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Africa Weekly\Business

New port set to launch major economic boost

By Chris Mabeya | China Daily Africa | Updated: 2017-11-10 09:52

China has partnered with Oman in a project to complete the construction of Tanzania's Bagamoyo and special economic zone by 2022.

The project is backed financially by China Merchants Holdings (International), China's largest operator, and Oman's State General Reserve Fund. The Chinese company will handle much of the construction work.

The port, once completed, will be the largest in East Africa and will boost the country's economic investment. It will be able to handle megaships - container vessels carrying 8,000 20-foot equivalent units - after the first phase is completed, with room for expansion.

 New port set to launch major economic boost

Bagamoyo port is 75 kilometers north of Dar Es Salaam, the commercial capital of Tanzania. Chris Mabeya / For China Daily

The port will have new roads, railways and the economic zone

Hu Jianhua, managing director of CMHI, said in a statement that the company would run Bagamoyo as one of its overseas ports.

"We shall compensate the people whose land was taken for the development of various business programs before completing the project," he said.

Stella Manyanya, an engineer and Tanzanian deputy minister for trade, industries and investment, says the project for a modern port is being carried out through collaboration between China and the State General Reserve Fund of Oman. She says she is optimistic that more than 190 industries will be set up in the Bagamoyo area, including a manure processing business that will be set up by the government of Oman.

"Once the port becomes operational, it will attract more investors who will help the country to attain its industrial economy agenda," says Manyanya.

"The strategy we have is that, by 2020, the Bagamoyo port should start offering services and receiving big cargo vessels."

The port and its industrial zone are designed to address congestion at the old port and support Tanzania to become East Africa's leading shipping and logistics center. The port is about 75 kilometers from the capital, Dar es Salaam, and 10 km from the town of Bagamoyo.

When the economic zone is fully developed, it will attract about 700 industries to become a strategic investment zone in East Africa.

CMHI says that among the projects envisioned for the zone are industrial parks worth $120 million and a $70 million tourism park, as well as free port facilities ($90 million), a free trade zone ($70 million), science and technology parks ($50 million), an international business center ($70 million) and industrial buildings ($20 million).

It is expected that, by 2025, Tanzania will realize its industrial economy agenda, with the Bagamoyo port incorporating proper infrastructure, including roads and electricity. A gas pipeline will cross over the port.

Initially, China and Oman signed a three-way partnership in 2013 that would have seen Tanzania get an undisclosed shareholding in the project, but the government was unable to raise $28 million to compensate landowners who were to be displaced by the project.

With investors anxious about losing the envisioned business opportunities, the government is negotiating with the investment partners for them to fund the compensation. In turn, the government will forego an equity stake in the project and only benefit from taxes on the land and occupancy by the investors.

The China-Tanzania relationship has seen increased investment and trade in recent years.

Tanzania Investment Centre statistics show that, by the end of June last year, Chinese investment in Tanzania had reached $6.62 billion, with about 600 Chinese companies operating in the country.

The Chinese investments are in agriculture, tourism and information, communications and technology, creating around 150,000 jobs in direct employment and with a total of around 350,000 people engaged in trade between the two countries.

China has also provided a large amount in concessional loans to help Tanzania build key infrastructure projects, including the Mtwara-Dar natural gas pipeline.

Oman has had profitable relations with Tanzania, investing in various projects, including Bagamoyo.

For China Daily

(China Daily Africa Weekly 11/10/2017 page28)

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