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By Alexandra Wexler | June 6, 2018 5:30 a.m. ET | Wall-Street Journal
DAR ES SALAAM, Tanzania—A populist president nicknamed “the Bulldozer” is cracking down on opponents and spooking foreign investors, shifting one of Africa’s more stable democracies onto an authoritarian path.
After winning Tanzania’s presidency in 2015—in an election marked by fraud allegations— John Magufuli garnered praise for ridding the public payroll of nonexistent workers, cutting public spending and making primary and secondary education free. He fired public officials on live television for failing to recall budget figures off the tops of their heads and was applauded for his aggressive anticorruption stance, securing huge support in conservative and rural communities of this mineral-rich East African nation.
But for the past year, the 58-year-old president, who got his nickname during his previous tenure as minister of works, has cracked down on dissent and imposed a raft of punitive taxes on foreign companies.
Across this tourist-friendly nation famed for safaris and beach vacations, harsh new defamation laws have been enacted and media outlets have been closed. Members of the opposition party and a journalist investigating a raft of execution-style murders have disappeared. Pregnant girls and teenage mothers have been banned from attending public schools.
Chilling EffectForeign investment in Tanzania has continued its slide after President JohnMagufuli took office in 2015.
Known for his detailed approach to public administration and bureaucratic efficiency, Mr. Magufuli appears to see himself as part of Africa’s rising cadre of autocratic technocrats: a group led by Rwandan President Paul Kagame, who has ruthlessly centralized political power while improving his country’s economy and governance.
Some analysts and investors warn that the Tanzanian president’s approach is imperiling what has been one of sub-Saharan Africa’s fastest-growing economies. The World Bank has downgraded growth estimates. More ominously, new regulations on foreign companies are pushing some of the country’s largest investors toward the door. Foreign direct investment has fallen 18% since 2014.
In May, the government canceled 11 mining licenses, including an undeveloped nickel project owned jointly by Glencore PLC and Canada’s Barrick Gold Corp.
Barrick subsidiary Acacia Mining PLC—Tanzania’s biggest gold miner and the country’s largest source of export revenue—says it is looking to sell a stake in some or all of its assets in the country after the government accused it of underreporting production and slapped the company with a $190 billion bill for unpaid taxes, penalties and interest—four times the country’s annual gross domestic product. Acacia has denied wrongdoing.
Other populist economic policies have dented investor sentiment, including forcing foreign telecommunications companies to list on the local Dar es Salaam exchange. Vodacom Tanzania PLC, part of South Africa’s Vodacom Group , fulfilled the requirement in August in Tanzania’s biggest initial public offering, raising 476 billion Tanzanian shillings ($210 million).
A champion of infrastructure spending, Mr. Magufuli has been criticized for his acute interest in costly large-scale projects, including the rebuilding of the national carrier, Air Tanzania. In late 2016, Air Tanzania purchased a Boeing 787 Dreamliner—which has a list price of $225 million—set to be delivered this year. Some analysts have questioned the cost and utility of such a purchase for an airline that currently operates only within Tanzania and the neighboring island nation of Comoros.
Mr. Magufuli’s moves, which he says are gradually resetting the balance between foreign companies and taxpayers, are popular with voters, according to some analysts and local polls. Some political analysts forecast more populist legislation in coming months.
Multiple officials in the Tanzanian government didn’t return requests for comment.
The president joins a growing list of African leaders who have embraced strongman tactics to produce faster growth and more-effective governance. In nearby Rwanda and Ethiopia, autocratic governments have ruthlessly improved efficiency and economic output while muzzling dissent. Other resource-rich nations including Zambia and the Democratic Republic of Congo have switched to more-confrontational tactics to renegotiate contracts with miners, with limited success.
“There are very few checks and balances left to rein [Mr. Magufuli] in,” said Ty McCormick, an analyst at political-risk advisory firm Eurasia Group.
This year, a Tanzanian activist based in Los Angeles called for nationwide antigovernment protests on Union Day, which celebrates the merger of Tanganyika and Zanzibar to form Tanzania on April 26.
The appeal was met with vitriol from the government. Officials threatened to charge protesters with treason, and one police chief in the capital, Dodoma, said any demonstrators would be “beaten like stray dogs.” The protests never materialized.
“We should not allow ourselves to be used by our enemies,” Mr. Magufuli said in a speech on Union Day. “We will not have mercy on anyone—inside or outside the country—who tries to destabilize us.”
The crackdown has sent shock waves through Dar es Salaam’s political and business classes. Opposition leaders and U.S.-based rights groups claim Mr. Magufuli is rapidly destabilizing democracy. Catholic bishops warn that continued political repression will undermine peace and unity. Western diplomats talk privately of a rapid erosion of institutions.
“The rise in politically related confrontations and violence is concerning,” the U.S. Embassy said in February, after a leading opposition party politician was kidnapped and killed. No one has been charged or held responsible.
Private-sector executives say government officials have become terrified of making decisions, for fear of incurring his wrath. Raising taxes on foreign companies has proven popular with many Tanzanians, about two thirds of who live in poverty.
“It’s a chess game, and the end goal is for the government to extract more money from the mining companies,” Mr. McCormick said.
For now, Tanzania’s smaller foreign investors are waiting to see if the government or mining companies blink first.
“Our in-country development has come to a complete standstill while we wait on the government to start considering mining and prospecting licenses,” said Lucas Stanfield, general manager for development at Peak Resources Ltd., a West Perth, Australia-based miner that is developing a rare-earths mine to produce metals like neodymium—used in the batteries of cellphones and electric vehicles. “[Investors] are losing confidence in the country.”
Write to Alexandra Wexler at alexandra.wexler@wsj.com
DAR ES SALAAM, Tanzania—A populist president nicknamed “the Bulldozer” is cracking down on opponents and spooking foreign investors, shifting one of Africa’s more stable democracies onto an authoritarian path.
After winning Tanzania’s presidency in 2015—in an election marked by fraud allegations— John Magufuli garnered praise for ridding the public payroll of nonexistent workers, cutting public spending and making primary and secondary education free. He fired public officials on live television for failing to recall budget figures off the tops of their heads and was applauded for his aggressive anticorruption stance, securing huge support in conservative and rural communities of this mineral-rich East African nation.
But for the past year, the 58-year-old president, who got his nickname during his previous tenure as minister of works, has cracked down on dissent and imposed a raft of punitive taxes on foreign companies.
Across this tourist-friendly nation famed for safaris and beach vacations, harsh new defamation laws have been enacted and media outlets have been closed. Members of the opposition party and a journalist investigating a raft of execution-style murders have disappeared. Pregnant girls and teenage mothers have been banned from attending public schools.
Chilling EffectForeign investment in Tanzania has continued its slide after President JohnMagufuli took office in 2015.
Known for his detailed approach to public administration and bureaucratic efficiency, Mr. Magufuli appears to see himself as part of Africa’s rising cadre of autocratic technocrats: a group led by Rwandan President Paul Kagame, who has ruthlessly centralized political power while improving his country’s economy and governance.
Some analysts and investors warn that the Tanzanian president’s approach is imperiling what has been one of sub-Saharan Africa’s fastest-growing economies. The World Bank has downgraded growth estimates. More ominously, new regulations on foreign companies are pushing some of the country’s largest investors toward the door. Foreign direct investment has fallen 18% since 2014.
In May, the government canceled 11 mining licenses, including an undeveloped nickel project owned jointly by Glencore PLC and Canada’s Barrick Gold Corp.
Barrick subsidiary Acacia Mining PLC—Tanzania’s biggest gold miner and the country’s largest source of export revenue—says it is looking to sell a stake in some or all of its assets in the country after the government accused it of underreporting production and slapped the company with a $190 billion bill for unpaid taxes, penalties and interest—four times the country’s annual gross domestic product. Acacia has denied wrongdoing.
Other populist economic policies have dented investor sentiment, including forcing foreign telecommunications companies to list on the local Dar es Salaam exchange. Vodacom Tanzania PLC, part of South Africa’s Vodacom Group , fulfilled the requirement in August in Tanzania’s biggest initial public offering, raising 476 billion Tanzanian shillings ($210 million).
A champion of infrastructure spending, Mr. Magufuli has been criticized for his acute interest in costly large-scale projects, including the rebuilding of the national carrier, Air Tanzania. In late 2016, Air Tanzania purchased a Boeing 787 Dreamliner—which has a list price of $225 million—set to be delivered this year. Some analysts have questioned the cost and utility of such a purchase for an airline that currently operates only within Tanzania and the neighboring island nation of Comoros.
Mr. Magufuli’s moves, which he says are gradually resetting the balance between foreign companies and taxpayers, are popular with voters, according to some analysts and local polls. Some political analysts forecast more populist legislation in coming months.
Multiple officials in the Tanzanian government didn’t return requests for comment.
The president joins a growing list of African leaders who have embraced strongman tactics to produce faster growth and more-effective governance. In nearby Rwanda and Ethiopia, autocratic governments have ruthlessly improved efficiency and economic output while muzzling dissent. Other resource-rich nations including Zambia and the Democratic Republic of Congo have switched to more-confrontational tactics to renegotiate contracts with miners, with limited success.
“There are very few checks and balances left to rein [Mr. Magufuli] in,” said Ty McCormick, an analyst at political-risk advisory firm Eurasia Group.
This year, a Tanzanian activist based in Los Angeles called for nationwide antigovernment protests on Union Day, which celebrates the merger of Tanganyika and Zanzibar to form Tanzania on April 26.
The appeal was met with vitriol from the government. Officials threatened to charge protesters with treason, and one police chief in the capital, Dodoma, said any demonstrators would be “beaten like stray dogs.” The protests never materialized.
“We should not allow ourselves to be used by our enemies,” Mr. Magufuli said in a speech on Union Day. “We will not have mercy on anyone—inside or outside the country—who tries to destabilize us.”
The crackdown has sent shock waves through Dar es Salaam’s political and business classes. Opposition leaders and U.S.-based rights groups claim Mr. Magufuli is rapidly destabilizing democracy. Catholic bishops warn that continued political repression will undermine peace and unity. Western diplomats talk privately of a rapid erosion of institutions.
“The rise in politically related confrontations and violence is concerning,” the U.S. Embassy said in February, after a leading opposition party politician was kidnapped and killed. No one has been charged or held responsible.
Private-sector executives say government officials have become terrified of making decisions, for fear of incurring his wrath. Raising taxes on foreign companies has proven popular with many Tanzanians, about two thirds of who live in poverty.
“It’s a chess game, and the end goal is for the government to extract more money from the mining companies,” Mr. McCormick said.
For now, Tanzania’s smaller foreign investors are waiting to see if the government or mining companies blink first.
“Our in-country development has come to a complete standstill while we wait on the government to start considering mining and prospecting licenses,” said Lucas Stanfield, general manager for development at Peak Resources Ltd., a West Perth, Australia-based miner that is developing a rare-earths mine to produce metals like neodymium—used in the batteries of cellphones and electric vehicles. “[Investors] are losing confidence in the country.”
Write to Alexandra Wexler at alexandra.wexler@wsj.com
