Reports by the World Bank and Fitch Solutions, and input from LEX Africa’s Tanzania member law firm reflect increasing confidence in the country’s economic prospects and future growth.
Tanzania is an East African country located east of Africa’s Great Lakes, north of Mozambique, and south of Kenya, and is bordered by Burundi, the DRC, Malawi, Rwanda, Uganda and Zambia. It also shares maritime borders with the Comoros and the Seychelles, and it has shorelines at Lake Victoria, Lake Tanganyika and Lake Malawi.
The country has relatively abundant water resources, with comparatively high, seasonal, rainfall and a number of major rivers and lakes. Most rural areas rely on groundwater from communal boreholes for water supply.
Tanzania is about three times the size of Italy, and its official capital is Dodoma, but its largest city, chief port, major economic and transportation hub, and de facto capital is Dar es Salaam.
The country is known for its vast wilderness areas and some of Africa’s most famous national parks. These include the plains of Serengeti National Park – a safari mecca populated by elephant, lion, leopard, buffalo and rhino, and Kilimanjaro National Park, home to Africa’s highest mountain Mount Kilimanjaro, at 5,895 m, which is a major tourist attraction.
Offshore lie the tropical islands of Zanzibar with a marine park home to whale sharks and coral reefs. Shortly after independence, Tanganyika and Zanzibar merged to form the nation of Tanzania in 1964.
The island of Zanzibar, also called Unguja, is a major holiday destination and has some of the most beautiful beaches in the world. It is part of the Zanzibar archipelago, which consists of the islands of Zanzibar and Pemba.
According to the World Bank, economic activity in Tanzania is recovering, with the 2022 real GDP growth rate projected to reach 4-5%, compared with 2021 at 4.3%, and up from 2% in 2020. As in mainland Tanzania, official data for Zanzibar shows that economic activity is recovering. GDP grew by 5.1% in 2021, following significant slowdown to 1.3% in 2020 due to the impact of the COVID-19 pandemic on the tourism-dominated services sector, which accounts for nearly 50% of Zanzibar’s GDP.
Much of Tanzania’s development success over the decade is attributed to its strategic maritime location, rich and diverse natural resources, and socio-political stability, as well as its rapidly growing tourism.
With a population of 61.5 million, Tanzania’s 2021 GDP was $67.8 billion, while its per capita income in 2021 was about $1,136. The accommodation and restaurants, mining, ICT, transport, and electricity sectors are driving the post Covid recovery.
The government of Tanzania has simplified investment regulations in order to attract investors from around the world. This is one of major messages given out by the Tanzania embassy in Pretoria.
Financed by the World Bank, the Tanzania Rural Electrification Expansion Program (TREEP) has helped the country to achieve one of the fastest access expansion rates in Sub-Saharan Africa over the past decade. Since its implementation began in March 2017, TREEP has provided more than 4.5 million people with access to electricity, exceeding the programme’s initial target of 2.5 million citizens and adding new connections for more than 1,600 healthcare facilities and nearly 6,000 education facilities.
Coffee, cotton, tea, cashew nuts, cocoa, and vanilla account for about 48% of Tanzania’s GDP, provide 65% of total export earnings and provide the most employment, and cut flowers is a potential growth area. There is also ongoing exploration for oil resources and negotiations are ongoing on how to utilise natural gas found in deposits in the south coastal areas.
Jasbir Kaur Mankoo, advocate at FB Attorneys in Dar es Salaam says the Tanzania economy is growing better than in previous years and there is more room for investment. “There have been quite a few changes in a positive way and the country is opening up to foreign investment.
“The current government is pro investment and is working out policies to streamline the flow of FDIs into the country. As is the case elsewhere, this does take time but we are moving in the right direction.”
She says the country has also improved in terms of its legal challenges. However, in some industries such as mining, there are still strict laws for investors in such areas as local content, state participation and natural resources-related dispute resolution. “Overall, the investment climate is improving and Tanzania is moving in the right direction as far as attracting FDI is concerned,” says Mankoo.
Sectors that have the greatest opportunities are agriculture and services to the oil and gas sector, she adds.
There have been quite a few changes in laws in Tanzania in the past year, with the most recent one being the state participation in mining through the Mining (State Participation) Regulations, 2022 update by which the government has a right to acquire a minimum 16% non-dilutable Free Carried Interest Shares in Mining Companies’ capital, says Mankoo.
“Also, there is the Data Protection Bill, which is in the process of being passed by the National Assembly and thereafter be assented to by the President to become law.”
In a report earlier this year, Fitch Solutions said Tanzania is again attracting new projects, which is “a sign of stronger confidence in the country’s regulations.” It added that the announcement of various investments by several major miners in recent quarters show that new projects are making progress and suggest that Tanzania’s mining sector is on track to grow in the coming years.