18 August 2014

Tanzania: Investment - Taking Fresh Look At Policy, Act

Moshi — THE government has been seeking views of investment stakeholders throughout the country after completing the preparations for general review of the investment policy framework.

Under scrutiny and consequent review are the 1996 National Investment Promotion Policy and the 1997 Tanzania Investment Act. The initial work was done in collaboration with Organisation for Economic Co-operation and Development (OECD); to evaluate the current policy situation and make recommendations to enable the country to attract higher investment to exploit its full potential.

Tanzania Investment Centre (TIC) Acting Manager for Northern Zone, Mr George Mukono says the review aims to identify areas for improvement of investment environment and business, to simplify investment procedures and run of business.

The land legislation has also been of great concern to many stakeholders, and was also subject for revision, land rights registration were accelerated, notably by providing stronger incentives for registration.

Local investors in Northern Zone are of the opinion that investment policy favours foreigners, leaving the locals in the cold, and are thus calling for action to reverse the trend, if locals are to prosper.

Mr Joachim Minde, a prominent businessman and investor in Kilimanjaro and Arusha regions, calls for limitations against foreigners in terms of trade restrictions, saying the current system does no justice to the locals.

Mr Minde who runs Kilemakyaro Mountain Lodge at Moshi, Laitolya Tours & Safaris Ltd and several hotels in Arusha contends that a vivid example is on investment in natural resources such as land and minerals, where locals are forced to retreat, regardless of their ability and desire.

He says if it is difficult for amendments to be done then action should be taken now in the on-going Constituent Assembly (CA) so that any changes in the laws may be binding.

"The investment policy and the law favours foreigners. The CA should now move to insert 'dos' and 'don'ts' in trade instead of the free market that has been cause of hopelessness in this sector," proposes Mr Minde.

His proposal is that limitations to foreign investors should be in terms of investment period. He says giving foreigners too long contracts deprives the locals of their basic rights.

However, globalization apparently integrates the economies of neighbouring and of trading state, usually forced to trade off such rules as part of a common tax, tariff and trade regime, as defined by a free trade pact, whereby agreements between countries increase level of free trade, by creating special tax, tariff and trade regulations that can reduce barriers.

Mr Minde's argument could recline a type of investment policy that favours local investors over foreigners, that is typically discouraged in such pacts, and the idea of a separate investment policy rapidly becomes a fiction or fantasy, as real decisions reflect the real need for nations to compete for investment, even from their own local investors.

Mr Minde proposes for an overhaul of the investment system so as to broaden tax base and make sure the big traders are subjected to the required tax and ensure economy growth, as "Caesar needs every coin".

The investor is upbeat that changing the investment policy would help local investors, but also help create jobs to many youths who are wondering about in the streets despite having graduated from local as well as foreign varsities and colleges.

Mr Emmaniel Masenga is at one with Mr Minde on the aspect of protection of the locals, and pleads with TIC to see to it that local businessmen who toil in running industrial units and create employment opportunities are not let down by importation of cheap and unworthy goods.

Jonas Mshiu, a company manager, says importation of cheap goods makes it difficult for local investors to compete, given the operation costs that include a lot of items. He said the effects of foreigners being favoured at the expense of the locals are adverse and could setback on employment creation opportunities.

They are on all fours with an economist from Prime Minister (PMO)'s Office, Mr Bariki Mwasaga who says the investment policy and Act were outdated, given changes that have occurred since 1997. The overhauling would help phase out bureaucracy from the authorities responsible for investment matters.

Mr Mwasaga, from Policy and Planning Department, proposes the policy and act need to take on board current national broad goals, like National Development Vision 2025 and that is the rationale for review. "There is a need to update investment regime to address emerging business environment and investment climate challenges.

Address linkages among investment promotion agencies, align with sectoral investment priorities embodied on policies and legislation," says Mr Mwasaga.

He also notes some of the current policy challenges including inadequacy in coordination of investment approval process, enabling environment for doing business, domestic and foreign investments, as well as exports and low value addition.

Mr Mwasaga unveils the proposed policy objectives as to strengthen institutional, legal and regulatory framework for investment, strengthen business linkages for large business and develop corporate social responsibility principles.

The economist says there is a need to define principles of special preference to domestic investors, develop quantifiable criteria and evaluation of investment incentives and their administration.

Vital in that respect also, are enhanced transparency, negotiations, technical capability and capacity building for investment projects and agreements. Elaborating on the government's policy, Dr Florens Turuka, Permanent Secretary in PMO's office says socioeconomic reforms are geared to improve business environment and investment climate, making Tanzania increasingly attractive, robust and viable investment destination for both domestic and foreign investors.

"The ultimate goal is to ensure that Tanzania achieves higher rates of inclusive economic growth commensurate to her competitive advantage in terms of abundant natural resources as well as strategic geographical location as a logistical hub to the rest of the continent, which provides investors with access to regional and global markets," he says in his preface to "OECD Investment Policy Reviews: Tanzania".

Tanzania has enjoyed uninterrupted peace, political stability and tranquility since independence. These key attributes, coupled with the existence of robust institutions for investment promotion and facilitation, have contributed to making the country's investment climate unique and increasingly attractive.

That is corroborated by another preface from Deputy Secretary-General, OECD , Mr Rintaro Tamaki who says Tanzania is currently one of the strongest performers of the non-oilproducing countries in Sub- Saharan Africa, whose Gross Domestic Product (GDP) growth that has exceeded 6% for ten consecutive years and stood at 6.9% for 2012-13.

He is happy that domestic and foreign private investment has significantly risen over the last two decades as Tanzania has steadily improved its investment environment and striven to increase opportunities for foreign and domestic investors, notably by opening to international trade and investment and liberalising its financial sector.

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