Negative perceptions about a country are likely to deter investment, especially if it involves a long-term commitment like building a new mine. Recent bad publicity about Tanzania and its president, John Magufuli, has created perceptions of yet another anti-business basket case, power drunk on the admiration of his people, writes Leon Louw.
Soon after his election in November 2015, Magufuli had the investor community eating out of his hands. His no-nonsense, straight talking manner and vows to rid the country of corruption made him the new ‘African messiah’.
But the love affair between business and John Joseph Magufuli was stillborn. The president delivered on his promises and really started clamping down on corruption, which caught most by surprise. It wasn’t just the usual populist rhetoric by a desperate politician. Magufuli meant business. His purge included not only crooked government officials, but he took straight aim at those that had sung his praises so loudly at the beginning of his tenure yet kept previous corrupt regimes in power for so long. Doing business in Tanzania was never going to be the same, and it hurt those that had become part of the patrimonial system – most importantly business.
Suddenly, Magufuli was enemy number one and analysts warned about investing in Tanzania. Sure, Magufuli is not as business friendly as we would like him to be, but at least he’s consistent. In the short term his economics will hurt those who historically depended on the goodwill of a corrupt system. In the long term, however, the Magufuli way is bound to reap rewards. Tanzania offers huge opportunities which are often overlooked as a result of negative perceptions.
I’ve just returned from a trip to Tanzania, and on the ground, the political and economic situation is a lot different from that portrayed in the media. Magufuli is popular amongst his people, and the business fraternity not implicated in corrupt dealings, is positive about the impacts of his reforms.
Those that are not, have already left Tanzania; are in the process of doing so, or are fighting legal battles to stay out of prison. The economy has taken a hit as a result, but the cleansing process has flushed out the fly-by-nights and those not committed to building a prosperous Tanzania. Dar es Salaam is a vibrant and fast-growing city, and, with the help of Chinese contractors, Tanzania’s infrastructure is getting a facelift. A new railroad system will soon connect the cities of Dodoma and Dar es Salaam, and the Julius Nyerere International Airport boasts a new, world-class terminal. Mining is a long-term play, and in Tanzania, for at least the next six years, the Magufuli way is the only way.
For more about mining in Africa, read the October issue of African Mining.