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An Overview of the
Investment Climate
&
Investment Potentials
in Tanzania
WHY INVEST IN TANZANIA?
TANZANIA
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Tanzania’s Advantages:
Tanzania’s inherent advantages
Government’s Commitment
Good Governance & Political Stability
Predictable Investment Climate
Preferred Investment Destination
Strategic Geographical Location
Gateway to Potential Markets
Attractive Investment Regime
Strong Public-Private Partnerships & Interactions
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TANZANIA’S ECONOMIC OVERVIEW
Population:
44.9 Million (2012.)
Population Growth
Rate
2.7 %(2012 )
GDP Per Capita
$ 652 (2012)
Annual Average Real
GDP Growth Rate 7.0%
(2003 - 2012)
Annual Average
Inflation Rate 8.6 %
(2003 -2012)
Agriculture Employs 80%
of the Workforce
Main imports:
Capital goods (i.e.. machinery and equipment),vehicles, petroleum
products, agricultural inputs, raw materials and other consumer goods
Main exports:
Agricultural products,(such as cashew nuts, tea ,coffee, cotton),cut flowers &
vegetable, minerals, fish and manufactured goods.
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<1>. GOVERNMENT’s COMMITMENT FOR
INVESTMENTS & PRIVATE SECTOR DEVELOPMENT
H.E Dr. Jakaya Mrisho Kikwete
President
United Republic of Tanzania
H.E Mizengo K.P Pinda (MP)
Prime Minister
United Republic of Tanzania
H.E Dr. Mary M. Nagu (MP)
Minister of State
( Investment & Empowerment )
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The Government is committed to economic growth
through private sector development
• Ever since the mid 1990s Tanzania has
followed a path of liberalisation and
privatisation. It has welcomed foreign
investment and managed to attracted
more FDI than Kenya or Rwanda,
particularly in areas such as agriculture,
tourism, mining and FMCG
• The government is continuing to pursue
Public Private Partnerships (PPP) for
infrastructure, agriculture, energy and
other strategic investments. Privatisation
and modernisation of key assets is a main
focus area
• Policies and laws defining incentives for
investment are continuously being updated
and improved
• Relative to the rest of Africa, Tanzania
continues to be competitive in the World
Bank’s Doing Business Index. In the
category “enforcing contracts“ Tanzania is
the best performing country in SubSaharan Africa
Source: World Bank; Doing Business Index 2012;
Enforcing Contracts (Doing Business Index 2012)
Ranking of Sub-Saharan African countries
Foreign Direct Investment (FDI), USD billion,
2000-2010
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<<1>> Tanzania is one of the most open and
stable democracies in Africa
<2>. Tanzania: Governance & Political Stability
• Tanzania
is
a
stable,
multiparty
democracy with a Competent Executive
under President, Democratic Parliament
and An Independent Judiciary.
Ranking of countries in Mo Ibrahim
Governance Index, 2011, (Sore/100)
• Presidential elections are held every 5
years. The current President will be
stepping down in 2015, followed by the
tradition of free and fair elections between
different candidates and parties
• Became independent in the early 1960s.
Since then, we been without civil wars or
ethnic rivalries. High Observant to Good
governance practices and Freedom of
Expression where; Media, Civil Societies
and opposition parties are able to operate
freely and challenge the ruling party openly.
Ranking of countries in Global Press Freedom
Index, 2011, Rank
• According to Transparency International,
Tanzania ranks as one of the least corrupt
countries in the region
Source: Mo Ibrahim Foundation, Press Freedom Index 2011
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<3>. Tanzania: fastest growing Economy
•
•
With GDP growth averaging 7% per year, Tanzania is
one of the fastest growing economies in East Africa
Other growth indicators over the last decade:
– The number of tourists to Tanzania has grown
by more than 70% to 780,000
– Consumption expenditure has grown by 96%
– The number of cell phone subscribers has
increased from 110,000 to 21 million
– FDI of more than US$5billion was invested in
the countries booming agriculture, mining,
FMCG and other industries
Average annual GDP growth, %, 2001-2010
Dar es Salaam
Number of tourists visiting Tanzania, thousands
+175%
Source : World Bank
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<4>. Predictable Fiscal Investment Regime
Due to its Predictable Fiscal Investment Regime, there is increasing number of
foreign direct investments in the country. Meanwhile, economic and structural
reforms have led to substantial progress in establishing a functioning market
economy, making it among the Top 10 fastest-growing economies in the world.
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<5>. Tanzania Ranked as #1 Investment
Destination for Corporates in the EAC
Source: RMB Global Markets Data – September 2013
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Trend of FDI flows into East African
Countries (US $ Million)
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<6> Tanzania is among Top 10 Most
Attractive Investment Destinations in Africa...
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< 7>. Country’s Statistical Potentials
based on the World Investment Trends
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World Investment Trends cont’d..........
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World Investment Trends cont’d..........
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FDI in East African Countries
(US $ Miln)
<9>. ACCESS TO POTENTIAL MARKETS
Tanzania enjoys Preferential Market Access with;
SADC
(About 300m People)
EAST AFRICA
COMMUNITY
(About 130M People)
China
(Over 4,000 Items)
Negotiated EPA with
European Union
AGOA (USA)
Africa Growth and
Opportunity Act
Over 6,000 items
Japan, Canada etc
3 MAJOR PORTS; GATEWAY TO SIX (6) LAND-LOCKED COUTRIES
(Uganda, Rwanda, Burundi, DR Congo, Zambia & Malawi)
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POTENTIAL INVESTMENT
OPPORTUNITIES IN TANZANIA:
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• Where does TIC come in....
WHERE TIC COMES IN...
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As Tanzania’s investment promotion agency,
TIC offers a range of services to investors
TIC Overview
 The Tanzanian Investment Centre (TIC) was established by
the Act of Parliament No 26 of 1997. The Centre Operates as
a Semi-Autonomous Institution under the Prime Ministers
Office (PMO).
 TIC is the primary Agency of the Government established
with the Mandate to Coordinate, encourage, promote and
facilitate investment in Tanzania.
 It is an instrumental institution to advise the Government on
the investment policy and investment related matters
Vision:
 To become a premier Investment Promotion Agency (IPA)
capable of creating and sustaining ever-increasing
investment flows in an attractive and competitive
environment that promotes Tanzania as the prime
investment destination of choice in Sub-Saharan Africa
Mission:
 To contribute to the sustainable economic development of
Tanzania through attraction on new investment and
maximizing its impact on the economy
Source: TIC Database.
Executive Director, TIC
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As Tanzania’s investment promotion agency,
TIC offers a range of services to investors
TIC as Investor’s One-stop-centre
 The Tanzanian Investment Centre (TIC) provides a one
stop-facilitation-shop to investors, offering a range of
services that includes but not limited to;
– Promotion of Investment Opportunities
– Facilitation Services for Investment activities
– After Care Services to Investors
– Linkage With Other Economic Blocks e.g: EAC,
SADC
 Senior officers from key Government Ministries,
Departments and Executive Agencies have been
permanently stationed at TIC. These are those from;
– Ministry of Lands & Settlement Development
– Ministry of Industry and Trade (MIT)
– Business Registration & Licensing Agency (BRELA)
– Tanzania Revenue Authority (TRA)
– Ministry of Home Affairs - Immigration Department
– Ministry of Labour
Source: TIC Database.
International Awards by TIC:
 2005 - Best Investment
Promotion Agency in Sub
Saharan Africa (By Africa
Investor Platform)
 2006 - Best country of the
future (By Financial Times)
 2007 - Best Investment
Promotion Agency in the world
(by UNCTAD/WAIPA)
 2008 - Gold Award for
Innovative Management in
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Africa ( By AAPAM)
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INVESTMENT FACILITATION SERVICES:
Senior Government officials from the following
Ministries/Government
Departments
have
been
stationed at TIC to assist investors to obtain various
licenses and permits they need in order to start
business.
1
2
3
4
5
6
• Registrar of Companies
• Immigration
• Business Licensing
• Land
• Labour
• Tanzania Revenue Authority
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INVESTOR WINDOWS FOR FISCAL INCENTIVES:
A) Priority Sector Projects
 Receive Fiscal Incentives through TIA Act 1997,
B) PPP Projects
 Receive Fiscal Incentives through PPP Act 2010,
C) Specialized EPZ related Projects
 Receive fiscal incentives through Specific laws (e.g. EPZ/SEZ etc.)
D) Other Projects (Above the land)
 Receive Fiscal Incentives through Tanzania Investment Act 1997
E) Mining, Energy & Gas Sector Projects (Below the land)
 Receive fiscal incentives through the Ministry of Energy and Minerals
F) Service Sector Projects
 Do not receive fiscal incentives but can access Non-fiscal Incentives
upon registration through TIC
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Incentives under the Tanzania Investment Act:
Financial
Incentives
Exemptions on Projects capital goods;
i) Import duty – 0%
ii) Value added tax – 0%
Tax Relief on Deemed capital goods;
i) Import duty – Exempted by 75% (Pay 25%)
ii) Value added tax – Reduced from 18% to 10%
Capital allowance
i)
Agriculture – 100%
ii) Mining - 100%
iii) Manufacturing – 50%
iv) Fish farming - 50%
v) Tourist services – 50%
vi) Hotels - 50%
Depreciation Allowance:
Ranging from 37.5% to 50% depending on the class of the
depreciable asset.
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Incentives under the Tanzania Investment Act:
Non-Fiscal
Incentives:
Automatic Immigration Quota: of up to 5 expatriates at the initial
stage of the projects (depending on nature of the project)
Unconditional transferability of funds:
 Net profits or dividends of the investment
 Payment in respect of foreign loans
 Remittance of proceeds net of all taxes and other obligations
 Royalties fees and other charges
 Payment of emolument and other benefits to foreign personnel
Note: The transactions must be through any authorized dealer bank
and in freely convertible currency.
 Protection against Non-Commercial Risks:
 Tanzania in a Member of MIGA (Multilateral Investment Guarantee
Agency, A Scheme under the World Bank) and IISD
Protection against Nationalization/Confiscation:
 Incase of change of policy, TIC registered projects can not be
confiscated by the Government
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Incentives under the Tanzania Investment Act:
Strategic Investor
Status
 In addition to existing investment incentives a potential investors,
with projects of specific/great impact to the society or economy may
apply for a strategic investor status to seek/request additional
investment incentives from the Government, as provided for in Rule
49 of the Tanzania Investment Regulations 2002.
 Criteria used to award ‘Strategic Investor status’ considers the
following:
The amount of capital to be invested (normally above UDS 20
million);
The contribution of the project in terms of creating employment
opportunities;
New and innovative technology to be introduced by the Prospective
investors strategic project;
The extent to which the Project brings capacity to manufacture
products for export and the earning of foreign exchange;
Whether the Investment is in the Special Economic Zone or
Geographically disadvantaged regions.
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Incentives under the Tanzania Investment Act:
Import Duty Draw
Back Scheme
 Refund of duty charged on imported inputs used for producing
goods for export and sold to foreign institutions like UN and its
agencies operating in Tanzania
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INVESTOR FACILITATION SERVICES:
NATIONAL INVESTMENT STEERING COMMITTEE (NISC)
 In an effort to improve the business environment and foster
economic growth through increased investment the Government
formed a National Investment Steering Committee chaired by the Hon.
Prime Minister.
 Other members of the committee are Minister of Finance, Minister of
Industry and Trade, Minister of Agriculture, Minister of Lands, Minister
for Investment and Empowerment, Attorney General, Governor of the
Bank of Tanzania and the Executive Director TIC (Secretary).
 This committee is entrusted with the role of investment policy
formulation and solving problems of investors on a fast track basis.
ACQUISITION OF LAND FOR INVESTMENTS:
• Foreign investors can obtain land for investment
through Tanzania Investment Centre, where
‘‘Derivative Right’’ is granted.
• Two main ways by which investors can obtain/
access land for investment:
A) To apply for land acquisition from the village, and
then follow all the necessary steps required, until the
land is transferred from village land to general land
and given to TIC in order to prepare a Derivative
Right for the investor.
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ACQUISITION OF LAND FOR INVESTMENTS:
B) To purchase a parcel of land from individuals/
Companies:
- Once the buyer and a seller have agreed upon the
price, the seller is required to surrender the land tittle
to the Commissioner for Lands in order to re-issue in
the name of TIC, which will eventually prepare a
Derivative Right for an investor.
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ACHIEVEMENTS OF TIC EFFORTS:
FDI INFLOWS TO TANZANIA FROM 2007 – 2012 (US$ Mill)
Source: UNCTAD - World Investment Report – 2013
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TREND OF PROJECTS REGISTERED WITH TIC
FROM 2005 TO 2012
Number of Projects
1000
800
550
600
400
200
0
871
678
701
825
572
896
509
2005 2006 2007 2008 2009 2010 2011 2012
Years
Source: Tanzania Investment Centre Database, 2013
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Distribution of 896 Investment Projects
registered at TIC in 2012 (per sector)
Source: Tanzania Investment Centre Database, 2013
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TOP TEN (10) LEADING COUNTRIES WITH REGISTERED INVESTMENTS IN
TANZANIA (BY VALUE OF Million US$) FROM 2006 - 2012
German
Canada
2% Oman
2%
4%
S. Africa
5%
Netherland
7%
USA
7%
China
11%
UK
36%
India
14%
Kenya
11%
Source: TIC Database, 2013
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China Investment Trends in Tanzania:
….488 Projects Registered at TIC
….$2.393 Billion in value
….76, 201 Jobs created thus far
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Number of Chinese Projects in Tanzania
332
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13
6
40
7
18
5
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Distribution of Chinese Projects by percentage (%)
Transportation Agriculture Commercial
3%
building
Tourism 5%
1% Construction
8%
9%
Services Telecom
1%
4%
Natural
Resources
1%
Manufacturing
68%
Chinese Investment Projects by Value (Millions USD):
Transportation,
Tourism, 71.86 88.47
Telecom,
538.25
Agriculture, Commercial
129.36 building, 29.80
Construction,
350.96
Services, 32.75
Natural
Resources,
8.31
Manufacturing,
1 142.95
Number of Jobs created by Chinese Projects
(per sector)
Telecom, 1 577 Tourism, 1 879
Services, 822
Transportation,
2 722 Agriculture,
7 616
Natural
Resources, 306
Commercial
building, 275
Construction,
2 802
Manufacturing,
58 202
Jobs created by Chinese projects per sector (in %)
Services
Telecom Tourism Transportation Agriculture
1%
2%
3%
4%
10%
Natural
Resources
Construction
0%
4%
Manufacturing
76%
Commercial
building
0%
OUR COMMITMENT TO INVESTORS
Application
Maximum Time taken
 Company Registration
 Industrial License
 Business licensing
 Certificate of incentives
 Resident Permit Class ‘A’
 Resident Permit Class ‘B’
 Special Pass
3days
1day
1days
7days
14days
14days
1day
OUR COMMITMENT TO INVESTORS
Application
Maximum Time taken
• Meeting with TIC staff
Immediately
• Arranging appointments
24hours
• Preparation and confirmation
of itinerary for Potential investors
3days
YOU MAY ALSO CONTACT:
Executive Director
Tanzania Investment Centre
Shaaban Robert Street,
P.O.Box 938
Dar es Salaam
Tel: +255 22 2116328-32
Fax: +255 22 2118253
Email: [email protected]
Website: www.tic.co.tz
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www.tic.co.tz
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