Investment climate still not good: report

Bagamoyo. Business leaders say the investment climate in the country remains unfavourable but current efforts by President John Magufuli to restore discipline in civil service and improve service delivery offer a glimmer of hope.

The sixth Business Leaders’ Perceptions of the Investment Climate in Tanzania Report – 2015 released on Saturday mentions corruption as the issue that has been least addressed by the government. The survey, which was conducted between July and August 2015, says doing business in Tanzania is becoming harder and that the government is making insufficient efforts to address key issues, except electricity generation and supply.

The findings released by the Tanzania Private Sector Foundation (TPSF) say factors that make it difficult for businesses to grow include tax administration, level of taxes, corruption and access to finance.

There has been improvement since Dr Magufuli took over almost a year ago, but the investment climate has not been completely turned around.

“The new leadership has come with a different approach and we are confident that something will happen. Some initiatives such as the Big Results Now are no longer operating, but at least the new government has created discipline in the civil service and that’s good for us,” TPSF Executive Director Godfrey Simbeye said at the launch of the report.

However, the perception of business leaders on the investment climate has not changed despite the government’s efforts to improve the situation, according to the findings.

“The results (of the survey) suggest that the perceptions of business leaders have not changed very much from 2009 to 2015…this is unfortunate as the government is actually making considerable efforts to make a difference.

“What the private sector wants are reforms in the business environment for investors to grow and expand. When they grow, they create more jobs and even pay more taxes. All these are healthy to the economy,” said Mr Simbeye.

Until 2015 power was the biggest problem business leaders wanted fixed, but now it is corruption.

“I think there is a relationship between tax administration and corruption...one may be fuelling the other,” said TPSF Policy Director Mr Gilead Teri when he presented a summary of findings in Bagamoyo at the weekend.

He cited as an example the 18 per cent value added tax (VAT) in Tanzania, which, he added, was the highest among East African Community member states.

The Confederation of Tanzania Industries (CTI) welcomed the report, saying it was timely as the country’s current leadership focused on industrialisation.

“This report is mainly about government operations, especially corruption. The government should thus take it as a tool for reforms in the issues identified,” said Mr Hussein Kamote, CTI Director of Policy and Advocacy.

On power supply, he said it was stable, but tariffs were too high compared with other countries that were competing with Tanzania in manufacturing.

“We are talking of countries like China and India whose products are dominant in Tanzania. Local products cannot compete with those from the said countries because our production costs are too high compared with them,” he added.

Tanzania Confederation of Tourism (TCT) Executive Secretary Richard Rugimbana said the report was a mirror for both the government and private sector.