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BUSINESS ENVIRONMENT IN TANZANIA PRACTICAL ASPECTS

BUSINESS ENVIRONMENT IN TANZANIA PRACTICAL ASPECTS. INTRODUCTION. The Government of the United Republic of Tanzania is committed to the continued development of a liberalised market economy with the private sector as the engine of growth.

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BUSINESS ENVIRONMENT IN TANZANIA PRACTICAL ASPECTS

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  1. BUSINESS ENVIRONMENT IN TANZANIAPRACTICAL ASPECTS

  2. INTRODUCTION • The Government of the United Republic of Tanzania is committed to the continued development of a liberalised market economy with the private sector as the engine of growth. • Objective: becoming a middle class country by 2025 (Vision 2025), • Role of State in developing market economy • Various strategic reforms are implemented to create an enabling environment for the private sector to grow and become the engine of sustainable economic development.(1960’s, 1970’s, 1980’s, 1990’s to 2009)

  3. Various Reforms Implemented • Reforms implemented to strengthen Business Environment by GoT with support of DPs -Privatization(PSRP)- World Bank and others -BEST- DFID, Netherland, SIDA, CIDA, World Bank(Since 2002 to date) -SELF- (ADB) -USAID

  4. BEST -PROGRAMME • Specifically aimed at strengthening Business Environment in Tanzania. • BEST is facilitating ongoing reforms in the following Components( USD 157 Millions) (a)Achieving Better Regulations Business Licencing Reforms, Land Law Reforms , Labour law reforms, Taxation Reforms, Agriculture Reforms, Import/Export

  5. BEST -PROGRAMME (b)Commercial Dispute Resolution Capacity Building, Reforming Courts and Legal Procedures, Clearing Case Backlog, Alternative Dispute Resolution Mechanism (c)Change of Government Culture Intervention to improve Service Delivery the Public to the private sector. (d)Tanzania Investment Centre Support to strengthen the Tanzania Investment Centre (e) Private Sector Advocacy Enhance Private sector participation in Government policy and legislation reforms

  6. Specific BEST I-Programme Challenges Some achievement but still some challenges • The programme did not adequately detail the sequencing and institutional arrangements for required specific reforms • BEST phase I was designed n 2002, and remained static hence failed to address new challenges emerging • Scope and administrative processes were not clearly documented and well introduced.

  7. Tanzania Doing Business Ranking

  8. Tanzania Ease of Doing Business Ranking • Despite the macroeconomic achievements and strong growth in recent years, cost of doing business in the country remains high as observed by the private sector. This has been reported via different reports locally and internationally. • Tanzania’s record against the continent’s top performers shows a downward trend over the last three years

  9. Tanzania’s record against the continent’s top performers

  10. General Problems in Various Reforms • Did not address key issues but addressed secondary issues • Lack of proper sequencing (Critical path) • No ownership in program Design • Effective use of Business for Reform • Capacity Gaps • No Linkages with main Public Sector and Local Government Reforms • Parallelism

  11. Performance of the Other Former Best Reformers • Why this situation for the whole group of former Best Performers?

  12. Performance of the other former best reformers

  13. TANZANIA TRADE WITH EAC • Tanzania Export to EAC has increased from $106.5 million in 2007 to $315.5million in 2008. • Tanzania Export to Kenya has increased from $ 101.1 million in 2007 to $235 million in 2008 • Tanzania Export to Uganda has increased from $ 46.1 million in 2007 to $ 53.8 million in 2008 • This shows a favorable Balance of Trade (Source: BOT)

  14. TANZANIA TRADE WITH EAC(Source: BOT)

  15. TANZANIA TRADE WITH KENYA • Tanzania Export to Kenya has increased from $ 101.1 million in 2007 to $235 million in 2008 • Tanzania import from Kenya was $ 100.1 million in 2007 and $ 197.9 in 2008 • This shows a favorable Balance of Trade with Kenya in 2007 and 2008 (Source: BOT)

  16. TANZANIA TRADE WITH KENYA(Source: BOT)

  17. Balance of Trade with Kenya (Source: BOT)

  18. Historical Look at FDI in the NeighborhoodFDI Inflows 1990’s and 2004-07

  19. Historical Look at FDI in the NeighborhoodFDI Inflows 1990’s and 2004-07 Cont.. • NOTE: The figure above compares historical FDI inflows for our neighbors. FDI Flow of Kenya in 2007 reflects French Telecom’s acquisition of majority share of Kenya Telecom. • Tanzania is doing better than other East African Countries in FDI inflow (FDI Inflows in the 1990’s and 2004-07 data from UNCTAD, World Investment Report 2008). • This situation has direct relationship with reforms on business environment that Tanzania has been implementing

  20. Historical Look at FDI in the NeighborhoodFDI Inflows 1990’s and 2004-07 Cont.. • Though Tanzania is leading in FDI inflow in EAC, Doing Business 2010 report on ease in doing Business has ranked Tanzania 131 while Kenya 95 and Uganda 112

  21. Historical Look at FDI in the Neighborhood(2)Stock of FDI in 2007(US$ millions) Tanzania occupies 54.2 % of total FDI flow to East African Region. As Tanzania has seen a longer period of political stability, its success in attracting FDI is line with a number of studies that have concluded that political stability is the most prominent element to decide FDI. Rwanda 170 Burundi 48 Kenya 1,892 Tanzania US$ 5,942 Mil Uganda 2,909 Data: UNCTAD World Investment Report 2008

  22. Example of SME Contribution in Investment • Growth in SMEs is an indication of the increase of local participation in investment.

  23. Micro Manufacturing Enterprises (Oil Extractors) are growing(Example of SME contribution in Investment) SMEs Production of Sunflower oil has increased, and this has attracted the production of sunflower seeds which has increased by 500% in last 4 years. Sunflower Production Jumped since 2006 Source : MAFSC

  24. TO SUMMARIZE THE INTRODUCTION • Tanzania with support from her DPs has been implementing a number of reforms. • Tanzania is doing better than other East African Countries in FDI inflow • Tanzania is currently enjoying increase in export to its neighbours with favourable balance of payments. • However, Tanzania is dropping in the Ease of Doing Business rankings.

  25. To improve Business Environment Tanzania in a Practical Way Need for a well focused strategy : • To deal with primary issues • To create ownership by all stakeholders • To Streamline the programme with clear definition of roles • To provide Capacity building to all stakeholders • Linked to Sector strategic plans/MTEF • Linked to all institutional levels (LGAs)

  26. STRATEGY FOR IMPROVING THE DOING BUSINESS ENVIRONMENT • The Government has read and discussed the recent trend of Tanzania ranking in various ease of doing business reports • In order to improve the Business Environment, a comprehensive strategy is being developed. • Task Teams have been formed to diagnose the core causes and come up with recommendations on how to improve Business Environment • Each Task Team is lead by a Permanent Secretary from a lead Ministry and draw members from related institutions and the private sector.

  27. REFORM AREAS AND RESPONSIBLE INSTITUTIONS • Starting Business and Closing Business • Dealing with Construction Permit • Employing Workers • Registering Property • Getting Credit • Protecting Investors • Paying Taxes • Trading Across borders • Enforcing Contracts • PS-MITM • PS-PMO RALG • PS-ML • PS-MLHHS • Governor-BOT • PS-MOCAJ • PS-MOFEA • PS-Home Affairs • PS-MOCAJ

  28. CONCLUSION AND WAY FORWARD • As observed by the private sector cost of doing business in the country remains high • In response to that, the Government has set up task forces to review public business support policies, regulations and administrative procedures. • Recommendations will be used to formulate a comprehensive Government led programme to ensure that Tanzania Doing Business Environment is ranked favourably locally and internationally in the near future.

  29. The Expected output will be as follows

  30. Next Steps Lead by Government and involve all other Key Stakeholders including Private Sector and LGAs. Civil Society will be invited to comment • To be finalized in march, 2010 with clear short, medium and long term measures • Will be streamlined to Government operations to avoid parallel structures • Some required actions may demand reviewing and/or harmonizing some policies regulation/procedures.

  31. Next Steps Cont… • Will guide future sector strategic plans/MTEFs and budget allocations • Capacity Building in all Government and LGAs to facilitate DB. • Work in progress with Great ownership. • Since the new strategy is institutionalized and mainstreamed, it call for more GBS financing • More resources • Create Independent Monitoring Group (Helleina kind)

  32. ASANTENI

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