On Thursday, Tanzanian authorities arrested four Chinese contractors as a result of slow progress in state-funded construction projects, a move expected to set an “example” to other businesses.

The arrested persons, three men and a woman, are employees of the companies contracted to build a canal and a section of road in Dar es Salaam. There was no fast and visible growth in the ongoing projects, which are considered to be of great public interest, the Dar government said.

Abubakar Kunenge, executive secretary of the Dar es Salaam region said: “The governor of the Dar es Salaam region, Paul Makonda, ordered the arrest of these business people, as he wants it to serve as an example to others.”

The four arrested contractors are expected to spend each night at the central police station and go every morning to supervise the works until the government decides the speed of work is sufficient. This shows that business people who cannot respect contracts have no place in Dar es Salaam.

President John Magufuli’s government has become known to take strict measures such as breaking or forcing the renegotiation of contracts it considers unfair with foreign companies.

In 2014, Tanzania was identified as the top destination for foreign direct investment in East Africa by the United Nations Conference on Trade and Development (UNCTAD). However, since the new government came to power in 2017, the country has shown a hostile attitude towards foreign investors.

Tanzania’s current government has adopted a rather combative stance toward foreign investment. It has also taken measures that have substantially changed investment conditions for foreign investors, especially those in the natural resources sector.

Since 2017, the government terminated its BIT with the Netherlands and passed several laws that limit foreign ownership as well as the use of international arbitration in the country’s natural resources industry. It also recently issued tough terms to Chinese investors over the Bagamoyo port project.

The recent attitude by the Tanzanian government raises concerns that foreign investment will be affected, as most foreign investors would be forced to pull out of doing business in Tanzania and that could affect the economy.

While it raises such concerns, it can also be seen as a means of checkmating the activities of foreign investors in Tanzania. By ensuring commissioned projects are carried out and completed as of when due.

 

By Faith Ikade.

Comments

Elsewhere on Ventures

Triangle arrow