TanzaniaInvest.com interviewed Dr.Adelhelm Meru, former Director General of Tanzania’s Export Processing Zones Authority (EPZA). EPZA is the principal Government Agency for Investment in the Tanzanian Economic Zones. In the Interview he reveals insight on Tanzania’s Investment Climate, services offered to International Investors in Tanzania and why Tanzania is an ideal investment destination.
TanzaniaInvest.com: What is the difference in positioning between EPZA and TIC, the Tanzania Investment Centre?
Dr. Adelhelm Meru: Tanzania has two investment promotion agencies; one is the Tanzania Investment Centre (TIC) and the other is the Export Processing Zones Authority (EPZA).
TIC coordinates investment in its totality and facilitates investments in different sectors and at different locations; whereas, EPZA registers investors who intend to invest in special zones only i.e Export Processing zones (EPZ) and Special Economic Zones (SEZ).
An investor who prefers to invest in Agriculture, Mining, Tourism or manufacturing outside the zones goes to TIC; however, investors who would like to locate in special zones especially those who would like to manufacture for export, register with EPZA. The two investment agencies complement one another.
TI: What is the second reason International Investors would want to approach EPZA?
AM: Best facilitation services and an attractive incentive package are other reasons which make EPZA attractive to international investors.
Economic Zones schemes exist in many countries but differ in how investors are facilitated. We believe EPZA’s facilitation services, especially the one stop service centre facility have made EPZA to be among the best investment destinations in the continent.
As I have already indicated, EPZA coordinates two types of Economic Zones, the Export Processing Zones (EPZ) which is basically manufacturing for export; and the Special Economic Zones (SEZ) which permits selling in the local market.
Each of the two schemes has its own set of incentives. Incentives given to EPZ investors include, among others, exemption from corporation tax for 10 years (10 years tax holiday); exemption from duties and taxes on capital goods and raw materials; exemption from VAT on utility services and on construction materials; exemption from withholding tax on rent, dividends and interests; and exemption from pre-shipment or destination inspection requirements.
{xtypo_quote_right}Incentives given to EPZ investors include exemption from corporation tax for 10 years, from duties and taxes on capital goods and raw materials, from VAT on utility services and on construction materials.{/xtypo_quote_right}
Investors through the SEZ scheme receive similar incentives except the 10 years tax holiday.
TI: How would you assess the success of EPZA so far?
AM: EPZA was established in 2006, and it started operations in 2007. Within the 6 years in which EPZA has been in operation, a total of 60 companies have been registered by the Authority and most of them are already operating.
The 60 Companies have invested a total capital of more than US$ 913 million, and have created over 21 million new direct jobs. This is in our view, a considerable achievement.
We continue to receive a number of applications from various companies aspiring for EPZ and SEZ licences. Our projections are to register over 90 companies by the end of this year.
In short, the two schemes are so far doing very well. If this trend continues, then the noble objective stated in the Tanzania Development Vision 2025 of transforming Tanzania from an agricultural to semi-industrialized economy will be realized very fast.
TI: What are the ambitions and challenges ahead?
AM: Our main ambition is to increase the number of developed zones to be able to accommodate as many investors as possible. So far the country has only six zones which are small in size and most of them can no longer accommodate new investors.
We have for that matter planned to develop 3 new zones at Bagamoyo, Mtwara and Kigoma in the next 5 years.
{xtypo_quote_left}In Bagamoyo we have earmarked 9,000 Hectares in which we intend to develop a modern Industrial cum Commercial Township.{/xtypo_quote_left}
In Bagamoyo we have earmarked 9,000 Hectares in which we intend to develop a modern Industrial cum Commercial Township.The zone will consist of a new port at Mbegani and a railway connection to the central railway line.
The major component of the zone will be an industrial area, but will as have a Free Trade Zone, a Logistic centre, an ICT park, a tourist park, residential areas and areas for other social activities.
The master plan for the area is already in place and preparations are underway to start development of basic infrastructure in the zone. Mtwara zone is next on the list. Following the gas and oil exploration activities in Mtwara, the area has become a potential to investment attraction.
EPZA has declared an area of 110 Ha to be a Free Port Zone at Mtwara port and already 18 companies have expressed interest to invest in this zone. Apart from the 110 Ha, EPZA has as well earmarked 2,600 Ha for development of a modern SEZ.
The last zone is Kigoma were EPZA has earmarked 700 Ha for development of a Trade Hub and Industrial zone that will capture the cross border trade between Tanzania and the neighbouring countries of Burundi, DRC and Zambia.
We believe that if the 3 zones are successfuly completed, Tanzania will become a true industrial cum commercial hub for East and Central Africa.
The only challenge is availability of funds to develop basic infrastructure; we however, plan to join hands with the private sector to develop the areas through Public Private Partnership ( PPP) arrangements.
TI: Industrial production needs power. Who is going to ensure that the power distribution network actually reaches the factory?
AM: Distribution of power to factories located in the special zones is a responsibility of the government through its power supply Agency (Tanesco) and EPZA. This is exactly what Tanesco and EPZA has been doing.
However, the new Electricity Act gives room for private companies to generate, transmit and distribute power. Similarly, the SEZ Act under the category of “SEZ Developers” allows private investors to generate and distribute power to investors within the zone.
Now that a new gas pipeline is being installed from Mtwara to Dar es salaam, the availability of enough gas will attract the private sector to invest in the production and distribution of power in the zones.
TI:On your website you refer that EPZA allows to take advantage of untapped opportunities in East Africa and the whole of the African Continent. Why being based in Tanzania instead of any other East-African country?
AM: We believe Tanzania has competitive advantages as compared to other countries.
First of all, the country has been experiencing peace and political stability since independence in 1961. This is a very important credit that no investor would like to compromise.
{xtypo_quote_right}Tanzania boarders with 8 countries, 6 of which are land locked; thus, trading with one leads to trading with all.{/xtypo_quote_right}
Secondly, Tanzania boarders with 8 countries, 6 of which are land locked; thus, trading with one leads to trading with all.
Thirdly, Tanzania has a variety of untapped natural resources and raw materials for production. It has over 40 million hectares of fertile land suitable for production of a variety of agro-products and agro-processing.
The country has several lakes, rivers and the Indian ocean suitable for fishing and fish processing. It has a broader market for its products through its various Bilateral and Multirateral preferential trade Agreements.
Such Agreements include Agoa of the United States, EBA of The EU, the EAC, SADC as well as countries like Japan, China, and India.
All these advantages and many more, rank Tanzania high on the list in terms opportunities and investment attraction.
TI: What would your welcoming message to the investors be?
AM: Tanzania is an ideal investment destination. It has several untapped resources and abundant raw materials for production of various products. It is one of the countries that have the most conducive investment climate in the region.
The best facilitation services offered by EPZA, coupled with a lucrative package of incentive under both the EPZ and SEZ Acts, make EPZA an investment destination of choice. EPZA welcomes investors from all parts of the world to come and grow with us.
