ADVERSE WB-2010 'DOING BUSINESS REPORT... '

DANIEL SEMBERYA

WHAT is the truth regarding the business environment in Tanzania? This may not be the 'Clash of the Titans;' nor was it intended to so be. But, reading between the lines, it becomes reasonably clear that the World Bank and a major investor in Tanzania, SonGas, may not exactly see eye to eye with each other on this particular one...


In its 2010 'Doing Business Report,' the World Bank ranked Tanzania in the 131st place out of the 181 countries it surveyed for the purpose of determining the degree of 'business-friendliness' across much of the globe. The more business-friendly a country is, the higher its ranking would be on the scale.

By parity of reasoning, such a low ranking for Tanzania would mean that the country's business climate is decidedly unfriendly – and, therefore, a powerful disincentive to potential investors, both foreign and local!

However, one of the country's major private sector investors, the Songo Songo Gas-to-Electricity Project (SonGas), thinks differently. The firm, which is part and parcel of the transnational CDC Globeleq Group, has interests in natural gas in particular, and the energy sector in general. It currently produces about a quarter of the electricity consumed in Tanzania.

According to the SonGas managing director, Christopher Ford,  Tanzania is a good place in which to invest – citing especially
the cost of running business in the country.

"Tanzania is a good place to invest; it is cheaper to produce gas here than most anywhere else," he said in an interview with Business Times in Kilwa District, Lindi Region last Friday.

SonGas currently produce 180MW of electricity at its Ubungo plant. Plans are afoot to produce another 145MW using natural gas at Tegeta plant, to be fed into the national grid.

Ford says the prevailing investment climate is good, and the company is looking forward to increasing the Songo Songo gas facility in order to increase production. To that end,  prospective investors – including the Government and the Energy & Water Utilities Regulatory Authority (EWURA) – are invited to catch the boat and support the proposed US$80 million project.

The SonGas views tend to tally with those of the Government's investment wing, Tanzania Investment Centre (TIC).

Speaking in a televised interview with TBC-1 on Tuesday, the TIC  executive director, Emmanuel ole'Naiko, said the World Bank's 'Doing Business Report-2010' did not reflect the actual situation in Tanzania.

"I don't know the people who were interviewed (for the Report). The information they gave does not reflect Tanzania's business climate," Naiko stated, adding that “the proper authorities were not consulted – and the report could have very well reflected the business climate prevailing in 2006!”

But, to the surprise of many, when the Report was released in January 2010, it was embraced as the gospel truth... And, no wonder the Government in Dar started to take some steps to rectify matters and, this way, avoid losing investors already in the country – and, at the same time, failing to attract prospective ones!

According to ole'Naiko, there are many prospective investors from Japan and other developed countries who are waiting in the wings, ready to invest in different sectors in Tanzania.

Potential investors are keenly eying Agriculture, the hospitality and other industries, and some of them have already sent their experts over to conduct feasibility studies in the country. Tanzania has until today received an investments of the tune of about US$740 million.

To recap, the WB Report cited some of the impediments to doing business in Tanzania as including the number of days it takes for one to register a company (too many); the procedures one has to follow to get permits (long and unnecessary), and general costs of running business (too high).

All this has come at a time when Tanzania is hosting the 3-day long 20th World Economic Forum on Africa, which ends in Dar es Salaam today.

In the event, some observers say the Forum will help advertise Tanzania's investment potentials and opportunities – as well as enable the country to learn from the success stories of other countries elsewhere.