Introduction: Reforms, Returns, Remembering
In the decade and a half since the dismantling of apartheid, the economic geography of sub-Saharan Africa has been radically reconfigured, with South Africa assuming the role of one of the continent’s leading investors. In few places has the growth of South Africa’s regional influence been more evident than Tanzania. Well-endowed with exploitable natural resources, and having recently implemented a sweeping set of economic reforms designed to reduce the role of the state in production and to facilitate foreign investment, Tanzania has experienced a rapid increase in capital inflows from South Africa, as well as higher levels of trade with Pretoria. More than 150 South African firms have entered the country since 1994, with virtually every major South African firm active in the region now operating in Tanzania. (Bandawe 2006; HSRC 2004; Gibbon 1999.)
While the influx of capital has been hailed by the Tanzanian government as a boon to economic growth, others have expressed deep concerns about South Africa’s economic expansionism. Issa Shivji, an internationally prominent Tanzanian scholar, legal expert, rights activist and social critic, has likened the South African capital invasion to a "second wave of primitive accumulation" (Shivji 2006: 169-177). Increasingly, the South African corporate presence has emerged as an important wedge issue in a protracted and painful national debate centred on Tanzania’s economic reform process.
| ||"The South African corporate presence has emerged as an important wedge issue in a protracted and painful national debate centred on Tanzania’s economic reform process."|| |
Many Tanzanians, whose political consciousness was shaped under the socialist government of the country’s first president, Julius Nyerere, have objected to the rapid privatization of nearly 400 parastatal concerns, including some of the country’s most prized economic assets. Others have bemoaned the dumping of cheap goods on national markets, and the extraction of valuable natural resources on concessionary terms by foreign nationals. In each of these areas, the insult added to injury has been the leading role of South African companies – many of them white-owned and managed, and banned from Tanzania during the long struggle against apartheid in which Tanzania played a leading and costly role. In the eyes of many Tanzanians, the fact that South African companies have now become so centrally involved in their economy effectively de-legitimizes the Tanzanian reform process itself.
For much of the 20th century bilateral relations between South Africa and what is now Tanzania were strained and uneven. In the early 1900s following the Anglo-Boer War, several groups of Afrikaners trekked to German-held Tanganyika, where they were granted up to a thousand hectares of land by the colonial government in the hopes of spurring agricultural production (Du Toit 1998; Spear 1997). These land use privileges were reaffirmed in the 1920s when the British assumed control of Tanganyika after World War I, and it was only the prospect of black majority rule that pushed thousands of Afrikaner families to leave East Africa on the eve of Kenyan and Tanganyikan independence in the 1960s. The early Afrikaner presence in Tanzania therefore exists within living memory – along with local resentment at the colonial preference afforded Afrikaner land rights over those of natives.
After independence and the merger of Tanganyika and Zanzibar to form the Republic of Tanzania, Tanzania became one of the staunchest opponents of the apartheid regime, playing a major role in supporting national liberation movements in South Africa, Zimbabwe, Mozambique, Angola and Namibia. Diplomatic ties with apartheid South Africa were cut and were not re-established until the arrival of majority rule in Pretoria in 1994. In the extended struggle against apartheid waged by neighboring African states, former Tanzanian President Julius Nyerere played a leading part in the formulation of anti-apartheid policies and strategies by the Organization of African Unity (OAU). The Executive Director of the OAU’s Liberation Committee, Brigadier Hashim Mbita, was also Tanzanian. Throughout the 1970s and 1980s, Tanzania provided invaluable support to the South African liberation movements, sheltering senior officials, offices and training facilities, hosting key high-level meetings and conferences, and providing crucial international diplomatic and logistical support.
"Until the release of Mandela from his apartheid jail in 1990, the national political discourse was one vehemently critical of and opposed to white South Africa’s role in sub-Saharan Africa – political or otherwise.
A retired civil servant shared his memories of the period in an interview in 2005. In his view, the leadership of the Nyerere government and the active presence of South African comrades in their midst had a profound impact on Tanzanians’ sense of national identity, and the liberation struggle itself became deeply ingrained in the popular Tanzanian political consciousness. As he put it, "When we think of South Africans, we do so inevitably against the apartheid backdrop. We always think of this period and the impact this had on our way of thinking….We paid dearly in terms of both support from abroad, and in terms of the drain on the few resources we had" (Interview with the author, 28 Oct. 2005). Until the release of Mandela from his apartheid jail in 1990, the national political discourse was one vehemently critical of and opposed to white South Africa’s role in sub-Saharan Africa – political or otherwise. In this context, the epithet " kaburu ," the Kiswahili term for Boer , carried tremendous pejorative force.
Suddenly, in the 1990s, with the advance of freedom in South Africa, the "rules of the game changed….This was not just a new chapter, but a whole new book" (Retired civil servant, interview with the author, 28 Oct. 2005). Now, instead of honing the knife’s edge of Tanzanian national identity on the rough politics of the southern African liberation struggle, Tanzania’s government actively sought to rehabilitate South Africa’s image and curry favor with the post-apartheid regime. Through speeches and impromptu remarks reported in the press, government officials exhorted the Tanzanian body politic to set aside their historical animosities and stop calling the South Africans kaburus (Mahwi 2004). Former President Mkapa went so far as to announce, "I wish we could have more South African investment in this country. The old apartheid South Africa was our enemy…The new independent South Africa is a friend and partner in development" (Moses 2002, emphasis added).
Old Enemies, New Partners?
If Tanzania and South Africa are in "partnership", it is a notably lop-sided one. In little more than a decade, South African capital has acquired controlling interests in Tanzania’s largest banking chain, the national airline, and the national brewery. South African companies have purchased or built hotels, mined gold and gemstones, and accumulated important stakes in hunting and photographic safari businesses. They managed the national electric utility, and they have established the country’s largest cellular telephone and television distribution networks. They have acquired factories producing sugar, plastics, cement, and fertilizer. South African companies have set up grocery and fast food chains, and established market connections resulting in the importation of diverse products, from furniture and ceramic tiles to clothing and fine wines. A pastoralist community activist summed up his frustration at this growing influx, commenting bitterly that, "We now live in the United States of South Africa".
The motivations driving these investments have been varied. Some of the most important investors in the mining and tourism sectors followed the country’s rich local resource endowments, while other ventures arrived in the context of broader continental expansion by Pretoria.1 Tanzania also presented regional opportunities for developing new revenue streams, for example through the construction of an inland port facility linking the otherwise incompatible southern and east African rail networks. (Robertson 2005.)
Measures taken by the Tanzanian government to make the country more "investor "friendly” have also been important. The Tanzanian Investment Center, the main state agency for promoting Tanzanian investment opportunities to outside investors, stresses that at least fifteen major new legal reforms have been enacted since the late 1990s, all aimed at streamlining the investment process (TIC, 2005).2 For some investors these steps have buoyed business confidence, resulting in Tanzania being listed as a preferred investment target in a number of surveys of South African corporate heads (Anonymous, 16 Feb. 2000).
| ||"Given local political sensitivities to the presence of South African businesses, government officials have at times been at pains to downplay recent trends."|| |
Given local political sensitivities to the presence of South African businesses, government officials have at times been at pains to downplay recent trends. In 2001 and again in 2006, the Tanzanian Investment Center released data showing that the country’s leading foreign investor was not South Africa, but rather the United Kingdom (see Table 1). However, these data were misleading. In presenting cumulative totals dating to 1990, the statistics failed to reflect changing historical trends, and notably obscured the peaking of South African investments in the early 2000s. Government statistics also failed to adequately capture a critical pattern of recent investments involving the privatization of government parastatals. Through numerous parastatal acquisitions, South African capital has assumed a central role in the imposition of fiscal discipline on Tanzanian workers, including a sharp reduction in the ranks of state employees. Thousands of public servants have lost their jobs, and bitter battles over retrenchment and pension compensation have resulted in strikes, as well as other forms of protest including arson.
|Source of FDI||No. of projects 1990-2000||Amount (bn Tsh) 1990-2000||% incoming FDI 1990-2004 (rank)|
|South Africa||42||142||10 (3)|
Political Fault Lines: Debating SA Investment
The practical impact of negative public incidents and antagonisms has been to keep the issue of South Africa’s expanded role in the national economy highly visible, and make it the centre of national debate. Here, differences over the government’s economic reforms have revealed deep cracks or political "fault lines" (Goodman 1999) within the Tanzanian body politic along lines of race, class and generation. Different forms of the South African corporate presence – including investment targets, trade effects and on-site management practices – have affected the debate in specific ways.
Many in the Tanzanian business community have wholeheartedly embraced the goals of the government’s neo-liberal reforms and are sympathetic to South African investors. They see the arrival of South Africans as the inevitable outcome of competition fostered in the context of the country’s post-socialist transition, and point to the benefits of inflows of entrepreneurial capital, technology and business skills into sections of moribund state-owned production. As one local commentator observed, " South Africa is not an issue. The issue is: there is an investor who was willing to come… The issue is people and work. People who want to work, be regulated as they work, be rewarded for working hard." (Businesswoman in Dar es Salaam, interview with author, 24 Mar. 2006.)
Some in the business community argue that Tanzanians had a chance to run their own affairs but failed. They lay the blame for that failure squarely at the doorstep of Tanzania’s government:
The National Bank of Commerce was gone . And it was the National Bank of Commerce, with full monopoly. I’ve never seen in the world, read anything about, a bank that has full monopoly, and made a loss! [The South Africans have] turned it around. I never could borrow in those days… Loans were being given on the basis of little notes coming from politicians…But [today] I borrow. So if it’s a South African bank that is facilitating my business…do I care? I mean, would that matter to you? (Businesswoman in Dar es Salaam, interview with author, 24 Mar. 2006.)
Such views have been bolstered by the fact that several parastatals acquired by South African investors have performed well in recent years. Tanzanian Breweries, for example, has seen its market share increase from roughly 20% when SAB Miller first acquired controlling interests in the firm in 1993, to over 80 % by 1997. Similarly strong economic performances have been recorded at Kilombero Sugar and Tanga Cement, among other businesses.
| ||"Others cast a more jaundiced eye on South African management practices, and dispute the notion that South Africans have ‘saved’ businesses run into the ground by local operators."|| |
Others cast a more jaundiced eye on South African management practices, and dispute the notion that South Africans have "saved" businesses run into the ground by local operators. Critics of the government’s open door investment policies argue that prior to privatization, parastatal managers were often hamstrung by state policies, patronage practices and corruption. These impossible conditions for management were only eased with the privatization fire sales of the 1990s and 2000s – and so it should have come as no surprise that the performance of the relaunched companies would improve.
For many detractors of the privatization process, the problem was not the state’s divestment of public corporations per se, but rather the kinds of investors accepted as buyers:
If government had first handed these firms over to the Tanzanian private sector, and then seen the Tanzanian private sector fail, then it would have made sense to seek out a foreign buyer. But not under these circumstances… I say, let a Tanzanian run Breweries. Then invite SAB in and let them invest on their own and build up their own plants and come and compete. (NGO representative, interview with author, 25 Nov. 2005.)
They also note that firms entering the economy were often in a position to strip existing parastatals of their assets, applying the proceeds as reinvestments in the privatized firms in the process. As one commentator explained in the case of Tanzanian Breweries:
They came over and grabbed up all the plums where they were available… One of the Breweries’ chief assets was actually the land they sat on. And the South Africans acquired all those real estate assets along with the physical plant. So the first thing SAB did was liquidate all the houses, and generated a bunch of working capital. So the cost of acquiring the brewery was actually minimal… And then they go on and talk about efficiencies as if that were the reason for all of their success. (Retired civil servant, interview with the author, 28 Oct. 2005.)
| ||"There is a widespread view that South African investors have had limited success in generating beneficial knock-on effects, such as encouraging secondary investment, nurturing new production and creating jobs."|| |
By extension, there is a widespread view that South African investors have had limited success in generating beneficial knock-on effects, such as encouraging secondary investment, nurturing new production and creating jobs. There are popular concerns over South African companies’ long-term commitment to Tanzania, and calls for greater regulation and supervision of foreign enterprises. Regulation, according to some, should require firms to undertake more substantial and beneficial reinvestment in Tanzania beyond the immediate concerns of production. As one prominent gemstone trader put it,
How long have the South Africans been in the country? And what have they done for Tanzanians? They earn 200 million dollars from gemstone mining and what have they done with it?…They repaired the road once ; they built a dispensary once ; they built a school block once . What is that when you have taken millions of dollars of profits out of the country? (Gemstone dealer, interview with author, 15 May 2006.)
Changing trade patterns with South Africa, which have been strongly skewed by the arrival of supermarket, retail and services chains that sell South African sourced products, have also led to public debate on the impact of Tanzania’s "reformed economy". Shoprite, the South African supermarket chain which entered Tanzania in 2000, looms especially large in the popular imagination. The initial expectations of small scale farmers, petty commodity producers and traders – that Shoprite would provide new platforms for reaching local markets – proved woefully misplaced. As in other countries in the region where Shoprite’s South African-focused product sourcing system was put in place, tensions soon emerged around issues of local retail displacement. As one representative of a small scale farmer cooperative noted,
Our members could supply Shoprite if they were given the proper training. So I’ve told Shoprite that they should do some training... But they are continuing to get their supplies from South Africa. There is no reason in the world that they should be getting eggs from South Africa. Or dairy. I can understand that maybe they need to get some of their horticulture from South Africa, their tangerines of a certain size, and their grapes…But tomatoes and onions? (Schroeder, R. Field notes, 2006.)
There have also been consumer complaints around quality and costs of services provided by new companies. Vodacom subscribers, for example, had anticipated that rates would decline as the number of subscribers skyrocketed (to more than four million by 2005). However costs continued to rise, as profits were partly redirected into promoting additional subscriptions.
Inevitably, complaints surrounding the influx of South African capital have also returned to the historical question of apartheid, race and nation. Many of the Ujamaa generation see echoes of the old South Africa in widely publicized local incidents involving post-apartheid investors, including maulings by security team dogs, and the locking up of "trespassers" in storage containers. Such actions prompted the Minister of Energy and Minerals to warn South African mining companies against such "apartheid acts", and remind them of the local resentment such practices evoked.
| ||"There is a popular perception among local business people that South Africans close ranks amongst themselves when it comes to sourcing materials, capital and skills."|| |
Many have also complained about the insularity of the South African business community. There is a popular perception among local business people that South Africans close ranks amongst themselves when it comes to sourcing materials, capital and skills. Local bidders for South African supply contracts often feel unfairly excluded primarily on the basis of nationality. The general consensus is that tensions around such issues are building. The Director of the Tanzanian Investment Center, whose job it was to promote foreign investment, has gone on record citing the need for foreign investors to "spare a little time to study Tanzanian culture". (Rwambali et al. 2000.) At the same time, some locals see a different form of discipline emerging in the future:
We aren't going to stand for this indefinitely. People are going to fight back. This mentality of approach where you segregate yourself, you play your own games, set up segregated schools…this will cost them… If you make a situation where people feel desperate in their own country, this is a recipe for a disaster. (NGO representative, interview with author, 25 Nov. 2005.)
Tanzania – South Africa: A New Struggle for Liberation?
For many Tanzanians these days, it seems very much as though the only source of foreign direct investment in the country is South Africa. This has been deeply unsettling on a number of levels. The fact that the long-anticipated South African invasion has come in economic rather than military form, is seen by many as deeply ironic. And many find it difficult to reconcile the influx of South African capital, imports and neo-settlers, with residual animosities towards all things "southern" born of the liberation struggles of the past forty years. The lines of political solidarity between Tanzanians and the South African public, once so strong and clear, have grown increasingly complicated.
In this context, it matters a great deal which face the "new South Africa" presents when it arrives as an investor: is it that of an historical comrade in arms, espousing the goals of the progressive wing of the ANC; or that of white-dominated corporate capital, which has survived the transition from apartheid, mostly intact? Or are both representations possible? These questions remain in play and are directly linked to broader Tanzanian debates around neoliberal reforms and the future direction of development in the country.
Currently, South African actors are deeply implicated in government reform policies, which have ushered in a new set of social and political-economic realities that are themselves heavily contested within Tanzanian civil society. In this regard, the moral economies of the past and the present have come together to reinforce one another. This leads many Tanzanians to condemn outright both the moral bankruptcy of the Tanzanian neo-liberal regime and South African capital’s central role in the implementation of Tanzania’s ongoing economic reforms. Once again, perhaps, South Africa might serve as a key foil in Tanzania’s ongoing popular struggles for liberation.
|While many South African companies claim to be at home in Tanzania, their insensitive and at times offensive behaviour has raised questions about the larger costs of welcoming them to the country. Incidents leading to friction have included:|
|1997||ConsCorps Africa, one of the continent’s largest tourism companies with 40 properties in six different African countries, made a splashy debut in Tanzania by purchasing several key sites on the lucrative northern safari circuit. It proceeded to raze a well-known hotel on the rim of the Ngorongoro Crater and replace it with an ultra-luxury facility which it marketed to the world under the dubious rubric of "Maasai meets Versailles" (http://www.ccafrica.com).|
|1997||In the gemstone sector, hundreds of small scale miners were forcibly removed from the core of a lucrative tanzanite mining site in the mid-1990s, clearing the way for acquisition by a South African mining firm. In the ensuing decade, South African security personnel at the mine were implicated in numerous shooting incidents which resulted in several fatalities and the wounding of dozens of small scale miner "trespassers". The corporate miners later established an exclusive tanzanite brand which was then used to discredit unbranded gems (like those produced by the small scale sector) as potentially illegal and unreliable.|
|1999||South Africa’s cellular operator Vodacom was granted a license in Tanzania in the late 1990s and quickly became the country’s leading network. This growth was matched by an aggressive publicity campaign, which included securing the rights to re-paint a number of prominent buildings in downtown Dar es Salaam and other larger urban centres. In Dar, giant renditions of the garish bright blue-and-white signage of Vodacom became a fixture of the urban landscape, creating jarring sight lines along main thoroughfares, and sometimes enveloping government buildings as well.|
|2000||Tanzanian Breweries, Ltd. (which was acquired by South African Breweries, now SAB Miller, in 1993) caused an outcry when it erected a public fountain in the shape of a giant beer bottle on a well-traveled site in Arusha, where a memorial statue to former president Nyerere and his famous "Arusha Declaration" of socialist principles had been proposed (Anonymous June 17, 2000). The new installation also outraged local residents because it spewed water at the height of a severe drought.|
|2000||ABSA Bank tendered a bid to purchase the National Bank of Commerce, the state-owned and largest banking chain with 35 branches, when it was listed for privatisation. ABSA’s initial purchase offer of US $18 million was, however, rescinded in the eleventh hour after it was discovered that NBC had accrued huge debts. Tanzanian observers were subsequently mystified when NBC ended up effectively paying ABSA US $18 million to assume the bank’s unresolved debts and take over management of its operations. (Rwambali 2000.)|
|2001||Two groups of South African researchers were expelled from Tanzania for testing ersatz anti-AIDS medications on Tanzanian soldiers, allegedly without their consent or knowledge. One of the compounds – virodene – was based on "a highly toxic industrial solvent banned in South Africa for use on humans" several years earlier; the other was a coal-derivative (Economist Intelligence Unit 2001).|
|2002||After failing in earlier attempts to establish partnerships with the local carrier, South African Airways (SAA) acquired a 49% stake in the parastatals Air Tanzania Corporation (ATC). SAA promptly repainted the ATC fleet, replacing the Tanzanian national symbol of a giraffe with a stylized version of the SAA logo, itself based on the South African national flag. It also stopped booking tickets using the ATC flight code which, critics alleged, rendered ATC "non-existent" as far as the International Air Transport Association was concerned. By late 2006, amid rising losses and antagonism between government and SAA, the airline’s privatization contract was cancelled and control of ATC reverted to Tanzanian authorities. (Kizigha 2006.)|
|2002||The energy management corporation, Netgroup Solutions, assumed control of TANESCO, Tanzania’s national electric utility. Following a serious drought in 2005, the country experienced massive power shortages throughout the country, and the Netgroup contract was discontinued on the grounds of poor managerial performance.|
|2003||The Group Five Construction company began work on a major contract to build a new headquarters for the Bank of Tanzania. Five years later, the original budget of $80 million for the as-yet-unfinished project had ballooned to $340 million. The cost overruns for the building’s "twin towers," which dominate the Dar es Salaam skyline, generated heated debate in parliament, where they were decried as being "at least four times higher than similar buildings in some of the world’s most expensive cities like London, New York and Tokyo" (Anonymous, July 18, 2007).|
|2006||The head of South Africa’s central bank, Tito Mboweni, created a considerable stir in Tanzania when he announced that the 14-member Southern African Development Community, which includes Tanzania, would gradually "converge" around use of the South African Rand and Botswana Pula, and discontinue the use of existing national currencies such as the Tanzanian Shilling (Anonymous July 13, 2005).|
|(Return to article text.)|
(Richard Schroeder is a professor in the Department of Geography at Rutgers University )
1. The CEO for SAB Miller, for example, which currently brews beer in 16 different African countries including Tanzania, was recently quoted as saying: "If there were more of Africa, we would invest in it." (Anonymous, 22 July 2005: 1.)
2. These include the following: National Investment Act (1990); Loans and Advances (1991); Banking and Financial Institutions Act (1992); Foreign Exchange (1992); Public Corporation Act (1992); Public Corporation Act Amendment (1993); Capital Market and Securities Act No 5 (1994) and amendment 1997; Tanzanian Investment Act (1997); Financial Laws (1997); Privatization Trust (1997); Mining Act (1998); Land Act (1999); Labor Institutions Act (2003); Employment and Labor Relations Act (2003); Land Act Amendment (2003).
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