Postcard from Tanzania

Tanzania: This is stretching beyond the Blog’s brief, but it eases me back in after a great safari to Tanzania. Many of the economic problems facing Tanzania are common to other countries and are often analysed, but there is nothing like seeing it first hand to concentrate the mind. The last population count was around 45m in 2012, up a half from the 30m in 1995. Population growth is around 3% per annum so 60m is in sight for 2022/3. Of the current population 45% are under 14 years old (a figure skewed by the grim toll of AIDs). Whilst GDP annual growth has been high single digits in recent times, GDP per pop is only $700. This puts the country very firmly in the bottom quartile of global economic wealth, (although the rich are very rich and the poor are very poor). The growing population is putting great stress on the land through de-forestation and over-farming. Water is a scarce resource, before you even worry about food, fuel, health etc. (Toothpaste and dental care barely gets a look in for many.) A legacy of President Julius Nyerere’s socialist principles is that the concept of freehold property has still not been rolled out, which appears to be putting off many foreign corporate investors. The most successful investors seem to be southern African (as a broad generality) who understand more of the local business practices (and probably have a pragmatic approach to ‘commissions’ and the like). At this stage Tanzania is too ‘small potatoes’ for many western companies, although SAB Miller and Diageo feature large in the beer market and the resources sector has attracted the likes of Ophir Energy and BG. Meanwhile, the Chinese are in evidence helping with infrastructure as part of their Africa ‘bear hug’. The wider point to take on board though is that a growing global population is going to demand more and more of the basics of water, power, food and health, with companies in those sectors facing huge opportunities (and responsibilities). It is worth noting though that technology can play a part in unexpected ways in such countries. The National Grid only covers 20% of the country and there are large voids in bank coverage and fixed line telecoms. However, in village after village, the main street could look ramshackle and dusty, but would have a Vodacom shop and M-Pesa (mobile payment) functionality.... Finally, there is that global phenomenon that you can be miles from tarmac roads and home, but there will be a bar with a satellite dish and someone sporting a football shirt (in this case mainly Man Utd or Arsenal) who can tell you the latest news and results!.  (Neil Cumming, 29th September 2014)

These comments are not a personal recommendation to deal. Any investments can fall as well as rise in value, so you could get back less than you invest. I may have a financial interest in some of the stocks written about. www.dividendpower.co.uk