania: President Hassan forges stronger ties with a cautious China

Analysts tell The Africa Report that the visit was symbolic and will set the pace towards rolling back stumbling blocks created by Tanzania’s former President John Magufuli, who had ground to a halt the $10bn Bagamoyo Special Economic Zone project, which was planned to be funded by a Chinese investor.

The project’s main feature, Bagamoyo Port, was planned to be Africa’s largest port.

The project had been given the green light by Jakaya Kikwete, Magufuli’s predecessor in 2013. But when the latter came to power three years later, he questioned the project’s cost, tax incentives, and 99-year lease.

Incumbent President Hassan, who assumed the presidency last year following Magafuli’s death, has said she is keen to revive the project.

Not public yet

The Chinese ambassador to Tanzania in April said China was expecting the investor and Hassan’s government to hold “further discussion and make substantial progress on the restart of the Bagamoyo port project”. However, the project wasn’t mentioned in public statements pertaining to her visit to China.

“I was expecting it to be the top agenda and maybe some announcement would come after that but that was not forthcoming,” Muhidin Shangwe, a Tanzanian scholar focusing on China-Africa relations, tells The Africa Report.

Tim Zajontz, a lecturer at the University of Freiburg whose research area includes China-Africa, says Bagamoyo could have been avoided due to “sheer cautiousness, as the result of the ongoing negotiations [which] seems unforeseeable”.

He notes that the geopolitical and economic climate have changed significantly since presidents Xi and Kikwete gave the nod to the project in 2013.

“China merchants will obviously want to secure the profitability of such a mega-project, while the Tanzanian government is unlikely to agree on far-reaching tax exemptions, as well as on a 99-year lease,” Zajontz tells The Africa Report.

He says Tanzania has made it clear that the project can be of economic value only if the Chinese can make credible commitments to attract manufacturing and different industries.

New agreements

China and Tanzania will expand the scale of bilateral trade, boost economic cooperation, and deepen high-quality Belt and Road cooperation while boosting infrastructure projects, according to the Chinese foreign ministry.

The two countries signed 15 bilateral cooperation agreements covering trade, investment, development cooperation, digital economy, green development, and blue economy. A key benefit for Tanzania from the agreements, Shangwe says, is to access the Chinese market.

China merchants will obviously want to secure the profitability of such a mega-project….”

“Opening more doors for Tanzanian goods to enter the Chinese market is a good gesture,” he says. “If you look at trade volume, Tanzania imports a lot from China and exports less.”

For China, the most significant deal inked could be the rehabilitation of the Tazara Railway that Beijing gifted to Tanzania and Zambia in the 1970s. Xi said the 1860-km-long railway marks a milestone in his country’s relations with Tanzania and Africa alike.

Shangwe says the railway’s traffic has been declining for decades, yet for the Chinese, it has always had a symbolic value.

“It’s very much at the centre of Chinese interests to see that such kind of a project is of good use,” he says. The railway was rebuffed by institutions such as the World Bank from the onset, arguing that it was not economically viable.

Traits of XI-Africa future cooperation

China’s era of open cheque diplomacy for the global south came to an end in 2018 when Beijing drastically scaled down its infrastructure loans on the continent.

China provided $153bn to African countries between 2000 and 2009, according to data by the China Africa Research Initiative (CARI) of John Hopkins University.

Between 2018 and 2019, new Chinese loan commitments to Africa amounted to only $7bn down from $9.9bn of the previous year, a decrease of nearly 30%.

Zajontz says Chinese policy banks have become much more risk-averse in their overseas lending, having adopted guidelines similar to those of the World Bank and IMF as negotiations over facilities would often take longer to be concluded.

‘Money is not coming’

Shangwe cites Tanzania as an example, with the government in talks with Chinese Exim bank to finance the third and fourth phases of its Standard Gauge Railway. “I think for the past four years discussions have been ongoing […] and the money is not coming,” he says.

As it’s already happening through the Belt and Road Initiative, Zajontz reckons, Chinese investors will most likely provide financing by foraging in public-private partnerships.

Politically, Zajontz predicts that Africa will continue to play a central role in Xi’s narrative around alternative globalisation under Chinese leadership.

“During Xi’s third term, China’s Africa policy is likely to be increasingly marked by growing geo-political and geo-economic competition with the West. Beijing will further concentrate its resources and diplomatic efforts to rally political support for Xi’s global ambitions.”

Meanwhile, African leaders, he says, will be calling for better access to China’s gigantic markets and Chinese investments in strategic sectors to diversify their economies.