Financial Data
Updated 25 Mar 2017


Tanzania

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Business opportunities and risks

Opportunities for you to do business in Tanzania

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As Tanzania continues to diversify the country’s economy, there are a number of investment opportunities for businesses. Reforms have also been made to the business environment, and it is now relatively cheap to register a business in the country.

Opportunities existing within the country include:

  • Rich in minerals, including gold, uranium, iron, vanadium, titanium and coal. Tanzania also has a wealth of natural gases. The development of the gas sector can transform the economy by boosting growth and improving persistent electricity shortfalls.
  • There are diverse economic opportunities for investors in tourism, mining and, in the long term, natural gas production
  • There are also opportunities to improve the tourism industry through improvements in infrastructure
  • Tanzania has a flourishing trade and investment environment
  • Due to its location, Tanzania’s transport system serves as an important link in regional trade. Landlocked neighbours use Tanzania’s transport system to get to maritime trade routes.
  • Tanzania offers competitive packages in terms of pricing and accessibility for a number of key utilities. The most important of these are water and electricity.
  • The rural population could get easier access to bank lending if property ownership laws are reformed.
  • There are plans to improve the country’s port infrastructure and reduce congestion. Trade lead times will also be sped up across the country and into its neighbouring trade partners. The improvements include extra capacity at the port of Dar es Salaam and extra equipment. Bureaucratic requirements for trading will also be streamlined, and one-stop border controls will be put in place.
  • Construction of coal and iron ore mines plus a 600MW coal-fired power plant will begin soon. China’s Sichuan Hongda will provide the capital for these projects, at approximately USD3 billion. The mines are expected to start production in 2018. Construction will begin soon on the port of Bagomoyo. Bagomoyo will be competing with Kenya’s port of Mombasa to become the regional transport hub. This will be integral to Tanzania’s future shipping and freight sector development.
  • Tanzania is thinking of setting up a new sugar production factory in a joint venture with an Indian company. The factory would be located in the Morogoro region and would produce 20 000 to 40 000 tonnes of sugar annually.
  • A Kenya-Tanzania power interconnection project has been launched by the Tanzanian and Kenyan governments. The project aims to connect the Eastern Africa electricity highway between Kenya and Ethiopia with the Eastern Africa power pool formed by countries of the Common Market for Eastern and Southern Africa (COMESA). This is part of a wider project to make power trade easier, bring down average energy production costs and improve the reliability and security of power supply to both Southern and Eastern Africa. The expected completion date is December 2017.

To do business in Tanzania, you need to know how local corporate compliance, financial reporting and tax requirements work.

Business opportunities
  • Due to its location, Tanzania’s transport system serves as an important link in regional trade. Landlocked neighbours use Tanzania’s transport system to get to maritime trade routes.
  • There are diverse economic opportunities for investors in tourism, mining and, in the long term, natural gas production.
  • Tanzania has a flourishing trade and investment environment.
  • Tanzania is rich in minerals, including gold, uranium, iron, vanadium, titanium and coal. It also has a wealth of natural gas reserves.
  • Tanzania offers competitive packages in terms of pricing and accessibility for a number of key utilities. The most important of these are water and electricity.
Operational risks to consider

The growth and development across Africa has attracted foreign investment and many multi-national companies to the continent. Yet there are some risks associated with doing business or operating in African countries.

The following are some of the potential risks facing investors operating in Tanzania:

  • Its high crime rates, corrupt and inadequate police force pose an operational security threat
  • Businesses face a risk from widespread petty crime. There has also been an increase in violent, financial and cyber-crime.
  • The country’s poor transport network stops it from being a gateway for regional trade in Eastern Africa. It also creates supply chain delays for Tanzania’s importers and exporters.
  • Corruption is endemic and poses a risk to the Tanzanian economy, which depends heavily on foreign assistance for its budget
  • The country relies heavily on agriculture, which is subject to extreme weather. Periodic droughts can lead to crop failures and serious food shortages
  • Problems when doing business in Tanzania also include limited access to financing, corruption, high tax rates, an inadequate supply of infrastructure and high inflation
  • The limited size and extent of the national transport network, particularly when it comes to air travel, inhibit the efficient flow of trade. This is further worsened by cumbersome and lengthy customs procedures. Tanzania receives a score of 32.8 out of 100 for logistics risk.
  • Pirate activity poses a risk to maritime trade
  • The threat of terrorism is relatively lower than for its East African neighbours. But, terrorism is possible through its porous borders, its close proximity to Somalia and the high concentration of expatriates.
  • The country has a poor infrastructure, a shortfall of technical and managerial skills, and inadequate and expensive access to finance. Some areas are under-serviced by air travel, which could make it costly to invest in areas where there is no reliable network of roads and railways.
Business challenges
  • Challenges when doing business in Tanzania include limited access to financing, corruption, high tax rates, an inadequate supply of infrastructure and high inflation.
  • The country’s underdeveloped transport network hinders it from becoming a gateway for regional trade in Eastern Africa. It also creates supply chain delays for Tanzania’s importers and exporters.
  • The country relies heavily on agriculture, which is subject to extreme weather. Periodic droughts can lead to crop failures and food shortages.
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