The Tanzanian government’s uncompensated appropriation of Biwater assets in Dar es Salaam, and the termination of its contract to run the water system, has been cheered on by some left-wing NGOs in the West. But whatever the rights and wrongs of the situation - and there may well be blame on both sides - one thing's for sure: international investors will be wary of putting money into Tanzania. That left-wing NGOs like the World Development Movement have been campaigning against the situation being resolved at the International Centre for the Settlement of Investment Disputes (they want Biwater to give in) will similarly act as miserable mood music to investors.

Contrast this to Kenya. In the June 2006 issue of Business in Africa (East Africa Edition), the CEO of Celtel Kenya Gerhard May says: "The investors have confidence in the country, Celtel Kenya and the Celtel-MTC group. The political risk is very low. Kenya is unique. There are other African countries where if the government loses a referendum, things become different."

Kenya will continue to be the investment capital of East Africa. Fortunately spared the level of 'ujamaa' (Swahili for socialism) under Tanzania's post-independence leader Julius Nyerere, it is seen to offer a safer place to do business.

But if Tanzania's failure to attract the investment coming into East Africa breeds a wave of resentment towards Kenya, it could destabilise the East African Community customs union (which broke down for similar reasons in 1972) and hold back moves to open up trade with East Africa’s neighbours.

Let’s hope then that Kenya's economic success at being a magnet for investment - the enterprise centre of East Africa - is seen not as a threat but as an example.