JUST a few days before the end of his second and final term in office in October 2015, outgoing president Jakaya Kikwete seemed like a man in a hurry as he oversaw the ground breaking ceremony for the construction of a proposed mega port in his Bagamoyo home town, touted as a legacy project for his presidency.
But today - one year down the line after that October 16, 2015 milestone - the $11 billion (24 trillion/-) initiative is surrounded by uncertainty amid reports that the government of Kikwete's successor, President John Magufuli, has either shelved it altogether or does not place it high enough on the agenda of national priorities.
According to a new report by a United States business lobbying group seen by The Guardian, the Chinese-funded Bagamoyo port project may now not take off after all due to lack of funding and competing priorities.
"The (…) project has been criticized for redundancies, over ambition and misalignment of assets with economic priorities," the US Chamber of Commerce said in its report titled 'Building the Future: A look at the economic potential of East Africa.'
"The (…) project has been criticized for redundancies, over ambition and misalignment of assets with economic priorities," the US Chamber of Commerce said in its report titled 'Building the Future: A look at the economic potential of East Africa.'
The International Monetary Fund (IMF) hinted in July that the Magufuli administration may have agreed to put the project on the back burner in favour of other pressing concerns such as expanding the port of Dar es Salaam and constructing a standard gauge railway line to link the port to landlocked neighbouring countries.
According to the US Chamber of Commerce report, the fact that the proposed Bagamoyo port is only 75 kilometres from the country’s main port of Dar es Salaam - and further away from potentially lucrative gas reserves in Mtwara Region - could turn it into a white elephant.
"Shipping agents worry that the immensely ambitious Bagamoyo port won’t have a significant impact for up to 20 years, claiming that with Tanzania’s current pace of growth, the larger ships that the port is designed for will not be needed," said the report.
"Some see it as a legacy project of former President Jakaya Kikwete, who hails from Bagamoyo," it added.
"Some see it as a legacy project of former President Jakaya Kikwete, who hails from Bagamoyo," it added.
It noted that the Tanzania’s large infrastructure gaps are likely to hinder both the construction and operation of the Bagamoyo port.
"Tanzania faces budget shortfalls that have raised the cost of borrowing, making new infrastructure financing difficult. Once the port is finished, operational costs will be very high and the port will require regular and extensive dredging," the US lobby warned.
"Tanzania faces budget shortfalls that have raised the cost of borrowing, making new infrastructure financing difficult. Once the port is finished, operational costs will be very high and the port will require regular and extensive dredging," the US lobby warned.
It continued: "It remains unclear whether there is sufficient coordination, financing, and bureaucratic capital to get the Bagamoyo Port project off the ground. There also remain considerable doubts about whether the project can be sustained and maintained in the long run."
According to the report, other promising smaller-scale investments exist, such as the expansion of the ports of Dar es Salaam and Mtwara, that would expand Tanzania's overall port capacity and logistics infrastructure in a way that better matches short to medium-term capacity needs.
Tanzania signed a $565 million deal in September 2014 with the World Bank and other development partners to expand the port of Dar es Salaam as part of plans to boost the country's role as a regional trade hub.
The government wants to lift capacity at the port to 28 million tonnes a year by 2020, from the 14.6 million tonnes it handled in the 2013/14 financial year. According to the World Bank, inefficiencies at the port cost Tanzania and neighbours up to $2.6 billion a year.
The port of Dar es Salaam, whose main rival is the bigger but also congested port of Mombasa in Kenya, acts as a trade gateway for landlocked states such as Zambia, Rwanda, Malawi, Burundi and Uganda, as well as the eastern region of Democratic Republic of the Congo.
The US Chamber of Commerce report said plans to upgrade the port, which handles over 90 per cent of Tanzania’s trade and is growing at 10 per cent per year, could resolve capacity issues and create an additional $2 billion in profits per year for the government, rather than embark on another expensive undertaking in Kikwete's hometown.
The report’s stinging criticism of the Bagamoyo port project appears to resonate with a statement issued by the IMF in July this year that warned Magufuli's government against trying to implement too many flagship infrastructure projects at the same time amid funding gaps.
IMF directors stressed that careful prioritization of government expenditures would be required under the 2016/17 budget to ensure that the spending does not exceed realistic revenue and financing projections and avoid domestic arrears accumulation.
"In this context, they (IMF directors) welcomed the (Tanzanian) authorities’ intention to postpone the launch of two large investment projects until the next mid-year budget review confirms the availability of revenue," said the IMF.
"In this context, they (IMF directors) welcomed the (Tanzanian) authorities’ intention to postpone the launch of two large investment projects until the next mid-year budget review confirms the availability of revenue," said the IMF.
Although the Magufuli administration has not publicly made it clear which two projects it has decided to shelve for the time being, political and economic analysts say the Bagamoyo port initiative is likely to be one of them.
But when contacted for comment yesterday, the permanent secretary in the Ministry of Works, Transport and Communications, Dr Leonard Chamriho, dismissed the notion that the government has decided to postpone implementation of the Bagamoyo port project indefinitely.
“This is not the first time that such reports have emerged," Chamriho told The Guardian, adding: "Let me tell you that the project will commence as planned and everything is going on very well.”
“This is not the first time that such reports have emerged," Chamriho told The Guardian, adding: "Let me tell you that the project will commence as planned and everything is going on very well.”
At last year’s ground-breaking ceremony, officials said construction of phase I of the Bagamoyo port project would take three years, after which the port would be able to handle mega-ships - with a container vessel size of 8,000 twenty-foot equivalent units (TEUs) - with room for expansion.
It was announced that the whole project - including roads, railways and a special economic zone - was expected to take 10 years to complete, but it was not made clear in how many phases it would be carried out.
"The (project) is aimed at realising the government's goal of bringing about an industrial revolution in Tanzania," quipped a beaming Kikwete at the ceremony.
"The (project) is aimed at realising the government's goal of bringing about an industrial revolution in Tanzania," quipped a beaming Kikwete at the ceremony.
The project is financially backed by China Merchants Holdings (International), China's largest port operator, and Oman's State General Reserve Fund. The Chinese firm will handle much of the construction work.
If implemented, the Bagamoyo port project - with an envisaged capacity to handle 20 times the cargo of the port of Dar es Salaam - would dwarf Kenya's port at Mombasa, which is currently east Africa's busiest port.
Jianhua Hu, executive vice-president of China Merchants Holdings, said implementation of the project would mark "the most significant event" in Tanzania-China relations over the past four decades.
Jianhua Hu, executive vice-president of China Merchants Holdings, said implementation of the project would mark "the most significant event" in Tanzania-China relations over the past four decades.
But according to the US Chamber of Commerce, the project is likely to remain a pipedream for now.
"The Bagamoyo port project is a long-term project that anticipates a fast-growing Tanzanian economy and will require significant follow-through from a large range of stakeholders interested in Tanzania’s ambitious strategic vision," said the American business lobby in its report.
"The Bagamoyo port project is a long-term project that anticipates a fast-growing Tanzanian economy and will require significant follow-through from a large range of stakeholders interested in Tanzania’s ambitious strategic vision," said the American business lobby in its report.
