US embassy cable - 05DARESSALAAM234

C O N F I D E N T I A L SECTION 01 OF 04 DAR ES SALAAM 000234 
 
SIPDIS 
 
DEPARTMENT FOR AF/E AND INR/AA 
 
E.O. 12958: 2/02/15 
TAGS: ECON, EAID, EINV, PGOV, TZ 
SUBJECT: Up-Country Travels:  Snapshots of Five Regions 
 
 
Classified by Pol-Econ Chief Judy Buelow for reason 
1.4(b) 
 
REF: A) Dar es Salaam 146 
 
1. (SBU) Summary:  From January 7-23, when Embassy Dar es 
Salaam had the use of a Twin Otter airplane from Prescott 
Aviation, mission personnel traveled to five of Tanzania's 
26 regions:  Mwanza, Shinyanga, Mtwara, Mbeya and Ruvuma. 
These five regions form an arc through western and southern 
Tanzania, which begins at Lake Victoria, then proceeds 
along the shores of Lake Malawi and across the Mozambican 
border.  Our choice of itinerary was motivated partly by 
our interest in seeing Tanzania's most remote areas while 
we had a chance to do so.  We also took the opportunity to 
inaugurate Self Help and DOD Humanitarian Assistance 
projects, and to meet with local government officials.  A 
picture emerges of a hinterland that is traditionally poor 
and remote, but with great aspirations for economic 
development.  Most of these regions have significant 
potential, but need major investment to realize that 
potential.  In many areas, the privatization of formerly 
moribund parastatals provides an engine for employment and 
growth:  the Wakulima Tea Growers Cooperative in Mbeya is a 
stand-out success story.  In Mwanza, the door opened to 
major new investments by the US agricultural company 
Cargill, once the government finally resolved an investment 
dispute with the company that dated to the socialist era. 
Our "snapshots" from each region follow.  End Summary. 
 
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Mwanza Region 
------------- 
 
2. (U) Mwanza Region in northern Tanzania hugs the southern 
shores of Lake Victoria and includes the city of Mwanza, 
Tanzania's second-largest city.  Twenty million people, 
nearly two-thirds of Tanzania's population, live in Mwanza 
and its neighboring Lake regions, making Mwanza city an 
important commercial hub.  Mwanza Region is buffered from 
the refugee population that has impacted neighboring 
regions to the west.  The Regional Commissioner told emboff 
that Mwanza was a "sleeping giant" with great potential for 
significant growth.  The region does in fact have 
significant resources, including fish, gold, cotton, cattle 
and access to tourism sites.  Recent infrastructure 
developments, including several newly-improved roads and a 
more reliable electricity grid, may set the stage for the 
giant to wake up. 
 
3. (U) Gold mining represents the region's largest foreign- 
exchange earner, and recent discoveries ensure that the 
mining industry will remain active for the foreseeable 
future.  Fish products make up the next largest export 
industry, with processed fish being shipped to Europe (and 
to the U.S. via Europe).  Fish products from Mwanza are 
also sold throughout Tanzania.  Mwanza also has a rich 
though undeveloped agricultural sector.  Cotton is the 
largest export crop, but Mwanza also produces cattle and 
tropical fruits.  The still undeveloped tourism industry in 
Mwanza has significant potential; Mwanza is as close to 
Serengeti National Park as the traditional tourist hub, 
Arusha, and the city is set in a beautiful natural 
environment.  Today, however, only one hotel reaches 
international standards, and there is no conference 
facility in the city. 
 
4. (SBU) Local authorities held an Investors Forum last 
year, and have focused on attracting further investment in 
the region, particularly in tourism.  American businesses 
have recently been active in Mwanza in at least three 
sectors: Cargill Cotton was the largest purchaser of 
Tanzanian cotton in 2004, and is looking to invest in 
commercial farming and ginneries in the region; a local 
investor recently signed a franchise agreement with US 
hotel chain Hawthorn Suites and plans to build a full- 
service hotel in Mwanza; and an American investment company 
is involved in the purchase of two high-speed ferryboats 
that will service Mwanza and other Lake Victoria 
communities.  The resolution of business disputes and US 
embassy commercial advocacy have been a significant factor 
in some of this new investment.  Cargill's dispute with the 
parastatal Cotton Marketing Board had dragged through 
courts and mediation since 1992; as recently as 2002, a 
Cargill executive told econoff the company would not 
consider further investments in Tanzania.  The government's 
payment of half of the disputed amount late in 2004, with a 
firm commitment to pay the remainder in 2005, has 
apparently sweetened Cargill on Tanzania and Mwanza 
investment. 
 
5. (U) Outside of the urban center of Mwanza, the region 
remains undeveloped.  Emboff visited Ukerewe district, 
comprised of 26 islands in Lake Victoria, to see two USG- 
funded projects.  Accessible only by ferry, the district is 
among the most remote in Tanzania.  The islands are not 
connected to the country's electrical grid, and only a few 
small streets are paved.  Residents feel far removed from 
the government in Dar es Salaam, and expressed dismay that 
their elected leaders have taken too long to provide needed 
infrastructure and services.  Traditional beliefs, 
including the practice of witchcraft, maintain a stronger 
hold in these rural areas.  Some of these practices have 
contributed to the spread of HIV/AIDS in the area.  (For 
example, it is believed that when a married person's spouse 
dies, he or she must engage in sex to be cleansed of the 
marriage.  The person to perform this "cleansing" is often 
appointed to do so for an entire village or group of 
villages.)  Education and modernization have been slow to 
influence such rural areas. 
 
---------------- 
Shinyanga Region 
---------------- 
 
6. (U) Shinyanga Region is just south of Mwanza and 
comprises vast stretches of farming and livestock lands. 
Cotton dominates the agricultural sector, as the land is 
too dry for many other crops.  A few gold mining sites and 
one diamond mine are found in Shinyanga.  Still, the 
population relies largely on subsistence farming, and has 
been hit hardest in Tanzania by the drought in recent 
years.  Roads are poor, and getting food aid to a dispersed 
population has been problematic.  Emboff commissioned four 
water wells built with Self-Help Fund assistance, which 
brought clean water much closer to a remote village and a 
secondary school.  Many villages in the region still lack 
nearby, clean water sources. 
 
7.(C)  Shinyanga is the hometown of Prime Minister 
Frederick Sumaye, who is campaigning vigorously to be the 
ruling party's nominee for president.  The Regional 
Commissioner for Shinyanga told emboff he had spent the 
last two days touring the region in preparation for the 
Prime Minister's upcoming visit.  The Regional Commission 
was expected to "pave the way" for the Prime Minister's 
campaign.  Paving the way often includes giving cash 
presents to important local leaders to ensure their 
support.  The Regional Commissioner, who is a CCM appointee 
from outside Shinyanga, was keenly interested to ensure the 
visit went well. 
 
8. (U) Economic prospects for Shinyanga revolve around 
cotton farming and livestock.  The government-owned cotton 
ginneries have been privatized, but are still unprofitable 
and in disrepair.  The vast majority of cotton is exported 
unprocessed at world prices, which have declined in recent 
years.  Despite a high number of livestock in the region, 
there is no large-scale commercial ranching, no dairy 
production, and no meat-processing plants.  Desperate for 
agricultural investment, Shinyanga will not likely be able 
to compete with other regions for scarce foreign 
investment. 
 
------------ 
Mbeya Region 
------------ 
 
9. (U)  Mbeya region, in south-central Tanzania, is 
relatively wealthy and agriculturally diverse, with a 
climate ranging from cool highlands to moist tropical 
forest.  Unique in Tanzania, Mbeya gets rain year-round. 
Because the Tanzania-Zambia highway runs through Mbeya, the 
region also has good onward transport connections for 
farmers seeking to get their coffee and tea crops to Dar es 
Salaam markets, or to auction houses in Moshi and Mombassa. 
Agriculture ranges from large tea and coffee estates, to 
small rice fields and the ubiquitous banana trees. 
 
10. (U) Possibly because of the reliable rains and good 
roads, the average Mbeya resident seems a bit wealthier 
than his counterparts elsewhere in the country.  Mbeya's 
wealth is still modest, measured in a brick houses with tin 
roofs, instead of a mud and wattle houses with thatched 
roofs.  Mbeya's relative wealth is also visible in the 
newer second hand clothes, high number of bicycles, and 
wider variety of commercial goods available in the markets. 
 
11. (SBU) Although in Dar es Salaam, politicians complain 
that the benefits of privatization accrue mostly to 
foreigners, particularly South Africans, a visit to 
Wakulima Tea Estate showed one privatization success story 
that benefits Tanzanians.  The tea company, privatized in 
2000, was formerly a parastatal industry and a perpetual 
loss-maker.  Now it is co-owned by a private entity, with 
the cooperative Rungwe Smallholders Association owning a 
25% equity.  After privatization, production skyrocketed 
from 500,000 kilograms to 3,338,743 kilograms of tea in 
2004, with price, quality, and profits following suit.  The 
Tanzania smallholders were justifiably proud when they 
showed Charge and EmbOff around the tea processing plant 
and presented production figures.  Operations were managed 
by a white, Kenyan-born expatriate manager, showing the 
degree to which larger companies in Tanzania economy still 
depend on expatriate managers.  (Embassy Self Help funded a 
clinic for Wakulima's workers.) 
 
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Ruvuma Region 
------------- 
 
12. (U) Ruvuma region, in Tanzania's far Southwest, is one 
of Tanzania's more isolated regions, and is closer 
economically to neighboring Malawi and Mozambique than to 
other parts of Tanzania.  In his introductory remarks, 
Regional Commissioner Retired Major General S.S. Kelembo 
painted Ruvuma as a region with great, albeit unrealized, 
agricultural and tourist potential.  Indeed, the flight 
over the region showed rich volcanic soil, and peaks of 
completely forested mountain ridges, all tucked along Lake 
Malawi.  Although Ruvuma borders Lake Malawi, officials 
said fishing is not a big industry, because the Tanzanian 
part of Lake Malawi is too deep for easy fishing. 
 
13. (U) Ruvuma has great potential, with 54,456 square 
kilometers of arable land, much of it unoccupied.  The 
local government is organizing an Investments Forum to 
inform investors about Ruvuma region. The Regional 
Commissioner made a pitch to Charge to solicit US investors 
in timber plantations, agricultural, and ranching. 
Regional Commissioner also noted Ruvuma's mineral wealth, 
largely unexploited, of gold, gemstones, coal, and 
diamonds.  However, limited road access hinders investment: 
Ruvuma is 20 hours by road to Dar as Salaam.  The Regional 
Commissioner was grateful for a USAID infrastructure 
program, now completed, that constructed 204 kilometers of 
rural roads and 20 concrete bridges in the region. 
 
-------------- 
Mtwara Region 
-------------- 
 
14. (U) Mtwara region, in the far southeast, bordering on 
Mozambique, was long one of the most isolated regions in 
Tanzania.  That Mtwara is now opening to the wider world is 
only partly due to the fact that its Masasi district 
happens to be home to President Mkapa.  Certainly, the 
newly-opened Mkapa bridge over the Rufiji river has done 
much to ease Mtwara's isolation.  Residents have high hopes 
for the ongoing improvements to the coastal highway; they 
anticipate that the new road will cut the drive time 
between Dar es Salaam and Mtwara from the current fourteen 
hours to five or six.  The region's traditional window on 
the world has been its ports, first, the shallow harbor in 
historic Mikindani, which sheltered the centuries-old dhow 
trade, later, the deep water port just down the coast in 
Mtwara city.  Mtawara's port, recently upgraded, is still 
operating at only 30 percent capacity. 
 
15. (U) The Mozambican border, delineated by the Ruvuma 
River, has both eased and exacerbated Mtwara's isolation. 
There is no bridge over the Ruvuma, nor is there any 
immediate prospect that Mtwara will find $30 million to 
fund a bridge project.  Nonetheless, the predominant Makua, 
Yao, and Makonde tribes all straddle the border, and petty 
traders easily cross back and forth.  Local government 
officials know that they cannot sufficiently control the 
trans-border traffic and worry that a criminal element from 
Mozambique is entering to prey on Mtwara's population. 
During Mozambique's long civil wars, insurgents often took 
refuge on the Tanzanian side.  Local officials in Mtwara 
report that their predecessors let the region become a 
neglected buffer zone.  Acting Regional Commissioner Sadiki 
referred to Mtwara as the "orphan region." 
 
16. (SBU) Orphaned Mtwara may be, but it is not lacking in 
resources. In the short term, food processing offers the 
best prospects for investors.  Mtwara is one of Tanzania's 
top producers of cashew nuts.  At present, most cashews are 
produced by small-scale farmers and shipped raw to India 
for processing.  Local officials dream of reviving the 
local cashew-processing industry, and capturing the 
resulting value added and new jobs for Mtwara.  On the 
Masasi-Newala road, two shuttered cashew-processing 
factories, former parastatals, are moldering away.  One of 
these factories was recently sold to a private investor; 
Masasi District Commissioner Rufanga expressed the hope 
that it would soon employ 200 workers.  The other factory 
is still awaiting a buyer.  Neither looked ready to open 
its doors soon.  Regional officials also hope to develop a 
deep sea fishing industry, but they worry that foreign 
poachers will decimate fish stocks, since the region has no 
capacity to patrol its waters.  In the longer term, local 
officials believe there are prospects for investment in 
mining.  The region is believed to hold deposits of garnet, 
tourmaline and marble.  While the infrastructure is barely 
developed, tourists may be tempted to visit the beautiful 
coastline, coral reef, and the historic district bordering 
Mikindani harbor. 
 
17. (SBU) Regional officials hope that cheap and reliable 
electricity will also encourage new investment.  To date, 
Mtwara has had to generate its electricity by burning 
imported diesel.  Regional officials are very excited about 
the Misimbizi gas pipeline project, a largely Canadian 
investment that is due to come online soon, and which they 
hope will provide abundant and reliable supplies of natural 
gas to power the generators. 
 
18. (SBU) Mtwara Region owes its much of its visibility to 
President Mkapa.  Several times a year, the President 
visits his home village, which is now accessible via an 
excellent dirt road.  Mkapa's entourage typically fills up 
the meager hotel offerings for miles around.  Officials in 
the regional and district governments report security is 
tight, and they rarely see or interact with the president 
or his entourage during these visits.  They all stoutly 
insist that the Mtwara region is well on the road to 
development, and won't fall into isolation and neglect when 
President Mkapa leaves office later this year. 
 
OWEN