TANZANIA An Overview of Investment Climate and Opportunities

Transcription

1 TANZANIA An Overview of Investment Climate and Opportunities Prof. Andrew E. Temu May

2 Outline Introduction: Economic Overview Challenges being addressed Facilitators: TIC and The SAGCOT Center Ltd Why Invest in Tanzania Few Examples of Investment Opportunities Investment Incentives Investment Trends & Exact Examples Conclusion 2

3 Introduction: Economic Overview GDP growth 7% (av) per year fastest in the region Peaceful, democratic, multicultural, good relationships with bordering countries GDP and Per Capita Income 7.40% 7.20% 7.00% 6.80% 6.60% 6.40% 6.20% 6.00% 5.80% 5.60% GDP Growth 7.00% 6.3% 6.5% 7.0% 7.0% 7.3% 6.9% 7.0% 7.1% 7.1% 7.1% 7.1% Per Capita (USD) Source: Bank of Tanzania, Tanzania Bureau of Statistics, Economic Intelligence Unit Annual Average Inflation and Interest Rates 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Consumer price inflation (av) Lending interest rate (av) Source: Tanzania National Bureau of Statistics Tanzania recorded a 7.0% GDP growth rate in GDP growth rate for the second quarter of the year 2016 was 7.9%. Inflationary pressures continue to ease as inflation single digit. compared to 16% at the end of 2012/13. The main drivers of growth recently have been several fast growing sectors: construction, transport and financial services. Fastest growth in 2015 was projected in following sub-activities : Construction (16.8%); Information and Communication (12.1%) ; Financial Services and Insurance(11.8%) ; Mining& Quarrying (9.1%) ; and Transport and Storage (7.9%). 3

4 Progress is however not without challenges WB s Ease of Doing Business Ranking

5 Tanzania is aware of areas posing difficulties We know how we arecompared with neighbors E.g. Ease of doing business sub-indices: East Africa

6 Challenges that are being addressed Governance: Government is working hard to fight corruption Labor Markets & Work Permits: Expensive and cumbersome Business Licensing regime: Needs to be simplified Taxation: The need to the widen tax base & simplify compliance Human Capital: Entrepreneurship & ICT has to be enhanced Access to credit: Especially MSMEs to enhance local content Agents of change you can use:

7 THE TANZANIA INVESTMENT CENTER Coordinating, promoting and facilitating Tanzania Investment Centre (TIC) is the primary agency of the Government responsible for coordinating, encouraging, promoting and facilitating investments Functions of TIC Creating and maintaining a positive climate for private sector investment; Vision To become a world class Investment Promotion Agency promoting Tanzania as Africa s premier investment destination Mission: To contribute to the sustainable economic development of Tanzania through attraction of new investment and maximizing its impact on the economy Providing advice to the Government on investment related matters; Stimulating local and foreign investments; Facilitating foreign and local investors; Stimulating and supporting the growth of Entrepreneurship and SMEs in Tanzania; Types of Investment TIC Supports Foreign Owned Investments Minimum Capital > US$ 500,000 Locally owned investments minimum capital > US$ 100,000 Industries/Sectors not included: Mining, Oil and Gas Collecting and disseminating up-to-date information on investment opportunities and incentive available to investors; Monitoring the Tanzania business environment and growth of Foreign Direct Investment (FDI) in the Country. 7

8 TIC Investment Facilitation Services Assists investors to obtain permits, licenses and visas through TIC One Stop Shop COMPANY INCORPORATION RESIDENCE PERMIT CLASS A RESIDENCE PERMIT CLASS B INDUSTRIAL LICENSE INVESTMENT FACILITATION SERVICES BUSINESS LICENSE ISSUANCE OF LAND DERIVATIVE RIGHT TAXPAYER IDENTIFICATION NUMBER WORK PERMIT 8

9 SAGCOT Centre Ltd SAGCOT is a public private partnership aiming to transform agriculture in Tanzania. Partners are local & international companies, farmers, development partners, Civil Society Organizations (CSOs) and the Government of Tanzania. By 2030, the partnership aims to: - Attract USD 3.2 billion of investments - Transform 350,000 hectares of arable land into profitable production and - Lifting 10,000 small scale farmers into commercial farming to the Southern Corridor. - SAGCOT Centre Ltd is the administrative unit 9

10 Reasons to Invest in Tanzania 10

11 Reasons to invest in Tanzania Peace, political stability and economic stability (1) Peace and political stability Peace Democracy Stability A B C Tanzania is one the most peaceful & politically stable countries in Africa with no history of civil wars, ethnical conflicts or internal uprising Established multiparty democracy with a multi-party electoral system with 19 political parties This political stability provides protection to investors. All presidents have been elected into office in fair and free elections (2) Economic stability with high growth potential Economic Growth Member of the World Bank s 7% Club, a group of countries forecasted to achieve real GDP growth of 7% or more for the next decade. On of the10 most attractive investment countries for corporate (RMB Investment Survey 2014). Population Growth Largest country by population (44.9 million) and land mass in East Africa Young and vibrant population growing at 5% per annum 11

12 Reasons invest in Tanzania Natural resources and investment incentives (3) Rich Natural Resources Gold Tourist Attractions (4) Investment Incentives & Guarantees Attractive fiscal and non fiscal incentives for investment Guarantees against nationalization & expropriation. Bilateral Investment Treaties signed with different countries providing further protection. Precious Stones Gas Discoveries Tanzania is Member of: Arable Land Regional Blocs Membership: East African Community (EAC) Southern Africa Development Community (SADC) 12

13 Reasons to invest in Tanzania Strategic location and access to markets (5) Strategic geographic location and (6) access to markets Southern Africa Development Community (SADC) (~300m people) East African Community (EAC) (~130m people) Japan China (~6000 items) Tanzanian Population (~45m people) Indian Ocean Rim Association for Regional Co-operation (IOR-ARC) Canada 3 Major Ports (Dar es Salaam, Tanga & Mtwara) Gateway To Six (6) Land-locked Countries (Uganda, Rwanda, Burundi, DR Congo, Zambia & Malawi) 13

14 7. Tanzania has an agro-climatic condition that is well suited to grow various crops Land Tanzania has 44 million ha of arable land. The land has huge potential for various crops. Rainfall Tanzania has bi-modal and uni-modal rainfall patterns The country receives rainfall of up to 1600 millimetres (mm ) annually Temperature Tanzania has predominantly tropical climate and some isolated highlands with typical temperate climates Temperature range from 10⁰ to 35⁰, depending on altitude and season Source: Ministry of Agriculture, Food and Cooperatives, World Trade Press Soil Soils in Tanzania vary according to parent rock and position on the landscape The major soil types are: Volcanic Alluvial Clay 14

15 Investment Opportunities15

16 Agriculture: crops, livestock and fisheries 16

17 Agriculture, Livestock and Fisheries Key Facts and Potential Areas for Investment Potential Areas: Key Facts: Agriculture employs about 67 % of the employed population and remains central to Tanzania s industrialization as it provides markets for industrial products and raw materials for industries. Tanzania has the 2nd largest livestock population in Africa. Less than 1% of all meat produced locally is processed, at the same time vast quantities ofprocessed meat are imported. The area of freshwater cover is estimated at 54,337 sq. km., which is about 6.1 % of the total country s surface area The country has Territorial Sea of 64,000 sq. km., an Exclusive Economic Zone (EEZ) covering an area of about 223,000 sq. km and 1,424 km coastline along the Indian Ocean. Cultivation of maize, sugarcane, rice, sunflower, pulses, floriculture, cotton, sisal, grape, and simsim as prioritized crops. Development of out growers to complement the sources of raw materials for the industries as appropriate. Expansion and improvement of irrigation systems; improvement of R&D in crops cultivation; Investment in Livestock farming focusing on Beef, Dairy, Chicken, Hides and Skins as prioritized products. Investment in fresh water fishing, sea and deep sea fishing, fish farming and aquaculture. 17

18 Agriculture: Crops Over 300,000 tons country sugar supply gap, set to Increase exponentially The primary market opportunity for sugar producers in Tanzania is local: as existing sugar estates reach peak production, the supply gap is set to increase at an estimated 6% per annum from the current 300,000 tons / year, driven by economic and population growth More than 300,000 tons sugar deficit in Tanzania >800,000 tons supply gap by 2020 As incomes rise, sugar consumption in Tanzania is expected to increase rapidly from the current low levels of per capita consumption Despite rapid production growth of existing estates following privatizations in the late 1990 s, supply could not keep up with demand over the last decade The supply gap is set to increase as existing estates reach their full capacity: the Sugar Board of Tanzania estimates that current producers could peak at 400,000 tons by 2020 Per capita sugar consumption 2010/11 est. 200 Production >300,000 tons current supply gap Source: Sugar Board of Tanzania, Illovo, Mtibwa, TPC, FAO +18 kg/yr World average per capita sugar consumption 18

19 Agriculture: Crops potential exemplified by sugar Target zones earmarked for increased sugar production The sugar supply gap is set to increase at an estimated 6% per annum from the current 300,000 tons / year, driven by economic and population growth. Map of existing and proposed new sugar estates TPC sugar mill There are 4 existing estates in Tanzania, producing a total of 300,000 tons of sugar per year and reaching their full capacity. Tanzania has among the highest average cane yields in the world, at 120 tons/ha due to good soils and climate. Kagera sugar mill Mtibwa sugar mill Kigoma site Mkulazi site Wami site With ample rainfall and generous rivers fed by the high hinterland plateaus, Tanzania has among the best irrigation potential in the subregion. Soil and topography in target sugar zones are ideal for industrial sugarcane cultivation. Ruipa site Rufiji site Kilombero sugar mill New target sugar zones Established mill 19

20 Agriculture, Livestock and Fisheries Tanzania is Strategically Positioned to Serve as a Food Basket for East and Central Africa EAC s population of million: A fast growing market with urbanization Tanzania as the Regional Food Basket Examples of Maize and Rice Democratic Republic of the Congo Rwanda Burundi Uganda Kenya Growing Regional Food Deficit: By 2020 annual imports for; Maize are projected to be 8 Million MT Rice are projected to be 2.8 Million MT Tanzania Zambia Zimbabwe Malawi Mozambique Tanzania is a large food producer & exporter, In 2014 she exported Over 200,000 MT of maize and 25,000 MT of rice. Central Corridor East Africa Community SOURCE: USAID SERA Policy Brief, TRA, RLDC Rice Strategy (2009), World Bank Indicators, DHS 2013 (East Africa Facts and Figures Report 2014)

21 Agriculture: Livestock Tanzania is well positioned to supply meat to markets in Africa & Middle East Demand for meat products Raising & fattening Live animal trading Meat Export Destinations EAC SADC Middle East Inter-regional trade in meat has increased significantly Major meat exporters: Brazil, Argentina & Australia, face logistical challenges to supply new growth areas in Africa, Middle East and Asia Meat Imports, (USD billion) Slaughtering Meat processing +84% +183% Leather processing +280% Retailing & marketing Notes: (1) Burundi, Kenya, Ruanda, Tanzania, Uganda; (2) Southern African Development Community; (3) Saudi Arabia, UAE, Yemen, Oman, Iran, Iraq; Source: Trade Map 21

22 Agriculture: Fisheries Opportunities in fishing and aquaculture development Establishment of a fishing port and fishing in the Exclusive Economic Zone Establishing fish processing plants and modern fishing boat building yards Establishment of dry docking and eco-tourism facilities Around 3,000 hectares suitable for shrimp farming in Mafia Island Establishment of commercial fish cage culture in both marine & freshwater areas Cultured species: Mud crabs, oysters, grouper and scallops for mariculture Fresh water species: Tilapias, African Catfish, Rainbow Trout & Freshwater prawns Production of formulated fish feeds and live fish food(eg. earthworms) 22

23 Investment Incentives 23

24 Incentives Granted to TIC Registered Projects Fiscal & Non-Fiscal Incentives Additional Incentives for Strategic Investors 1. FISCAL INCENTIVES 1. Exemptions on projects capital goods 2. Tax relief on deemed capital goods 3. Capital allowance 4. Depreciation allowance The amount of capital to be invested (normally above US$ 50 million) STRATEGIC INVESTOR STATUS For projects of specific/great impact to the society or economy, investor may apply for a strategic investor status to seek/request additional investment incentives from the Government NON-FISCAL INCENTIVES Automatic Immigration Quota 2. Protection against non-commercial risks 3. Protection against nationalization / confiscation 4. Unconditional transferability of funds The contribution of the project in terms of creating employment opportunities New and innovative technology to be introduced by the Prospective investors strategic project The extent to which the Project brings capacity to manufacture products for export and the earning of foreign exchange Whether the Investment is in the Special Economic Zone or Geographically disadvantaged regions 2. 24

25 Investment Trends 25

26 FDI Flows into Tanzania ( ) Tanzania is the leading recipient of FDI in the EAC region ACCORDING TO WORLD INVESTMENT REPORT 2016 (FDI in 2015, USD Billion) TANZANIA $ KENYA $ UGANDA $ RWANDA $ BURUNDI $ Tanzania s FDI Flows (in US$ Billion) Source: UNCTAD - World Investment Report

27 Top Ten Countries Based on Value of Registered Projects : TANZANIA INVESTMENT CENTRE INVESTMENT STOCK OF LEADING COUNTRIES SEPTEMBER 2016 COUNTRY PROJECTS JOBS VALUE IN $M 1 UNITED KINGDOM ,840 5, UNITED STATES OF AMERICA ,797 4, MAURITIUS 65 9,510 4, CHINA ,200 3, INDIA ,292 2, AUSTRALIA 56 3,876 1, KENYA ,965 1, NETHERLANDS ,771 1, BELGIUM 32 1, EGYPT TOTAL 3, ,933 27,

28 Strategic Investments A total of 42 projects registered valued at US$ 12,278 Million Strategic Investors Sectors 42Total number of Strategic Investment Projects Total value of Investments (US$) 130,720 Investor Portfolio Snapshot 12,278M Total Jobs Created (Direct and Indirect) Agriculture & Livestock Energy & Natural Resources Manufacturing Commercial Building & Economic Infrastructure Transport Broadcasting & Telecommunications 2016 Tanzania Investment Centre (TIC) 28

29 Conclusion We have noted elements that demotivate the private sector, disincentives..; there are multitudes of taxing bodies..; I detest the 14 days taken to clear goods at the port ; I am telling the private sector that I am with you My government will cooperate 100% with complying private sector firms Private sector, I am telling you, If you don t move during the 5th phase, you will never move We welcome potential investors from Netherlands to Tanzania Tanzania Investment Centre (TIC) HE President John Pombe Joseph Magufuli United Republic of Tanzania 29

30 Thank you for your attention! Contacts Thank you for your attention! 30