Representatives from Toyota Tsusho Corporation (TYO:8015), the trading arm of the Japanese conglomerate Toyota Group, have recently visited Tanzania to explore investment opportunities in different…
FDIs to Tanzania were drawn mostly to the mining sector, the oil and gas industry, and the primary agricultural products sector (coffee, cashew nuts and tobacco).
The primary investors to Tanzania are China, India, Kenya, United Kingdom, Mauritius, Oman, the United Arab Emirates, Canada, the United States, the Netherlands, South Africa, and Germany.
Investors are drawn to Tanzania’s commitment to implement sound macroeconomic policies, its efficient privatization program and abundant natural resources. However, low levels of industrial development, environmental concerns, lack of transparency and poor compliance with legislation are barriers to investment.
The World Bank (WB) emphasizes that implementing a government policy for improved business environment and subsequently, increased FDI inflows is crucial to sustaining the country’s economic growth.
In the WB’s latest Doing Business 2019 report, Tanzania ranked 144 in ease of doing business out of 190 countries
In 2017/18, the country has implemented a positive change in making it easier to start a business by launching online company registrations and thus reducing time and costs for entrepreneurs.
To further promote investment, in June 2018 Tanzania lowered the income tax rate for new investors in the pharmaceutical industry from 30% to 20%.
In 2019, the African Development Bank (AfDB) approved a USD 55 million facility to strengthen the implementation of reforms to enhance Tanzania’s economic competitiveness and private sector participation in the country’s growth.
The Bank’s support will finance the second phase of the Good Governance and Private Sector Development Program (GGPSDP) that will help close the 2019/20 financing gap and make key government agencies more effective.
FDI in East Africa
In 2020, FDI to East Africa dropped to USD 6.5 billion, a -16% decline from 2019. FDI to Kenya decreased by -34% to USD 717 million, compared with USD 1.098 billion in 2019 FDI to Uganda decreased by -35% to USD 823 million, compared with USD 1.3 billion in 2019. However, FDI to Tanzania sightly increased to USD 1.0 billion in 2021 from USD 991 million in 2019.
Latest Update: 10th August 2021
Sources: African Development Bank (AfDB), United Nations Conference on Trade and Development (UNCTAD), World Bank (WB)