Development plans in Tanzania address the local business environment

 

The United Republic of Tanzania comprises two separate, semi-autonomous regions: mainland Tanzania (formerly Tanganyika) and Zanzibar, an archipelago of islands with its own executive, legislative and judicial branches. Certain areas of law are union matters, meaning the same law applies to both lands, while for non-union matters – such as corporate or land law – Zanzibar’s legislature passes its own regulations.

Tanzania is a common law country, with business laws historically based on UK statutes. Commonwealth case law also holds persuasive precedence. Tanzania has signed several international treaties, including the New York Convention on the recognition and enforcement of foreign arbitral awards, and provides streamlined enforcement of foreign judgments from commonwealth countries, thus facilitating cross-border business. As Tanzania undertook major reforms towards a free-market economy in the 2000s, numerous business laws were enacted. The Tanzania Investment Centre, Zanzibar Investment Promotion Authority and Export Processing Zones Authority are at the forefront of facilitating investment. With GDP growth projected at 6.8% in 2018, Tanzania remains a key target for foreign investors, with China taking the lead. Construction, mining, transport and communications were key growth drivers in 2017, backed by manufacturing, infrastructure development and a widening consumer base.

Executive Direction

President John Magufuli came to power in October 2015, bringing significant change with his slogan “hapa kazi tu”, meaning “nothing but work”. He has used new laws as a means of social change, purging corruption, inefficiency and waste, while increasing development spending and introducing free universal education in a bid to meet the goals of Tanzania Development Vision 2025. President Magufuli has made numerous changes to state and regulatory bodies, including dismissing public servants that used false education certificates and relocating government offices from Dar es Salaam to Dodoma. While the changes have resulted in regulatory delays, the level playing field that is being created is welcomed by the business community. Tanzania’s “Big Results Now!” programme resulted in the liberalisation of on-grid electricity, the move to an online companies registry, and other modernisations, such as electronic passports, though the programme was disbanded in mid-2017.

State Moves

The government plans to spend nearly 45% of its FY 2017/18 budget on infrastructure to drive GDP growth in the next 10 years. Projects span building a new standard-gauge rail line; revitalising flag carrier Air Tanzania; constructing, modernising or expanding several ports, airports and ferry services; improving roads; establishing special economic zones; and developing a long-awaited liquefied natural gas plant.

Tanzania also plans to increase electrification around the country. This has led to significant gas-to-electricity projects and plans for Tanzania’s first wind farm – the $300m Singida wind power project – in a bid to reduce reliance on hydropower. Uganda’s decision to route its $3.55bn heated crude export pipeline through Tanzania is also a boon to local infrastructure works.

Private sector engagement grew in 2017, spearheaded by the government and the Tanzania Private Sector Foundation. However, many perceived ills of private sector investment have yet to be addressed, including potential renationalisation or re-allocation of industries and factories privatised in the 1990s, in part because nearly 200 privatised factories are not operational. Similarly, the Ministry of Lands, Housing and Human Settlements Development is revoking land titles subject to development conditions that have not been met by titleholders. Where in accordance with non-retrospective law and clearly stated conditions of investment permits, this enhances a transparent investment landscape that benefits the whole economy.

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The Report: Tanzania 2018

Legal Framework chapter from The Report: Tanzania 2018

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