Investment Outlook Tanzania offers one of the most attractive investment opportunities in Africa, having enjoyed sustained and robust growth over the last 15 years. This is expected to continue in 2017 and onwards following recent years of economic growth averaging 7%. This places Tanzania as one of the fastest growing economies in the world, at more than double the global average of 3.3%. Tanzania’s unique geographical location has always been a main attraction for investors. Sitting on the Indian Ocean with trade links to Asia and beyond, it is one of the primary trade routes to 6 land-locked countries (Democratic Republic of Congo, Zambia, Uganda, Rwanda, Burundi and Malawi). It is also a member of the Southern Africa Development Community which boosts its ability to orchestrate trade in East and Central Africa. Investments made into the country cannot be arbitrarily expropriated by the Government as Tanzania is a signatory to many multilateral and bilateral agreements, giving investors a heightened comfort knowing their investments are protected. Tanzania held presidential elections in October 2015 which saw success for now President John Magufuli. President Magufuli began his 5-year tenure by implementing a series of radical measures which included the sacking of several high-ranking and long-standing officials, giving the tax authority – the Tanzania Revenue Authority ( TRA ) – added impetus to maximise tax collection revenues and spearheading local empowerment initiatives. In terms of local empowerment initiatives, the Finance Act 2016 was passed in July 2016 and it introduced obligations on all telecoms companies to become publicly listed entities and offload a minimum of 25% shares to Tanzanian citizens. Similar public listing and local shareholding requirements were introduced in October 2016 for the mining sector via the Mining (Minimum Shareholding and Public Offering) Regulations 2016. Reliable statistics showing the growth rates of industry sectors in Tanzania are hard to obtain, however it is well known that the property, IT and telecoms sectors have achieved some of the most impressive growth. Notably there is reported to be a shortage of three million homes in Tanzania, and with urbanisation set to continue, property prices are likely to remain high. The average monthly rent of a one bedroom apartment in Dar es Salaam is currently around USD 800, compared to just USD 445 in Nairobi. The IT and telecoms sectors have also experienced high levels of growth up to 2016. Internet service penetration more than tripled between 2011 and 2016, which undoubtedly allows
significant room for growth. The Government of Tanzania hopes these sectors will continue to grow rapidly supported by demand from neighbouring landlocked countries to connect through Dar es Salaam to fibre optic networks laid in the Indian Ocean. The capital markets and commodities sectors are rapidly developing. The Government is taking steps to officially launch the Tanzania Mercantile Exchange, which will be the country’s first commodity exchange, and numerous IPOs are expected to be rolled out over the coming years (most of which will be open to foreign participation). Other key sectors promising growth include the power and transport sectors, in which existing infrastructure is currently unable to meet a demand level that is anticipated to grow significantly over the next decade. Forms of Corporate Structure Foreign investors can incorporate a new company, set up a subsidiary company or register a branch office in Tanzania. For long-term investments in Tanzania, new companies or subsidiary companies are often incorporated in order to take advantage of local laws (e.g. there will be no flowback of liability to the parent company if a subsidiary company is incorporated). For short-term investments, branch offices are used as they are easier to wind-up. The most commonly used corporate entities in Tanzania are: • Company Limited by Shares – by far the most common type of company used for business purposes; and • Company Limited by Guarantee – primarily used for non- profit organisations and non-governmental organisations. Procedure for Setting up a Business To set up a limited liability company, the following steps need to be taken:
Item
Time Approximate cost (USD )
1 Find out if the proposed company name is available for use
1 day
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2 Prepare the company's incorporation documents
1 day
20 – 50
3 Take the company's incorporation documents to the Registrar of Companies for registration and pay the prescribed incorporation fees
1 day
100 – 500
4 Receive a certificate of incorporation
3 days
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