Tanzania: One year of bountiful foreign investment inflows

WHEN President Samia Suluhu Hassan told Tanzanians about her intentions to open up the economy to investors, on her inauguration in March 2021, it was hard to imagine how that could have been possible.

During that time the Covid-19 pandemic had wrecked down the global economy and brought air travel to a complete halt. At the same time the country’s business climate was regarded as unfriendly to investors.

One year down the lane, however, President Hassan has proved doubters wrong by delivering with flying colours across all metrics.

Revenue collection has been at record levels despite the change of tactics into a more friendly tax collection approach. The Tanzania Revenue Authority has been able to collect an average of Sh1.85 trillion per month in President Hassan’s one year in office compared to a monthly average of Sh1.5 trillion in the 2020/2021 fiscal year.

Record investments have also been registered by the Tanzania Investment Centre (TIC) in the 12 months President Hassan has been in power.

According to TIC in one year of President Hassan’s rule (between March 2021 and February 2022) the Centre registered 272 projects worth $4.088 billion, which are expected to create 55,814 jobs. This can be compared to $1.013 billion investments in the twelve months of 2020 equivalent to a growth of 300 percent.

TIC Executive Director Dr Maduhu Kazi, said investment projects registered in one year of President Hassan is a record in the 25 years of TIC existence.

It becomes much of a feat considering the global economic chokehold caused by the Covid-19 pandemic. “We will see more investors coming based on contacts that we have already established through the President’s foreign tours, which we also participated,” Dr Kazi noted.

TIC is responsible for promoting, facilitating, coordinating and registering foreign and domestic investments that meet capital thresholds of $500,000 for foreign owned and $100,000 for locally owned projects.

The record number of investment projects registered has been made possible because President Hassan’s strategy has been to focus on strategic investment promotion tours. She has led these tours herself, giving them weight and authority, which is key to winning the confidence of big, strategic investors.

In addition, the government is focusing on promotion of development of industrial parks to enable integrated services for investors to reduce cost and time spent by investors looking for separate land.

Strategic investments are those with capital thresholds of $20 million for Tanzanians and $50 million for foreigners. Special strategic investments are those that are worthy $300 million and above. Usually, these kinds of investments need special incentives that are beyond normal incentives.

It is in that vein President Hassan led a business delegation to France and Belgium from February 10 to 20 this year. In the two European countries President Samia and her delegation were able to meet investors from all over Europe who were very interested to invest in Tanzania.

And about 34 investors showed interest to invest in Tanzania, either as new investors, or existing investors who seek to expand to other areas.

In the same month of February President Hassan went to the Dubai 2020 Expo where she presided over the Tanzania-UAE investmetn forum that was convened at the occassion of Tanzania Day on February 27.

During the Expo, about 37 Memoranda of Understanding (MoUs) were signed between private sector companies from all over the world participating in the Dubai Expo 2020 and Tanzanian public and private sector organizations. The MoUs would produce investments worth USD8 billion and create 214,575 employment opportunities.

President Hassan’s administration has also come up with the strategy of industrial parks to boost industrialization. Currently Elsewedy Electric Company, an investor from Egypt, is building an industrial park in Kigamboni Dar es Salaam that would house at least 100 factories. Authorities have also allocated land in Morogoro Region where the Dakawa sugar industrial park has been set up to facilitate investment in the sugar production value chain.

The Elsewedy industrial park is one of the several strategic and special strategic investment projects that the government has approved in one year of President Hassan. Other projects include the ITRACOM fertilizer project, Knauf Gypsum and the Bagamoyo Sugar project. These are new projects that will reduce imports and save the country the much coveted foreign exchange. And yet other projects are Taifa Gas project, the Kagera Sugar project and Mtibwa Sugar project. These are existing projects that will involve massive expansion.?

Together with attracting investments President Hassan has also worked hard to remove obstacles to investments and improve the overall business climate and rebuild the trust between private sector and government. ?

Under her guidance, Tanzania also quickly ratified the African Continental Free Trade Area (AfCTA), which widens the trade scope of investors who put their money into Tanzania, making available to them the 1.3 billion Africa consumer market.

As a result of her visit to Kenya in May 2021 a total of 56 out of 64 non-tariff barriers between Tanzania and Kenya have been scrapped. This is a milestone that has facilitated trade and investments between the two neighbouring countries. Bilateral trade data between Tanzania and Kenya increased threefold to nearly $1billion since March last year.

President Hassan’s leadership has also been crucial in unlocking huge investment and infrastructure projects that had stalled for years. Last year the government resumed talks with investors on the $30 billion liquefied natural gas (LNG) project to be located in Lindi Region. Negotiations for the $10 billion Bagamoyo port project were also revived. In the power tours that she made overseas President Hassan was able to raise the interest of other investors on the Bagamoyo port. She said in a recent interview with Bloomberg: “I have been in Belgium and at Antwerp investors were asking for it [Bagamoyo port]. Recently we had the Abu Dhabi port asking for Bagamoyo. Even Dubai World is asking for Bagamoyo.” Said the President

The ever increasing efficiency of the TIC has had snowballing effect on investors’ sentiments, too in the past one year. It now takes three days to register a project and obtain certificate of incentives at the TIC’s for investors who have all the required documents. Previously it took up to a week or more.

This is because of digital transformation of government institutions at One Stop Shop Centre, which are responsible for issuing various permits and licenses. One Stop Centre is a facility located at the TIC, which hosts 12 government institutions.

According to Dr Kazi, efforts are at advanced stages to link the digital platforms of each institution at the One Stop Shop Centre through the electronic single window. The electronic window is 70 per cent complete and will completely change investor experience by simplify registration of projects immensely.

“It will facilitate the whole process from applications, processing of the applications, to issuing of permits. It will also help the flow of information among the 12 institutions responsible for issuing permits to investors,” Dr Kazi said.

Giving further statistics on investments registered in one year of President Hassan’s administration Dr Kazi noted that 110 out of the 272 projects registered were foreign owned, 82 projects are locally owned and 80 projects were joint venture between foreign and local investors.

Most of the registered projects were in the manufacturing sector (139 projects). Projects in other sectors are as follows: agriculture (20 projects), commercial buildings (23), economic infrastructure (2), energy (1), financial services (4) and human resources (10). And yet other sectors include services (19), telecommunications (1), tourism (24) and transportation (29).?

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