HOPES AND EXPECTATIONS ON TOURISM IN TANZANIA

DAMAS MAKANGALE Daily News; Thursday,January 22, 2009 @20:00

TOURISTS in close proximity with a wild elephant in Mikumi National Park. The booming commodity markets, rising profitability of investments -- the highest among developing regions in 2007 and 2008 and improved policy environments, have attracted more Foreign Direct Investment (FDI) in developing economies in Africa. A large proportion of the FDI flow into Tanzania has increased from 552 million US Dollars in 2006 to 600 million last year, ranking the country among the top ten recipients in Africa. The Executive Director of Tanzania Investment Centre (TIC), Mr Emmanuel ole Naiko, told reporters at a news conference during the launching of the "World Investment Report 2008," that increased exploration and exploitation of natural resources were behind the increase. "Globally, FDI inflows grew at 30 per cent in 2008 from 1,300 billion US Dollars in 2006 to 1800 billion dollars last year, thus surpassing the record set in 2000," Mr Naiko said. He added: "The growth of FDI inflows to Africa by ten per cent makes a stock growth to 393 billion US Dollars". On his part, the Secretary General of UNCTAD, Dr Supachai Panitchpakdi, said that developing countries enjoyed a 21 per cent increase in FDI inflows to 500 US billion dollars, reflecting in many cases booming commodity prices and an improving policy environment. Dr Panitchpakdi said that UNCTAD's annual survey of host country policy trends suggests that governments are continuing to make investment climate more attractive. "As we have said before, the quality of investment can be more important than the quantity. Indeed one of our longstanding recommendations urges governments to pay closer attention to the usefulness of potential investors," he said. He said the report suggests that governments should explore greater use of private sector resources, including international companies to increase investment in infrastructure, to boost social and economic development in the region. The World Investment Report (WIR) 2008, which was launched a couple of months ago, indicates that the FDI inflow in Africa has recorded an impressive performance. It shows that FDI on the continent has hit a record and that Africa has the highest returns on investment. Least Developing Countries (LDCs) in Africa have also registered another year of growth in their FDI inflows. A large proportion of the FDI projects launched in the region last year were linked to the extraction of natural resources. The commodity price boom also helped Africa to maintain a relatively high level of outward FDI, which amounted to six billion US dollars in 2007.Despite higher inflows, Africa's share in global FDI remained at about three per cent. TNCS from the United States and Europe were main investors in the region, followed by African investors, particularly South Africa. The report -- titled "Translational Corporations and the Infrastructure Challenge," shows that Africa logged a remarkable record after receiving 53 billion US dollars in 2007 in FDI. Africa also trumped other developing regions by providing the highest rate of returns on FDI for the past two years. The World Investment Report, which was released by the United Nations (UN) through United Nations Conference on Trade and Development (UNCTAD), said that after four consecutive years of growth, global Foreign Direct Investment inflows rose in 2007 by 30 per cent to reach 1,833 billion US dollars. Despite the financial and credit crisis especially the credit crunch in United States, all the three major economic groupings -- developed countries, developing countries and the transition economies of South East Europe and the Commonwealth of Independent States (CIS) -- saw growth in their inflows. The increase of FDI largely reflected relatively high economic growth and strong corporate performance in many parts of the world. Reinvested earnings accounted for about 30 per cent of total FDI inflows as a result of increased profits of foreign affiliates, notably in developing countries. To some extent the record of the FDI levels of dollar terms also reflected the significant depreciation of the dollar against other major currencies. However, even measured in local currencies, the average growth rate of global FDI inflows was still 23 per cent in 2007. FDI inflows into developed countries reached 1,248 billion USD dollars. The United States maintained its position as the largest recipient country, followed by the United Kingdom, France, Canada and the Netherlands. The European Union (EU) was the largest host region, attracting almost two thirds of total FDI inflows into developed countries. In developing countries, FDI inflows reached their highest level ever, 500 billion US dollars -- a 21 per cent increase over 2006. The least developed countries (LDCs) attracted 13 US billion dollars worth of FDI in 2007. In Africa, FDI inflows grew to 53 billion US dollars in 2007, whereby a new record booming commodity markets, rising profitability of investments and improved policy environments fuelled inflows. LDCs in Africa also registered another year of growth in their inflows. A large proportion of the FDI projects launched in the region in 2007 were linked to the extraction of natural resources.The commodity price boom also helped Africa to maintain a relatively high level of outward FDI, which amounted to six billion US dollars in 2007. In spite of higher inflows, Africa's share in global FDI remained at about three per cent Transnational Corporations (TNCs) from the United States and Europe who were the main investors in the region, followed by African investors, particularly from South Africa. Africa's FDI inflows in 2007 continued to be geographically concentrated the top 10 host countries accounted for over 82 per cent of total inflows and nine countries received inflows of one US billion dollars or more. The surge in FDI to the region and its profitability were driven by the boom in global commodity prices and by Africa's changing policy environment. North Africa attracted 42 per cent and sub Saharan Africa 58 per cent to the region. Investment in African Least Developed Countries also grew for the second consecutive year. As a result of the commodity price boom, income on inward FDI grew by 31 per cent in 2007 and the rate of return on investment in Africa was the highest among developing regions in 2006 and 2007