14 February 2019

Tanzania: Investing in Tanzania? Here's What You Need to Know

Photo: Daily News
The East African Legislative Assembly (EALA) hails the efficiency at the Dar es Salaam port.

Tanzania was ranked number 144 among the 190 economies in the ease of doing business according to the latest World Bank annual rankings.

The rank of Tanzania deteriorated to 144 in 2018 from 137 in 2017. Ease of doing business in Tanzania averaged 135.18 from 2008 until 2018, reaching an all-time high 135 in 2013 and a record low of 125 in 2010.

The Ease of doing Business Index assesses 190 economies and covers 10 indicators which span the lifecycle of a business.

These 10 indicators include Starting a Business, Dealing with construction permits, Getting electricity, Registering property, Getting credit, Protecting minority investors, Paying taxes, Trading across borders, Enforcing contracts and Resolving insolvency. Each of the above indicators carries equal weightage.

Below is a list of legal procedures for an investor to undertake before opening a business in Tanzania according to the 2018 report from the World Bank.

Apply for clearance of the proposed company name from the Business Registration and Licensing Authority (BRELA)

Obtain a notarized declaration of compliance.

Apply for the incorporation of the company and obtain a certificate of incorporation (an industrial licence will be obtained upon application and submission of a certificate of incorporation/compliance or Tanzania Investment Centre (TIC) certificate of incentives)

Apply for and obtain Taxpayer Identification Number (TIN) with the Tanzania Revenue Authority (TRA)

Apply for a business licence from the regional trade officer. (depending on the nature of the business)

Apply for a Value Added Tax (VAT) certificate with the Tanzania Revenue Authority (TRA)

Register for the workmen's compensation insurance at the National Insurance Corporation (NIC) or other insurance alternative.

Obtain registration number at the National Social Security Fund (NSSF)

On the other hand, there is the Tanzania Investment Centre's (TIC) Investment Guide which too needs to be looked into before opening a business. TIC was established in 1997 by the Tanzania Investment Act to be "the Primary Agency of the Government to coordinate, encourage, promote and facilitate investment in Tanzania and to advise the Government on investment policy and related matters."

The agency deals with all enterprises whose minimum capital investment is not less than Tshs.1.1 billon ($500,000) if foreign owned or Tshs.230 million ($100,000) if locally owned. Enterprises engaged in mining and petroleum are supposed to follow the approval process contained in their respective laws. However, the agency is entitled to assist all investors to obtain permits, authorization and other necessities as required by other laws to set up and operate investments in Tanzania. According to the TIC Investment Guide a company is required to;

Have a business plan or feasibility study

Have a memorandum and articles of association

Have a certificate of incentives (for projects approved by TIC)

Have a lease agreement or title deed

The Rand Merchant Bank (RMB) of South Africa recently released its 2019 edition of "Where to Invest in Africa" which provides data and analysis to invest in the continent, and points out new investment opportunities. In the report, Tanzania was ranked number 7 out of the 54 nations in Africa. The methodology used encapsulates what RMB perceive to be the most important conditions for viable investment in Africa: economic activity, expressed as a weighted average of market size and forecasted levels of GDP growth, and the operating environment depicted as a weighted average of four international surveys measuring the ease of doing business.

The report reminds that according to the IMF, East Africa is the region of the continent with the highest forecasted GDP growth for the period 2018-2023, with an average of more than 6%.

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