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An Overview of the Investment Climate & Investment Potentials in Tanzania

An Overview of the Investment Climate & Investment Potentials in Tanzania. WHY INVEST IN TANZANIA?. TANZANIA. 2. Tanzania’s Advantages:. TANZANIA’S ECONOMIC OVERVIEW. Population: 44.9 Million (2012.). Annual Average Real GDP Growth Rate 7.0% (2003 - 2012).

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An Overview of the Investment Climate & Investment Potentials in Tanzania

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  1. An Overview of the Investment Climate &Investment Potentials in Tanzania

  2. WHY INVEST IN TANZANIA? TANZANIA 2

  3. Tanzania’s Advantages:

  4. TANZANIA’S ECONOMIC OVERVIEW Population: 44.9 Million (2012.) Annual Average Real GDP Growth Rate 7.0%(2003 - 2012) Population Growth Rate 2.7 %(2012 ) Annual Average Inflation Rate 8.6 % (2003 -2012) GDP Per Capita $ 652 (2012) Agriculture Employs 80% of the Workforce 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

  5. <1>. GOVERNMENT’s COMMITMENT FOR INVESTMENTS & PRIVATE SECTOR DEVELOPMENT H.E Dr. Jakaya Mrisho Kikwete President United Republic of Tanzania H.E Dr. Mary M. Nagu (MP)Minister of State ( Investment & Empowerment ) H.E Mizengo K.P Pinda (MP)Prime Minister United Republic of Tanzania 5

  6. The Government is committed to economic growth through private sector development Enforcing Contracts (Doing Business Index 2012) Ranking of Sub-Saharan African countries • 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 Foreign Direct Investment (FDI), USD billion,2000-2010 Source: World Bank; Doing Business Index 2012; 6

  7. <2>. Tanzania: Governance & Political Stability <<1>> Tanzania is one of the most open and stable democracies in Africa Ranking of countries in Mo Ibrahim Governance Index, 2011, (Sore/100) • 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 Ranking of countries in Global Press Freedom Index, 2011, Rank Source: Mo Ibrahim Foundation, Press Freedom Index 2011 7

  8. <3>. Tanzania: fastest growing Economy Dar es Salaam Number of tourists visiting Tanzania, thousands Average annual GDP growth, %, 2001-2010 +175% • 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 8

  9. <4>. Predictable Fiscal Investment Regime 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. 9

  10. <5>. Tanzania Ranked as #1 Investment Destination for Corporates in the EAC Source: RMB Global Markets Data – September 2013 10

  11. Trend of FDI flows into East African Countries (US $ Million) 11

  12. <6> Tanzania is among Top 10 Most Attractive Investment Destinations in Africa... 12

  13. < 7>. Country’s Statistical Potentials based on the World Investment Trends 13

  14. World Investment Trends cont’d.......... 14

  15. World Investment Trends cont’d.......... 15

  16. FDI in East African Countries (US $ Miln)

  17. <9>. ACCESS TO POTENTIAL MARKETS Tanzania enjoys Preferential Market Access with; Negotiated EPA with European Union SADC (About 300m People) EAST AFRICA COMMUNITY (About 130M People) AGOA (USA) Africa Growth and Opportunity Act Over 6,000 items Japan, Canada etc China (Over 4,000 Items) 3 MAJOR PORTS; GATEWAY TO SIX (6) LAND-LOCKED COUTRIES (Uganda, Rwanda, Burundi, DR Congo, Zambia & Malawi) 17

  18. POTENTIAL INVESTMENT OPPORTUNITIES IN TANZANIA: 18

  19. Where does TIC come in.... WHERE TIC COMES IN... 19

  20. As Tanzania’s investment promotion agency, TIC offers a range of services to investors TIC Overview • 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 Executive Director, TIC 20 Source: TIC Database.

  21. As Tanzania’s investment promotion agency, TIC offers a range of services to investors TIC as Investor’s One-stop-centre • 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: • 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) 21 Source: TIC Database.

  22. INVESTMENT FACILITATION 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. 22

  23. INVESTOR WINDOWS FOR FISCAL INCENTIVES: • 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 23

  24. Incentives under the Tanzania Investment Act: • 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 allowance i) 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 Incentives

  25. Incentives under the Tanzania Investment Act: • 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:

  26. Incentives under the Tanzania Investment Act: • 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

  27. Incentives under the Tanzania Investment Act: Import Duty Draw Back Scheme • 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

  28. NATIONAL INVESTMENT STEERING COMMITTEE (NISC) INVESTOR FACILITATION SERVICES: • 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.

  29. ACQUISITION OF LAND FOR INVESTMENTS: • 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. 29

  30. 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. 30

  31. FDI INFLOWS TO TANZANIA FROM 2007 – 2012 (US$ Mill) ACHIEVEMENTS OF TIC EFFORTS: Source: UNCTAD - World Investment Report – 2013 31

  32. TREND OF PROJECTS REGISTERED WITH TIC FROM 2005 TO 2012 Number of Projects Years Source: Tanzania Investment Centre Database, 2013 32

  33. Distribution of 896 Investment Projects registered at TIC in 2012 (per sector) Source: Tanzania Investment Centre Database, 2013 33

  34. TOP TEN (10) LEADING COUNTRIES WITH REGISTERED INVESTMENTS IN TANZANIA (BY VALUE OF Million US$) FROM 2006 - 2012 Source: TIC Database, 2013

  35. China Investment Trends in Tanzania:….488 Projects Registered at TIC….$2.393 Billion in value….76, 201 Jobs created thus far

  36. Number of Chinese Projects in Tanzania

  37. Distribution of Chinese Projects by percentage (%)

  38. Chinese Investment Projects by Value (Millions USD):

  39. Number of Jobs created by Chinese Projects(per sector)

  40. Jobs created by Chinese projects per sector (in %)

  41. 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

  42. OUR COMMITMENT TO INVESTORS Application Maximum Time taken • Meeting with TIC staff Immediately • Arranging appointments 24hours • Preparation and confirmation 3days of itinerary for Potential investors

  43. YOU MAY ALSO CONTACT: Executive Director Tanzania Investment Centre Shaaban Robert Street, P.O.Box 938 Dar es Salaam Tel: +255 22 2116328-32 Fax: +255 22 2118253 Email: information@tic.co.tz Website: www.tic.co.tz

  44. www.tic.co.tz 44

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