Kenya, Tanzania have everything to gain by creating larger market

The visit by Tanzanian President John Magufuli last week is a welcome indication that Kenya and Tanzania are ready to engage on economic matters.

As notable members of East African Community (EAC), our two countries have a lot to gain from each other.

Kenya and Tanzania share an extensive boundary with at least four very busy highway crossings and are already doing substantial trade. The two countries have everything to gain by maximising on the existing opportunities to create an even greater market for their populations.

However, many in Kenya have argued that Tanzania’s approach to economic relations with Kenya has mostly been cautious, and often restrictive. And there is a lot of history to explain Tanzania’s measured caution in engaging the rest of EAC, especially Kenya.

The structures of British imperial governance in Kenya (a colony) and Tanganyika (a trustee territory of the UN) left Tanzania at a lower level of economic development.

The subsequent experimentation with socialism by Tanzania, and the closure of the border with Kenya from 1977 to 1984 did not help to narrow the economic gap between the two countries.

Further, the 1979 invasion of Idi Amin’s Uganda by Tanzania did severely strain Tanzania’s coffers.

By the time President Nyerere left the leadership in 1985, Tanzania was virtually a bankrupt nation with scarce foreign reserves, broken down infrastructure and collapsed state-run industries.

And ever since, Tanzania has been on an economic “catch-up” journey which is still work in progress.

How far Tanzania has travelled in the last 30 years is illustrated by an experience I had in 1985. As a young director of Esso Oil Kenya, I had negotiated with Tanzania Petroleum Development Corporation (TPDC) to resume shipments of industrial diesel by lake (MV Nyangumi) from Kisumu to the Musoma power plant which was consistently down without fuel. Bulk shipments from Kisumu had ceased in 1977 when the border with Kenya was closed by Tanzania.

President Nyerere told the TPDC bosses that he wanted to meet me at the State House to reassure him that diesel shipments would indeed resume without delay.

The jovial president jokingly told me that Musoma was his home area, and without power it was not looking good for him. He also managed to get me to look into the possibility of supplying fuel from Mombasa to the Tanga Cement factory, which was also down without fuel.

Foreign exchange was a serious problem, but I managed to get an irrevocable letter of credit for bulk supplies to Musoma guaranteed by the Tanzanian central bank.

At the meeting, the president instructed the governor of the central bank on phone to issue the guarantee. Supplies were delivered on time and Musoma had lighting thereafter. The president retired a few months later.

All along, Tanzania has tended to view Kenya as a country intent on economically benefiting at the expense of Tanzania’s economic capacity gaps especially in areas of trade, tourism and skilled labour.

And this may have led to policies by Tanzania skewed towards protecting its “local content” by restricting inputs from neighbouring countries.

And this may be justifiably driven by Tanzania’s genuine self-determination to give her country a chance to develop her own capacity, free of competition from neighbours.

However, this has not been in sync with the EAC common market guiding principles, thus creating room for policy conflicts within the group.

Irrespective of the development path and policies chosen by Tanzania, the country is evidently on a continued growth trajectory, and is making large strides in all key economic sectors especially in extractives, infrastructure and energy.

This makes Tanzania a key regional economic player (and competitor!) who cannot be ignored by any worthy neighbour. And this is the reason why engagement at all times between Kenya and Tanzania is important.

I will now jump into my favourite subject of infrastructure, prominently featured during the state visit. The two presidents committed to develop the highways from Bagamoyo through Lunga Lunga, and from Mwanza through Isebania.

These two highways, plus the Namanga and Voi-Taveta connecting roads make the two countries probably the most inter-connected by highways in Africa.

But there cannot be economic value on these highways unless we populate them with massive trade and tourism on either direction. How to achieve this ambition is the challenge we need to be facing head-on, sooner than later.

President Magufuli also touched on quality of road work done by contractors. In my petroleum consultancy jobs, I have driven through nearly all the major roads of Tanzania and I can vouch that the country has a first class network of well designed and maintained roads.

It is evident that the road surfacing is of superior bitumen/gravel mixture capable of holding heavier axle loadings. Their good preventive maintenance practices ensure longer life for their roads. I honestly believe that our road authorities can pick an idea or two from Tanzania.

On the fight against corruption, I salute President Magufuli’s no-nonsense crusade to strengthen work ethics and public resource governance.

Yes, the straight-jacket democratic methods for combating corruption have failed in Africa. Corruption successfully thrives in the “fertile cracks” of democratic systems and institutions.

President Magufuli may just be writing a first class case study and manual on how to upgrade work ethics and public resource governance in Africa.

Mr Wachira is the director of Petroleum Focus Consultants; [email protected].