Tanzania strengthens economic ties with regional neighbours

 

Tanzania is East Africa’s largest nation and has historically served as a gateway to many of the region’s landlocked states. Following independence in 1961, the country took on a more significant role in the area, becoming an influential mediator in the affairs of neighbouring countries. Today, securing stronger diplomatic and economic ties with its neighbours has become central to Tanzania, ensuring its competitiveness on both a regional and global scale.

Post-Independence

After gaining independence Tanzania took a staunch role in supporting other African nations in their liberation efforts, and opened up Dar es Salaam to headquarter numerous liberation movements. Julius Nyerere, the country’s first president, was a founding member of the Non-Aligned Movement, stood against South Africa’s apartheid government and played an active role in the Organisation of African Unity (the predecessor to the African Union). In the years that followed the country also came to play a major role in resolving conflict in Burundi, Rwanda and Kenya, and hosted refugees fleeing disputes in their homeland.

EAC

In the 1990s Tanzania was one of the main actors, alongside Kenya and Uganda, in reviving talks to re-establish the EAC, which collapsed in 1977. Today, the community – which seeks to grant member countries financial and economic privileges, such as the free movement of goods and services – also comprises Rwanda, Burundi and South Sudan, and is headquartered in Arusha, in the north of Tanzania. A framework for a Customs union, a common market and a monetary union have since been established, and the bloc is pursuing its efforts towards further integration.

Regional Integration

Home to 150m people and having a combined GDP of around $146bn, the bloc has made significant strides in trade and investment volumes. However, much remains to be done to help streamline policies and foster further collaboration. Since 2014 Tanzania has expressed concern over a pending economic partnership agreement (EPA) with the EU for the free flow of trade between the two blocs, claiming it went against national economic interests. The country has also been at odds with some of its members after Kenya, Rwanda and Uganda united in 2013 to form a “coalition of the willing” in a bid to accelerate integration, an approach that Tanzania’s president at the time, Jakaya Kikwete, was hesitant to adopt.

His successor, John Magufuli, has demonstrated willingness to restore relations within the community, which are necessary for sustaining growth and efficiency. The delivery of key integration projects pertaining to trade and infrastructure are highly contingent on continued collaboration within the bloc. These include the Tanga Railway, which is expected to run through mainland Tanzania and eventually connect to Uganda, Rwanda and Burundi; and the Bagamoyo Port, which is expected to be the biggest port in East Africa, mainly serving Uganda, Rwanda and Burundi.

Kenyan Relations

Such large-scale projects in the region have also brought about a great deal of competition as community members seek to attract big investments. This was the case with the oil pipeline Uganda chose to run through Tanzania instead of Kenya in March 2016. Competing for projects has also highlighted policy differences between the two East African giants: their standoffs have often had a ripple effect on the region as a whole, and in the past their disputes led to the collapse of the community in 1977 after Tanzania closed its border with Kenya.

More recently, the tensions have been slightly muted, largely confined to government discussions over the EPA with the EU, which has put Kenya’s exporters in a difficult situation. Tariff and non-tariff barriers imposed by Tanzania on traded goods with Kenya have also resulted in disagreement, though the two countries have increasingly sought to resolve their differences. These attempts are of prime importance given the significant trade relations between both countries and their influence as economic powerhouses in the EAC.

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Cover of The Report: Tanzania 2018

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This article is from the Country Profile chapter of The Report: Tanzania 2018. Explore other chapters from this report.