Tanzania recently entered a significant 30-year port agreement with DP World, a state-owned port operator based in Dubai. This partnership grants DP World operational rights for a section of the Dar es Salaam port, sparking controversy and protests from opposition factions and human rights organizations after Tanzania’s parliament approved the deal on June 10, 2023. Critics argue that the terms in the Host Government Agreement (HGA) and Lease and Operation Agreement disproportionately favour DP World over national interests.
Host Government Agreements (HGAs) and Lease and Operation Agreements are essential legal instruments in foreign investments, particularly in sectors like energy, mining, and infrastructure. These documents define the terms governing the operations of foreign entities within a host country, covering tax regulations, environmental protection, employment, local community development, and dispute resolution mechanisms.
Under this agreement, DP World will lease and operate four out of twelve berths at the Dar es Salaam port. The goal is to enhance the port’s efficiency and capacity, reducing cargo clearance times and accommodating up to 130 vessels each month, up from the current 90. DP World also commits to investing $250 million in the port over the next five years.
Tanzania has three significant seaports: Dar es Salaam, Tanga, and Mtwara. Dar es Salaam handles about 95% of the country’s international trade, serving landlocked nations like Zambia, the Democratic Republic of Congo (DRC), Burundi, Rwanda, Malawi, Uganda, and Zimbabwe.
The Port of Dar es Salaam faces challenges such as prolonged cargo clearance, capacity constraints, insufficient connecting trains and wagons, poor road and railway infrastructure, and persistent congestion. Addressing these issues is crucial for the country, making the agreement with DP World pivotal.
Despite its challenges, the port has improved significantly, ranking 312th in the World Bank’s 2022 Container Port Performance Index (CPPI). It surpassed Mombasa, which ranked 326th among 348 global ports. This elevation solidified Dar es Salaam’s position as the preferred choice for East African shippers, a progress attributed to recent infrastructural improvements.
The port’s progress was aided by a $345 million credit from the International Development Association and a $12 million grant from the United Kingdom’s Department for International Development, facilitated by the World Bank in 2017.
With the DP World agreement, the seaport is expected to expand its operations, benefiting the country and neighbouring countries like DRC and Zambia, known for critical minerals like copper and cobalt. DP World’s Chairman and Chief Executive, Sultan Ahmed Bin Sulayem, stated that the port would strengthen its role as a maritime gateway for these minerals, crucial for green energy production.
