In its latest economic update on Tanzania titled, The Road Less Traveled: Unleashing Public-Private Partnerships in Tanzania, the World Bank warns Tanzania's growing vulnerability to downturns in China's business cycles.
The Bank observes that Tanzania is relying on China to fuel its ambitious industrialization drive at a time when the Chinese economy has begun slowing down. The report cites Chinese Foreign Direct Investments (FDI) in Tanzania, which grew significantly in 2013 to touch US$60 million, and to the substantial growth of development finance, including $1.2 billion in 2013/14-2014/15 for the construction of the gas pipeline from Mtwara to Dar es Salaam.
The report cautions that if the Chinese economy stalls, it may put a further strain on the availability of development finance far Tanzania. The magnitude of the ripple effect in the future depends on how successful and smooth China's economic rebalancing will be.
To redress the risk, the World Bank said Tanzania needs to increase investments in infrastructure and human capital to further unlock its growth potential while enabling the private sector to create more jobs. The report highlighted the need to explore public private partnerships (PPPs) since this is still an under-utilized way of financing development, consistent with the Sustainable Development Goals (SDGs).
But the Bank’s advice on the sustainability of Tanzania’s Look East policy and over reliance on China has understandably sparked a backlash from some quarters. Critics of the World Bank say that the World Bank has been advising Tanzania for more than 30 years on how to improve its economy, but has little to show for the advice.
Similarly, the Confederation of Tanzania Industries (CTI) dismissed the report as a veiled attempt by the World Bank to protect Western interests in the country by campaigning against China. "Many countries the world over have realized that they cannot move ahead with the West as the sole development partner. They know that they can also attain their goals by cooperating with China, which has proved to be friendly," says the CTI Advocacy and Policy Director, Mr. Hussein Kamote.
The CTI representative also noted that China has over the years overshadowed the influence of Europe and Western countries in Africa. "Many developing nations have opted to cooperate with China because it does not attach many strings to its donations or grants," he says.