Report: Business climate in Tanzania positive, but snags remain

Dar es Salaam. Tanzania’s business climate looks positive, but businesses are concerned about issues such as foreign currency shortages, infrastructure and limited access to credit impeding cross-border trade.

The latest Stanbic Bank Africa Trade Barometer report says while businesses continue to have a positive perception of the government’s pro-business approach, there are still some tariff and non-tariff barriers that undermine their ability to trade with other African countries.

The study surveyed 227 businesses, 70 percent being small businesses, in seven broad thematic categories, namely trade openness, access to finance, macroeconomic stability, infrastructure, foreign trade, governance, and economy and traders’ financial behaviour.

Speaking during the report’s launch, Stanbic head of business and commercial banking Fredrick Max said 94 percent of businesses anticipate revenue growth in the coming year, reflecting a positive perception of the government’s support for cross-border trade.

“The report reveals that high gross domestic product (GDP) growth and a stable inflation rate have positively impacted Tanzania’s macroeconomic conditions,” he said.

However, the study says that infrastructure, specifically power supply, was mentioned by 51 percent of the businesses as a major obstacle, while 44 percent identified the state of the country’s roads as a major challenge in their capacity to trade with other countries.

“The instability of power supply poses several challenges for businesses, including cost increases, drops in productivity and damage to capital equipment,” the report says.

Local businesses also said recent foreign currency shortages significantly impeded cross-border trade as businesses struggled to acquire the necessary foreign currency to pay for imports.

Businesses also identified access to credit as a challenge, particularly for smaller businesses, with data in the report showing that 80 percent of the small businesses surveyed facilitate cross-border sales via cash.

For larger businesses, digital payment methods are the primary methods for facilitating cross-border transactions in Tanzania.

Respondents emphasised the importance of flexible loan terms and less restrictive clearance requirements.

Additionally, surveyed businesses stressed the significance of insurance provision for their goods.

“Stanbic Bank in Tanzania is committed to driving the growth of cross-border trade further by continuously providing advisory and innovative financing solutions to home-grown businesses and championing PPPs for sustainable development,” said Mr Max.

Stanbic Bank economist Zainul Chandoo said Tanzania still holds positive factors such as consumption power, investors’ confidence, sustainable debt development, and government emphasis on public-private sector partnerships.

"That is why even the perceptions of the businesses in Tanzania showed high optimism on the future growth of their revenues,” he said, while emphasising finding solutions for existing issues such as dollar scarcity.

According to Stanbic, this barometer is being launched to address the information vacuum surrounding African trade data, and it has now become one of the continent’s leading trade indexes, supporting the growth of intra-Africa trade.

The fact that most surveyed businesses were small businesses is one of the central value adds of the publication.

In its third issue, the barometer concentrates on ten countries: Angola, Ghana, Kenya, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Uganda, and Zambia.