Tanzania Country Brief: February 2011
Friday, 25 March 2011
Updates on business environment, data releases, and industry developments.

BUSINESS ENVIRONMENT
  • Licensing agency to speed up business registration: The Business Registration and Licensing Agency (BRELA) has announced its commitment to further reducing the time taken to register company and business names. This follows the decision to amend the Evidence Act No 15, 2007, which will allow for the submission of electronic documents, and even for an online registration facility. BRELA representatives pointed out that the online registration option will reduce not only time spent and paperwork, but entrepreneurs’ traveling costs as well.
  • EPZ Authority partners up with Tanzania Revenue Authority: The Tanzania Revenue Authority (TRA) will open an office at the Export Processing Zones Authority’s (EPZA’s) compound in Dar Es Salaam. Spokespeople for the two organisation hope that the partnership will attract more investment interest into Tanzania, by creating a more positive business environment, as well as plugging tax evasion loop-holes.
  • Tanzania to build new sea ports: Two new sea ports are planned at Mbegani in Bagamoyo and Mwambani in Tanga in order to alleviate congestion at the Dar Es Salaam port. Meantime, the Dar port’s gates 14 and 15 are under construction, with the Minister for Transport claiming that Tanzania plans to take full advantage of its position as the ocean gateway for five landlocked nations. In an effort to improve trade and transport through the nation, some buildings in the capital are being demolished to provide for road expansion.
  • Uganda, Tanzania to work jointly on new trade infrastructure: Currently. 99% of Ugandan trade goes through Mombasa, with only !% passing through Dar Es Salaam, but this may change. Tanzania and Uganda are discussing plans to team up on a USD2.7bn joint venture to improve trade infrastructure. The investment is set to include construction of the Tanga-Arusha-Musoma railway, the rehabilitation of the Musoma-Mwamba road and ferries, as well as construction of a new Port Bell pier in Kampala. Tanzanian government officials hope that this move to support Ugandan trade will in turn vastly increase volumes of cargo coming through Dar port. However, Mukwano industries general manager, Busingye Rwabogo, noted that the cost of the additional 600km on the road from Dar, as compared to the road from Mombasa, would be hard to transfer to the customer. Recent investments have brought cargo lag time at the Dar Es Salaam port down to 11 days from 25.
  • Land value drops in some areas of Dar Es Salaam: Poor infrastructure and security in some areas of Dar Es Salaam have made plot prices fall, creating sizeable pricing gaps between regions of the city.


DATA
  • Inflation: Headline inflation rose for the third month in a row, climbing to 6.4% in January from 5.6% in December according to the National Bureau of Statistics. The rise, which mirrors a trend across the region, has been driven by the chronic energy shortages currently affecting the country as well as increasing food and fuel prices both domestically and on international markets. Despite a recent adjustment, food and non-alcoholic beverages still comprise 47.8% of the CPI basket, and with dry weather and higher production costs predicted to continue through the year, analysts predict inflation to return to double figures during 2011.
  • Debt: Tanzania’s total debt stock increased by 1.1% in December driven by the depreciation of the shilling according the Monthly Economic Review published by the Bank of Tanzania. At the end of 2010, national debt stood at just under USD11bn, with 79% representing external debt and the remainder borrowed domestically.
  • Fiscal deficit: Unplanned expenditures and stagnant revenues are threatening to cause major problems for Tanzania’s budget deficit. The government is desperately seeking cash injections to cover a shortfall after energy and food crises ran down the country’s coffers.

INDUSTRY NEWS
Mining:
  • Chinese firm commits USD3m to coal, iron ore industry: Having won a bid to invest, Sichuan Hongda Corporation Ltd will inject the USD3m in Mchuchuma coal and Liganga iron ore projects in southern Tanzania. Mchuchuma is expected to produce 600MW of power, which should supplement Tanzania’s predominant hydropower electricity sources, hopefully mitigating the nation’s severe power shortages.
  • Workers’ pay constitutes lion’s share of mining tax revenue: At least 54.5% of Tanzania’s mining, gas and oil tax revenue comes from deductions from workers’ wages, and not levies on the extracted materials themselves, reveals a report by the Tanzania Extractive Industries Transparency Initiative (TEITI). Stamp duty contributes only 0.3%, mining lease 0.9% and import duty 34%.
  • Canadian company raises USD10m for mining works in Tanzania and Namibia: Helio Resource Corp plans to invest in an exploration project in Tanzania’s Lupa, Rukwa region, aiming to develop the 238 sq. metre SMP Gold project into an open pit gold resource.

Banking:
  • Private sector credit increases: Lending by commercial banks to the private sector increased by 20% in the twelve months up to December 2010, according to the latest Monthly Economic Review by the Bank of Tanzania. Most of the lending was in the form of personal loans, followed by loans for trading activities. Competition among lenders for borrowers in the private sector brings down interest rates: the overall lending rate for December 2010 was 13.45%, down from 14.38% in December 2009.
  • BancABC to support SMEs: Tanzanian bank BancABC has obtained a USD10m loan from the World Business Capital (WBC) Inc. to lend to small and medium sized enterprises (SME). The loan, which is guaranteed by the private sector support arm of the US government, will support long-term funding requirements of SMEs relating to asset financing, loans and working capital.

Telecommunication
  • Tanzania Posts Corporation in need of funds: The Tanzania Posts Corporation (TPC) is seeking TZS30.8bn to equip it to function competitively, and have submitted a recovery plan and budget to the Ministry of Science, Technology and Communications. Plans to procure investment and working capital are underway. The TPC hopes to initiate a new postcode system, but is aware that the increased penetration of mobile phones has impacted its finances already. Between 2005 and 2010, the volume of letters handled by the corporation fell by 11%, with volumes of parcels handled dropping by 40.7% over the same period.
  • BoT, TCRA to regulate mobile money: Following a sharp rise in mobile money transactions in Tanzania, the Bank of Tanzania (BoT) and the Tanzania Communications Regulatory Authority (TCRA) have signed a MoU which will allow the bodies to jointly supervise mobile payment platforms and the transactions made through them. The link-up should plug previous regulation gaps, when each institution operated in a strictly circumscribed sphere of control over the nascent industry.

DEVELOPMENT FINANCE
  • WB to grant and loan budget support of USD2.5-3bn over next four years: The World Bank (WB) has committed USD2.5-3bn to Tanzania in general budget support, to be disbursed over the next four fiscal years. The announcement was made by WB country director John McIntire as he presented his organisation’s country assistance strategy. The sectors to share in the funds include health, education, infrastructure and energy, as well as environmental conservation.

REGIONAL NEWS
  • South Sudan and DRC keen to join EAC:  The East African Community, currently made up of Tanzania, Kenya, Uganda, Rwanda and Burundi, could expand in size as the Democratic Republic of the Congo (DRC) and the brand new South Sudan express interest in membership. However, some commentators have shown doubt about the new additions, arguing that the DRC especially, could be a destabilising influence on the community.





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