Investment climate in Tanzania

Geographical location

Tanzania is found in the Eastern Africa region and has a long Indian Ocean Coast.  Six land locked countries depend on Tanzania ports for their imports and exports. The country has   world renowned tourist attractions that include Serengeti, Kilimanjaro, Ngorongoro and the Spice islands of Zanzibar. The country has also natural resources, a sizeable domestic and sub regional market; a wide local raw materials supply base; abundant and inexpensive skills, assurance of personal safety, warm friendly people and a suitable market policy orientation

Investing in Tanzania

  • Tanzania is a gate way for Eastern, Southern and Central Africa due to her favourable geographical location.
  • Unparalleled political stability
  • Lucrative investment opportunities in infrastructure, privatisation and value adding facilities.
  • Business-friendly macroeconomic stability
  • Investment guarantees and settlement of disputes.
  • Tanzania Investment Centre offers a one stop-shop
  • A well-balanced package of incentives to investors

Regulatory framework

Investment in Tanzania is regulated by the Constitution of the United Republic of Tanzania and Tanzania Investment Act, 1997 (No. 26 of 1997).

Economy

Tanzania has gone through a number of economic and structural reforms that has enabled the country to achieve stable and high economic growth performance averaging 6.5% per annum over the last decade. The performance of the economy has been high due to increased public consumption and positive growth rates in construction, communication, financial services, mining sectors and other sectors. However agriculture that provides livelihood to about 70% of households has continued to show slower growth. In 2016/17 budget the government high priorities were   in the areas of infrastructure development with the aim of the supporting the economic development programs.  The population growth of over 3% per annum has however neutralised the impact of the economic growth on the country’s poverty eradication efforts. The poverty rate has declined to below to 28% in 2015.    Tourism is the top foreign exchange earner for the country followed by minerals. Tourism earned the country over US$ 2 billion.

Inflation

Inflation stood at 5% in December 2016  and it  is projected to remain at the same level in the second half of 2016/17 according to Bank of Tanzania Monetary Policy Statement February 2017.

Ease of doing business

Overall, Tanzania ranks 139 out of 189 economies in “Starting a Business” as per the Ease of Doing Business Report, 2016. Poor access to finance, corruption and inadequate infrastructure are seen as the largest barriers to doing business. In his regard the Tanzanian government  named these sectors as some of the main focus areas in the 2016/17 budget.

Political

Tanzania has enjoyed peace since it attained independence in 1961 and has had five democratically elected Presidents. The current President   Dr. John Pombe Magufuli was elected in 2015.  Transfer of power from one President to another has been quite smooth.

Key development challenges

Tanzania faces the following developmental challenges;

  • Lack of adequate infrastructure
  • Improving the business environment,
  • Increasing agricultural productivity
  • Investing in value addition,
  • Improving service delivery
  • Management of urbanization.

Urbanisation rate

The population was projected at 50 million in 2016 by Tanzania National Bureau of Statistics. According to the World Factbook (CIA) 31.6 % of the population of Tanzania lived in urban areas in 2015. The urbanisation rate growth for period 2010-15 was estimated at 5.36%

Corruption index

According to Transparency International Tanzania score was 30 and ranked 116 least corrupt nations out of 176 countries. Tanzania is therefore among the countries in Africa with high corruption levels.  Since assuming office in November 2015, President Magufuli is determined to tame corruption and improve the public sector performance levels. The President has already made some progress.

Security

Tanzania is a reasonably secure country for foreign visitors but still one needs to take necessary precautions for your personal security.

Unemployment and skilled labour

The 2014 Integrated Labour Force Survey showed unemployed at 22.2% on the mainland. It stood at 17.8% in rural areas and about 40% in Dar es Salaam. Lack of adequate skilled labour is among major constraints an investor faces when operating in Tanzania.

Assistance to foreign investors

The government has favourable attitude towards current and potential investors in Tanzania .The Tanzania Investment Centre (TIC) was established with a key  role of coordinating , encouraging , promoting and facilitating  investment in Tanzania and to advise the Government on investment policy and related matters. The agency therefore assist investors to obtain permits and authorization required to set up and operate investments in Tanzania.

Restrictions on Foreign investment

According to the Land Act of 1999, all land shall continue to be public land and remain vested in the President as trustee for and on behalf of all the citizens of Tanzania. The law recognizes three types of land in Tanzania namely General land, Village land and reserved land. The General land is a surveyed land usually located in urban and peri-urban centres. Village land is usually land in villages and within villages in rural Tanzania. Some village land has been surveyed but the majority of the land is un-surveyed. Village land cannot be used for investment until it is transferred into general land. Reserved land includes that reserved for forestry, National parks, and public recreation grounds.  Access to General land is rather complex and Tanzania Investment Centre is available to facilitate the process. With permission from government investors can occupy land for investment purposes.

Remittance Policies

There are no conditions for transfers of net profits, repayment of foreign loans, royalties, fees charged for foreign technology, and remittance of proceeds provided the transfer is adequately supported.

International Arbitration

Tanzania has entered into bilateral agreements with various countries relating to arbitration. The corresponding countries include Switzerland, Germany, Netherlands, United Kingdom, Sweden, Denmark, Egypt, Korea, Mauritius, Malawi and Zimbabwe. In addition Tanzania has two principal arbitration bodies the Tanzania Institute of Arbitrators (TIA) and the National Construction Council (NCC) each with its separate set of arbitral rules.  TIA was established in accordance with the Arbitration Act and NCC is a statutory body created under the National Construction Council Act, 1979. Investors are however free to refer international investment and commercial disputes to international arbitration bodies such as the International Centre for Settlement of Investment Disputes (ICSID), the International Chamber of Commerce (ICC) and the London Court of International Arbitration (LCIA).

Intellectual Property Rights

The Patents in Tanzania is governed by Patents Act No.1, 1987, as amended by Acts Nos. 13 and 18 of 1991. Tanzania has also ratified WIPO Convention, 1967 1, Patent Cooperation Treaty (PCT) 1970 2, The Protocol on Marks within the Framework of African Region Industrial Property Organization (the Harare Protocol), 1993) 3, Agreement on the Creation of the African Regional Industrial Property Organization (ARIPO), 1979 4, Paris Convention 1883–1967 5; and “Agreement on Trade Related Aspects of Intellectual Property Rights (Annex 1C of the Marrakesh Agreement Establishing the WTO 1994”.

The investment climate in Tanzania has been summarized to inlcude the following

Tanzania Vision 2025

Zanzibar Vision 2020

Investment Opportunities in Tanzania

Supporting organizations

Tax climate

Investment Facilitation

Business Environment

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