On the Ground in Tanzania

I recently fulfilled an old dream of visiting a Sub-Saharan African country and spent an incredible 10 days in Tanzania.


While there, I visited 3 different areas: the capital, Dar es Salaam; Kilimanjaro; and Zanzibar. The language in Tanzania (as in much of the eastern part of Africa) is Swahili, which distinctly resembles Arabic. Words are quite easy to remember and I am sure you know at least one of them already... for example, "safari" means "journey" in Swahili, "karibu" is "welcome" and "asante" is "thank you".

First, let me cover some of the basics about the Tanzanian economy.

As a percentage of GDP, agriculture is the most significant part of the economy (around 50%) and employs nearly 80% of the population. However, other sectors are also becoming more significant as the country develops. Tanzania's tourism sector, for example, is growing by leaps and bounds and ranks as the second highest source of foreign exchange behind agriculture. Also, the extraction of natural resources like gold, diamonds and tanzanite has grown significantly in the last decade and represents the largest source of economic growth in Tanzania.

According to the online magazine "Tanzania invest," Tanzania's government seems to be moving in the right direction with their economic policies. In their proposed budget for 2011/2012, they planned to eliminate many export taxes in order to relieve tax burdens for export-oriented small businesses. They also want to exempt VAT for agricultural equipment in order to promote mechanization in the farming sector (which has been stuck in a time warp).

The banking sector has seen strong growth, but is still in its infancy in Tanzania. Abu Dhabi and Dubai are only 5 hours away by flight and offer much more reliable banking options. The official estimate (2010) for inflation in the country is 7.2 %.

In terms of religion, the population of mainland Tanzania is approximately half Christian, half Muslim. Even so, religious conflict appears to be an event literally unheard of anywhere in the country. Most Tanzanians left a very positive and peaceful impression on me during my stay there.

Dar es Salaam ("Dar")

The first stop on my trip to Tanzania was Dar es Salaam. Frankly, there is nothing very special I want to mention about Dar for the simple reason that I don't really like large, chaotic, and undeveloped cities.

It is definitely THE capital of Tanzania in terms of everything: a strategic coastal location, large population, home of the government and as well as the center of commercial activity. Driving there can be a nightmare as the number of cars has increased significantly over the last few years, while very little road construction seems to be going on. In Dar, one would be able to find most of the things westerners are used to, ranging from bowling lanes to food (restaurants anywhere I went to in Tanzania served food quite familiar to a westerner's taste).

The hotel where I stayed, The Tanzanite, was nothing special by European or American standards, but was one of the better hotels in Dar. The staff was efficient (which was often not the case during my trip), rooms were clean, and the rate was 70 USD.

While in Dar, I became acquainted with one of the local guys, Goodluck (his real name), who spent a couple of days as my driver showing me around. He owned a little Toyota and worked for one of the leading airline companies. According to him, his salary was around 600 USD a month.

Goods are quite inexpensive in Dar. For example, in one of the nicest restaurants of the city the bill came at 45,000 shillings (26 USD) for two of us. For a taxi ride from the airport to anywhere in town, it was around 20-25 USD. A live-in maid would cost an incredible 37 USD or so a month... but she would likely not speak any English.

Rent is also cheap. The house Goodluck lives in rents for 300,000 shillings (175 USD) a month. And while the quality wasn't what I would live in, I suspect something decent by Western standards (nice 3 bedroom house in safe neighborhood) could be had for about 500 USD (unfortunately, I did not do any real estate market analysis except from talking to locals, so I can't speak more specifically about price ranges for houses and apartments in Dar).

One evening I struck up a conversation with the manager of the hotel where I was staying in (it was very easy to get acquainted with people in Tanzania as they tend to have open hearts). He said the hospitality industry was doing extremely well - because of strong economic growth in the country - and I got an impression that opening any hotel in Dar would be a good business as occupancy would be near 100%.

Another man I met, a Tanzanian who had just majored in IT in the UK, had opened up a small automobile importing business to Tanzania from the UK in his spare time. He mentioned that he has to deal with a lot of bureaucracy and red tape, but because his business is now well established in the country, he knows who to talk to in customs and the process flows smoothly.

He told me the last purchase he made was a few BMWs. When I asked about his cost base, he said that he bought one of them on one of the UK's online websites for 1,800 pounds, shipped it for 900 pounds to Tanzania, and paid import dues of approximately 3,600 USD. So all together it comes up at approximately 8,000 USD and he sold it for... 25,000 USD. And according to him that was his average margin!

Impossible you say?

Well, I know for sure that it is possible as similar margins existed in Russia (where I grew up) in the 90s right after the Soviet Union fell apart. Anybody who was at least somewhat entrepreneurial could make substantial amounts of money on literally anything.

That's the beauty of being "early" in an emerging market.

But there was a downside to it, too. The real "Wild West" that formed in the former Soviet empire dictated that entrepreneurs often were involved in different kinds of criminal activity, and it wasn't at all unusual to hear about someone getting kidnapped, murdered or just going to prison. Nowadays, I constantly meet a number of those former "millionaires" who've gone completely broke. As markets advanced, competition strengthened and the people who got used to easy money couldn't keep up.

Coming back to Dar and Tanzania in general... economically, it is starting so low and things have been going so well for the country in the last few years that there seems to be a huge potential for venturesome pioneers... but without the necessity of getting into criminal activity (the order of law here seems to be much more established here than in 1990s Russia). Also, based on what I have seen and heard, government does not meddle excessively into business and while corruption is definitely present, I was told it was manageable.

There is definitely money to be made there for those who can overcome the "African stigma" and will dare to buy a one-way ticket to Dar es Salaam.

It is also worth mentioning that a typical "mzungu" (a "foreigner" in Swahili) normally gets special treatment here in Tanzania just because he/she looks different.

The level of attention I enjoyed (from both sexes) could probably be compared to what a basketball superstar experiences on the streets of American cities: while many people don't necessarily care about basketball, the majority would be at least interested in getting to know him. And that applies both to men and women. Zanzibar, which I'll cover later on, is a little different in this respect as mzungus are abundant in quantity and variety there. But, as a general rule, if you are at least a little extroverted the chances are you will not feel lonely anywhere in Tanzania.

Well, that's all for today. I'll continue discussing my tour in Tanzanian next week as I landed in the beautiful Kilimanjaro region...

Happy travels,

Mark

Tags: tanzania, adventure,