Once a darling of foreign investors John Magufuli is proving a headache for business
Since coming to power two years ago Magufuli also known as the Bulldozer, has in recent months put pressure on many investors.
John Magufuli, nicknamed the Bulldozer, has in recent months put pressure on many investors as part of his campaign to fight corruption and government inefficiency.
Since coming to power two years ago Magufuli has read the riot act to multinational corporations based in his country in a bid to reduce corruption and tax evasion which he says is denying his people of their wealth.
Case in point is his ongoing battle with London based Acacia Mining after the company was hit with a $190 billion fine
Tanzania’s government accused the company of allegedly operating in the country illegally and also for failing to fully disclose its export earnings over a 17-year span between 2000 and 2017.
This and others has led to Africa's richest man and a major investor in the country, Nigeria's Aliko Dangote, speaking out about the current business conditions prevailing in Tanzania.
There is history. Dangote's cement company was engaged in a bitter $600 million dispute with Tanzania's government over investment incentives related to a new cement plant in Mtwara, southern Tanzania that was finally resolved by the personal intervention of Magafuli at the time.
There is no such goodwill now after Dangote's latest comment.
“They’ve scared quite a lot of investors and scaring investors is not a good thing to do,” he said at the Financial Times Africa Summit in London.
“Once an investor complains the rest will run away, they don’t even want to hear the details.” He complained as he advised Mr. Magufuli to “have a look at” his policies.
Multinational retailers are also exiting the country due to low profitability.
Since 1999, six multinational supermarkets have come into Tanzania and three closed down or sold their stake.
Similarly, London listed Petra Diamonds, also temporarily closed its Williamson mine in Tanzania after the government accused it of undervaluing a shipment.
Kenya, a traditional ally of Tanzania and a member of East Africa Community has not had it any easier either.
The two countries have been involved in a trade squabble that shows no sign of being resolved soon despite months of negotiations which included personal discussions between presidents Uhuru Kenyatta (Kenya) and John Pombe Magufuli.
Foreign Affairs Cabinet Secretary, Amina Mohamed and her Tanzanian counterpart Augustine Mahinga on 23rd July signed a trade truce but before the ink could even dry, Tanzania went against its word and Kenyan products still face barriers to enter Tanzania market.
As a result, trade between Tanzania and Kenya dropped by 32 per cent to Sh13.24 billion from Sh19.43 billion over the same period last year, Kenya National Bureau of Statistics (KNBS) data reveals.
One foreign investor, who declined to be named, described the investment climate in Tanzania as “sinister”.
“It’s coming through the back door to seize the assets,” Dangote said. “They can come back in the next few years and take a majority of the shares at their price.”
“It’s the wrong policy. Once you chase an investor out, it will be very difficult to bring that investor back.”
JOIN OUR PULSE COMMUNITY!
Eyewitness? Submit your stories now via social or: