An Overview of the Investment Climate

&Investment Potentials

in Tanzania

An Overview of the Investment Climate

&Investment Potentials

in Tanzania

TANZANIA

WHY INVEST IN TANZANIA?WHY INVEST IN TANZANIA?

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Tanzania’s Advantages:

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TANZANIA’S ECONOMIC OVERVIEW

Population: 44.9 Million (2012.)

Population Growth Rate 2.7 %(2012 )

GDP Per Capita $ 652 (2012)

Agriculture Employs 80% of the Workforce

Annual Average Real GDP Growth Rate 7.0% (2003 - 2012)

Annual Average Inflation Rate 8.6 % (2003 -2012)

Main imports: Capital goods (i.e.. machinery and equipment),vehicles, petroleum products, agricultural inputs, raw materials and other consumer goods

Main exports: Agricultural products,(such as cashew nuts, tea ,coffee, cotton),cut

flowers & vegetable, minerals, fish and manufactured goods.4

H.E Dr. Jakaya Mrisho KikwetePresident

United Republic of Tanzania

<1>. GOVERNMENT’s COMMITMENT <1>. GOVERNMENT’s COMMITMENT FOR FOR

INVESTMENTS & PRIVATE SECTOR INVESTMENTS & PRIVATE SECTOR DEVELOPMENTDEVELOPMENT

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H.E Dr. Mary M. Nagu (MP)Minister of State

( Investment & Empowerment )

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H.E Mizengo K.P Pinda (MP)Prime Minister

United Republic of Tanzania

Source: World Bank; Doing Business Index 2012;

• Ever since the mid 1990s Tanzania has followed a path of liberalisation and privatisation. It has welcomed foreign investment and managed to attracted more FDI than Kenya or Rwanda, particularly in areas such as agriculture, tourism, mining and FMCG

• The government is continuing to pursue Public Private Partnerships (PPP) for infrastructure, agriculture, energy and other strategic investments. Privatisation and modernisation of key assets is a main focus area

• Policies and laws defining incentives for investment are continuously being updated and improved

• Relative to the rest of Africa, Tanzania continues to be competitive in the World Bank’s Doing Business Index. In the category “enforcing contracts“ Tanzania is the best performing country in Sub-Saharan Africa

Enforcing Contracts (Doing Business Index 2012) Ranking of Sub-Saharan African countries

Foreign Direct Investment (FDI), USD billion,2000-2010

The Government is committed to economic growth

through private sector development

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• Tanzania is a stable, multiparty democracy with a Competent Executive under President, Democratic Parliament and An Independent Judiciary.

• Presidential elections are held every 5 years. The current President will be stepping down in 2015, followed by the tradition of free and fair elections between different candidates and parties

• Became independent in the early 1960s. Since then, we been without civil wars or ethnic rivalries. High Observant to Good governance practices and Freedom of Expression where; Media, Civil Societies and opposition parties are able to operate freely and challenge the ruling party openly.

• According to Transparency International, Tanzania ranks as one of the least corrupt countries in the region

Source: Mo Ibrahim Foundation, Press Freedom Index 2011

Ranking of countries in Mo Ibrahim Governance Index, 2011, (Sore/100)

Ranking of countries in Global Press Freedom Index, 2011, Rank

<<1>> Tanzania is one of the most open and stable democracies in Africa

<2>. Tanzania: Governance & Political Stability

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• With GDP growth averaging 7% per year, Tanzania is one of the fastest growing economies in East Africa

• Other growth indicators over the last decade:– The number of tourists to Tanzania has grown by

more than 70% to 780,000– Consumption expenditure has grown by 96%– The number of cell phone subscribers has

increased from 110,000 to 21 million– FDI of more than US$5billion was invested in the

countries booming agriculture, mining, FMCG and other industries

Source : World Bank

Average annual GDP growth, %, 2001-2010

+175%

Number of tourists visiting Tanzania, thousandsDar es Salaam

<3>. Tanzania: fastest growing Economy

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Due to its Predictable Fiscal Investment Regime, there is increasing number of foreign direct investments in the country. Meanwhile, economic and structural reforms have led to substantial progress in establishing a functioning market economy, making it among the Top 10 fastest-growing economies in the world.

<4>. Predictable Fiscal Investment Regime

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<5>. Tanzania Ranked as #1 Investment

Destination for Corporates in the EAC

Source: RMB Global Markets Data – September 2013

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Trend of FDI flows into East African Countries

(US $ Million)

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<6> Tanzania is among Top 10 Most

Attractive Investment Destinations in Africa...

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< 7>. Country’s Statistical Potentials based on the World Investment Trends

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World Investment Trends cont’d..........

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World Investment Trends cont’d..........

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FDI in East African Countries (US $ Miln)

EAST AFRICA COMMUNITY

(About 130M People)

AGOA (USA)Africa Growth

and Opportunity Act Over 6,000 items

China(Over 4,000

Items)

Negotiated EPA with European

Union

SADC(About 300m

People)

Japan, Canada etc

<9>. ACCESS TO POTENTIAL MARKETSTanzania enjoys Preferential Market Access Tanzania enjoys Preferential Market Access

with;with;

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3 MAJOR PORTS; GATEWAY TO SIX (6) LAND-LOCKED COUTRIES

(Uganda, Rwanda, Burundi, DR Congo, Zambia & Malawi)

POTENTIAL INVESTMENT

OPPORTUNITIES IN TANZANIA:

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WHERE TIC COMES IN...

• Where does TIC come in....

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The Tanzanian Investment Centre (TIC) was established by the Act of Parliament No 26 of 1997. The Centre Operates as a Semi-Autonomous Institution under the Prime Ministers Office (PMO).

TIC is the primary Agency of the Government established with the Mandate to Coordinate, encourage, promote and facilitate investment in Tanzania.

It is an instrumental institution to advise the Government on the investment policy and investment related matters

Vision: To become a premier Investment Promotion Agency (IPA)

capable of creating and sustaining ever-increasing investment flows in an attractive and competitive environment that promotes Tanzania as the prime investment destination of choice in Sub-Saharan Africa

Mission: To contribute to the sustainable economic development of

Tanzania through attraction on new investment and maximizing its impact on the economy

TIC Overview

Source: TIC Database.

As Tanzania’s investment promotion agency, TIC offers a range of services to investors

Executive Director, TIC

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The Tanzanian Investment Centre (TIC) provides a one stop-facilitation-shop to investors, offering a range of services that includes but not limited to;– Promotion of Investment Opportunities– Facilitation Services for Investment activities– After Care Services to Investors– Linkage With Other Economic Blocks e.g: EAC, SADC Senior officers from key Government Ministries,

Departments and Executive Agencies have been permanently stationed at TIC. These are those from;

– Ministry of Lands & Settlement Development– Ministry of Industry and Trade (MIT)– Business Registration & Licensing Agency (BRELA)– Tanzania Revenue Authority (TRA)– Ministry of Home Affairs - Immigration Department– Ministry of Labour

International Awards by TIC:

TIC as Investor’s One-stop-centre

Source: TIC Database.

As Tanzania’s investment promotion agency, TIC offers a range of services to investors

2005 - Best Investment Promotion Agency in Sub Saharan Africa (By Africa Investor Platform)

2006 - Best country of the future (By Financial Times)

2007 - Best Investment Promotion Agency in the world (by UNCTAD/WAIPA)

2008 - Gold Award for Innovative Management in Africa ( By AAPAM)

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INVESTMENT FACILITATION INVESTMENT FACILITATION SERVICES:SERVICES:

Senior Government officials from the following Ministries/Government Departments have been stationed at TIC to assist investors to obtain various licenses and permits they need in order to start business.

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INVESTOR WINDOWS FOR INVESTOR WINDOWS FOR FISCAL INCENTIVES: FISCAL INCENTIVES:

A) Priority Sector Projects Receive Fiscal Incentives through TIA Act 1997,

B) PPP Projects Receive Fiscal Incentives through PPP Act 2010,

C) Specialized EPZ related Projects Receive fiscal incentives through Specific laws (e.g. EPZ/SEZ

etc.)

D) Other Projects (Above the land) Receive Fiscal Incentives through Tanzania Investment Act

1997

E) Mining, Energy & Gas Sector Projects (Below the land) Receive fiscal incentives through the Ministry of Energy and

Minerals

F) Service Sector Projects Do not receive fiscal incentives but can access Non-fiscal

Incentives upon registration through TIC

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Incentives under the Tanzania Investment Act:

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Exemptions on Projects capital goods;i) Import duty – 0%ii) Value added tax – 0%

Tax Relief on Deemed capital goods;i) Import duty – Exempted by 75% (Pay 25%)ii) Value added tax – Reduced from 18% to 10%

Capital allowancei) Agriculture – 100%ii) Mining - 100%

iii) Manufacturing – 50% iv) Fish farming - 50%

v) Tourist services – 50% vi) Hotels - 50%

Depreciation Allowance:Ranging from 37.5% to 50% depending on the class of

the depreciable asset.

Exemptions on Projects capital goods;i) Import duty – 0%ii) Value added tax – 0%

Tax Relief on Deemed capital goods;i) Import duty – Exempted by 75% (Pay 25%)ii) Value added tax – Reduced from 18% to 10%

Capital allowancei) Agriculture – 100%ii) Mining - 100%

iii) Manufacturing – 50% iv) Fish farming - 50%

v) Tourist services – 50% vi) Hotels - 50%

Depreciation Allowance:Ranging from 37.5% to 50% depending on the class of

the depreciable asset.

Financial IncentivesFinancial Incentives

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Automatic Immigration Quota: of up to 5 expatriates at the initial stage of the projects (depending on nature of the project)

Unconditional transferability of funds:

Net profits or dividends of the investment Payment in respect of foreign loans Remittance of proceeds net of all taxes and other obligations Royalties fees and other charges Payment of emolument and other benefits to foreign personnel

Note: The transactions must be through any authorized dealer bank and in freely convertible currency.

Protection against Non-Commercial Risks:

Tanzania in a Member of MIGA (Multilateral Investment Guarantee Agency, A Scheme under the World Bank) and IISD

Protection against Nationalization/Confiscation:

Incase of change of policy, TIC registered projects can not be confiscated by the Government

Automatic Immigration Quota: of up to 5 expatriates at the initial stage of the projects (depending on nature of the project)

Unconditional transferability of funds:

Net profits or dividends of the investment Payment in respect of foreign loans Remittance of proceeds net of all taxes and other obligations Royalties fees and other charges Payment of emolument and other benefits to foreign personnel

Note: The transactions must be through any authorized dealer bank and in freely convertible currency.

Protection against Non-Commercial Risks:

Tanzania in a Member of MIGA (Multilateral Investment Guarantee Agency, A Scheme under the World Bank) and IISD

Protection against Nationalization/Confiscation:

Incase of change of policy, TIC registered projects can not be confiscated by the Government

Non-Fiscal Incentives:Non-Fiscal Incentives:

Incentives under the Tanzania Investment Act:

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In addition to existing investment incentives a potential investors, with projects of specific/great impact to the society or economy may apply for a strategic investor status to seek/request additional investment incentives from the Government, as provided for in Rule 49 of the Tanzania Investment Regulations 2002.

Criteria used to award ‘Strategic Investor status’ considers the following:

The amount of capital to be invested (normally above UDS 20 million);

The contribution of the project in terms of creating employment opportunities;

New and innovative technology to be introduced by the Prospective

investors strategic project;

The extent to which the Project brings capacity to manufacture products for export and the earning of foreign exchange;

Whether the Investment is in the Special Economic Zone or Geographically disadvantaged regions.

In addition to existing investment incentives a potential investors, with projects of specific/great impact to the society or economy may apply for a strategic investor status to seek/request additional investment incentives from the Government, as provided for in Rule 49 of the Tanzania Investment Regulations 2002.

Criteria used to award ‘Strategic Investor status’ considers the following:

The amount of capital to be invested (normally above UDS 20 million);

The contribution of the project in terms of creating employment opportunities;

New and innovative technology to be introduced by the Prospective

investors strategic project;

The extent to which the Project brings capacity to manufacture products for export and the earning of foreign exchange;

Whether the Investment is in the Special Economic Zone or Geographically disadvantaged regions.

Strategic Investor Status

Strategic Investor Status

Incentives under the Tanzania Investment Act:

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Refund of duty charged on imported inputs used for producing goods for export and sold to foreign institutions like UN and its agencies operating in Tanzania

Refund of duty charged on imported inputs used for producing goods for export and sold to foreign institutions like UN and its agencies operating in Tanzania

Import Duty Draw Back Scheme

Import Duty Draw Back Scheme

Incentives under the Tanzania Investment Act:

NATIONAL INVESTMENT STEERING COMMITTEE (NISC)NATIONAL INVESTMENT STEERING COMMITTEE (NISC) In an effort to improve the business environment and foster

economic growth through increased investment the Government formed a National Investment Steering Committee chaired by the Hon. Prime Minister.

Other members of the committee are Minister of Finance, Minister of Industry and Trade, Minister of Agriculture, Minister of Lands, Minister for Investment and Empowerment, Attorney General, Governor of the Bank of Tanzania and the Executive Director TIC (Secretary).

This committee is entrusted with the role of investment policy formulation and solving problems of investors on a fast track basis.

INVESTOR FACILITATION SERVICES:

• Foreign investors can obtain land for investment through Tanzania Investment Centre, where ‘‘Derivative Right’’ is granted.

• Two main ways by which investors can obtain/ access land for investment:

A) To apply for land acquisition from the village, and then follow all the necessary steps required, until the land is transferred from village land to general land and given to TIC in order to prepare a Derivative Right for the investor.

ACQUISITION OF LAND FOR INVESTMENTS:

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ACQUISITION OF LAND FOR INVESTMENTS:

B) To purchase a parcel of land from individuals/ Companies:

- Once the buyer and a seller have agreed upon the price, the seller is required to surrender the land tittle to the Commissioner for Lands in order to re-issue in the name of TIC, which will eventually prepare a Derivative Right for an investor.

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FDI INFLOWS TO TANZANIA FROM 2007 – 2012 (US$ Mill)

Source: UNCTAD - World Investment Report – 2013

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ACHIEVEMENTS OF TIC EFFORTS:

TREND OF PROJECTS REGISTERED WITH TIC

FROM 2005 TO 2012Number of Projects

550678 701

871

572 509

825 896

0200400600800

1000

2005 2006 2007 2008 2009 2010 2011 2012

Source: Tanzania Investment Centre Database, 2013

Years

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Distribution of 896 Investment Projects registered at TIC in

2012 (per sector)

Source: Tanzania Investment Centre Database, 201333

UK36%

India14%

Kenya11%

China11%

USA7%

Netherland7%

S. Africa5%

Canada4%

German2% Oman

2%

Source: TIC Database, 2013

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TOP TEN (10) LEADING COUNTRIES WITH TOP TEN (10) LEADING COUNTRIES WITH REGISTERED INVESTMENTS IN TANZANIA REGISTERED INVESTMENTS IN TANZANIA (BY VALUE OF Million US$) FROM 2006 - (BY VALUE OF Million US$) FROM 2006 -

20122012

China Investment Trends in Tanzania:….488 Projects Registered at TIC

….$2.393 Billion in value….76, 201 Jobs created thus far

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Number of Chinese Projects in Tanzania

Distribution of Chinese Projects by percentage (%)

Chinese Investment Projects by Value (Millions USD):

Number of Jobs created by Chinese Projects

(per sector)

Jobs created by Chinese projects per sector (in %)

OUR COMMITMENT TO INVESTORS

Application Maximum Time taken

Company Registration 3days Industrial License 1day Business licensing 1days Certificate of incentives 7days Resident Permit Class ‘A’ 14days Resident Permit Class ‘B’ 14days Special Pass 1day

OUR COMMITMENT TO INVESTORSOUR COMMITMENT TO INVESTORS

Application Maximum Time taken

• Meeting with TIC staff Immediately

• Arranging appointments 24hours

• Preparation and confirmation 3days of itinerary for Potential investors

YOU MAY ALSO CONTACT:Executive DirectorTanzania Investment CentreShaaban Robert Street,P.O.Box 938Dar es SalaamTel: +255 22 2116328-32Fax: +255 22 2118253Email: information@tic.co.tz Website: www.tic.co.tz

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www.tic.co.tz

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