WHAT'S IN STORE FOR INVESTORS IF KIKWETE IS ELECTED FOR A SECOND TERM?

 WHAT'S IN STORE FOR INVESTORS IF KIKWETE IS ELECTED FOR A SECOND TERM?

  

“The main concern is the pervasiveness and scale of corruption, which is a key theme that has haunted his presidency. Many foreign investors find the operational risks from corruption formidable.”

THE SILVERDALE FARM CASE

President Kikwete gave his personal assuance to the British government that the rule of law would be applied to the Silverdale Farm case. It was not and British investors Stewart MIddelton and Sarah Hermitage were driven from Tanzania by violence, corruption and abuse of law facilitated by Ministers of his government, the police and the judicary together with corrupt government administrations such as the Lands Department and State Attorneys office in Moshi. Over one hundred Tanzanians lost their jibs and hopes for the future. What can they hope for, for the next five years,more of the same?

Tanzania's President Kikwete Will Probably Win a Second Term in Landslide
By Sarah McGregor and Wilfred Mwakalosi - Oct 29, 2010

Tanzanian President Jakaya Kikwete will probably win a presidential election this weekend by a landslide as the success of his economic policies supersedes concerns about growing corruption, said pollsters and analysts including Sebastian Spio-Garbrah at Da Mina Advisors LLP.

The 60-year-old leader will probably win more than two- thirds of the ballots cast in the Oct. 31 vote, six times more than his nearest rival, according to an opinion poll conducted by the University of Dar es Salaam this month. While his lead slipped six percentage points since March, Kikwete’s closest rival, Wilbrod Slaa of the Chama cha Demokrasia na Maendeleo party, has the support of only 12.3 percent of voters.

Since taking office in December 2005, Kikwete’s policies helped generate average annual growth of 6.7 percent, according to International Monetary Fund data. Over the same period, Tanzania’s ranking deteriorated to 116th from 93rd on an index of the world’s most corrupt countries compiled by Transparency International, the Berlin-based organization.
“The economy is growing and it survived the recent recession much better than most other economies,” Spio-Garbrah said in a phone interview from New York yesterday. “Clearly Kikwete will win re-election, that’s not in doubt, but there are big issues with corruption and governance within his party, the Chama cha Mapundzi.”

The Tanzanian unit of Synovate, the London-based market- research firm, said on Oct. 10 that Kikwete has the support of 61 percent of the electorate. The Synovate and University of Dar es Salaam polls didn’t provide a margin of error.
Maintain Policy

Kikwete has pledged to maintain fiscal policies that are expected to drive the economic growth rate to 6.5 percent this year and 6.7 percent in 2011, the IMF said on Oct. 6. That compares with average growth rates of 5 percent and 5.5 percent expected in the rest of sub-Saharan Africa in the same periods.

During his first five-year term, Kikwete boosted spending on roads and energy projects, using higher tax revenue and donor funding, while keeping a lid on government borrowing. He also helped negotiate the formation of a common market for the East African Community, which includes Kenya, Uganda, Rwanda and Burundi and is aimed at boosting regional trade and attracting investment.

“Kikwete can take some credit for sustaining growth through the global economic crisis,” Anne Fruhauf, a London-based Africa analyst at Eurasia Group, said in a phone interview yesterday. “The main concern is the pervasiveness and scale of corruption, which is a key theme that has haunted his presidency. Many foreign investors find the operational risks from corruption formidable.”

Corruption Critics say Kikwete’s record on fighting corruption has been marred by a failure to prosecute graft cases.
In January 2008, Kikwete fired Central Bank Governor Daudi Ballali following an irregular-payments scandal over which Prime Minister Edward Lowassa resigned. In a separate incident that year, Andrew Chenge stepped down as infrastructure development minister after being investigated in a bribery probe involving BAE Systems Plc in 1997. Ballali died in May 2008 and no government ministers were prosecuted in either of the cases.

Donors to Tanzania announced in May they planned to cut their pledges in the 2010-11 fiscal year by about $220 million to $534 million. “The big frustration from the donor community has been the follow-through, they haven’t worked through the judicial system with prosecutions and court cases,” said Fruhauf.

Gold, Coffee

Tanzania is Africa’s fourth-largest gold exporter, after South Africa, Ghana and Mali. Companies including Barrick Gold Corp., the world’s largest producer of the precious metal, and AngloGold Ashanti Ltd. mine deposits in the country. The East African nation is also the continent’s fifth-biggest exporter of coffee, after Ethiopia, Uganda, Ivory Coast and Cameroon. Home to 43 million people belonging to more than 100 ethnic groups and religions, Tanzania is reputed as a bastion of peace in an unstable region. For that, Kikwete won international kudos, including from former U.S. President George W. Bush, who in 2008 signed a $698 million grant from the government’s Millennium Challenge Corp.

The country has been a less certain bet for foreign investors. The World Economic Forum’s 2010-11 global competitiveness index ranked the country 113th out of 139 countries, compared with 110th a year earlier.
Rites Ltd. of India, which won a 25-year concession and 51 percent stake in Tanzania Railways Ltd. in 2007, has faced threats from the government officials that they may seize back control of the rail line.

Mining Laws

Changes to mining laws in April, which increased royalties paid on minerals to 4 percent from 3 percent, will give the government a stake in all future projects. The Tanzania Chamber of Minerals and Energy, an industry group, opposed the law, saying it will deter new investment by mining companies and halt expansion plans at existing mines.
This weekend’s vote will elect a president for the union of Tanzania, which includes the mainland as well as the Indian Ocean archipelago of Zanzibar. There will be a separate ballot to choose Zanzibar’s president and parliament.
On Zanzibar, clashes followed the last two elections in 2000 and 2005, after the opposition accused the island’s president, Amani Abeid Karume, and his CCM party of vote- rigging. A new power-sharing arrangement approved by Zanzibar residents in July eased concerns that there will be further clashes this weekend.

About 20 million people are registered to vote in the elections. Polling stations open at 7 a.m. local time and close at 4 p.m. Final results are expected on Nov. 2 or Nov. 3.