Gaia blog

Tanzania – a place to be

30.05.2013

One of the world’s fastest growing economies with young, growing and urbanizing population. One of the biggest Foreign Direct Investment targets in Africa. Enormous minerals and gas reserves. Enough fertile land to feed a good part of the world…

Interested? You better act fast

Finns and Americans are already on their way. A business delegation of 20 Finnish enterprises, led by Minister Alexander Stubb (International Trade) and Minister Heidi Hautala (International Development Cooperation), visited Tanzania this week. President Obama will follow July 2nd with a business delegation of 500 executives.

The programme of the Finnish mission included networking and business talks with Tanzanian corporations as well as meetings with officials. The level of interaction was remarkable – clearly a sign of our times.

Exit plan for development aid

Tanzania aims to be aid independent by 2025 and this is exactly what Finland wants to help Tanzania with. However, it means changes to the classic development cooperation.

Finland is one of the long-time development cooperation partners to Tanzania. During the 40 years of development aid, the assistance projects have addressed issues such as poverty reduction, access to drinking water, education and forestation. The aid has also included support to administration and direct budget support.

Today, Tanzania is still poor, corrupted and its administrative capacity must be improved. The government has more than doubled the state budget, but it still needs direct budget support from donors like Finland. The country is ranked 122nd out of 145 countries to do business in. It may not sound attractive, but sound business partners are what Tanzania needs and when you scratch the surface, you can find real business opportunities. If the equation can be fixed, the exit plan from aid dependency can become reality.

Business for development

Business for development was one of the central themes of the recent Finnish delegation. Joint business ventures between Finnish and Tanzanians aim at employing people, making investments and other forms of prosperity.

In order to get there, sound business management shall be developed, people trained and new technology applied. This will create not only anticipated profits, but also needed modern examples of development such as networks of excellence, transparency, accountability and efficient administration.

Traditionally, companies have been largely excluded from development circles. Many Western companies are now more accountable and keen for true corporate responsibility than public organizations. Why should they be a “no-go”? Tanzanians cannot afford to wait. And, most certainly, companies from BRICs will not wait.

Hunger for energy

Growing population and economy means that energy consumption will to be quadruple in a short period of time. Today, firewood and charcoal are still the most important sources of energy. With the stunning pace of deforestation (400 000 ha/year), Tanzania will loose its forests within few years.

Options for charcoal are needed desperately but they’re hard to find and implement. Electricity grid covers just 14% of the households. Significant gas exploration gives some hope, but current plans are to export 90% if not all the gas.

Gaia, with its Tanzanian partner ARTI Energy, has developed a business model that to offer households sustainable charcoal that is made of agricultural waste instead of wood. The project (www.gaia.fi/tanzania) demonstrates that socially and environmentally sustainable charcoal can also be a viable commercial business.

This business venture is a milestone in the new kind of sustainable development and it also served as the starting point of the Finnish Ministerial mission.

Pasi Rinne
Chairman of Gaia

Gaia offers a wide range of innovative solutions for sustainability in Africa. We partner with developing organizations, NGOs and private sector to provide affordable but impactful solutions, and our recently established partnership in Tanzania is an important and strategic move that enables us to take part in designing the 21st century Africa.

Pasi Rinne

Chairman of Gaia Group, Partner

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