High Commission of India Dar es Salaam

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1 High Commission of India Dar es Salaam No. Dar/Com/201/1/ March, 2011 Economic and Commercial Report for the month of February Gross Domestic Product: Tanzania s GDP growth for the year 2007 was 7.3%, 2008 was 7.4% and in 2009 was 5.0%, while expected growth in 2010 is 6.0%; compared to the 6.2% in 2006 and the 6.9% in Nominal GDP: US$ 22.6 billion; Shares of GDP at Current Prices 2009 (est): Services (including tourism) 50.8%, Industry and Construction 22.6%, Agriculture and Fishing. 26.6%. [National Bureau of Statistics] Tanzania s GDP: Purchasing power parity US$ billion (2010 est.) Per capita (ppp) US$ 1,500 (2010 est.) 2. Budget Trend Total budget Re-current Expenditure Development Expenditure Fiscal Year TZS (trillion) App. US$ (billion) TZS (trillion) App. US$ (billion) TZS (trillion) App. US$ (billion) 2006/ / / / / The 2010/11 Budget sets out the following targets: GDP growth rate of 7% and 7.1% for 2010 and 2011 respectively; Reduce inflation rate to 5% by end of June 2011; To increase domestic revenue from 16.1% (estimated) of GDP in 2009/10 to 17.3% of GDP in 2010/11; To improve investment climate in the country; To place greater emphasis on expanding the agriculture sector and achieve food security. 3. Rate of Inflation: The annual inflation rate in the month of December 2010 increased to 5.6% compared to 5.5% in November 2010 while in December 2009 was 12.2%. Annual food inflation increased to 7.3% in December 2010 compared to 7.1% in November 2010 and 14.5% in December The annual non-food inflation decreased to 4.7% in December 2010 compared to 4.9% in November 2010.

2 4. Exchange Rate: The end-period exchange rate of the Tanzanian shilling (TZS) was TZS 1, per US dollar in December 2010 from TZS 1, per US dollar recorded in November 2010, and TZS 1, per US dollar in December External Debt: During the year ending December 2010, Tanzania s external debt stock was US$ 8,675.5 million, compared to US$ 8,575.0 million registered at the end of previous month. Out of the total external debt stock, US$ 6,885.7 million (80.3%) was disbursed outstanding debt and the remaining balance of US$ 1,689.3 million (19.7%) was interest arrears. During the month of December 2010, External debt service amounted to US$ 4.0 million, out of which, principal repayment was US$ 2.4 million and interest payment was US$ 1.6 million. 6. Current Account Balance: On a year-to-year basis, Tanzania s current account deficit for the year ending December 2010 was US$ 2,405.8 million, compared with a deficit of US$ 2,150.9 million for the year ending December During the review period, imports outweighed the exports of goods and services: while imports were US$ 8,963.2 million, exports were US$ 5,827.2 million. 7. Strategic Grain Reserves: According to official estimates, Tanzania s strategic grain reserve was about 210,895 tons at the end of December 2010, compared to 197,747 tons recorded in November On annual basis the SGR stock increased by 171.6% from 77,644 tons recorded in December The increase in the stocks was on account of purchase of grains by the National Food Reserve Agency (NFRA). 8. Tanzania s revenue collection: Revenue collections in December 2010 amounted to TZS billion (App. US$424 million). Tax revenue collections amounted to TZS billion (App. US$ 403 million), while non-tax revenue collections was TZS 29.9 billion (App. US$21.0 million), in December 2010 compared to TZS 147 billion (App. US$ million 2005 s ER) tax revenue collection in December 2005 when the Kikwete government took office. 9. Foreign Trade: Latest available figures pertaining to export and imports of merchandise goods are given below: (Figures in millions of US Dollar) Item Exports 1, , , , , , Imports 2, , , , , , Trade deficit 1, , , , , , [Source: Bank of Tanzania]

3 10. Trade with 10 major countries Tanzania s principal export destinations: China, Switzerland, and India is the fifth largest importer. Tanzania s exports (US$ millions) Country China Switzerland South Africa Kenya India Japan Germany DRC Belgium Netherlands Rwanda [Source: Tanzania Revenue Authority] Tanzania s trade in services 11. In December 2010, Tanzania s export of services marginally increased to US$ million compared to US$ million in the previous month. On annual basis, in the year ending December 2010, services receipts amounted to US$ 2,139.8 million compared to US$ 1,854.6 million during the year ending December 2009, due to improvement in travel (tourism) receipts. (Figures in millions of US Dollar) Item Service Exports , , , , , Service Imports , , , , , Service trade balance [Source: Bank of Tanzania]

4 12. Tanzania s principal import sources: India is leading; others are China, South Africa, UAE, Japan, Switzerland, Singapore, Kenya, United Kingdom and Saudi Arabia. Tanzania s Imports (US$ millions) Country India China South Africa UAE Japan Switzerland Singapore Kenya United Kingdom Saudi Arabia Germany [Source: Tanzania Revenue Authority] 13. The principal export commodities (Values in US$ million) Item Gold , , Manufactured goods Fish & Fish Products Cotton Tobacco Coffee Vegetable & oil seeds Other Minerals Cashew nuts [Source: Bank of Tanzania]

5 14. The principal import commodities (f.o.b Values in US$ million) Item Other Consumer Goods , , Machinery , , , Oil , , , , Transport equipment Building & construction equipment Industrial raw materials Food & foodstuffs Fertilizers [Source: Bank of Tanzania] 15. India-Tanzania Bilateral Trade India s exports US$ million in 2007; US$ million in 2006; in 2008 it stood at US$ and in 2009 was US$ million; while 2010 is amounting to US$ Imports from Tanzania were US$78.65 Million in 2007 compared to US$56.56 million in 2006; in 2008 it stood at US$171.82; in 2009 was US$ million; while 2010 is amounting to US$ Principal commodities: Exports Petroleum products, iron & steel, pharmaceuticals, engineering goods, motor vehicles, cotton textiles, electric apparatus, Organic Chemicals, consumer goods, garments; Imports raw cashew nuts, gemstones, raw cotton, pulses, timber. (Figures in million US dollars) Years Imports from India Exports to India Volume of Trade , , Balance of Trade (in favour of India) [Source: Tanzania Revenue Authority]

6 Major categories of service trade Exports 16. Tourism: In December 2010, Tanzania s service receipts in the tourism sector which accounts for 60 percent of total services receipts amounted to US$214.9 million compared to US$190.7 million in the preceding month. The aggregate receipts in the tourism sector from January to December 2010 amounted to US$ 2,139.8 million. Imports 17. During the month of December 2010, services payment amounted to US$188.2 million, slightly higher than US$ million in November From January to December 2010, total services payment amounting to US$ 1,838.1 million. Foreign Direct Investments (FDIs) Progress in Tanzania 18. Tanzania Investment Centre (TIC) expects to receive 750 investment projects worth 3billion US dollar in 2011, up from 570 projects in 2009, worth 2.3 billion US dollar and 610 projects in 2010, worth 2.5 billion US Dollar. The manufacturing sector emerged top among all the sectors in 2010 in attracting more investment projects but in 2011, tourism and construction are expected to take the lead. The numbers of jobs which will be created from 750 projects in 2011 are projected to be over 80,000, up from 57,000 jobs in 2009 and 70,000 jobs in A number of investors have expressed determination in investing in agricultural sector which for years has not been much attractive to investors. Among the requests received by TIC to invest heavily in agriculture comes from Saudi Arabia's King Abdullah's son seeking to invest in dairy farm, rice and other cereals. An English firm has invested in rice growing at the Kilombero farm in Kilombero District, Morogoro Region with a hope of supplying for both domestic and foreign market. In a period of , the United Kingdom has been leading among countries with more investment worth US$1, in 795 projects. India is the second with 229 projects worth US$1, Major areas of investment were: tourism, natural resources, energy, manufacturing, telecom, banking and insurance, transportation and infrastructure. Target sectors which TIC promotes for investment are agribusiness, extractive industries, infrastructure and tourism. In the agribusiness sector, in addition to traditional crops are horticulture, floriculture, fish and aquaculture, sugar ethanol, palm oil and jatropha, pyrethrum and Artemisia as well as organic cotton. Another area that the TIC is interested to attract FDI is that of setting up Import substitution industries. Such as fertilizer production plants, agricultural machinery plants, and other farm implements such as tractors and ploughs. Establishment of factories for packaging material for various agricultural commodities is highly encouraged and the state offers strategic incentives to attract such investments into the country. In the extractive industries sector the emphasis are on minerals-base metals and gemstones, gold, Tanzanite, hydrocarbons (oil and natural gas) and Coal. Refining, processing, smelting, cutting and polishing. In the infrastructure sector the focus are on power, ICT Backbone, roads, seaports as well as airports. In the Tourism sector the much welcomed investments are on Beach tourism, conference tourism, sports/golf tourism, city tourism,

7 medical tourism as well as historical tourism. Tanzania's economy mainly depends on tourism, mining and agriculture. EPZs are set to boost industrial development in Tanzania. The priority sectors for EPZs investment in Tanzania are agro-processing, mineral processing, processing of fish, meat and leather products, textiles and garments making, ICT and engineering related industries and any other export oriented manufacturing operations. 19. Projects registration for ten leading countries S/No. Country No. Of Projects No. Of Employees Value (Mln. USD) 1 United Kingdom ,040 1, India ,838 1, Kenya ,819 1, Netherland , USA , China , South Africa , Germany , Oman 32 1, Italy 89 6, Tanzania is a seeker of foreign investment and is not a major investor abroad. Developments in business and investment during the month of February, Canadian Firm Raises 15 Billion for Mining Works Helio Resource Corp of Canada, which has an interest in SMP gold project at Lupa in Rukwa, has successfully closed its private placements for gross proceeds of 10 million US dollars (about TZS15bn/-). The fund raised is meant for exploration works in Tanzania and Namibia, with a portion going to meet general corporate expenses. The initial exploration results showed a total of 940,000 ounces or some 30 metric tonnes. Helio's focus is to develop the 238 square km SMP Gold Project in the Lupa Goldfield, south west Tanzania into a significant open pit-able gold resource.

8 22. Norwegian firm to feed 10MW into national grid Sporadic power interruptions which are almost throttling the country s economy might be reduced after a Norwegian firm announced that it will generate renewable power and sell it to the state electricity supply company, Tanesco. The company is proceeding with its plans to generate 15 MW from a combined heat and power (CHP) plant to be connected to the national grid. 10 MW would be sold to Tanesco for supply to the national grid, and the remaining would be used for private industrial development. So far the firm has invested more than US$100m, and in Tanzania alone the company invested US$6.5m in 2010 and has plans to do more this year. Established in 1997, Green Resources is registered in Norway, has operations in Tanzania and Uganda, and is expanding to Mozambique and Southern Sudan. Major agreements proposed/ finalised during February, 2011: 28. Japan injects over TZS7bn/-[App. US$5 million] into agriculture Japan has granted 400 million Yen (about US$5million) to support agricultural sector development initiatives in the country. The grant availed through the Food Security Project for Underprivileged Farmers, will enable the government to procure between 7,000 and 8,000 tonnes of fertilizer which will be sold to farmers at reasonable prices. An agreement to that effect was signed in Dar es Salaam on 24th February 2011 by the Japanese Ambassador to Tanzania, Mr Hiroshi Nakagawa and the Permanent Secretary in the Ministry of Finance, Mr Ramadhani Khijjah. 24. WB issues USD 38m for urban councils` capacity building The World Bank has approved an International Development Association (IDA) credit of US$ 38 million to support implementation of a project aimed at improving access to urban services in Zanzibar. The Zanzibar Urban Services Project (ZUSP) will strengthen institutional capacity of the Zanzibar Municipal Council (ZMC) on Unguja Island and develop infrastructure, such as surface water drainage systems, solid waste collection and transportation, street lights and a sea wall including a promenade along Mizingani road within the World Heritage Site of Stone Town. The project will also support the town councils of Chake Chake, Mkoani and Wete on Pemba Island by strengthening their institutional capacity and through the identification and implementation of simple and small investments. This is the third operation to be approved by IDA for Tanzania during fiscal year 2010/2011. In total, the World Bank s currently active country portfolio includes 24 operations with a net commitment of US$ billion. In addition, Tanzania benefits from 11 regional projects, in which Tanzania-specific financing amounts to over US$ 230 million.

9 Investment/ Business developments in East Africa during the month of February, WB issues USD16m grant for EAC financial reforms The East African Community (EAC) and the World Bank (WB) have signed a grant agreement worth US$ 16 million to support a project that will transform the bloc s financial sector. The project, to be implemented in two phases over a period of nine years, will support EAC efforts towards building a harmonised financial service sector market for the region. The EAC Secretariat working with the WB prepared the EAC - FSDRP. The objective of the EAC FSDRP is facilitating the establishment of a single financial market among EAC partner states with a view to making a wide range of financial products and services available to all East Africans at competitive prices. India s investment interests 29. In a period of , investments with Indian interest cost US$1, million which employed about 31,838 people; ranking as the 2 nd largest Investor in Tanzania. Potential exists for Indian investment/participation in projects relating to development of IT and telecom systems, power generation - gas, hydel as well as coal based, power transmission, constructionroads, bridges, ports, hospitals and infrastructure development, mining, agro processing, gem cutting and polishing, educational services, railways. With Agriculture first initiatives in July 2009, investment opportunities opened up in agriculture farming as well. M/s. Kamal Steel, an Indian company, is also in the process of developing an EPZ, approximately 45 km. Away from Dar es Salaam. China Tanzania 32. Chinese Firm to Inject $3m Into Coal, Iron Ore Mines Chinese firm, Sichuan Hongda Corporation Ltd will invest US$3 million in the Mchuchuma coal and Liganga iron ore production projects in Southern Tanzania. This is the first major mining investment by the firm in Tanzania, after it was selected out of 48 international companies that bid to develop the two projects. The projects will provide the base for industrial activities and a source of coal for both local industrial use, as well as for export. The Mchuchuma coal project, which is expected to produce 600 Megawatts of electricity, will supplement the hydropower sources in Tanzania. The Mchuchuma mining area has an estimated 540 million tonnes of coal deposits, which is enough to produce electricity for over 100 years. The Mchuchuma project covers an area of about 141 square kilometres while the Liganga Steel Complex covers 179 square kilometres.

10 32. China reiterates interest in investing in EAC bloc The government of China has expressed interest in cooperating with East Africa Community (EAC) partner states in boosting investments in agriculture, manufacturing, mining and service sectors. A high-powered delegation from China visited the EAC secretariat offices on 22nd February 2011, led by Director of Department of West Asian and African Affairs in the Ministry of Commerce of the People s Republic of China, Chai Zhijing. The Second Secretary in the Chinese Embassy in Tanzania, Zhijing specifically outlined areas of partnerships, as animalhusbandry, production, minerals and other natural resources processing, logistics and tourism. The delegation held official talks with EAC secretary-general ambassador Juma Mwapachu and also exchanged views with other top officials of the bloc s secretariat. India Tanzania 32. India to invest over US$250m [App. TZS350bn/-] new projects in Tanzania Indian investors are expected to invest in Tanzania more than TZS350bn/- [US$250 million] in steel and technology sectors. This was revealed over the 62th Republic Day of India by Tanzania Industry and Trade minister Dr Cyril Chami. He mentioned other areas where the investors had shown interest as packaging industry and manufacturing of tricycles and motorbikes. Dr Chami urged Indian investors to consider investing more in value addition of agricultural products, raw hides and skins as well as processing of gems and jewelry. For his part, Indian Ambassador to Tanzania Kocheril Bhagirath said Tanzania is important to India due to the historical relationship, which has been stabilized by the founders of these two nations. India will continue to cooperate with Tanzania in economic and social spheres in order to promote this relationship. India will continue to offer scholarships to Tanzanian students, adding that the programme was part of India s strategy to consolidate friendly relations between the two countries. 32. India boosts cashew nut export products Government of Tanzania has commended India for accepting processed cashew nut products to enter the Asian country on quota free arrangement. India has in place a market access facility that allows developing countries in Africa, to export 468 products, ranging from minerals, agricultural products, forestry, hides and skins on quota free treatment. Minister for Industry, Trade and Marketing Dr Cyril Chami showered praise on the Indian High Commissioner to Tanzania, Mr Kocheril Bhagirath during the 62nd Republic Day of India held at the Diamond Jubilee Hall in Dar es Salaam. Statistics dating back to 2009 show that India had 205 projects out of the 3,000 foreign direct investment ( FDI) in the country, valued at $1.23 bn, creating some 21,559 jobs. "These figures rank India third as far as FDI is concerned," remarked the minister.

11 35. Business Enquiries from India to Tanzania During February, 2011 a total of 13 trade enquiries from India were received and replied. Most of the enquiries were seeking for importers, distributors of building materials, agricultural products, pharmaceuticals, textiles and other consumer goods. The enquiries from India during the month of February, 2011 are as follows: S/No Company Enquiry Action taken I Natural Gems & Jewelry Inc., Importers/dealers of Jaipur-India gemstones & Jewellery. II III IV V VI VII VIII IX X XI XII XIII (S. T. Than), Tirupur, Tamil Nadu - India (Avinash C. Gupta), Gurgaon - India (Paras Shah), Sunbeam International Gujarat, India (Vaibhav Jain), JYOTIDIP SOLAR, Ahmedabad , India (Shyam), Surya Gems, Jaipur, Rajasthan - India. (Amit Agarwal), Dhanbad Fuels Ltd, (India) (Rakesh Shah), Rico. Mumbai, India. (Arun Naik), Goa Pharmaceutical Manufacturers Association, India. (Babu Bantipuli), Deluxe Scientific Surgico Pvt. Ltd., New Delhi , India. (Shariq Haneef/Esther M.), Silverlink Africa Ltd. Indian Co. Operating from Kenya EA. (Ramesh Nakra), Ras Tek Pvt Ltd, Mumbai , India. (Pankaj Jindal), Jindal Export, Rajasthan, India. Importers of Textile Printing Inks. Inputs on supplying of manpower from India etc. Buyers/importers of paper and paper products. Importers of Solar products. Importers of precious & semi precious gemstones and Jewellery. Importers/distributors of PP Bags. Importers/distributors of Home appliances. Importers of Pharmaceuticals. Importers of Blank optical Storage Madia & Flash storage products i.e CDs & DVDs. Agro-suppliers & teak wood Contact of M/s. VIP Engineering marketing Ltd and M/s. Independent Power Tanzania Ltd. Importers of Food- Flavours, Food colours and seasonings. List of Tanzanian importers/contacts, useful websites, relevant authorities as well as chambers of commerce and industries were provided so that they could contact directly with their offers.

12 36. Business Enquiries from Tanzania to India Mostly, Tanzanians come to the office of the High Commission to present their enquiries verbally. During February, 2011 four trade enquiries from Tanzania were received and attended. The enquiries were seeking for suppliers of Pharmaceuticals, sugarcane molasses and calcium carbide: The enquiry from Tanzania during February, 2010 is as follows: S/No Company Enquiry Action taken I (Mr.Mustafa Jengo), Contact of Indian Dar es Salaam, Mob: Pharmaceuticals Manufacturers. II (Mr. Mahmoud A. Ibrahim), M/s. COZY TRADERS (T) LTD Dar es Salaam info@cozytraders.com III (Mr. Philemon Uwitijije Bashigwa), Dar es Salaam joseph.misago@yahoo.com IV (Mr. Joanes Muga), TOL Gases Ltd Dar es Salaam Mob: jmuga@tol-gases.co.tz Formalities for establishing an Office in Mumbai. Contact of Indian suppliers/manufactu rers of sugarcane molasses. Contact of Indian manufacturers/suppl iers of Calcium carbide. List of Indian manufacturers/suppliers were provided as well as important websites which provide economic and business information in India so that they could contact directly with their offers. N.J. Gangte Counsellor High Commission of India 82 Kinondoni Road, Dar-es Salaam Tel , Fax , couns@hcindiatz.org