HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements...Tanzania

# 					2017 Investment Climate Statements: Tanzania			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Despite continued strong macroeconomic indicators relative to the region, increasing uncertainty in government policies has recently raised questions about the business climate and long-term prospects for investment in Tanzania. Though the government publicly states a favorable attitude towards foreign direct investment, in 2016 it pursued policies which prioritized domestic production, often to the detriment of attracting foreign investment or trade.

Tanzania has sustained an average rate of 6-7% economic growth since the late 1990s due to a relatively stable political environment, reasonable macroeconomic policies, structural reforms, a resiliency from external shocks, and debt relief. The IMF recently reported that Tanzania’s macroeconomic performance remains strong, economic growth is projected at about 7 %, and inflation is expected to remain close to the Government of Tanzania’s (GoT) 5 % target. Despite these figures, widespread poverty persists with 43.5% of Tanzania’s population living below the extreme poverty line of $1.25 per day (2005 PPP exchange rate). The average annual GDP growth has been hardly perceptible among Tanzania’s predominantly rural (70%) population. Inclusive, broad-based growth is stymied by slow growth in labor intensive sectors (agriculture employs 67% of Tanzania but has grown at under 4% per year over the past decade) and a high and steady population growth rate of 3% percent.

Beginning 2016, the GoT instituted significant measures to raise revenues, encourage the hiring of Tanzanian citizens over foreigners, and protect/grow local industry. Some stakeholders fear these measures adversely affect the business environment and potential investment. On the revenue front, the measures include new taxes in certain industries (e.g., telecommunication, banking, and tourism) as well as more assertive collection measures by the Tanzania Revenue Authority that some label arbitrary and without merit. On the employment front, new regulations were implemented making it more costly, difficult, and time-consuming to hire foreign employees. Finally, on the local industry front, the GoT is using increased tariffs and import and export bans as a stated, but ineffective, way to protect/grow local industry. Some examples of affected items include sugar, corn, coal, mineral sands, and second-hand clothing. Some businesses complain that these measures increase operational costs, reduce profits.

The private sector also expressed increasing concern with government decisions that limit private sector consultation and/or that give the private sector little advance notice. Examples include a number of the import and export bans that were implemented without warning as well as some of the new taxes that were introduced in 2016. 2016 also saw a number of highly publicized disputes between the private sector and the Government of Tanzania, including two that involved U.S. companies. Moreover, arrears continue to be a problem with the GoT and some contractors remain unpaid. These issues increase the perceived risk of investment and potentially discourage investment.

One key issue to watch will be how the Tanzania judicial system handles a recent arbitration award issued to Standard Chartered Bank – Hong Kong. Investors rely on international arbitration as a way of enforcing its contracts. The issue is still being litigated. Another key issue is whether the GoT continues to mandate that private companies float their shares on the Dar es Salaam Stock Exchange (DSE) as it demanded for mining companies and telecom companies in 2016. The first company to pursue an IPO in compliance with the mandate received GoT approval to extend the deadline of its IPO share sale to allow more time to sell unpurchased shares.

Best prospects in Tanzania traditionally included agriculture and agro-processing, minerals processing, textiles, and the services sector, driven by banking, construction, and trade. The GoT’s recent aggressive revenue raising measures, however, made investment in many of these sectors less attractive. Government plans for infrastructure development, including moving the seat of government to Dodoma, is purported to offer investment opportunities in railroads, real estate development, and construction-related industries, such as cement. Untapped potential in the tourism sector may only be achieved through increased infrastructure investment. Corruption, especially in government procurement, privatization, taxation, and customs clearance, remains a major concern for donors and foreign investors. The GoT acknowledged the problem of corruption and included the elimination of corruption among its stated goals. Grand corruption, however, remains a problem and prosecution of government officials is very rarely pursued.

Tanzania held its fifth multi-party general elections on October 25, 2015. The ruling Chama Cha Mapinduzi (CCM) party faced its most serious competition in the multi-party era (since 1995). CCM party candidate John Pombe Magufuli won the Union presidential election with 58% of the vote. In semi-autonomous Zanzibar, the October election was controversially annulled, and a re-run election was held on March 20, 2016. CCM swept the re-run amidst an opposition boycott, in a poll that was widely criticized for failing to adhere to principles of a free and inclusive election. A special session of Parliament wrote a new draft constitution destined for a public referendum, scheduled for April 30, 2015, although the process was subsequently postponed indefinitely.

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Though the Government of Tanzania (GoT) generally speaks favorably about foreign direct investment (FDI), it does little to follow a policy program to effectively attract it. The 2016 World Investment Report of UN Conference on Trade and Development’s (UNCTAD) reported that Tanzania attracted $1.532 billion in 2015 compared to $2.049 in 2014, a decrease of 25%. Some stakeholders are concerned that the government’s current approach toward the private sector increases the perceived risk of investment and, thereby, limits FDI. Some of the concerns mentioned by stakeholders relate to the difficulty of hiring foreign workers, reduction in profits caused by revenue raising measures, increased local content requirements, a perceived unstable regulatory environment, lack of private sector consultations, a preference for government ownership, and forced public offering listings in select markets.

The theme of Tanzania’s National Five Year Development Plan 2016-21 (FYDP 2) is “Nurturing Industrialization for Economic Transformation and Human Development.” Much of Tanzania’s focus on industrialization is in line with the East African Community Strategy to Implement Industrialization Policy (2012-2032). Tanzania aims to increase the productivity of its agriculture sector to serve as a basis for creating more value-added products through its industrialization efforts.

The Tanzania Investment Center (TIC), established by the Tanzanian Investment Act of 1997, serves as “the primary agency of the government to coordinate, encourage, promote, and facilitate investment in Tanzania.” The agency acts as a one stop center for investors, helping to obtain permits, licenses, visas, and land access among other support. Registering with TIC is not mandatory, but offers incentives for joint ventures with Tanzanians and wholly owned foreign projects investing a minimum of $500,000.

TIC-approved projects receive TIC certificates of incentives which include VAT and import duty exemptions and 100% repatriation of profits, dividends, and capital after tax. Similar incentives are offered to investors in semi-autonomous Zanzibar through the Zanzibar Investment Promotion Authority (ZIPA). TIC promotes investment and trade opportunities in agriculture, mining, tourism, telecommunications, financial services, energy, and transportation infrastructure. The Tanzania Investment Regulations distinguish “strategic investors,” eligible for additional incentives, stating that such investors may be selected by the government based on a number of criteria including the size of the investment and its impact on the national economy, significant job creation potential, and the introduction of new technology. According to TIC, a minimum investment of $50 million is required for joint ventures with Tanzanians and wholly owned foreign projects to receive “strategic investor” status. However, investment incentives may be unpredictable; in 2015 the government moved to limit the scope of incentives by creating a new investment threshold of $300 million for a foreign investor to qualify as a “special strategic investor.” In addition, concerns over government treatment of a U.S.-based company with strategic investor status remain unresolved since 2016.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

Foreign investors generally receive treatment equivalent to domestic private investors in Tanzania but limits still exist in a number of sectors. TIC continues to improve investment facilitation services by providing joint venture opportunities between local and foreign investors. Despite improvements in recent years, investment challenges remain. The Tourism Act of 2008 bars foreign companies from engaging in mountain guiding activities and only Tanzanian citizens may operate travel agencies, car rental services, or engage in tour guide activities. The 2010 Mining Act gave the Minister of Energy and Minerals discretion to require foreign mining companies to give the government an ownership share in order to receive a Mining Development Agreement. The Mining (Minimum Shareholding and Public Offering) Regulations 2016 place foreign ownership limits and stock exchange listing obligations on certain mining companies. Moreover, the Finance Act of 2016 requires telecom companies to list 25 percent of their shares on the Dar es Salaam Stock Exchange (DSE). As of this writing, three telecom companies have started the process for listing.

Currently, there is no limit on foreign investment in shares of companies listed on the DSE. There are restrictions, however, on investments in government bonds. More specifically, regulations permit only East African residents to invest in government bonds (note that prior to 2014, only Tanzanian residents were permitted to invest and transact in DSE-listed government bonds). East Africans (excluding Tanzanian residents), however, are not allowed to sell government bonds bought in the primary market until after a one year lock-up period.

The country imposes foreign equity ownership restrictions on a number of service sectors. For example, foreign capital participation in the telecommunications sector is limited to a maximum of 75%. While the Broadcasting Services Act allows a maximum of 49% foreign ownership of Tanzanian TV stations, foreign capital participation in local nationwide newspapers is prohibited.

**Other Investment Policy Reviews**

The Organization for Economic Cooperation and Development (OECD) Investment Policy Review of Tanzania published in 2013 came up with four key policy recommendations: (i) rationalize investor rights and obligations and make them easily accessible, (ii) increase land tenure security for agricultural investors, (iii) enhance private investment in public infrastructure, and (iv) better promote and facilitate investment for both domestic and foreign firms. The Review is the result of a self-assessment undertaken by a national task force composed of government agencies, the private sector, and civil society.

The World Trade Organization (WTO) also published a Trade Policy Review in 2013 that covers East African Community member states (Burundi, Kenya, Rwanda, Tanzania, and Uganda). The main suggested areas for improvement revolve around the five member countries implementing the common external tariff (CET) and their inability to harmonize trade, export, and tax policies.

**Business Facilitation**

According to Doing Business in Tanzania 2017, starting a business in Tanzania requires nine procedures. Globally, Tanzania ranks at 135 out of 190 economies on the World Bank’s ease of starting a business, dropping eight points from 127 in 2016. In Tanzania the Business Registration and Licensing Agency (BRELA) is responsible for business registration. BRELA issues certificates of compliance for foreign companies, certificates of incorporation for local companies, and certificates of registration for single proprietorship. Firms must then register their businesses with the Tanzania Revenue Authority (TRA), the National Social Security Fund (NSSF) or any of the other five social security schemes in Tanzania and, depending on their business activities. They also should obtain business licenses with the Ministry of Industry and Trade or from the municipality. The Tanzania Investment Center (TIC) provides online registration services for business registration with BRELA, as well as registration with the TRA and social security funds. (Simultaneous registration website – http://tiw.tic.co.tz/ )

Investment promotion and facilitation in Tanzania is driven by the Tanzania Investment Center (TIC), the Government’s investment promotion agency, which falls under the overall responsibility of the Ministry of Industry, Trade, and Investment (MITI). The agency deals with all enterprises whose minimum capital investment is not less than $500,000 if foreign owned or $100,000 if locally owned.

**Outward Investment**

There are restrictions on Tanzanian residents’ participation in foreign capital markets and ability to purchase foreign securities. Under the Foreign Exchange (Amendment) Regulations 2014 (FEAR), however, there are circumstances where Tanzanian residents may deal in securities with other EAC residents. In addition, FEAR provides opportunities for residents to engage in Foreign Direct Investment and acquire real assets outside the EAC.

							2. Bilateral Investment Agreements and Taxation Treaties					

Tanzania has bilateral investment treaties with 19 countries and seven other investment agreements with regional economic blocs. The country is also a signatory to global investment instruments such as the International Centre for Settlement of Investment Disputes (ICSID) convention, the New York Convention, and the UN Guiding Principles on Business and Human Rights.

Currently, the United States of America and Tanzania do not have bilateral investment or taxation agreements. Tanzania is a member of the East African Community (EAC), which signed a Trade and Investment Framework Agreement (TIFA) with the United States in July 2008. Under the U.S.-EAC Trade and Investment Partnership Initiative, the United States and EAC are seeking to expand trade and investment ties and dialogue with the private sector.

							3. Legal Regime					

**Transparency of the Regulatory System**

Tanzania has formal processes in place for creating rules and regulations. Generally, after an Act is passed by Parliament, the creation of regulations is delegated to the Minister of the designated Ministry. In theory, stakeholders are legally entitled to an opportunity to comment on regulations before they are implemented. Stakeholders, however, often report that they either are not consulted or are given too little time to provide useful comment.

In 2016 the President signed the Access to Information Act into law. In theory, the Act gives citizens more rights to information. Some stakeholders, however, believe that the Act gives too much discretion to the GoT to withhold disclosure. At present, information, including rules and regulations, is available on the GoT’s “Government Portal” – http://www.tanzania.go.tz . However, much information is missing from the site and the information is not kept current. Alternatively, current and proposed regulations/rules can be obtained on the relevant Ministry’s website, but sometimes information is missing or not current on these sites as well.

Nominally independent regulators are mandated with impartially enforcing regulations. The process, however, has sometimes been criticized as being subject to political influence depriving the regulator of the independence it is granted under the law. For example, in 2017, the nominally independent Energy and Water Utilities Regulatory Authority approved an 8.5 percent increase in tariff charges after rejecting the State-owned electric utility’s request for an 18.2 percent increase. Several days later, the Minister of Energy and Minerals revoked the increase alleging that it was not adequately consulted. Critics of this justification pointed to documents and meeting attendance records as evidence that the Minister was aware of the proceedings.

**International Regulatory Considerations**

Tanzania is a member of the World Trade Organization (WTO) and its National Enquiry Point (NEP) for the WTO in Tanzania is the Tanzania Bureau of Standards (TBS). As NEP, TBS handles information on technical regulations and standards adopted or proposed to be adopted and conformity assessment procedures adopted or proposed to be adopted.

Tanzania is part of both the East African Community (EAC) and the Southern African Development Community (SADC). As a member of these regional blocks, Tanzania is often subject to their respective rules and regulations, such as the EAC common external tariff and rules on the free movement of workers, and the SADC Harmonized Seed Regulatory System for trade in approved seed varieties.

**Legal System and Judicial Independence**

The Tanzanian legal system is based on the English Common Law system. The first source of law is the Constitution of 1977 (although a new constitution, which was approved by a special Constituent Assembly, is awaiting a public referendum initially set for April 30, 2015 but subsequently postponed indefinitely); followed by statutes or acts of parliament; and case law, which are reported or unreported cases from the High Courts and Courts of Appeal and are used as precedents to guide the lower courts. The Court of Appeal of Tanzania, which handles all the appeals from Mainland Tanzania and Zanzibar, is the highest ranking court in the country, followed by the High Court of Tanzania, which handles all types of civil and criminal cases and commercial matters. There are four specialized divisions within the High Courts: Labor, Land, Commercial, and Corruption and Economic Crimes. The Labor, Land, and Corruption and Economic Crimes divisions have exclusive jurisdiction over their respective matters, while the Commercial division is without exclusive jurisdiction. District and Resident Magistrate Courts also have original jurisdiction in commercial cases involving monetary amounts up to TZS 50 million ($22,442), and TZS 300 million ($134,650), respectively. The High Court has original jurisdiction for cases exceeding that amount.

Apart from the formal systems of courts, there exist quasi-judicial bodies including the Tax Revenue Appeals Tribunal, which was established under the Tax Appeals Act, and the Fair Competition Tribunal, which was established under the Fair Competition Act. Notwithstanding the court and quasi-judicial bodies, Tanzania also has alternate dispute resolution procedures in the form of arbitration proceedings.

Judgments originating from countries whose courts are recognized under the Reciprocal Enforcement of Foreign Judgments Act (REFJA) are enforceable in Tanzania. To enforce a foreign judgment from a court in a listed country, the judgment holder has to make an application to the High Court of Tanzania to have the judgment registered. Countries currently listed in the REFJA include Botswana, Lesotho, Mauritius, Zambia, Seychelles, Somalia, Zimbabwe, Swaziland, the United Kingdom, and Sri Lanka.

The Judiciary in Tanzania was named as the third most corrupt institution, after the Tanzania Police Force and the Tanzania Revenue Authority (TRA), according to the 2015 Transparency International Global Corruption Barometer. The selection and appointment of judges in Tanzania is criticized for its non-transparent nature. The Judiciary Service Commission proposes a list of candidates to the President who then appoints them as judges. However, the criteria and process for identifying the candidates is unknown.

**Laws and Regulations on Foreign Direct Investment**

The Tanzania Investment Center (TIC), established by the Tanzanian Investment Act of 1997, was created to be “the primary agency of the government to coordinate, encourage, promote, and facilitate investment in Tanzania.” The agency acts as a one stop facilitative center for investors, helping to obtain permits, licenses, visas, and land access among other support. See www.tic.co.tz .

**Competition and Anti-Trust Laws**

The GoT passed the Fair Competition Act of 2003 to “promote and protect effective competition in trade and commerce and to protect consumers from unfair and misleading market conduct.” The Fair Competition Commission (FCC), established under the Act, is an independent government body mandated to intervene, as necessary, to prevent significant market dominance, price fixing, and extortion of monopoly rent to the detriment of the consumer, and market instability in the country. The FCC deals with all issues of anti-competitive conduct and has the authority to restrict mergers and acquisitions if the outcome is likely to create dominance in the market or lead to uncompetitive behavior.

**Expropriation and Compensation**

The GoT may expropriate property after due process for the purpose of national interest. The Tanzanian Investment Law guarantees:

- Payment of fair, adequate, and prompt compensation.
- A right of access to the Court or a right to arbitration for the determination of the investor’s interest or right and the amount of compensation.
- Any compensation shall be paid promptly and authorization for its repatriation in convertible currency, where applicable, shall be issued.

GoT authorities do not discriminate against U.S. investments, companies, or representatives in expropriation. Since 1985, the Government of Tanzania has not expropriated any foreign investments. There have been, however, several cases of government revocation of hunting concessions that grant land rights to foreign investors, including a U.S.-based company with strategic investor status in 2016.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Tanzania is a member of both the International Centre for Settlement of Investment Disputes (ICSID) and the Multilateral Investment Guarantee Agency (MIGA). ICSID was established under the auspices of the World Bank by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. MIGA is World Bank-affiliated and issues guarantees against non-commercial risk to enterprises that invest in member countries.

Tanzania is a signatory to the New York Convention on the Recognition and Enforcement of Arbitration Awards, though the Arbitration Act of Tanzania does not give force of law in Tanzania to the provisions of the conventions. An arbitration award will be recognized as binding once it is filed in a Tanzanian court and will be enforceable as if it were a decree of the court, subject to the provisions of the Arbitration Act of Tanzania.

*Investor-State Dispute Settlement*

Under Tanzanian regulations, disputes between a foreign investor and a Tanzanian state entity that are not settled through negotiations may be submitted to arbitration through one of several options:

- Arbitration based on the arbitration laws of Tanzania.
- Arbitration in accordance with the rules of procedures of the International Centre for Settlement of Investment Disputes (ICSID).
- Arbitration within the framework of any bilateral or multilateral agreement on investment protection to which the government and the country of the investor are parties.
- Arbitration in accordance with the World Bank’s Multilateral Investment Guarantee Agency (MIGA), to which Tanzania is a signatory.
- Arbitration in accordance with any other international machinery for settlement of investment disputes agreed upon by the parties.

Despite the legal mechanisms in place, foreign investors sometimes complain that the GoT changes the general terms and conditions and does not honor agreements. Additionally, investors continue to face challenges receiving payment for services rendered for GoT projects. Press widely reported of an alleged breach of contract between a U.S. company and Tanzania Electric Supply Company (TANESCO). The dispute reportedly continues as the electricity plant lays idle.

There is also concern over Tanzania’s commitment to upholding International Centre for Settlement of Investment Disputes (ICSID) decisions after a case involving Standard Chartered Bank – Hong Kong (SCB HK) and TANESCO. On April 23, 2014, the Tanzanian High Court ordered both parties in on-going ICSID arbitration proceedings to refrain from “enforcing, complying with or operationalizing” a decision made by the Tribunal in ICSID proceedings from February 12, 2014. Some interpreted the ex-parte injunction as a clear breach of the provisions of the ICSID Convention and the actions of the High Court put Tanzania in violation of its international law obligations. After the case was reconsidered by the tribunal, SCB HK was awarded $148.4 million plus interest. SCB HK is currently attempting to get its award enforced by the Tanzanian High Court. Despite its efforts, SCB HK has yet to collect its award and the matter continues to be litigated in the Tanzanian High Court.

*International Commercial Arbitration and Foreign Courts*

Investment-related disputes in Tanzania can be protracted. The Commercial Court of Tanzania, established in 1999, is headquartered in Dar es Salaam and operates two sub-registries located in the cities of Arusha and Mwanza. The sub-registries, however, do not have resident judges. A judge from Dar es Salaam conducts a one-week session every month at each of the sub-registries. The government said it intends to establish more branches in other regions including Mbeya, Tanga, and Dodoma in the coming years, although progress has stagnated. Court-annexed mediation is also a common feature of the commercial dispute resolution system.

**Bankruptcy Regulations**

The Bankruptcy Act Cap 25 regulates bankruptcy proceedings and the Companies Act No 12 2002 as amended regulates insolvency proceedings. According to the 2017 World Bank’s Ease of Doing Business report, it takes an average of three years to conclude bankruptcy proceedings in Tanzania. The recovery rate for creditors on insolvent firms was reported at 21 U.S. cents on the dollar, with judgments typically made in local currency.

							4. Industrial Policies					

Investment Incentives

The Tanzania Investment Center (TIC) offers a package of investment benefits and incentives to both domestic and foreign investors without performance requirements. A minimum capital investment of $300,000 if foreign owned or $100,000 if locally owned is required. These incentives include:

- Discounts on customs duties, corporate taxes, and VAT paid on capital goods for investments in mining, infrastructure, road construction, bridges, railways, airports, electricity generation, agribusiness, telecommunications, and water services.
- 100% capital allowance deduction in the years of income for the above mentioned types of investments – though there is ambiguity as to how this is accomplished.
- No remittance restrictions. The GoT does not restrict the right of foreign investors to repatriate returns from an investment.
- Guarantees against nationalization and expropriation. Any dispute arising between the Government and investors may be settled through negotiations or submitted for arbitration.
- Allowing interest deduction on capital loans and removal of the five-year limit for carrying forward losses of investors.

Investors may be granted “Strategic Status” or “Special Strategic Status” to receive further incentives. The criteria used to determine whether an investor may receive these designations are available on TIC’s website. (See http://www.tic.co.tz/menu/313 )

The Export Processing Zones Authority (EPZA) oversees Tanzania’s Export Processing Zones (EPZs) and Special Economic Zones (SEZs). EPZA aims to attract investment by creating a healthy business environment through the development of strong industrial and commercial infrastructures and by offering investment incentives and facilitation services. Minimum capital requirements for EPZ and SEZ investors are $500,000 for foreign investors and $100,000 for local investors. Investment incentives offered for EPZs include:

- An exemption from corporate taxes for 10 years.
- An exemption from duties and taxes on capital goods and raw materials.
- An exemption on VAT for utility services and on construction materials.
- An exemption from withholding taxes on rent, dividends, and interests.
- Exemption from pre-shipment or destination inspection requirements.
- SEZs offer similar incentives, excluding the 10 year exemption from corporate taxes.

The Zanzibar Investment Promotion Agency (ZIPA) and the Zanzibar Free Economic Zones Authority (ZAFREZA) offer roughly equivalent incentives as those offered by the Union’s TIC and EPZA policies.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

Tanzania established export processing zones (EPZs) and special economic zones (SEZs) following the enactment of the Export Processing Act of 2002 and the Special Economic Zone Act of 2006. These economic zones are assigned geographical areas or industries designated to undertake specific economic activities with special regulations and infrastructure requirements. Industries operating in an EPZ are required to export 80% or more of the goods produced. Industries operating in a SEZ have no specific condition for export, allowing manufacturers to sell all or part of the goods produced in the domestic market. Currently there are six SEZ industrial parks and 52 stand-alone EPZ factories. Twenty regions have earmarked areas between 500 to 9,000 hectares specifically for EPZ/SEZ.

**Performance and Data Localization Requirements**

The Non-Citizens (Employment Regulation) Act (see Section 12 Labor Policies and Practices below) requires employers to attempt to fill positions with local hires before seeking work permits for foreign employees, and to develop plans to transition to local employees.

As the result of discovering offshore gas, the Tanzanian government established a comprehensive policy and legal framework to guide operations in the oil and gas industry. As a result, the GoT approved the Local Content Policy (LCP) for the sector in May 2015 and key items were embedded in the August 2015 Petroleum Act. The Ministry of Energy and Minerals (MEM) has drafted local content regulations under the Petroleum Act, but in the first quarter of 2017 was still accepting public comment and had not yet finalized the regulations.

Recognizing the local content initiative cuts across all economic sectors, the government decided that local content development and management should take a multi-sector approach, rather than being confined to a single ministry or sector. In 2015, the government directed the National Economic Empowerment Council (NEEC) to oversee the implementation of local empowerment initiatives in Tanzania. Initially, local content development and management will be focused on selected sectors of the economy, starting with: Extractives; Energy; Construction; Transport; Agriculture, livestock and fisheries; Manufacturing and Production; Trade; public procurement; Science and Technology; Tourism; Financial (Banking and Insurance) and Environment. The objective of the local content policy is to put local products and services – delivered by businesses owned and operated by Tanzanians – in an advantageous position to exploit opportunities emanating from inbound foreign direct investments.

In the area of local data storage, the National Payment Systems Act of 2015 requires all banks, both local and foreign, to physically house computer servers in Tanzania. The Act comes with continued government effort to better monitor financial transactions and control cybercrime. Implementing regulations for the Act issued in 2015 include: The Payment Systems Licensing and Approval Regulations, and The Electronic Money Regulations.

							5. Protection of Property Rights					

**Real Property**

Land ownership remains restrictive in Tanzania. Under the Land Act of 1999, all land in Tanzania belongs to the State. Procedures for obtaining a lease or certificate of occupancy may be complex and lengthy, both for citizens and foreign investors. Less than 15% of land has been surveyed, and registration of title deeds is currently handled manually, mainly at the local level. Foreign investors may occupy land for investment purposes through a government-granted right of occupancy (“derivative rights” facilitated by TIC), or through sub-leases through a granted right of occupancy. Foreign investors may also partner with Tanzanian leaseholders to gain land access.

Under the Tanzania Investment Act of 1997 and the Land Act of 1999, occupation of land by non-citizen investors is restricted to lands for investment purposes. Land may be leased for up to 99 years, but the law does not allow individual Tanzanians to sell land to foreigners. There are a number of opportunities for foreigners to lease land, including through TIC, which has designated specific plots of land (a land bank) to be made available to foreign investors. Foreign investors may also enter into joint ventures with Tanzanians, in which case the Tanzanian provides the use of the land (but retains ownership, i.e., the leasehold). The GoT plans to expand TIC’s land bank and modernize its land titling and registration system, though both changes are long delayed in execution.

Secured interests in property, both movable and real, are recognized and enforced under various laws in Tanzania. There is no single comprehensive law to secure property rights. Though TIC maintains a land bank, restrictions on foreign land ownership may significantly delay investments. Land not already processed for investment in the land bank has to go through a lengthy review and approval process by local-level authorities, as well as the Ministry of Lands, Housing, and Human Settlements Development and the President’s Office, in order to be officially re-designated from “village land,” with customary rights of occupancy, to “general land,” which may be titled for investment and sale.

The Ministry of Lands, Housing, and Human Settlements Development handles registration of mortgages and rights of occupancies. The Office of the Registrar of Titles is responsible for issuing titles and registering mortgage deeds. Title deeds are recognized as a mortgage for securing loans from banks. Traditional Certificates of Occupancy for village land are still being piloted for use as collateral, and this is currently limited to groupings of village-level borrowers. The Registering Property rank in the World Bank’s 2017 Ease of Doing Business report indicates Tanzania went up one place from 133 in 2016 to 132 in 2017. According to the report, it takes eight procedures and 67 days to register a property.

In February 2016, the GoT launched the Land Tenure Support Program (LTSP) to improve transparency and efficiency in the land sector, and to ensure current and future demands for land leads to beneficial and equitable outcomes for rural populations. The program audits land ownership and usage in the country, targeting holdings that are 50 acres and above. Owners of land that is deemed uncultivated and serving no social or economic function could potentially have their title deed revoked. Any confiscated land parcels would be reallocated to a new owner with no land, and title deeds automatically expire after three years if the new owner fails to develop the allocated parcel.

**Intellectual Property Rights**

The Fair Competition Commission (FCC), housed in the Ministry of Industry and Trade, is charged with protecting property rights in Tanzania. The agency is responsive to requests for assistance from private companies, but lacks resources for comprehensive identification of counterfeits and nation-wide investigations.

The process for taking action against counterfeiters is as follows: the petitioner, who must be the owner of the brand or its legal representative, sends a letter requesting FCC action and pays an investigation fee of Tanzania shillings (TZS) 3 million ($1,346); following a consultation with the petitioner, the FCC raids the suspected offender and confiscates all counterfeit goods. The offender may choose to sign a written confession and pay a fine which ranges from TZS 200,000 ($90) to TZS 8 million ($3,591), depending on the value of the confiscated goods. Alternatively, the case may be forwarded to the Director of Public Prosecution (DPP) for a court hearing. If the offender is found guilty and convicted, he may be sentenced to jail for a period ranging from 4-15 years, receive a fine of between TZS 10-50 million ($4,489 – $22,443), or receive both a jail term and a fine. The confiscated goods are destroyed at the expense of the offender. The vast majority of offenders confess and pay the lower fine rather than engaging in the court process, which may drag on for years.

Registration of patents and trademarks is on a first-in-time, first-in-right basis, so companies should consider applying for trademark and patent protection in a quick manner. It is the responsibility of the rights’ holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .”

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

Tanzania’s Dar es Salaam Stock Exchange (DSE) was incorporated in 1996; trade on the DSE began in 1998. The Capital Markets and Securities Authority (CMSA) Act facilitates the free flow of capital and financial resources to support the capital market and securities industry in Tanzania. Tanzania, however, restricts the free flow of investment in and out of the country, and Tanzanians cannot sell or issue securities abroad unless approved by the Capital Markets and Securities Authority. In 2016, the IMF noted that capital market development, in particular total market capitalization, remained low. The DSE’s total market capitalization declined 7.5 percent during 2016.

Under the Capital Markets and Securities (Foreign Investors) Regulation 2014, there is no aggregate value limitation on foreign ownership of listed non-government securities. Despite progress, the country’s capital account is not fully liberalized and only foreign individuals or companies from the other East Africa Community (EAC) nations (Burundi, Kenya, Rwanda, South Sudan, Uganda) are permitted to participate in the government securities market. Even with this recent development allowing EAC participation, ownership of government securities is still limited to 40% of each security issued.

As part of the Finance Bill 2016, Tanzania’s government ordered telecoms companies registered within the country to float a 25 percent stake on the DSE by January 1, 2017. While the GoT has claimed that the DSE has sufficient liquidity to accommodate these listing, many stakeholders are concerned that the offerings are too large for DSE’s low market capitalization. Although several companies have expressed their intent to conduct an Initial Public Offering (IPO), only Vodacom has issued an IPO. The offer period opened on March 9, 2017 and was originally scheduled to close on April 19. The schedule close, however, was extended to May 11 to allow more time to sell unpurchased shares. The expected listing date, when shares will begin trading on the Dar es Salaam Stock Exchange (DSE), is June 6, 2017.

As part of the Mining (Minimum Shareholding and Public Offering) Regulations 2016, large scale mining operators were required to float a 30 percent stake on the DSE by October 7, 2018. On February 24, 2017, however, the GoT surprised the industry by amending the regulations so that the 30 percent stake must now be floated by August 23, 2017, rather than October 7, 2018.

Obtaining credit on the local market is difficult for many investors, both foreign and domestic. In 2016, there was a sharp decrease in the money supply and liquidity was an issue of private sector concern.

**Money and Banking System**

2016 was a challenging year for banks as they adjusted to the imposition of new taxes, the GoT’s movement of a large amount of its deposits out of commercial banks and into the Bank of Tanzania (BoT), a sharp drop in market liquidity, and an increase in non-performing loans (NPL). According to the BoT, “the quality of the banking sector’s assets deteriorated as reflected by the ratio of non-performing loans to gross loans, which increased to 9.5 percent (as of the end December 2016) from 6.4 percent recorded at the end of December 2015. Despite challenges, the IMF reported in its January 2017 Fifth Review under the Policy Support Instrument that the “banking sector is well-capitalized, liquid and profitable on average.”

On March 6, 2017, in response to continuing market liquidity problems, the BoT decreased the interest rate which it charges for lending to other banks from 16 percent to 12 percent. The BoT hopes that this move will increase access to credit for the private sector, but it is still too early to assess the impact of the rate decrease.

As of June 30, 2016, the banking sector was composed of 41 full-fledged commercial banks, 3 financial institutions, 12 community banks, 4 deposit taking microfinance banks, 3 financial leasing companies, and 2 private credit reference bureaus. Despite growth in the number of financial institutions, the participation in the formal banking sector is still low. Depending on the study, formal banking sector participation ranges from 3 to 25 percent. Mobile money has been very successful in Tanzania and, according to recent reports, financial inclusion is dramatically increased when mobile banking is taken into account.

Private sector companies have access to a variety of commercial credit instruments including documentary credits (letters of credit), overdrafts, term loans, and guarantees. Credit to the private sector, however, has been negatively impacted by the decrease in market liquidity. Foreign investors may open accounts and make deposits in registered private commercial banks. Interest earned by non-residents or foreign investors from deposits in banks registered by the Bank of Tanzania (BOT) is exempt from income tax, in accordance with the Income Tax Act of 2004. Foreign exchange regulations have been eliminated to attract investors and simplify international transactions.

The Banking and Financial Institution Act of 2006 established a framework for a Credit Reference Bureau and permits banks and financial institutions to release information to licensed reference bureaus in accordance with regulations and allows credit reference bureaus to provide to any person, upon legitimate business request, a credit report. Currently, there are two private credit bureaus operating in Tanzania – Credit Info Tanzania Limited and Dun & Bradstreet Credit Bureau Tanzania Limited.

**Foreign Exchange and Remittances**

*Foreign Exchange*

Tanzanian regulations permit unconditional transfers through any authorized bank in freely convertible currency of net profits, repayment of foreign loans, royalties, fees charged for foreign technology, and remittance of proceeds. The only official limit on transfers of foreign currency is on cash carried by individuals traveling abroad, which cannot exceed $10,000 over a period of 40 days. Shortages of foreign exchange occur rarely. Bureaucratic hurdles continue to cause delays in processing and effecting transfers; delays may range from days to weeks. Investors rarely use convertible instruments.

*Remittance Policies*

The Embassy is not aware of any recent complaints from investors regarding delays in remitting returns and there have been no remittance policy changes this year.

**Sovereign Wealth Funds**

Tanzania has not established a Sovereign Wealth Fund.

							7. State-Owned Enterprises					

Public enterprises do not compete under the same terms and conditions as private enterprises because they have access to government subsidies and other benefits. SOEs are active in the power, communications, railway, telecommunications, insurance, aviation, and port sectors. SOEs typically report to ministries and are led by a board. Typically, a presidential appointee chairs the board but it is also usually composed of private sector representatives. SOEs are not subjected to hard budget constraints. SOEs do not discriminate against or unfairly burden foreigners, though they do have access to sovereign credit guarantees. With emerging potentials in the oil and gas sector, investors continue to monitor the potential increase of governmental influence on these economic activities.

As of June 2015, the GoT’s Treasury Registrar reported shares and interests in 215 public parastatals, companies and statutory corporations. (See http://www.tro.go.tz ) Reported categories are as follows:

- Service oriented entities which receive government subvention – 142
- Service oriented entities which do not receive government subvention – 12
- Business oriented 100% owned by government – 16
- Business oriented majority share-holding owned by the government – 07
- Business oriented minority share-holding owned by the government – 31
- Social Security funds – 07

The SOEs are under relevant Government Minister depending on the functions they perform. The senior management of SOEs reports to the Board of Directors appointed by the relevant Ministry. The Minister appoints board members to serve preset terms, the selection process is usually competitive and applicants, including from private sector, are interviewed for the positions. Summary financial results for fiscal year 2015 of SOEs are included in the GoT’s consolidated financial statements which are available on the Ministry of Finance’s website.(See http://www.mof.go.tz/mofdocs/anouncement/000-GoT%20FS%2030062015%20Final%20-%20With%20Audit%20Opinion.pdf )

**Privatization Program**

The government retains a strong presence in energy and mining. In the past, the GoT has sought foreign investors to manage formerly state-run companies in public-private partnerships, but successful privatizations have been rare. Though there have been attempts to privatize certain companies, the privatization process is not always clear and transparent. In some instances, the GoT took back control as was the case in 2009-10 when the government nationalized formerly-privatized Tanzania Railways Limited, General Tyre, and Kilimanjaro International Airport due to mismanagement.

In 2010, the GoT enacted the Public Private Partnership (PPP) Act. According to the act, any ministry, government department or agency, or statutory corporation may act as a PPP procuring authority. The 2014 amendment of the PPP Act created a new PPP Center to be incorporated in the Office of the Prime Minister through merging the Coordination Unit and the Finance Unit. It also sets up a PPP Technical Committee to recommend PPP projects for approval by the National Investment Steering Committee. In spite of these developments, the Tanzania’s Five Year Development Plan (2016-2021) (FYDP II) recognized weaknesses in the PPP legal framework and inadequate understanding and operationalization of PPP concepts as impediments to private sector financing. As a result, FYDP II calls for an expanded role for the private sector through PPPs. Despite this goal, little progress has been made in this area.

							8. Responsible Business Conduct					

Responsible business conduct (RBC) is practiced by a number of large foreign firms in the banking, mining, oil and gas, and telecommunications sectors and is generally viewed favorably. Responsible conduct includes respecting human rights, environmental protection, labor relations and financial accountability. Most large foreign companies practice corporate social responsibility (CSR) and typically pay for media coverage of their charitable activities.

Tanzania has laws covering labor and environmental issues. For example, the 2003 Occupational Health and Safety Act requires employers to institute safety measures for those working in potentially harmful environments such as providing protective clothing or periodic health examinations. In 2004, the Government of Tanzania overhauled its employment and labor laws and enacted the Employment and Labor Relations Act (ELRA) and the Labor Institutions Act (LIA).

The ELRA establishes labor standards, rights and duties, while the LIA specifies the government entities charged with administering labor laws. In 2007, subsidiary legislation was enacted to facilitate the enforcement of labor rights and standards stipulated in the ELRA – the most significant being the Employment and Labor Relations (Code of Good Practice) Rules, G.N. No. 42 of 2007.

The National Environment Management Council (NEMC) is a government institution that has the mandate to undertake enforcement, compliance, review and monitoring of environmental impact assessments; perform research; facilitate public participation in environmental decision-making; raise environmental awareness; and collect and disseminate environmental information. Stakeholders, however, have expressed concerns over whether the NEMC has sufficient funding and capacity to handle its broad mandate.

There are no requirements for public disclosure of RBC-related policies, procedure or practices unless specifically required by law and the GoT has not yet addressed executive compensation standards. Dar es Salaam Stock Exchange (DSE) listed companies must comply with listing conditions including releasing legally required information to shareholders and the general public. In addition, the DSE signed a voluntary commitment with the United Nations Sustainable Stock Exchanges Initiative in June 2016, to promote long-term sustainable investments and improve environmental, social and corporate governance. Tanzania has accounting standards compatible with international accounting bodies.

The Tanzanian government does not usually factor in RBC policies or practices into procurement decisions, unless the law specifically necessitates otherwise. The government is responsible for enforcing local laws, however, the media regularly reports on corruption cases where offenders allegedly manage to avoid sanctions. There have also been reports where corporate entities in collaboration with local government carry out controversial undertakings that may not be in the best interest of the local population.

Conflicts between mining companies and neighboring communities have been reported mostly in gold mining areas, leading to intrusion into mining sites and frequent clashes with mining company guards and police. These communities generally protest the government decision to give mining rights to international mining companies. In July 2016, the GoT reportedly confirmed reports that a river was no longer a safe source of water due to activities at Acacia’s North Mara Gold mine. The GoT, however, stated it would send samples abroad for further testing to verify internal reports.

Forty six Tanzanian companies participate in the United Nations Global Compact Network which focuses on RBC. In addition, several local and foreign NGOs monitor and promote RBC issues in Tanzania, mostly in the extractive sector where foreign owned companies operate in remote areas and at time come into direct confrontation with the local population. Some foreign companies have engaged NGOs to mitigate violent conflict with the communities neighboring the extractive industries sites to avoid adversarial confrontations. In addition, some of the multinational mining companies who are signatory to the Voluntary Principles on Security and Human Rights (VPs) have taken the lead and appointed NGOs to conduct programs to mitigate conflicts between the mining companies, surrounding communities, local government officials and the police.

There are no specific requirements for local and foreign companies in Tanzania to comply with any foreign guidelines pertaining to RBC, they are only required to comply with local laws and regulations. The government does not maintain a National Contact Point (NCP) to work with the OECD with respect to multinational enterprises.

Tanzania is a member of EITI since 2009 and in 2015 Tanzania enacted the Extractive Industries Transparency and Accountability Act, which requires that all new concessions, contracts and licenses are made available to the public. The government produces EITI Reports that disclose revenues from the extraction of its natural resources. Companies disclose what they have paid in taxes and other payments and the government discloses what it has received. These two sets of figures are compared and reconciled.

							9. Corruption					

Tanzania has several laws and institutions designed to combat corruption and illicit practices, although the government does not implement the laws effectively and corruption is generally perceived to be rampant at all levels. The Economic and Organized Crime Control Act of 2016 established a special court to deal with economic crimes such as corruption. The Prevention and Combating of Corruption Bureau (PCCB) is a law enforcement institution established and mandated by the Prevention and Combating of Corruption Act No. 11 of 2007 to prevent corruption, educate society on the effects of this problem, and enforce laws against corruption. The Ethics Secretariat (ES), an independent department under President’s office entrusted with powers to monitor the ethical conduct of public leaders, was established to enforce standards of ethical behavior and conduct, by ensuring compliance with the Public Leadership Codes of Ethics Act 1995.

President Magufuli, who took office in November 2015, has voiced a desire to fight corruption. This has to some extent affected public discourse about the prevailing climate of impunity, and some officials are reportedly more reluctant to engage openly in corruption. Some critics question how effective the initiative will be in tackling deeper structural issues that have allowed corruption to thrive. There has been little effort to institutionalize President Magufuli’s ad hoc measures, a lack of prosecutions, and persistent underfunding of the country’s main anti-corruption bodies.

Companies/individuals seeking government tenders are required to submit a written commitment to uphold anti-bribery policies and abide by a compliance program. These steps are designed to ensure that company management complies with anti-bribery polices.

Transparency International (TI) has consistently rated Tanzania poorly for its perceived corrupt business practices. TI’s 2016 Corruption Perception Index (CPI) placed Tanzania at 116 (117 in 2015) out of 176 (168 in 2015) countries surveyed, with a score of 32 (30 in 2015) for 2016. The score indicates the perceived level of public sector corruption on a scale of 0-100, where 0 means that the country is perceived as highly corrupt and 100 means it is perceived as clean. TI’s 2015 Global Corruption Barometer (GCB) for Tanzania reported that the police are perceived as the most corrupt institution followed by the tax authority and the judiciary.

Corruption persists in government procurement, privatization, taxation, and customs clearance and remains a major concern for foreign investors and donors. While giving or receiving a bribe (including bribes to a foreign official) is a criminal offense in Tanzania, enforcement of laws, regulations, and penalties to combat corruption is largely ineffective. Corruption is endemic, but measures to combat it are applied impartially to both foreign and domestic investors

*Resources to Report Corruption*

Government agency responsible for combating corruption:

The Director GeneralPrevention and Combating of Corruption BureauP.O. Box 4865Dar es Salaam, TanzaniaEmail: dgeneral@pccb.go.tzPhone: +255 (0)22 215-0043Website: http://www.pccb.go.tz 

Executive DirectorLegal and Human Rights CentreP.O. Box 75254Dar es Salaam, TanzaniaTel: +255 22 2773038/48Email: lhrc@humanrights.or.tzWebsite: www.humanrights.or.tz 

							10. Political and Security Environment					

Since gaining independence, Tanzania has enjoyed a relatively high degree of peace and stability compared to its neighbors in the region. Tanzania has held five national multi-party elections since 1995, the most recent in 2015. Union government elections have been generally free of political violence. Elections on the semi-autonomous Zanzibar, however, have been marred by political violence several times since 1995.

The October 2015 general elections for the union government were conducted in a largely open and transparent atmosphere. The elections in Zanzibar, however, were controversially annulled, and a heavily criticized re-run election was held on March 20, 2016 despite an opposition boycott. During the intervening period, a series of explosions occurred in Zanzibar, and political parties and independent civil society organizations reported numerous but isolated instances of possibly election-related violence. In 2013, the government of Tanzania launched a constitutional review process, although that process was ultimately postponed and has not yet been rescheduled. The constitutional reform process yielded tensions and public debate on a number of controversial issues including the status of the Union between mainland Tanzania and Zanzibar.

In addition to monitoring the political climate, foreign investors remain concerned about land tenure issues. Although the government owns all land in Tanzania and oversees the issuance of land leases of up to 99 years, many Tanzanian citizens feel that foreign investment has led to exploitation of Tanzanian resources. This has resulted in conflict between investors and residents in some areas. In Arusha, some of these conflicts have led to violence, prompting the GoT to emphasize its commitment to supporting foreign investment while also ensuring the intended benefit of the investments to Tanzanian citizens. In March 2015, Tanzania expressed interest in creating a task force to prepare the country to potentially join the Voluntary Principles Initiative on Security and Human Rights in the extractives industry, though no formal commitment has been made by the government.

							11. Labor Policies and Practices					

The GoT’s Five Year Development Plan (2016-2021) (FYDP II) seeks to industrialize and transform the economy to middle income status. FYDP II notes the importance of training and gaining the necessary labor skills to create an industrialized economy. The Integrated Labor Force Survey Analytical Report of 2014 reported that of the total labor force of 20.03 million persons, only 3.6 percent is considered to be highly skilled. Tanzania faces persistent shortages of skilled labor. While the number of university graduates, especially in business management and information technology, continues to grow, tertiary education is very limited, and many foreign investors find that local labor is insufficient to fill even administrative positions. The FYDP II recognizes the need for graduates to possess more marketable skills and for students to have better learning environments.

On the regional front, as of 2016, Tanzania, Uganda, Rwanda and Kenya have committed to the EAC’s 2012 Mutual Recognition Agreement, focused on engineering credentials and making a more regionally competitive engineering market. In Tanzania, labor and immigration regulations permit foreign investors to recruit up to five expatriates with the possibility of additional work permits granted under specific conditions. As an incentive under the EPZ Act, the government may provide for a greater number of work permits for management and technical staff when these skills are unavailable locally.

In September 2015, the GoT implemented the 2015 Non-Citizens (Employment Regulation) Act which introduced stricter rules for those who want to hire foreign workers. The Act gives the Labor Commissioner within the Ministry of Labor and Employment the power to approve or deny all work permit applications from foreigners. The Labor Commissioner must determine if “all possible efforts have been explored to obtain a local expert” before approving any application. In addition to other requirements, the Act requires employers to submit “succession plans” for their foreign employees, detailing how knowledge and skills would be transferred to local employees. Under the new law, non-citizens may be granted work permits for a period of two years which may be renewed up to a total validity period of five years.

The same law also covers permits for foreign investors who are issued work permits with validity period of ten years which may be extended if the issuing authority is satisfied that the investor is contributing positively to the economy and well-being of Tanzanians.” Some stakeholders fear that this provision creates an opening for corruption and arbitrarily prejudicial decisions against the foreign investors.

Since the enactment of the new foreign workers law, immigration and labor departments and other public officers including the police have been conducting “special permit inspections” to verify on the validity of the work permits of foreign workers and investors. On February 22, 2017, the Commissioner for Labor required all foreigners working in Tanzania to submit their work permits to the nearest labor office for verification.

Mainland Tanzania’s minimum wage is set by categories covering 12 employment sectors. The minimum wage ranges from Tsh 100,000 ($45) per month for agricultural laborers to Tsh 400,000 ($180) per month for laborers employed in the mineral sector (companies with mining and prospecting licenses). Mainland Tanzania’s minimum wage was last changed in July 2013. Zanzibar, however, increased its minimum wage from Tsh150,000 ($68) to Tsh 300,000 ($135) in April 2017.

The Union and Zanzibar governments have separate labor laws. Workers on the mainland have the right to form and join independent trade unions. As of 2012, approximately 13% of the formal sector work force is made up of unionized workers, including members of the Trade Union Congress of Tanzania (TUCTA) – one of the largest labor unions. In the agricultural sector, the country’s largest employment sector, an estimated 5-8% of the work force was unionized.

The law provides for collective bargaining in the private sector. In the public sector, the government sets wages administratively, including for employees of state-owned enterprises. On the mainland, disputes are regulated and resolved by mediation through the Commission for Mediation and Arbitration.

Mainland workers have the legal right to strike and employers have the right to a lockout after complying with certain legal requirements and procedures. The law restricts the right to strike when to do so would endanger the life and health of the population. Workers in certain sectors (water and sanitation, electricity, health services and associated laboratory services, firefighting, air traffic control, civil aviation telecommunications, and any transport services required for the provisions of these services) are restricted from striking. Workers in other sectors may also be subject to this limitation.

The labor law in Zanzibar applies to both public and private sector workers. Zanzibar government workers have the right to strike as long as they follow procedures outlined in the Employment Act of 2005. They are not allowed to join mainland-based labor unions. The Zanzibar labor law requires a union with 50 or more members to be registered and sets literacy standards for trade union officers. An estimated 40% of the Zanzibar workforce is unionized.

							12. OPIC and Other Investment Insurance Programs					

The U.S. Overseas Private Investment Corporation (OPIC) signed an incentive agreement with the Government of Tanzania in December 1996. While the number of U.S. subsidiaries and affiliated companies eligible for OPIC financing remains small, a growing number of companies have received OPIC funds for operations in Tanzania. The current portfolio includes projects in the agriculture, energy, microfinance and logistics sectors. In 2016, OPIC opened its first-ever East Africa office located in Nairobi Kenya to support qualifying investment opportunities in Tanzania and the greater East Africa Region. In addition, USAID’s Development Credit Authority (DCA) provides guarantees for commercial loans for qualifying investments, and has active portfolio guarantees with four banks to encourage lending to small and medium enterprises.

Tanzania is an active member of the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group that promotes foreign direct investment in developing countries by offering political risk insurance (guarantees) to investors and lenders, and by providing technical assistance to help developing countries attract and retain foreign investment.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Table 3: Sources and Destination of FDI*

Top country sources of FDI into Tanzania include South Africa, the United Kingdom, Kenya, Canada, and China. According to TIC, the UK was the largest source of FDI in 2013, outside of Africa. FDI continues to grow, particularly in the sectors of telecommunications services, energy infrastructure, road construction, breweries, tourism / hotels, mining, and agriculture. The Bank of Tanzania restricts Tanzanians from investing abroad, while very few international firms (primarily Kenyan) list on the Dar es Salaam Stock Exchange. There is currently no information on Tanzanian FDI abroad (FDI outflows), as Tanzanians are legally barred from participating in foreign investment funds or offerings.

Source: IMF’s Coordinated Direct Investment Survey (CDIS)

*Table 4: Sources of Portfolio Investment*

Data not available.

							14. Contact for More Information					

Economic OfficerU.S. Embassy686 Old Bagamoyo RoadP.O. Box 9123Dar es Salaam, TanzaniaTel: +255 22 229-4000Email: DRSCommercial@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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