Tanzania is the ninth-largest economy in sub-Saharan Africa, with a population of 49.25 million. Its economy has been experiencing impressive and consistent GDP growth, even in spite of the low oil prices that have harmed many emerging markets, making the country and even more attractive place to do business.
Strong macroeconomic fundamentals combined with sensible and strategic reform have worked together to raise the country’s standing in the World Bank’s Ease of Doing Business index from 145 in 2013 to 132 for 2017. In the World Bank’s most recent report, access to credit rose 40 percentage points, raising its ranking from 152 in 2016 to 44 in 2017 following some impressive reforms. However, paying taxes dropped eight positions from 146 to 154.
Looking ahead, the new government has cited enhanced infrastructure and manufacturing friendly policies as key catalysts to sustaining its impressive growth trajectory. The 2016/2017 budget aims to increase funding for development projects whilst at the same time address the need for fiscal consolidation to support and promote macroeconomic stability. The overarching aim of the administration, similar to its predecessor, is to transform Tanzania into a middle-income country, which the World Bank defines as nations with a per capital gross national income of between USD1,045 and USD12,746.
Its free market economy is made even more attractive knowing that the Dar es Salaam port serves eight land-locked countries, has 44 million ha of arable land, and is politically stable, largely on account of the political system largely being dominated by the Chama Cha Mapinduzi (Revolutionary State Party) since the introduction of multiparty democracy. Swahili is the most widely used language, and English is the official language of education and business, but over 100 tribal languages are also spoken across the country.
Tanzania’s current president is the sitting chairman of the East African Community (EAC), which the country is a founding member of. More recently, Tanzania ratified the 2010 EAC Common Market Protocol, which promotes regional integration through the adoption of common tariffs and allowing of free movement of goods, services, capital, labor, and rights of establishment. It is also one of the founding members of the Southern African Development Community (SADC), which has a total of 15 members, and coordinates largely on issues of integration and security.
Investors in Tanzania are therefore well positioned to leverage opportunities for trading within the blocs to access markets beyond Tanzania’s borders. At the same time, however, transporting goods across borders is still not a simple process. The World Banks ranks Tanzania at 180 out of 190 countries surveyed.
Foreign investors are safeguarded against the nationalization and expropriation of their investments. Furthermore, Tanzania has concluded double-taxation agreements with several countries. Among other agreements, Tanzania is a member of the Multilateral Investment Guarantee Agency (MIGA) and International Centre for Settlement of Investment Disputes (ICSID), as well as being a signatory to the New York Convention on the recognition to the New York Convention and enforcement of Arbitration Awards.
Establishing a company
Regarding the company name, an applicant has to write a letter with at least three proposed names for the company by mail to the Registrar of Companies or at the counter of BRELA for clearance. This process usually takes one day to complete and carries no charges. In order to apply for company incorporation and obtain the certificate of incorporation the Memorandum and Articles of Association must be completed and filed with the Business Registration and Licensing Agency (BRELA). Companies can only be registered in Dar es Salaam. A lawyer is not required, but using one is common practice. Once forms have been submitted the certification of incorporation is usually processed within three to four days and will cost TZS337,200. The next step is to apply for a taxpayer identification number (TIN) with the Tanzania Revenue Authority (TRA). The process is computerized, free of charge, and takes a minimum of two days to obtain depending on the number of requests at the time. The Certificate of Incorporation shall be attached to the TIN application enclosed with Memorandum and Articles of Associations when a person makes application to TRA.
Applying for a business license takes six days and is done at the Ministry of Industry and Trade or local government authority, and costs TZS1,000, with all documents as well as proof of suitable company premises and Tanzanian citizenship of at least one of the shareholders.