Tanzania intra-SADC trade decline by 15 pc

How easy or difficult in doing business

By Mnaku Mbani

Tanzania is among of the countries in Africa that has received a considerable number of investments from both local and foreign sources over the last decade.

According to Ernst & Young, the country’s Foreign Direct Investment (FDIs) inflows represented its highest level in 2014 given that it attracted slightly $2,142 million compared to its last peak of $2,131 million in 2013.

The country was ranked in the 3rd position in attracting Foreign Direct Investments (FDI) in East Africa in 2014, behind Kenya and Uganda, the E&Y 2015 Africa Attractiveness Survey said.

Tanzania has continued to lead other countries in the East African region in attracting Foreign Direct Investments (FDIs) due to, among others, economic diplomacy it has been pursuing with foreign countries.

In 2014, FDI covered half of the country’s current account deficit and approximately 6.5 per cent of its Gross Domestic Product (GDP).

According to the 2016 Doing Business Report published by the World Bank, Tanzania ranked 139th out of 189 countries, which is a mere 1 position climb up from last year’s 140th position.

Major gains were recorded in trading across border from 181st in 2015 to 180th position in 2015 and dealing with construction permit which gained to 126th from 149th respectively.

According to the minister for foreign affairs, East Africa and international cooperation Dr. Augustine Mahiga, investors are attracted to the country’s commitment to implementing sound macro-economic policies, its effective privatisation programme and rich natural resources.

The veteran diplomat cited the Dangote Cement factory in Mtwara Region as among fruits the country has reaped from the economic diplomacy

However, low levels of industrial development, environmental concerns, lack of transparency and poor compliance with legislation are obstacles to both local and foreign investments.

According to data collected by Doing Business 2016, starting a business in Tanzania requires 9.00 procedures, takes 26.00 days, costs 18.00 per cent of income per capita and requires paid in minimum capital of 0.00% of income per capita.

Globally, Tanzania stands at 129 in the ranking of 189 economies on the ease of starting a business.

Tanzania made starting a business easier by eliminating the requirement for inspections by health, town and land officers as a prerequisite for a business license.

To improve its business environment, the Government launched several large-scale infrastructure projects (port facilities, oil and energy production, gas liquefaction) that were carried out and financed by China (EUR 850 million for a gas pipeline) among others.

The construction of the pipeline was completed in October 2015. This year, the construction of a large port in Bagamoyo was launched, at a cost of USD 11 billion.

The project is jointly funded by China Merchants Holdings International and Oman Investment Fund. A number of new hydrocarbon fields have been discovered and coal reserves have grown from 1.5 to 5 billion tons. This potential should attract an increasing amount of FDI in the coming years.

The mining sector, the oil and gas industry, as well as the primary agricultural products sector (coffee, cashew nuts and tobacco) draw most FDI. The United Kingdom, China, South Africa, the European Union and Canada are the country’s primary investors.

Tanzania has failed to establish itself as a major business hub due to the slumping business enhancement infrastructure over the years.

As in some countries a company registration may need hours or a day maximum, the same feat would tend to take at least three days or more, customarily (Save for exceptional times) in Tanzania.

Kheri R. Mbiro is an Advocate and Partner, Litigation and Arbitration, at Breakthrough Attorneys believes that with the recent discoveries of oil and gas, uranium and other invaluable resources in all corners of the country, Tanzania is an inescapable destination for investors, large and small scale alike.

 A more conducive business environment will bolster these investment ventures as well as supporting and dependent sectors such as labour, transportation, energy and related social services.

“It is without question that the efforts outlined above are positively geared towards strengthening entirely the business environment,” Mbiro says.   

In the aforesaid 2016 report Tanzania is desperately trying to catch up with the neighbouring countries which are boasting far superior business environs.

For example in the 2016 edition of the Report Rwanda has been ranked at 69th, Kenya ranks 108th from 136th in 2015, Uganda ranks 122nd.

Some of the reforms that have helped to easy business environment include launch of the Tanzania Customs Integrated System (TCIS) for speeding up of import and export documentations and accreditation

The Business Registration and Licensing Agency (BRELA) also launched an online portal/platform for business registration, name search and registration (BNRS).

End