Nairobi — DESPITE earning $20 million from its export processing zones over the past two years, Tanzania is still grappling with crippling infrastructural problems at the EPZs.

Gaudence Mwenda, Assistant Director of Planning in the Ministry of Industry and Trade, last week said that most investors in the EPZs were still complaining about poor infrastructure, including roads, water, power and labour.

"Some investors claim they have to retrain the workforce to enhance their competency, while some workers still have a parastatal mentality that has affected investors and their operations.

Mr Mwenda said that, due to high power costs, some investors were looking at the possibility of using natural gas from Songo Songo as an alternative. "We have high power tariffs and the Tanzania Electricity Company (Tanesco) is not responding to their complaints; at times, it even tells them to buy their own transformers.

He said, however, that in other countries, such facilities were facilitated by the respective governments.

Citing the example of the Millennium Business Park, Mr Mwenda said the investor was complaining of lack of water and unreliable power supply, which, he added, ought to be provided by the government as an incentive to investors. He said the EPZ textile mills, A-Z and Sunflag faced similar problems in Arusha.

Last August, Minister for Industries and Trade Dr Juma Ngasongwa told parliament that the country had earned $19.86 million from exports from five EPZ points in Dar es Salaam. Plans were underway to establish more centres in Kigoma, Tanga, Mtwara and Arusha towns.

In Zanzibar, a new authority -the Zanzibar Investment Promotion Authority (Zipa) - has been created to take over the operations of the Zanzibar Free Economic Zones Authority, the Free Port Authority and the Zanzibar Investment Promotion Agency.

Since their introduction in Zanzibar, EPZs have faced many problems.

"We hope the creation of Zipa will positive for investment on the Isles," said the chairman of the Zanzibar Employers' Association, Dr Salim S. Nasser last week.

Asked to comment on the situation in the EPZs, Dr Nasser said, "It's not all that rosy in the export processing zones, because a lot of red tape still exists. I hope the new authority will become a one-stop shop and help reduce bureaucracy, which is a disincentive to investors."

He said the new authority was expected to help in defining and clarifying exemptions and import and export procedures.

"As it is, everything has to be referred to the minister; it is all very complicated. I have suggested a few things that could be done to help remove red tape and improve the image of Zanzibar as an investment destination. The major suggestion is to make Zipa a one-stop shop," he said.

Anthony Perez, director of Business Systems and Strategies at Ernst and Young, said, "While the government has created the right environment for the private sector to undertake business, a lot needs to be done in the export processing zones if we have to move forward."

He listed the three main problems of EPZs as unreliable infrastructure, high administrative costs and expensive raw materials, which he said "makes our EPZs unattractive to potential investors or those that are already operating in these areas."

The cost of electricity in Tanzania is said to be among the highest in East Africa and the Tanzania Electric Supply Company last week said it would increase the rate by 4.8 per cent for its domestic customers.

"We are operating under difficult conditions and yet we are supposed to export 70 per cent of goods, which in most cases fail to compete effectively on the world market because the cost of production is very high in Tanzania," said a source at Nida Textiles, the first Dar es Salaam-based textile firm to start production since the EPZ Act was enacted in 2002.

N Textiles, which was inaugurated in May 2003 by President Benjamin Mkapa, last month it said it had scaled down production as the plant undergoes rehabilitation.

So far, the government has approved five EPZ projects, including Nida, Millennium Business Park, Star Apparels, African Pride Textile Mills and Reclaimed Appliances.

Nida makes bedsheets and pillowcases and has already exported products worth over $5.8m. Millennium Business Park, a joint venture between Tanzanians and Britons, built the infrastructure at the EPZ, which it lets out to other operators. Star Apparels is owned by investors from Sri Lanka, and produces garments, while Reclaimed Appliances is owned by investors from the UK and produces electrical appliances. African Pride Textile Mills also produces garments.