Tanzania is a country with a wealth of untapped investment potential. A stable political climate, a young and rapidly growing population, and abundant natural resources well-position Tanzania for sustained economic growth. Its strategic location in East Africa makes it an ideal hub for trade and commerce. As a gateway to the broader region, it creates access to significant markets and opens even more potential investment opportunities.
The recently concluded Tanzania edition of the ALN-ready business roadshow aimed to provide an effective platform for dialogue, providing a candid overview of opportunities, challenges, risks and rewards of investing and doing business in the country. This edition highlighted how critical commercial and policy topics can promote partnerships and encourage deal-making. This supports Tanzania in establishing itself as a regional economic hub and a gateway to East and Central Africa.
Changes in Approach to Investment
Recognising that bolstering investment in Tanzania is an invaluable opportunity for investors and the country’s social and economic development, the new government under President Samia Suluhu Hassan has turned the tide on its diplomatic, economic and political approaches. These changes continue to play a key role in opening up the country and encouraging important conversations around investor relations and foreign direct investment.
Strengthening Regional Trade Relationships
Steps have included relaxing labour and immigration requirements to accommodate expatriate workers in specialised fields, a shift away from authoritative and imposing tax collecting methods, harmonising investment laws and policies to reduce duplicative licencing and permitting requirements to ease market entry and expansion for investors and empowering the Tanzania Investment Centre (TIC) as the primary channel for investment into the country.
Furthermore, Tanzania has made a vital move to enhance its relationship with its neighbours, including Kenya and Uganda. This is vital for regional trade and the stability of the East African Community, which has made significant strides in creating a common market in the region which promotes the ease of movement of goods and people across the region. Tanzania is also a member of the SADC and acts as a link between Eastern and Southern Africa ; unlocking the SADC bloc’s trade potential remains a key priority.
Key Sectors for Investment in Tanzania
The policy changes continue to shape the country’s investment attractiveness in key sectors such as natural resources, agriculture, tourism, projects and infrastructure, financial services, energy, and manufacturing among others. The government’s pledge to improve the investment climate suggests it is willing to bottom out on the core issues setting back investments. There is renewed hope that this will translate into the necessary policy reforms to reduce the uncertainty currently affecting certain sectors, which should, in turn, accelerate the furtherance of the country’s economic and social development objectives while capitalising on some factors that were previously undermined, such as the use of Public-Private Partnerships to actualise major projects that are in the country’s economic plans. These types of partnerships will help to create more collaboration between the public and private sectors, which has been lacking in previous years.
Tanzania’s vibrant and growing economy presents opportunities across sectors. The country also has a budding start-up scene. Fintech, health tech, and agri-tech opportunities are on the rise. With a fast-growing young population, high level of social cohesion, strategic location and access to EAC and SADC consumers, Tanzania is optimally positioned to unleash a wealth of returns to investors. – Shemane Amin, Partner, ALN Tanzania
The Role of the Tanzania Investment Centre in Enhancing Investment
According to the most recent report from the TIC, investment into the country in the first quarter of 2023 was almost triple that in 2022.
The TIC was established in 1997 as Tanzania’s primary agency to coordinate, encourage, promote, and facilitate investment in the country and advise the government on investment policy and related matters. It has recently undergone significant reform under a new leadership. The Government’s objective is for the TIC to be the primary and central facilitator of foreign and domestic investment in Tanzania.
The TIC plays a key role in easing how businesses are set up in the country by coordinating, encouraging, promoting, and facilitating investment in Tanzania and advising the government on investment policy and related matters. Importantly, it provides the certificate of incentives to investors, in relation to fiscal and non-fiscal incentives, which offer substantial benefits to investors. Besides providing the certificate of incentives, the TIC also strives to offer a one-stop shop for important services that businesses may need. They have brought together 12 government institutions currently providing services, such as the Ministry of Labour, the Ministry of Lands, the Business Registration and Licensing Agency, the Tanzania Bureau of Standards, Tanzania Electric Supply Company, National Identification Authority and National Environment Management Council, among others.
The certificate of incentives plays an important role in investors accessing fiscal and non-fiscal incentives. For businesses importing capital goods, there is a 75% reduction in the cost of import duty. For non-fiscal incentives, there is the ease of acquiring work permits and a one-stop facilitation centre where an investor can access all the services they need. – Gilead Teri, Executive Director, Tanzania Investment Centre
In addition to stimulating local and foreign investments, the TIC is also responsible for advising the Government on investment-related matters and creating and maintaining a positive climate for private-sector investment. It acts as a vital instrument for fostering a positive climate for investing in the country, especially now that the government and the private sector are actively engaging each other to find the best solutions to promote the ease of doing business in Tanzania. The organisation also ensures that it is a reliable partner for investors in their overall business journey, where it can offer aftercare services for registered investors. This is one of the attractions Tanzania offers to attract foreign direct investment.
A Different Approach to Governance and Policy
Economically, Tanzania is focusing on promoting economic growth and development through infrastructure projects, such as the development of ports and the expansion of the country’s road, rail and airport network. To achieve these objectives, the country is engaging with the private sector more and at an earlier stage to be able to have the most effective outcome. Investors can therefore expect to see increased stakeholder engagement and access to government to continue, as well as the mobilisation of efforts to bring clarity to the regulatory regime, enabling the private sector to operate in a more conducive environment.
The government is more open to bringing the private sector into the conversation from the start, which has helped form a long-term partnership. We are seeing more private sector experts taking up roles in key Government positions that will act as investment funnels for the country. – Santina Benson Majengo, Executive Director, CEO Roundtable Tanzania
Diplomatically, the country has moved to restore relations through economic diplomacy to ensure they do not exist in isolation. To realise its objectives, Tanzania is aware that it must build partnerships, both new and revitalise existing ones. By enhancing these relationships, investors are able to regain their trust in the country’s business landscape as well as the government’s commitment to easing the ease of doing business.
Increasing Investor Confidence and Large-scale Investments
The cumulative effect of these efforts, some of which are still being implemented, is steadily increasing investor confidence, as evidenced by several large-scale investments across sectors and the return of mining and oil gas majors, among others, to the negotiating tables. This is in the wake of the announcement of major foreign investment projects, which are set to propel the country’s economic growth, including the USD 40 billion LNG project that will make it the region’s LNG giant with plans to develop its 57.54 trillion cubic feet of gas that has already been discovered, by 2028. These institutions will help to bolster investor confidence and ensure that Tanzania achieves its economic goals.
Tanzania’s energy sector has a high potential for private sector participation in PPPs. A key area where these partnerships can thrive is the LNG project which will be significant for energy production in the country. The project will have an investment potential of USD 30 – 40 billion in the next 20 years. – John Ulanga, Regional Director, TradeMark Africa
With various institutions such as Moody’s recently giving the country a positive credit rating score and the IMF also indicating that it is set to become East Africa’s major economic hub in ten years, Tanzania remains a top investment destination to consider in Africa.