Financial constraints have forced Tanzania to miss out on ownership of the $10 billion Bagamoyo Port and Special Economic Zone project.

Under a three-way partnership signed with Oman and China in 2013, Tanzania was to get an undisclosed shareholding in the project by dint of raising $28 million for compensating landowners who were to be displaced.

But the government managed to raise only $1.5 million and compensated a few of the 2,180 registered residents of the area earmarked for the project. There are other owners of large tracts who do not reside in the area and are yet to be registered for the compensation.

With investors anxious of losing the business opportunities envisaged from the project, the government is now negotiating with the investment partners for them to fund the compensation of land owners. In turn, the government will forego an equity stake in the project and only benefit from taxes on the land and occupancy by the investors.

Minister for Industries and Trade Charles Mwijage told The EastAfrican that the discussions with investment partners also revolve around the legal framework to ensure there would be no conflict between them and the Bagamoyo community.

China Merchants Holdings International (CMHI), a port management firm, is understood to be ready to raise money for the compensation. CMHI managing director Hu Jianhua said in a statement two weeks ago that the company would run Bagamoyo as one of its overseas ports.

"We had not abandoned this project. We were waiting to compensate the people whose land was taken for development of various business programmes," he said.

CMHI said in its report that the Bagamoyo SEZ is part of its global investments. In Africa, the Chinese company has invested in Kenya, Ethiopia, Togo, Nigeria and Djibouti.

The Bagamoyo project framework agreement was signed on March 24, 2013 to enhance competition along the EastAfrican coast and supplement the Tanzanian ports of Dar es Salaam and Mtwara.