Research and consulting in Tanzania

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Research and consulting in Tanzania

Country overview:

With over a decade of consulting and research on Tanzania, IOA has gained deep insights into this East African nation, known for its abundant mineral wealth and fertile agricultural land. Our economists have tracked Tanzania’s robust recovery from the global recession, showcasing its diversified economy. Following two decades of steady growth after transitioning away from a command economy, Tanzania achieved middle-income status in 2020. This milestone contributed to a decline in poverty levels, from 34% in the previous decade to 26%. Additionally, remittances from Tanzanians abroad have surged by 60% since 2022, providing a significant boost to national revenue while raising concerns about growing dependency.

Despite persistent issues with government corruption, IOA analysts recognise promising policies such as import substitution, which supports local industries producing goods like machinery that were previously imported. Agriculture and mining continue to be the cornerstones of Tanzania’s economy.

Key opportunities in Tanzania:

  • Extensive mineral deposits provide a strong foundation for a thriving mining industry
  • Agriculture remains a reliable export sector, supported by a climate suitable for cultivating a wide variety of crops
  • Pro-industrial policies are driving growth and diversification in the manufacturing sector

Key concerns/risks in Tanzania:

  • Wide-spread poverty is a stubborn condition and has led to crime in urban areas
  • Government corruption has undermined service delivery and negatively impacted society at large
  • Inadequate infrastructure and limited public transport have slowed economic progress and hindered the growth of the tourism industry
  • Persistent poverty remains a significant challenge, contributing to increased crime rates in urban areas
Tanzania

Tips on doing business in Tanzania:

Starting a business:

  • Tanzania’s ownership regulations are more restrictive toward foreigners compared to some other markets, with industries such as shipping, telecommunications, mining, and tourism imposing significant limitations on foreign ownership
  • Non-citizens are generally prohibited from owning property unless it is for investment purposes, and even then, only through leaseholds. Foreigners must submit their project details to the Tanzania Investment Centre (TIC), while fully foreign-owned businesses are required to commit a minimum capital investment of US$50 million
    (Read more at: https://www.tic.go.tz/)

Doing business:

  • Tanzania provides several incentives for foreign investors across various sectors, including a 0% import duty on capital goods and additional benefits for agricultural initiatives. Investors in local manufacturing projects can also access a 50% tax allowance on capital goods and machinery
  • Common challenges for businesses align with those faced in many African markets. These include inadequate infrastructure, which complicates logistics, persistent corruption, inefficient bureaucracy, and unreliable courts that hinder contract enforcement. Additionally, the country faces a significant shortage of skilled labour

Culture and society:

  • Building relationships and rapport is a key aspect of Tanzanian business culture, often preceding formal negotiations. Reciprocal gift-giving is a common practice, but care should be taken to ensure it does not cross into bribery
  • Haggling is a standard practice, with extended negotiations over prices being customary. English serves as the primary language for business communication, making the investment process more accessible for Anglophone investors
  • Visitors should remain vigilant about personal safety, as incidents of violent crime, including kidnappings and robberies, have been reported in the past

A sample IOA research report on Tanzania: