Investing in Tanzania
Initiatives by the Tanzanian Government to boost foreign investment in the country have reaped rewards, but the country continues to face a number of challenges.
Over the past 20 years, the Tanzanian Government has implemented major economic reforms to liberalise trade, including enhancing the role of the private sector and creating the Tanzania Investment Centre (TIC) to promote, facilitate and reduce restrictions on investments. This new institutional and legal framework has generated a steady growth in GDP and resulted in an increased inflow of foreign direct investment (FDI).
In 2014, Tanzania attracted US$2,142m of FDI – a rise of 14.5% – thanks in part to gas discoveries, and the efforts of the TIC. For the first time since the Tanzania economic crisis of 2005-07, the country is once again the leading FDI destination in the East African Community (Burundi, Kenya, Rwanda, Tanzania and Uganda).
In recent years, the Government has sought to attract investment in the mining and agricultural sectors, including the Kilimo Kwanza (Agriculture First) initiative and the Southern Agricultural Growth Corridor of Tanzania (SAGCOT) partnership. Both sectors are eligible for 100% capital expenditure deductions.
Support from the United Nations, particularly UNCTAD and UNDP, in terms of strategic policy advice and practical guidance, is invaluable as the country seeks to implement the New Economic Model and achieve the Tanzania Development Vision 2025.
Addressing the issues
Despite the increasing inflows of FDI, Tanzania needs to attract and retain more investors. To do this it must tackle a number of challenges, including the lack of adequate and reliable power, poor infrastructure and the shortage of designated areas for investment projects, such as farming land and industrial plots. There is also much work to be done on transforming negative perception of Africa as a place to do business.
Some investors are hesitant to invest due to uncertainties around the taxation regime, regulation and compliance, and are unclear about the rules around Public Private Partnerships. Tanzania also faces a lack of skilled labour, fundamental to certain investment sectors.
The Government has made efforts to tackle these challenges in various ways, including attracting infrastructure investment to create quality employment, establishing a land bank to attract investors in the energy sector, and improving awareness of Tanzania’s investment climate and available opportunities.
For more information, contact:
Nexia SJ, Tanzania
T: +255 221 208 06/7