Tanzanian President John Magufuli’s escalating battles with business risk alienating the very investors he needs to drive his multi-billion dollar industrialization policy.
On Monday, the 57-year-old leader ratcheted up his dispute with miners by accusing Acacia Mining Plc of operating illegally in Tanzania and insisting the government is owed billions of shillings of unpaid taxes. It’s the latest in a series of broadsides against private investors who are being unnerved by his administration’s stance and its lack of consultation on policy. Shares in Acacia, which denies any wrongdoing, slumped as much as 16 percent.
“It’s negative that you have these uncertainties playing out in the market, especially at a time when you’re relying on growth and infrastructure development to be supported by private sector activity,” said Lisa Brown, a risk analyst at Rand Merchant Bank in South Africa.
Magufuli came to power 19 months ago with a pledge to industrialize sub-Saharan Africa’s sixth-biggest economy. The country has transport and utilities projects worth at least $19 billion in the pipeline, according to PricewaterhouseCoopers LLP. Last week, the Finance Ministry said it will spend at least 1.8 trillion shillings ($809 million) in the next fiscal year on projects including building a standard-gauge railway and upgrading its main port in Dar es Salaam.
While Magufuli has said the private sector is “an important ally” in the government’s development efforts, it has yet to secure funding for the key projects like the railway. The Finance Ministry said June 7 it’s in the final stages of talks with Credit Suisse Group AG on a $500-million loan for financing projects, without providing further details.
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