INVESTMENT

Investment through the Tanzania Investment Centre (TIC)

119.            During 2002, Tanzania Investment Centre continued to provide investment promotion services as a one-stop centre and introduced a revised Investment Guide to improve the 1998 Publication. The establishment of the National Investment Steering Committee facilitated decision making on investment proposals as well as resolution of investment-related disputes in the country.

 

120.            The number of investors who secured various approvals in 2002 were: 296 on tax related issues by TRA; 257 on incorporation of companies; and 116 on business licensing, compared to 308 on tax related issues by TRA; 116 for incorporation of companies; and 148 issues related to business licensing in 2001. Furthermore, 1,043 foreigners were granted work permits, student permits and resident permits as dependants. In addition, 50 foreign investors were advised and assisted on issues related to land acquisition in the country.

 

121.            During 2002, the Tanzania Investment Centre approved 311 investment projects worth sh. 1,024 billion with capacity to provide jobs for 33,000 Tanzanian nationals, compared to 220 projects worth sh. 1,091 .8 billion approved in 2001. Out of the projects approved during the year, the manufacturing sector led by registering 103 projects valued at sh. 198.4  billion compared with 82 projects valued at sh. 124.7 billion in 2001, followed by tourism sector which registered 72 projects valued at sh. 85.7 billion. Out of the projects approved during 2002, 35 were local investors, 20 were foreign investors while 17 were on joint venture basis. Other sectors which attracted investors, include construction which had 39 projects, social services sector 26 projects, petroleum and mineral sector, 19 projects and the agricultural sector, 16 projects.

 

122.      The distribution of projects on regional basis indicates that Dar-es-salaam region is led by registering 191 investment projects. Other regions which attracted investors were: Arusha, 62 projects;  Mwanza, 14 projects; Tanga, 10 projects; Morogoro, 8 projects; Iringa, 8 projects; Kilimanjaro, 7 projects; Shinyanga, 7 projects; Coastal, 4 projects; Mbeya, 5 projects; and Mara, 3 projects. Rukwa, Kagera, Tabora, Mtwara, Singida, Ruvuma registered two projects each, while Lindi, Dodoma and Kigoma Regions attracted one project each.

 

Foreign Direct Investment (FDI)

123.            During 2002, the level of foreign direct investment declined to US $ 240.4 million from US $ 374.4 million recorded in 2001. The high levels of foreign direct investment attained during the period 1999-2001 were on account of substantial investments in the mining sector. The Table No. 7.1 shows the growth of FDI flows in the country from 1997 to 2002.

 

Table No. 7.1:  GROWTH OF FOREIGN DIRECT INVESTMENT FLOWS

(FDI) IN THE COUNTRY, 1997-2002

 

 

Note:    The value of investments for the period 1999-2002 has been revised following the results of a joint study conducted by the Bank of Tanzania, National Bureau of Statistics and the Tanzania Investment Centre.

 

Sensitisation of Local Investors

124.            Workshops to sensitise local investors were held in Dar-es-Salaam, Kigoma, Dodoma, and Mbeya regions and Mafia District. The main objective of these workshops was to  provide opportunities to local investors to understand how to invest through TIC.

 

Improvement of the Business Environment

125.          During 2002, TIC established  its website as a means of enhancing communication between our country and potential investors world wide. In its resolve to remove obstacles in investment and ensure private sector participation in the economic development of the country, the Centre prepared investment regulations and procedures which have enabled the Centre to discharge its responsibilities effectively in the promotion of investments in the country. Moreover, the Capital Goods Committee was established to facilitate fast importation of capital goods in the country.

 

126.          The Tanzania Investment Centre has been vested with powers to acquire allocated land for investment in according to  the Land Act 1999. Investors requiring land will be given land under land derivative rights. In furtherance of these responsibilities the Centre has toured in Tanga, Arusha and Morogoro regions and Mafia district to identify and allocate land areas for investment.

 

127.          The establishment of the Tanzania National Business Council (TNBC) composed of representatives of the government and the private sector has given impetus to efforts in enhancing the business environment of the country. During 2002 the government in consultation with the private sector under the TNBC umbrella has reviewed policies and various legislation’s with the objective of creating an environment conducive to business development and investment promotion. Some of the policies and legislative issues considered during the period were: preparation of recommendations for the amendment of the Lands laws of 1999 aimed at enhancing collateralisation of land tittles for loans to be advanced to medium and small enterprises; establishment of the Land Bank system as a mechanism for commercialisation of the agricultural sector; revision of labour laws for the purpose of promoting employment in the country; review of tax system and to remove problems emanating from administering many taxes; strengthening security of citizens and their properties; reduction of bureaucratic procedures in the provision of licences; and  enhancement of private sector participation in negotiation of international trade and investment agreements.

 

RESTRUCTURING AND PRIVATISATION OF PUBLIC ENTERPRISES

128.          The Parastatal Sector Reform Program has completed 10 years since its inception (January 1993 – December, 2002).  During this period, tremendous achievements have been realised, whereby a total of 265 enterprises, have been privatised, equivalent to two thirds of the total public enterprises earmarked for privatisation since the start of the programme, and 265 non-core assets have been sold. During the period between January - December, 2002, nine parastatals were privatised and 115 non-core assets were sold while the privatisation process for 4 parastatals reached a Memorandum of Understanding stage.  Out of the privatised enterprises, 135 were privatised to Tanzanians through 100 percent share sale, 15 parastatals were privatised to foreign investors through 100 percent share sale, 115 were sold through joint venture arrangements between the government, Tanzanian nationals and foreign investors.  Parastatals privatised to Tanzanian nationals include those sold to employees and managements of the respective parastatals.

 

129.          Among the privatised parastatals, there are some which increased production and recorded significant profits which enabled them to pay taxes to the Government. Others have since qualified to be enrolled in the stock exchange market, while others have paid dividends to shareholders, including the government.  Table No. 7.2 shows privatised parastatals which led in payment of dividends to the Government.

 

Table No. 7.2:  PARASTATALS WHICH LED IN PAYING DIVIDENDS

 TO THE GOVERNMENT IN 2001/2002

                       

Source:    Tanzania Revenue Authority – TRA

 

130.          In addition to the leading privatised parastatals which led in paying dividends to the government and its joint shareholders, there are others which also made significant profits and paid taxes to the government.  These include Kibo Industries; Tanzania Blanket Manufacturers; Sugar Industries (Kilombero, Mtibwa and TPC); Morogoro Canvas Mill and HANDICO.   Table No. 7.3 shows taxes paid to the government by some of the privatised parastatals.  However, there are privatised parastatals which have not been rehabilitated due to lack of capital experienced by investors who acquired them. Parastatals in this category are mostly those which were privatised to Tanzanian nationals.  They include Regional Transportation Companies (RETCOS); Leather Industries, Light Source Industry (Dar es Salaam), Tanzania Bag Corporation, (Moshi); Ubungo Spinning Mill, Tanzania Bicycle Company and Textile Mill (Ubungo).

 

Table No.: 7.3: TAXES PAID TO THE GOVERNMENT BY SOME OF THE PRIVATISED PARASTATALS  2000/01 – 2001/02

 

          

  Source:   Tanzania Revenue Authority.

 

131.          During 2002, focus was on the privatisation of large utility enterprises including Tanzania Electric Supply Company (TANESCO), remaining business units of Tanzania Harbours Authority (THA), Tanzania Railways Corporation (TRC), National Microfinance Bank (NMB) and large state farms in the agriculture and livestock sectors.  The privatisation of these parastatals is at various stages.  For instance, with regard to the privatisation of TANESCO, the government has placed the enterprise under a management arrangement with the Net Group Solutions of South Africa in April, 2002.  During 2002, major tasks related to the privatisation of TRC involved reviewing of the Railway Act and the identification of employees for retrenchment during the first phase of the privatisation process as well as allocation of statutory terminal benefits in the 2002/2003 government budget.    With regard to the privatisation of the rest of THA’s units, the strategy has already been agreed and is awaiting actual implementation. Concerning the privatisation of large state farms in agriculture and livestock sectors, a new strategy for their privatisation was set in February 2002.

Table No.34