After Israelis, Tanzania expects Chinese tourists

An uptick in diplomatic ties between Tanzania and Israel has started to bear socio-economic fruits, the Prime Minister Kassim Majaliwa said.

The premier who saw off 274 tourists on the Israeli Airlines plane at the Kilimanjaro International Airport (KIA) over the weekend, pleaded  with the visitors to serve as Tanzania`s ambassadors back home.

Over 1,000 tourists from Israel were since April 20, this year, in the northern tourism circuit to sample various attractions in Serengeti National Park and Ngorongoro Conservation Area.

The first group of the tourists left on Friday night, the second, which was seen off by the Premier, flew on Saturday afternoon, the third on Saturday evening and the last on Saturday night.

Majaliwa invited members of the business community from Israel to invest in the tourism sector in the natural-resource rich Tanzania. He further asked the Israelis to consider coming back to visit Rubondo, Katavi and Ruaha National Parks and Selous Game Reserve in the Southern Circuit as well as Zanzibar.

`We are flattered,` Majaliwa told Carmel  Shlomo, the Director of Another World, as he extended his gratitude to local and Israel tour operators for promoting Tanzania as number one tourist attraction in Africa.

Ten tour operating firms were involved in arranging the Israelis` safari to Serengeti and Ngorongoro Crater, namely Excellent Guides, Mauly Tours and Safaris, Matembezi, Leopard Tours and Safaris, African Queen Adventures and TAWISA from Tanzania and Another World, My Trip, Camel and Safari Company from Israel.

The Tanzania Tourist Board Director, Devotha Mdachi, said a similar group of tourists from Israel were scheduled to arrive in Tanzania by June 2019. `Also expected in May this year are over 300 tourists from China,` she said in an interview, adding that the board was arranging a trip of Israel journalists and tour operators to Tanzania later this year.

One of the Israeli tourists marveled at how the country is very good and its people excellent upon his arrival a week ago, but however observed that roads heading for Serengeti needed to be improved.

Dr. Hamis Kigwangalla, the Natural Resources and Tourism Minister said the government was reforming the tourism sector for it to offer quality services. Last year, the ministry unveiled its ambitious plan to invest over Tshs.300 billion ($130 million) in the untapped Southern circuit for the country to register 2.2 million tourist arrivals a year from the current 1.3 million.

Dr. Kigwangalla said the money would be spent on improving infrastructure, increasing tourist services and promoting the virgin destinations and its rich culture, cuisine and the people of Tanzania cemented renewal of its friendship with Israel when it opened its embassy in Ramat Gan in May 2018, over 20 years after ties between the two countries were re-established.

Tanzania had initially established diplomatic ties with Israel in 1963, but they were torn asunder in 1973, thanks to the intense Arab pressure.

Earnings from tourism, Tanzania`s main source of hard currency, jumped 7.13 per cent in 2018, as a result of increased arrivals of foreign visitors. Tourism revenues fetched Tshs5.5 trillion ($2.43 billion) during the period 2018, up from Tshs.5 trillion ($2.19 billion) in 2017. Tourist arrivals totaled 1.49 million in 2018, as opposed to 1.33 million in 2017.

Also read:Tanzania-China Direct Flights set to Boost Tourism

Kenya’s biggest trading partners, Uganda tops EAC

China dominates as Kenya’s top import source globally 

Uganda is Kenya’s biggest trading partner within the East Africa Community (EAC), latest data show, with China dominating the global scene.

The Economic survey (2019) shows total trade volumes (import and exports) between Kenya and Uganda in the year 2018, were valued at Ksh111.3 billion (USD1.09 billion).

Tanzania comes in a distant second with a total trade value of Ksh47.6 billion (USD468.9 million) while Rwanda is third with Ksh19 billion (USD187.2 million).

Trade with DR Congo, South Sudan and Burundi, mainly export markets for Kenya, were valued at Ksh15.2 billion (USD149.6 million), Ksh12.9 billion (USD127.1 million) and Ksh6.6 billion (USD65.02 million) respectively.

Uganda

During the year under review, Uganda increased the value of its exports to Kenya by 17.6 per cent to close at Ksh49.4 billion (USD486.7 million), from Ksh42 billion (USD413.8 million) in 2017.

READ:Uganda keen on enhancing exports to EA region

“The value of imports from Uganda rose largely driven by increased imports of maize, sugar, milk and animal feeds,” the Kenya National Bureau of Statistics (KNBS) has noted.

Kenya however exported more to her neighbour where total volumes were valued at Ksh61.9 billion (USD 609.9 million),a slight increase from Ksh61.8 billion (USD608.9 million).

Uganda exports to Kenya include wood and articles of wood, wood charcoal, fodder, mineral, cereals, dairy products, honey, edible products, sugars and sugar confectionery, coffee, tea, mate and spices, tobacco and manufactures tobacco substitutes among other products.

In return, Kenya exports salt, sulphur, earth, stone, plaster, lime and cement, mineral fuels, oils, distillation products, plastics, pharmaceutical products, vehicles, beverages, spirits and vinegar, soaps, lubricants, waxes, candles, modeling pastes among others.

Tanzania

The value of imports into Kenya from Tanzania increased by 3.5 per cent to Ksh17.8 billion (USD175.4 million) up from Ksh17.2 billion (USD169.5 million), mainly on live animals, cereals, beverages, spirits and vinegar, fertilizers, mineral fuels, oils, distillation products and textile articles.

Kenya exports to Tanzania on the other hands gained marginally to close at Ksh29.8 billion (USD293.6 million) from Ksh28.5 billion (USD280.8 million), despite the existing tariffs and Non-Tariff Barriers (NTBs) between the two states.

READ:Kenya, Tanzania mistrusts ripping apart the EAC

Last year, the two EAC member states were entangled in a trade war after Dar es Salaam denied unrestricted entry of Kenyan made chocolate, ice cream, biscuits and sweets entry into its market.

Nairobi retariated by imposing new tariffs on Tanzania products such as flour with both breaching the EAC common market protocol, which allows free movement of locally manufactured goods.

Presidents Uhuru Kenyatta and John Magufuli have on several occasions directed their ministers to resolve outstanding trade disputes, to pave way for increased trade between the two countries and the region as a whole.

ALSO READ:Why Magufuli, Kenyatta are worried over Kenya-Tanzania borders

Rwanda and the rest of EAC

The President Paul Kagame led country lost ground on its exports to Kenya where the value dropped by 29.4 per cent to close at Ksh1.2 billion (USD 11.8 million) from Ksh1.7 billion (USD16.7 million) in 2017.

This is expected to further dwindle based on the recent tiff with Uganda which has led the closure of borders, with Uganda being the main transit route between Kenya and Rwanda.

Kenya’s exports to Rwanda however surged to Ksh17.8 billion (USD175.4 million) from Ksh17.1 billion (USD168.5 million) in value.

Those to DR Congo, South Sudan, and Burundi however dropped to Ksh15.2 billion (USD149.6 million), Ksh12.9 billion (USD127.1 million) and Ksh16.8 billion (USD165.5 million), from Ksh18.9 billion (USD186.2 million), Ksh6.6 billion (USD 65 million) and Ksh7.4 billion (USD72.9 million) respectively.

“This was occasioned mainly by the political instability in these regions,” a trade expert told The Exchange.

EAC and Africa

Kenya’s total imports (value) from her EAC peers totaled Ksh68.4 billion (USD 673.9 million) an upward trend compared to Ksh60.9 billion (USD 600 million) the previous year.

READ:EAC bloc has made significant gains in reducing trade bottlenecks

The East Africa economic power house however lost ground on her exports to the regional markets where the total value dropped 1.9 per cent to close at Ksh129 billion (USD1.27 billion), from Ksh131.6 billion (USD1.29 billion) the previous year.

In the continent, South Africa topped as Kenya’s biggest trading partner with the trade being in favour of the southern country.

This is on the Ksh64.7 billion (USD637.4 million) worth of imports from SA up from Ksh61.9 billion (USD609.8 million), against exports valued at Ksh4.4 billion (USD43.3 million). Kenya however gained 57.1 per cent from Ksh2.8 billion (USD 27.6 million) a year earlier.

Other notable trading partners in Africa include Egypt where the country exported to, goods worth Ksh201. Billion (USD198 million), and Somalia whose imports from Kenya in the year amounted to Ksh15.1 billion (USD148.8 million).

Imports from Swaziland were valued at Ksh8.6 billion (USD84.7 million) a drop from Ksh11.2 billion (USD110.3 million ) in 2017, while those from Zambia closed the year at Ksh6.9 billion (USD67.9 million) after dropping from Ksh7.7 billion (USD75.8 million).

Mauritius, another key trading partner exported goods worth Ksh6.1 billion (USD 60.1 million) to Kenya, a drop compared to Ksh7.3 billion (USD 71.9 million) in 2017.

During the year, total imports from the African market were valued Ksh205.9 billion (USD 2.03 billion) a slight increase from Ksh200.5 billion (USD 1.98 billion) the previous year.

That of exports however dropped slightly, by 3.4 per cent, to close at Ksh216.2 billion (USD 2.13 billion) compared Ksh223.9 billion (USD 2.21 billion) the previous year, meaning Kenya lost its export market share in intra-Africa trade.

China and the World

China continues to dominate as the top source of imports into the country in the global scenario, despite losing five percentage points on its trade with Kenya last year.

READ:US-China rivalry to shape Kenya, Africa’s foreign policy in 2019

According to the survey released this week, imports from china were valued at Ksh370.8 billion (USD3.65 billion) in 2018, a slight drop from 390.6 billion (USD3.85 billion) the previous year.

India comes in a distant second where imports from the Far East nation totaled Ksh185.3 billion (USD1.83 billion). This was however an increase from Ksh170.4 billion (USD 1.68 billion) worth of imports into the country in 2017, mainly on account of medicinal and pharmaceutical products.

The drop in the value of imports from china is seen as a result of reduced importation of machinery and equipment, related to the construction of the standard gauge railway, whose phase two-Nairobi-Mai Mahiu is 91 per cent complete.

Major Chinese imports to Kenya include machinery, electronics, motorcycles, motor vehicles spare parts, furniture and clothes.

Other top import sources for the country are Saudi Arabia and the United Arab Emirates (UAE), where total imports were valued at Ksh172.7 billion (USD 1.70 billion) and Ksh147 billion (USD 1.45 billion ) respectively.

The Asian continent remains the top source of imports into the country having closed at a total of Ksh1.168 trillion (USD 11.5 billion) in value last year.

It is followed by Middle East whose imports closed the year at Ksh355.7 billion (USD3.50 billion).

Imports from Europe and the US were valued at Ksh292.6 billion (USD2.88 billion), and Ksh85.9 billion (USD846.3 million) respectively last year.

READ ALSO:How Trump will beat China in Africa

Exports to china last year were valued at a paltry Ksh11.1 billion (USD 109.4 million) with the total exports to Asia closing at Ksh180.9 billion (USD1.78 billion).

“The increase in exports to Far East was largely due to significant improvement in exports to India, China, Thailand and Afghanistan,” KNBS notes in its survey.

According to the official government statistics, trade balance widened by 1.4 per cent to a deficit of Ksh1.147 trillion (USD11.30 billion) in 2018, from a deficit of Ksh1.131 trillion (USD 11.14 billion) in 2017.

“The growth of exports weakened in 2018 compared to the strong performance recorded in 2017, as increased uncertainties in the global trade led to constrained external demand,” KNBS Director General Zachary Mwangi noted during the release of the survey in Nairobi.

Kenya’s top exports include tea, horticulture, articles of apparel and clothing accessories, coffee, titanium ores and concentrates, collectively accounting for 62 per cent of the total domestic export earnings.

“The rise in exports was mainly as a result of increase in exports of horticultural products, while the slowdown in import growth was attributable to decline in imports of food due to favourable weather conditions as well as a reduction in the value of machinery and transport equipment imports,” Mwangi said.

The government has prioritized growth of the manufacturing sector, under the big four agenda, with a key focus on value addition on local produces, as it seeks to bridge the trade deficit and increase the sector’s contribution to the GDP.

“We have been implementing various initiatives to support manufacturers. This includes cutting by half the cost of electricity for industries,” National Treasury CS Henry Rotich said.

READ:Five ways Kenyan government bets will boost manufacturing sector

Kenya’s Chinese debt to hit USD9.8 billion as world meets in Beijing

Loans from China closed 2018 at USD6.2 billion (Ksh 627.1 billion)

Kenya will be keen to secure additional funds from China for construction of Phase 2B of the Standard Gauge Railway (SGR), as the World meets for the second Belt and Road Forum for International Cooperation (BRF) in Beijing.

The forum which takes place this week is expected to attract a high number of Heads of States from Africa and across the globe, with thousands of delegates from over 100 countries.

President Uhuru Kenyatta’s administration is seeking a Ksh370 billion (USD 3.67 billion) loan to extend the rail project which is currently at its second phase of construction (Nairobi-Naivasha).

Phase one of the project, 472 kilometre Mombasa —Nairobi line, is currently operational having been completed and commissioned by President Kenyatta on May 31, 2017.

It was constructed by China Road and Bridge Corporation (CRBC) on a Ksh327 billion (USD3.2 billion) loan from the Exim Bank of China.

READ: Boost for East Africa trade as Kenya commences SGR cargo services

Phase 2A is being developed by a sister company-China Communications Construction Company (CCCC), funded by the Chinese at a cost of Ksh150 billion (USD1.48 billion).

The 120-kilometre line which runs between Nairobi-Mai Mahu and -Duka Moja, a small centre between Suswa and Narok town, is 90 per cent complete.

The funds being sought by the government are meant to fund Phase 2B (Duka Moja-Kisumu) and the final stretch (Phase 2C) connecting Kisumu to the Kenyan-Ugandan border of Malaba.

President Kenyatta and former Prime Minister Raila Odinga are expected to lead a delegation from Kenya to the Beijing meeting.

“I will be part of the delegation that will accompany the President to the Asian country next week,” Mr Odinga confirmed at a public forum over the weekend.

In a recent meeting at the Chinese Embassy in Nairobi, Kenya Railways acting Managing Director Philip Mainga said the government is keen to secure funds during the BRF meeting.

“We hope to sign phase 2B during the meeting,” Mainga said, “Kenya Railways is working with the Chinese government in achieving the commitment we have on the 974 kilometre Mombasa-Malaba SGR project.”

Heavily indebted to China

If secured, Kenya will push up its debt obligation to China to above USD9.8 billion (Ksh991.2 billion), after loans from Beijing closed 2018 (December) at USD6.2 billion (Ksh627.1 billion).

This is up from USD5.3 billion (Sh536 billion) a year earlier, where a lion share has gone towards the construction of the multi-billion SGR.

The move will add pressure to the country’s debt portfolio which stands at USD53.3 billion (about Ksh5.4 trillion), nearly double the country’s annual budget.

ALSO READ: Tough times: Kenya piles Kshs 2.5 billion debt in a day

China tops the list as the biggest lender to Kenya followed by Japan, France and Germany.

Other sources for Kenya’s funds include the International Development Association (IDA), International Fund for Agricultural Development (IFAD) and the African Development Bank (AfDB).

In the next financial year commencing July 1, the government plans to borrow Ksh306.5 billion (USD3.03 billion) externally and Ksh277.5 billion (USD2.24 billion) in the domestic market to bridge its budget deficit.

It plans to spend Ksh2.67 trillion (USD26.3 billion) in the fiscal year with the budget focusing on President Kenyatta’s Big Four Agenda of affordable housing, growth in the manufacturing sector, universal healthcare and food security.

Kenya Revenue Authority (KRA) is expected to collect Ksh1.88 trillion (USD18.5 billion) to support the budget up from the current revised Ksh1.65 trillion (USD16.3billion).

The proposed spend for the year 2019-2020, by Treasury Cabinet Secretary  Henry Rotich, is up from the Ksh2.51 trillion (USD24.8 billion) he had proposed for the current fiscal year(2018-2019) which ends on June 30. The budget was however revised upwards to Ksh3.074 trillion(USD30.3 billion).

Kenya country’s ballooning debt has continued to spark debate over its sustainability with both the World Bank and the International Monetary Fund (IMF) cautioning the government to go slow on its borrowing.

In a recent report, the IMF noted that the country’s risk of defaulting on debt repayment had increased from low to moderate.

There has been a heated debate that Kenya could lose its key assets, among them the Port of Mombasa, to China if it defaults its debt. Kenya could lose Mombasa port to China over SGR debt

Financial experts have since questioned China’s motive in its increasingly lending spree to Kenya to finance mega infrastructure projects, warning that it could be a debt trap.

READ: Is China setting a debt trap on Kenya?

The Chinese government has however dismissed the claims, even as it defended its relationship with Kenya, which it has termed mutually beneficial.

“We are not putting Kenya into a debt trap. China-Africa Corporation cannot put Africa into a trap but booming economic growth,” the Chinese Embassy in Nairobi said.

The Belt and Road Initiative

A project of President Xi Jinping, China is using the Belt and Road Initiative (BRI) to enhance both China’s development and its cooperation with global partners.

According to the Chinese government, BRI represents a major breakthrough in “both theory and practice, and it carries far-reaching significance.”

Since its inception, the BRI has received a strong endorsement and warm support from the international community. So far, a total of 124 countries and 29 international organizations have signed BRI cooperation documents with China.

Most recently, during President Xi’s visit to Italy, the two countries signed an MOU on promoting BRI cooperation, giving a new impetus to this process.

Meanwhile, the BRI vision has been included in documents of major international institutions including the United Nations, the G20, the Asia-Pacific Economic Cooperation and the Shanghai Cooperation Organization.

China has been using the platform to strengthen global trade links across the world, in particular between Asia, Africa and Europe, with investment in an array of large-scale infrastructure projects along these two land and sea corridors.

The land route runs along the ancient Silk Road that for centuries connected China with Europe via Central Asia and Russia. Once completed, it will consist of a number of new road and rail routes, as well as energy pipelines and other key infrastructure.

The sea route is a maritime trade corridor built for the 21st century. It will stretch from Chinese coastal ports all the way to Europe via new and upgraded ports in the South China Sea, the Indian Ocean, the Middle East and the Mediterranean.

The potential size and scope, with related investments totalling as much as USD8 trillion by 2020, is projected to boost global trade by 12 per cent, impacting more than 65 countries and nearly two-thirds of the world’s population.

This year’s BRI has three things to look out for. First, the number of foreign heads of state and government officials in attendance (expected to be high) as they seek partnerships.

Secondly, the number of countries participating with thousands of delegates expected and third, there will be numerous side events including 12 thematic forums focusing on practical cooperation, and for the first time, a conference organized specifically for the business community.

A huge number of African leaders are expected to attend the forum where they will be keen to present the interests of their respective countries, especially on development.

Business communities from Africa are also expected to sign numerous MoUs for closer trade ties, a move that will tighten China’s grip on Africa.

ALSO READ: How China plans to beat US in capturing Africa

Average age of an East African citizen

The indicator in question in this column is figure 17.6.

17.6 of what?

According to published government statistics, the median weighted average age of an East African citizen is 17.6 years old. Among the 157 million East Africans alive today there are equal numbers of people over 17.6 years old as there are people under 17.6 years old.

So how do 17.6 years as a median age compare to other locales around the world?

average age of an East African citizen - The Exchange
Average age of an East African citizen – The Exchange

If the EAC were a country it would be the 13th youngest country in the world with Uganda, Burundi, and Tanzania bringing down the weighted average against the relatively older Kenya. To add perspective, the median age of both the #1 and #2 economies of the USA and China are more than twice as old at 37.8 years and 36.8 years respectively than an East African. Even more dramatic, ageing Japan has 46.5 years as median age and not surprisingly has a large retired population. Other countries in Africa are the closest in the median age of the population followed by economically challenged areas of the Middle East.

Young people demand different goods and services than older citizens. What types of goods and services are most likely to be in higher demand in East Africa versus developed nations?

Food, lots of it. A younger population means more mouths to feed. In addition, East Africans have children younger than citizens of other developing nations. Education – both secondary, tertiary, and vocational education will continue to experience high aggregate demand. Energy – either at home or in some productive means will be required for all the people. Telecom services tend to be very popular among more youthful populations.

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Do local markets have the ability to meet the demands of this young and growing population?

On the food front, East Africa has tremendous arable land available for farming though complex land rights issues and lack of capital for the use of modern farming techniques limit potential.

Education is sorely lacking throughout the EAC and affordable private schooling is entering the marketplace with early signs of success. It is likely that increased options and suitability of vocational and other means of education will emerge in the upcoming years to meet demand.

To meet its energy needs, thankfully, East Africa has a high potential for renewables such as solar with rapidly decreasing costs as well as traditional energy sources such as natural gas and other carbon-based energy sources.

Telecommunications is one of Africa’s great growth stories. Telecom services, mobile money transfers and mobile banking are making first impressions on youngsters all throughout the East African community.

With the scalability of telecom towers and networks, any location economically viable can connect East Africans to the sum of human knowledge through the magic of the internet.

What are the economic implications of millions of young East Africans coming of age in the upcoming years?

East African citizens have the benefit of the development of the remainder of the world and can leapfrog over the past and skip the expensive learning curves that have come with it. Things such as landline telephones, electrical poles to homes and businesses, bank branches, money transfers, and a host of other services have cost developing nations hundreds of billions of dollars, costs which were passed on to consumers. Not so for today’s East African youngster.

East Africa’s population is unconstrained by corporate institutional structures, products, or means of providing services.

It is highly likely that new brands and entire categories of businesses will emerge to meet the needs of the youngest and most interesting generation on the planet today.

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About the authors:

David L. Ross is Managing Director of Statera Capital and US Ambassador to the Open University of Tanzania active in growing companies in Eastern and Southern Africa through primary investment, investment advisory, strategic partnerships, and executive education. Connect on LinkedIn at https://tz.linkedin.com/in/davidlross1 or at david@stateracapital.com

Catherine Mandler is a Senior Analyst at Statera Capital. Connect on LinkedIn at http://www.linkedin.com/in/CatherineMandler or at catherine@stateracapital.com

Tanzania, China in cement bilateral ties

The Tanzanian government has pledged continued support to Chinese investments at the 2019 Tanzania-China High-level Investment and Business Environment Dialogue in the commercial capital Dar es Salaam on April 17, 2019.

The Minister of State in the Prime Minister’s Office responsible for Investment, Angellah Kairuki, said Chinese investment has had and will continue to play an important role in helping us reach our goal of attaining a middle-income country status by 2025.

She said as the two countries marked 55 years of diplomatic relations this year, Tanzania was committed to continuing working closely with China, particularly through mechanisms within the Forum on China-Africa Cooperation that promotes government and private investments. However, it is unavoidable that some misunderstandings may occur in the rapidly growing and wide-ranging economic relations and trade, she told the event.

“Even so, it is my sincere belief that cooperation and common development will continue to represent the main trend.” “I wish to use this opportunity to urge all of us here present that when problems occur, we should not hesitate to seek appropriate solutions as equal partners through consultations and dialogues with the view to further expanding mutually beneficial cooperation,” said Kairuki.

The minister said Tanzania will strive to ensure ease of doing business by addressing delays in the issuance of work permits and residence permits. Wang Ke, the Chinese ambassador to Tanzania, said the dialogue was a good beginning for the two countries to strengthen communication on investment and business policies.

“If such dialogues can be institutionalized, the Tanzanian government would know better the wishes and appeals of Chinese enterprises in Tanzania, and the Chinese enterprises would better adjust themselves to the new policies of Tanzania,” she said. She said recent years have witnessed steady development of bilateral relations between China and Tanzania, especially the fruitful cooperation in economic and trade fields.

The bilateral trade volume in 2018 reached about Tshs.8.9 trillion ($3.9 billion, registering a year-on-year growth of 15 percent, said the Chinese envoy, who added that China has been the largest trading partner of Tanzania for three consecutive years. Up to now, she said, China’s total investment in Tanzania has exceeded Tshs.16.1 trillion ($7 billion), which made China the largest foreign investor in Tanzania.

Wang said at present, over 200 Chinese companies were making investments and operating in Tanzania, adding that China was also the largest project contractor in Tanzania with investments ranging from infrastructure, mining, agriculture to manufacturing, hotels, real estate and banks. Noting that this year marks the 55th anniversary of the establishment of China-Tanzania diplomatic relations, Wang said the Chinese embassy in Tanzania will continue fulfilling its obligations by building connections and facilitating participation in China-Tanzania cooperation.

The China-Tanzania high-level dialogue on investment and business environment was aimed at providing a platform for the Tanzanian government to publicize, introduce and promote its investment policies and business environment and to facilitate investment, project contracting and trade business operations of Chinese companies in Tanzania.

Also read: Tanzania to open consulate in Guangzhou trade hub

 

Tanzania to participate in the first China-Africa economic and trade expo

The Tanzania Trade Development Authority (TanTrade) said in a statement issued on Wednesday that the country is set to participate in the first China-Africa Economic and Trade Expo to be held in Changsha, the capital of central China’s Hunan province between 18th and 20th June, 2019.

The body has also urged the local companies to grab the `golden chance` provided by the trade expo which will focus on trade, investment, finance, agriculture, mining, energy, tourism and infrastructure.

Officials will sign bilateral agreements during the exhibition, engage in investment promotions, and establish a “new mechanism” for future economic cooperation.

The expo is part of a slew of promises made by president Xi Jinping during last September’s Forum on China–Africa Cooperation (FOCAC) in Beijing. During his speech to African leaders, President Xi proposed eight initiatives aimed at pursuing a “win-win” strategy giving new impetus to economic, political, and security collaboration. He had specifically pointed to the changing global dynamics, noting how the international order was changing and emerging nations were rising.

To solidify relations, Xi had said Beijing will launch an industrial promotion initiative aimed at encouraging Chinese companies to increase their investments in Africa. China also promised to exempt some poorer nations from debt, increase imports from Africa, help promote African brand products, support the African Continental Free Trade Area (ACFTA), and give 100,000 scholarship and training opportunities to young Africans.

Xi also said Beijing will exempt least developed African states from paying exhibition fees at its annual high-level China International Import Expo.

China’s commitment to balancing the “win-win” strategy with Africa came as it faced allegations from American officials and others of encouraging dependency and debt. After all, Chinese lending to the continent jumped tenfold in the last five years, a borrowing spree that many worry could push debt limits to unsustainable levels.

Beijing, however, pushed against these sentiments, committing Tshs.138 trillion ($60 billion) in 2018 to development projects in Africa over the next three years. President Xi also said China won’t impose its will or interfere in African countries’ internal affairs—a point praised by leaders like Tanzania’s president John Magufuli.

Also read: Tanzania to open consulate in Guangzhou trade hub

 

 

China Trade Week to boost investment with African countries

The third edition of the China Trade Week (CTW), a “One Belt, One Road” initiative inspired event will take place in Ethiopia from May 2 to 4 at the Millennium Hall in Addis Ababa.

MIE Groups, the founder of the conference will host the three-day event in collaboration with the Ethiopian Prana Events.

Established in 2013, China Trade Week had its first event in the United Arab Emirates (UAE) which was warmly welcomed by the local business community, it was followed by the first African event in Kenya in 2015 which had an even bigger response. It later debuted in Ethiopia in 2017.

The trade fair seeks to pull over 100 investors and exhibitors from sectors including construction materials and machinery, lighting and energy, clothing and textiles, electrical goods and electronics, automotive parts and accessories, health and beauty, print, packaging and plastic, baby and infant products and food and beverage.

Commenting on the trade fair, Zahoor Ahmed, Director International Events, MIE Groups said, “We look forward to welcoming thousands of professionals to this year’s CTW Ethiopia, at a time when the country is going through significant positive economic and regional changes.”

The Ethiopian Chamber of Commerce & Sectorial Associations Secretary-General, Africa Zeleke added, “The chamber decided to partner with this trade fare as China remains the biggest market for many Ethiopian goods exported.

This includes 70 per cent of our sesame. Also, the majority of our goods are imported from China and we want to narrow the gap of the trade imbalance by attracting FDI and helping technology transfer for our business.”

China has played a crucial role in Ethiopia’s economic development.

There are over 400 Chinese investments valued at over $4 billion that are active in Ethiopia that have created more than 100,000 jobs as of 2018.

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According to data from the Ethiopian Ministry of Trade and Industry, Ethiopia during the 2017-2018 fiscal year has already exported goods worth about $245 million to China.

The South Asian country continues to build its influence in Africa as it seeks to compete with the US in investment inflow in the continent.

The trade fair is geared at enhancing trade with the African countries, exploring and exposing business investment opportunities for potential investors as well.

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Guide on how to invest in Ethiopia – The Exchange

Earlier this year, Ethiopia’s Garden of Coffee announced its plan to open 100 outlets in China by 2022. China has opened its market to accommodate African commodities to bolster their international relations.

Is China setting a debt trap on Kenya?

Loans from China hit a high of US$6.2 billion last year

The Chinese government has dismissed claims that it’s continued heavy lending to Kenya in the financing of mega infrastructure projects is a ‘ debt trap’, even as loans from Beijing hit a high of ShUS$6.2 billion(Sh625.9 billion) in December last year.

This is up from US$5.3 billion (Sh535 billion) a year earlier with a lion share going towards the construction of the multi-billion Standard Gauge Railway (SGR).

“We are not putting Kenya into a debt trap. China-Africa corporation cannot put Africa into a trap but booming economic growth,” China’s Charge’ D’affaires (Nairobi) LI Xuhang said during a meeting in Nairobi on the update on the SGR and China-Kenya relations.

“Kenya can decide on who they want to partner with. Kenyan people are wise enough to choose their trade and corporation partners. They can decide who benefits them more,” Xuhang said, noting that the fast-growing China-Africa relations have rattled other developed country.

His sentiments come in the wake of growing concerns that Kenya could lose its key assets to Beijing, among them the port of Mombasa, if the government defaults in the payment of the Sh327 billion(US$3.25 billion) owed to Exim Bank of China for construction of Phase one of the Standard Gauge Railway (SGR) project.

Apart from the first phase (472 kilometre) Mombasa-Nairobi SGR, the Chinese are funding and constructing Phase 2A at a cost of Sh150 billion (US$1.49 billion).

The 120-kilometre line which runs between Nairobi-Mai Mahiu and -Duka Moja, a small centre between Suswa and Narok town, is 90 per cent complete.

The government is said to be in negotiations with Beijing for an additional Sh370 billion (US$3.67 billion) to complete the remainder of the project, which is Phase 2B (Duka Moja-Kisumu) and the final stretch (Phase 2C) connecting Kisumu to Malaba, the Kenyan-Uganda border.

Kenya Railways acting Managing Director Philip Mainga has revealed that the government is keen to secure funds during the second Belt and Road Forum for International Cooperation (BRF) set for Beijing later this month.

“We hope to sign phase 2B during the meeting,” Mainga said, “Kenya Railways is working with the Chinese government in achieving the commitment we have on the 974-kilometre Mombasa-Malaba SGR project.”

Phase one of the SGR project was constructed by China Road and Bridge Corporation while Phase 2 is being developed by a sister company-China Communications Construction Company (CCCC).

China has funded over 70 development projects in the country cutting across transport, energy, water and housing sectors where about 50 Chinese companies are involved.

The Ministry of Foreign Affairs has defended the China-Kenya relation saying it is mutual and beneficial to the country.

The Asian Directorate at the ministry said the SGR is a landmark project for the government and its full impact will be felt once it reaches Malaba.

The directorate’s in-charge of China Lindsay Kiptiness, however, said grants and loans must be spent in their intended purpose if the country is to make any meaningful gains from the borrowing.

“We must ensure projects don’t become victims of corruption,” Kiptiness said, “As long as we can sustain our debt and projects contribute to economic development, I don’t see why we should not borrow for development.”

With the debate on increased borrowing from China continuing, the Nairobi embassy has given Kenya an option of pursuing Public-Private-Partnerships (PPPs) as an alternative to solid borrowing for projects.

Kenya spent nearly Sh15.43 billion to service loans from China in the first half of the 2018/19 financial year (July-December).

The government has largely contracted a mix of semi-concessional and commercial debt from China and international capital markets (Eurobond) since 2014 to improve the country’s infrastructure.

Meanwhile, Kenya Railways has called on the Chinese government to help secure the rail network in Kenya, with terrorism being among the biggest concerns.

Kenya’s public debt crossed Sh5.27 trillion (US$52.3 billion) last December, National Treasury statistics show, up from Sh4.57 trillion (US$45.4 billion) a year earlier, and Sh3.83 trillion (US$38 billion) in December 2016.

China set to support ailing TAZARA line

The Chinese ambassador to Tanzania, Wang Ke made the pledge on 5th April during the tomb-sweeping activity to commemorate the Chinese experts who died during the construction of the Tanzania Zambia Railway Authority (TAZARA) line in the early 1970s.

The ambassador said that her country was ready to fund the refurbishment of the TAZARA to explore ways and means of upgrading and overhauling the TAZARA line once a consensus is reached.  The ambassador noted that the embassy had initiated talks with the government over the fund stressing that her country was ready, willing and able to support the refurbishment, and reminded that joint efforts by China, Tanzania and Zambia in overcoming numerous difficulties and obstacles was highly needed to reach the target.

Last year the TAZARA management appealed to the member states to inject more funds in order to make the railway line improve its operations and performance. The TAZARA Deputy Managing Director, Dr. Bertram Kiswaga said that additional efforts would go a long way in ensuring the performance of the railway was improved. He said that TAZARA was transporting 208,000 tonnes adding that in order to be profitable it needed to transport 600,000 tonnes annually.

Dr. Kiswaga said that despite all those, the corporation is unable to pay salaries because it is not making profits, calling the member states to inject more funds to sustain the railway`s performance. He further stated that the challenge was to increase the corporation`s locomotives, wagons, coaches and repairing tracks.

TAZARA  was constructed as a turnkey project between 1970 and 1975 through the interest-free loan of Tshs.1.1 trillion ($500 million) from the People`s Republic of China, with commercial operations starting in July 1976, covering 1,860 kilometers from Dar es Salaam to New Kapiri Mposhi North Eat of Zambia.

However, aged between 30-40 years, most mainline locomotives that are currently in operation have outlived their lifespan and frequently breaking down, a situation exacerbated by the authority`s failure to adhere to maintenance schedules due to liquidity challenges. Over the years, passenger service operational levels have dropped drastically, where four trains per week lifted around 455,000 passengers in the 2014/2015 financial year, compared to double that number of passengers ten years ago despite a growth in population. Earlier, TAZARA used to run six trains per week.

Also read: Discussions on revamping TAZARA to be held in Beijing

 

Belt and Road Initiative to boost China – Africa trade

Standard Chartered Bank on Friday said that the “Belt and Road Initiative” will not only boost trade and investment opportunities between China and South Africa but will also provide economic development opportunities between China and various African countries.

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Kweku Bedu-Addo, chief executive of Standard Chartered Bank South Africa, said the Belt and Road Initiative was presently the most ambitious and far-reaching project of its kind in the world.

“The initiative will benefit all countries along the routes, contributing to global economic and social development,” Bedu-Addo said.

“We are present in two-thirds of Belt and Road markets, and our rich heritage, deep local knowledge and unparalleled connectivity mean that we are ideally placed to help our partners, clients and communities to make the most out of the initiative.”

The Belt and Road Initiative is a China-led strategy to strengthen global trade links across the world, in particular between Asia, Africa and Europe, with investment in an array of large-scale infrastructure projects along these two land and sea corridors.

The land route runs along the ancient Silk Road that for centuries connected China with Europe via Central Asia and Russia. Once completed, it will consist of a number of new road and rail routes, as well as energy pipelines and other key infrastructure.

The sea route is a maritime trade corridor built for the 21st century. It will stretch from Chinese coastal ports all the way to Europe via new and upgraded ports in the South China Sea, the Indian Ocean, the Middle East and the Mediterranean.

The potential size and scope, with related investments totalling as much as U.S.$8 trillion by 2020, is projected to boost global trade by 12 per cent, impacting more than 65 countries and nearly two-thirds of the world’s population.

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Bedu-Addo said that in 2017, Standard Chartered Bank globally committed additional financing for Belt and Road projects of at least U.S.$20 billion by 2020, and was involved in more than 50 Belt and Road deals worth more than U.S.$10 billion across a range of products and services.

He said that the Belt and Road Initiative has made significant headway in the past four years and has gained support from more than 100 countries and international organisations, and more than 80 of them have signed cooperation agreements with China.