Britain will forge a new partnership between east Africa, leading businesses and the London Stock Exchange Group to boost development in the region, Justine Greening announced as she headed DFID’s first business delegation.
Accompanied by senior representatives of 18 British and international businesses and social enterprises, the UK’s International Development Secretary set out four new commercial initiatives to help the poorest benefit from economic growth in Tanzania.
The UK will also establish a new partnership with the London Stock Exchange Group to develop capital markets in east Africa. The first stage will provide bespoke training to financial professionals, regulators and government officials across the region through London Stock Exchange Group’s Academy.
Launching the UK’s High Level Prosperity Partnership in Dar Es Salaam, Justine Greening said:
For too long the development world has seen the skills and potential of the private sector as something separate to its own efforts. I want to take a different approach.
The only way for developing countries to end their dependency on aid is to create more jobs, growth and tax receipts. In the end, for individuals too, a job is the only sustainable route out of poverty.
Business can bring much needed investment and innovation at a scale that can be transformational, providing prospects and economic opportunities for communities. It is sensible for us to work with business to make sure their plans help local communities.
Antonella Amadei, Head of Global Business Development at London Stock Exchange Group, said:
We are delighted to work with DFID on this important initiative. This education and training programme can help to grow and strengthen east African capital markets, enabling companies in the region to raise capital and create jobs – contributing to long-term economic development.
Working in partnership with frontier and emerging economies is a vital part of London Stock Exchange Group’s strategy. As the global economy evolves, partnerships like this with frontier and emerging economies are vital to enable the UK to compete on the world stage.
DFID will set up four new trial partnerships with businesses and not-for-profit organisations working in Tanzania. DFID will collaborate with social enterprise and business with loans and equity, generating a return that can be reinvested.
Working with Unilever, the Wood Family Trust and Gatsby Foundation, DFID will:
Co-invest in major new tea plantation. Subject to final negotiations between the parties, DFID will provide up to £7.5 million to allow the partnership to invest in a tea project in the Southern Highlands of Tanzania. The funding will boost the incomes of potentially more than 3,600 potential tea farmers spread throughout 27 villages. The funding will be returnable for subsequent investments by the Wood Family Trust.
Working with the Africa Agricultural Development Company (AgDevCo) and following, DFID will:
Finance a new hydro power plant to support production at Tanzanian Tea Packers Wakalima Tea Factory. DFID will provide up to £2.5 million to fund the development and construction of a hydro plant that will significantly reduce the energy costs and improve the productivity of the tea company.
Invest up to £3.3 million in Equity for Tanzania, a leasing company set up by UK charity Equity for Africa that provides finance for small and medium size businesses in Tanzania. DFID’s funding will allow Equity for Tanzania to provide finance to small agribusinesses and farmers in need of agricultural equipment. The scheme will initially start in Moshi and Mbeya and extend to the rest of Tanzania. DFID’s co-investment will allow SMEs to get the equipment they need.
Provide up to £6.7 million investment in Kilombero Plantations Ltd (KPL), east Africa’s leading rice producer. This will help finance a rice husk gasification plant and in due course a large expansion of irrigation capacity to increase rice yields and improve resilience to climate changes. KPL already works with over 5,000 smallholder farmers and plans to further invest in this partnership with smallholders.
Tanzania has experienced high economic growth of around six per cent over the past decade, yet 30% of people still live on less than £7 a month.
Businesses are starting to realise the potential. UK companies are already leading investors in Tanzania, with around 35 FTSE registered companies operate here. However, too much red tape, poor infrastructure, a lack of a skilled workforce and a complex tax regime is preventing it from reaching its full potential.