Monday, January 4, 2010

Tanzania to clinch $700m Eurobond loan

Tanzania is set to receive a $700 million-plus long-term loan from the international market through Eurobond, and is only waiting to identify the right long-term credit rating firm.

The authorities say plans for the sovereign bond issue — among the few in Africa after Senegal and Gabon — are at an advanced stage.

The authorities are handling the entire process carefully to ensure they receive the right rating, which will lure private portfolio investment from aboard.

Eurobond is an attractive financing tool that gives the issuers the flexibility to choose the country in which to offer their bond, according to the country’s regulatory constraints.

The rating is crucial as it determines the amount of investment coming in. Fitch Ratings — a global rating agency that operates in 150 countries — uses long-term credit ratings on a scale from ‘AAA’ to ‘D’.

The rating was introduced in 1924 and was later adopted and licensed by Standard & Poors.

Moody’s also uses a similar scale, but names the categories differently.

Like S&P, Fitch uses intermediate modifiers for each category between AA and CCC, where the investment grade AAA is given to the “best quality” companies — those considered reliable and stable.

AA is for “quality companies,” considered slightly more risky than AAA; while A indicates that the economic situation can affect finance. BBB is given to “medium class companies” which are considered “satisfactory at the moment.”

The Bank of Tanzania expects to receive a high rating due to the country’s economic and political stability, and the economic reforms instituted over the past two decades. The bond was to have been issued earlier but the global credit crunch compelled the government to postpone the move last year.

With the global recession easing, the country has decided to seek Euros 500 million ($718 million) for infrastructure development.

Prof Benno Ndulu, Governor of the Bank of Tanzania, told The EastAfrican in Dar es Salaam in an exclusive interview that the process will not take long as the arrangements were almost complete before the cash crunch hit.

Prof Ndulu chairs the Eurobond Issuing Committee.

He said a number of rating agencies have been shortlisted and the government will appoint one firm to carry out the exercise this January.

“The risk is outweighed by the bond’s benefit. And economic growth will eliminate speculative motives,” he said.

BoT, which is the bond custodian and facilitator on behalf of the government, now needs only a go-ahead from the Ministry of Finance and Economic Affairs to pave the way for the rating.


Finance Minister Mustafa Mkulo confirmed from China last week that the bond issue is on track, adding that he did not want to comment much until the bond matures.He said all precautions have been taken to make it a success.

An economist with the Confederation of Tanzania Industries, Hussein Kamote, said sovereign bonds should be handled carefully to avoid speculation.

“Unlike foreign direct investments that create economic growth, private portfolio investments follow growth,” he said.

London is one of the centres of the Eurobond market, but Eurobonds can be traded throughout the world.


Monday, November 23, 2009


Dear Readers of ET,

After a 2 month Sabbatical leave I wanted to let you know that am back and with a lot of energy and regular posting would resume with immediate effect.

Many thanks.


Economy Ticker

Serengeti Advisers Media Report for September 2009

Serengeti Advisers has just released their SAL Media Report for SEPTEMBER 2009. Click here to view the report.

*If you are interested in receiving the SAL Media Report you can reach them at

Tuesday, October 6, 2009

Serengeti Advisers Media Report for August 2009

Serengeti Advisers has just released their SAL Media Report for AUGUST 2009. Click here to view the report.

*If you are interested in receiving the SAL Media Report you can reach them at

Tuesday, September 22, 2009


Courtesy of January Makamba’s blog(TAIFA LETU)


-World Economic Forum on Africa 2010 will take place in Dar es Salaam, Tanzania
-The 20th meeting on Africa of the Forum will be held from 5 to 7 May 2010

Geneva, Switzerland, 18 September 2009 – The World Economic Forum announced today that Tanzania will host the 2010 World Economic Forum on Africa in Dar es Salaam from 5 to 7 May.

“The World Economic Forum on Africa is an important opportunity to take the pulse each year of the most influential of Africa’s stakeholders. We look forward to holding the meeting in Tanzania at a time when the whole East Africa region is expected to experience stronger growth,” said Andre Schneider, Managing Director, World Economic Forum.

President Jakaya M. Kikwete of Tanzania echoed his enthusiasm: “It is an honour for Tanzania to host the 2010 World Economic Forum on Africa. We are looking forward to welcoming the community, which I am confident will continue to make important contributions in our collective quest for a better world. It is heartening to see the positive impact that the World Economic Forum has on key issues of global concern. This unique gathering regularly convenes a very diverse group of friends of the continent who are united in their optimism of what Africa can, must and will achieve.”

Katherine Tweedie, Director and Head of Africa at the World Economic Forum, placed the development in its historical context: “2010 is a special year for the community. Not only will it be the 20th anniversary of the World Economic Forum on Africa, it is also the first time that the Forum’s Africa meeting will be held in East Africa.”

“The World Economic Forum on Africa has historically brought together the most respected and influential leaders in business, government, civil society, media and academia, and enabled them to contribute towards making Africa a better place and to improving the lives of all Africans. We are excited and supportive of the move to take the community to Tanzania, and we are confident that it will be a success,” added Patrice Motsepe, Executive Chairman, African Rainbow Minerals Ltd (ARM) and a member of the Forum’s International Business Council.

Motsepe is also a member of the Forum’s Africa Circle which includes leaders who have taken part in the Africa meeting for 10 or more years. Other members of the Africa Circle include former President of South Africa, Thabo Mbeki; Trevor Manuel, Minister of the National Planning Commission (NPC) of South Africa; Reuel Khoza, Chairman of the Nedbank Group; Former President of Mozambique and current Chairperson of the Africa Forum for Former African Heads of State, Joaquim Alberto Chissano; Maria Ramos, Chief Executive Officer of Absa Group; and Simba Makoni of Makonsult who is a former Minister of Finance for Zimbabwe.

The World Economic Forum on Africa takes place over three days and is renowned for its informal style that engenders frank and open conversation among the most influential leaders with a stake in the region. The 2009 gathering was hosted in Cape Town by newly elected President Jacob Zuma of South Africa.


Tanzania has been listed (Successful reformer: Tanzania's transformation to an open market economy) by the WORLD BANK as one of the African Successes (Category I) as one of the countries that have been successful in terms of growth experiences—pace and quality of economic growth.

Tanzania’s transformation to a market economy
Over the past 15 years Tanzania dramatically improved its economic performance, as a process of comprehensive economic reforms transformed the country from a controlled economy to an open, market-based one.


  • Beginning in the mid-1990s, the macro economy stabilized, inflation declined to single digits, and economic growth improved. Growth accelerated in recent years, averaging about 7% a year in 2001-07.
  • Growth has been broad-based. Although agriculture remains Tanzania’s main economic sector-- employing 80% of the work force--other sectors have posted strong performances. Following privatization, manufacturing sector output rose briskly driven by an increase in the output of a number of commodities, including sugar, beer, soft drinks, cement, and steel. Tourism has emerged as an important sector contributing to over 10% of the GDP.
  • Mining is growing in impact and importance. Although its contribution to GDP is still small, at around 3%, the sector is one of the most important foreign exchange earners. Annual gold output increased from five to 50 tons between 1999 and 2007, making Tanzania the fourth largest African gold producer.
  • Liberalization of trade and exchange regimes boosted non-traditional exports and reversed large external imbalances.
  • Tanzania has been successful in attracting FDI. A large share of FDI is directed to the mining sector, but manufacturing, tourism, and financial sectors have also attracted FDI.
  • Establishment of a competitive banking system has facilitated increased availability of credit for productive activities.
  • There has been remarkable progress in enrolment in primary and secondary schools.

Key success factors/drivers of success:

  • Tanzania’s reform process began gradually in 1986 and intensified beginning in 1996. The first phase saw a partial liberalization of the economy. The second phase saw far-reaching structural reforms. The reforms, which were a response to the dismal economic performance of the country in 1970-85, transformed the country to market economy.
  • The major reforms since 1996 include the following: sound fiscal and monetary policies to control inflation; fiscal consolidation and stronger public financial management; privatization and reform of state-owned enterprises; reduction in the level of state intervention in the economy—trade reform, liberalization of the financial sector, and creation of market-oriented regulatory framework.
  • Macroeconomic stabilization and structural reforms were instrumental in attracting FDI, which was a key factor in fostering higher growth in the nonagricultural sectors. Fiscal incentives to foreign investors—especially in the mining sector—such as generous depreciation allowances, indefinite loss carry forward, exemptions from import duties and the value-added tax, and some income tax holidays were instrumental as well in attracting FDI.
  • Donors supported the government’s reform efforts through large inflows of official donor assistance.


Chandra, Vandana, Pooja Kacker, and Ying Li. 2005. Tanzania: Growth Exports, and Employment in the Manufacturing Sector. World Bank, Washington, DC.

Mahamba, Robert, and Jorgen Levin. 2005. Economic Growth, Sectoral Linkages, and Poverty Reduction in Tanzania. World Bank, Washington, DC.

Nord, R., Y. Sobolev, D. Dunn, A. Hajdenberg, N. Hobdari, S. Maziad, and S. Roudet. 2009. “Tanzania: The Story of an African Transition.” IMF.

Simonsen, Marianne, and Louise Fox. 2005. A Profile of Poverty in Tanzania, World Bank, Washington, DC.

Treichel, Volker. 2005. “Tanzania’s Growth Process and Success in Reducing Poverty.” IMF Working Paper WP/05/35.
Utz, Robert. 2008. Sustaining and sharing growth in Tanzania. The World Bank. Washington, DC.
World Bank. 2009. Tanzania Country Brief.