Economy in Tanzania:
Tanzania is an emerging economy in East Africa, known for its political stability and robust economic growth. The country has focused on diversifying its economy, which is traditionally reliant on agriculture, with significant investments in mining, manufacturing, and tourism. President Samia Suluhu Hassan’s administration continues to prioritize infrastructure development, energy projects, and improving the business environment to attract foreign investment.

Agriculture remains a critical sector, with key exports including coffee, tea, cotton, cashews, and tobacco. Additionally, Tanzania is rich in natural resources such as gold, diamonds, and natural gas, presenting substantial investment opportunities.

Tanzania is a member of the East African Community (EAC), enhancing its role in regional trade. The country’s strategic location, with access to the Indian Ocean via the port of Dar es Salaam, strengthens its position as a trade hub.

Facts and Figures:

• Official Name: United Republic of Tanzania
• Capital City: Dodoma
• Languages: Swahili, English
• Population: 60 Million (2022)

SWOT Analysis

Strengths:

• Rich natural resources, including minerals and natural gas
• Political stability and sustained economic growth
• Strategic location with access to regional and international markets
• Membership in the EAC, enhancing regional trade opportunities

Weaknesses:

• Underdeveloped infrastructure and energy sectors
• High levels of poverty and unemployment
• Dependence on agricultural exports
• Bureaucratic hurdles and regulatory challenges

Opportunities:

• Investment in infrastructure development, including roads, railways, and ports
• Exploration and development of mineral and natural gas resources
• Expansion of the manufacturing sector
• Growth in tourism, leveraging Tanzania’s natural beauty and wildlife

Threats:

• Political and economic instability in the region
• Vulnerability to climate change affecting agriculture
• Corruption and bureaucratic inefficiencies
• Health challenges, including the prevalence of diseases like malaria and HIV/AIDS

Potential Industries in Tanzania

Healthcare Industry:
Tanzania’s healthcare sector is growing, driven by increasing demand for services and products to treat chronic diseases like HIV/AIDS, malaria, and tuberculosis. There are opportunities for European companies to supply pharmaceutical products and medical technology. Local production of medical consumables and equipment is also becoming important.

Investment Opportunities:

• Supplying pharmaceutical products and medical technologies
• Establishing local manufacturing facilities for medical consumables
• Partnering with local healthcare providers to improve service delivery
• Investing in telemedicine and digital health solutions

Construction Industry:
Tanzania is focusing on improving its infrastructure, with significant investments planned for road construction, energy projects, and urban development. European companies can participate by supplying construction machinery, tools, building materials, and consulting services.

Investment Opportunities:

• Supplying construction machinery, tools, and building materials
• Participating in large-scale infrastructure projects
• Offering consultancy services for construction supervision and project management
• Engaging in private sector construction projects

Energy Industry:
Tanzania’s energy sector needs significant investment to meet the growing demand for electricity. Hydropower and natural gas projects dominate the landscape, but there are also opportunities in solar and other renewable energy sources. European suppliers, project developers, and consultants find Tanzania’s energy market attractive.

Investment Opportunities:

• Developing hydropower and natural gas energy projects
• Supplying and installing off-grid solar solutions
• Providing technical consultancy for energy projects
• Investing in energy storage and distribution systems

Water and Environment:
Population growth and urbanization are driving the need for investments in water and wastewater management. European companies can offer technical components and consulting expertise to address these challenges. Stricter environmental regulations require industries to invest in wastewater treatment and waste management solutions.

Investment Opportunities:

• Developing and supplying water and wastewater treatment solutions
• Offering consulting services for environmental management
• Investing in waste management and recycling facilities
• Partnering with local governments on sustainable urban development projects

Agriculture:
Tanzania’s agriculture sector requires more investment to meet domestic and export demands. Key areas include coffee, tea, cotton, cashews, and tobacco. There are opportunities to improve agricultural productivity and value addition through modern technologies and practices.

Investment Opportunities:

• Investing in modern agricultural technologies and practices
• Developing commercial farming operations for export crops
• Establishing processing facilities for agricultural products
• Partnering with local farmers to improve yield and sustainability

Market Access

Legal Framework, Founding, Investing

Legal System:
Tanzania’s legal system is influenced by English common law due to its colonial past. Many legal acts are based on British models, and judges often reference British legal acts and decisions. Customary law applies in certain areas but is generally not relevant for commercial disputes.

Legal Disputes:
Companies should consider arbitration in legal disputes. An arbitration award can be obtained locally under the Arbitration Act, based on the UNCITRAL Model Law. Alternatively, arbitration awards obtained abroad can be recognized and enforced in Tanzania under the New York Convention of 1958. Companies can also file claims in Tanzanian courts, with the Commercial Court handling commercial disputes.

International Organizations
Tanzania is a member of:

• African Union (AU)
• African, Caribbean and Pacific Group of States (ACP countries)
• East African Community (EAC)
• Common Market for Eastern and Southern Africa (COMESA)
• United Nations (UN)
• Commonwealth of Nations
• World Trade Organization (WTO)
• Multilateral Investment Guarantee Agency (MIGA)
• World Intellectual Property Organization (WIPO)
• African Regional Intellectual Property Organization (ARIPO)

International Agreements and Bilateral Treaties
Tanzania is part of several international treaties, including:

• New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
• African Continental Free Trade Area Agreement (AfCFTA)
• ICSID Convention on the Settlement of Investment Disputes

Bilateral agreements between Tanzania and Europe include:

• Double Taxation Agreement
• Investment Protection and Promotion Agreement

Setting up a Company in Tanzania:
Company formation is regulated by the Companies Act, 2002, and is done electronically via the Business Registration and Licensing Agency (BRELA) platform. After formation, companies must be registered in the Companies Registry. The process takes around 14 days, though longer times may be expected.

Establishment Requirements for Selected Legal Forms:

• Private Company Limited by Shares: No minimum capital, max 50 shareholders, limited liability, electronic formation, registry registration required.
• Public Company Limited by Shares: Minimum capital of 50 million TZS, at least 1 founder, limited liability, electronic formation, registry registration required.
• Branch: At least 30% local ownership, appointment of local representatives, higher corporate tax, registry registration required.

Investing in Tanzania:
The Tanzania Investment Act governs investments, with the Tanzania Investment Centre (TIC) serving as the responsible authority. TIC offers a one-stop center for handling bureaucratic steps. Foreign investment is allowed in most areas, but there are restrictions on land purchases and hiring foreign workers. Corporate tax is 30%, with branches of foreign companies taxed at 37.5%. VAT is 18%, and various withholding taxes apply.

Import Duties:
Tanzania, as part of the EAC, has a customs union with a common external tariff. Import duties are 25% for finished goods, 10% for intermediate products, and zero for raw materials and capital goods. Some sensitive goods have higher duties. The regular VAT rate is 18%, and excise duties apply to harmful and luxury goods. Customs clearance fee is 3.5%, with an additional 2% infrastructure fee.

Companies in EPZs and SEZs receive customs and tax relief. The EU-Tanzania bilateral free trade agreement concluded in June 2023, pending ratification, will further facilitate trade.

Custom Declaration:
Customs declarations are made electronically via the Tanzania Electronic Single Window System. Only approved customs agents can access this system, and importers can apply for a license. Declarations must be submitted within 21 days of goods arriving in Tanzania. The SCT system in the EAC simplifies customs clearance, and companies can apply for AEO status for expedited processes.

Standards for Imported Goods:
Almost all goods must meet standards set by the Tanzania Bureau of Standards (TBS), with verification through the PVoC program. SGS is the contact for exports from Europe. Non-compliant goods are not released by customs. Certain products, such as animals, plants, and used vehicles, are exempt from PVoC but are checked upon arrival.

Trade Barriers:
Import permits or licenses are required for some goods, including agricultural products, mineral oil products, pharmaceuticals, and chemicals. Import bans exist for counterfeit goods, harmful cosmetics, certain chemicals, plastic bags, used tires, and cars older than eight years.

Labor Market and Wages:
Regular employment is estimated at 6% of the population. Companies compete for a small pool of highly qualified workers, offering good retirement and medical benefits to attract and retain talent. The qualification of young professionals to meet the needs of the economy is a major challenge.

Development Projects and Tenders:
International donors, particularly the World Bank and African Development Bank, support many development projects in Tanzania. These projects often result in international tenders for consulting, delivery, and construction services.

Prepared by: Vincent Oluoch Odhiambo