Business in Tanzania

Aired January 2005

The United Republic of Tanzania in East Africa is a colourful land of 26 regions with widely varied terrain and climates. It is the home of 126 cultural groups, and more than 120 languages are spoken within its borders. It is the country where Swahili was born, the language likely to be named the official language in Africa in the next few years since it is already widely spoken in parliaments throughout the continent.

Tanzania is also home to one of the world’s largest natural harbors, and shares borders with eight other nations. It’s no wonder Tanzania has been a trading hub for centuries and is ideally placed to serve as a base for U.S. companies wishing to establish a presence in East Africa.
Tanzania covers almost 365,000 square miles and is composed of the Tanzanian mainland as well as the Indian Ocean islands of Zanzibar, Pemba and Mafia. Tanzania has two capitals: Dar es Salaam, whose Arabic name means “haven of peace”, and Dodoma, the administrative capital and largest city.

Tanzania’s population of 3.6 million people is 99% native African. Around 30% of the population is Christian, 35% Islamic and 35% practice indigenous religions. Around 80% of the country’s citizens live in rural areas. English and Swahili are Tanzania’s two official languages, but Arabic and many indigenous dialects are also widely spoken.

As rich in natural wonders as in cultural diversity, Tanzania contains Mount Kilimanjaro, the highest point in Africa, as well as Lake Victoria, one of the largest lakes in the world, and the game-rich Olduvai Gorge, Serengeti Plain and Great Rift Valley.

FINANCE

Tanzania’s financial sector is particularly investor-friendly. The Ministry of Finance is active in supporting business development and in facilitating foreign investment, and the Bank of Tanzania has proved very effective in regulating the sector and achieving financial stability.

The Ministry of Finance aims to promote excellence in public financial management, budgeting, and value for money; to develop and maintain international-standard fiscal policies and strategies; to promote professionalism in the business sector overall; and to facilitate the implementation of the latest information technology for the financial sector.

Tanzania’s currency is the Tanzanian shilling, which has been increasing in value in global markets for the past five years. Tanzania also has US $2 billion in foreign-currency reserves, thus reducing the risk of currency fluctuation for foreign investors.

Since it began to liberalize its economy in the 1980s, Tanzania has prospered as a capital market. The Dar es Salaam Stock Exchange (DSE) was founded in 1995 and both foreign and local companies can now publicly trade shares. Sixty percent of shares on the stock exchange are available for foreign purchase, while the remaining 40% are retained for Tanzanian ownership.

Tanzania is becoming an increasingly attractive investment target that offers an inflation rate of just 4.4% and annual GDP growth of 6.2%, along with a stable currency, high rates of domestic reinvestment into infrastructure and community development, and an investment-friendly government. Numerous policies and incentives have been created to encourage foreign and local investment in Tanzania’s long-term future.

Overall, Tanzania has created a thriving, stable investment climate that offers a number of advantages to foreign investors.

TOURISM & TRANSPORT

Tanzania is a natural for tourism development, home of some of the world’s most famous sites, including Mount Kilimanjaro, the game-rich Serengeti National Park, Ngorongoro crater and Zanzibar. The country has long been dedicated to preserving its natural heritage and has established 13 national parks. Tanzania offers a rare mix of spectacular scenery, exceptional flora and fauna, historical and archaeological sites, highly prized handicrafts and works of art, pristine ocean beaches and a rich culture that includes more than 120 ethnic groups.

The government aims to make tourism Tanzania’s number one foreign-exchange earner with the help of foreign investment. There are no limits to foreign ownership of projects in the tourism sector, although joint ventures with Tanzanian companies are particularly welcome.

Each of the many different regions in Tanzania offers its own unique attractions. In the Arusha region, for example, cultural tourism and hiking and mountain climbing in national parks are the primary attractions, whereas in the south, national parks are dedicated to rare flora and fauna and game reserves. The northern regions of Tanzania are the most developed and best known internationally; the Serengeti Plain, Mount Kilimanjaro and Ngorongoro National Park are all in the north. The southern portions of the country are less developed and have exceptional potential. Developing Selous Game Reserve, for example, is a top priority for the Ministry of Natural Resources and Tourism.

Tanzania has more land allotted to national parks and game reserves than any other wildlife destination in the world. The government’s policy is to upgrade and increase tourism infrastructure in these areas while also preserving the country’s natural heritage. The overall approach is “low volume, high value”.

The Ministry of Natural Resources and Tourism has implemented a master plan that aims to attract one million tourists to Tanzania per year by 2010, a goal that may be achieved by 2006 given the recent rapid growth of the tourism sector. As a result of this growth, the ministry has redoubled its efforts to ensure that new tourism projects are environmentally friendly and preserve the country’s natural beauty.

Over 300 private tour operators are now operating in Tanzania, but numerous opportunities still exist for private investors, for example in infrastructure development.