Tanzania. Is It a Safe Place to Invest?

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The Tanzanian government have embarked on a major campaign to attract foreign investors into Tanzania stating it to be a 'Haven for Investors,' but is Tanzania a safe place to invest?

The Tanzanian government have embarked on a major campaign to attract foreign investors into Tanzania stating it to be a 'Haven for Investors,' but is Tanzania a safe place to invest?

The UK is a major investor in Tanzanian and is its largest bilateral development partner. Tanzania enjoys preferential debt status vis-à-vis the UK government based on ‘good governance’. Eager to attract foreign investment and promote a diversified and reformed economy led by the private sector particularly, the agricultural sector the Tanzanian government has recently engaged in an aggressive and vocal campaign to portray Tanzania as an investor friendly country committed to the rule of law. However, the investor friendly rhetoric does not sit comfortably with the realty of life in Tanzania for the foreign investor.

It is the issue of security that should pose serious concerns for investors in Tanzania particularly issues of widespread corruption in the police and the judiciary. Can investors rely on any consistent protection from those who seek to abuse their lawful interests? The indications are that they cannot and that corruption, particularly in the police and the judiciary and district administrations now often crosses international boundaries.

A recent worrying illustration was the arrest of British investor Stewart Middleton a bona fide investor in Tanzania in all respects. Mr. Middleton operates in the agricultural sector and his company; Silverdale Tanzania Ltd employs 120 staff bringing much needed financial independence to the local community. He purchased an assignment to a lease to a farm, Silverdale & Mbono Farms, Hai, from Tanzanian hotelier Benjamin Mengi legally and, transparently. Subsequent to the money being paid to Mengi, he demanded the lease back. When refused, Mengi is alleged to have engaged in an unlawful campaign to terrorise Mr. Middleton into leaving Tanzania despite a High Court ruling (Hon. Kileo. Revision 1. 2006) denying Mengi’s application to evict Mr. Middleton from the farms.

In November 2005 armed police seized Mr. Middleton from the streets of Moshi on the instruction of RCO Kighondo. He was not told why he had been arrested, charged, cautioned or given legal representation. Taken before a district court he was asked to plead to ‘trumped up’ charges (CC. 24-25, 2005), which do not appear in the Penal Code and, were dropped by the Director of Public Prosecutions as soon he was informed of the circumstances.

Since November 2005, the IPP Media Group, (the CEO of which is Reginald Mengi, Benjamin Mengi’s brother), have engaged in a libellous campaign defaming Mr Middleton in newspapers printed in English and Swahili and published on the internet. No right to reply is given. See particularly but not exclusively, The Guardian 23/11/2005, Nipashe 3/1/2006, Guardian 19/1/2006, Mwananchi 22/11/2005, Nipashe 22/11/2005, Guardian, 23/11/2005, Nipashe, 2/2/2006, Alhamisi 19/1/ 2006 and the Guardian 19/1/ 2006.

In July 2006, Mr. Middleton was again arrested RCO Kighondo and committed to prison for two weeks by magistrate Temu (CC-635/2006). Prior to the hearing, he was placed in a public cage for four hours. The arrest was sanctioned by Regional Police Commissioner Tossi. Mengi watched outside the cage laughing at Mr. Middleton’s incarceration.

A representative of the British High Commission stated Mr. Middleton’s committal was a foregone conclusion with armed police waiting in vehicles outside the court to take him to prison before he had a chance to speak. He was denied bail on the grounds that he had previously failed to appear at court.

Hearing a Revision of the committal (No.1. H.C. 2006) on the 21st July, Judge Mwakugile at the High Court in Moshi released Mr. Middleton immediately stating there was no evidence to support Mr. Middleton’s arrest and refusal of bail and no evidence that he had any history of disobeying court orders. He dismissed magistrate Temu from the case stating she was ‘not free from bias’ and, that the case contained ‘irregularities’. The principle State Attorney Lyimo offered no evidence stating the arrest was a travesty of justice and obtained by corruption. Little comfort to Mr. Middleton as he rotted in an African jail for three nights.

Whilst Mr. Middleton was in prison Benjamin Mengi and Anold Kimaro attended Silverdale Farm and threatened Mr. Middleton’s staff screaming that he had put the ‘Masungu’ (foreigner) in prison and that anyone that challenged him would be put them there to. Mr. Middleton has reported Mengi for Conspiracy To Murder, RB No BNG/RB/1585/2005, Threats To Kill, RB No BNG/RB/155/2006 and RB No MOS/RB/1787, 2305/06, Criminal Damage, RB No MOS/RB/1787, 2305/06 and Fraud, RB No MOS/RB/1787, 2305/06. Not one criminal charge has yet been brought against Benjamin Mengi.

With the above events resembling daily life in neighbouring Zimbabwe rather than ‘investor friendly’ Tanzania, how can Tanzania proclaim to be investor friendly? Amidst the rhetoric of assurances from the Tanzania government that it is, lurks a frightening reality that smacks of racism and intimidation not dissimilar to the Zimbabwe regime. To dismiss individual cases such as Mr. Middleton’s under a ‘small fish in a big pond’ response is not appropriate when citizens of the UK are donating aid to Tanzania on the basis of ‘good governance’. Mr. Middleton’s situation is now so serious that British M.P. Roger Gale has laid a motion before the British Parliament for the immediate suspension of all ‘preferential debt’ aid to Tanzania until such time as Mr. Mengi is brought to task for his activities and Mr. Middleton’s land tenure secured.

How then can Tanzania move forward and provide a more secure environment for foreign investors? What is clear is that this cannot be obtained by rhetoric alone no matter how convincing that might be. To date, there is no manifest commitment from the embryonic new Presidency to apply the rule of law to Mr. Middleton’s situation by which his commercial interests are being destroyed.

Until Tanzania, demonstrates a ‘fact’ rather than fantasy’ commitment to good governance, the UK government and public should be questioning Tanzania’s ‘privileged debt’ status and investors, should be asking the question, ‘is Tanzania a safe place to invest’. At this point in time, the evidence suggests it may not be. In any case, if relying on the Investment Guide to Tanzania be aware, ‘Caveat Emptor’, this is Africa.

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Paul Harple

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