Engagement Ofchina On Development In Tanzania:a Case Study From Foreign Direct Investment

The study examined the engagement of Chinese Foreign Direct Investment (FDI) on development in Tanzania. It specifically analyzed FDIs and theircorresponding impact on development, benefits, and challenges andalso determined perceptions of Tanzanians on Chinese engagement to FDIs in Tanzania. A cross-sectional research design was employed to examine Chinese engagement FDIs in Tanzania, In achievement of the intended objective, qualitative and quantitative data was collected. Quantitative data was collected from relevant reports of concerned institutions mostly from books, and journals whereas qualitative data was obtained through the use of questionnaires. A sample of300respondents obtained through random sampling and another sample of100respondents obtained through purposive sampling was obtained from nine institutions and Ten Chinese Companies that were selected for the purpose of this study. Due to inevitable circumstances, the study was confined tothe years1999to2012. The collected data wasanalyzed using Statistical Package for Social Sciences (SPSS), wherebyanalytical time series, Liker scale and descriptive analysis were conducted.The findings showed that, the general contribution of FDI inflows has a significant contribution to the economic growth of Tanzania. Chinese projects significantly boost development in Tanzania and bridge the gap in the Government’s financial year budgets. From the results, the Chinese FDI stock in the years1999-2011had a lead in the manufacturing sector followed by other sectors in the order; construction, wholesale and retail, finance and insurance, agricultural commodities with a corresponding imports in the order; oil, machinery, transport equipment, building and construction equipment. Tanzania recorded a trade balance deficit during the year of2003-2012. The expansion of deficit was mainly caused by an increase in the value of goods imported compared to the value of exports. However, the results show that there was an increase in total exports during the years. Chinese investment has been helpful in creating employment which in return contributes well to the economic growth and reduction of poverty. Moreover, the findings from Ten Chinese Companies’workers showed that, technology transfer to employees is mainly through training and learning by interaction. The findings of the study showed that, engagement of China in Tanzania pose both benefits and challenges. Tanzania benefits from Chinese FDIs in social services projects such as railways, roads, agriculture, mining, education, manufacturing and health. In addition, it also benefits in technologies and skills acquisition, capital and government revenue generation especially through; Corporate Income Tax (CIT), Pay as You Earn tax (PAYE), Skill Development Levy (SDL), Value Added Tax (VAT) and other taxes which are charged within companies.While conducting the study, it was noted that, China FDIs facedchallenges such as inadequacy of consistent power, poor roads and rail network particularly on feeder roads while investors acquire resources for their investment purposes. Pertaining people perception on China FDIs engagement, the results indicated that, Tanzanians’ perception is positive with majority of the respondents in favor of it especially on the basis of development in Tanzanian. Based on the findings, the study concludes thatthe overall policies on investment attract Chinese FDI to speed up the development in Tanzania. The Government of the United Republic of Tanzania recognizes and appreciates the support extended to Chinese FDI for a long time in history. However, there was less agreement on its other potential advantages such as Open export-oriented economies which may be more successful in encouraging FDI inflows. Foreign investors do not care about the impact on their investments in manufactures. FDI can help to fight against poverty reduction.Chinese products are better when compared to products from other countries.Taxes emanating from China’s FDI’s supported Tanzania’s GDP by promoting competition in the domestic input market, export commodities, infrastructures, telecommunication, agriculture, jobs creation, importing goods and commodities which is beneficial to the people of Tanzania.Therefore, the study recommended that both Tanzania and China governments should ensure that the partnership is a win-win situation since Tanzania has natural resources that need to be developed and exploited for the benefit of both parties.