China "Going Out"

World Bank caution to Tanzania criticised

These comments by Tanzanian economics professor Humphrey Moshi serve as quite an indictment of the wayward World Bank. When China — no stranger to poor practices itself — is your “saviour” from bad World Bank policies … The Daily News reports.


By the Daily News

A local economist has taken issues with the recent World Bank caution to Tanzania over-reliance on China, saying the Asian economic powerhouse has become a saviour and genuine partner of Africa.

Prof. Humphrey Moshi of the University of Dar es Salaam (UDSM) told the ‘Daily News’ in an interview on Monday that World Bank caution on over-reliance on China should be treated with caution as some policies had failed many African countries.

“World Bank suggestion has saddened me. We shouldn’t forget we have been implementing their policies for two decades now and look at where we are,” he said in his reaction to the warning by the World Bank that increasing economic ties between Tanzania and China could be threatened by Beijing’s faltering growth.

He said there were aspects in World Bank and IMF policies that did not deliver as expected and as a result they compounded problems in some African countries. Prof. Moshi said World Bank and IMF were the architect of ‘the Washington Consensus,’ which is responsible for the worst inequalities and the explosion of poverty in the world, especially in Africa.

The Bretton Woods institutions had made themselves ‘indispensable’ in order to strengthen and expand their power and influence in Africa, he said. According to him, their reaction when Tanzania and some other countries in Africa take ‘look East’ policy to develop its manufacturing sector, infrastructure boost economy was not surprising.

“The saviour of industrial policy is China and other developed nations of the East. We stand to gain from China’s relocation plans. It is the right time to grab the opportunities,” he said.

China is considered as the most promising investor to help build Africa’s manufacturing base and build infrastructure network to facilitate relocation of its labour-intensive industries to Africa. Prof. Moshi said China is willing to help Africa build infrastructure network, achieve industrialisation by scaling up financial, technological and human resources support to Africa.

A World Bank report shows that Chinese investment in Africa is increasingly shifting towards the manufacturing sector as the Asian nation diversifies out of primary sectors such as agriculture and mining. Manufacturing is key to Africa’s future development, the report notes. China is Africa’s largest trading partner and the trade volume between them amounted to $220 billion in 2014.

China has become Tanzania’s largest trading partner and second largest source of investment. Bilateral trade reached 2.47 billion US dollars last year, up 15.2 per cent year on year, according to Xinhua.

China has supported Tanzania in construction of major transport infrastructure projects including the 1,860 km long TAZARA railway line in the mid 1970s which at the cost of 500 million US dollars, it was the largest single foreign-aid project undertaken by China.

It also facilitates a 1.2 billion US dollars loan from Export-Import Bank of China for the 532 km (330 mile) Mtwara- Dar es Salaam natural gas pipeline and gas processing plants designed to deliver higher volumes of natural gas for power generation and other applications.

Last December, during a summit of the Forum on China-Africa Cooperation in South Africa, Chinese President Xi Jinping told African leaders his country would pump $60 billion into development projects, cancel some debt and boost agriculture under a three-year plan that will extend Beijing’s influence in the continent.

Xi said China would step up investment in factories manufacturing goods for export in Africa, in addition to building roads, ports and railways on the continent.

Prof. Honest Ngowi of the University of Mzumbe, Dar es Salaam campus said the ‘look East’ policy for some countries in Africa was good as it seeks to diversify sources of borrowing and even trade.

“It is always good to diversify your portfolio … your sources of borrowing and even trade because in case of external shock, these may absorb the shocks … then you have exit route, this applies even in trade,” he told the ‘Daily News.’

However, he said it was important to judge World Bank caution on its merit. “The question should not be who issued the advice … What matters is if it makes sense,” he said.

In its economic update on Tanzania in a report titled, The Road Less Travelled: Unleashing Public-Private Partnerships in Tanzania, the World Bank observes that in recent years, the Chinese economy has been slowing down, partly reflecting a rebalancing towards a consumptiondriven, services-oriented growth model.

It says China’s faltering growth may have sizeable knock-on effects on the Tanzanian economy as a result of a deceleration in exports. A sharper-than-expected slowdown in China could spill over into the Tanzanian economy through both direct and indirect investments.

The original version of this article is available at the publisher’s website here

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