Press release

Tanzania and the UK forge new partnership on trade and investment

Tanzania and the UK have pledged to forge a strong new partnership to boost trade.

The Prime Minister of United Republic of Tanzania, Hon. Mizengo P. Pinda (MP) and the UK’s Secretary of State for International Development (DFID), Justine Greening, have pledged to forge a strong new partnership to boost trade, investment and economic development to benefit the people of Tanzania.

Speaking at a joint event in Dar es Salaam on 5 November, they formally launched a High Level Prosperity Partnership which will see the UK and Tanzania create even closer commercial links. The partnership will centre on 4 main areas namely: oil and gas, renewable energy, agriculture and business environment strengthening.

It is hoped the partnership will double the number of UK companies doing business in Tanzania, particularly in the renewable energy and agriculture sectors by 2015. Tanzania is one of five African countries entering such a partnership with the UK, along with Ghana, Mozambique, Cote d’Ivoire and Angola.

The DFID Secretary of State is accompanied on her visit to Tanzania by a high-level business delegation comprising senior representatives from 18 British and international businesses looking to find new ways to boost jobs and investment across the continent. The UK’s Development Secretary is using the visit to announce brand new partnerships between DFID and commercial businesses to help Tanzanians benefit from economic growth. The investments will be in the form of loans and equity rather than traditional aid grants. It is the first time DFID has hosted such an international delegation anywhere in the world.

Prime Minister Pinda welcomed the initiative saying:

It is my hope that this Partnership will open a new window of opportunity to these important areas of cooperation.

Justine Greening said:

For too long the development industry has seen the skills and potential of the private sector as something separate to its own efforts. I want to take a different approach.

The only way for developing countries to end their dependency on aid is to create more jobs, growth and tax receipts. In the end, a job is the only sustainable route out of poverty for individuals.

Business can bring much needed investment and innovation at a scale that can be transformational. Responsible investment provides prospects and economic opportunities for communities. It is sensible for us to work with business to make sure their plans help local communities.

Justine Greening set out 4 new commercial initiatives to help the poorest people in Tanzania benefit from economic growth:

  1. Working with Unilever, the Wood Family Trust and Gatsby Foundation and following due diligence, DFID will Co-invest in a tea project. Subject to final negotiations between the parties, DFID will provide up to £7.5 million to allow the partnership to invest in a tea project in the Southern Highlands of Tanzania. The funding will boost the incomes of more than 3,600 potential tea farmers spread throughout 27 villages. The funding will be returnable for subsequent investments by the Wood Family Trust.
  2. Investing up to £3.3 million in Equity for Tanzania, a UK based organisation that provides finance to small and medium agricultural businesses in Tanzania. DFID’s funding will allow Equity for Tanzania to provide more finance to SMEs to access agricultural equipment in Mbeya. Traditional investors have been reluctant to invest at this early stage. Without DFID’s co-investment, smallholders in Mbeya region would struggle to access finance.
  3. Finance to a new hydropower plant to boost production at Tanzanian Tea Packers Ltd. DFID will provide £2.5 million to sign a purchase agreement with the Tanzanian Electric Supply Company and the company to build the plant.
  4. Providing up to £6.7 million to Kilombero Plantations Ltd (KPL), East Africa’s leading rice producer, to help finance a rice husk gasification plant. Poor public infrastructure is holding the company back. This will allow business to overcome the lack of proper public infrastructure, irrigate more land and increase yields. KPL already works with over 5,000 smallholder farmers and plans to further expand this.

Greening also announced the establishment of a new partnership with the London Stock Exchange Group to develop capital markets in east Africa. The first stage of the partnership will provide training to up to 20 financial professionals, regulators and government officials from across east Africa at the London Stock Exchanges’ Academy.

Speaking at the UK-Tanzania High Level Prosperity Partnership launch, Ms Greening noted that Tanzania had experienced high economic growth of around 6% over the past decade, yet still 30% of its people live on less than £7 a month. She said:

Businesses are starting to realise the potential.

UK companies are already leading investors in Tanzania, with around 35 FTSE registered companies operating here. However, too much red tape, poor infrastructure, a lack of a skilled workforce and a complex tax regime is preventing it from reaching its full potential.

Ms Greening also added that she believed businesses could bring much needed investment, taxes and innovation. At the same time, DFID’s expertise and support could drive new investment and create new jobs in the poorest places:

I want this innovative, self-sustaining, job-creating investment to be a major part of how DFID works in the future. I see Tanzania very much as a flagship country when it comes to this new approach. I believe things that work here can be replicated across Africa and other developing nations.

Notes to editors

  1. Tanzania is one of five African countries entering a High level Prosperity Partnership with the UK, along with Ghana, Mozambique, Cote d’Ivorie and Angola. The partnership will see the UK and Tanzania create even closer commercial links. It is hoped the partnership will double the number of UK companies doing business in Tanzania in the renewable energy and agriculture sectors by 2015.
  2. Justine Greening will be accompanied by senior delegates from the following organisations: AgDevCo, Agrica, Aldwych International, ASCO, Serengeti Breweries Ltd, Diageo, Equity for Tanzania, Gatsby Foundation, JCB, London Stock Exchange, Mott Macdonald, Pall-Ex Group, SABMiller, Swire Pacific Offshore, Temporis Capital, Unilever, Vinci plc, Women’s World Banking and the Wood Family Trust.

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