Tanzania: Gas search lifts investment flow

A liquefied natural gas (LNG) tanker arr14 July 2013, Dar es Salam – TANZANIA registered significant increase in foreign direct investments in 2012 despite a major global downturn, the World Investment Report 2013 indicates.

The report launched in Dar es Salaam indicates that Tanzania registered 38.77 per cent increase in FDIs from US$ 1229.4 million in 2011 to US$ 1,706 million as global trend shows alarming decline in investment inflows.

“Contrary to the global fall in FDI inflows, Tanzania had a significant increase,” the Executive Director of the Tanzania Investment Centre, Mrs Juliet Kairuki, said at the launching ceremony of the report.

The drivers of the substantial increase in the FDI inflows to Tanzania are mainly oil and gas exploration activities in southern regions of the country, she said. She said the FDI flows for Tanzania increased by US$ 476.6 million making the country increase its share in the African region and maintaining its share in East Africa by 27 per cent.

Tanzania’s share of FDIs to Africa rose from 2.6 per cent in 2011 to 3.4 per cent last year, she said adding Tanzania’s shares of FDI in Africa were 1.8 per cent and 4.2 per cent in 2009 and 2010 respectively.

The TIC boss said the investment report indicate growing contribution of FDIs to the national income as it contributed more than 38 per cent. She said the inflow trend of FDIs in Tanzania showed a steady increase as it is the case with Africa and East African countries.

The 2013 report shows there is a steady increase for the East African countries except Burundi and Kenya. Uganda leads in the East African region for attracting largest FDI inflows thanks to the discovery of oil fields in the East African country. On the global level, the report shows global foreign direct investments fell by 18 per cent to US$ 1.35 trillion in 2012 and are likely to remain at a similar level this year.

The FDI recovery expected to take longer than expected mainly because of global economic fragility and policy uncertainty, according to the report. “This sharp decline was in stark contrast to other key economic indicators such as GDP, international trade and employment which all registered positive growth at the global level,” Mr Kariuki said.

She attributed the global decline in FDIs to economic fragility and policy in a number of major economies which gave rise to caution among investors. “The road to FDI recovery is thus proving bumpy and may take longer than expected,” she said.

The report further shows that developing countries took the lead as in 2012 they absorbed more FDIs than developed countries, accounting for 52 per cent of global FDI inflows. This is partly because the biggest fall in FDI inflows occurred in developed countries, which now account for only 42 per cent of global flows, the report shows.

“FDI inflows to developing economies proved to be much more resilient than flows to developed countries, recording their second highest level to US$703 billion. They accounted for a record 52 per cent of global FDI inflows, exceeding flows to developed economies for the first time ever, by US$142 billion,” the TIC boss said.

The report shows that the FDI inflows in 2013 are expected to remain close to 2012 levels with upper range at US$ 1.45 trillion, she said. The World Investment Report 2013 focuses on Global Value Chain: Investment and Trade for Development.

*Henry Lymo, Tanzania Daily News

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