Tanzania: Slowing Down EAC Integration over Land Concerns?

Thursday, 15 January 2009

Page 2 of 2 Is Land Really the Issue? Tanzania’s socialist past still complicates business Tanzania: Prospects for Foreign Direct Investment from Germany , and this applies to land issues just as much. Before the socialisation of 1976 land titles were derived from the route to ownership, for example tribal inheritance, Muslim law or colonial civil law. With the introduction of socialism, all land had been declared state property. However, long leases were then granted under often intransparent conditions, particular in fertile farming areas and residential areas of the city. In 1988 the granting of leases of 33, 66 and 99 years began.   A large amount of land was deemed to be not used by nor granted in title to groups or persons, and was therefore still completely public. In 1998, this was notionally collected into a Land Bank, available after negotiation to investors under the aegis of the Tanzania Investment Centre or the Zanzibar Investment Promotion Authority (ZIPA) for Zanzibar. However, the local authorities and the Ministry of Lands also have to approve the process, and particularly at local level early ownership is remembered, or more recent grants to well connected members of a district are recalled, which leads to other interested parties impeding the process. As a consequence, the Land Bank scarcely works. Non citizens have not been able to own, i.e. be granted title to land, since 1976 when land was nationalised and since 1988 when leases began to be properly organised. But locally registered companies can own, and anyone can lease land. As such, access to land in itself is not necessarily the main or only headache for foreign investors, and Tanzania’s reluctance to change the system is not the major obstacles – obtaining work permits, for example, has been a difficulty for many Kenyan companies doing business in Tanzania. However, financing for e.g. agri-projects and long-term industrial investment requires assured ownership for the financing of investment, and thus investors see themselves at risk.   Since the perceived dominance by foreigners and land questions are such emotive issues, it is easier for Tanzanian politicians to play along with these sentiments, even if in private many admit that Tanzania would probably fare better by embracing the EAC. But the land debates are really a reflection of residual historical animosities combined with Tanzania’s weaknesses vis-à-vis its more dynamic, capitalist neighbours: Lower skill levels, including language skills, and lack of business experience pitches the Tanzanians against the better educated and better trained Kenyans. Kenyans come back from Tanzania with raised eyebrows at the slow pace in its post-socialist neighbour, and they are typically perceived as a threat.In some sense, quite rightly so, argues David Robertson, who represents the East Africa Association, a business association of foreign investors, in Tanzania. He acknowledges that differences in language skills and business culture present an initial obstacle – and often some underlying hostility in the Ministry of Immigration and Lands. And, he argues, foreign investors will look for someone who fits the mould to run their company – so most Tanzanians would not be considered, and income disparities would increase as a consequence. A vicious circle results: As Tanzanians feel left out from opportunities that foreign direct investment can create, their latent opposition to these new market entrants increases, who will then find another reason not to consider Tanzanians for managerial positions. In the end, the fear of outside domination, especially from Kenya, prevents moving on to a situation where expat professionals could impart much needed skills through on-the-job training. Government officials who are, in principle, in a position to push the country out of this deadlock have benefited from the situation as any investor interested in moving things forward will have to offer some ‘facilitation’, i.e. financial inducement.  Perspectives Tanzania was long the more reluctant party to the EAC, and the recent objections to both land purchases and a common EAC passport have again raised doubts as to how much the government is committed to regional integration, or whether it is just paying lip service. Officially, the Tanzanian government supports the union, but many public personalities have called for slowdown in the integration – and behind the scenes, officials from the other member states have become cynical of the commitment and support of the Tanzanian government: “The truth is that the Tanzanian government is not keen on the idea and the other member states have realised this. This year [2009] however, will see Kenya, Uganda, Rwanda and Burundi make significant developments in the integration process without Tanzania,” says a high ranking East African diplomat based in Dar Es Salaam, Tanzania’s capital, who declined to be named due to diplomatic etiquette. For one of the East African diplomats, this is sad as it might be history repeating itself, having embraced a particularly economic disastrous policy after its independence from Britain. “It is clear that Tanzanians have not learnt from the socialist ‘Ujamaa’ policy that had grievous economic implications on their country. Now, they are seeing a hidden agenda in the push for an integrated East African market and this will only hurt them more in the future,” said the diplomat. While many Tanzanians want to pull Uganda onto their side, Uganda’s President, Yoweri Museveni is actually on record as saying that the integration should go on without Tanzania who can then join later at their own pace. Of course Tanzania is still very much a member of the EAC, and the overall regional integration process has, in the past, been hampered as much by capacity constraints in the member states as by the desire to protect specialist and vested domestic interests EAC: Locally Manufactured Vehicles Stuck at Internal EAC Customs Borders . However, if the EAC members feel that Tanzania is really dragging its feet to the detriment of all others – and Rwanda has certainly injected some new dynamism to the regional union – then the East African Treaty Agreement offers two options: According to the East African Treaty agreement, a partner state may be suspended from the Community if that State fails to observe and fulfill objectives and issues agreed upon. Upon suspension, the member state ceases to enjoy all the benefits that the other states enjoy such as free movement of goods, people and taxation exemption. Suspension, however, does not entail expulsion and a member state could still be allowed back into the union if it agrees to comply with the terms and condition. The second option   far more drastic and unlikely to occur   is outright expulsion. A partner state may be totally expelled from the community for gross and persistent violation of the principles and objectives of the East African Community Treaty after giving such partner state 12 months’ written notice. If Tanzania withdraws or is expelled, all the property of the EAC in Tanzania – which hosts the EAC Secretariat in Arusha   shall remain vested in the community. Tanzania shall have no claim to or any rights over any property and assets of the community currently within its border and, according to the treaty, Kenya Uganda, Rwanda and Burundi shall continue doing business in the offices and in use all other such facilities even after the expulsion or withdrawal of Tanzania. Since Tanzania is generally asking for “more time”, it is highly unlikely that the other four member states will push for the country’s expulsion – especially given Kenya’s already substantial portfolio in Tanzania. Rather, a suspension, which is indefinite, will be the most logical solution as it will enable the other four countries to continue with the process as they give Tanzania time to ‘catch up’. Suspension will mean that Tanzanian exports will no longer be included in the Common External Tariff (CET), but incur duty like imports from any other non-EAC country. This will curtail the exports of Tanzanian goods to Kenya. Latest statistics indicate that Tanzania’s 2007 exports to Kenya were officially valued at KES6.5bn.Similarly, should the EAC follow Rwanda’s example of removing labour restrictions for EAC members, Tanzanian nationals will not benefit from this. And even if Tanzania should be suspended, regional integration issues are not becoming any easier: In October 2008, the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (Comesa), and the EAC have agreed to work towards a full integration of those three blocs. A member of SADC, Tanzania left COMESA in 2000, but all the other EAC states are members.    Share this article with others: Comments (0) Subscribe to this comment's feed Write comment Show/Hide comment form Name Email Title Comment smaller | bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Add Comment << Start < Prev 1 2 Next > End >>