Obama walks into the dragon’s den

US President Obama’s visit to three African countries, Tanzania, South Africa and Senegal, is seen as Washington’s new drive to counter the ever-growing Chinese influence on the continent and also to push more US investment in the world’s fastest-growing region. What has been the impact of the visit? Richard Mgamba, writing from Dar es Salaam, looks at the visit from the Tanzanian perspective.

At the beginning of July, residents of Dar es Salaam rubbed their eyes in disbelief – the usually dusty and dirty city had been scrubbed clean and the beggars had disappeared. Billboards along the major roads were festooned with posters bearing the beaming face of US President Barack Obama.
This was part of the red carpet treatment rolled out to welcome the US leader who had come with an energy package worth around $7bn in his pocket and hopes of a deeper partnership in his heart. China dominates investments, trade, grants and projects in Tanzania. Obama was walking into the dragon’s den.
In March, just 10 days after taking office, Chinese President Xi Jinping made Tanzania his first stop on a three-nation
African trip. He signed 19 trade, cultural and diplomatic accords, worth $12bn, in Tanzania alone. There are approximately 8,000 Chinese-owned businesses operating in the country, ranging from large-scale construction projects to small shops and
market kiosks.
The Chinese president’s visit had been rather low key, in contrast to the fanfare that greeted Obama. In 2008, former US President George Bush spent four days, his longest stay in any African country, in Tanzania. The question most Tanzanians were asking themselves was whether the US was taking on China headlong and if so, what was in it for them.
Located strategically on the coast of Indian Ocean, Tanzania is a gateway for many landlocked neighbours and a jumping-off point for companies looking to expand commercial opportunities.
It would appear that the US’s main interest in Tanzania, apart from security issues, is in energy. Tanzania has huge reserves of hitherto untapped natural gas but it current power supplies are woefully inadequate.
Currently the country’s national grid generates only 1,400 MW including electricity produced by independent power producers. The target is to achieve 10,000 MW by 2025. This will require an investment of around $8bn.
With the discovery of natural gas, Tanzania plans to abandon the use of expensive heavy furnace oil by June 2014, when the Chinese-funded 524km gas pipeline is completed.
The country hopes to benefit from Obama’s $7bn Power Africa initiative for sub-Saharan Africa. Tanzania is one of the six countries chosen to participate in the project. It would help in providing power to some of the 20m who are currently not connected to the grid. US companies are already involved in the energy sector. Former Secretary of State Hillary Clinton visited the Symbion Power Corporation’s 110MW plant during her visit and Obama followed suit this time around. Symbion has teamed up with another US company, GE, to build a 400 MW plant in Tanzania’s gas region of Mtwara. Both companies can expect to be heavily involved in the new US energy funding.

Oblique reference to China
Obama referred to the Chinese dominance in Tanzania obliquely. Was his trip aimed at countering the growing Chinese influence on the continent?
“I actually welcome the attention that Africa is receiving from countries like China and Brazil and India and Turkey,” he said but added, “When we look at what other countries are doing in Africa, I think our only advice is, make sure it’s a good deal for Africa.
“Somebody says they want to come build something here: Are they hiring African workers? Somebody says that we want to help you develop your natural resources: How much of the money is staying in Africa?
“I do think that it’s important for Africans to make sure that these interactions are good for Africa.
“There has been a long history of extracting resources from Africa – you take raw materials, you send them to some place else where they get used, processed, sometimes sold back to Africa.
“The profits stay there, the jobs stay there and not much stays in Africa.”
Obama offered up the US as a more equitable partner which wanted African economies to grow into consumer powerhouses. Strong economies would mean the US would get
“somebody to trade with, to sell iPods to, airplanes, all kinds of good stuff”.
Obama’s visit comes just three months after the Chinese President Xi Jinping visited Tanzania during which 19 deals were signed between Beijing and Dar es Salaam, including the multibillion-dollar modern port project to be constructed in Bagamoyo to service the Great Lakes region. Scheduled for completion by 2017, the port at Bagamoyo – northwest of Dar es Salaam – will be able to handle 20m containers a year or 20 times more cargo than the Dar es Salaam port, which can handle a
maximum of 800,000 containers. The port construction project will include the building of a new 34-kilometre road joining Bagamoyo to Mlandizi and 65 kilometres of railway connecting Bagamoyo to the Tanzania-Zambia Railway (TAZARA) and Central Railway line.
The bilateral deals call for China to commit $500m in 2013 for starting the port construction. The new port also would transform Bagamoyo into an East African hub for Indian Ocean shipments to and from six of Tanzania’s mostly landlocked neighbours, ease congestion at the Dar es Salaam port and make Tanzania’s import-export sector more efficient.
The neighbouring countries of Malawi, Zambia, Democratic Republic of Congo, Burundi, Rwanda and Uganda would like to export and import products via Tanzania, the shortest and most viable route to the Indian Ocean. But for now, these countries must make do with the Kenyan port of Mombasa and the South African port of Durban, which are more distant and costly routes.
Just two years ago, Beijing arranged a $1.3bn loan to the Tanzanian government at an interest rate of just 3% to finance the construction of 524 km Mtwara-Dar es Salaam gas pipeline. Traditionally, China has been a strong partner of Tanzania, dating back to the eras of Julius Nyerere and Mao Tse Tung. Between 2000 and 2012, China financed a number of projects in Tanzania such as the new ultra-modern stadium in Dar es Salaam; the Mwalimu Nyerere Modern Conference Centre; rehabilitation of Amani stadium in Zanzibar; the Dodoma Urban Water rehabilitation and Chalinze Water Supply projects; construction of the Dakawa Agricultural Technology Demonstration centre; and it has been involved in defence cooperation, an ICT backbone infrastructure fibre-optic project and many other projects.
While US relations with African countries come with a string of conditions, such as human rights, democracy, good governance and many more, China’s approach is directly linked to trade and investment – and doesn’t include any political conditions.
In terms of trade and investment, the US has performed poorly in Tanzania during the past decade, compared to Beijing.
For instance, Tanzania is currently ranked 136th trading partner with the US at a paltry $316m in total (two-way) goods trade during 2011. But over the same period, Tanzanian’s imports from China were estimated at over $1bn.