Tanzania's new investment law close to taking effect

Dar es Salaam. The Investment Act, 2022 regulations are almost ready, The Citizen has learnt.

The new law, which is aimed at improving the investment climate, was passed by Parliament last December after being published in the Government Gazette.

President Samia Suluhu Hassan signed it into law in February this year, paving the way for a team of stakeholders from various spheres, led by the Investment ministry, to start preparing the regulations.

The Tanzania Investment Centre (TIC) was one of the key stakeholders which took part in preparing the regulations.

TIC corporate affairs director Suleiman Mnzava said the regulations were currently at the vetting stage by the Attorney General

“As a team, we are done with our part of preparing the regulations and we submitted the same to the Permanent Secretary responsible for Investment for improvement, if necessary,” he told The Citizen.

From that point, the regulations were taken to the responsible minister for further procedures.

“The minister has already forwarded the regulations to the Attorney General for the vetting process,” Mr Mnzava said.

After the vetting is completed, the regulations will be taken back to the responsible minister, who will take the same to the Government Printing Office for gazetting for seven to 14 days.

The regulations will then be ready for use and this could open a new era for the Investment Act, 2022, which repeals the Tanzania Investment Act No. 26 of 1997.

Asked when vetting will be completed, Attorney General Eliezer Feleshi said it is a confidential process.

“This (vetting) is more of a government internal process. What I can say as of now is that we are at a good stage and as a government we are done with stakeholders’ engagement,” he said.

The changes brought about by the new law provide clarity on several key issues, including on procedure.

Main highlights of the new law include access to international arbitration, reduction in investment capital for a Tanzanian investor, establishment of an integrated electronic system and adding functions for the TIC.

 The list also includes, clear time frame for an issued certificate of incentive, protection of existing certificates of incentives and removal of time to appeal to the minister for Investment, Industry and Trade.

Attracting investors

The new law has granted foreign investors access to settle disputes with TIC or the government through arbitration, a move that is expected to be a drawing card.

 The decision to utilise local or foreign avenues has been left for parties to a dispute to agree mutually.

The government withdrew from international arbitrations back then in 2018 on grounds that it had no faith in multilateral arbitration and investment guarantee bodies, saying they lack neutrality in resolving disputes between member countries and investors.

As it happens, economists warned that the decision by the government will scare away investors because most foreign investors prefer international arbitrations in resolving disputes.

Local investors to smile

The new law has reduced the minimum investment capital threshold for a business owned by a Tanzanian from $100,000 to $50,000.

The minimum investment capital threshold for foreigners remains $500,000.

Going digital

The new law mandates the TIC to establish an integrated electronic system for investment promotion and facilitation.

The system will enable efficient data integration between all the relevant regulatory authorities involved in issuing appropriate licenses, permits, approvals and consents required by investors.

More power for TIC

Added functions of TIC include implementation and coordination of efforts to improve the country’s image and investment climate as well as investment promotion in Tanzania.

Certificate of incentive

The new law stipulates a clearly defined time frame in which incentives attached to a certificate will remain active.

Section 20 of the law provides that financial incentives shall be active for a period not exceeding five years from the date issued.

Again, non-monetary incentives shall be active throughout the project implementation period.

No appeal timeframe

The New Act has removed the time limitation to appeal to the minister in relation to an investor's rejected application for permit or approval.

All appeals concerning permits and approvals will be guided in accordance with the specific laws governing the said licences and approvals and such appeals may be addressed to the relevant minister.