A pro-business approach that has worked wonders

Dar es Salaam. Tanzania has witnessed a marked improvement in the business climate in the past two years, thanks to political will at the highest office in the land.

Since coming into office on March 19, 2021, President Samia Suluhu Hassan has made it clear that she wants to lead a country where businesses flourish.

Addressing Parliament for the first time in April 2021, President Hassan dedicated almost a third of her 90-minute speech explaining what her government would do for Tanzania to regain investors’ trust.

She also dwelt on how economic diplomacy, incentivising strategic projects, fighting corruption, removing red tape in issuance of work permits and approval of investment projects, among other measures, would boost investment to spur economic growth and reach the aspired eight percent annual growth rate.

President Hassan promised that her administration would review laws and regulations governing investment to make Tanzania more attractive to investors.

This was apparently based on Tanzania’s consistent poor showing in the World Bank’s Doing Business Reports.

The country’s highest position even was in 2016 when it was ranked 132nd globally.

Since then, it has been dropping, occupying the 137th, 144th and 141st positions in 2017, 2018 and 2019, respectively.

The ranks were below regional peers Kenya, Rwanda and Uganda, which had initiated a number of reforms during the period under review.

As for Tanzania, the unsatisfactory rankings during that period were largely associated with the government’s unpredictable policies and regulations governing businesses.

Ease of doing business was hampered by restricted access to finance, corruption, high tax rates and bureaucracy, among other factors.

As a result, members of the business community believed that the pace of reforms was painfully slow.

But with President Hassan’s assurance, the narrative has changed and businesses are now telling a different story.

Tanzania Business Community communications director Stephen Chamle described the two years President Hassan has been in office as “the period of revamping the private sector”.

He commended the Head of State for her political will in creating a conducive business environment with a view to attracting both local and domestic investors.

“The use of a task force in tax collection, an approach which was unhealthy, is now a thing of the past. We are very grateful for that,” Mr Chamle told The Citizen.

He said during the past two years, no account of a businessperson has been frozen as was the case before President Hassan came into office.

Mr Chamle also hailed President Hassan’s government for engaging the private sector in matters related to taxes and other areas affecting businesses.

He said frequent dialogues with the government have been key to addressing challenges the business community has been grappling with in recent years.

Mr Chamle challenged all government officials to support the Head of State’s efforts to attract more investors.

In the past, courtesy of what some analysts describe as a combative approach to international business, aggressive domestic policies and unusual response to Covid-19 pandemic, the country was in the headlines for all the wrong reasons.

As a result, official figures show that the value of foreign direct investment (FDI) plunged by 43 percent between 2015 and 2019.

Not surprisingly, members of the business community – both local and international – took a new interest in Tanzania after President Hassan said in April 2021 that it was time to seriously improve the business environment.

Official data presented in Parliament in June 2017 showed that some 7,277 businesses in Kariakoo, Dar es Salaam, and other parts of the country had been closed.

Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) executive director Nebart Mwapwele said President Hassan’s two years in office had witnessed profound change.

“The President’s pro-business approach has restored the private sector’s trust and confidence in investing in the country,” he told The Citizen.

He commended the relaxation of conditions for local investors to get incentives, now that they are required to have projects worth at least $50,000 (about Sh115 million), down from the previous $100,000 (about Sh230 million).

“Previously, at least 25 percent of the value of the project ($100,000) was supposed to be deposited in a bank account. That condition is no longer there,” said Mr Mwapwele.

An economist from the University of Dodoma, Dr Lutengano Mwinuka, told The Citizen that President Hassan’s two years in office have been full of hope, thanks to her pro-business approach.

Available figures show how decisions made in the last two years have convinced investors to bring their money to Tanzania.

Going by Tanzania Investment Centre (TIC) data, a total of 132 projects worth $3.16 billion (about Sh7.3 trillion) were registered in five months from July to November 2022.

“Her pro-business approach has opened up the country to both local and foreign investments,” Dr Mwinuka said.

Tanzania Private Sector Foundation (TPSF) chairperson Angelina Ngalula shared similar sentiments, praising President Hassan for her support of the private sector.

In the past year, global instability and wars, rising inflation, variable energy costs, supply chain disruptions, the Covid-19 pandemic and rising interest rates sent shock waves around the world and into the local economy.

“Yet, favourable economic policies and government support for the private sector as the engine of economic growth have led to record-breaking profits in the banking industry, vibrant capital markets and a sharp increase in foreign direct investment,” Ms Ngalula told The Citizen.

Reforms

When the Sixth Phase Government’s first budget was presented in Parliament in June 2021, it outlined numerous measures that were aimed at improving the business environment.

The government exempted income tax on interests derived from government bonds.

It also avoided the allure of making excise duty adjustments on non-petroleum products like beer, soft drinks, water, wines and spirits except for spirits and local beer that manufactured using locally grown malt barley.

It also came up with a number of import duty incentives to promote local production.

Maintaining the tempo

As for the wider private sector’s role in the economy, the government said it would bank on the implementation of the Blueprint for Regulatory Reforms for Improvement of Business Environment, to enable private sector participation in economic growth.

Official government data show that since the implementation of the blueprint kicked off on July 1, 2019, the government has managed to remove 230 nuisance charges in various sectors that were frustrating businessmen and investors.

Meanwhile, Investment, Industry, and Trade Minister Ashatu Kijaji said last November that the government was in the final stages of establishing a single window that will provide prompt services to investors in its renewed attempt to improve the investment climate.

The one-stop window will make sure that investors get their licences in a span of one to three days.

The investment window will be different from other one-stop centres in the sense that it will contain some top decision makers who will be in a position to solve some issues instantly.

Dubbed Tanzania Electronic Investment Window (TeIW), the system aims to link all electronic systems that already provide one-stop services at the TIC which include 12 institutions.

These are TIC, National Identification Authority (Nida), Tanzania Revenue Authority (TRA), Business Registration and Licensing Authority (Brela), Labour Department, Immigration, Lands department and Tanzania Bureau of Standards (TBS).

Others are Tanzania Medicine and Medical Devices Authority (TMDA), National Environmental Management Council (Nemc), Tanzania Electricity Supply Company (Tanesco) and the Occupational Safety and Health Authority (Osha).

Annual TNBC meetings

For two years consecutively, President Hassan has effectively chaired meetings for the Tanzania National Business Council. She chaired the first one in June last year while the second one, which was the 13th since the government established TNBC, was held in June, this year.

The meetings bring members of the business community together with senior government officials to deliberate on issues that hinder the smooth flow of businesses in the country.