Why investment in ports is crucial for Tanzania’s economic prosperity

SINCE the inception of maritime trade, ports have played a pivotal role in the economic development of nations. Currently, over 80 per cent of global merchandise trade is transported via sea routes.

According to the World Bank container ports have become essential nodes in global supply chains and are crucial to the growth strategies of many emerging economies.

The development of high-quality port infrastructure, operated efficiently, has often been a prerequisite for successful growth strategies among countries which rely on port economies.

Investment, when done correctly, fosters the necessary confidence to attract investment in production and distribution systems, supporting the growth of manufacturing and logistics, creating employment and increasing income levels, says experts.

Tanzania is taking a similar path. Recently, the National Assembly endorsed the Resolution on the Inter – Governmental Agreement IGA) between Tanzania and the United Arab Emirates (UAE) concerning partnership on ports development.

Cognisant of the current high competition among regional ports, maritime industry experts have commended the government’s worthwhile decision to invite private investors to invest in the development of the country’s ports. In separate interviews with the ‘Daily News’ this week, they pointed out reasons as to why the country’s port infrastructures modernisation is a must to ensure more quality services in the East African Region, hinting that the port has a great chance to win over its competitors.

Marine Service Company Limited’s (MSCL) Managing Director, Mr Eric Hamissi says port efficiency is crucial in boosting economic production, arguing that more imports and exports are key indicators of economic growth. He notes further that the improvement of infrastructures at the Dar es Salaam Port among others will cut time and costs spent on imports and exports, hence boosting growth of the national economy.

Mr Hamissi says with regard to the country’s strategic geographical location, the Dar es Salaam Port can better serve as the gateway to all land-linked countries of Democratic Republic of Congo, Uganda, Malawi, Rwanda and Burundi than any competing neighbouring ports. He applauds the government’s efforts to invite private investors with vast experience to deploy the latest machinery and technologies to boost efficiency and operations at the country’s ports, especially the principal port of Dar es Salaam.

“Many countries with best port practice today use Public Private Partnership (PPP) and they cherish private investors,” says Mr Hammisi, insisting that the government would remain watchful to ensure the country reaps benefits from the investments.

An economist, Dr Isaac Safari from Saint Augustine University of Tanzania (SAUT) insists that well-operating ports can maximise government revenues due to efficiency and the quality services delivery. Dr Safari says the revenue from the ports can contribute massively to the national budget and enable the government to implement other development projects and social service delivery such as water and electricity supply.

“With improved port infrastructures the country can collect over a half of its budget from the ports,” he says, welcoming the decision to engage private investors who would bring in modern port equipment and technologies.

He commends the government for initiating the Inter-governmental Agreement (IGA) with the DP World, a Dubai Emirate-based shipment company and calls for continued public education on the details of the agreement since it is important for citizens to be informed.

Over the weekend, the ruling Chama Cha Mapinduzi’s (CCM) Central Committee passed three resolutions in support of port improvements in the country.

According to a statement released by the party’s Ideology and Publicity Secretary, Ms Sophia Mjema, the CC meeting chaired by the party’s chairperson Dr Samia Suluhu Hassan, underscored that investment and operation of the ports must be for the national interest as per the CCM 2020-2025 Election Manifesto.

“The government must speed up public education on the relevance of the InterGovernmental Agreement (IGA) between Tanzania and Dubai in boosting efficiency of the ports,” Ms Mjema said in the statement.

According to surveys, low capacity for cargo clearance and poor cargo handling capacity are among the main setbacks that need to be addressed for smooth operation of the country’s ports. Last month, the National Assembly endorsed the IGA, arguing that the deal is crucial for transforming the port sector.

The IGA concerning Economic and Social Partnership for the Development and Improving Performance of the Ports in Tanzania was signed on February 28th, last year between the implementation institutions that are Tanzania Ports Authority (TPA) and DP World based in Dubai.

The agreement aimed at, among other things, to develop and improve operations of strategic infrastructures for sea and lake ports in areas such as special economic zones, logistics, parks and trade corridors.

Debating the resolution, members of Parliament assured the public that the partnership has taken into consideration broad interests of the nation, assuring that it is going to increase efficiency in the country’s ports. The lawmakers, however, advised the government to be careful and consider important issues raised in the agreements that will be executed in the future.

For instance, Same East MP, Ms Anne Kilango Malecela said that President Samia Suluhu Hassan is against contracts which are not beneficial to Tanzania, thus she could not allow such an agreement to be signed if it was not favorable for the country.

“I call upon Tanzanians to be assured that the Sixth Phase Government will not allow endorsement of contracts that are not beneficial to the country and this signed agreement is going to bring efficiency to the country’s ports,” Ms Kilango said.

Ubungo Member of Parliament, Professor Kitila Mkumbo said that the resolution which was brought to the National Assembly does not speak about selling of the ports rather improvement and development. Prof Mkumbo added; “Neither Chama Cha Mapinduzi nor President Samia could allow the government to bring into Parliament a resolution that aims to sell the port.”

“The MPs also could not allow such a resolution to be brought to the National Assembly, thus I would like to assure citizens that the resolution is concurrent with the ruling party’s economic policies,” he said.

He said that the public fear regarding the agreement was due to the fact that the country had no good history on issues related to privatisation.

“People had raised concerns because of the history that there are some areas in which the country had not benefited from,” he added.

The legislator further said after the MPs endorse the resolution the government is going to do its normal tasks of signing the project agreements. The MP further recommended the government to consider the issue of time frame and be specific in order to clear the public fear.

Prof Mkumbo added that the contracts to be entered later should also take into account areas in which the government has already made massive investments.

Special Seats MP, Ms Judith Kapinga (CCM) said that the government has considered broad interests of the nation when signing the agreement. She said Tanzanians have questioned IGA because of the previous records by some officials who caused loss to the nation by entering into agreements that were not beneficial to the country.

“We want to tell the government executives that in the past the country incurred loss; thus, we will not allow such kind of agreements again … we will make sure that the contracts entered are beneficial to the nation” she said.

Sikonge MP, Mr Joseph Kakunda, (CCM) said that majority of those who are protesting the agreement are the ones who have been for years not wishing well for Tanzania.

“This is the reason why they are struggling to ensure that the agreement is not implemented, as they are sure that it will bring economic transformation in the country,” he said.

On different occasions, Prime Minister Kassim Majaliwa has been insisting that the government will consider views from the public regarding the agreement.

Adjourning the 11th session of the 12th Parliament in Dodoma late last month, the premier said the government has a clear vision of delivering positive results to the country, as far as the agreement is concerned,” he observed.

He reiterated that the agreement seeks not only to decongest the Dar es Salaam port, but it will also improve its efficiency. Mr Majaliwa noted that the government was losing out on revenues due to the current inefficiency of the port.

The Prime Minister further allayed fears on the credibility of the Emirati multinational logistics company based in Dubai, United Arab Emirates.

“This is a reputable firm, credited for handling 190 ports in 68 countries around the world,” the PM assured.

According to Mr Majaliwa, DP World boasts of requisite expertise in running logistical related activities. According to the PM, the agreement will prioritise a raft of issues, ranging from port’s ownership, tenure of the contract, local content to the security of the host country.

“The agreement further seeks to cement political and economic ties between Tanzania and Dubai,” he emphasised.

Throughout the implementation of the envisioned project, Tanzania Ports Authority (TPA) will be responsible for the management of all ports in the country as stipulated in the Ports Act number 17 of 2004.

So will be the responsibility of security organs in protecting and safeguarding waters within the limits of the ports, just as it was the case during the heydays of the Tanzania International Container Terminal Services (TICTS).

“I want to assure Tanzanians that TRA will be the sole revenue collector once the deal comes to fruition,” he insisted. The Prime Minister equally challenged the Ministry of Works and Transport to sensitise the public on the prospects of the deal.

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