Tanzania records a dramatic surge in FDI

Tanzania attracted US$6.56bn in foreign and domestic investment during the fiscal year ending June 2024, reflecting a 21.6% increase over the previous year, with investors from Asia playing a significant role in this growth. The Tanzania Investment Centre, the nation’s investment promotion agency, registered 707 projects, a sharp 91.6% rise compared to the 369 projects in the previous fiscal year. Manufacturing was the leading sector, with 313 projects valued at US$2.462bn. This was followed by transport, which accounted for 128 projects worth US$1.035bn, and commercial building construction, with 76 projects totalling US$1.079bn.

In the first nine months of the year, China was the leading source of foreign direct investment (FDI) in Tanzania, contributing a total of US$1.305bn. Notable recent Chinese investments in Tanzania include the Sapphire Float Glass Factory, with a capacity to produce 700 tonnes of float glass, toughened glass, and mirrors daily, and the US$320m Sino-Tan Industrial Park on the outskirts of Dar es Salaam, expected to host 300 industries.

India was also one of the top five foreign investors in Tanzania during the first three quarters, with commitments totalling US$162m. India has made Tanzania a cornerstone of its economic diplomacy in Africa. Following Tanzanian President Samia Suluhu Hassan’s state visit to India last year, 15 memoranda of understanding were signed, covering areas such as trade, investment, defence, security, and healthcare. Since 2023, more than a dozen Indian business delegations have visited Tanzania. Significant commitments from Indian firms include Adani Group’s investment in a container terminal at Dar es Salaam port, Gravita’s new plastic recycling facility, and Apollo Hospitals’ 60-bed cancer care centre.

Singaporean entities are also making significant inroads into the Tanzanian market. In the first quarter of the fiscal year, Singapore ranked as the second-largest foreign investor in Tanzania, with inflows of US$139m. At last year’s Africa Singapore Business Forum, over 25 companies expressed interest in investing in the East African country. Among those eyeing opportunities is Toppan Ecquaria, a Singaporean subsidiary of Japan’s Toppan Holdings that specialises in digital government software and solutions; the company recently conducted a visit to Tanzania.

Despite growing interest, Tanzania has mostly trailed its neighbours in attracting FDI in recent years. According to the United Nations Conference on Trade and Development’s latest World Investment Report, Tanzania recorded FDI inflows of US$1.265bn in 2022, lower than Uganda’s US$2.953bn, Mozambique’s US$2.458bn, and Kenya’s US$1.597bn.

In its most recent Where to invest in Africa publication, investment bank RMB ranks Tanzania 12th out of 31 countries in terms of investment attractiveness. The report cites Tanzania’s strong GDP growth forecast, 5.5% for 2024, and its expanding population of about 65m as key positive factors. However, it also notes that the country’s investment potential is limited by relatively low urbanisation, with few metropolitan areas beyond Dar es Salaam. The report also highlights Tanzania’s position as the world’s 14th largest producer of natural gas, with substantial reserves estimated at 57tr cubic feet. The country is actively seeking partners for further exploration, development, and processing activities, which could require investments of up to US$31.7bn.

 

References

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