Economic and social research foundation (esrf)

ECONOMIC AND SOCIAL RESEARCH FOUNDATION (ESRF)

TANZANIA INVESTMENT POLICY AND PERFOMANCE

(REPORT A –FINAL)
by


Dr. Flora Musonda
And
Ms. Lorah Madete

22 July 2002


Paper Prepared for CUTS Centre for International Trade Environment and Economics-Investment for Development (IFD) Project

TABLE OF CONTENTS

LIST OF ABBREVIATIONS iii

1.0 Introduction 1

2.0 MACROECONOMIC OVERVIEW 2

2.1 Macroeconomic Performance for the Past Decade 2

2.2 Infrastructure 3

2.2.1 Transport 3

2.2.2 Communications 4

2.2.3 Power Sector 4

2.2.4 Water 5

2.3 Technology and Skill Level 5

2.3.1 Technology Level 5

2.3.2 Skills 5

2.4 Investment Flows 6

2.4.1 Domestic Investment 7

2.4.2 Foreign Investment 8

3.0 MAIn Policy trends over the past decade 18

3.1 National Development Strategy 18

3.1.1 Growth Promotion and Poverty Reduction Efforts 18

3.2 Trade Policy 18

3.2.1 The Tariff Regime 19

3.2.2 Regional and International Trade Arrangements 19

3.2.3 WTO Membership 19

3.3 Capital Controls 19

3.4 Privatisation Regulation 19

3.4.1 Parastatal Reform Process and Methods 20

3.5 Competition Law 20

3.5.1 The Legislation and Institutional Framework 20

3.6 Labour Regulations 21

3.7Environmental Regulation 22

3.8 Fiscal Regime Facing Investors 22

3.9 Intellectual Property Rights Regime 24

4.0 INVESTMENT policy Audit 25

4.1Background 25

4.2 Investing in Tanzania 26

4.2.1 The Registration Process 26

4.2.2 Investment Incentives 27

4.2.3 Dispute Settlement 27

4.3 Bilateral/Regional Agreements on Investments 27

4.3.1 Bilateral Investment Treaties 27

4.3.2 Bilateral Treaties for Avoidance of Double Taxation (DTT) 28

5.0 Policy making Process for INVESTMENT Issues 29

5.1 National Policy Objectives for Investment 29

5.2 Policy Formulation Process 29

5.3 Independence of Sub-National Layers in of Government in Dealing with Investment Issues 29

5.4 Importance Accorded to Investment 30

6.0 INVESTMENTs In ZAnzibar 30

6.1 Background 31

6.2 Investment Patterns 31

6.2.1 Sectoral Distribution 31

6.2.2 Spatial Distribution 31

6.2.3 Source Countries 32

6.2.4 Institutional Framework 32

6.2.5 Investment Incentives 33

6.3 Impact of FDI in Zanzibar 34

6.3.1 Employment Opportunities 34

6.3.2 Transfer of Technology and Technical Know How 34

7.0 CONCLUSIONS 35

REFERENCES 37

LIST OF ABBREVIATIONS

AD - Arusha Declaration

ARIPO - Africa Regional Industrial Property Registration Organisation (ARIPO)

ATC - Air Tanzania Cooperation

ATE - Association of Tanzania Employers

BoT - Bank of Tanzania

BRELA - Business Registration and Licensing Agency

CBI - Cross Boarder Initiative

CDTT - Centre for Development and Transfer of Technology

COSTECH - The Commission for Science and Technology

DPS - Deputy Permanent Secretary

DRC - Democratic Republic of Congo

DSE - Dar es Salaam Stock Exchange

EAC - East African Community

EADB - East African Development Bank

EIA - Environmental Impact Assessment

ERP - The Economic Recovery Program

ESAP - Economic and Social Action Programme

ESRF - Economic and Social Research Foundation

EU - European Union

EWURA - Energy and Water Regulatory Authority Act

FDI - Foreign Direct Investment

GATS - General Agreement on Trade in Services

GATT - General Agreement Tariff Trade

GDP - Gross Domestic Product

GFCF - Gross Fixed Capital Formation

HDI - Human Development Index

HIPC - Highly Indebted Poor Countries

ICSID - International Center for Settlement Disputes

ICT - Information and Communication Technology

IFTD - Integrated Framework for Trade and Development

IMF - International Monetary Fund

IMTC - Inter -Ministerial Technical Committee

IOR-ARC - Indian Ocean Rim Association for Regional Cooperation

IPC - Investment Promotion Centre

IPR - Intellectual Property Right

IPTL - Independent Power Tanzania Ltd

ISD - Insurance Supervision Department

ISPs - Internet Service Providers

LART - Loans Advances and Realisation Trust

MEBO - Management/Employment Buy Out

MHSTE - Ministry of Science, Technology and Higher Education

MIGA - Multilateral Investment Guarantee Agency

MTEF - Medium Term Expenditure Framework

MTS - Multilateral Trading System

NISC - National Investment Steering Committee

NBS - National Bureau of Statistics

NDC - National Development Corporation

NEAP - National Environmental Action Plan

NEMC - National Environmental Management Council

NEP - National Environmental Policy

NESP - National Economic Survival Program

NGO - Non Governmental Organization

NPES - National Poverty Eradication Strategy

NSTP - National Science and Technology Policy

OFL - Own Funds Facility

OGL - Open General License

PER - Public Expenditure Review

PPP - Purchasing Power Parity

PRSP - Poverty Reduction Strategy Paper

PSRC - Parastatal Sector Reform Commission

RBPS - Restrictive Business Practices

RPFB - Rolling Plan and Forward Budget.

SADC - Southern African Development Community

SAP - Structural Adjustment Programme

SUA - Sokoine University of Agriculture

SUMATRA- Surface and Maritime Regulatory Authority Act

TANESCO - Tanzania Electrical Supply Company Ltd

TAZARA - Tanzania Zambia Railways Authority

TBC - Tanzania Broadcasting Commission

TCC - Tanzania Communications Commission

TFTU - Tanzania Federation of Trade Unions

THA - Tanzania Harbours Authority

TIC - Tanzania Investment Centre

TIN - Tax Identification Number

TPTC - Tanzania Posts and Telecommunication Corporation

TPC - Tanzania Posts Cooperation

TRA - Tanzania Revenue Authority

TRC - Tanzania Railway Cooperation

TRIPS - Trade Related Aspects of Intellectual Poverty Rights

TTCL - Tanzania Telecommunications Company Ltd

TUCTA - Trade Unions Congress of Tanzania

UK - United Kingdom

UNDP - United National Development Program

URT - United Republic of Tanzania

USD - United States Dollar

VAT - Value Added Tax

VP - Vice President

WTO - World Trade Organization

WIPO - World Intellectual Property Organisation

ZAFREZA - Zanzibar Free Zone Authority

ZFA - Zanzibar Free Zone Authority

ZIPA - Zanzibar Investment Promotion Agency