EU investors laud moves to improve business climate in Tanzania

Dar es Salaam. Potential investors from the European Union (EU) are cautiously optimistic that the current government’s efforts to improve the business environment will foster investment and foreign direct investment (FDI) inflows.

Blaming an unfavourable business environment, the EU Investment in Tanzania Report 2022 says that the country saw a marked decrease in investment from 2015, with FDI inflows dropping by a third.

The report, which was unveiled yesterday, further says that during the period under review, the number of new businesses registered in the country also dropped by a third.

Challenges highlighted include cumbersome administrative procedures, unfriendly labour laws, a harsh taxation system, red tape in acquiring land for investment, and uncertainty surrounding work and residence permits.

However, the report says that EU investors have commended President Samia Suluhu Hassan for overseeing reforms aimed at creating a conducive business environment.

“Investors are cautiously optimistic that these presidential statements will be translated into tangible actions over the short to mid-term.”

The report says that FDI inflows will largely depend on the ability of the current administration to create favourable conditions to attract investment.

“The existence of an independent and transparent judiciary framework, an aligned legislative framework, and a level playing field for international investors are important components of any conducive business environment.”

However, investors from the EU are happy that the Sixth Phase Government under President Hassan has worked, and continues to work on impediments to trade and investment.

Renewed interest among investors from the EU is set to promote investment in the country, and improve the balance of trade (BOP) with Tanzania.

Currently, Tanzania imports more than what it exports to the EU.

Going by the report, the EU’s exports to Tanzania were valued at €856 million (about Sh2.1 trillion) last year, while imports stood at €456 million (about Sh1.1 trillion).

The EU head of delegation to Tanzania, Mr Manfredo Fanti, said in a fresh move to increase Tanzania’s exports to the EU, they would help Tanzanian businesses to meet stringent international standards, which have been an obstacle to Tanzanian goods penetrating the EU market.

He added that they would help Tanzania’s investors to market their products so that they could easily penetrate the EU market.

Tanzania’s major exports to the EU are largely agricultural products, with tobacco, coffee, cotton, cashew nuts, tea and cloves topping the list. The country also exports gold and manufactured goods.

EU exports to Tanzania include machinery, boilers, pharmaceutical products, electronic equipment, cereals, paper and paper boards, fertiliser, beverages, spirits and vinegar.

Investment, Industry and Trade deputy minister Exaud Kigahe said for Tanzania to graduate from lower middle-income to upper middle-income status, it needed partnerships that were on a win-win basis.

“We need you (EU) to help us with capacity building among Tanzanians so that we can increase our competitiveness,” Mr Kigahe said during the report’s launch.

Some 100 companies from the EU have invested in the country, creating an estimated 151,000 jobs, according to the report that was jointly prepared by the EU Delegation and the European Business Group (EUBG).

Foreign Affairs and East African Cooperation minister Liberata Mulamula said the government was committed to creating an enabling business environment to attract more investments.

This, she added, was evident in the adoption and implementation of the blueprint that sets the stage for a raft of amendments to laws and regulations governing the conduct of business in the country.