Investment climate in Tanzania

 

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. Inflation was at 6.5% in January 2016 mainly due to higher domestic food prices and the depreciation of the Tanzanian shilling.  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.

Why invest 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

Doing business in Tanzania

The highlights of World Bank score of doing business in Tanzania is summarised as follows;

Topic World Bank 2017 rank World Bank 2016 rank Change
Overall 132 144 12
Starting a business 135 127 -8
Dealing with Construction Permits 136 139 3
Getting electricity 87 83 -4
Registering property 132 133 1
Getting credit 44 152 108
Protecting Minority Investors 145 145  
Paying taxes 154 146 2
Trading across the boarders 180 180  
Enforcing contracts 59 60 1
Resolving insolvency 100 98 2

The country made some improvements in a number of areas.

 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).

Population

The last population census of 2012 showed a population of 44 people. The population has increased four times from 12.3 million in 1967 to estimated population of  48.8 million in 2015. The growth rate was estimated as 2.7% in 2015. The population of Tanzania is therefore projected at 52 million   people in January 2017.

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%

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.

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 in Tanzania is 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 in 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 obtain 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 World Intellectual Property Organisation (WIPO) Convention, 1967, Patent Cooperation Treaty (PCT) 1970 , The Protocol on Marks within the Framework of African Region Industrial Property Organization (the Harare Protocol), 1993), Agreement on the Creation of the African Regional Industrial Property Organization (ARIPO), 1979, Paris Convention 1883–1967; and “Agreement on Trade Related Aspects of Intellectual Property Rights (Annex 1C of the Marrakesh Agreement Establishing the WTO 1994”.

National Parks

The Tanzania National Park manages all the wildlife parks and reserves in Tanzania. The country’s   world renowned tourist attractions  include Serengeti, Kilimanjaro, Ngorongoro and the Spice islands of Zanzibar.

Natural Resources

The country natural resources include natural gas, gold, diamond , nickel. copper, cobalt, lakes , mountains , beaches and islands among others.

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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