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flag Tanzania Tanzania: Investing

In this page: FDI in Figures | What to consider if you invest in Tanzania | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

Tanzania is one of the most preferred destinations for foreign investment in Africa, ranking among the 10 biggest recipients of FDI on the continent. According to UNCTAD’s World Investment Report 2023, FDI to the United Republic of Tanzania increased by 8% to USD 1.1 billion (from USD 1 billion one year earlier). Moreover, the number of announced greenfield projects in the country surged by 60%, and there was also a rise in the number of international project finance deals. At the end of the same period, the total stock of FDI stood at USD 18.6 billion, around 24.2% of the country’s GDP. According to the Tanzania Investment Centre (TIC) Quarterly Investment Bulletin for the period July to September 2023, a total of 137 projects valued at USD 2069.49 million were approved. These projects are anticipated to create 86,986 new employment opportunities. The manufacturing, mining, and energy sectors are the primary recipients of FDI in Tanzania. Other sectors such as agriculture, tourism, and infrastructure have also been attracting FDI in recent years. The country’s primary investors are China, India, Kenya, the United Kingdom, Mauritius, Oman, the United Arab Emirates, Canada, the United States, the Netherlands, South Africa, and Germany. Several foreign companies, including Statoil, BG Group, and ExxonMobil, are investing in natural gas exploration and production projects, while mining companies such as Barrick Gold, AngloGold Ashanti, and Acacia Mining are also investing in the country.

Investors are drawn to the country's commitment to implementing sound macroeconomic policies, its efficient privatization program, and abundant natural resources. However, low levels of industrial development, environmental concerns, lack of transparency, and poor compliance with legislation are barriers to investment. The business environment remains hampered by ineffective regulations. Labour regulations are not flexible enough to support a dynamic labour market. Foreign investment in land is limited, and investment in other sectors can be screened. During John Magufuli's presidency (2015-2021), investor unfriendly policies have caused a growing mistrust of international investors, damaging the perception of Tanzania's business climate, which remains restrictive. In 2017, Tanzania approved new regulations in the mining sector that allow the government to tear up and renegotiate mining contracts, partially nationalize mining companies, introduce higher royalties, enforce local beneficiation of minerals, and bring in strict local-content requirements, which undermined investor confidence. President Samia Suluhu Hassan affirmed her commitment to prioritizing economic growth and strengthening Tanzania's economy through further development of the country's mining and quarrying sector. She also stressed the need for Tanzania to increase foreign investment to encourage growth, particularly in helium, gold, and nickel mining and oil extraction. Foreign investors generally enjoy treatment equivalent to domestic investors in Tanzania, but limitations persist in various sectors. There are no geographical restrictions on private establishments with foreign participation or ownership, nor are there limitations on the number of foreign entities allowed to operate in any given sector. Additionally, there are no sectors where approval is required for greenfield Foreign Direct Investment (FDI) but not for domestic investment. However, Tanzania discourages foreign investment in certain sectors through restrictions on foreign equity ownership or other activities. These sectors include aerospace, agribusiness (fishing), banking, insurance, construction and heavy equipment, travel and tourism, energy and environmental industries, information and communication, and publishing, media, and entertainment. In 2020, Tanzania relaxed but did not entirely eliminate the foreign ownership limitations in the mining sector. Tanzania ranks 87th among the 132 economies on the 2023 Corruption Perception Index and 86th out of 184 countries on the latest Index of Economic Freedom.

 
 
Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 9441,0331,111
FDI Stock (million USD) 16,49017,52318,634
Number of Greenfield Investments* 121524
Value of Greenfield Investments (million USD) 2341,0091,353

Source: UNCTAD - Latest available data.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

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What to consider if you invest in Tanzania

Strong Points

Strong points of investing in Tanzania include:

  • High economic growth potential (the GDP growth over the last 10 years is around 7%, one of the fastest growing economies in Africa)
  • Increasing economic stability (inflation down from 16% in 2012 to 4% in 2018)
  • Rich natural resources (arable land and mineral subsoil)
  • Strategic location (the country is a gateway to 6 landlocked countries - Uganda, DRC, Rwanda, Burundi, Zambia and Malawi)
  • Three deep water ports that serve neighbouring countries
  • Access to Southern African Development Community free trade market
  • Political stability (the country has not experienced any conflict or civil war since gaining independence)
Weak Points

Weak points of investing in Tanzania include:

  • Limits of foreign right to private establishment (foreign companies are banned from operating certain tourist businesses and need to give a certain share of ownership to the government to receive a mining development license, investment restrictions on government bonds, etc.)
  • Foreign equity ownership restrictions on certain services sector (telecommunications, TV channels, newspapers)
  • Lack of adequate and reliable power
  • Poor infrastructure
  • Lack of skilled labour force
Government Measures to Motivate or Restrict FDI

Foreign investors can benefit from many fiscal and non-fiscal incentives. These include:

  • Access to Tanzania Investment Centre (TIC) One Stop Facilitation Centre for procedures related to permits, licenses and approvals
  • 0% import duty on Project Capital Goods, Computers and Computer Accessories, Raw Materials and Replacement Parts for Agriculture, Animal Husbandry and Fishing, Human and Livestock Pharmaceuticals and Medicaments, Motor Vehicle in Completely Knocked down (CKD) form and inputs for Manufacturing Pharmaceutical Products, Hotel equipment
  • 10% import duty on semi-processed/semi-finished goods
  • 100% capital expenditure deduction (mining and agricultural sectors)
  • 50% capital allowances in the first year of use for plant and machinery used in manufacturing processes and fixed in a factory, fish farming; or providing services to tourists and in a hotel
  • Right to repatriate 100% of foreign exchange earned, profits and capital.
  • Automatic permit of employment to 5 foreign nationals on projects holding certificates of incentives

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Procedures Relative to Foreign Investment

Freedom of Establishment
The Tanzania Investment Act of 1997 provides for payment of fair, adequate, and prompt compensation to foreign investors. The law also guarantees access to the court or arbitration for the determination of adequate compensation; and prompt repatriation of benefits in convertible currency where applicable.
Acquisition of Holdings

Foreigners can acquire interests in a domestic company through purchase of its shares and assets. However, there are certain sector-specific restrictions. These include:

  • Telecommunications and media: Foreign capital participation in the telecommunications can be up to 75% maximum. Tanzanian TV stations can be owned up to 49% by foreigners. Foreign investors are barred from acquiring shares in nationwide newspapers. Telecommunication companies are required to list 25% of their shares on the Dar es Salaam Stock Exchange.
  • Mining: Foreign mining firms must have at least 5% equity from an 'indigenous Tanzanian company' (indigenous Tanzanian company is defined as a firm owned at least 51% by Tanzanians and with 100% of its non-managerial positions held by Tanzanians). Foreign firms are also required to grant the government a 16% carried interest. Foreign companies that provide goods or services to the mining sector must incorporate a joint venture company in which an indigenous Tanzanian company holds equity of at least 20%.
Obligation to Declare
The Tanzania Investment Centre (TIC) operates as a one-stop shop for foreign investors. Foreign companies are not required to register with the TIC; however, registering is the only way to be eligible to benefit from investment incentives (through investment incentives), including VAT and import duty exemptions. Registering with the Zanzibar Investment Promotion Authority (ZIPA) in the semi-autonomous region of Zanzibar provides access to similar investment incentives.
Requests For Specific Authorisations
Foreigners need to meet certain conditions in order to be recognised as "strategic" or "special strategic investors": The minimum investment capital to obtain "strategic investor" status is USD50 million for wholly owned foreign companies and joint ventures with Tanzanians. The threshold is USD300 million for the "special strategic investor" status. The status is granted by the National Investment Steering Committee (NISC).
Foreign investors are barred from most tourism activities: Mountain guiding, travel agency, car rental and tour guiding are not open to foreigners. Port services licences are only granted to Tanzanian companies. Furthermore, there are various restrictions in fisheries: Foreign-owned ships cannot engage in local trade. Only Tanzanians can be licenses as shipping agents. Fishing and fish export licenses cost three times the local ones, exclude several operations and collection of specified fish and fish products.
Gemstone mining licenses are granted exclusively to Tanzanians (a minister waiver is available).
Pursuant to the Zanzibar Investment Promotion and Protection Act, the government can restrict foreign investment in Zanzibar in order to provide better terms to Zanzibaris engaged in businesses requiring natural resources.

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Investment Opportunities

Investment Aid Agency
Tanzania eRegulations - Investment Framework
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Tanzania
Online Tenders, Tenders in Tanzania
Tanzania Invest, Tenders in Tanzania
Tanzania National e-Procurement System, Tenders in Tanzania
DgMarket, Tenders worlwide
Other Useful Resources
Tanzania Chamber of Commerce, Industry & Agriculture
TIB Development Bank
 
 

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