Infrastructure

Why Magufuli Cancelled $10B Bagamoyo Port Deal with China

President Magufuli says the conditions set by the investor amount to selling Tanzania to China.

Updated on

June 15, 2019

Tanzania President John Magufuli has indefinitely suspended plans to construct what would have been East Africa’s largest port in Bagamoyo, Tanzania, after disagreeing with Chinese investors on the terms of the highly ambitious infrastructure project.

Preliminary works for the $10 billion (Sh1 trillion) Bagamoyo Port at Mbegani Creek in Bagamoyo, 75 km north of Dar es Salaam, were launched in October 2015 by then-President Jakaya Kikwete, with some residents relocated to pave the way for construction.

This followed the signing of a deal between Tanzania and China’s largest port operator, China Merchant Holdings International (CMHI) and the government of Oman to build the port and set up a special economic zone to transform the country into a regional business hub.

However, when President Magufuli came into office in November 2015, the project took a back seat as he prioritised the expansion of the Dar es Salaam, Tanga, and Mtwara ports.

Mr Magufuli also sought to renegotiate the Bagamoyo Port project’s terms with the investor.

But after years of fruitless talks, President Magufuli has finally declined to move ahead with the project saying the conditions set by the investor amount to selling Tanzania to China.

“Those investors are coming with tough conditions that can only be accepted by mad people. They told us once they build the port, there should be no other port to be built from Tanga to Mtwara south,” Mr Magufuli said on Friday.

“They want us to give them a guarantee of 33 years and a lease of 99 years, and we should not question whoever comes to invest there once the port is operational. They want to take the land as their own but we have to compensate them for drilling construction of that port,” he said, adding that the investor barred the State from collecting revenue from the port.

The fallout shines a spotlight on the growing criticism of Chinese operations in Africa.

In October 2018, for example, Sierra Leone cancelled plans to build a $318 million (Sh32 billion) China-funded airport outside the capital Freetown in an incident that sent shock waves throughout Beijing’s largest financial institutions.

While cancelling the project, President Julius Maada Bio, said Sierra Leone could not afford to repay the loan – adding that the priority should be to make Lungi airport viable.