Competitive Investment Climate:
In the African countries improvement index report, published by the Centre for International Development at Harvard University, Tanzania has clinched the top spot in a report titled “The Africa Competitiveness Report 2000/2001”, benchmarking macro economic and investment climate success factors; Tanzania ranks first followed by Morocco, Mozambique, Nigeria and Uganda.
The comprehensive economic and political reform measures, undertaken since mid 1986, have progressively brought about an efficient economic management, financial discipline, and a framework for a dynamic, high growth economy. Today the economy of Tanzania is poised to reap the benefits of these reforms as evidenced by securing top spot in Africa’s Improvement Index 2000 and qualification for the Highly Indebted Poor Countries (HIPC) initiative by the World Bank and IMF. Through all these, Tanzania has managed to regain the confidence of foreign investors and the donor community.
Peace and Stability
Tanzania is free of ideological confrontations, ethnic problems and labour disputes. It is a centre of economic and political stability in Sub Saharan Africa. Multi party democracy adopted in 1992 has not disturbed the peaceful political climate of the country. The political scene is characterised by parliamentary democracy and public consensus on key social and economic priorities.
Large Potential Market
Tanzania offers a wealth of market opportunities for foreign companies. With a population of over 32 million consumers, a rapidly growing economy, and high levels of domestic investment spending, the Tanzania market will remain an important target destination for local and foreign products and services. On top of that, Tanzania is part of two distinct market areas: Southern Africa Development Community (SADC) and the East African Community (EAC), with some 300 million consumers.
With three major ports located along the Indian Ocean and those along the fresh water inland ports around Lakes Victoria, Tanganyika and Nyasa, Tanzania provides access to the land locked countries of Uganda, Burundi, Rwanda, Zambia, Malawi, DRC and beyond. Tanzania has a central location in terms of its distance from major global markets. As such Tanzania location is close to any export markets.
Transparent Investment Laws
The pro investment attitude by Government is clearly demonstrated by the innovative investment legislation, the increasing number of foreign direct investments in the country and economic and structural reforms that have led to substantial progress in establishing a functioning market economy. Institutional support for priority investment projects is readily available from the Tanzania Investment Centre (TIC) and other Government institutions.
There is a sustained programme for building good quality roads. Two railway networks connect 14 out of 20 cities and the neighbouring country of Zambia. There are also international and domestic airports linking Tanzania to the world. The three major ports of Dar es Salaam, Tanga and Mtwara function as hubs for traffic emanating from, and destined to land locked neighbouring countries of Uganda, Burundi, Rwanda, Zambia, Malawi, and Democratic Republic of Congo.
Tanzania has a stable fiscal regime with sustainable level of inflation. Under its economic recovery program, Tanzania increased revenue streams and substantially reduced spending. During the quarter ending December 2000, the quarterly year-to-year inflation rate, declined to 5.7 percent as of December 2000, from an average of 7.0 percent recorded in the corresponding quarter in 1999. This continuous decline in the rate of inflation is mainly the result of prudent fiscal and monetary policies.
Tanzania offers a well-balanced and competitive package of fiscal incentives in comparison with other African countries. Aiming at providing competitive fiscal regime on foreign trade, Tanzania has signed double taxation treaties with Denmark, India, Italy, Norway, Sweden, Kenya, Uganda, Zambia and Finland. Countries with which negotiations are continuing include South Africa, Republic of Korea, Zimbabwe, United Arab Emirates, Russia, Seychelles, Mauritius, Egypt, Yugoslavia and Oman.
Abundant Natural Resources
Tanzania’s untapped natural resources offer a wide range of investment opportunities; arable land, minerals and natural tourist attractions are all awaiting potential investors. Tanzania is internationally renowned for its abundance of wildlife attractions and unexploited mineral reserves. These sectors (Mining and Tourism) are the leading recipient of foreign investment flow and are tipped to become the “growth sectors” of the economy.
Investments in Tanzania are guaranteed against nationalisation and expropriation. Tanzania is a signatory of several multilateral and bilateral agreements on protection and promotion of foreign investment. Among other international agreements and membership, Tanzania is a member of Multilateral Investment Guarantee Agency (MIGA) and International Centre for Settlement of Investment Disputes (ICSID).
Inflow of foreign direct investment in Tanzania:
Economic and Structural Reforms
Tanzania had been carrying out successful economic and structural reforms, which have improved economic performance and sustained growth. These achievements are based on solid foundations of political and economic reform undertaken by the Government since 1986, placing Tanzania in a position where a prolonged period of high GDP growth rates is expected.
Labour Cost and Availability
Access to low cost labour is a key priority for companies competing in African economies. Tanzania offers trainable skilled labour at significantly lower labour costs. The Government has made a long-term commitment to develop a pool of well-trained and educated specialists. In the 2001 budget, for example, the Government has increased its education budget by 20% compared to the previous budget.