Tanzania: primer | Global finance magazine

Tanzania’s new leadership prepares for post-Covid economic growth.

Dar es Salaam

POPULATION STATISTICS

Place: East Africa

Neighbours: Mozambique; Malawi; Zambia; Democratic Republic of Congo; Burundi; Rwanda; Uganda; Kenya

Capital: Dodoma (official); Dar es Salaam (commercial)

Population (2021): 61,435,647

Official language: English; Swahili

GDP per capita (2019): $ 1,122

GDP growth (2020): 5.8%

Inflation (2019): 3.3%

Currency: Tanzanian Shilling

Investment Promotion Agency: Tanzania Investment Center

Available investment incentives: No import duty on most capital goods; 10% import duty on semi-processed goods; Reimbursement of some excise duties; 100% capital deductions in certain sectors; Special economic zones

Ease of Doing Business Rank (2020): 141

Rank of the Corruption Perceptions Index (2020): 94

Political Risks: In March 2021, a new government with unclear priorities took power.

Security risks: Covid-19 travel bans aside, travelers must avoid moving within 20 km of the Mozambique border due to terror and kidnapping threats. Travelers must avoid moving within 20 km of the borders of Burundi and the Democratic Republic of the Congo, with the exception of certain cities and national parks, due to armed groups, human traffickers and kidnappers.

ADVANTAGES

With a few exceptions, foreign investors receive national treatment

With 26.1% (2019), Tanzania has one of the lowest poverty rates in Africa

DISADVANTAGE

Foreign investment is deterred in several sectors by restrictions on foreign ownership or other activities

Child labor

Currency convertibility

Some risk of expropriation

Investment-related dispute resolution can be protracted

Difficulties in hiring workers

Opaque tax policy

Swell: African Development Bank, Associated Press, BBC, The Citizen, Government of Canada Global Travel Advisory, International Monetary Fund, Reuters, Transparency International, US Bureau of International Labor Affairs, US State Department, World Bank, World Population Review

For more information, see Global financeData page of the Economic Report of Tanzania.

Political stability remains one of the most important characteristics of Tanzania for foreign investors and drives the country’s economic success.

“It’s the second largest economy in East Africa, which has grown consistently around 6% over the past six years, apart from [Covid-19] Interruptions, ”says Corti Paul Lakuma, macroeconomist and research fellow at the Economic Policy Research Center.

According to Melissa Cook, Managing Director of the US investment research company African Sunrise Partners, Tanzania also offers commercial opportunities in regional markets beyond its borders. “If you have a business in Tanzania, you have a very large addressable market.”

Tanzania is a member of several trade organizations, including the East African Community and the African Continental Free Trade Area (AfCFTA) of the African Union. The AfCFTA, which has 1.3 billion people in 54 countries, went fully operational in early 2021 and aims to double intra-African trade by 2035.

“You are not talking about investing in a single country,” she added.

The country’s tourism sector has attracted hotel chains like DoubleTree by Hilton Hotel, Four Points by Sheraton, and Ramada by Wyndham. “A lot of countries talk about tourism as a way of getting people to work and generating foreign exchange,” explains Cook. “Tanzania has an enormous tourist infrastructure and is already one of the top travel destinations.”

The country’s consumer sector includes drinks company Diageo, while the raw materials sector includes petroleum multinational Total. Due to advertisements looking for bidders for Total-Anlagen, there were rumors in 2020 that the oil company wanted to exit. However, these facilities were only excess real estate created with Total’s acquisition of Gulf Africa Petroleum in 2017. Company officials at the time determined that the company was not leaving. It had invested $ 200 million in its operation over the past three years.

Notwithstanding these benefits, recent government policies have raised questions about the short and medium term prospects for Foreign Direct Investment (FDI) … They have also promoted what the State Department calls “a tougher business environment.”

Tanzania, which first applied for a Covid-19 vaccine to the World Health Organization in mid-June, is one of the last countries to give the green light to a Covid-19 vaccination program, let alone announce its introduction. Foreigners may be able to get vaccinated through their national embassies.

The delay underscores the conflicting legacy of former President John Magufuli, who died from coronavirus in March this year, according to unofficial reports the government denies. He was one of Africa’s strongest Covid-19 deniers and discouraged the use of face masks. He argued that the country was “Covid-free” and had already got rid of the virus through prayers, an approach that resulted in delays and loss of life. According to the WHO, there were only 509 Covid-19 cases in Tanzania as of May 2020, resulting in 21 deaths when the government stopped disclosing data to the public.

Magufuli was also notorious with the media and political opposition; and he practiced economic nationalism, which violated many East African Community agreements and hindered foreign direct investment. However, he drove Tanzania’s progress and was the architect of the roughly 6% growth, points out Lakuma of the Economic Policy Research Center. Magufuli’s efforts made Tanzania one of the few African countries to achieve middle income status.

Since taking power in March, President Samia Suluhu Hassan has taken a more open approach to the pandemic by promoting research, masks, vaccinations and the publication of Covid-19 data. She has also released some of the political prisoners and introduced tax incentives to encourage recovery. Before making investment decisions, investors could wait for the results of these changes to see if Tanzania’s previous growth picks up again.


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