Market access : How to access the Tanzanian market

Tanzania is desirous of expanding its standing as a powerful magnet for many of the most important investors, from within and outside the African continent. Yet some outmoded policies and laws (e.g. the National Investment Promotion Policy of 1996 and the Tanzania Investment Act of 1997) as well as a diversity of perceptions about the role of culture and communication in business habitually constitute challenges for foreign investors. The fact is, surmounting these challenges is a very delicate affair.

The good news is that multinational teams with cross-cultural sensitivity and skills are becoming more common, meaning multinational companies (MNCs) and other foreign investors can benefit from a progressively varied knowledge base and fresh, astute approaches to solving problems bedevilling businesses in Tanzania.

National and local constituencies need to be placated by government policymakers and executives; and simultaneously, “[the] policymakers and executives have a desire to nurture and sustain cooperative relationships with [MNCs] as enterprises that engage in foreign direct investment” says Paul Kibuuka, a tax and corporate lawyer and policy analyst. Keeping those relationships healthy is an important ingredient for the government to conduct effective negotiations with foreign investors.

This conflictual situation that policymakers and executives find themselves in somehow ruptures legal and regulatory reform ponderings of the government, thereby altering the communication process and leading to “mixed” and “conflicting” messages between stakeholders in the foreign investor’s home country and in the local host country of Tanzania.

Exacerbating the situation is cultural diversity, which makes communication difficult since the mindset and language of people from different cultures are different. There is a view that this may lead to policymakers and executives reneging on their constituencies. Consequently, reform efforts may retard and foreign investors may lack the freedom to operate and grow their businesses in Tanzania.

So, what’s the secret of reducing the conflict and enhancing good business environment (policy, legal, institutional, and regulatory) reforms for governing Tanzanian business? For the sake of clarity, business environment is a sub-set of investment climate a sphere in which the World Bank has a long history of helping countries maximize the benefits of private sector investment.

And now here’s the secret, a very simple secret espoused by Mr Kibuuka: “It’s being proactive and consistent with government relations, public policy and advocacy activities throughout the process of negotiations with the government as well as deploying a ricochet communication strategy to create a meaningful impact on the Tanzanian regulatory process in the investor’s sector of interest”.

It will suffice to give this theoretical illustration. Suppose that a big French pharmaceutical MNC wants to launch operations in Tanzania. Before negotiating with the ministerial dockets of investment (in the Prime Minister’s Office) and/or industries and trade, the MNC approaches government officials in the capital of Dodoma to devise its investment position.

While the media in Tanzania starts to cover the negotiations, that position is re-devised from French to Swahili to appeal to the demands of the Tanzanian market and the regulatory priorities of the Ministry of Health and the Tanzania Medicine and Medical Devices Authority, among other regulators.

Subsequently, the position from the French MNC is shared with Tanzanian journalists and editors who cover business and the economy, generating responses from pharmaceutical stakeholders in Tanzania which are translated into French and shared with the media in France to reach a suitable degree of attention in Dodoma. Thus, the ricochet communication strategy referred to by Mr Kibuuka. Moreover, as additional strategic alliances with stakeholders in both France and Tanzania are developed for the purpose of, inter alia, broadening its messaging, the French pharmaceutical MNC garners more influence during negotiations and policy discussions with Tanzanian policymakers and decisionmakers. Simply put, foreign investors who just let their messaging to chart its own course will find it difficult to garner more leverage when it comes to accessing, and growing their businesses in, the Tanzanian market.

Especially for tightly regulated sectors of the economy in Tanzania, MNCs and other foreign investors need to appreciate that the skills, experience and good regulatory relationships of a local lawyer are pivotal in a ricochet communication strategy for accessing and thriving in the Tanzanian market.

Lilian Kyaruzi ([email protected]), a corporate lawyer, is a director in Isidora & Company and the Taxation and Development Research Bureau.