How Tanzania's new business blueprint will change things

Dar es Salaam. The cabinet has approved a blueprint that will set the stage for a raft of amendments to laws and regulations governing the conduct of businesses in Tanzania.

The aim, the Industry, Trade and Investment minister, Mr Charles Mwijage, said in a widely circulated video clip, is to improve the country’s business environment and attract more investors.

The blueprint – prepared after thorough consultations with various private sector associations and World Bank officials - will see the government initiate amendments of various laws including those governing Value Added Tax (VAT), Indicative prices for imports, Immigration and Labour, Social Security and Environmental Management, to mention but a few.

The changes, classified as ‘Quick Wins’ and ‘Medium Term’ reforms, would also see several areas affected including ports, regulatory bodies and fees paid to various government agencies by members of the business community.

The envisaged changes are in line with Tanzania’s efforts to market itself as an investment hub where bureaucracy and high costs of doing business will be a thing of the past.

The blueprint comes against the backdrop of Tanzania’s lacklustre performance in the World Bank’s Doing Business reports.

The reports cover 11 specific issues namely starting a business, dealing with construction permits, getting electricity, registering property and getting credit.

Other issues are protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labour market regulations.

According to the World Bank’s Doing Business 2018 Report, which was released in 2017, Tanzania was ranked 137th out of 190 economies.

The country did not fare well in aspects of starting a business (ranked 162nd globally), dealing with construction permits (156th) trading across borders (182nd) and in registering a property (142nd).

Against that background, the government seems to specifically target the areas in its holistic approach in order to improve the business climate.

Construction permits

The fifth-phase government under President John Magufuli now plans to come up with a single regulatory body, which will help remove obstacles that the investors face when seeking construction permits.

Currently, an investor has to go through a number of regulatory agencies, including the Contractors Registration Board (CRB), Engineers Registration Board (ERB) and Architects and Quantity Surveyors Registration Board (AQRB).

All regulatory bodies charge fees.

“It’s recommended that one regulatory body, which will be known as the Construction Industry Development Board, should be introduced. This board will host CRB, ERB, and AQRB as departments in order to enhance coordination and improve efficiency,” according to the new plan.

The fees charged by the boards will also have to be reviewed.

Starting a business

With a 162nd rating out of 190 economies in the World Bank’s report in the aspect of starting a business, the government believes it has to act immediately in order to turn Tanzania into a business-friendly destination.

Backing the argument with a 2016 study conducted by the Tanzania Chamber of Commerce, Industries and Agriculture (TCCIA), the blueprint – a brainchild of the Industry, Trade and Investment minister, Mr Mwijage and his Permanent Secretary, Prof Elisante Ole Gabriel – states categorically that multiple regulatory agencies were making it difficult for the investors to start businesses.

The National Environment Council (Nemc), Operational Safety and Health Authority (Osha), Tanzania Food and Drugs Authority (TFDA), Tanzania Bureau of Standards (TBS), the Fire Department, the Weights and Measures Agency (WMA) and the Energy and Water Utilities Regulatory Authority (Ewura) have been cited as among the agencies that cause the investors to spend more time and resources before starting their businesses.

Unnecessary delays at the Local Government Authority (LGA) level also complicate the situation.

The government currently is determined to bring all agencies dealing with certain businesses under one roof with a view to simplifying various processes.

Certain fees will also have to be abolished and only to be recouped through operational efficiencies of some government departments.

Private sector delights

Even without going through the final copy that was ultimately approved by the cabinet on Friday, Mr Mwijage said the private sector believes that the document is a turning point for Tanzania.

“Though I have not yet seen the final copy, I believe the blueprint is a turning point for Tanzania’s business environment,” said the Tanzania Private Sector Foundation (TPSF) executive director, Mr Godfrey Simbeye, during an interview with The Citizen recently.

The private sector, he said, was involved in preparation of the blueprint from the onset.

“We only pray that the same inclusivity is seen during its implementation. I commend the government for the initiative because the document contains up to 70 per cent of private sector grievances,” Mr Simbeye said.

Cross-border trading

The World Bank’s 2018 Doing Business Report, which was released last year, put Tanzania in position 182 globally out of 190 economies. The situation is compounded mainly by customs procedures pertaining to cross-border trade.

Complaints from businesses operating haulage operations from the port of Dar es Salaam make the situation even more complex.

A 2014 situational analysis report by the Confederation of Tanzania Industries (CTI) states that there are at least 10 regulatory agencies associated with at least 16 different charges at the Dar es Salaam port.

They include Tanzania Revenue Authority (TRA), the Surface and Marine Transport Regulatory Authority (Sumatra) TFDA, WMA, Railway transporters (Tazara and TRL), TBS, several ministerial departments, Tanzania Radiation Commission and the Chief Government Chemist.

With each agency having its own opaque and complex administrative procedures, businesses are the losers.

The government now wants to form a one-stop-centre where investors can meet all regulators.

“Formulate a one-stop-centre (preferably an online system) where the relevant investors can meet all regulators, process the required permits and make payments at one place,” the blueprint says, noting that part of the recommendations is already being implemented by the Tanzania Ports Authority (TPA) in collaboration with USAID.

The blueprint recommends that the investors in the mining and petroleum – who are forced to follow the approval process contained in their respective laws due to institutional fragmentation at the one-stop-centre for Tanzania Investment Centre (TIC) – to be considered for the arrangements.