The UK's international development secretary has announced four major projects in Tanzania worth £20m. The schemes form part of Britain's drive to increase private sector involvement in development by putting more money through entrepreneurs and doubling the number of UK companies doing business in the country.
The announcement by Justine Greening was made in Tanzania's largest city, Dar es Salaam, where she is travelling with high-profile business representatives to look at investment opportunities to boost economic growth, create jobs and "ensure everyone benefits from that growth".
The development secretary highlighted the importance of small businesses in creating employment but said the British government was concerned by the lack of loan opportunities in the country, where only 69% of smaller-sized business have access to finance.
Those to benefit under the so-called high level prosperity partnership, aimed at increasing trade and investment between the two countries, and deepening commercial links, include Equity for Africa, a UK-based organisation that provides finances to small agricultural businesses in Tanzania, which will receive £3.3m.
One £7.5m project will allow the Department for International Development (DfID) to invest in tea farming in the southern highlands of Tanzania. DfID said the investment would boost the income of more than 3,600 tea farmers in 27 villages.
Another £6.7m will be invested in Kilombero Plantations, part of the Southern Agricultural Growth Corridor of Tanzania, a public-private partnership focused on developing the region's agricultural potential and fostering inclusive, commercially successful agribusinesses that will benefit small-scale farmers.
DfID will sign a £2.5m purchase agreement with Tanzania Electric Supply Company to build a hydropower plant that is expected to boost energy production at Tanzania Tea Packers.
Greening insisted the initiatives were not designed to revive tied aid – money given to a country or area where people need it, but they have to agree to spend it only on goods and services provided by the country or organisation that has given the money. "I should be absolutely clear that this is not about bringing back tied aid," she said.
"The onus will continue to be on British companies to show Tanzania, and other developing countries, why their offer is the best one – and I believe they are well placed to do this. The UK has been amongst the international leaders in corporate governance."
Despite the UK's push to develop trade relations with the country, it faces significant competition from increasing Chinese political and commercial influence. China was Tanzania's second-largest source of foreign investment in 2012, according to the Tanzania Investment Centre, and China's president, Xi Jinping, signed a $800m (£500m) bilateral trade deal with Tanzania in March.
While Britain sees Tanzania as one of Africa's success stories, critics say the economic growth is not benefiting the poor people, who are the majority.
Tanzania's prime minister, Mizengo Pinda, travelled 280 miles from Dodoma, the Tanzanian capital, where he had been attending a parliamentary session, to officiate the event.
He admitted that the government's work with foreign investors had been inefficient at times, with investors being required to travel around the vast country to find land for investment and bureaucratic processes for attaining work permits. Pinda promised he would personally try to improve the situation.
"Doing business in Tanzania is a big challenge. It is crucial that we address [them]," he said. "British companies shouldn't move from one place to another looking for solutions. We should create a team that will handle all the concerns raised. We are working to create a system at the Tanzania Investment Centre that will enable investors to get everything in one place."
Pinda added that he would push for a better co-ordinating system for investors in cotton farming.
Despite the new approach, which seeks to promote trade rather than aid, Pinda urged the British government to continue to give general budget support, which contributes significantly to Tanzania's total budget.
Tanzania is one of five African countries, along with Ghana, Mozambique, the Ivory Coast and Angola to form the high-level prosperity partnership with the UK. A new union between the London Stock Exchange Group and the Dar es Salaam stock market will provide training for up to 20 financial professionals, government officials, and regulators at the London Stock Exchanges' academy.
