Five things government needs to do to win over private sector

Dar es Salaam. The business community wants the government to increase the pace of resolving outstanding issues that make it hard for the private sector to fulfill its role as a catalyst for economic growth.

Not only have the challenges been there for too long, businesspeople argue, the pace of resolving them has also been sluggish to the detriment of the economy and the capacity of the government to increase revenue collection.

At a public private consultative meeting chaired by the minister for Investment, Industries and Trade, Dr Ashatu Kijaji yesterday representatives from the private sector mentioned at least five key issues that need to be looked upon immediately.

The issues include review of the tax code; formalization of the informal sector, and speeding up the execution of the blueprint for regulatory reforms.

Understanding the importance of small businesses to the economy, the private sector members made a plea to the government to pay special attention to Small and Medium Enterprises (SMEs) in terms of access to financing and technical and professional services.

In that context they suggested the establishment of a special Bank and a SMEs Business Platform to cater for the needs of SMEs.

Facilitating the growth of SMEs into large firms will have lasting impacts on the Tanzanian economy because more than 95 per cent of all businesses in the country are SMEs, according to the Tanzania Chamber of Commerce, Industry and Agriculture.

Only about four per cent are formally registered, statistics from the latest SMEs survey by the ministry of Investments, Industries and Trade indicate.

Tanzania Women Chambers of Commerce chairperson Mercy Sila said once established the SMEs Business Platform should bring together youth, women and the elderly to discuss common issues facing small businesses.

Her sentiments were echoed by Mr Daniel Simkanga, the Chief Executive Officer of a cargo handling company, Alliance who called for a collaborative approach to help uplift small firms.

“We need an intra-industrial business platform if we are to move to the next level,” Mr Simkanga suggested.

Dr Kijaji saw eye to eye with the business community on the need to nurture SMEs. “We want to see small-scale businesses graduate to large-scale,” she told over 500 participants of the Ministerial Public Private Dialogue meeting who were drawn from both the private and public sectors.

On the contentious issue of reviewing the taxation system businesspeople wanted quick decisive actions by the government before it was too late.

“Unfriendly taxation system will be a catalyst for tax evasion and smuggling,” warned Stephen Chamle, a spokesperson of a business association known as Tanzania Business Community. Chamle cited the punitive tax code as a major hindrance to formalization of the informal sector.

Reviewing the taxation system would better be done under the umbrella of a tax commission Nakiete Pharmacy Ltd managing director Vicent Minja told the consultative meeting

“Without it (tax commission), it will be hard to have a friendly taxation system,” Mr Minja, who also serves as chairperson of TCCIA Dar es Salaam Regional Chamber, cautioned.

Of specific concern was the high charges of the Electronic Tax Stamp (ETS). “ETS charges should be cut. They are hurting manufacturers,” Confederation of Tanzania Industries (CTI) representative Godson Killiza said, urging the government to bear the cost of ETS.

Addressing taxation concerns the deputy Permanent Secretary in the Ministry of Finance and Planning, Mr Lawrence Mafuru said the taxation system was always being fine-tuned to align it with the existing economic situation.

“We have started a tax dialogue this year and it will be sustainable,” informed the meeting, which is part of regular consultative processes initiated by President Samia Suluhu Hassan’s government to improve the business climate.

The Blueprint

The business community is also not satisfied with the slow implementation of the contents of the Blueprint for Regulatory Reforms to Improve the Business Environment also known as the Blueprint. The Blueprint seeks to streamline regulatory authorities to increase the efficiency of their oversight functions over the economy.

Mr Minja also said the pace at which the blueprint for regulatory reforms was being implemented was not promising.

The Vice President, Dr Philip Mpango said in December last year that the execution of the blueprint had reached only 13 percent, a snail pace that forced him to direct the respective authorities to pull up their socks to reach at least 50 percent by December this year.

Despite the challenges, however, the government is doing a notable job to improve the business and investment climate, the consultative meeting itself being an attestation of that fact.

“Over the last two years or so we have witnessed genuine efforts to fashion a conducive business environment,” Paul Makanza the Vice chairman of the Tanzania Private Sector Foundation (TPSF) said, adding “We hope it will be sustainable.”

Mr Simkanga also wanted the government to look at the aviation industry, which he said was overregulated. He said there is need to strike a balance between control and facilitation to enable players in the industry do more business.

Yesterday’s meeting was conducted under the auspices of the Tanzania National Business Council (TNBC) which is the formal forum for Public and Private Dialogue in the country.