Tanzania's investment bill to open up the economy
- The newly proposed investment act which was tabled for the first reading on Friday is meant to promote local participation in the economy
Dar es Salaam. In a quest to reform the country’s economy, a new proposed investment act, tabled for the first reading, seeks to encourage and attract more trade and investments both local and foreign.
Speaking exclusively with The Citizen after the Parliament had been adjourned, Dr Ashatu Kijaji, Minister of Investment, Industry and Trade, explained that among other things, the new law is meant to encourage, nurture and increase local participation in the economy.
“President Samia Suluhu Hassan’s aspiration is to see the country with suitable investment climate which attracts more business, so the proposed investment bill is one of the tools that will see the dream of our president [Samia Suluhu Hassan] be realised,” she explained.
According to her, the government has decreased by 50 percent, capital requirements for a locally owned business to enjoy benefits and protection provided under the Investment Act 1997; as previously, the minimum investment value for such projects was $100,000.
“We want to encourage, promote and facilitate more local investments, mind you, 78 percent of the country’s large taxpayers; are those registered with the Tanzania Investment Centre (TIC) which in turn grants Certificates of Incentives whereby holders are entitled to various incentives as stipulated in the Investment Act, 1997,” he observed.
According to Act (of 1997), it defines incentives as tax reliefs and concessional tax rates, which may be accessed by an investor under the Income Tax Act, the Customs Tariff Act, the Tanzania Revenue Authority Act, the Value-Added Act, and any other law for the time being in force and includes additional benefits that may be accessed by an investor under sections 19 and 20 of the Tanzania Investment Act 1997.
Dr Kijaji further explained that the proposed bill intends to harmonise all laws related to investment by making the new proposed Investment Act 2022 as a supreme legislation for investments matters and that all other acts will have to reflect it.
“We have been facing some challenges regarding tax incentives and the like, because sometimes the investment act does give relief to a certain project, yet you sometimes find there are some bureaucracies in the implementation simply some legislations are not in line with the said incentives,” she noted.
Adding that: “Even with the National Investment Steering Committee (NISC) which is chaired by the Prime Minister, sometimes, their resolutions were unimplementable, the difficulties were due to the current law, so with the proposed one, things will run smoothly.”
Although the new Investment Act 1997 will cease to operate after the proposed bill comes into law, everything that was done under former Act 1997, will maintain its status as legal entity and that will keep its benefits such as investment incentives under the new law.
When reached for comment, Dr Amina Abubakar, an independent economist said: “Although I haven’t read the said bill, I think it is a recommendable job, having more local investments, means the money will be retained locally.”
She added: “I am sure the bill will also reduce revenue and tax complaints as when it becomes operational, then it will become the principal law on all matters related to investment and trade. I see this as a positive if we are to have a conducive environment for trade.”
For Mr Warson Jumanne, Business practitioner, was of the view that the proposed bill will serve as a traction to both foreign and local investments, which in turn will generate more employment.
“I am sure, it will be an effective tool to attract investors, this will increase more government export earnings and diversify the economy, in fact, enabling private enterprises, especially small and medium firms to function, has a positive impact on job creation and is therefore good for the economy,” he clarifies.
Tanzania offers a wealth of market opportunities for both domestic and foreign markets. The country’s rapid economic growth and high levels of domestic investment spending, with 20 percent urban, offers a sizable market that will remain an important target destination for local and foreign products and services.
The country is part of the two distinct market areas: East African Community (EAC), that comprises seven countries, and Southern Africa Development Community (SADC), amounting to the sum of over 527 million consumers.
Tanzania is a trading partner with some European Union (EU) countries, China, India, the United Kingdom (UK), United Arab Emirates (UAE) and the United States (US).