Judegment Day At The High Court London

Judegment Day At The High Court London
Mengi v Hermitage: Libel Claim Successfully Defended

Tuesday, 22 February 2011

Is Tanzania an appropriate country to hold an African investment forum?

In April 20111,The Commonwealth Business Council (UK) will hold in conjunction with the Tanzanian Government, the Africa Investment Forum 2011 entitled “Accelerating East African Investment and Accessing an African Market of a Billion People” at the Mlimani City Conference Centre Dar es Salaam, Tanzania.

Mohan Kaul, Director General of the CBC states the The 2011 Forum will focus on the theme “Accelerating East African investment”, linking Tanzania, the East African Community, Africa and the World. The Forum provides a platform to bring investors and projects together to showcase new opportunities, enhance African trade and investment, and to build new business partnerships. The focus will be on promoting linkages between African economic clusters as a means to attract new investment.

The Commonwealth Business Council on its Web site states the,

 ‘(CBC) provides leadership in increasing international trade and investment flows, creating new business opportunities, promoting good governance and corporate social responsibility, (emphasis added) reducing the digital divide and integrating developing countries into the global market. In fulfilling its mission, CBC strives to provide a bridge between the private sector and governments, between emerging markets and developed markets and between small businesses and international private sector. CBC’s goal is to achieve economic empowerment for shared global prosperity through the enhancement of private sector contribution to social and economic development’.

Is Tanzania a safe place in which to invest and is this an appropriate country for such a Forum.

Eager to attract foreign investment and promote a diversified and reformed economy led by the private sector particularly, the agricultural sector the Tanzanian government engage in an aggressive and vocal campaign to portray Tanzania as an investor friendly country committed to the rule of law. In 1999, Tanzania engaged in major economic reforms intending to liberalize the economy in an attempt to make the country investor friendly. However, the rhetoric of an investor friendly environment does not sit comfortably with the realty of life in Tanzania for the investor.

The Investment Guide to Tanzania produced is a pristine publication produced with the clear intention of enticing foreign investment into the country. It sets out the ‘opportunities’ and ‘conditions’ prevailing in Tanzania for investors. It states that the rule of law is well established and the level of security relatively high. However, relative to what one has to ask. Wide spread corruption in the Police, Judiciary and Co-operative administrations (who in the main govern the agriculture sector by way of carving out sub-leases from head leases granted to them by the government) in Tanzania is perhaps the single most negative element fettering foreign investment and development in the country and adversely affecting the lives of Tanzanian citizens.

President Kikwete first came to power in 2005 on the back of anti corrupt rhetoric and assurances of good governance trumpeted loudly to the donor community in search of aid. The UK has provided £596 million in aid to Tanzania since 2000 (£140 million in 2009/2010 alone) and in 2008, the European Commission donated E555 million being the largest ever financial commitment made by the EU since it was founded in 1975 with European Commissioner for Trade Karel De Gucht stating "this substantial financial commitment demonstrates our confidence in the Tanzanian Government to put good governance, accountability and the fight against corruption at the centre of their agenda".

This confidence in Tanzania’s government is seemingly ill founded. Despite these staggering amounts of aid Tanzania remains one of the poorest countries in the world with a third of the population living below the poverty line. The 2009 Human Rights Report states 'senior government officials estimated that 20 percent of the government's budget in each fiscal year was lost to corruption'. Allegations of Grand corruption remain rampant with Kikwete providing little more than rhetorical evidence of his anti corruption stand.

It is accepted that government transitions to multiparty democracies and claims of good governance based on the existence of a rule of law are problematic. Donors expect the law not to be interfered with by the State. However, donor insistence for transitional regimes to adhere to western principles of good governance in particular non-interference with the judiciary by the executive allows for corrupt regimes to act with impunity. This is the case in Tanzania supported by The Heritage Foundation’s 2010 Index of Economic Freedom Report which found Tanzania’s Judiciary to be ‘… underdeveloped and vulnerable to the political whims of the executive’ casting doubt on the integrity of President Kikwete’s assurances to the contrary. It seems therefore that aid is simply a matter of rhetoric. The State says the right things, the State gets the aid. Thus the whole concept of aid is reduced to a game, a matter of political correctness, which can never lead to sustainable development, the true purpose of aid.

Tanzania ticks all the right boxes with it’s claims of good governance and adherence to the rule of law based on the existence of a multi part democracy but these elements are mutually exclusive and, if you dig though the rhetoric a disturbing picture emerges. In the last two years Tanzania has dropped 32 places in Transparency International’s Corruption Perceptions Index and Transparency International (Kenya 2009 survey) found the Tanzanian Judiciary to be the most corrupt institution in East Africa. Cases of grand corruption float in and out of public exposure amounting to little more than an unconvincing and half-hearted attempt to placate donors.

In 2008 the Tanzanian government launched a series of high-profile corruption prosecutions including the theft of billions of shillings from the Bank of Tanzania's External Payments Arrears account. The Richmond energy scandal where former Prime Minister Edward Lowassa resigned after being implicated in improperly awarding a contract to the US-based electricity company Richmond Development to provide electricity after a drought early in 2006. The BAE Systems scandal where Tanzania was supplied with an overly sophisticated radar system amidst allegations that BAE aid bribes to secure the contract resulting in BAE pleading guilty to ‘accounting misdemeanours’ before the High Court in London. And last but by no means least the Dowans scenario where Tanzania is hovering on the brink of breaching international law if it fails to pay the International Chamber of Commerce  arbitration ruling without legal justification.

Despite the endless corruption scandals President Kikwete launched his second campaign by defending his record stating, "the government in the past five years has fought corruption zealously. We have amended the anti-corruption laws and we have strengthened the anti-corruption bureau”. However revelations from the Wikileaks cables indicate that the director general of the Prevention of Corruption Bureau Edward Hosea claims he fears for his life and suggests that President Kikwete is being held hostage by a political and business elite in Tanzania which he refers to as ‘the untouchables’. Whilst Hosea denies the context of the revelations by Wikileaks, ongoing and unresolved corruption scandals in Tanzania show that the institutions in place to combat corruption in Tanzania are largely ineffective despite the rhetoric.

Of particular interest to the UK is the Silverdale Farm scandal where British investors Stewart Middleton and Sarah Hermitage suffered a four year campaign of violence and abuse of law by Benjamin Mengi brother to Media Tycoon Reginald Mengi which forced them from the country in 2008 with the loss of their investment. The case, which has all the ingredients of a Mugabe land grab and described by former British High Commissioner to Tanzania Andrew Pocock as ‘a continuing outrage’ prompted British M.P. (Thanet North) Roger Gale to call for the suspension of British Aid to Tanzania until Benjamin Mengi, who he described as a small time crook, was brought to justice.

Despite the fact that President Kikwete has failed to honour his promises to apply the rule of law to this case, the UK continues to supply Tanzania with over a quarter of its direct budget support. UK’s International Development Secretary Andrew Mitchell states he is determined to get value for money in respect of Britain’s £2.9 billion bilateral aid budget. The Department for International Development is to review and scrutinise those countries who share around £2.9 billion of the UK’s bilateral aid. The evidence suggests that Mr. Mitchell will struggle to get value for money for his taxpayers in Tanzania.


Dr. Mary Nagu


(second from left in the background)

President Kikwete


  Emmanuel Ole Naiko, Director of the Tanzanian Investment Centre

(first from the right back row)



Dr. Mary Nagu, former Minister of Justice.

How can I resolve the Silverdale Farm case in a manner that protects the Mengi name’?

President Kikwete

Promised the British government that he would apply the rule of law to the case.

Emmanuel Ole Naiko, Director of the Tanzanian Investment Centre

‘The Silverdale Farm case makes me sick to my stomach, why is no one doing anything about it’?


Is Tanzania an appropriate place to hold an African Investor Forum?

The reader is left to decide!


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