TANZANIA REVIEW 2010

2nd edition

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PO Box 22731Dar es SalaamTelephone: +255 754314865E-mail: brabys@brabys.com

MARKETINGMarie Gibbons

PRODUCTIONCreative Solutions - René Hartslief

DESIGNCreative Solutions - Michel Gribben

PHOTOGRAPHYRené Hartslief, Marie Gibbons, Tanzania Tourist Board, ZIPA, Tanzania Government Flight Agency, Corporate Tanzania

EDITORIAL RESEARCH & CONTENTLouella Morgan-Jarvis

While every care has been taken in the preparation of this publication, the publishers can accept no liability for any errors or omissions that may occur. This publication is the exclusive property of the publishers and no part of the contents may be reproduced in any form without prior written permission of the publishers.

Published by

Foreword ...........................................3

Introduction ........................................4

Trade & Investment .........................10

Business & Finance .........................15

Tourism ............................................24

Agriculture & Fisheries ....................30

Manufacturing ..................................34

Mining Industry ................................40

Physical Infrastructure .....................42

Social Infrastructure.........................52

Zanzibar...........................................56

Useful Information ...........................62

Map..................................................63

Index To Advertisers ........................64

Contents

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Foreword

The Government of the United Republic of Tanzania has over the past several years made great strides in achieving a series of economic reforms that have produced a favourable set of macro-economic fundamentals, characterised by high economic growth, low inflation and an improved foreign reserve position. Testament to this success is a growth rate that averaged 7 percent between 2005/06 and 2008/09.

This healthy economic backdrop, coupled with the country’s political stability, abundant natural resource base and wide market coverage due to its geographical location and membership of regional economic blocks with access to preferential trade agreements, makes Tanzania a promising investment destination, particularly in areas such as agriculture, tourism, manufacturing, mining and energy.

As part of the Investment Code, Tanzania offers a well-balanced package of benefits and incentives that are applied uniformly to domestic and foreign investors. Investment opportunities are available through the Tanzania Investment Centre, a one-stop shop for investor facilitation, in collaboration with embassies and trade centres abroad.

Among the major changes undertaken to create an investment-friendly climate for foreign and local capital has been the shift from its previous reliance on state control to a predominantly market-oriented environment. In the investment arena, almost all key players have been liberalised, including monetary management, agricultural marketing arrangements, the foreign exchange system,

local and foreign banks and non-bank institutions, and the tax regime. Substantial progress has also been made towards putting in place a general policy and legal environment which is more favourable for private sector expansion and sustainable economic development.

Notwithstanding its good economic performance over the past decade, the global financial crisis and subsequent recession has affected Tanzania through reduced economic activities and financial flows in tourism, exports and foreign direct investment. In order to mitigate the adverse impact of the crisis, Government is taking steps to strengthen the economy. This involves sustaining efforts to create a conducive environment for attracting local and foreign investment, promoting tourism and improving and expanding essential infrastructure services, namely roads, railways, harbours, airports and rural electrification, while mobilising concessional loans and support in order to enhance Government’s capacity to finance big infrastructure development projects, which includes engaging the private sector through Public-Private Partnership (PPP).

Giving a comprehensive overview of the Tanzanian economy as well as government policies and programmes, the TANZANIA REVIEW is regarded by the Ministry of Industry, Trade and Marketing as an important tool for the local, regional and international business community to learn more about the country and identify opportunities for productive investment. I therefore encourage investors, as well as business and industry leaders, to read this second edition of the TANZANIA REVIEW, which should prove to be both interesting and informative.

Dr Mary M Nagu (MP)Minister of Industry, Trade and Marketing

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IntroductionA fascinating land of geographical and cultural diversity, the United Republic of Tanzania was created through the union of two sovereign states, Tanganyika and Zanzibar. From the snow-capped peak of Kilimanjaro, across the plains of the Serengeti to the shores of the Indian Ocean and the exotic island of Zanzibar, this vibrant and compelling country beckons tourists from across the globe. Aside from its fi rst class tourism product, both mining and manufacturing have potential for further development, and agriculture remains a mainstay of the economy.

With a per capita income of some US$ 400 per annum, Tanzania is one of the region’s poorer countries. Nevertheless, far-reaching political, economic, fi nancial and administrative reforms, coupled with external fi nancial assistance from both bilateral donors and multilateral institutions, have resulted in private-sector growth and increased levels of investment, with economic growth averaging around 7 percent per annum for close on a decade. Likewise, steady improvement has been seen in many of the country’s social development indicators.

Around 30 percent of Tanzania’s surface area comprises protected natural habitat, making it one of the most naturally diverse countries in the world.

THE TANZANIAN ECONOMYA series of economic reforms have transformed Tanzania’s once command-based economy into a market economy, with trade, exchange rates and interest rates having been fully liberalised, the fi nancial sector restructured and many parastatals privatised. While this resulted in better macroeconomic performance, characterised by relatively high economic growth, low infl ation and an improved foreign reserve position for most of the past decade, the global fi nancial crisis and subsequent recession have seen reduced economic activities and fi nancial fl ows in tourism, exports and Foreign Direct Investment.

The economy in 2008/09 and beyondGDP growth for 2008 was 7.4 percent compared to 7.1 percent in 2007. Agricultural activities recorded growth of 4.6 percent in 2008, compared to 4 percent in 2007, while growth in the

Fishing sector rose to 5 percent from 4.5 percent in the previous year. Manufacturing activities continued to exhibit faster growth, with 9.9 percent in 2008 – the highest growth rate recorded over the preceding seven years – compared to 8.7 percent in 2007.

However, this favourable scenario has been curtailed in the medium term by the ongoing global economic downturn. Macroeconomic projections indicate GDP growth of 5 percent in 2009 and a gradual rebound to 7.5 percent by 2012, owing to the expected recovery in the world economy.

Although Tanzania had managed to subdue infl ation to single digit levels, infl ationary pressures in 2008 due to the lagged effects of rising world petroleum and food prices earlier in the year saw annual infl ation increasing to 13.5 percent in December 2008. Following the decline in world commodity prices, domestic infl ation had eased to 12.1 percent by the end of September 2009. The severe food shortage in the region due to the prolonged drought has kept food prices high and infl ation in double digits.

During the year ending October 2009, the overall balance of payments recorded a surplus of US$ 692.8 million, up from a defi cit of US$ 191.1 million reported during the previous year. This performance is largely attributed to the narrowing of the current account defi cit from US$ 3 074.0 million in the year ending October 2008 to US$ 2 000.4 million, following an increase in exports of goods and services, surge in offi cial current transfers and infl ows of balance of payment support.

Meanwhile, US$ 245.8 million balance of payment support from the IMF under the Exogenous Shock Facility (ESF) and US$ 249.0 million allocation of Special Drawing Rights (SDR) contributed to a large increase in the gross foreign reserves position. Gross offi cial reserves increased to US$ 3 521.9 million in October 2009 from US$ 2,580.0 million recorded in the corresponding month in 2008. This level of reserves was enough to cover about 5.7 months of imports of goods and services.

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Tanzania, just like other developing economies, has been affected by the world fi nancial crisis, particularly in agriculture, mining and tourism activities.

Over the past decade, the annual average exchange rate between the Tanzanian Shilling and the US Dollar has continued to increase, while the rate of depreciation has fl uctuated. During 2009, the Tanzanian Shilling continued to depreciate against the US Dollar, falling to TZS 1308.8 per US Dollar in March 2009 from TZS 1185.1 per US Dollar in March 2008. The Shilling lost 10.4 percent of its value between March 2008 and March 2009.

TOPOGRAPHYLying just south of the equator, Tanzania is the largest of the East African countries. Its total surface area of 945 000 square kilometres (approximately four times the size of the United

Kingdom) includes the islands of the Zanzibar archipelago. The country borders on Kenya and Uganda to the north, Rwanda, Burundi and the Democratic Republic of Congo (DRC) to the west, and Zambia, Malawi and Mozambique to the south.

Tanzania consists of three principal geographical regions, comprising the highlands, the saucer-shaped plateau (averaging about 1 222 metres) and the low-lying coastal plains and islands to the east. There are isolated mountain groups in the northeast and southwest, while the northern highlands boasts Ngorongoro Crater as well as the highest mountain in Africa – the 5 892-metre Mount Kilimanjaro.

Lake Victoria, on the border of Kenya and Uganda, is the largest lake on the continent. The Great Rift Valley that runs through central Tanzania is covered with numerous lakes, including Rukwa, Nyasa, Kitangiri, Eyasi and Manyara. Lake Tanganyika, which lies between Tanzania and the DRC, is the second oldest and deepest lake in the world.

Situated some 32 kilometres to the east of the mainland, the island of Zanzibar is the biggest coral island off the coast of Africa at about 1 650 square kilometres. Pemba Island, lying about 40 kilometres to the northwest, has a total area of around 984 square kilometres.

CLIMATETanzania’s equatorial climate results in pleasant weather throughout the year, with the hottest months occurring from November to February (25°C to 31°C) and the coolest period between May and August (15°C to 20°C). In the highlands, temperatures range between 10°C in the cold season and 20°C in the hot season, while the rest of the country rarely sees temperatures lower than 20°C.

There are two rainfall systems in Tanzania. In the southern, western and central areas, rains fall between December and April, while in the northern and north-eastern coastal region there are two rainy season – during November and December (short rains known as ‘mvuli’) and between March and May (long rains or ‘masika’).

PAST & PRESENTThe history of mainland Tanzania, or Tanganyika as it was once known, stretches back to prehistory, with the renowned Olduvai Gorge having provided fossilised remains of some of humanity’s earliest ancestors.

Zanzibar and the coastal area were exposed to Arab traders as early as the 8th century, and by the 13th century the region was attracting immigrants from as far afi eld as Persia and India. In the 19th century the trade in slaves, ivory and cloves fl ourished under the reign of Sultan Seyyid Said, attracting commercial interest from both the United States and Britain.

Little is known of Tanganyika’s interior until the early 1800s, when it was explored by slavers, European missionaries and explorers. It is generally thought that the area was once inhabited by ethnic groups similar to Southern Africa’s Bushmen and Hottentots, who were slowly displaced by advancing Bantu tribes from the south and Nilotic peoples from the north.

The Ngorongoro Crater - Photo Courtesy: Tanzania Tourist Board

Giraffe - Photo Courtesy: René Hartslief

that the area was once inhabited that the area was once inhabited that the area was once inhabited by ethnic groups similar to by ethnic groups similar to by ethnic groups similar to Southern Africa’s Bushmen Southern Africa’s Bushmen Southern Africa’s Bushmen and Hottentots, who and Hottentots, who and Hottentots, who were slowly displaced were slowly displaced

Bantu tribes from Bantu tribes from

from the north.

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The Anglo-German agreement of 1890 made Zanzibar and Pemba a British protectorate, while Tanganyika fell under the direct administration of the German government, with headquarters set up in Dar es Salaam. While British rule through a Sultan saw the political status quo in Zanzibar remaining largely unchanged until after World War II, German rule on the mainland provoked local resistance and a growing sense of nationalism.

Following the defeat of Germany in World War I, Tanganyika was handed over to Britain. The ensuing years saw a growing movement for political self-determination, with Julius Nyerere founding the Tanganyika African National Union (TANU) in 1954. By the end of 1959, Britain had agreed to the establishment of internal self-governance for Tanganyika.

The country enjoyed a peaceful transition to independence under the moderate TANU, led by Nyerere, who became prime minister on independence in December 1961. One year later the new nation adopted a republican constitution, with Nyerere as its fi rst president.

Zanzibar’s quest for political independence began to gather momentum in the mid-1950s, and in December 1963 it became an independent constitutional monarchy under the sultan. However, less a month later the sultan was overthrown by the African majority, and a new government was formed with the Afro-Shirazi Party (ASP) leader Abeid Karume as President.

United Republic of TanzaniaOn 26 April 1964, the sovereign republics of Tanganyika and Zanzibar united to form the United Republic of Tanganyika and

Zanzibar – a unitary republic comprising the Union Government and the Zanzibar Revolutionary Government. The country’s name was changed to the United Republic of Tanzania on 29 October 1964.

To form a sole ruling party in both parts of the union, Julius Nyerere merged TANU with Zanzibar’s ruling ASP to form the Chama cha Mapinduzi (CCM) Revolutionary Party in February 1977. Up until the mid-1980s, Tanzania was a one-party state with a socialist economy.

Julius Nyerere was succeeded as president in 1985 by Ali Hassan Mwinyi, whose administration undertook a number of political and economic reforms. The fi rst multiparty general election was held in 1995, and Benjamin Mkapa of the ruling CCM won around 62 percent of votes cast.

Re-elected in 2000 with 71 percent of the vote, Mkapa continued in his efforts to move Tanzania towards a free-market economy. He was succeeded by Jakaya Kikwete in the 2005 elections, which the CCM won by an even larger margin, picking up additional parliamentary seats.

Under the terms of the union, Zanzibar retains considerable local autonomy. Its political landscape has, however, been marred by confl ict between competing interests. Zanzibar’s fi rst multiparty elections were held in 1995. Amani Abeid Karume, the son of Zanzibar’s fi rst president, was elected president in 2000 and again in 2005. The next general elections for both the mainland and Zanzibar are scheduled for October 2010.

THE PEOPLEOne of Tanzania’s greatest assets is its people, who are courteous, warm and friendly. About nine-tenths of the population comprises indigenous African tribes, mostly speaking Bantu languages, although there are also Nilotic groups such as the Masai, and a minority population of people of Indian, Pakistani and Goan origin, as well as some Arab and European communities.

One of the most ethnically diverse nations in Africa, Tanzania has more than 128 different tribes.

Although Kiswahili is the offi cial – and by far the most widely used – language (93 percent), English is spoken by at least one and a half million Tanzanians as their second language. There are in total more than 135 other indigenous languages spoken across the country.

Approximately 40 percent of mainland Tanzania is Christian (mainly Roman Catholic, followed by Anglican and Lutheran). Islam is the religion of more than a third of the people,

Masai dancers - Photo Courtesy: Tanzania Tourist Board

Wooden carving - Photo Courtesy: René Hartslief

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especially along the coast, and some 23 percent of Tanzanians follow traditional beliefs. Zanzibar is 96 percent Muslim and 4 percent Hindu. According to the World Bank’s World Development Indicators, Tanzania’s estimated population in 2008 was 42.5 million, with a population growth rate of 2.9 percent per annum. Around 97 percent of the population reside in Tanzania Mainland and about 3 percent in Zanzibar. The majority of the country’s inhabitants live in rural areas. Life expectancy is estimated at 56 years.

MAIN CENTRESTanzania is divided into 26 administrative regions – 21 on the mainland, three on Zanzibar and two on Pemba. In addition to this, there are 130 administrative districts, ten in Zanzibar and 120 on the mainland. Dar es Salaam: Known by locals as ‘Dar’, this cosmopolitan city is Tanzania’s commercial and industrial capital, and has 2 497 940 inhabitants according to the 2002 Census, although 2010 estimates put the population at around three million, making it East Africa’s second-largest metropolis. The bustling harbour is the country’s main port, and most government offi ces are based here, as are diplomatic missions and non-governmental organisations.

Founded in 1862 by Sultan Seyyid Majid, Dar es Salaam became the centre of administration under German and later British rule. Today modern high-rises jostle with mosques, temples and colonial architecture, such as the White Father’s House and St Joseph’s Cathedral. Sights worth seeing include the Botanical Gardens, National Museum and Village Museum, as well as the Kariakoo Market, Kivukoni Fish Market, city centre and waterfront.

Dodoma: The administrative capital of Tanzania since 1973, Dodoma is centrally situated on the eastern edge of the southern highlands some 309 kilometres west of Dar es Salaam. This pleasant town is much smaller and less developed than Dar es Salaam, with a population of around 155 000 (2003). Today the town is at the centre of Tanzania’s wine industry, and there are lovely prehistoric rock paintings in the vicinity of the Irangi Hills.

While Tanzania’s capital is Dodoma, Dar es Salaam remains the country’s social and economic powerhouse.

Mwanza: Tanzania’s second largest city with around one and a half million inhabitants, Mwanza is a regional economic hub and major port located on the south-eastern shore of Lake Victoria, which borders Uganda to the northwest and Kenya to the northeast. The city is thus an important transit point in the trade and transport routes between Tanzania and her northern neighbours.

The land around Mwanza consists primarily of tea, cotton and coffee plantations, and large volumes of cash crops pass though here on their way to market. Tourists will fi nd the town a good place from which to explore the surrounding attractions, such as Rubondo Island National Park and the western Serengeti.

Mbeya: Located in the southern highlands, bounded by the Poroto mountain range to the southeast and the Mbeya mountain range to the north, the agricultural centre of Mbeya is known for its pleasant climate and setting. Its close proximity to the Zambian border, in addition to its position on the Great North Road and the TAZARA railway, makes the town an important link in the road and rail routes between Tanzania, Zambia and Malawi.

Cotton - Photo Courtesy: René HartsliefGrapes - Photo Courtesy: René Hartslief

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Mbeya was founded in the 1930s during Tanzania’s gold rush, and the surrounding area has rich gold fi elds which continue to provide a lucrative source of income as well as attracting substantial international

investment. The region’s produce of tea, coffee, cocoa and bananas is packaged here before being transported either inland or to the coast.

Arusha: the capital of the Northern Circuit safaris and the country’s

third-largest city, Arusha is situated in the northern highlands among the foothills of Tanzania’s second-

highest mountain, the imposing Mount Meru with its impressive

crater. The rich volcanic soils produce abundant crops of wheat, coffee, fl owers and

pyrethrum, making this an important agricultural zone.

Built in the early 1900s by the German colonial government, this once quiet

agricultural backwater is currently among Tanzania’s most prosperous centres. Known as the ‘Geneva of Africa’, Arusha is a focal point for international relations and diplomacy, being the site of the International Criminal Tribunal for Rwanda, the African Court on Human and Peoples’ Rights and the offi ces of the East African Community.

Bagamoyo: In days gone by, this sleepy harbour town with its crumbling colonial architecture was a prominent trading hub and slaving port on the East African coast. While Bagamoyo is now known for the manufacturing of dhow sailboats, it was once the last mainland stop for slave and ivory caravans travelling from Lake Tanganyika to Zanzibar, and later became an important centre for missionaries in their efforts to abolish the slave trade.

Kigoma: The capital of western Tanzania, and Lake Tanganyika’s busiest port, Kigoma is a signifi cant centre for foreign trade as well as being the main arrival point for refugees coming from confl ict-beset countries in central Africa. It is also the fi nal stop on the Central Line Railway from Dar es Salaam, built in the early 20th century to transport agricultural produce from the hinterland to the coast. Set amid spectacular mountain scenery and forests rich in wildlife, Kigoma is a convenient base from which to visit the Gombe Stream and Mahale Mountains national parks.

Moshi: The central point of Tanzania’s coffee-producing region, the lovely town of Moshi lies amid vast coffee plantations at the foot of Mount Kilimanjaro. While the town’s coffee plantations and international auctions are well worth seeing, Moshi is most frequently used as a base from which to climb Mount Kilimanjaro, the continent’s highest mountain. Other features of interest here include the economically lucrative sugar plantations and various cultural tourism programmes in the nearby villages.

Tanga: Tanzania’s chief seaport after Dar es Salaam, the industrial, trading and export-import centre of Tanga with its attractive and well-preserved colonial architecture has a surprisingly tranquil atmosphere. Places worth visiting here include the medieval Tongoni ruins and Amboni Caves.

Tabora: Once a focal point in the slave and ivory trade, when it served as a stopover for caravans from Lake Tanganyika and Central Africa en route to the coastal town of Bagamoyo, Tabora was also a well-known mission station during the 19th century, being visited by both Stanley and Livingstone. The town continued to fl ourish under German rule, when it became one of the most busy and prosperous centres in East Africa.

With the Central Line Railway branching at Tabora to both Kigoma and Mwanza, the town remains an important transit point and stopover for visitors to Tanzania’s western hinterland and beyond. The Livingstone Museum some 15 kilometres away is also worth a visit.

Zanzibar Town: Situated along the waterfront, this is largest urban centre on the island of Zanzibar. The Arabian-style old quarter, also known as Stone Town, is full of shops, bazaars, mosques and palaces, with many buildings dating back to the era of the slave trade. Top attractions include the waterfront market of Forodhani Gardens, as well as the House of Wonders and Palace Museum.

Halfway from Cape Town to Cairo - Photo Courtesy: Marie Gibbons

Wheat- Photo Courtesy: René Hartslief

Trade & InvestmentDuring the past decade Tanzania has dramatically transformed its economy. This is refl ected in its strong macroeconomic fundamentals, with falling infl ation, higher infl ows of Foreign Direct Investment (FDI) and consistently increasing GDP growth – an impressive annual rate of 7.2 percent between 2002 and 2008.

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Government programmes have focused on enhancing the business environment and sustaining trade and investment partnerships with China as well as other Asian countries and the Middle East. This includes increasing the value of goods produced and ensuring that in the medium term no unprocessed products are exported; implementing the Exports Strategic Plan; continuing to implement the Mini-Tiger Plan 2020 and the Business Environment Strengthening for Tanzania (BEST) programme.

The emphasis on an ever more open and competitive market economy and adherence to the principles of multilateral trade resulted in real GDP growth of 7.4 percent in 2008, up from 7.1 percent in 2007. Notwithstanding the setbacks brought about by the global economic downturn, government continues to pursue economic and fi nancial policies that are friendly to business, favourable to the growth and development of the indigenous private sector, and attractive to foreign capital. It is, however, vital that the cost of doing business is reduced in order to stimulate supply response at the micro-level to complement macroeconomic and political stability.

The export market in 2009At the beginning of 2009, prospects did not seem promising, with Tanzania’s traditional export crops – notably cotton, cloves, coffee and cashew nuts – and non-traditional exports, excluding gold, experiencing an unprecedented decline in demand and price due to the global economic slowdown. Earnings from tourism and transportation (transit trade) as well as infl ows of FDI were impacted negatively too.

Nevertheless, during the year ending October 2009, the export of goods rose by 8.4 percent to US$ 2 719.0 million, largely due to a notable rise in exports of both traditional and non-traditional goods. Much of the increase was recorded in tobacco, horticultural products, re-exports and other exports. While

exports of gold and manufactured goods saw slower growth, they continued to dominate, accounting for 35.2 percent and 21 percent of goods exports, respectively

Tanzania’s main markets include the East African Community (EAC), Southern African Development Community (SADC), China, the European Union (EU) and United States (US).

THE INVESTMENT ENVIRONMENTTanzania is a stable and peaceful multiparty democracy, promoting good governance and the rule of law. The country has implemented a series of political, economic and administrative reforms in the past two decades in order to encourage private sector investment and development.

There is no restriction on foreign exchange and the government has lent its support to an open investment regime, mobilisation of private capital initiatives and further liberalisation of the fi nancial sector in line with World Bank recommendations. Investments on the Dar es Salaam Stock Exchange (DSE) are open to foreign investment, capped at 60 percent.

Changes in Tanzania’s business environment have seen it become better aligned with the practices of developed economies, while a reduction in red tape has facilitated the process of investing in the country as well as the procedures involved in setting up and running a business. Furthermore, there is increased transparency in matters such as taxation, labour laws and other issues that are central to bringing in FDI.

The current Tanzanian administration has made tackling corruption a priority. The National Anti-Corruption Strategy (NACS) was launched in December 2006 and the Anti-Corruption Act, also known as the Prevention and Combating of Corruption Bureau (PCCB) Act, came into force the following

The Government of United Republic of Tanzania has established the Tanzania Trade Development Authority (TanTrade) as statutory organ, vested with regulatory, executive, advisory and consultative powers in relation to development of Trade in Tanzania. The Tanzania Trade Development Authority was enacted by the Parliament by Act No. 4 of 2009 and it replaces the Board of Internal Trade that was established by Act of 1973 and the Board of External Trade established by Act of 1978. The transformation of the Board of External Trade (BET) to Tanzania Trade Development Authority (TanTrade) is an eminent response to substantial changes in trade landscape in Tanzania and worldwide as a whole. TanTrade is building from where BET had ended.

The Vision of TanTradeTo become a world class focal point centrally positioned to support national economic excellence through trade development.

The Mission of TanTradeTo enhance Tanzania’s economic performance through development and promotion of goods, services and ideas for both local and foreign markets.

TanTrade’s Mission will be achieved through:- a) Assisting Tanzania’s enterprises and other business operators to consolidate their competitiveness in domestic and foreign markets; b) Stimulating Tanzania’s trading capabilities through the integration of the domestic market; and c) Spearheading Tanzania’s competitive integration in international trade and global economy by identifying trading opportunities therein, and facilitating their utilization.

The Core ValuesTanTrade’s service delivery is guided by the following set of core values:

a) Professionalism TanTrade to observe professional ethics and standards in developing and delivering services to her clients.

b) Team Work Spirit TanTrade believes that this is an age of cooperation. To overcome challenges of business community rests upon partnerships with others.

c) Competitiveness TanTrade to inculcate trading culture, innovativeness, efficiency and productivity among Tanzania enterprises and other business operators to meet market demands.

d) Transparency and Accountability TanTrade to uphold the principal of integrity, good governance and accountability, zero tolerance to corruption and discrimination of any kind in her service delivery.

e) Corporate Social Responsibility TanTrade understands that it is part of the community and therefore values her active participation in community initiatives.

f) Public-Private Partnership (PPP) TanTrade endeavours to promote and sustain public private collaboration in offering her services.

Tel: +255 22 2850238 / 2850065

Fax: +255 22 2850539

PO Box 5402, Dar es Salaam

E-mail: betis@intafrica.com

Website: www.bet.co.tz

year. According to Transparency International’s Corruption Perceptions Index (CPI) as well as the Mo Ibrahim Foundation Index on Governance, the country tops the East African region in the fi ght against corruption.

Investments in Tanzania are guaranteed against nationalisation and expropriation, and the country is a signatory to several multilateral and bilateral agreements on the protection and promotion of foreign investment. It is a member of the Multilateral Investment Guarantee Agency (MIGA) as well as the International Centre for Settlement of Investment Disputes (ICSID). Furthermore, there exist double taxation treaties with Kenya, Uganda, Zambia, Denmark, India, Italy, Norway, Sweden and Finland, among other countries.

Tanzania has a sizeable domestic and regional market. Bordering the Indian Ocean, it is well positioned geographically to exploit trade links with its land-locked neighbours and the international market. Improvements to the country’s transport networks are a top priority, and a national policy on Public-Private Partnerships is being developed in order to enable the private sector to participate in infrastructure projects.

There is a sustained programme for building good quality roads. Two railway networks connect 14 out of 21 cities and the neighbouring country of Zambia. There are also international and domestic airports linking Tanzania to the world. The three major ports of Dar es Salaam, Tanga and Mtwara function as hubs for traffi c emanating from, and destined to, the neighbouring countries of Uganda, Burundi, Rwanda, Zambia, Malawi and Democratic Republic of Congo (DRC).

Tanzania is not troubled by labour disputes and there is abundant unskilled labour. Following government’s commitment to develop a pool of well-trained and educated specialists, the number of university graduates, especially in business management and IT, is growing rapidly, and management and administrative positions are increasingly being fi lled by locals. Another area currently receiving attention is infrastructure, particularly in the development of competitive public utilities. Current challengesAs a result of the current recession, global investment fl ows have declined and capital is no longer as easily accessible. Tanzania is thus determined to do more internally to attract investment, and is continuing with economic reforms as well as taking steps to improve its business environment. As such, a government task force has been set up to review business and investment support policies, regulations and administrative procedures.

Furthermore, government is:• Compensating cooperatives and private companies which sold cotton and coffee at a loss• Guaranteeing the rescheduling of outstanding loans• Providing working capital on concessional terms• Strengthening the export credit guarantee scheme (ECGS) and Small and Medium Enterprises (SMEs) guarantee scheme• Soliciting additional resources from development partners

FOREIGN DIRECT INVESTMENTSignifi cant efforts have been made to encourage investment, and Tanzania continues to attract the highest infl ows of Foreign Direct Investment (FDI) in the East African region. However, the current prognosis is not particularly promising, with the economic situation in developed countries having reduced the ability of foreign investors to invest abroad.

Manufacturing, tourism, construction, commercial buildings, telecommunications, economic infrastructure, transportation, agriculture, fi nancial institutions, energy, natural resources and

mining & petroleum received the largest share of investments for the period 1990 to 2008. Out of the many countries which invest in Tanzania, the United Kingdom continues to dominate, followed by Kenya, India and the Netherlands, the US, China and South Africa.

Between 2004 and 2009, Tanzania received an annual average of US$ 554.1 million in Foreign Direct Investment.

Investment promotion agenciesEstablished by the Tanzanian Investment Act of 1997, the Tanzania Investment Centre (TIC) (www.tic.co.tz) is the main agency for promoting, coordinating, encouraging and facilitating investment in Tanzania and has worked with United Nations Industrial Development Organization (UNIDO) to attract positive growth, FDI and local capital formation into the economy. In 2007, the TIC was named the Best Investment Promotion Agency in the World by the World Association of Investment Promotion Agencies (WAIPA).

The centre is actively involved in advising investors on the correct procedures for setting up business in Tanzania, providing joint venture opportunities between local and foreign investors and also acting as a consultant to government on investment-related issues. A one-stop facility for investors, the TIC also consists of immigration offi cers, an Assistant Registrar of Companies and Licensing, Land, Labour and Tanzania Revenue Authority liaison offi cers.

The Zanzibar Investment Promotion Agency (ZIPA) and the Zanzibar Free Economic Zones Authority (ZAFREZA) provide roughly equivalent incentives as those offered by the Mainland’s policies, and are discussed in greater detail in the chapter on Zanzibar.

The Export Processing Zones Authority (EPZA) is an autonomous government agency operating under the Ministry of Industry, Trade and Marketing. The authority coordinates, facilitates, promotes and licenses export-led manufacturing investments in Tanzania.

Incentives for investmentThe Tanzanian government uses Trade-related Investment Measures (TRIMs) to promote development objectives and encourage investment in line with national priorities. Investor incentives are both fi scal and non-fi scal, and are provided for under the Tanzania Investment Act, Export Processing Zone (EPZ) Act, Mining Act and Special Economic Zone (SEZ) Act.

As part of the Investment Code, Tanzania offers a well-balanced package of benefi ts and incentives that are applied uniformly to domestic and foreign investors:• Zero Custom Duty and deferred VAT on capital goods for investments in sectors such as mining, EPZs, infrastructure, road construction, bridges, railways, airports, generation of electricity, telecommunications and water services.

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Zanzibar Investment Promotion Agency - Photo Courtesy: ZIPA

TANZANIA PRIVATE SECTOR FOUNDATION

Dedicated to Promote Private Sector Developmentand Enterprise Competitiveness

IntroductionThe Tanzania Private Sector Foundation (TPSF) was established on 4th November 1998 as a result of multi-folded efforts by various stakeholders of the Private Sector. The TPSF was established as a company limited by guarantee to promote private sector-led social and economic development in Tanzania by:i) providing member organizations with services they value;ii) understanding and representing their common interest; andiii) engaging in effective advocacy with the Government.

Since its founding, TPSF has served as a focal point for private sector advocacy and lobbying on behalf of the private sector.

Vision Statement“An effective Apex Private Sector Organization, providing a focal point for the articulation of private sector-led approaches to Tanzania’s economic and social development.”

Mission Statement“To promote private-sector-led social and economic development in Tanzania by providing member organizations with services they value, by understanding and representing their common interests, and by engaging in effective advocacy with the Government.”

What is our Core Activity?The Foundation’s core activity is Policy-Advocacy and Lobbying which seeks to raise issues, participate in and infl uence Government policy formulation and implementation in favour of the private sector. This activity is organized around the following themes:i) Policy Research - to conduct independent and evidence-based research on policy matters affecting the private sector and engage with the Government during the policy formulation and implementation processes and to ensure that the private sector inputs are taken on board;ii) Private Public Dialogue - covering policy and advocacy/lobbying initiatives on issues enabling the business investment environment such as taxation, infrastructure and sector-specifi c issues such as trade, tourism, agriculture, etc. In the latter set of issues TPSF seeks to add value to and support the work of its constituent members;iii) The National Business Forum - a platform for development and implementation of the policy impact agenda. This is the arena where evidence-based researched policy issues are raised by the Private Sector and are considered by the Government to reform. After, impact assessment is conducted to assess the impact of the dialogue and advocacy efforts with the Government.

Tel: +255 22 2601913

Fax: +255 22 2602368

PO Box 11313, Dar es Salaam

E-mail: info@tpsftz.org

Website: www.tpsftz.org

TSPS is making differences to Tanzania Small &Medium Enterprises

Business Development GateThis is an exciting programme where people compete against each other on the quality of their business plan. When they are successful they are awarded a grant to execute their business plan.

The picture depicts the grand prize winners in the Mtwara region.

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• 100 percent capital allowance deduction in the years of income for the abovementioned types of investments. • No remittance restrictions on the repatriation of returns from investments. • Investments are guaranteed against nationalisation and expropriation. • Interest deduction on capital loans is allowed and the fi ve-year limit for carrying forward losses has been removed.• Five percent customs duty and VAT tax deferral on capital goods for priority sectors, including livestock, aviation, commercial buildings, commercial development and microfi nance, export oriented projects, geographical special development areas, human resources development, manufacturing, natural resources, tourism and tour operators, transport, radio and television broadcasting.

Established by the EPZ Act of 2002, Export Processing Zones attract investments in agribusiness, textiles, electronics and Spatial Development Initiatives (SDIs). Licensed EPZ investors enjoy fi scal incentives coupled with simplifi ed operating procedures and superior infrastructure for faster set-up and smoother operations. Additionally, the EPZA provides facilitation and after-care service to new and existing investors. Further information on export processing zones may be found in the ‘Business & Finance’ chapter.

Special Economic Zones were established in 2006 to expand investment in light industry, agro-processing and agriculture. Green fi eld FDIs are allowed through SEZ legislation. The Tanzania Mini-Tiger Plan is seeing the construction of the Benjamin William Mkapa SEZ at Mabibo, Dar es Salaam, with infrastructure including roads, pavements, water and electricity.

INVESTMENT OPPORTUNITIESPotential investors are encouraged to set up enterprises in areas that will be benefi cial to further economic development, promoting growth as well as stimulating social upliftment. The priority sectors for investment include:• AGRIBUSINESS – Traditional crops, horticulture, fl oriculture, oil palm, Jatropha, sugar ethanol, organic cotton, pyrethrum, Artemisia, fi sh and aquaculture.• EXTRACTIVE – Minerals, including base metals and gemstones, gold and tanzanite, as well as hydrocarbons such as oil, natural gas and coal for the energy sector. There is also the prospect of refi ning, processing, smelting, cutting or polishing these materials.• INFRASTRUCTURE – Power, roads, seaports and airports.

Furthermore, the Export Process Zones Authority welcomes export-oriented investments in textiles and garments, leather processing and manufacturing, wood products, electrical and electronic appliances and Information and Communications Technology (ICT).

There are also signifi cant opportunities for investment in Tanzania’s many natural resources, in particular tourism and wildlife. A quarter of the country is set aside for game reserves, and world-famous tourist attractions include, among others, Mount Kilimanjaro, the Serengeti, Ngorongoro conservation area and the spice islands of Zanzibar.

In the transport sector there are opportunities in Build, Operate and Transfer (BOT) projects, and a concession system aimed at attracting foreign investors to build infrastructure has been launched. Industry, which currently comprises the processing of agricultural products and light consumer goods, has the potential for further development, as do the services and fi nancial sectors.

TRADE AGREEMENTSTanzania’s geographical advantage and trade agreements have created vast market opportunities for investors. These include

attractive Preferential Trade Agreements with the United States (US), European Union (EU) and Japan – such as the US’s African Growth and Opportunity Act (AGOA) and the EU’s Everything But Arms (EBA) – as well as other regional trade agreements with neighbouring countries.

AGOA offers countries enhanced trade preferences, facilitates both higher levels of trade and investment in support of positive economic and political developments in the region and encourages reciprocal trade and investment in Africa. Many of Tanzania’s exports enjoy duty-free treatment under AGOA.

EBA grants duty-free access to imports of all products from least developed countries without any quantitative restrictions, except to arms and munitions. The provisions of the EBA Regulation have been incorporated into the GSP Regulation. For products that do not fulfi l the GSP’s rules of origin requirements, the normal third country duty rates apply, or any preferential duty rate agreed by a separate agreement with the EU.

Tanzania belongs to the East African Community (EAC), along with other founder members Kenya and Uganda, and Rwanda and Burundi, which joined the EAC in 2007. The group comprises a market of over 126.6 million people with a combined GDP of US$ 73 billion. Economic development and regional integration have been enhanced through the removal of all non-tariff barriers on cross border trade, harmonising of standards and specifi cations of goods and services, adoption of an East African Single Tourist Visa and East African Passport, establishment of the EAC Tourist Council and the launch of a civil aviation agency.

Being a member of the East African Community has had many positive benefi ts for Tanzania, which has witnessed a phenomenal increase in regional trade to the extent that it enjoys a trade surplus with Kenya.

The EAC is focused on widening and deepening the integration process among the fi ve partner states. In this regard, the community is working towards the implementation of a Common Market Protocol in 2010 and a Monetary Union in 2012.

Tanzania is a member of the Southern African Development Community (SADC), a grouping of 14 countries with a combined population of over 247 million and a cumulative GDP of US$ 431 billion. Other members of SADC include South Africa, Zimbabwe, Zambia, Malawi, Botswana, Mauritius, Angola, Democratic Republic of Congo, Namibia, Lesotho, Swaziland, Seychelles and Mozambique.

SADC launched a Free Trade Area (FTA) in 2008 involving zero tariff levels for 85 percent of all goods traded among member states. Liberalisation of tariffs on the remaining 15 percent of goods, considered to be sensitive products, is expected to be completed in 2012. Outstanding issues in the implementation of the SADC FTA, such as the review of the rules of origin and elimination of non-tariff barriers, are also being addressed. This is one of the fi rst milestones of the SADC Regional Indicative Strategic Development Plan, and is to be followed by a Customs Union and Common Market.

Provisions under the Cotonou Agreement for trade between the EU and African, Caribbean and Pacifi c (ACP) countries came to an end on 31 December 2007. Thereafter, eight SADC countries (Angola, Botswana, Lesotho, Mozambique, Namibia, Swaziland, Tanzania and South Africa) embarked on negotiations with the EU. The subsequent Interim Economic Partnership Agreement (IEPA) that was signed during 2009 replaces the Goods Chapter of the Cotonou Agreement and provides the country’s private sector with a wider choice of imported goods, possibly at lower prices. Negotiations have begun on trade in services and investment that will lead to a full EPA.

1515

Business & FinanceThe private sector in Tanzania has grown signifi cantly in the past decade, with the support of an ever more investor-friendly business climate and institutions as well as a rapidly evolving fi nancial sector which has facilitated credit extension to business.

improved business licensing, other areas that have benefi ted include land regulation and labour law reforms. The Business Activities Registration Act (BARA) of 2008 should also help to cut down on red tape.

The Tanzanian government began implementing the Private Sector Competitiveness Project (PSCP) in 2007 in order to boost competitiveness, particularly among Micro, Small and Medium Enterprises (MSMEs), by reducing the cost of doing business while building capacity among domestic fi rms and facilitating their participation in international markets.

The Property and Business Formalisation Programme (PBFP) aims to facilitate the transformation of property and business in the informal sector into legally held and formally operated entities in the economy, thus helping property owners to use their assets as collateral in accessing capital.

Specifi c interventions by government to mitigate the impact of the fi nancial crisis and subsequent economic slowdown include the guaranteed rescheduling of outstanding loans and the provision of working capital on concessional terms, with government providing soft loan facilities for on-lending to businesses whose operations have been adversely affected. Furthermore, the Export Credit Guarantee Scheme (ECGS) and Small and Medium Enterprises (SMEs) Guarantee Scheme are being strengthened.

PrivatisationThe privatisation of formerly state-owned industries began with the Parastatal Sector Reform Policy of 1992, with the purpose of either selling off or restructuring parastatals, which had for the most part been a major fi nancial burden on government. The Privatisation Programme was launched the same year, with the intention of:

• Enhancing the effi ciency of state enterprises and their contribution to the economy

BUSINESS & THE PRIVATE SECTORVarious steps have been taken to reform the business environment by simplifying and speeding up the investment process and procedures involved in setting up a business, as well as enhancing transparency and encouraging stakeholder participation. This is being achieved through continued implementation of the Private Sector Development Strategy and the Business Environment Strengthening for Tanzania (BEST) programme.

A number of institutions and forums have been put in place to ensure broader participation in decision making, including representatives from the private sector, trade unions, professional associations, media, government departments and other representatives from civil society. Existing initiatives include the Tanzania National Business Council (TNBC), Investors’ Roundtables, Special Reform Task Forces, investment seminars, board membership in the Tanzania Investment Centre (TIC) and other government agencies.

The TNBC provides a forum for public-private sector dialogue with a view to reaching consensus and mutual understanding on strategic issues related to the investment process and business environment in Tanzania. The President of Tanzania chairs local and international roundtables, as well as the Chief Executive Offi cers’ Roundtable where the President meets private sector representatives to discuss ways of improving the country’s business competitiveness.

The Tanzania Private Sector Foundation (TPSF) was established in 1998 to promote private sector led social and economic development in Tanzania, serving as a focal point for private sector advocacy, and lobbying on behalf of the private sector.

The BEST programme was set up in 2003 to reduce the costs and delays involved in starting and operating a business by removing various legal and regulatory obstacles. In addition to

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• Reducing the fi nancial burden of enterprises on the government budget• Expanding the role of the private sector to enable government to concentrate on maintaining law and order and the provision of essential public services• Encouraging wider participation by citizens in the ownership and management of enterprises

The Parastatal Sector Reform Commission (PSRC) set up in 1993 began with the privatisation of manufacturing, agricultural, trade and mining enterprises, and had by 2007 reduced the number of parastatals in Tanzania from 400 to less than 140, concluding a total of 920 divesture transactions. This included the sale of 319 units and the disposal of 601 non-core units to Tanzanians, foreigners or joint venture companies through the sale of shares and assets, leases or liquidations.

The success of the privatisation programme has been evident in the marked improvement in productivity and value added to the economy, including job creation and effi ciency in areas such as telecommunications. Privatisation has also enabled more than 10 000 Tanzanians to acquire shares in these companies through the stock exchange.

EXPORT PROCESSING ZONESPhysical and procedural incentives in Export Processing Zones (EPZs) lower operational costs, thereby enabling both local and foreign investors to be internationally competitive.

Procedural incentives comprise being able to operate under a single license issued by the EPZ Authority, on-site customs inspection in the EPZs, One-Stop Service Centre for investors, facilitation and after-care services, and rapid project approval. The minimum amount of capital required to establish a company in an EPZ is US$ 500 000 or more for foreign investors and US$ 100 000 for local investors. The business should be a new investment and produce or process at least 80 percent of its goods.

Fiscal incentives include:• Exemption from all taxes and levies imposed by Local Government Authorities on products produced in EPZs.• Exemption from corporate tax for ten years.• Exemption from Value Added Tax (VAT) on utility and wharf charges.• Exemption from withholding tax on rent, dividends and interests for ten years.• Remission of Custom Duty, VAT and other taxes on raw materials and goods of a capital nature related to production in EPZs.• Remission of customs duty, VAT and any other tax payable in respect of importation of one administrative vehicle, ambulances, fi re fi ghting equipment vehicles and up to two buses.

• Treatment of goods destined to EPZs as transit cargo.

Non-Fiscal incentives comprise:• Access to competitive, modern and reliable services available within the EPZs.• Allowance to sell up to 20 percent of goods to the domestic market.• Entitlement to an initial automatic immigrant quota of up to fi ve persons during the start-up period and subsequent processing of additional applications by the EPZA.• Exemption from pre-shipment or destination inspection requirements.• Provision of temporary visas at point of entry to key technical, management and training staff for a maximum of 60 days.• Accessing the ECGS, subject to compliance with applicable conditions and procedures.• Unconditional transferability of profi ts, dividends and loyalties.

EPZ enterprises must be situated in specifi c areas that are treated as being outside the customs territory for VAT, customs tariff and exchange control purposes. There are currently three available EPZ industrial sites, which include: Millennium Business Park at Ubungo (Dar es Salaam), Hifadhi EPZ at Ubungo (Dar es Salaam) and Vector Health EPZ at Kisongo (Arusha). Furthermore, there is one Special Economic Zone (SEZ), namely the Benjamin William Mkapa SEZ.

In addition, there are other sites in 13 regions which have been set aside for EPZ development. Each site is approximately 2 000 hectares. Investors are invited to develop satellite towns, factory buildings and warehouses for lease or their own operation. Development can be done privately or under Public-Private Partnership in the form of BOT, BOOT or Concession Agreement.

All EPZ areas are integrated with international trade gateways such as air, sea and lake ports, as well as border areas.

JOB CREATIONThe Integrated Labour Force Survey of 2005/06 recorded an increase of 2.8 million jobs in the fi ve years since the 2000/01 survey, with a total of 20.6 million people active in the labour force of Tanzania Mainland compared to 17.8 million people in 2000/01. Based on the national defi nition of unemployment, this translates to 1.0 million male and 1.3 million female unemployed, equivalent to 11.0 percent in 2005/06 compared to 12.9 percent in 2000/01.

The National Employment Creation Programme launched in 2006 aims to create over one million jobs by 2010. By 2007, unemployment had dropped to 10.4 percent, according to 2009 East African Community Facts and Figures.

An employment bureau was established in 2009 as part of the National Policy for Employment and its strategy. Furthermore, nine district councils benefi ted from a training programme to help citizens create self-employment for poverty reduction. An employment centre was launched in Mwanza to cater for employment services in the Lake Zone.

Government continues to implement the National Economic Empowerment Policy of 2004, with current initiatives including:• National Economic Empowerment and Job Creation Programme• Mwananchi Empowerment Fund• Small Entrepreneurs Loan Facility (SELF)• National Income Generation Programme (NIGP)

The empowerment policy aims to create a favourable environment for investment and economic growth; improve

Central Bank of Tanzania - Photo Courtesy: Marie Gibbons

17

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the tax system and its administration; review laws, rules and regulations to ensure that they meet the requirements of a market oriented economy; and ease the availability of capital in order to enable more Tanzanians to access loans.

Other areas of focus intend to raise skills and knowledge levels; strengthen economic infrastructure; promote the establishment and development of cooperatives; improve the capacity to produce goods of high quality; create better and more reliable public services; support the establishment of appropriate marketing systems and identifi cation of markets; improve and simplify licensing procedures; create a favourable environment for Tanzanians to participate more effectively in the privatisation of state enterprises; and use land as a springboard to accelerate empowerment.

In 2007 the second phase of the National Economic Empowerment and Job Creation Programme was offi cially launched. The Bank of Tanzania approved 13 fi nancial institutions to participate in the scheme and extend credit to eligible applicants. Under the fi rst phase, government provided TZS 10.5 billion in cash guarantees to the National Microfi nance Bank Limited (NMB) and the CRDB Bank Limited. The banks, in turn, agreed to leverage this sum and lend three times the amount issued by the government, extending loans amounting to TZS 32.3 billion.

Government continues to sensitise the general public to form and join Savings and Credit Cooperative Societies (SACCOS) in order to increase opportunities for accessing credit from fi nancial institutions and government programmes. This resulted in a remarkable increase in the number of SACCOS from 1 875 in 2005 to 4 780 in 2008. During the period July 2008 to March 2009, loans amounting to TZS 68.58 billion were extended to 131 640 entrepreneurs

(members of 210 SACCOS and 86 economic groups). Out of these benefi ciaries, 58 907 were women and 72 633 men. Loans were also provided through the Women’s Development Fund, Youth Development Fund and the Tanzania Social Action Fund (TASAF).

The business environment is being enhanced for informal sector entrepreneurs, with the construction of business centres in Dar es Salaam and the implementation of the Informal Sector Activities Formalisation Programme during 2009.

During 2009/10, the main areas of focus include the following:• Facilitating the availability of capital for economic activities• Implementing the resolutions of the National Dialogue on Economic Empowerment held in November 2008• Conducting dissemination and sensitisation seminars for district and regional leaders so that they can sensitise other stakeholders on the National Economic Empowerment Policy and Act No. 16 of 2004• Coordinating and evaluating empowerment activities and initiatives in various sectors of the economy

BANKING & FINANCIAL SERVICESBanking was a state monopoly led by the Bank of Tanzania (BoT) and the National Bank of Commerce (NBC) until 1991, when the sector was opened to private and foreign capital. The fi rst private banks opened in 1993, and in 1997 the former NBC (which once accounted for over three quarters of local transactions), was split into NBC-1997 and the National Microfi nance Bank (NMB).

Tanzania has a relatively small yet vibrant banking and fi nancial services sector, which has expanded signifi cantly in the past decade. Financial markets consist of markets for money, bonds, equities, foreign exchange and collective investment

19

schemes. By February 2010 there were a total of 28 registered commercial banks operating in the sector. The National Microfi nance Bank (NMB) is the largest bank in Tanzania, by customer base as well as branch network, with 120 branches located in more than 80 percent of Tanzania’s districts.

The microfi nance subsector services Small and Medium Enterprises (SMEs) in the domestic market as well as other sectors historically ignored by commercial banks. By the end of 2008, there were 157 registered bureaux de change operators in Tanzania, operating under the Foreign Exchange Act of 1992 and Foreign Exchange (Bureaux de Change) Regulations of 1999.

While multinational banks once catered only for larger corporations, the role of SMEs has become increasingly important to economic growth. Expansion in the banking industry saw credit extension to the private sector growing at above 35 percent per annum by 2008, refl ecting government efforts to reduce domestic borrowing for fi nancing the budget and the promotion of a conducive environment for private sector participation in the economy.

The private sector has access to a variety of commercial credit instruments, including letters of credit, overdrafts, term loans and guarantees. Foreign investors can open accounts and make deposits in registered commercial banks. In accordance with the Income Tax Act of 2004, interest earned by non-residents from deposits in banks registered by the central bank is exempt from income tax. Profi ts, dividends and capital can be readily repatriated, and venture capital has been set up to meet the need for equity injections into businesses.

The Banking and Financial Institutions Act of 2006 consolidated laws relating to banking so as to harmonise the operations of all fi nancial institutions in Tanzania, foster sound banking activities and regulate credit operations. The Act also established a Credit Reference Bureau, enabling banks and fi nancial institutions to release information to licensed reference bureaus, which are in turn allowed to provide a credit report in the event of a legitimate business request.

The Finance Leasing law facilitates improved access to credit through leasing. Moreover, various legal amendments are being made in order to facilitate the provision of mortgage fi nancing products by fi nancial institutions.

The Bank of Tanzania Act of 2006 specifi es functions and objectives as to the regulation and supervision of banks and fi nancial institutions. The process of privatising or streamlining the remaining government-owned banks and other fi nancial service providers continues.

To help mitigate the impact of the global economic downturn, government has adopted a strategy that includes daily surveillance and supervision of banks by the Central Bank in order to detect potential problems in the banking system and take immediate action. Other measures are aimed at removing bottlenecks in the fi nancial sector in order to improve the availability of credit to the private sector, increasing the minimum pension, re-capitalising the Tanzania Investment Bank to enable it to operate a special window for lending to investors in agriculture, and establishing an Agricultural Development Bank. Improving productivity in the agricultural sector will help increase domestic food supply and thereby reduce infl ationary pressures.

Financial intermediation grew by 11.9 percent in the 2008/09 fi nancial year.

Monetary and fi nancial developments in 2009According to the Bank of Tanzania’s Monthly Economic Review of November 2009, the growth of monetary aggregates in the year ending October 2009 remained moderate, mainly on account of continued slow growth of banks’ credit to the private sector. In particular, the growth rate of extended broad money supply (M3) slowed to 14.6 percent, which was

20

signifi cantly lower than the 24.8 percent recorded in October 2008. Likewise, broad money supply (M2) grew by 17 percent in the year ending October 2009, compared with 30.2 percent recorded in October 2008. During 2010, government aims to contain the growth rate of money supply (M2) consistent with GDP growth, infl ation targets and foreign reserve levels.

The change in money supply in the year ending October 2009 occurred mostly in non-transferable deposits (savings and time deposits) which accounted for 54.7 percent of total change in M3 and 63.7 percent of M2. The introduction of new fi nancial products by banks may have contributed to the observed increase in non-transferable deposits.

Growth of credit to the private sector decelerated to 17.8 percent in October 2009 from 39.5 percent recorded in the corresponding month in 2008. The rate of growth registered in October 2009 was the lowest since 2001 as well as being below the programme target of 23.7 percent for the year ending December 2009. The sustained slower growth rate is attributed to the cautious stance taken by banks in providing credit to the private sector in the wake of the global fi nancial crisis.

Credit fl ows from banks decreased in most areas, except for personal loans, which continued to hold the largest share and accounted for 21.8 percent of the total stock of outstanding loans in October 2009. Banks have preferred to invest in treasury securities, repos and foreign assets, while lending more carefully to private enterprise.

Businesses that make VAT-exempt supplies, such as banks, insurance companies and fuel retailers, will benefi t from the reduction in VAT on Mainland Tanzania from 20 percent to 18 percent in 2009, as it is a real reduction in their costs.

Insurance, investment and social securityOnce monopolised by the state-owned National Insurance Corporation (NIC), the insurance industry was substantially liberalised with the Insurance Act of 1996. Since then, a number of international insurance companies have set up in Tanzania, and the sector currently comprises 18 insurers, 44 brokers and one reinsurance company.

The insurance industry is administered by the Insurance Supervisory Department in the Ministry of Finance. The new Insurance Act of 2009 provides for the establishment of the Tanzania Insurance Regulatory Authority, which is to regulate and supervise the insurance industry. It also proposes to expand coverage of the insurance sector so as to increase revenues to government and ensure that insurance business in Tanzania is administered and operated in an orderly manner and in compliance with international best practice.

Momentum Tanzania is a trusted insurance company focusing on meeting the healthcare and general insurance needs of individuals and corporate houses in Tanzania, and plans to introduce life insurance in the near future. The company is part of Momentum Africa and First Rand Group of South Africa, which has witnessed phenomenal growth on the African continent, where it has a presence in 13 countries.

Momentum’s performance is underpinned by a culture of innovation, fl exibility, tenacity and growth. Its range of products is aimed at enhancing the quality of life and well-being of its customers, employees and communities in which it operates. In the fi rst year of operations, Momentum Tanzania had written a gross premium income of TZS 8 billion and built up a strong client base.

Momentum Tanzania offers a wide range of general and health insurance products to suit the specifi c requirements of diverse clientele. General insurance products include individual and package policies to cater to all types of casualty, property and liability covers. Health insurance products offer a wide array of combinations for in-patient and out-patient cover, with add-on

Photo Courtesy: Marie Gibbons

21

special benefi ts. The company is linked to about 300 service providers across Tanzania, comprising hospitals, pharmacies and clinics, to ensure that its members enjoy prompt and personalised healthcare facilities.

Unit Trust of Tanzania (UTT) is a government entity under the Ministry of Finance and Economic Affairs, and is responsible for promoting a savings and investment culture in the country, launching and managing collective investment schemes and warehousing shares from privatised public enterprises. Investment advantages include risk diversifi cation as well as benefi ts from economies of scale and low transaction costs.

The National Social Security Fund (NSSF) provides a wide range of short and long term benefi ts to Tanzanians through: old age pension; disability pension; survivors’ pension; employment injury benefi t; social health insurance benefi t; maternity benefi t and funeral grants benefi t.

TAXATIONTax administration in Tanzania has a three-tier structure. Central Government tax is administered by the Tanzania Revenue Authority (TRA), a semi-autonomous government agency, while Local Government tax administration is undertaken by local authorities. In Zanzibar, the Zanzibar Revenue Board administers local taxes and levies, including VAT, while the TRA collects Union Government taxes, comprising customs and excise duty and income tax, which are remitted to the Zanzibar Government.

The tax base and rate structure of the Tanzanian tax system has been rationalised and streamlined with a view to instituting a fair, simple, equitable, effi cient and taxpayer/investor-friendly regime. The regulatory framework has been harmonised, an incentive regime put in place and rates gradually reduced. To attract investment, government has abolished protectionist

excises, replaced Sales Tax with VAT, and the two-tier corporate tax with a single rate.

Income tax contributes around 32 percent of total domestic revenue, while VAT contributes some 28 percent and excise duty approximately 20 percent. These three categories account for 80 percent of the total tax revenue projected in 2009/10.

Tanzania’s corporate tax rate is 30 percent, while VAT is chargeable on goods and services at 18 percent on Tanzania Mainland and 20 percent in Zanzibar, and at zero percent for exports. Withholding taxes on business and capital incomes such as dividends, interest and royalties are also applicable at rates ranging between 10 and 20 percent.

While personal income tax remained unchanged in 2009/10, the budget proposed a reduction in the corporate tax rate from 30 percent to 25 percent for companies listed on the Dar es Salaam Stock Exchange.

During the period July 2008 to March 2009, domestic revenue collection reached TZS 3 199 134 million (3.2 trillion), equivalent to 91 percent of the estimated amount of TZS 3 529 214 million (3.5 trillion). This is a shortfall of TZS 330 080 million compared to the target for the period. Excise duty collection amounted to TZS 222 737 million, compared to the target of TZS 262 460 million, while income tax collection was TZS 940 675 million, equivalent to 89 percent of the target. Government targeted to collect TZS 435 225 million on import duty; actual collection amounted to TZS 343 331. An area that performed well was VAT, which was TZS 490 662 million compared to the target of TZS 488 461 million.

Domestic revenue accounted for 15.9 percent of the GDP for the year 2008/09. Measures currently being taken to build sustainable capacity for increased domestic revenue

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UNIT TRUST OF TANZANIA (UTT)(Dhamana ya Uwekezaji Tanzania)

Pioneer of Unit Trust Schemes in Tanzania; Brings You Knowledge, Foresight & Analysis

Save to Invest - It’s Your Money, It’s Your Investment, It’s Your Profit, We Just Facilitate the Process

Sukari House, 2nd Floor, Sokoine Drive / Ohio Street • PO Box 14825, Dar es Salaam, TanzaniaTel: +255 22 2128460 / 2122501 • Fax: +255 22 2137593

Call Centre (toll free): +255 754 800 544 / +255 754 800 4550715 800 544 / 0715 800 455 (TIGO) • 0754 800 544 / 0754 800 455 (VODA)

E-mail: uwekezaji@utt.tz.org • Website: www.utt.tz.org

� IPO of 90.5bn Shillings� Historical average annual returns 15%� No monthly fees� Open end scheme� Balanced return from equity and debt� No assurance, yet high visibility and predictable� Units can be used as collateral

Wekeza Uwezeshwe

� Unit Linked Insurance Plan� 99% Investment� Life Insurance� Permanent disability insurance� Accident insurance� 500 000 Funeral expenses� Loyalty bonus of 5% or 7%� Only a monthly minimum of 8 340

Kamilisha Ndoto Yako

mobilisation include:• Broadening the tax base by registering new taxpayers and improving the business and investment climate• Implementing the TRA’s Third Five-Year Corporate Plan 2008/09-2012/13, which aims to strengthen accountability among taxpayers and tax collectors• Strengthening the capacity of the Customs and Excise Tax Department in the supervision and collection of revenue• Improving the procedures for collection of non-tax revenue• Improving the tax structure, fees, levies and other revenue measures

The aim is to increase domestic revenue collection to 16.4 percent of GDP in 2009/10, 17.2 percent in 2010/11 and 18.3 percent by 2011/12.

THE STOCK EXCHANGEGoverned by the Capital Markets and Securities Authority (CMSA) Act of 1994, the CMSA was established in 1996 in order to facilitate the creation of a stock exchange for mobilising and allocating savings for medium and long-term investments. Trading activities at the Dar es Salaam Stock Exchange (DSE) commenced in April 1998, and in May 2003 trading was opened to foreign investors. The DSE launched its Automated Trading System during 2007.

Market capitalisation during the 1st quarter ending 30 September 2009 decreased by 0.86 percent from TZS 5 181.46 billion as at 30 June 2009 to TZS 5 136.76 billion. The decrease is attributed to falling share prices of several securities during the period under review. However, on an annual basis, it has risen from TZS 3 392.75 billion in October 2008. The composition of market capitalisation as at 30 September 2009 was 38.30 percent and 61.70 percent for local and cross-listed companies respectively.

During the quarter under review, the market experienced a fall in prices for most equities. The DSE All Share Index declined by 0.8 percent from 1 231.09 (30 June 2009) to 1 221.26 (30 September 2009).

Total market turnover increased by 228 percent between the 4th and 1st quarters, from TZS 7.04 billion to TZS 23.07 billion. The increase in turnover was to a large extent due to the trading of CRDB shares on the exchange, which accounted for 50.3 percent of total turnover generated during the quarter.

The equity market currently consists of 15 companies listed on the DSE. Participation by non-residents is limited to 60 percent of the shares. The listed companies are TOL Gases Ltd, Tanzania Breweries Ltd, Tanzania Tea Packers Ltd, Tanzania Cigarette Company, Tanga Cement Company Ltd, Swissport Tanzania Ltd, Tanzania Portland Cement Ltd, Kenya Airways Ltd (cross-listed), East Africa Breweries Ltd (cross-listed), Jubilee Holdings Ltd (cross-listed), Dar es Salaam Community Bank (DCB), National Investment Company Limited (NICOL), Kenya Commercial Bank Ltd, CRDB Bank Plc and National Microfi nance Bank (NMB).

The Treasury bonds market has four maturities of two, fi ve, seven and ten years that are issued in the primary market by the Central Bank on behalf of the government, and are listed on the DSE. The secondary market trading of government bonds needs further stimulus.

Seven corporate bonds have been issued and listed on the DSE. These are: East African Development Bank (TZS 15 billion), East, Central and Southern African Trade Development Bank (TZS 15 billion), Barclays Bank Tanzania Ltd (tranches A, B and C for TZS 10 billion, 10 billion and 4.6 billion, respectively), Standard Chartered Bank Tanzania Ltd (TZS 8 billion) and ALAF Ltd (TZS 15.07 billion).

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OUR VISIONCHC aspires to becoming a strong organisation, capable of effectively and efficiently accomplishing its

functions for the national interest.

OUR MISSIONCHC is committed to apply the best commercial perspectives in the disposal of residual assets, collectionof charged off loans, liquidation and divestiture of public enterprises, coordination of the establishment

of Regulatory Authorities, monitoring and evaluation of parastatals that have been privatised andfinalisation of cases tranferred to the Corporation by virtue of the establishment Act.

OUR CONTACTS1st Floor, Consolidated Holding Corporation Investment House, Samora Avenue / Zanaki Street

PO Box 21195, Dar es Salaam, TanzaniaTel: 255 22 2110531 • Fax: 255 22 2114782

E-mail: chc@iwyafrica.com • Website: www.chc.co.tz

Consolidated Holding Corporation House220/50 Mirambo Street • PO Box 9252, Dar es Salaam, Tanzania

Tel: 255 22 2117988/9 • Fax: 255 22 2119778 / 2122870

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CONSOLIDATED HOLDING CORPORATION(CHC)

Established under the National Bank of Commerce(Reorganisation and Vesting of Assets and Liabilities Act, Cap 404 R.E.)

Government has deliberately provided several incentives in order to encourage active participation in capital markets by issuers as well as investors.

Incentives to issuers include:• Reduced corporate tax from 30 percent to 25 percent where at least 30 percent of the issued shares are held by the public.• Tax deductibility of all Initial Public Offering (IPO) costs for the purposes of income tax determination. All IPO costs are accepted by the Tanzania Revenue Authority (TRA) as acceptable expenses used in the generation of income and profi ts, and therefore are taken into consideration when determining profi t for tax purposes.• Withholding tax on investment income made by a Collective Investment Scheme (CIS) is fi nal tax. Investors in a CIS are not charged tax on the income distributed by the CIS after the scheme’s income taxation.

Photo Courtesy - Corporate Tanzania

Incentives to investors comprise:• Zero capital gains tax as opposed to 10 percent for unlisted companies.• Zero stamp duty on transactions executed at the DSE compared to 6 percent for unlisted companies.• Withholding tax of 5 percent on dividend income as opposed to 10 percent for unlisted companies.• Zero withholding tax on interest income from listed bonds whose maturities are three years and above.• Exemption from withholding tax on income accruing to fi delity funds maintained by the DSE for investor protection.• Income received by Collective Investment Scheme (CIS) investors is tax-exempt.

Bank of Tanzania, Twin Towers - Photo Courtesy - Corporate Tanzania

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TourismTanzania is rich in both natural and cultural attractions, boasting a total of eight world heritage sites and over a quarter of its total landmass set aside for conservation.A sought-after tourism destination, Tanzania encompasses the vast plains of the Great Rift Valley, the heights of Mount Kilimanjaro, the largest freshwater lakes in Africa, and the pristine beaches and fascinating history of the Zanzibar archipelago. In recent years, increased investment in tourism services has seen major improvements in air access and infrastructure development in terms of road networks, particularly on safari circuits, as well as the construction of new luxury hotels on the mainland and Zanzibar.

Between 1990 and 2008, tourism attracted the second most investment of any sector in Tanzania – some US$ 4 819.7 million – and the sector presently contributes around 16 percent to Tanzania’s Gross Domestic Product (GDP). While during 2008 and 2009 the country’s tourism industry felt the knock-on effect of the global recession on its major source economies through a slowdown in tourist arrivals, the industry is nonetheless projected to register positive growth during 2010, with many of its potential markets on the road to recovery. As such, the World Tourism Organisation forecasts growth of between 3 and 4 percent in international tourist arrivals for the year.

The Ministry for Tourism and Natural Resources predicts that the tourism industry will expand between 8 and 9 percent during 2010.

TOURISM PROMOTIONThe Tanzania Tourist Board

(TTB), together with the Ministry of Tourism and Natural Resources and the private sector, promotes the country’s many attractions

in both domestic and international markets, notably

Europe and the United States (US).

Promotional efforts include media advertisements and participation in local travel and tourism fairs such as Karibu Travel Fair, Nane Nane and Saba Saba, as well as the emerging markets of China, Japan, Singapore, India and Russia. As a result, Tanzania has seen the number of tourists from China double, from 4 798 in 2006 to 8 982 in 2008. There has also been a signifi cant increase in Indian tourists, from 13 020 in 2006 to 17 530 in 2008.

The US remains Tanzania’s top source market, with the number of American tourist arrivals between 2007 and 2008 rising from 58 341 to a record high of 66 953. In 2009, using the slogan ‘The Land of Kilimanjaro, Zanzibar and the Serengeti’, the country showcased its expanding luxury tourism product at the Luxury Travel Expo in Las Vegas.

During 2008/09, promotional campaigns for Tanzania’s tourist attractions were conducted in institutions of learning in Dar es Salaam and Lindi. TTB, in collaboration with the Ministry of Tourism and Natural Resources, is also concentrating on

Zanzibar - Photo Courtesy: Tanzania Tourist Board

TOURISM PROMOTIONThe Tanzania Tourist Board The Tanzania Tourist Board

(TTB), together with the (TTB), together with the (TTB), together with the Ministry of Tourism and Ministry of Tourism and Ministry of Tourism and Natural Resources and the Natural Resources and the private sector, promotes the private sector, promotes the private sector, promotes the country’s many attractions country’s many attractions

in both domestic and in both domestic and in both domestic and international markets, notably international markets, notably

Europe and the United Europe and the United Europe and the United States (US).States (US).

It is a land of superlatives and contrasts, something for everyone: from themajestic Mount Kilimanjaro to the fabled Islands of Zanzibar. The largestand most diverse wildlife concentrations on Earth including the matchlessSerengeti plains, Ngorongoro Crater, Katavi and the mighty Selous GameReserve. The Legacy of the ancient Swahili civilisations, such as Kilwa Ruins

once a city of the Arabian Nights. Wonderful places for swimming, snorkelling,scuba diving, fishing off thousands of kilometres of Indian Ocean coastlineand around the Africa’s Great Lakes. And then there is Tanzania’s greatestasset: its friendly people and cuisines. The country is among the world’sleaders in Cultural tourism. This is indeed AUTHENTIC AFRICA.

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promoting cultural tourism, as well as implementing a campaign to attract travellers coming to the continent for the Football World Cup in South Africa.

2008 Tanzania Tourism Sector SurveyThe 2008 Tanzania Tourism Sector Survey, involving 4 265 respondents on behalf of 6 388 international tourists, was carried out at fi ve entry/exit points; namely, Julius Nyerere International Airport, Kilimanjaro International Airport, Namanga, Zanzibar Airport and Tunduma.

According to the fi ndings of the survey, the average length of stay in Tanzania mainland was nine nights as compared to ten in Zanzibar, and the overall average expenditure per visitor was US$ 209 per person per night for tourists on a package tour and US$ 186 per night for non-package tour visitors. Survey respondents remarked on infrastructure, particularly the roads leading to Serengeti and Tarangire national parks, as well as conditions in airports and their facilities, as areas requiring the most improvement. The survey also indicated that more tourists now prefer non-package tours.

POLICIES & PROGRAMMESThe fi rst National Tourism Policy adopted in 1991 set the overall objectives and strategies necessary for ensuring sustainable tourism development in Tanzania. This saw the establishment of the Tanzania Tourist Board (TTB), improved private sector participation and the approval of new tourism-related projects in collaboration with the Tanzania Investment Centre. Tourism development in Zanzibar falls under the Zanzibar Commission for Tourism (ZCT), while the Tourism Confederation of Tanzania (TCT) is the main national private sector body representing the industry.

The Tourism Policy was revised in 1999 to focus more on community-based tourism and the sustainable conservation and management of both the environment and local culture to create a low-impact, high-quality eco-tourism product. The spotlight is currently on the development of niche markets, such as bird

watching, hunting, fi shing and scuba diving, and cultural as well as conference tourism.

Steps have been taken to improve existing infrastructure, and investment opportunities are available in construction and management of hotels, lodges and restaurants, infrastructure ventures, aviation projects, training institutes, tour operations, travel agencies and marketing organisations. The Mtwara Development Corridor initiative, which spans southern Tanzania, southern and central Malawi, northern Mozambique and eastern and northern Zambia, is also the focus of ‘bush and beach’ tourism projects.

In 2008, preparations commenced for the implementation of a Maritime Cultural Heritage Programme. The programme will include the investigation and documentation of a number of sites as part of developing a Maritime Heritage Database, with a view to providing information on the value of Tanzania’s underwater and maritime heritage and the need for its protection. A survey of the Great Northern shipwreck – a site with both historical and natural signifi cance – began in April 2009.

TOURISM ASSETSTanzania boasts an unmatched variety of fauna and fl ora as

Palace Museum, previously called the Sultan’s Palace - Photo Courtesy: Marie Gibbons

House of Wonder (Maritime Museum) - Photo Courtesy: Marie Gibbons

Zebra and Impala - Photo Courtesy: René Hartslief

promoting cultural tourism, as well as implementing a campaign to attract travellers coming to the continent for the Football World Cup in South Africa.

2008 Tanzania Tourism Sector SurveyThe 2008 Tanzania Tourism Sector Survey, involving 4 265 respondents on behalf of 6

watching, hunting, fi shing and scuba diving, and cultural as well as conference tourism.

Steps have been taken to improve existing infrastructure, and

Palace Museum, previously called the Sultan’s Palace - Photo Courtesy: Marie Gibbons

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well as history, heritage and spectacular scenic beauty. The diversity of its tourism product encompasses pristine sandy beaches, coral reefs and marine parks; sites rich in history, from early hominid remains to artefacts and architecture; not to mention the many opportunities for cultural tourism. It is therefore little wonder that the country contains a total of eight UNESCO World Heritage Sites.

Set in the enormous caldera of an extinct volcano, Ngorongoro Conservation Area (NCA) in northern Tanzania boasts a spectacular blend of landscapes, wildlife, people and archaeology, unsurpassed anywhere else in Africa. Declared a World Heritage Site in 1979 and the Eighth Wonder of the World in 1982, the NCA is also an international biosphere reserve. Here pastoralism as practised by the Masai coexists in harmony with natural resources conservation and tourism.

During July 2009, Tanzania celebrated the Golden Jubilee of the milestone discovery by Mary Leakey of the fossilised cranium of Paranthropus boisei – the oldest known hominin – at Olduvai Gorge in the Ngorongoro Conservation Area.

The NCA encompasses a large concentration of wildlife, with over 25 000 large mammal including black rhino, elephant, wildebeest, hippo, zebra, giraffe, buffalo, antelope and lion. From here the nearby crater of Empakai, fi lled with a deep alkaline lake, and the active volcano of Oldonyo Lengai, can be seen. Excavations carried out in the Olduvai Gorge have unearthed one of humankind’s earliest ancestors – Homo habilis – and at Laitoli site early hominid footprints can be seen which date back some 3.6 million years.

Other top heritage sites include:• The ruins and irrigation system surrounding Engaruka, left by a highly developed yet unidentifi ed civilisation some 500 years ago.

Old Fort in Kilwa - Photo Courtesy: Tanzania Tourist Board

Porcupine - Photo Courtesy: René Hartslief

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• The towns of Lindi and Mikindani, which were both central ports in the network of Indian Ocean trade.• Tendunguru, which is a signifi cant site for palaeontology, as the remains of the largest known dinosaur species were discovered here.• Important archaeological remnants from the Swahili coast may be found in the island ruins of Kilwa Kisiwani and the nearby Songo Mnara.• Over 150 caves at the Kondoa rock art site, which bear images refl ecting the religion and rituals of their early inhabitants.• Zanzibar’s historic Stone Town, with a rich architectural resource refl ecting its part in the seaborne trade between Asia and Africa.

The country’s many natural wonders and rich wildlife experience may be experienced on a walking or boat safari, or even from a hot air balloon drifting over the Serengeti. Adventure tourists can hike on the slopes of Mount Meru, scale the heights of Kilimanjaro, or explore an ocean wonderland on a diving or snorkelling excursion. There is also horse riding and mountain biking, with canoeing trips in Arusha National Park and excellent deep sea fi shing in the vicinity of Zanzibar and Pemba. Then there are soda lakes like Lake Manyara and Lake Natron, and the freshwater lakes of Victoria, Tanganyika and Nyasa, where tourists can enjoy fi shing trips, hiking and swimming.

Tourism opportunities on the islands of Zanzibar and Pemba, known for the historic Stone Town, beautiful beaches and spice plantations, are covered under the ‘Zanzibar’ chapter.

The Tanzanite ExperienceLocated in the foothills of Mount Kilimanjaro is the valuable, rare and mysterious gemstone known as tanzanite, which was discovered in 1967. The supply of tanzanite is fi nite, and could diminish considerably within the next 15 to 20 years. The ‘Tanzanite Experience’ has been developed to create a greater awareness of the blue/purple mineral zoisite through tourism and education. Visitors are treated to an adventurous underground tour down a mine shaft to learn about the history, geology, process and mining ethics of tanzanite.

NATIONAL PARKS & GAME RESERVESThe Tanganyika National Parks Ordinance of 1959 established the organisation now known as Tanzania National Parks (TANAPA). Conservation in Tanzania is governed by the Wildlife Conservation Act of 1974, which allows government to establish protected areas and outlines how these are to be organised and managed. TANAPA now encompasses a total of 16 national parks.

Tourism provides valuable revenue to support the conservation work of the national parks, as well as wildlife research and the education and livelihood of local communities. In addition, tourism helps to generate international awareness of conservation issues, while the physical presence of tourists assists in deterring poachers and helps park rangers in their game management work.

Human activity is closely monitored and all development strictly regulated. Buildings in the parks must be unobtrusive and waste disposal is carefully controlled. Park visitors and facilities

Cheetah - Photo Courtesy: René Hartslief

Located in the foothills of Mount Kilimanjaro

zoisite through tourism and education. Visitors are treated to an adventurous underground tour down a mine shaft to learn about

and the education and livelihood of local communities. In addition, tourism helps to generate international awareness addition, tourism helps to generate international awareness of conservation issues, while the physical presence of tourists assists in deterring poachers and helps park rangers in their game management work.

Human activity is closely monitored and all development strictly regulated. Buildings in the parks must be unobtrusive and waste disposal is carefully controlled. Park visitors and facilities

Elephant - Photo Courtesy: Tanzania Tourist Board

Crocodiles - Photo Courtesy: René Hartslief

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are widely distributed to prevent harassment of animals and to minimise the human impact on the environment. Even in Tanzania’s most popular park, the Serengeti, more than 7 000 square kilometres – almost half the park’s area – remains a wilderness zone with no roads.

Lying in northern Tanzania along the Kenyan border, where it is contiguous with the Masai Mara National Reserve, the Serengeti National Park is the country’s oldest reserve. It encompasses 14 763 square kilometres of grassland plains and savannah as well as riverine forest and woodlands. It is also the site of the annual migration of around 200 000 zebra, 300 000 Thomson’s gazelle and over a million wildebeest to new grazing lands some thousand kilometres to the north. The Serengeti is known for its rich populations of leopard and lion, as well as endangered black rhino and cheetah.

At 5 895 metres high, Mount Kilimanjaro is covered with snow and ice throughout the year, despite its position just three degrees south of the equator. At Kilimanjaro National Park, this dormant volcano with its twin peaks of Kibo and Mawenzi, draws climbers from around the world. A journey up the mountain’s slopes takes hikers from lush tropical rainforest, populated with leopard, antelope and elephant, through heath and moorland and then into the icy, arctic terrain of the summit.

Covering an area of 54 600 square kilometres in southern Tanzania, the Selous Game Reserve is one of the largest wildlife reserves of the world, and offers visitors a true taste of untamed Africa. Designated a UNESCO World Heritage Site in 1982 because of its pristine environment and diversity of fauna, Selous is characterised by grassy plains, seasonally fl ooded pans, riverine forests and lakes. This unique ecosystem boasts larger concentrations of wildlife, such as hippopotamus, crocodile and the rare African wild dog, than any other game reserve in Africa, and supports 30 000 elephant, 200 000 buffalo, 80 000 wildebeest and ever increasing numbers of black rhino.

The smallest of Tanzania’s national parks, Gombe Stream’s claim to fame is its chimpanzee population which was studied by British researcher Jane Goodall. Set between steep mountains and valleys, this narrow strip of primeval forest is also home to a wide variety of other primates, including blue or red-tail monkeys.

Tanzania’s other principal parks comprise the protected habitat of Lake Victoria’s Rubondo Island; the rainforests, beaches and wild chimpanzees of Mahale Mountains National Park; the popular and easily accessible Mikumi National Park, with its fl ood plain, open grasslands and wide variety of birdlife; and the hot springs, famous tree-climbing lions and dense populations of elephant and buffalo in Lake Manyara National Park. A wonderful beach and bush experience awaits visitors to Saadani National Park, while Katavi is the country’s fourth-largest protected wildlife area and excellent for game viewing.

In the southern highlands there are magnifi cent wildfl owers to be found on the Kitulo Plateau and an untouched wilderness in Ruaha National Park. The Amani Nature Reserve contains some of the planet’s most biologically diverse rainforests; Arusha National Park is the site of the country’s second-highest mountain, Mount Meru; while Tarangire National Park is known for its elephants and massive baobabs and the forested Udzungwa Mountains for both primates and bird watching. Located just south of the border with Kenya and east of the Pare Mountains, Mkomazi National Park is the focus of an intensive breeding programme to save the endangered black rhino.

Chimpanzee - Photo Courtesy: René Hartslief

country’s second-highest mountain,

both primates and bird watching. Located just south of the border with Kenya and east of the Pare

Mkomazi National Parkis the focus of an intensive breeding programme to save the endangered black

Agriculture & FisheriesAgriculture plays a major role in Tanzania’s economy, and is a substantial source of revenue and jobs, employing nearly 80 percent of the workforce.

Agricultural activities, which comprise crops, livestock, forestry and hunting, continue to make up a signifi cant portion of Tanzania’s Gross Domestic Product (GDP), and have been growing at an average of 4 percent per annum for the past decade. Nevertheless, the contribution of agriculture to GDP has exhibited a modestly declining trend over this period, refl ecting the gradual modernisation of the economy and expanding output in other sectors. Agriculture made up 25.8 percent of Tanzania’s GDP in 2008 compared to 29 percent in 2001.

The sector expanded by 4.6 percent in 2008; an improvement over the 4 percent recorded in the previous year. This good performance was mainly due to better weather conditions (particularly during the fi rst quarter), improved infrastructure for irrigation and rural roads, distribution of subsidised fertilisers targeting the main production regions, availability of quality seeds and other agricultural inputs, and sensitisation of commercial livestock farming.

However, the large degree of dependency on the agricultural sector means that the economy is especially vulnerable to adverse weather conditions and unfavourable prices in

international primary commodity markets. For this reason, agriculture was particularly affected by the global fi nancial and economic crisis, which brought about a decline in both demand and prices for commercial agricultural products, mainly from the third quarter of 2008. This, together with the subsequent drought, saw government revise anticipated growth in the sector to just 3 percent for 2009.

In the short term, government is focusing on distributing food from surplus regions to those with shortages, and the European Union and World Bank have pledged to provide additional fi nancing to support food production and ensure sustainable food supply in the country. In the medium term, a number of strategies are being initiated to increase agricultural output and ensure food suffi ciency in the context of ‘Agriculture First’, which is the theme of the 2009/10 national budget. A rebound in growth is anticipated over the next few years as these initiatives are implemented.

CROP PRODUCTIONTanzania’s ecological diversity contributes to its success – and potential for growth – in the agricultural sector. The country has nine agro-ecological zones: coastal plains, eastern plateaus and mountain blocks, southern highlands, northern rift zone and volcanic highlands, central plateau, Rukwa (Ruaha rift valley), inland sedimentary, Ufi pa and western highlands.

Major staple crops include maize, sorghum, millet, rice, wheat, pulses (mainly beans), cassava (tapioca), potatoes, bananas and plantains. A wide range of tropical and temperate fruits are also produced, such as oranges, pineapples, mangoes, avocados, apples and grapes. In the

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Tropical fruit - Photo Courtesy: René Hartslief eastern plateaus and mountain

Major staple crops include maize, sorghum, millet, rice, wheat, pulses sorghum, millet, rice, wheat, pulses (mainly beans), cassava (tapioca), (mainly beans), cassava (tapioca), potatoes, bananas and plantains. A wide range of tropical and temperate fruits are also produced, such as oranges, pineapples, mangoes, avocados, apples and grapes. In the

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fi rst quarter of 2009 (January-March), the sector registered a slight increase in output of the major staple food crops, namely: maize (2 percent), paddy (4 percent) and sorghum/millet (1 percent).

The arable subsector grew by 5.1 percent in 2008 compared to 4.5 percent in 2007, and presently constitutes just over three-quarters of the country’s agricultural GDP.

Principal export crops include coffee, cashews, tobacco, tea, cloves and other spices, horticultural crops, oil seeds (groundnuts, sesame, and sunfl ower) and fresh cut fl owers. Between 2007 and 2008, coffee production rose from 34 000 tonnes to 58 000 tonnes, while sugar cane output increased from 2.0 million tonnes to 3.5 million tonnes. However, over the same period the output of tea declined dramatically, from 159 000 tonnes to 35 000 tonnes.

Export volumes of coffee, tobacco and cloves also rose substantially in the year up to October 2009, contributing to the

healthy increase of 31.8 percent in traditional exports from the level recorded during the corresponding period in 2008. This good performance may be attributed to favourable weather conditions and timely accessibility of agricultural inputs, which boosted output notwithstanding the fact that export unit prices for these commodities decreased.

Also in the year up to October 2009, notable increases were recorded in horticultural products – US$ 42.3 million compared to US$ 29.8 million during the year ending October 2008. Similarly, other exports rose by 19 percent to US$ 325.4 million, mainly as a result of increased exports of oil seeds and wood products.

LIVESTOCKThe livestock subsector contributes almost 16 percent to agricultural GDP, and grew by 2.6 percent in 2008 compared to 2.4 percent in 2008. Between 2007 and 2008, slight decreases were noted in the herd sizes of cattle, sheep and goats; cattle from 19.1 million to 18.8 million, sheep from 3.6 million to 3.56 million, and goats from 13.6 million to 13.1 million. However, the number of pigs grew from 1.2 million to 1.6 million and poultry from 30.0 million to 33.3 million over the same period.

Current challenges facing the sector include animal diseases, poor infrastructure and lack of reliable markets, investments and

Coffee plants - Photo Courtesy: René Hartslief

Tobacco - Photo Courtesy: René Hartslief

Cattle - Photo Courtesy: René Hartslief

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processing industries. Nearly all animal products – such as meat, dairy and skins – are absorbed by the domestic market, and while the Tanzanian government recognises the need for private investment in this sector to fi nance the export industry, it believes that for the time being developing the domestic market in order to meet local demands for meat and dairy is the main goal.

FISHERIESTanzania is rich in fi shery resources. Marine waters cover 40 000 square miles and fresh water lakes some 36 000 square miles. Major fi sh catches include sardines, catfi sh, tilapia, Nile perch, dagaa and, to a lesser extent, prawn fi shing in coastal areas. The country’s inland fi shing industry – in particular the ‘Great Lakes’ of Victoria, Tanganyika and Nyasa – has been the focus of much activity in recent years.

Nile perch is the primary fi shing catch in Lake Victoria, and there is also potential for developing fi shing resources in Lake Nyasa and Tanzania’s coastal areas – especially deep sea fi shing and commercial prawn fi shing. Efforts to develop and expand the fi shing industry have been hampered by territorial disputes (in the case of Lake Nyasa) and illegal fi shing activities, as well as the need for investment to upgrade the local fi shing fl eet and other infrastructure. There has been modest growth in fi shing activities since 2000.

The sector expanded by 5 percent in 2008 compared to 4.5 percent in 2007; mainly on account of government efforts to combat illegal fi shing practices and traffi cking of fi sh and fi sheries products across the borders, as well as the strengthening of aquaculture production and promotion of environmental conservation. Over the same period, the fi shing catch rose from 328 000 tonnes to 350 000 tonnes. However, the overall contribution of fi shing to total GDP decreased to 1.2 percent in 2008 compared to 1.3 percent in 2007.

While government projected that growth would decline to 3.7 percent in 2009 in response to the ongoing global economic crisis, according to the National Bureau of Statistics’ quarterly GDP estimate report, increased demand for fi sh in foreign markets saw fi shing activities growing by 7.9 percent for the January to March 2009 period. It is predicted that fi shing activities will continue to recover as global economic activities pick up in the medium term.

AGRICULTURAL POTENTIALDespite its remarkable potential, Tanzania’s agricultural sector remains surprisingly underdeveloped. According to East African Community Facts & Figures (2009), the country has 48.1 million hectares of agricultural land. Of this, just 9.5 million hectares is cultivated. Unlike several other countries in the region, the vast majority of land available for cultivation is neither virgin forest nor environmentally sensitive.

One reason for such underutilisation is the fact that agriculture in Tanzania remains largely un-mechanised. According to government fi gures, nearly three quarters of the country’s crops

Fish - Photo Courtesy: René Hartslief

Pineapples cultivated by hand - Photo Courtesy: René Hartslief

Large scale vegetable farming - Photo Courtesy: René Hartslief

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are cultivated by hand hoe; a further 20 percent are cultivated by ox plough and only 10 percent by tractor. Agricultural production is also adversely affected by gender disparities (with women forming the bulk of the agricultural labour force), periodic droughts and poor weather conditions, limited capital investment, lack of agricultural technology (especially with respect to irrigation technology), and inadequate and inappropriate use of fertilisers.

Agricultural production and development are also limited by the fact that most farms in Tanzania are organised around smallholder subsistence models, with the average farm size of 0.5 to 3.0 hectares. For instance, only 1 percent of the livestock industry is run by large-scale ranches and dairies, with the rest of the industry in the hands of small-scale subsistence farmers.

Investment opportunitiesThe government has taken a number of steps to encourage investment in agriculture. Reformed land policies allow for 99-year leases to foreign companies, while liberalisation within the industry enables the private sector to compete in the processing and marketing of cash crops. This has enabled foreign companies such as the UK’s Brooke Bond and South Africa’s Illovo to invest in planting tea and sugar cane.

There are several crops that show specifi c potential for investment. Sisal is already an important and versatile crop, which has undergone signifi cant expansion in the past few years with large-scale plantations having been built in a number of sites, including Dodoma, Shinyanga, Kigoma and some coastal areas. With the Tanzanian government having identifi ed biofuel as a priority sector, the further cultivation of crops such as sugar cane (to produce ethanol), oil palm trees and Jatropha (curcas) seeds holds promise.

Tanzania also has a large potential market for honey, producing 5 600 tonnes per year of which only 477 tonnes (11 percent) is currently exported. Annually, some 138 000 tonnes is available for harvesting, which could contribute a total of TZS 184 billion to the national income every year.

EXPANDING PRODUCTIONA strong and supportive policy environment is key to further growth in the agricultural sector. The Agriculture and Livestock Policy (1997) is currently under review, while the Agricultural Sector Development Strategy (2001) and the seven-year Agricultural Sector Development Programme (ASDP) aim to revamp agriculture for increased productivity, profi tability and farm income. These pieces of legislation emphasise enabling farmers’ access to and use of agricultural knowledge, technologies, marketing systems and infrastructure, and the promotion of private sector investment.

The Tanzanian government recognises the importance and potential of agriculture as a contributor to wealth creation. As

such, the motto for the 2009/10 national budget is ‘Agriculture First’, which underlines the renewed focus on fostering agricultural development. In the 2009/10 fi scal year agriculture received 7 percent of the national budget allocation – some TZS 666.9 billion, which is an increase of 30 percent over the TZS 513.0 billion allocated in 2008/09.

A number of measures were proposed in the 2009/10 budget to redress the adverse impacts of the global economic crisis on the sector. These include:• Guaranteeing of loans intended for investment in the sector.• Compensation of losses incurred by cooperatives and private companies which sold cotton and coffee at a loss.• Establishment of an Agricultural Development Bank.• VAT and customs duty changes to promote the dairy sector, and VAT exemption on land preparation, cultivation, planting and harvesting in order to reduce production costs. Currently agricultural implements and fertilizers are VAT exempt.• Improving access to credit and fast-tracking the setting up of a special window for lending to agricultural ventures at the Tanzania Investment Bank (TIB).

In addition, productivity and growth in agriculture is to be boosted through:• Improvements to the rural road network and irrigation infrastructure, including rain water harvesting. • Improvements to storage facilities for agricultural crops and livestock products and assistance to farmers in identifying reliable markets.• Strengthening the capacity of the Strategic Grain Reserve to buy and store suffi cient grains consistent with national food requirements. • Ensuring the timely availability of inputs for arable agriculture and livestock farming, including improved seeds, fertilisers, agro-chemicals and veterinary medicines, and that the Agricultural Input Fund is suffi ciently funded.• Giving priority in the allocation of farm implements and other inputs to the major food crop production regions of Mbeya, Ruvuma, Rukwa, Iringa, Morogoro and Kigoma.• Identifying and surveying land for large-scale food crop farming to take advantage of the existing opportunity in terms of local and world market demand.• Supporting research institutions to develop improved seeds and encouraging other institutions to scale-up seed production. • Reduction of unsustainable forest harvesting.• Establishing and reviving agro-processing industries, with private sector participation.

Sugar cane - Photo Courtesy: René Hartslief

Storage facilities - Photo Courtesy: René Hartslief

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ManufacturingThe privatisation of most government-owned manufacturing enterprises in the late 1990s set in motion a process of steady growth within the sector, and the Tanzanian government has prioritised manufacturing as a catalyst for future economic expansion.According to the Tanzania Development Vision 2025, the country aims to move from an under-productive agricultural economy to a semi-industrialised one led by modernised and highly productive agricultural activities which are effectively integrated and supported by industrial and service activities in both rural and urban areas.

Growth in the manufacturing sector has risen from 1.5 percent in 1995 to 8.7 percent in 2007 and 9.9 percent in 2008.

Presently, manufacturing activities make up 9.4 percent of Tanzania’s Gross Domestic Product (GDP) and the sector is the country’s largest urban employer. Employment in the industry rose from 91 112 in 2007 to 92 015 in 2008.

Growth in 2008 was the highest recorded in the past seven years, and may be attributed to sustainability in industrial production, particularly for food and dairy products, industrial chemicals, printing, and an overall increase in manufactured exports. Nonetheless, the global fi nancial and economic crisis is challenging further expansion by reducing private sector participation in manufacturing activities as well as infl ows of Foreign Direct Investment (FDI). It is expected that growth will slow to 5.7 percent in 2009 before rebounding to 9.5 percent by 2012.

Current priorities include the enhancement of local manufacturing capacity, value addition, and decreasing exports of raw materials in favour of processed good. Export processing zones remain in the spotlight, and government continues to concentrate on sustaining trade and investment partnerships with China, other Asian countries and the Middle East. A number of programmes are also underway to increase the contribution of small and medium enterprises (SMEs), which are seen as vital for stimulating local manufacturing.

The reduction in the standard VAT rate from 20 percent to 18 percent during 2009 aids manufacturers targeting the domestic

market. Furthermore, a number of manufacturers stand to benefi t from reductions in customs duties on various inputs, as announced in the 2009/10 national budget.

MANUFACTURING ACTIVITIESMost manufacturing concerns are situated in Dar es Salaam, the country’s industrial and commercial centre, as well as around the larger cities – particularly Arusha in northern Tanzania. The main markets for Tanzania’s manufactured goods are the Democratic Republic of Congo (DRC), Rwanda, Burundi and Uganda.

Principal manufacturing activities comprise food, beverage and tobacco processing; textiles and clothing; paper and paper products; leather and footwear manufacturing; chemicals, rubber and plastics. The priority sectors for investment include the following export-oriented manufacturing operations:• Textiles and garments• Leather processing and leather products• Lapidary, including gold, diamonds and gemstones such as tanzanite• Agro-processing• Fish processing• Wood and wood products• Electrical and electronic appliances• Information and Communications Technology (ICT) industries

Manufacturing received a larger share of investment than any other sector for the period 1990 to 2008 – some US$ 6 151.8 million.

Food processing and refi ning covers both large and small-scale industries, and includes dairy products, canning and preserving of fruits and vegetables, canning of fi sh and similar foods, manufacture of animal and vegetable oils, grain milling, sugar production and prepared animal feeds.

The beverages industry includes the distilling and blending of spirits; manufacture of wines, cider and beer; production of soft

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Packaging Excellence

NampakTanzania

Tel: +255 22 2864251/2/3/4Fax: +255 22 2863853

PO Box 618, Dar es Salaamwww.nampak.com

drinks and carbonated water; and the bottling of natural spring and mineral water.

The world’s second largest brewer of beer, SAB Miller, currently owns 52.83 percent of Tanzania Breweries, with factories located in Dar es Salaam, Arusha and Mwanza. The introduction of a fourth factory will boost its overall beer production by approximately 22 percent.

Adding value to locally produced products, agro-processing is vital to primary sectors like agriculture. Crops such as cotton, coffee, tea, sugar cane, sisal and tobacco require processing to be made into more valuable fi nished commodities. The current low investment in agro-processing is being addressed by government through the continued promotion of private sector investment in the subsector as well as the building of local fertiliser manufacturing factories.

Both horticulture and fl oriculture have grown signifi cantly over the past two decades. The fl ower industry was established

in 1987, and intensive commercial production of roses began fi ve years later. Today, roses are the main export fl ower, making up some three quarters of exports. Other fl owers include lisianthus, carnations and chrysanthemums. Some 90 percent of Tanzania’s cut fl owers are exported to the Netherlands.

Horticultural exports, consisting principally of cut fl owers, were valued at US$ 42.3 million during the year ending October 2009 compared to US$ 29.8 million during the corresponding period in 2008. This 41.7 percent increase was largely due to expansion in horticultural production coupled with new investments in the southern part of Tanzania.

The tobacco subsector comprises the manufacturing of cigarettes and tobacco. Export volumes of manufactured tobacco rose by 78.5 percent between October 2008 and October 2009, on an annual basis. Furthermore, the value of manufactured tobacco exported rose by 128.7 percent over this period, from US$ 1.6 million to US$ 3.8 million.

Swedish ethanol producer and distributor SEKAB is planning to produce sustainable bio-energy in Tanzania from sugar cane and sorghum, which is to be processed into ethanol and electric power. This is expected to have a positive effect on local farming and lead to out-grower possibilities as well as reduced poverty due to a much more productive, commercial and profi table agricultural sector.

There are also indications that fi sh processing could gain momentum, and there has been extensive development of industrial processing plants for the export trade in Nile perch, with Lake Nyasa showing the most potential for development.

The textiles and garments subsector comprises spinning, weaving and fi nishing of textiles as well as garments

Coca-Cola (Zanzibar Bottlers) - Photo Courtesy: Marie Gibbons

Roses are the main export fl ower - Photo Courtesy: René Hartslief

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manufacture, knitting and the manufacturing of carpets, rugs, cordage, rope and twines. Tanzania’s labour-intensive textiles industry, which has historically focused on supplying the local market, has come under pressure in recent years due to cheap imports from the East, and remains constrained by weak institutional infrastructure. The export market consists mainly of cotton yarns and home linens. In the year ending October 2009, the volume of cotton yarn exported dropped by 77.1 percent and the value by 58.5 percent compared to the same period in the previous year.

Tanzania has three main cement producers: Tanzania Portland Cement Company (TPCC), Tanga Cement Company and Mbeya Cement Company. Domestic demand currently stands at 1.9 million tonnes, with the capacity of local producers around 1.8 million tonnes.

Operating under the Twiga brand, TPCC is the country’s largest producer, currently supplying over 40 percent of Tanzania’s cement needs. The second largest manufacturer, Tanga Cement, produces the Simba brand, while Mbeya Cement Company, whose majority shareholder is Lafarge, produces the Tembo brand.

Spurred by robust growth in construction, Tanzania’s cement industry has grown rapidly over the past few years, with modernisation and expansion programmes having seen the installation of state-of-the-art technologies to help boost production even further. During 2009, TPCC was involved in an expansion project to raise its production capacity to over 1.6 million tonnes, while Tanga Cement has commissioned a new mill and packer, which will see output at the factory rise from 750 000 tonnes to 1 250 000 tonnes of cement per annum – an increase of 67 percent. Despite these positive developments, the industry is also facing the challenge of cheap cement imports fl ooding the region.

EXPORT DEVELOPMENTThe export market for manufactured goods comprises cotton yarn, manufactured coffee, manufactured tobacco, sisal products (yarn and twine), plastics, textiles and apparel and iron/steel. During 2008, exports of manufactured goods rose, partly due to government’s efforts to attract FDI and a strengthened business environment. In the year ending October 2009, the export value of manufactured goods rose slightly to US$ 571.8 million from US$ 564.3 million over the corresponding timeframe in 2008. Manufactured goods accounted for a healthy 21 percent of all goods exports over this period.

Export Processing ZonesThe Export Processing Zones (EPZ) Programme promotes export-oriented investment within designated zones aimed at creating international competitiveness for export-led economic growth. The programme offers a range of attractive fi scal, physical and procedural incentives to ensure lower cost operations, faster set-up and smoother operations.

The Export Processing Zones Authority (EPZA) is an autonomous government agency operating under the Ministry of Industry, Trade and Marketing. The Authority coordinates, facilitates, promotes and licenses export-led manufacturing investments in Tanzania, both local and foreign. Additionally, the EPZA provides facilitation and after care services to new and existing investors.

Projects operating under the EPZA earned the country more than US$ 250 million in exports between 2007 and the beginning of 2010. This trend is likely to improve as investments continue to be made in various sectors. The authority has so far registered 33 companies involved in textiles and garments, agro-processing, processing and manufacturing of leather products, as well as activities related to fi shing processing, lapidary, wood products, electrical and electronic appliances, and ICT. Over US$ 210 million has been invested in these projects and more than 9 000 jobs created.

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Mining IndustryMining resources in Tanzania are plentiful, and include precious and base metals, diamonds and gemstones, fossil fuels and agricultural, chemical and industrial minerals.Tanzania is the fourth-largest gold producer in Africa, after South Africa, Ghana and Mali, and ranks among the top producers of diamonds world-wide. Coloured gemstones, including Tanzanite, are also mined extensively, while uranium has great potential. Between 1999 and 2007, Tanzania’s annual gold output increased from fi ve to 50 tonnes, with an average annual growth rate of 38 percent.

While the Tanzanian mining industry is relatively small, contributing just 2.6 percent to the country’s GDP in 2008, it is a key sector in terms of foreign exchange earnings.

However, in the wake of the global fi nancial crisis, the mining sector registered a signifi cant fall in growth: from 10.7 percent in 2007 to a record low of 2.5 percent in 2008. During this period, prices of major metals (excluding gold) also continued to decline, and a number of major projects were cancelled or put on hold, including a US$ 3.5 billion aluminium smelting project in Mtwara. The export value of minerals amounted to US$ 992.7 million in the year ending October 2009, which was somewhat lower than US$ 1 001.0 million recorded in the year ending October 2008. Nevertheless the value of gold exports rose over this period.

Industry forecasts suggest that Tanzania’s minerals sector – gold mining in particular – will resume an upward trend in the near future, as production capacity increases. Other areas with potential include coal and uranium, with a number of projects likely to come on-stream in the next few years.

REGULATORY FRAMEWORKThe Mining Act (1998) is the principal legislation that governs mineral rights and mineral trading, although this is currently under review to align it more closely to the needs and development of local communities.In the 2009/10 budget, a number of new fi scal measures were proposed for the mining sector. These include:• Limiting the VAT special relief given to mining companies to cover only prospecting and exploration activities.• Abolishing the excise duty exemption granted to mining

companies.• Abolishing the partial fuel levy exemption granted to mining companies by revoking Government Notice No. 99 of 2005.These changes will affect mining companies entering into a Mining Development Agreement (MDA) from 1 July 2009.

GOLDTanzania boasts a gold reserve of about 45 million ounces. Gold output rose from 39.8 tonnes in 2008 to around 50 tonnes in 2009. Gold exports rose by 2.4 percent to US$ 958.3 million during the year ending October 2009 compared to the corresponding period in 2008. This increase in value was largely due to higher gold prices in world markets, as export volumes were slightly lower.

The Geita Mine, AngloGold Ashanti’s only operation in Tanzania, produced 264 000 ounces of gold in 2008 compared to 327 000 ounces in 2007, and record production of 618 571 ounces in 2005. In the third quarter of 2009, Geita continued its recovery under a new management team, delivering a 32 percent rise in production to 83 000 ounces for the quarter.

Barrick Gold Corporation’s Buzwagi Mine is the country’s second-largest mining operation and largest single open pit. The deposit has proven and probable reserves of 3.6 million ounces of gold and 175 million pounds of copper. The fi rst gold was poured at Buzwagi during May 2009. The mine is expected to produce about 200 000 ounces of gold in 2009 at total cash costs of between US$ 320 per ounce and US$ 335 per ounce.

The Tulawaka Mine is a joint venture between MDN Inc (30 percent) and Pangea Goldfi elds Inc (70 percent), a wholly owned indirect subsidiary of Barrick Gold Corporation and project operator through its Tanzanian subsidiary, Pangea Minerals Ltd. Tulawaka produced 94 180 ounces of gold for the year ending 31 December 2009, with total sales amounting to US$ 90.2 million. Since beginning operations in March 2005, the Tulawaka mine has produced 748 549 ounces of gold. For the 2010 fi scal year, the mine operator is forecasting production of 76 736 ounces of gold. Extensive exploration and

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underground development work will be carried out in 2010 and 2011 to defi ne more reserves and to extend the mine life.

In 2008, gold production at Barrick Gold’s North Mara Mine totalled around 197 000 ounces at a total cash cost of US$ 757 per ounce. Proven and probable mineral reserves as of 31 December 2008 were estimated at 3.0 million ounces.

DIAMONDSThe Williamson Mine is an open pit diamond mine at Mwadui in northern Tanzania. At 146 hectares, Williamson is the largest kimberlite pipe ever to be mined economically, having been operated continuously as an open pit mine for almost 70 years. During this time it has produced over 20 million carats, and there remains a major resource of some 40 million carats. The mine regularly produces large, high-quality stones and is a source of rare and extremely valuable fancy pink diamonds. In November 2008, De Beers sold its entire 75 percent stake in the mine to Petra Diamonds Limited. Between November 2008 and June 2009, 1.5 million tonnes of ore was extracted from the pit and 84 486 carats recovered. The value of the parcels sold thus far has averaged US$ 126 per carat, which is an exceptional achievement and almost equivalent to company expectations before the fall in the diamond market towards the end of 2008. Petra’s expansion plan for the Williamson Mine includes increasing throughput to between 7.5 and 10 metric tonnes per annum, yielding an estimated annual production of some 500 000 to 600 000 carats and a mine life of 19 years, whilst targeting unit operating costs of US$ 9 per tonne.

GEMSTONESTanzania has an abundance of coloured gemstones, including minerals such as ruby, sapphire and emerald, and remains the only source of the sought after gemstone tanzanite. In 2008, the output of gemstones was approximately 1 858 000 kilograms, compared to a total of 2 063 272 kilograms in 2007.

TanzaniteTanzanite is found in the Simanjiro district south-east of Arusha. TanzaniteOne Limited, a South African company with more than 700 employees, owns the mining licence for Block C, the largest block at the centre of a resource which produces three quarters of the world’s tanzanite. Production exceeded targets in 2009, with some 1.91 million carats produced at a grade of 51 carats per tonne and sales recorded of US$ 12.2 million, helping to move the company back towards profi tability. TanzaniteOne has also signed a memorandum of understanding with Japan’s Hohoemi Brains Inc for the cutting and distribution of its gemstones.

NICKELThe Kabanga Nickel Project, located in north-western Tanzania, south of Lake Victoria and near the Burundi border, is a 50:50 joint venture between Barrick Gold and Xstrata Nickel. One of the world’s few undeveloped large-scale nickel sulphide projects, Kabanga has measured and indicated resources estimated at 37.4 million tonnes at 2.59 percent nickel and an additional 16 million tonnes of inferred resources at 2.9 percent nickel, with a 1 percent nickel equivalent and 1 percent nickel cut off grade. In 2009, the project received a retention license for a period of fi ve years from the Tanzanian government. Completion of the feasibility study is scheduled for 2010, and plans for the execution phase are under review to align the project’s development with market conditions.

URANIUMTanzania has strong uranium potential, with numerous occurrences of surface uranium mineralisation having been identifi ed. Presently, the most promising of these are Uranex NL’s Manyoni Project, situated about 70 kilometres west of Dodoma, and Mantra Resources’ Mkuju River Project in Southern Tanzania. The mining of uranium (U3O8) at both these projects is expected to begin within the next two to three years.

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Physical InfrastructureFurther economic expansion rests upon improving infrastructure in key sectors such as power, transportation and communications.

Reliable and affordable utilities as well as modern and effi cient communications and transport systems are essential for future economic and social development. Recognising the importance of infrastructure for economic growth, the government has continued to place considerable focus on infrastructure development. As such, some 11.5 percent of the 2009/10 national budget has been set aside for:• Improving and expanding essential infrastructure services, including roads, railways, harbours, airports and rural electrifi cation• Implementing ongoing infrastructure projects, focusing on roads, electricity and water• Strengthening the operational capacity of underperforming parastatals with a view to increase their effi ciency• Finalising the preparation of a national policy on Public Private Partnership (PPP) in order to enable the private sector to participate in infrastructure projects

CONSTRUCTIONThe construction sector currently contributes between 6 and 7 percent to Tanzania’s Gross Domestic Product (GDP). In 2008, activities in the sector grew at a rate of 10.5 percent compared to 9.5 percent in 2007. This was driven by the construction of roads and bridges, residential and non-residential buildings and improvements to water infrastructure.

In the period 1990 to 2008, construction received the third largest share of investment, followed by commercial buildings. By the end of 2009, additional investment in the sector had boosted performance even further, with construction activities growing at between 12 and 15 percent.

Commercial real estate is a current focus in the construction industry. Projects include a US$ 20 million state-of-the-art ten-storey offi ce block, which opened in Dar es Salaam’s central business district in early 2010, the 18-storey Viva Complex being developed by the Tanzania Red Cross Society and a local private property developer, and the country’s tallest building – the 25-storey Uhuru Heights, being undertaken by Nida Textile Mills and Indian property giant Cosmos.

TRANSPORTATIONTanzania’s transport infrastructure comprises road, rail, air, water and pipeline. The country relies heavily on the transport network to connect its largely rural population to services and economic opportunities, as well as to transfer goods and people between local and global markets. The country’s roads, railways and ports are of vital importance domestically; they also serve to link the East African region, particularly Tanzania’s landlocked neighbours such as Burundi, Malawi, Rwanda, Uganda and Zambia, to international markets.

The 1 720-kilometre long TAZAMA pipeline, which is jointly owned by Zambia and Tanzania, allows the importation of crude oil from Dar es Salaam to Ndola refi nery in Zambia. There is another pipeline of 232 kilometres which is used to transport natural gas from Songo-Songo to Dar es Salaam.

In 2003, a National Transport Policy was put in place in order to guide the development of the sector, and a Public-Private Partnership (PPP) Policy and Regulatory Framework is presently being set up. The ten-year Transport Sector Investment Programme (TSIP) presents Tanzania’s strategy for achieving future transport-related goals. TSIP is being implemented in two fi ve-year phases, from 2007/08 to 2016/17.

Transport services grew by 6.9 percent in 2008 compared to 6.5 percent during the previous year. The increased growth rate was attributed to larger volumes of road transport cargo and greater numbers of international air passengers.

Transport corridorsTanzania has two primary corridors: • The Central Transport Corridor connects Dar es Salaam and the coastal regions with the Western and Lake Victoria regions of Tanzania, thereby linking the country’s main port to the neighbouring countries of Burundi, Rwanda, Uganda and the Democratic Republic of Congo (DRC) via Dodoma. • The Southern Corridor links Dar es Salaam to Zambia in the south-west via the 1 860-kilometre TAZARA railway line, which

The Tanzania Government Flight Agency (TGFA) under the PSRP and EA Act No. 30 of 1997 was established on 17th May 2002 taking over the functions of carrying VIPs and top government offi cials from a unit dating back to the British Trusteeship period.

The agency has 4 aircraft: A Piper Navajo, a Fokker 50, a Fokker 28 and the recently acquired Gulfstream G550 Business jet which has enabled expansion of fl ight operations from territorial Africa to the rest of the world. This gives TGFA a world-wide capability.

Apart from its traditional role of providing air transport to the government and its top leadership, it used its spare capacity to provide air service to the general public at large.

THE VISIONStrong, competitive and responsive Government Flight Agency, able to provide high quality and safe air services.

THE MISSIONTo provide executive air service to government VIPs, the strategic public and private clientele in a sound business-like manner.

THE BUSINESSThe Tanzania Government Flight Agency has three departments, namely: Flight Operations, Technical Services and Business Support.

FLIGHT OPERATIONSThis department is manned by well trained and experienced pilots, cabin crew and fl ight dispatchers. For years these personnel have had the task of planning and executing the transporting of the President of the United Republic of Tanzania, and all other VIPs in the Government. The new ultra long range jet has enhanced the ability to meet VIP worldwide travel needs.

TECHNICAL SERVICESFor the planes to fl y safely there are experts who maintain these machines in a very professional manner. Well trained engineers and technicians have taken the daunting task of making sure that every dispatched plane is airworthy to maintain customer satisfaction and on time performance. Most of the maintenance is done by these qualifi ed personnel except for major overhauls and checks which are done abroad. Projections are made so that in future all the major checks are done at our own maintenance base.

BUSINESS SUPPORTThis department deals with Finance and Administration. The agency has changed from government accounting to commercial based accounting system so as to enhance fi nancial discipline and accountability.

Fokker 28

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then connects with Zambia Railways. Some 970 kilometres of line is in Tanzania and 890 kilometres in Zambia.

Current initiatives include the Second Central Transport Corridor Project, which is being undertaken with assistance from the World Bank. The project includes the construction of Bus Rapid Transit (BRT) infrastructure in Dar es Salaam to upgrade the public transport network and reduce traffi c congestion, the upgrading of 170 kilometres of road between the towns of Korogwe and Same to trunk road standard, and work to improve the Zanzibar Airport runway. It is anticipated that the project will be completed by the end of 2011.

Road networkThe length of Tanzania Mainland’s total road network is estimated to be 86 472 kilometres, based on the Road Act of 2007. The Ministry of Infrastructure Development, through the Tanzania National Roads Agency (TANROADS), manages about 29 847 kilometres, comprising 10 601 kilometres of trunk roads (5 062 kilometres paved and 5 538 kilometres unpaved) and 19 246 kilometres of regional roads (646 kilometres paved and 18 600 kilometres unpaved). The remaining urban, district and feeder roads (56 625 kilometres in total) are the responsibility of the Prime Minister’s Offi ce Regional Administration and Local Government (PMO-RALG).

In the past decade, the condition of trunk and regional roads has steadily improved due to various maintenance interventions and development activities. The overall road condition assessment at the end of December 2008 indicates that 73 percent were good, 23 percent fair and 4 percent poor, compared to 25 percent good, 40 percent fair and 35 percent poor in December 2001. All regional headquarters except four – Rukwa, Tabora, Kigoma and Manyara – have been connected with tarmac roads.

Other notable developments include a decrease in overloaded vehicles from 40 percent in 2000 to 6 percent in 2009. Furthermore, between June 2007 and June 2009, a total of 912 kilometres of trunk and regional roads were upgraded to bitumen standard. Collections for the Road Fund have increased from TZS 73 billion in 2005/06 to TZS 218.4 billion in 2008/09.

Current roads sector projects and studies taking place under the auspices of the East African Community include: • Arusha – Namanga – Athi River Construction Project• Feasibility Studies and Detailed Design of the Arusha – Holili – Taveta Road• Feasibility Studies and Detailed Design of the Malindi – Lunga Lunga and Tanga – Bagamoyo Road • Scoping Study on the Civil Engineering Contracting Capacity in East Africa• Study on the East African Transport Strategy and Regional Road Sector Development Programme • Study on the East African Transport Facilitation Project• The East African Road Network Project (EARNP) Air transportTanzania has around 125 aerodromes, including the four international airports of Julius Nyerere, Kilimanjaro, Zanzibar and Mwanza. There are 58 domestic airports, the main ones being Arusha and Mtwara.

Established in 1999, the Tanzania Airports Authority (TAA) is a semi-autonomous agency under the Ministry of Infrastructure Development. It owns, operates, develops and maintains 62 airports and airstrips on Tanzania Mainland, including Julius Nyerere International Airport (JNIA) and Kilimanjaro International Airport (KIA), with the latter having been concessioned to the Kilimanjaro Airports Development Company (KADCO).

According to EAC Facts & Figures (2009), the number of fl ights increased from 160 766 to 179 455 between 2006 and 2007, and climbed to 181 434 in 2008. Also in 2008, international passenger numbers rose to 1.288 million, domestic passengers to 1.622 million and transit passengers to 0.327 million, while some 32 872 tonnes of cargo was transported.

The national carrier Air Tanzania Company Ltd (ATCL) is currently being restructured in order to strengthen its capacity to compete in the aviation market. At present ATCL has just two Dash 8 Q-300 planes, with a carrying capacity of 50 passengers each. By early 2010, government was actively engaged in fi nding a suitable company to invest in and run ATCL under a Public-Private Partnership. The new investor is also expected to implement ATCL’s long-term strategic plan, which includes procuring nine planes for domestic and international fl ights, training pilots and engineers and changing the operating technology system.

Airport infrastructure and services are currently being upgraded to international standards, in particular JNIA, KIA and Zanzibar International Airport. Domestic airports earmarked for infrastructure improvements include Mwanza, Bukoba, Dodoma, Kigoma, Mafi a and Songwe.

Marine and lake transportBordered to the east by the Indian Ocean, Tanzania’s coastline boasts the bustling ports of Dar es Salaam, Tanga and Mtwara, in addition to six smaller coastal ports, while there are also a number of inland ports on the lakes of Victoria, Tanganyika and Nyasa – 11 main lake ports and 43 smaller ones.

Tanzania has a total of 63 ports, nine along the coast and 54 on the lakes.

Most marine transport is routed through the port of Dar es Salaam, which handles 90 percent of the country’s total ocean freight and is an important outlet for neighbouring land-locked countries. The Dar es Salaam container terminal is operated by Tanzania International Container Terminal Services (TICTS). There are plans to increase the capacity of seaports from the current 10 000 million tonnes to about 20 000 million tonnes per year.

In the past two years, Tanzania has seen huge improvements in its capacity to effi ciently move goods and handle other trade logistics. This follows investment by the Tanzania Revenue Authority (TRA) of US$ 19 million and the Tanzania Ports Authority (TPA) of some €12 million. Furthermore, government has offi cially ended the TICTS monopoly in an effort to increase effi ciency by allowing competition in the provision of services.

During 2009, port operations in Dar es Salaam improved by between 35 and 45 percent, with a tremendous reduction in the container dwell time (the time that cargo remains in the

Photo Courtesy: Tanzania Government Flight Agency

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port terminal storage area before clearance) and improved productivity of the container terminal. Between January and December 2009, dwell time dropped from an average of 20 days to between 11 and 13 days for transit and domestic goods respectively. Furthermore, a ship now waits for only 3.8 days at the outer anchorage compared to an average of 12.7 days in January 2009. The turnaround time needed to prepare a ship for a return trip improved to 6.7 days from 18.9 days over the same period.

In addition 37 765 containers were transferred to Inland Container Depots (ICDs) without additional costs between January and December 2009, creating extra space at the port’s container terminal. This is in contrast to 10 504 containers in 2008. Customs clearance procedures have also improved due to extended working hours at the customs department.

Tanzania’s main lake ports of Mwanza, Kigoma and Kyela are used to transport cargo and passengers inland as well as between neighbouring countries. There are investment opportunities in reliable ferry connections to carry containerised and transit cargo on Lake Victoria and Lake Tanganyika. During 2008, the inland ports saw some 137 938 tonnes of cargo and 487 201 passengers. There are presently 16 operating vessels on the lakes.

Rail transportTanzania’s railway network is 3 676 kilometres in length, consisting of two separate railway systems which operate on different gauges – the 2 706-kilometre Tanzania Railways network and the 975-kilometre narrow-gauge line run by the Tanzania Zambia Railway Authority (TAZARA). During 2008, railway infrastructure comprised 216 stations, with 1 569 000 passengers transported and 954 000 tonnes of cargo.

Tanzania Railways was privatised in 2007, whereafter it was jointly owned by the Rail Indian Technical and Economic Services Limited (RITES) Company of India (51 percent) and the Tanzanian government (49 percent). At the beginning of 2010, government decided to terminate its contract with RITES on the running of Tanzania Railways Limited (TRL). Government will either take over TRL activities or look for a private investor.

Rail transport is the second most important mode of transport after road, and is critical for long distance freight along the main transport corridors. However, due to the poor conditions of tracks and ageing rolling stock and locomotives, tonnage freight volumes and passenger numbers have continued to fall every year (from 60 percent of port cargo in the 70s and 80s to 6 percent in 2009). With the poor performance and falling service levels of the railway transport system, road transport has taken a large proportion of freight and passenger services in the region.

During 2009/10 the Chinese government is injecting US$ 39.3 million to recapitalise TAZARA, which will include offering technical support.

COMMUNICATIONSFollowing a series of policy reforms, Tanzania’s fast-expanding Information and Communications Technology (ICT) industry is today characterised by a liberalised market, healthy competition and continually improving technology and infrastructure. Deregulation, privatisation and new technologies are opening up new areas of potential investment.

The splitting of the parastatal Tanzania Posts and Telecommunications Corporation (TPTC) in 1993 saw the emergence of the Tanzania Posts Corporation (TPC), Tanzania Telecommunications Company Limited (TTCL) and the industry regulator, the Tanzania Communication Commission (TCC). In

2003, TCC merged with the Tanzania Broadcasting Commission (TBC) to form the Tanzania Communications Regulatory Authority (TCRA), which regulates telecommunications, broadcasting and postal services.

Numerous new players have entered the market following the introduction of the converged licensing regime in 2006, the liberalisation of Voice over Internet Protocol (VoIP) telephony and introduction of third generation mobile services and wireless broadband networks. The government has embarked on a national fi bre optic backbone rollout to connect population centres around the country, and while penetration remains low, the advent of services such as Seacom’s submarine fi bre optic cable (launched in July 2009), and the East African Submarine Cable System (EASSy) and O3b Networks satellite system (both due for completion in 2010), should further invigorate the market, offering lower running costs for higher capacity services.

Tanzania has two fi xed-line operators – TTCL and Zantel – and eight mobile networks. While the country’s fi xed line sector has remained stagnant since 2000, the mobile sector has in the past decade grown at over 40 percent per year, with subscriber numbers estimated at 15 million at the beginning of 2010. With mobile penetration standing at less than 40 percent there is still a great deal of room for expansion.

Many Internet Service Providers (ISPs) offer wireless services to increase connectivity and range while decreasing outlay. According to the International Telecommunication Union (ITU), the country had 520 000 Internet users as of June 2009, which represents around 1.3 percent of the population. However, while only a small percentage of people have their own Internet subscription, it is estimated that more than a quarter of the population has access to the Internet through subscriptions, institutions or Internet cafés.

The communications sector grew by 20.5 percent in 2008 compared to 20.1 percent in 2007, outpacing all other economic sectors. This was due to an overall increase in subscription rates, particularly with regard to mobile phones.

Optic Fibre Cable Infrastructure Backbone NetworkTanzania’s National ICT Policy focuses on developing a reliable and state-of-the-art ICT Infrastructure Network of adequate capacity, high-speed and country-wide coverage, encompassing backbone level as well as the last-mile broadband access connectivity. Work on the US$ 170 million 10 000-kilometre optic fi bre cable (OFC) network began early in 2009 and is due to be operational by the end of 2010.

WATER & SANITATIONOne third of Tanzania receives less than 800 millimetres of rainfall and is thus arid or semi-arid, while a third of the rest

Railway network - Photo Courtesy: René Hartslief

Ministry of Communications, Science & Technology

IntroductionThe Ministry of Communications, Science and Technology was established in February 2008 as per the Government Notice No. 20 of February 2008. The mandates of the new Ministry include: communication, science and technology which were formerly under the then Ministries of Infrastructure and Ministry of Higher Education, Science and Technology.

Vision“To have knowledge based society with the capacity and capability to harness Science, Technology and Innovation and ICT for the transformation of the economy that is sustainable and globally competitive.”

Mission“To facilitate human capital development and knowledge generation for sustainable wealth creation and better livelihood of Tanzanians through policy development, and promotion of Science, Technology and Communications.”

The National ICT OFC (Optic Fibre Cable) Infrastructure Backbone NetworkAs one of the specifi ed focus area in the National ICT (Information Communication Technology) policy, the government is committed towards the development of reliable state-of-the-art ICT Infrastructure Network of adequate capacity, high-speed and country-wide coverage. The infrastructure will cover Backbone level as well as the last-mile broadband access connectivity. The national ICT infrastructure will be commensurate with grass-root needs, and compliant with regional and international standards. The National Backbone Infrastructure network is intended to provide affordable bandwidth to citizens, businesses and government entities thus increasing the Tanzania networked readiness, an environment necessary for Tanzania to become a regional Hub of ICT infrastructure and ICT solutions.

Objective of Infrastructure Development in TanzaniaDevelopment of the National ICT OFC Infrastructure Backbone Network in Tanzania is being perused in order to foster the achievement of goals and objectives of poverty reduction and building of the Information/Knowledge Society as outlined in various strategies including:• The National Development Vision 2015• National Strategy for Growth and Reduction of Poverty as known in Kiswahili MKUKUTA, and• United Nations Millennium Development Goals (MGDs) of 2015• The World Summit on the Information Society (WSIS) Plan of Action

Implementation of National ICT OFC BackboneThe Ministry of Communications, Science and Technology is collaborating with a contractor from China to build the 10,000 km OFC network. Offi cially, the project started on 01/02/2009, and is expected to cost US $170m and become operational by the end of 2010. The OFC Backbone will be connected to the submarine fi bre-optic cables to offer lower tariffs for international connectivity, thus meeting Tanzania’s demand for large bandwidth and higher data speeds. These advantages will allow Tanzania to handle a larger volume of communication for voice, data, video and high speed internet, including media services.

Benefi ts of the National ICT Backbone NetworkThe Backbone network will offer a number of benefi ts to the Government, Users, Service Providers and Operators and the rest of the community. These include:• Easy Access of Information to all citizens for enhanced and smooth communication between the people• Effi cient connectivity within Tanzania, and between Tanzania and other landlocked neighbouring countries and to the rest of the world• Low and affordable costs of communication services to the customers• Fast narrowing of the Digital Divide among the people, the haves and the have nots, institutions, countries and continents• Accelerated achievement of goals and objectives of National Vision 2025, MKUKUTA, MGDs of 2015, and WSIS Plan of Action• Promoted use and application of ICT for development through online learning (e-education, e-schools), e-medicine, internet services, e-mail services, e-leadership, e-business, e-agriculture, e-governance, e-voting, e-culture, e-transport, e-communications, e-ticketing, e-commerce• Facilitated establishment of a Special Economic Zone (SEZ) and Digital (Smart) Village• Optimal use of the envisaged Universal Communications Access Fund for supporting really in places (rural and underserved areas) where the National ICT Backbone Network did not pass through• Facilitate establishment of Community Information where people can access information and other important issues regarding social and economic development• Enhancement of building of local human capacity by expanding local training and research and development institutions on ICT for development• Facilitates on-line and distant learning to ensure for increased number of adequately trained and skilled professionals in ICT industry for sustainable development

ContactsMinistry of Communications, Science and TechnologyJamhuri Street, Plot No. 1168/19 • PO Box 2645, Dar es SalaamTel: +255 22 2111254-7 • Fax; +255 22 2112533E-mail: mst@mst.go.tz • Website: www.mst.go.tz

John S Nkoma, Director General, TCRA Email: dg@tcra.go.tz, Website: www.tcra.go.tz

PO Box 474, Dar es Salaam • Tel: +255 22 211 8947 • Fax: +255 22 211 6664

TANZANIA has experienced unprecedented growth in the communications sector (mobile and fi xed telephony, radio, television, internet, postal) in the past few years. This is in terms of number of operators, products, services, number of subscribers (See Figure 1) and applications. To get an insight into this growth, this article will briefl y highlight what is behind regulating the communications sector, a function performed by the Tanzania Communications Regulatory Authority (TCRA). TCRA is a quasi independent government body established under the Tanzania Communications Regulatory Authority Act No.12 of 2003 which merged the then Tanzania Communications Commission and the Tanzania Broadcasting Commission. The core functions of TCRA are: Promotion of effective competition and economic effi ciency; Protecting the interests of consumers; Promoting the availability of regulated services; Licensing and enforcing license conditions of broadcasting, postal and telecommunications operators; Establishing standards for regulated goods and services; Regulating rates and charges (tariffs); Managing the radio frequency spectrum; Monitoring the performance of the regulated sectors; Monitoring the implementation of ICT applications; Managing numbering resources.

Figure 1: Growth of subscriber base in telecommunications for the period 2000 – 2008.

What are the reasons for the success of the communications sector in Tanzania? There are several reasons, but these are underpinned by four major reasons: Excellent Policies, Excellent Legal and Regulatory environment for the Investors, Excellent regulatory Framework, which we summarise below.

First, the communications policies. These are articulated in the following communication policies: National Telecommunications Policy of 1997, National ICT Policy of 2003, National Information and Broadcasting Policy of 2003 and National Postal Policy of 2003, which can be downloaded from the TCRA website.

Secondly, the legal framework can be found in the following legislations: Tanzania Broadcasting Services Act No 6 of 1993, Tanzania Communications Act No 18 of 1993, Tanzania Communications Regulatory Authority Act No 12 of 2003 and the Universal Communications Service Access Fund Act of 2006. Again, these can be downloaded from the TCRA website.

Thirdly, there are fourteen regulations governing the communications sector. These are: The Tanzania Communications (Broadband Service) Regulations 2005, The Tanzania Communications (Consumer Protection) Regulations 2005, The Tanzania Broadcasting Services (Content ) Regulations 2005, The Tanzania Communications (Licensing) Regulations 2005, The Tanzania Communications (Importation and Distribution) Regulations 2005, The Tanzania Communications (Installations and Maintenance) Regulations 2005, The Tanzania Communications (Interconnection) Regulations 2005, The Tanzania Communications (Telecommunication Numbering and Electronic address) Regulations 2005, The Tanzania Postal Regulations 2005, The Tanzania Communications (RadioCommunications and Frequency Spectrum ) Regulations 2005, The Tanzania Communications (Tariff) Regulations 2005, The Tanzania Communications (Type Approval of Electronic Communications Equipment) Regulations 2005, The Tanzania Communications (Quality of Service) Regulations 2005, The Tanzania Communications (Access and Facilities) Regulations 2005.

Fourthly, there is licensing framework which includes the Converged Licensing framework and other licenses. The Converged Licensing Framework (CLF) was introduced on 23rd February 2005 and consists of four licenses, namely: Network Facilities License (NFL), Network Services License (NSL), Applications Service License (ASL) and Contents Services License (CSL). The Converged Licensing Framework is Technology

Email: dg@tcra.go.tz, Website: www.tcra.go.tzPO Box 474, Dar es Salaam • Tel: +255 22 211 8947 • Fax: +255 22 211 6664

John S Nkoma, Director General, TCRA Email: dg@tcra.go.tz, Website: www.tcra.go.tz

John S Nkoma, Director General, TCRA Email: dg@tcra.go.tz, Website: www.tcra.go.tz

REGULATING THE COMMUNICATIONS SECTOR IN TANZANIA

Neutral and Service Neutral. There are four market segments; International, National, Regional and District. There are currently approximately 156 licensees comprising 13 NFL, 12 NSL, 59 ASL, 45 CSL (Radio) and 27 CSL (TV).

Other licenses include Public Postal License, Courier Service License, Frequency User License, Installation and Maintenance License, Importation and Distribution License, Type Approval, Numbering Resources.

In conclusion, one can say that there have been lot growths in the communication sector. However, there is more to come with the advent of the coming of submarine cables and impending growth in the use of the internet and broadband services, over and above voice and SMS. TCRA is well placed to face the future regulatory challenges.

Zanzibar Chief Minister H.E. Shamsi Vuai Nahodha (left) in a light moment with Members of the TCRA Board at the opening ceremony of Tanzania Communications Regulatory Au-thority (TCRA) Offi ce building in Zanzibar. On the Chief Minister’s left, is the Union Deputy Minister for Communications, Science and Technology Hon. Dr Maua Daftari (MP).

Mpwapwa residents in Dodoma Region surf at a community owned Telecentre. The centre is jointly supported by ITU and TCRA under rural connectivity project offering ICT education to the local populations targeting the underserved rural societies.

The Director General of Tanzania Communications Regulatory Authority (TCRA) Prof. John Nkoma (right) presents a license to Dovetel (T) Ltd in Dar-Es-Salaam. More investors are joining the communications sector since the introduction of Converged Licensing Framework which was introduced in 2005.

The Minister for Communications, Science and Technology Prof. Peter Msolla presents a cheque worth TShs.10m/- to the Headmaster of Uhuru co-education Primary School at the climax of the World Communications and Information Society Day in Dar-Es-Salaam on 17th May 2008. Standing on the Minister’s left is the TCRA Director General Prof. John Nkoma. Others are Hon. Margareth Sitta (MP), Minister for Community Development, Gender and Children; Eng. Augusto Kowero, Ag. Director of Communications in the Ministry Communications, Science and Technology and Eng. James Kilaba Deputy Director for Infor-mation and Communication Technologies (Standards) of the TCRA.

The Minister for Information, Culture and Sports Hon. George Mkuchika (second left) Head of the Tanzanian delegation to the 7th Conference of the Ministers of Information of the Non-aligned Countries (COMINAC) at Saint Margarita Island, Venezuela. Left, TCRA’s Deputy Director, Broadcasting Affairs Mr. Frederick Ntobi and the Managing Editor of Tanzania Standard Newspapers Ltd Mr. Issac Mruma (third right)

Tanzanian Delegation to the 24th Universal Postal Union Congress (UPU) held in Geneva in July/August 2008 led by Hon. Peter Msolla, Minister of Communications, Science and Technology in a group photo after successfully representing at the country in the general elections where Tanzania was elected Member of the Council of Administration for 4 years term.

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of the country has precipitation of above 1 000 millimetres. However, about 7 percent of the country’s land surface is covered by lakes, including Lake Victoria (the second largest fresh water lake in the world), Lake Tanganyika (second deepest lake in the world) and Lake Nyasa, and there are a number of large rivers as well as important groundwater reserves.

Development targets set out in the National Development Vision 2025, Millennium Development Goals and National Strategy for Growth and Reduction of Poverty (MKUKUTA) aim to achieve by 2010: clean and safe water to 65 percent and 90 percent of the population in rural and urban areas respectively (up from 53 percent and 73 percent in 2003); the expansion of urban sewerage from 17 percent in 2003 to 30 percent; adequate sanitary facilities in all schools; 95 percent access to basic sanitation; and to reduce water-related environmental pollution levels from 20 percent in 2003 to 10 percent.

The Water Sector Development Programme (WSDP) – one of the largest water sector programmes in Africa, with a US$ 1 billion budget over a fi ve-year period (2007-2012) – has been initiated to strengthen institutions for integrated water resources management and to improve access to and delivery of sustainable water supply and sanitation services.

Under the WSDP, Urban Water Supply and Sewerage Authorities (UWSSAs) have been established in 19 major urban centres. In addition, the Dar es Salaam Water and Sanitation Authority (DAWASA) has been established.

During 2008/09 the implementation of the Lake Victoria-Shinyanga-Kahama water supply project was completed at a cost of TZS 250 billion, and distribution of water to Shinyanga and Kahama towns and surrounding villages is in progress.

51

Works to construct rural water supply schemes in 1 320 villages will begin during the 2009/10 fi scal year, with investment of around US$ 400 million over a period of two years. Upon successful implementation, four million people – over 10 percent of the country’s population – should benefi t from the endeavour.

Rural water services coverage rose from 57.1 percent in 2007 to 58.3 percent in 2008.

The sanitation and hygiene sub-component of the WSDP focuses on promoting sanitation and hygiene and making use of existing and promising approaches for household and community sanitation as well as school-based activities. During the fi rst two years of implementation a total of 1 531 909 people were sensitised on sanitation and hygiene issues, resulting in the construction of 1 762 improved latrines. Current priorities include strengthening the rehabilitation and construction of sewage water infrastructure in urban centres for environmental protection.

ENERGYMost of Tanzania’s electricity is generated through hydropower, although the country has a wide variety of potential energy sources, ranging from solar power and wind to coal and natural gas, as well as possible oil reserves. Electricity is currently only available to a little over one-fi fth of the population, and almost exclusively in urban centres.

Fuelwood continues to be a major source of energy generation for much of Tanzania’s population, especially those in rural areas. Measures are being undertaken to improve access to sustainable energy, including promoting the use of alternative sources of power.

The Tanzania Electric Supply Company (TANESCO) is responsible for the generation, transmission, distribution and

sale of electricity across Tanzania Mainland, and also provides bulk power supply to the State Fuel and Power Corporation (SFPC) of Zanzibar. The company’s power generation system comprises mainly hydro (90 percent) and thermal generation, with the latter coming from two gas-fi red power plants in Dar es Salaam, which contribute a total of 145 MW. TANESCO also imports some power from Uganda and Zambia, and has a number of diesel-based generators.

Other sources of generation are from independent power producers (IPPs), which feed the national grid and some isolated areas. These include Independent Power Tanzania Ltd (IPTL) with 100 MW (diesel-based) installed capacity and SONGAS (Songo-Songo gas to electricity project), which by the end of 2007 had 182 MW capacity. IPPs supplied 33 percent of Tanzania’s total energy demands in 2008.

In 2008, Tanzania had installed capacity of 561 MW of hydropower and 121 MW of thermal power. The growth rate of electricity and gas activities dropped by 5.4 percent in 2008 from 10.9 percent in 2007. This came about because of the decline in electricity and gas generation, as well as the expiration of key contracts such as Dowans, APR and Aggreko.

The country’s reduced growth rate notwithstanding, present energy generation capacity falls short of that required to meet the demands of the economy. Medium-term strategies include increasing power generation, particularly with regard to distribution and increased access in rural areas. In addition, government will intensify efforts to establish national oil reserve facilities and the expansion of gas production facilities at Songo-Songo and Mnazi Bay.

Natural gas was discovered in 1977 at Songo-Songo Island. The fi eld now actively produces gas that is used for power generation as well as serving several industries.

52

Social InfrastructureDespite the challenges posed by the global recession, government continues to prioritise the development of social infrastructure and the scaling up of investment in the education and health sectors.HEALTH CARETanzanian health statistics present a mixed picture. While in some areas services have improved markedly and health indicators are generally more positive, the country continues to face a number of serious challenges. Survey data collected from various sources, including the United Nations Children’s Fund (UNICEF), the Joint United Nations Programme on HIV and AIDS (UNAIDS) and the World Health Organisation (WHO), suggest that Tanzania’s health profi le is typical of developing countries. Its total fertility rate remains high (between 5.2 and 5.7), while life expectancy at birth is just under 52 years.

Health services expanded at 9 percent in 2008 compared to 8.8 percent in 2007. This growth arose from the implementation of vaccination, malaria, tuberculosis and HIV/AIDS programmes.

Between 2008 and 2009 there was an increase in the number of health facilities, while modest improvements were made in the rates of maternal and child mortality. Furthermore, improved availability of clean and safe water in urban and rural areas has contributed to advances in the general health of the population, especially women and children.

At present, the strategic focus of the health sector includes the ongoing implementation of various public and primary health programmes and the strengthening of mother and child health services (MCH), with the spotlight on:• Continued implementation of The Primary Health Services Development Programme 2007-2017 (MMAM), with the objective of improving the quality of reproductive and child health• Continuation of the National HIV/AIDS Control Programme• Strengthening the capacity of human resources at all levels• Rehabilitating and constructing health centres and acquiring equipment• Improving the centre for heart surgery at Muhimbili National Hospital

Health Sector Performance Profi le Report (2009)A number of positive developments have taken place in Tanzania’s health sector. These include confi rmed gains in child survival, with progressive and signifi cant declines in under fi ve and infant mortality. However, for more than ten years there has been little or no improvement in neonatal mortality. Newborn deaths are still a challenge, and account for almost 30 percent of all deaths in children younger than fi ve years in Tanzania.

Noteworthy improvements may be seen in higher levels of public spending on health, with a slightly greater share for the district level, as well as further decentralisation of planning and budgeting to lower-level facilities. Integrated Management of Childhood Illness (IMCI) coverage has increased, as has vaccination coverage. Additionally, scaling up of proven interventions, including malaria prevention and case management, have taken place and should further contribute to positive and sustained improvements in the child survival indicators.

The tuberculosis (TB) treatment success rate is high at 84.7 percent, one of the highest in the world. Furthermore, various studies indicate that major reductions have taken place in the incidence of malaria.

HIV/AIDS remains a signifi cant public health concern in Tanzania. While estimates vary due to sampling strategies used, current HIV prevalence in the adult (15 to 49 years) population is estimated at 6.8 percent for females and 4.7 percent for males (Tanzania HIV/AIDS and Malaria Indicators Survey 2007/08).

About 34 percent of HIV positive pregnant women were receiving Anti Retroviral drugs (ARVs) for the Prevention of Mother-to-Child-Transmission (PMTCT) of HIV/AIDS in 2007. This had increased to 55 percent by 2008. A total of 80 628 persons with advanced HIV infection were receiving ARV combination treatment by the end of 2007; by the end of May

54

2009 a total of 248 280 people were receiving Anti Retroviral Therapy (ART).

The implementation of MMAM is ongoing, with increased student enrolment in health training institutions, posting of trained staff to councils and building of more dispensaries and health centres to increase access to services.

Vaccination against measles remains high (88 percent) and is set to rise towards the target of 90 percent by 2010. Year 2008 shows a reversal of the DPT-HB3 vaccination downward trend, with a 3 percentage point increase in coverage from 83 percent in 2007 to 86 percent in 2008.

A number of challenges remain, particularly in areas such as the maternal mortality rate, with no improvement in skilled attendance at birth and no net increase in the skilled human resource situation. Antenatal care attendance among pregnant women before 16 weeks of gestation has improved (48 percent); however, reaching a target of 60 percent by 2010 remains a challenge. The health sector will require a threefold increase in workforce with an annual tenfold increase in hire rate over the next ten years if MMAM is to be successfully implemented.

Future development within the sector is contingent upon urgent and sustained strengthening of emergency obstetric, neonatal and child care (EmONC) at all levels to address high maternal and newborn mortality in Tanzania. Presently only 5 percent of health facilities provide such services. Continued implementation of MMAM is also vital, particularly the human resource component.

EDUCATION & TRAININGThat the Tanzanian government considers education a top priority is evidenced by the fact that the sector receives more public funding than any other sector in the country. In the 2009/10 national budget, education was allocated TZS 1 743.9 billion, which represents 18.3 percent of the total budget and is a 22 percent increase over the TZS 1 430.4 received in 2008/09.

Education is also identifi ed as a main area of focus in the government’s National Strategy for Growth and Reduction of Poverty (MKUKUTA). Furthermore, in recent years the government has concentrated on implementing its Primary and Secondary Education Development Programmes (PEDP and SEDP). The continued focus on these two programmes, together with increased recruitment of teachers, is credited with having been the main reason for the 6.9 percent growth in the sector in 2008 over 5.5 percent in 2007.

For the 2009/10 fi scal year, government is putting the emphasis on protecting achievements already attained and strengthening areas of weakness. The priority is to recruit qualifi ed teachers at all levels, as well as to provide teaching materials and infrastructure. In the long term, a national programme for teachers’ residential housing is being prepared, with its implementation to start in peripheral, underserved areas.

Education infrastructureIn Tanzania, bilingual education (English and Kiswahili) is the norm, and is mandated by law. The structure of the formal education and training system comprises two years of pre-primary education, seven years of primary education, four years of junior secondary, two years of senior secondary and up to three or more years of tertiary education.

For pre-primary education, the Gross Enrolment Ratio (GER) increased to 38 percent in 2008 from 35.2 percent in 2007, and the Net Enrolment Ratio (NER) to 36 percent from 33.1 percent over the corresponing period. At the same time, however, the teacher-pupil ratio at the pre-primary level rose to 1:53 from 1:43.

In the education sector, one of the main achievements in the past few years is a higher enrolment rate at all levels of education.

For primary education, the GER dropped from 114 percent in 2007 to 112 percent in 2008, while the NER remained steady at around 97 percent. There were a total of 8 316 925 pupils in primary school during 2007. Quality enhancement indicators show that the number of pupils per desk remained at four during 2007 and 2008. Over the same period, the pupil to teacher ratio increased marginally – from 53:1 to 54:1 – and the pupil to classroom ratio dropped slightly from 78:1 to 77:1, while the pupil to textbook ratio remained at 5:1. The primary school completion rate in 2008 was 65 percent, while transition rates from primary to secondary school stood at 52 percent in 2008 from 57 percent in 2007.

The secondary school GER for Forms I-IV increased to 26 percent in 2008 from 22 percent in 2007, while the NER increased to 24 percent from 21 percent. By the end of 2007, 448 448 pupils were enrolled in 3 485 secondary schools. The average student to teacher ratio was 37:1 in 2008 compared to 34:1 in 2007. The secondary to tertiary transition rate was 26 percent in 2008 compared to 30 percent in 2007.

There are 32 universities in Tanzania, including University of Dar es Salaam, the oldest (1961) and largest university in the country, Sokoine University of Agriculture (1984) in Morogoro, and Muhimbili University of Health Sciences in Dar es Salaam. Of these, 11 are public institutions and 21 are privately run. The number of registered students in universities increased by 82.2 percent to 64 878 in 2007 from 35 606 in 2006. The number of students in government technical colleges increased from 2 466 in 2006 to 3 544 in 2007.

The number of government teachers’ colleges increased to 32 in 2007 from 31 in 2006. Over the same period, the number of private teachers’ colleges increased to 55 from 53.

Zanzibar University Library - Photo Courtesy: Marie Gibbons

2009 a total of 248 280 people were receiving Anti Retroviral Therapy (ART).

ESRF ECONOMIC AND SOCIAL RESEARCH FOUNDATION

The Economic and Social Research Foundation (ESRF) is an independent policy research institution based in Dar es Salaam, Tanzania. It was established in 1994 after two years of analysis, planning and development in response to the need for development of institutional capacity for policy analysis. The primary objectives of the Foundation are to strengthen capabilities in policy analysis and decision making, to articulate and enhance understanding of policy options in Government, the public sector, the donor community, and the growing private sector and civil society. ESRF played a catalytic role in the country’s socio-economic reforms in the late 1980s and early 1990s.

ESRF Vision and MissionVision: to become a regional and international centre of excellence in capacity development for policy analysis and development management, policy research, and policy dialogue by the year 2015.Mission: Advancing knowledge and analysis to public and private sector entities through sound policy research fi ndings, capacity development and by advocating good development management practices.

ESRF ObjectivesThe overall objective of ESRF is to develop capacity in economic and social policy analysis and development management by conducting and disseminating results from social and economic policy research, facilitating policy dialogue and conducting training on policy analysis and development management.

The activities of ESRF are as follows:

Research and Publications• Growth and wealth creation• Governance• Globalisation and regional integration• Social services and the quality of life• Natural Resource Management Unit

Capacity Development and Policy Voice• Short-term training• Post-graduate Diploma in poverty analysis (funded by UNDP)• IFP (International Fellowship Programme - funded by Ford Foundation International Fellowship Programme)• Policy dialogues

Commission Studies - Demand-driven studies

Knowledge Management - ICT (Information and Communication Technology and Library)

• TZ Online - www.tzonline.org

• TAKNET (Tanzania Knowledge Network) - www.taknet.or.tz

• Tanzania Development Gateway - www.tanzaniagateway.org

For more information please contact:The Executive Director, Economic and Social Research Foundation (ESRF)

Tel: +255 22 2790260E-mail: esrf@esrf.or.tz • Website:

ESRF Headquarters

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ZanzibarPart of the United Republic of Tanzania, Zanzibar has an autonomous government, complete with its own president, cabinet, legislature and judiciary.

Zanzibar is an archipelago situated about 35 kilometres off the coast of mainland Tanzania. It is made up of over 50 small islets and two main islands (Unguja and Pemba), which are the focus of most economic activity and are home to the vast majority of Zanzibar’s population. Unguja, also known as Zanzibar, is the larger and more developed of the two islands at 2 332 square kilometres, while Pemba is the smaller at 868 square kilometres.

The population of Zanzibar was 984 625 in 2002, the year of the last census, with an annual growth rate of 3.1 percent. Based on these fi gures, the population for 2010 is estimated at 1 257 014.

Present-day Zanzibar has been shaped by its early history of trade links with the East. The capital city and centre of commercial and political activities is Zanzibar Town, located on the western side of Unguja. Zanzibar Town also contains the UNESCO World Heritage Site of Stone Town.

TOURISMZanzibar boasts a wide variety of tourism options, from the historical and cultural sites of Stone Town to beach and leisure activities and eco-adventure holidays. If luxury and pampering is the aim of one’s holiday, Zanzibar can accommodate this through a variety of upmarket hotels and resorts on both the east and west coasts of Unguja Island, and an easy drive from the airport and Zanzibar Town. Many of these establishments are situated right on the coast with private beaches, spa services and marine activities.

Such stays can be combined with day-trip spice tours to Stone Town or one of Zanzibar’s spice plantations. Other day trips include a boat ride to Prison Island. Once a prison for renegade slaves, Prison Island now boasts excellent coral formations, good diving, and an opportunity to see its giant land tortoises, some of which are thought to be over a century old.

The tourism industry is regulated by the Zanzibar Commission for Tourism (ZCT), which was established in 1992.

For lovers of culture and history, Stone Town is an ideal place to start. A UNESCO World Heritage Site since 2000, Stone Town gained its name from the approximately 1 700 multi-story ‘stone’ buildings (they were actually constructed with coral and mortar, not stone) in the old town area. The area is also known for its architectural diversity. While only 83 square blocks in size, it contains 23 ‘landmark buildings’, two cathedrals, over 50 mosques, 157 balconies, verandahs and loggias, and more than 200 massive and elaborately carved wooden doors.

Ecotourism opportunities abound in Zanzibar. Jozani Forest, less than half an hour’s drive from Zanzibar Town, is home to the last indigenous population of (Kirk’s) Red Colobus Monkey in the world. Jozani is a conservation project aimed at preserving not only the Red Colobus, but also a number of other species, including the rare forest antelope, Ader’s Duiker and many species of birds. It is also an example of some of the last indigenous forest ecosystems on the islands.

For those interested in the marine and beach experience, Zanzibar has many opportunities for snorkelling and exploring spectacular coral reefs. Six kilometres off Unguja Island, Chumbe Island Coral Park was designated Tanzania’s fi rst Marine National Park in 1994. Its coral reef, which was declared ‘world’s best shallow water coral reef’ by the Australian Institute of Marine Sciences, is home to nearly 400 species of fi sh, turtles, dolphins and the giant coconut crab.

Pemba Island is smaller, more lush and hilly than Unguja, and receives far fewer tourists. While this means a less developed tourism infrastructure on the island, it also provides the opportunity to experience beautiful and unspoiled beaches with few other people around. Small guesthouses are dotted around the island and there are a few upmarket hotels and resorts specialising in deep sea diving.

Of Tanzania’s US$ 1 288.7 million in tourism earnings during 2008, Zanzibar received approximately US$ 160.3 million.

SUSTAINABLE TOURISM CHALLENGES ZANZIBAR INVESTMENT OPPORTUNITIESSince last decade, where Zanzibar encourages investments in Zanzibar, Tourism Investments has been growing and stimulate Zanzibar Economy. This sector has been promoting source of development for Zanzibar.

Zanzibar has alternatively illustrated its efforts to promote tourism where this challenges, based on the strengthening and expansion of tourism investments. Now where reforms have taken and continue to take place, opportunities exist in high income ecotourism investments, expansion of existing facilities, buy out existing local small hotels for upgrading, environmental friendly water sports, linking with tourism services such as classic international restaurants, health and spa services, recreation/theme parks.

Tourism Investments impact local employment opportunities and local business development. Creation of linkages through tourism challenges to strengthen Zanzibar’s economy. Since, this will stimulate local communities to take part in the economic development. Zanzibar has to stay natural beautiful by promoting environmental sustainable tourism that adapt to the demand of the world crisis and epidemics customers.

TOURISM ATTRACTIONSZanzibar boasts a wide variety of tourism attractions, from the historical and cultural sites of Stone Town, a UNESCO declared Heritage Site, to the beach and leisure activities, to eco and adventure holidays. If luxury and pampering is the aim of one’s holiday, Zanzibar can accommodate this through a variety of up market hotels and resorts. Zanzibar tourism attractions include the lovely beaches that the island is famous for, places of history (the stone town, Beit el Ajaab, old fort and the like), culture and plenty of marine sports and activities to keep one occupied. Some of the famous tours and excursions include:• The stone town tour• The spice plantations• Jozani Forest reserve• Dhow cruise and small island adventure• Scuba diving• A tour of the north and east coasts• Kizimkazi tour• A boat ride to Prison Island (Once a prison for renegade slaves, Prison Island now boasts excellent coral formations, good diving, and an opportunity to see its giant land tortoises, some of which are thought to be over a century old.)

TOURISMZanzibar boasts as a rare playground for exciting tourism activities and attractions. With more emphasis on ecotourism, investment opportunities exist in:• Up market hotels/resorts, especially chain hotels• Tourism supporting services such as first class restaurants, diving and sea sports• Exhibition and conference centres• Theme parks

WHY ZANZIBAR?There are many reasons to support your decision to choose Zanzibar as a destination for your investment, including:• Minimum political risk: Zanzibar is stable politically, socially and economically. Private investments are welcomed and protected both constitutionally and through international conventions to which Zanzibar, being part of the United Republic of Tanzania, is a signatory• Strategic location: Zanzibar is placed within the trade routes of the region and offers an effective spring board for entry into the region• Availability of skilled, trainable English speaking labour• Free repatriation of profit• 100% foreign ownership allowed• Opportunity to employ expatriates in key positions• Constantly improving business environment• Regional and International market concessions• Utilize the East African and SADC market by using Zanzibar as a hub for regional trade

All correspondences should be addressed to:EXECUTIVE DIRECTORP.O.BOX 2286 – ZANZIBARTEL: 255-24-2233026/2237353 •FAX: 255-24-2232737Email: zipa@zanzinet.com • zipaznz@zanzinet.comWebsite: www.zanzibarinvest.org

58

BACKGROUNDSocial Security is a basic right for every citizen wherever he/she resides in accordance with the United Nation Human Right Declaration of 1948. Its implementation was followed with the ILO convention No.102 of 1952. Bearing in mind, paramount importance of this right, both Republic of Tanzania and

that of Zanzibar have recognized in their respective constitution its existence and is now fully implemented in their respective countries.

STRUCTURE OF ZSSFZSSF is an autonomous institution established by its own Act and it is administered by the

Managing Director and governed by the Board of Trustees which shall be composed by members from Government, Worker/employees and employer’s associations. ZSSF is under the

auspices of the Minister responsible for Finance and Economic Affairs.

MEMBERS REGISTRATION LIABILITYEvery employer shall be liable to register in the prescribed manner as a contributing employer to

the Fund within 14 days from the date of announcement of the Act. They are also liable to register their employees as benefi ciaries within 14 days after commencement of employment. Failure for the

employer to comply with registration’s provisions stipulated shall be guilty of a legal offence.

MEMBERS’ CONTRIBUTIONSIt is the legal obligation of the employer to contribute to Fund 15 percent of the employee’s salary. In this amount, the employer shall deduct 5 percent of its employee salary and the employer shall

contribute 10 percent of the employee’s monthly salary which is liable for the ZSSF member’s contribution.

ZSSF INCOME AND INVESTMENTSource of ZSSF income shall be from members’ contribution, income from investment, aid and other

sources which shall be directed by the Board. ZSSF income shall be utilized on the following:• To pay members’ benefi ts

• To meet administrative cost of ZSSF• To promote investment in order to boost ZSSF income so as to meet the above mentioned

objectives together with the improvement of social well-being and country’s economy.

ZSSF PROJECT INVESTMENT STANDARDS• Safety • Liquidity • Yield• Social and Economic Utility

All investment related activities shall be governed by the Board of Trustees and by following advice of the Minister responsible for Finance and Economic Affairs.

Based on the above four standard, the Fund reserve power to invest the member’s contribution to the different investment portfolio.

ZSSF BENEFITS TO MEMBERSZSSF Act offers the following benefi ts:

• Old Age Benefi t • Invalidity Benefi t • Survivors Benefi t.

Tel: +255 24 2230242, +255 777 459323 – Fax: +255 24 2232820PO Box 2716, Zanzibar, Tanzania

E-mail: info@zssf.org

INVESTMENT POTENTIALZanzibar has been gaining importance as an investment destination, both regionally and globally. The country is relatively stable politically, socially and economically, and private investments are welcomed and protected both constitutionally and through international conventions. Free repatriation of profi ts is allowed, as well as 100 percent foreign ownership. Furthermore, Zanzibar’s strategic location within East African trade routes makes it an effective springboard for entering the region.

Established through the Investment Code of 2004, the Zanzibar Investment Promotion Authority (ZIPA) is a one-stop investment centre that acts as a focal point for investment promotion and facilitation in Zanzibar. Investment incentives include exemption from taxes on goods for export and exemption from corporate tax, among other advantages.

Zanzibar is connected to the National Power Grid through an underwater marine cable from mainland Tanzania. While the island of Pemba is served by industrial diesel oil-run generators, plans are underway to connect it to the National Grid. There is adequate water for industrial and household use.

A network of tarmac trunk roads covers most of Zanzibar, and there is a passable network of tertiary roads reaching all rural areas. The main seaport is situated in Stone Town and caters for ocean going vessels, cargo-handling services, passenger cruise ships and ferryboats. Tourists and cargo may be fl own in through Zanzibar International Airport, which is capable of handling a variety of different aircraft sizes. The airport is presently undergoing rehabilitation.

There are various local, regional and international fi nancial institutions offering a wide range of services, and while land is government-owned, it can be acquired by lease for up to

49 years (renewable). Zanzibar is well served by the main telecommunications companies operating in Tanzania, and Internet services are available at very competitive rates.

Zanzibar has a number of sectors that offer lucrative investment opportunities: • Exciting tourism activities and attractions, particularly ecotourism, brings investment opportunities in upmarket hotels and resorts, tourism support services (such as restaurants, diving and sea sports), exhibition and conference centres, and theme parks.• Zanzibar also offers great potential for investment in the service sector, including education, health care centres, business and fi nancial services, and information and communications technology.• Opportunities in agriculture include the export of fresh tropical fruits, horticulture and fl oriculture, fruit processing and canning, poultry production, production of ornamental fi sh, agro-processing and value addition in marine products, animal feed, dairy, coconut by-products, milling and packaging. Zanzibar is also known for its exotic home-grown spices, such as cloves, cinnamon, cardamom, nutmeg, black pepper and chillies, and this sector offers great potential for expansion and the creation of forward linkages through value addition.• Infrastructure development is another key area, with the development and construction of a commercial port at Mpigaduri under concession arrangements and power generation using eco-friendly sources such as wind, biogas and solar power encouraged.• With the country’s location alongside excellent marine resources, the fi shing industry has almost limitless potential for development. Various types of fi sh, shrimps, lobsters, seaweed and other marine resources are plentiful, and investors may choose suitable areas for deep sea fi shing, processing and canning, or aqua culture (fi sh farming and seaweed production).

Free Economic ZonesFree Economic Zones, otherwise known as Export Processing Zones, comprise geographical areas specialising in manufacturing, processing, warehousing or assembling goods or services for export. Managed by ZIPA, these zones offer fi rm free trade conditions and a liberal regulatory environment. Potential investors must carry out an industrial or processing activity and export not less than 80 percent of their product

Three sites have so far been declared Export Processing Zones, and allow duty free import of raw and intermediate materials and capital goods to manufacturers for export:• Fumba Free Zone, situated 24 kilometres from the seaport and 10 kilometres from Zanzibar International Airport, covers an area of 3 000 hectares and is ideal for light engineering and projects based on the maximum use of local raw materials, such as marine and agricultural resources and garment manufacturing.• Amaan Industrial Park, some 3 kilometres from the seaport and 2 kilometres from the airport, covers an area of 12.5 hectares and has existing infrastructure such as sheds/ warehouses, utilities and onsite customs inspection.• Offering untouched land ready to host potential investors, Micheweni Free Zone on the north-eastern tip of Pemba covers an area of 808.8 hectares and is 75 kilometres from the seaport and 45 kilometres from the airport.

Free Port Zones offer duty free storage of transit goods as well as opportunities in labelling and packaging, sorting, grading and cleaning, simple assembly, minor processing, quality control and catering. The Maruhubi Zone is located about 5 kilometres from the seaport and has all basic facilities, while the recently declared Air Port Zone is intended to cater for air cargo based operations.

ZANZIBAR PORTS CORPORATION

PO Box 263, ZanzibarTel: +255 24 223 2017 • Fax: +255 24 223 2859

E-mail: zanzibar-port@zanzinet.com

Comprising two main islands, Unguja and Pemba, Zanzibar is located in the Indian Ocean, about 22 miles off the coast of mainland Tanzania.

There are fi ve ports in Zanzibar and Pemba Islands. Zanzibar Ports Corporation (ZPC) is a public entity, which has full autonomy for operation and development of ports.

The Zanzibar Ports Corporation (ZPC) plays a major role in the island’s fortune. It now handles over 1,000 ferry passengers daily and a substantial percentage of all goods consumed on the island. It has over 2,500 employees.

At present, the port has the capacity for handling cargo in an area of 420,000 square feet, with four covered sheds, each capable of holding 3,000 tons of cargo.

A central part of the government’s Vision 2020 plan is the development of the islands as a springboard for export-oriented industrial products. Port activities are regarded as one of the main areas of economic potential.

A process of development and renovation of facilities is under way at the Zanzibar port with the aim of turning it into a transshipment hub for East, Central and Southern Africa, and the rest of the world.

The Zanzibar Ports Corporation (ZPC) is currently undergoing a US $60 million reconstruction plan. The works are to rebuild the current port and dedicate it solely to passenger traffi c including cruise ships and to build an entire new port which will handle only cargo.

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Useful InformationOffi cial name: United Republic of Tanzania

Location: East Africa

Capital: Dodoma (seat of government), Dar es Salaam (economic)

Form of Government: Republic; multiparty system since 1992

Head of State and Government: President Jakaya Mrisho Kikwete (since 21 December 2005); Zanzibar is semi-autonomous and has its own parliament and president (President Amani Karume, since 2000).

Border countries: Kenya, Uganda, Rwanda, Burundi, the Democratic Republic of Congo (DRC), Zambia, Malawi and Mozambique.

Total area: 883 590 square kilometres of land (Zanzibar 1 650 square kilometres, Pemba island 984 square kilometres) and roughly 59 000 square kilometres of water.

Lakes: Lake Victoria (largest lake in Africa and second largest in the world); Lake Tanganyika (second deepest in the world); Lake Nyasa.

Highest point: Mount Kilimanjaro (5 892 metres)

Climate: Tropical, with hot and humid coastal areas, although temperatures may fall below freezing in high-altitude areas such as Kilimanjaro and the Ngorongoro Highlands. There are two rainy seasons – late March to June and November to January. December to March is hot and dry; June, July and August are cool and cloudy.

Population: 42.5 million – Tanzania Mainland 41.3 million; Zanzibar 1.2 million (2008 estimate)

Ethnic groups: Over 90% indigenous African groups of Bantu and Nilotic origin; also minority population comprising Indian, Pakistani, Goan, Arab and European.

Religions: Christianity (45%), Islam (35%) and indigenous beliefs (20%), with Zanzibar almost completely Muslim.

Languages: There are two offi cial languages – Kiswahili and English (the primary language of commerce, administration and higher education). Arabic is widely spoken in Zanzibar and there are many indigenous languages (over 135).

Weights and measures: Metric system

Electricity: Local current is 220v, 50 cycle AC

Time difference: GMT +03:00

Currency: Tanzanian shilling (Tsh/TZS), divided into 100 cents.

Business and banking hours: Businesses are generally open weekdays 08:00 - 17:00, Saturdays 08:00 - 13:00. Most banks open from 08:30 - 15:00 on weekdays, 08:30 - 13:30 on Saturdays. Many shops stay open later.

Foreign exchange: Travellers’ cheques, dollars or pounds may be exchanged at any authorised bank or bureaux de change in the main towns.

Credit cards & ATMs: Access, MasterCard, Visa, American-Express, and Eurocard are accepted by most hotels, restaurants, travel agencies and the larger stores. There are ATMs available in branches of major banks.

Visa requirements: Visitors must have a valid passport, and most require a visa, with three-month single-entry tourist visas available at Tanzanian embassies abroad.

Health precautions: Visitors require anti-malarial drugs. While the yellow fever vaccination is no longer offi cially required when entering Tanzania, it is still a requirement if you wish to visit Zanzibar.

Communications: There are eight mobile telephone operators, and roaming lines work near most major cities and towns. Internet cafés are plentiful in major city centres. International Direct Dial is available.

Dialling code: The country code for Tanzania is +255. The outgoing international code is 00 for the United States and 000 for all other countries.

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64

Index to AdvertisersA to Z Textile Mills .....................................................................37African Life Assurance ..............................................................17Atlas Copco ..............................................................................51Business Connexion (Tanzania) ...............................................17Capricorn Hotels .......................................................................29CFAO DT Dobie Tanzania ........................................................45Consolidated Holding Corporation............................................23Department of Fisheries ...........................................................60Drilling and Dam Construction ..................................................50Economic and Social Research Foundation.............................55Mantra Resources Limited........................................................41Mbeya Cement Company Limited ............................................38Ministry of Communications, Science and Technology ............47Mollel Electrical Contractors .....................................................50Momentum Tanzania Insurance Company .......inside back coverNampak Tanzania Limited ........................................................36National Bank of Commerce.......................................................2National Social Security Fund ..................................................19Southern Sun Hotels (T) Limited ................................................5Strategis ...................................................................................53Tanelec Limited.........................................................................35Tantrade....................................................................................11Tanzania Communications Regulatory Authority ......................48Tanzania Distilleries ..................................................................39Tanzania Government Flight Agency ........................................43Tanzania National Reinsurance ................................................18Tanzania Portland Cement Company ............... inside front coverTanzania Private Sector Foundation.........................................13Tanzania Revenue Authority .....................................................21Tanzania Tourist Board .............................................................25The Jubilee Insurance Company ..............................................20The Tanzanite Experience ........................................................27Unit Trust of Tanzania ...............................................................22Zanzibar Investment Promotion Authority.................................57Zanzibar Ports Corporation ......................................................59Zanzibar Social Security Fund..................................................58

TANZANIA REVIEW 2010

2nd edition