FLY ON THE WALL: Why Fastjet is a key case study

Happy New Year to our esteemed readers, and as we welcome the new year (2019), it is time we took stock of the past one with clarity of mind.

It seems that we in Tanzania are extremely poor at handling investment matters. Indeed, the kikokotoo issue (calculation of actuarial social security benefits), and the possible collapse of the low-cost airline Fastjet have assisted us to see the reality on the ground – assuming we are willing and ready to do so.

Be not shocked by the fact that retirees are actually investors who – by virtue of their membership of social security systems – have invested their dues for future benefits.

Being “of, by and for the people,” a democratic government is tasked with overseeing social security players to always ensure that they deliver on their mandate.

But, going by the comments of SSRA director general Irene Isaka, the regulator dropped a clanger – and the government smartly stepped in to salvage the situation.

One sunny morning long ago, we were taking coffee in the lobby of a top-class hotel in Dar es Salaam with Captain (rtd) Balthazar (not his real name) as he waited for a phone call from the ministry of Home Affairs, at that time still under Mr Mwigulu Nchemba.

Capt Baltazar was seeking to meet a senior government official over permits and other authorisations he needed for his airline’s operations.

Without going into details here, Capt Balthazar enumerated the challenges which he had to go through -- and that, he would be forced to close down his operations at the Julius Nyerere International Airport (JNIA) in Dar es Salaam due to demands that amounted extortions.

I assured him that we now were in a business-friendly environment because the new Chief-in-Town was dealing with elements whose only reason for existence was killing the goose that lays the golden eggs.

This was in 2016 – and the Captain was sceptical.

I phoned him in 2017, but couldn’t get him. But he did call back, saying he was in a neighbouring country where he has moved his operations “and jobs” – as he crudely put it – as our business environment was just not friendly enough.

So, here we had ejected an investor – and a Tanzanian investor, mind you – by dragging our feet, being indecisive on investment matters, thereby forcing him to take his investment elsewhere.

A senior foreign ministry official later confirmed as much to me.

Listening to TCAA director general Hamza Johari, I got the impression that he is a dedicated public servant operating in a very difficult environment. What else could he to do regarding the Fastjet thrown the spanner in the works?

Only it was not funny. Fastjet Plc (the UK investor in Fastjet Tanzania) was already preparing to exit the Tanzanian market because – rightly or wrongly – the regulatory environment (landing rights being key), was reportedly working pell-mell to clear the way for the new kid on the block, the revamped Air Tanzania Company Ltd (ATCL).

Is it possible for ATCL to operate side by side with other airline operators? The question should be” would an environment in which Tanzania only has ATCL be of benefit to the ultimate beneficiary, the flying public? The answer is obvious. Airline operations are interdependent to the extent that if Airline A has problems, it calls on Airline B to the rescue; and so on; and so forth...

The presence of Precision Air and Fastjet Tanzania can, therefore, be seen to be good for the air travel sub-sector. Fares will be competitive and services quality enhanced – unlike the case for one dominant operator. Forget the political showmanship under the cover of ndege zetu – our own planes!

What needs to happen is for TCAA to sit down with Fastjet Tanzania and work on the rescue arrangements that Tanzanian investor Lawrence Masha has in mind. After all, when our freshly purchased aircraft was held up in Canada, we did not see the Canadian government intervening on behalf of the unpaid creditors.

What are needed are judicious, well-thought out solutions to challenges. That is what we seem to lack in Tanzania. Instead of tarring Mr Masha black, we should be congratulating and supporting him for investing in his motherland.

Let the ‘new’ Fastjet-Tanzania bring in planes, restart operations and settle its old debts. Anything else is tantamount to a political side shows and brinkmanship which do nothing to boost our ease of doing business environment.