Nigerian billionaire Aliko Dangote opted for Kenya rather than Tanzania to build his Sh2 trillion refinery in Lamu, leaving Tanzanians displeased.
The decision to pick Lamu is emerging in the middle of an infrastructure race pitting the two countries as the nations seek to be the regional logistics hub, anchored by projects like the standard gauge railway (SGR).
The Business Daily sat down with Khamis Mussa, the Tanzanian Minister of Finance, on the sidelines of the Africa 50 Infrastructure to discuss the Dangote snub, the SGR race, and the pursuit of Uganda.
We initially expected the Dangote refinery project in Tanga before its relocation to Lamu. Does Tanzania feel slighted by this change?
I think we need first to appreciate that Aliko Dangote is a key investor and has prioritised Africa by domiciling all his projects within the continent.
Beyond the refinery project, Dangote is already invested in Tanzania, which has several projects including a cement plant. He has more projects in the pipeline in this country, including potentially a port investment and a fertiliser plant.
We have had discussions on the need for a refinery within East Africa in the aftermath of the Middle East crisis. Initially, the project was proposed to sit in Tanga, but we believe that the final decision as to where the refinery sits is guided by economic reasons.
How is Tanzania positioning itself as a gateway for the continent?
I believe it’s not only a question for Tanzania as we all must continue investing in infrastructure to plug the huge deficit. We could potentially grow our economies faster with investments in infrastructure. For me, it’s not really an option, especially for coastal countries that can link projects with the hinterland.
For Tanzania, our main neighbours would be Rwanda, Uganda and the DRC. Traditionally, we also have Zambia, which has one of the region’s most iconic infrastructure projects-the Tazara railway that was done in the early 1970s.
How are you approaching the extension of your current SGR line?
At the moment, we are doing a new SGR line to the Western side of the country into two key regions, including Mwanza, which would take us to Rwanda and Uganda and the other to Kigoma, which would connect us to Burundi, and potentially DRC.
Within the planned SGR extension, we are also considering two new lines in addition to the Dar es Salaam-Mwanza-Kigoma section. The first is to do a new line from Tanga port to Musoma, which would really benefit Rwanda and Uganda. On the southern side, we want to put a line from Mtwara to Mbamba Bay, which can connect to Malawi and parts of Zambia.
We understand our role as a coastal country, just like Kenya. I recently had a meeting with the Kenyan ambassador to Tanzania about the need to create interconnectivity within the region.
We want to turn these transport corridors into economic corridors, and this entails mapping along the corridors to identify key sectors, whether it is mining, agro-processing, logistics and tourism, so we can quickly recoup our investment in the projects.
Are you already seeing the economic impact from these investments?
At the moment, this has not been to the scale that we think is possible. We are working with the World Bank to map out these projects to realise this potential. This will be for the SGR and the Tazara corridor. We also must bring in the private sector, as we cannot entirely undertake these projects as a government.
What will it take to deliver these projects faster than you have previously?
While we do investments that benefit our neighbours, we must realise that the lion’s share of these investments will be done by us.
When we take these projects to the borders of our neighbours, they will finish on their part, but we must put over 2,000 kilometres of rail, for instance, while Burundi will perhaps put down 200 kilometres on its side.
Most of these projects will be debt-financed, and as such, we must be conscious of debt levels and debt servicing.
Will Tanzania remain part of the regional power pool with Ethiopia, Uganda and Kenya given the scaling you have undertaken in local power generation?
I am not sure we have enough power and we should not allow complacency. I initially assumed that we were close to self-sufficiency until I learnt of the requirement for industrialisation. We aim at doubling the generational capacity between now and 2030 from 4,000 megawatts (MW) to 8,000MW. Tanzania will remain part of the energy pool.
There is a line from Ethiopia through Kenya; we also need to take power to Uganda, which also takes power to Kenya, and we also must do a line to Zambia. There are now discussions on nuclear energy in the region, and we hope to play an important part in that conversation.
What is your approach to diversifying your funding sources given prior success in sticking mostly to domestic revenue mobilisation?
Public-private partnerships (PPPs) have huge potential, but we are yet to fully benefit from it. We have heard concerns from private investors, but we are also seeing their demand for these projects. Perhaps it will take price and payment guarantees from the government side so the private sector can come in. PPPs are a good option over debt.
