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Viewing cable 08DARESSALAAM650, AGOA ELIGIBILITY REVIEW - TANZANIA

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Reference ID Created Released Classification Origin
08DARESSALAAM650 2008-10-09 06:41 2011-08-25 00:00 UNCLASSIFIED Embassy Dar Es Salaam
VZCZCXRO1878
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0650/01 2830641
ZNR UUUUU ZZH
R 090641Z OCT 08
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 7943
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHNR/AMEMBASSY NAIROBI 1018
RUEHKM/AMEMBASSY KAMPALA 3206
RUEHLGB/AMEMBASSY KIGALI 1137
RUEHJB/AMEMBASSY BUJUMBURA 2699
UNCLAS SECTION 01 OF 03 DAR ES SALAAM 000650 
 
SIPDIS 
 
AF/EPS FOR ANN BREITER AND GABRIELLE MALLORY 
PASS USTR FOR CONNIE HAMILTON 
 
E.O. 12958:  N/A 
TAGS: ETRD EAGR ECON PGOV PREL ELAB PTER TZ
SUBJECT: AGOA ELIGIBILITY REVIEW - TANZANIA 
 
REF: STATE 85086 
 
1. This cable is in response to reftel. 
 
2. Country:  Tanzania 
Current AGOA Status:  Eligible 
 
Country Background Summary:  Tanzania's population increased to 
approximately 40.3 million in 2007.  2007 Gross National Income 
(GNI) was $16.2 billion and GNI per capita was $400.  Over the past 
two decades, Tanzania has been transformed from a centrally 
planned/command economy to a market-oriented system through 
successful implementation of trade liberalization measures.  The 
government has taken deliberate steps to encourage private 
sector-led growth through restoration of market forces and less 
interference in commercial activities.  These measures, including 
privatization of state-owned companies, reduction of tariff and 
non-tariff barriers and fiscal/monetary reforms, have opened doors 
for expansion of private sector operations in all spheres of 
business.  Growth averaged 7 percent from 2001-2007; the economy 
grew 7.1 percent in 2007 and is predicted to grow at 7.8 percent in 
2008. 
 
The Government of Tanzania (GOT) is a stable, multiparty democracy. 
The ruling party (former single party) dominates the executive and 
legislative branches.  Tanzania continues to make progress in 
strengthening its market-based economy and eliminating barriers to 
U.S. trade and investment.  The GOT pursues economic policies to 
reduce poverty, to encourage good governance, and to protect worker 
rights.  Despite these efforts, poverty is widespread and corruption 
remains a major problem.  Tanzania's $698 million Millennium 
Challenge Compact entered into force in September 2008.  The Compact 
aims to remove constraints to economic growth through targeted 
investments in Tanzania's transport, energy and water sectors. 
 
Comments on Eligibility Requirements 
 
I. Market based Economy 
 
Major Strengths Identified 
 
-- Privatization efforts continued.  The government replaced the 
Presidential Parastatal Sector Reform Commission (PSRC) with the 
Consolidated Holding Corporation (CHC), which has the mandate of 
finalizing the divestiture of remaining public firms and monitoring 
and evaluation of the performance of those already privatized. 
 
-- In August 2008, the government announced plans to float an 
additional 21 percent of its 51 percent stake in the National 
Microfinance Bank. The remaining 49 per cent shares of the bank are 
owned by a consortium led by the local National Investment Company 
(NICOL) and Rabobank of the Netherlands. 
 
-- Performance under the International Monetary Fund's Policy 
Support Initiative program remains good.  All assessment criteria 
for the third review (quantitative targets for end-December 2007) 
were met and the structural reform program remains broadly on 
track. 
 
-- Regional integration remains an important objective. Negotiations 
within the East African Community (EAC) toward the establishment of 
a common market have begun, although they have proceeded slowly. 
The five members of the EAC have signed an interim trade agreement 
with the EU.  In July 2008 the EAC signed a Trade and Investment 
Framework Agreement (TIFA) with the U.S. 
 
-- Foreign Direct Investment (FDI) into Tanzania has increased, 
principally in the mining, manufacturing, tourism, construction and 
transportation sectors. In 2007, the value of FDI increased to USD 
600 million from USD 552 million in 2006. The increase was mainly 
due to investment for expansion in the mining sector. 
 
Major Issues/Problems Identified 
 
-- Poor infrastructure in transport, communications and energy 
remains a major bottleneck that requires increased and sustained 
investment. The country is implementing a Medium Term Transport 
Sector Infrastructure Investment Plan but many areas remain 
untouched. 
 
-- Businesses and households, particularly in rural areas, lack 
access to credit. 
 
II. Political Reforms/Rule of Law/Anti-Corruption 
 
Major Strengths Identified 
 
DAR ES SAL 00000650  002 OF 003 
 
 
 
-- Encouraged by the president's public support of press freedom, 
the press was able to expose evidence of corruption; widely 
publicized scandals led to the resignation of four ministers, 
including the Prime Minister, and the dismissal of the governor of 
the Bank of Tanzania. 
 
-- The government is following up on the findings of the Public 
Procurement Regulatory Authority (PPRA), which has stepped up its 
audits of procurement agencies, with the objective of better 
enforcing existing regulations. Following the introduction of a 
reinforced legal framework, the Prevention and Combating of 
Corruption Bureau (PCCB) is investigating several cases of alleged 
grand corruption. 
 
-- Efforts to improve credibility and combat inefficiency saw the 
judiciary create evening shifts for the hearing of additional court 
cases.  The courts also provided alternative sentences to women 
during the year due to lack of adequate prison facilities. 
 
-- There were several prosecutions of magistrates on counts of 
corruption between 2007 and 2008. 
 
Major Issues/Problems Identified 
 
-- The national judiciary is formally independent, but the judiciary 
remained underfunded, corrupt, inefficient, and subject to executive 
interference, especially in the lower courts. 
 
-- Foreign investors and businesses, including U.S. firms, continue 
to encounter corruption in Tanzania. 
 
-- Fourteen months of negotiations between the ruling CCM and the 
opposition CUF failed to resolve the political stalemate in the 
semi-autonomous archipelago of Zanzibar following the isles' flawed 
2005 election. 
 
III. Poverty Reduction 
 
Major Strengths Identified 
 
-- With donor support, Tanzania continues to increase government 
investment in health, education, and sectors that stimulate economic 
growth, especially infrastructure. 
 
Major Issues/Problems Identified 
 
-- GDP per capita remains low; recent economic growth has yet to 
make significant inroads to reduce rural poverty. 
 
IV. Workers' Rights/Child Labor/Human Rights 
 
Major Strengths Identified 
 
-- The GOT continued to make substantial progress under the auspices 
of the International Program for the Elimination of Child Labor. 
Tanzania has focused on combating the worst forms of child labor in 
agriculture, mining, and prostitution. 
 
-- In April 2008 the government produced guidelines for child labor 
intervention at the district and community levels. 
 
-- In August 2008 the government completed its Child Labor Report, 
which was derived from the 2007 Integrated Labor Force Survey 
Report. 
 
-- The Trade Unions Act of 2000 recognizes workers' freedom of 
association, the right to bargain collectively, and the right to 
strike. 
 
-- The Government's human rights record improved during the year 
2007/08.  Unlike in previous years, there were no reports of 
killings in police custody. 
 
-- Tanzania increased focused on combating the worst forms of child 
labor in agriculture, mining, prostitution and domestic labor. 
 
Major Issues/Problems Identified 
 
-- Police officers tortured, threatened, and otherwise mistreated 
suspected criminals and prisoners during the year. 
 
-- Prison conditions remained harsh and life threatening. 
 
-- Arbitrary arrest and prolonged detention remained problems. 
 
 
DAR ES SAL 00000650  003 OF 003 
 
 
-- The Constitution prohibits forced or compulsory labor, but does 
not explicitly prohibit forced labor by children; however, the 
Employment Ordinance establishes 15 years as minimum age for 
contractual employment, but does not apply to children working on 
family farms or herding livestock. 
 
-- Workers in Tanzania have the right to associate, form unions, and 
bargain collectively and these rights are well respected. 
 
V. International Terrorism/U.S. National Security 
 
Major Strengths Identified 
 
-- In November 2006, the Tanzanian Parliament passed the Anti-Money 
Laundering (AML) bill.  The AML law established the legal groundwork 
for Tanzania to create a Financial Intelligence Unit (FIU) and to 
bolster the GOT's ability to combat financial crime, including 
counterterrorist financing. 
 
-- Tanzania opened its interagency Counterterrorism Center in 2007. 
The Center will build the GOT's capacity to prevent and respond to 
terrorist attacks.  In cooperation with the United States, Tanzania 
worked to identify terrorist networks in order to prevent acts of 
terrorism. 
 
-- The GOT continued its participation in several multi-year 
programs to strengthen law enforcement and military capacity, 
improve aviation and border security, and combat money laundering 
and terrorist financing. 
 
-- Tanzania cooperated with the United States and complied with its 
obligations under UN Security Council resolutions. 
 
Major Issues/Problems Identified 
 
None. 
 
ANDR