Tanzania’s business environment ranking improves on enhanced credit data

Thursday October 27 2016

 

By By Nuzulack Dausen ndausen@tz.nationmedia.com @nuzulack

Dar es Salaam. The government’s efforts in easing availability of credit data have helped Tanzania to climb seven places in doing business assessment, a historic performance for the last five years. Tanzania is currently ranked 132nd globally in the ease of doing business, a new World Bank Group – which was released on Tuesday, November 25 – shows.
In a similar report last year, the country was ranked 139th.However, the country is doing poorly in areas of streamlining the tax system and cross-border trading.


The report dubbed: “Doing Business 2017: Equal Opportunities for all” reveals that East Africa’s second largest economy expanded the coverage of credit reference bureaus by distributing credit data from retailers.

Creditinfo Tanzania Limited expanded borrower coverage from 1.31 million firms and individuals as of January 2015 to 1.78 million by January, 2016.
The data included firms and individuals with information on their borrowing history for a period of five years.

“As the result, Tanzania started to score on the Doing Business depth of credit information index,” the report reads.
That was the only positive reform achieved last year while stepping back by complicating tax system according to the report.

In 2012, the Bank of Tanzania introduced credit reference system which allows private companies to collect credit information which helps commercial banks and other lending institutions to understand their borrowers’ records. The intention is to ensure that credit is issued only to those borrowers who have a tendency of repaying.

However, Tanzania still lags behind regional peers, a move that puts the country at a disadvantageous position when it comes to attracting investors.

It is however hoped that such an improvement sends a positive message to President John Magufuli’s administration which has undertaken radical changes in public service management – aimed at increasing efficiency in delivery of public services and improving the business environment – during the past one year.
Tanzania performed well in areas of starting a business, getting electricity, getting credit and dealing with the construction permits.
However, it has performed poorly in the aspect of cross-border trading, securing the 11th worst performing rank globally.

Mr Godfrey Simbeye, the executive director for the Tanzania Private Sector Foundation (TPSF) lauded the success achieved, noting however that he was not surprised by the findings in the report. During the past few years, said Mr Simbeye, Tanzania’s speed of reform has been slow.

 “This assessment was done in the first months of President Magufuli’s administration but now things have started to move on the right pace and rural electrification program has helped many to get electricity so I am certain that next year, we will improve from where we are today,” said Mr Simbeye.

The government said the achievement was an exceptional and it will continue to improve business environment by implementing several reforms like easing business registration process, formalising land ownership and introducing the electronic single window system.

“On the matter of poor performance in cross-border trade, I think everyone knows that Tanzania has a dozen borders and this puts us a disadvantageous position if we are to be compared with other who have just two border points. However, we have improved a lot but some issues have not been reflected in the report,” said Mr Christopher Mramba, Assistant Director of Business Environment in the Prime Minister’s office.