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Tanzania

Sekondi Accra

Social conditions in Tanzania are likely to remain calm in 2011, though new and unfamiliar alerts were raised by a brief spasm of violence during the general elections convened on October 31, 2010. President Jakaya Kikwete and the ruling Chama Cha Mapinduzi (CCM) won with 61% of the vote, well below the 80% they claimed in 2005. A low turnout, at 43%, showed a high level of dissatifaction with government and the slow pace of economic development. The election also marked the opposition's strongest results, with Chama Cha Demokrasia na Maendeleo's Willibrod Slaa earning 26.3% of the vote.

While the political situation was less tense in Zanzibar, opposition parties adopted an aggressive tone on the mainland, accusing the National Electoral Commission of fixing the result. Police fired tear gas at protestors in Dar es Salaam as they gathered onto the streets after the count was delayed. On Zanzibar, after the CCM's Ali Mohamed Shein defeated Seif Sharif Hamad, the Civic United Front's candidate for the region's presidency, the two decided to form a government of national unity in order to avoid the violence that marked previous polls.

Having promised to retire in 2015, President Kikwete plans to concentrate on building a legacy as a proponent of economic development. In September 2010, the government signed a deal with Russia's Borodino Group to build a 222 megawatt (MW) hydroelectric dam to try and meet the country's more than 100MW deficit in the coming years. The government also plans to complete an electrical interconnector with Zambia by 2012. With Dar es Salaam playing an increasingly important role in the regional transit trade, the Tanzania Port Authority has started a $650 million dollar project to build a second container terminal by 2014.

A major diplomatic, economic and political challenge facing Tanzania in 2011 is the steady decline in donors financial support. In 2010, donor cut aid budgets by about one-third, slashing $220 million dollars from their committments. In part, this is a reflection of the country's poor performance in transparency rankings and the failure of the government to deliver better standards of governance. Tanzania also performed poorly in the World Economic Forum's Global Competitiveness Report 2010-2011, descending 13 places from the previous year. The report stated that Tanzania's education system and infrastructure were factors impeding efforts to improve competitiveness.

The mining sector has been one of the keys to sustained economic growth over the past decade, but new legislation in April 2010-raising the gold royalty rate, enforcing the local listing of mining companies and increasing the discretionary powers of the mines ministry-caused consternation among investors. Nevertheless, the largest gold producer, Barrick, which has four mines producing more than 700,000 ounces annually, has agreed to the local listing requirement. In early 2010 it established a new entity, African Barrack Gold, currently listed in London, with plans of listing in Dar es Salaam and Johannesburg. Other companies have announced new investments: one that should lead to the expansion of the Williamson diamond mine and the other involving the launch of a new gold mine in the region of Mbeya.

After real GDP growth declined to 5.5% in 2009, the International Monetary Fund (IMF) forecast it would recover to 6.5% in 2010 and 6.7% in 2011. Inflation increased 6.6% in August 2010, up from 6.3% the previous month, due to the rise in food prices during the month of Ramadan. The rise in inflation coincided with forecasts of poor rainfalls, indicating the risks of food shortages. A ban on exports of food crops is likely to be maintained for some time to come.

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Tanzania maintains an embassy in the United States at 1232 22nd St NW, Washington, DC 20037 (tel. 202-939-6125).
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