Dar es Salaam. Members of the private sector should expect more positive changes in Tanzania’s business climate as President Samia Suluhu Hassan takes more steps to turning the country into the darling of prospective investors.
Apart from putting new custodians in ministries that deal with Tanzania’s priority projects, President Hassan is also trying to alleviate thorny challenges of petty traders and licenced businesses during the past five years or so.
In what could be described as the days are numbered for hawkers, commonly known as ‘Machinga’ who are operating their businesses in urban centres without abiding by laws and regulations, President Samia Suluhu Hassan yesterday directed Regional Commissioners (RCs) and District Commissioners (DCs) to look for special areas for petty traders.
The presence of informal businesses in the middle of traders who pay tax and rent has been a long cry of the business community because it creates unfair competition.
This is because formal traders pay tax while informal ones do not.
“I want the RCs to make an arrangement that will neither hurt shop owners nor the hawkers,” the Head of State said as she was swearing in the newly appointed three ministers and Attorney General (AG).
“We have given them freedom to do business so that they can get their daily bread. But we have observed laxity among them to the extent that they are now everywhere and block shops.”
As it is, the shop owners are now using the ‘Machinga’ to operate their businesses so that they could make a living profitably as informal traders who do not pay tax.
“This denies the government revenue because the ‘Machingas’ do not pay tax, but the shop owners are required to pay tax,” said the President.
He directed the hawkers to abide by the laws and regulations
Tanzania Business Community director for communications, Stephen Chamle, told The Citizen that the directives by the President were encouraging to traders and that would bolster their confidence to invest.
He said things were worse on the grounds and it was really discouraging traders because they were not ready to compete with traders who were not paying tax.
In the process, with a view to creating a fair playing field, he called for the respective authorities not to bring in free-riders in front of traders who were subjected to tax and rent paying.
Further, he expressed the need to do a feasibility study to identify who a ‘Machinga’ is and who is not.
In doing so, he expounded, it would avoid repeating the same mistake that had happened during provision of special identity cards (IDs) to petty traders, whereas some formal traders were trading in the name of hawkers in order to evade tax.
Quoting the Tanzania Revenue Authority (TRA), he said in a strange situation, since the government started issuing special IDs to petty traders in January 2019, Mr Chamle said the number of hawkers had increased by 200 percent.
“It is high time the government invested massively on creating a business environment that will enable broadening of the tax base by setting a stage for the ‘Machingas’ to graduate to formal business,” he recommended.
The University of Dar es Salaam (UDSM) Economics don, Dr Abel Kinyondo, said from a purely economic point of view the plan to drag petty traders away from the middle of formal business was a right move.
However, noting that petty traders are political capital, he said, the question is on whether the same stance of removing hawkers from the said areas would be maintained even when the country is approaching the general election in 2025.
The President’s move to embrace fairness in taxation, Dr Kinyondo said, could mean creating a more friendly business environment and thus attracting more investors if the same stance could be maintained.
“It is unfair for a shop owner who is paying tax to compete with a person who literally does not pay tax,” he said.
“In the long-run it is difficult to predict what the future of the President’s new move holds, but in the short-run, we could read that we are becoming more serious and more professional.”
In another development, he said, placing new faces in key ministries like Works and Transport, Energy, Communication and Information Technology meant the Head of State started detaching from his predecessor, the late Dr John Magufuli.
Prof Delphin Rwegasira of the UDSM School of economics said the cabinet’s mini-reshuffle was good, but he said they would like to see programmatic implications of changes. “We understand that the President has recorded achievement so far, which is good, but going forward we would wish to see a more programmatic approach to change in terms of new things and new directions,” he said.
On the question of petty traders, Prof Rwegasira expressed the need for authorities responsible for urban development to come up with proper organisation of the machingas to control their movements. Economist and business expert Donath Olomi seemed to have been reading from the same script, saying in every planning that the government was undertaking, they had to think of the petty traders.
He said considering the fact that the petty traders were absorbing a large number of Tanzanians, in every project related to construction of markets, bus stands and roads, the government needed to think of them.
The vice chairman of the Tanzania Association of Petty Traders, Mr Stephen Lusinde, welcomed the President’s directives.
However, he called for the law enforcers concerned to sit down with them in sincere efforts to find a better way of implementing the directives.
“We need to sit down and share ideas, exchange views and sincerely hear each other out. Otherwise, we will find ourselves back to those bad old days where force was used to disperse Machingas,” said Mr Lusinde.