H.E Dr Samia Suluhu Hassan, President of Tanzania.
By TPSF Secretariat
On March 19, 2023, H.E. Samia Suluhu Hassan, president of the United Republic of Tanzania, marked two years in
office with stellar performances in maintaining political stability, economic recovery and resilience, enhancing socio-economic development and branding Tanzania as a safe and ideal investment destination.As the apex and umbrella organization of the private sector in the
country, the Tanzania Private Sector Foundation (TPSF) has been the
government’s strategic partner representing over 6 million businesses through
its member associations. TPSF actively engages with the government in
formulating and reviewing policies, advising and advocating for a conducive
business and investment climate, in order to attract more investors and improve
the country’s economy.
The sixth phase government has been instrumental in ensuring that
the private sector becomes the engine of economic growth. In the last two
years, the Tanzania private sector has become an important strategic partner
for the government in achieving Tanzania Development Vision 2025 that aims to
achieve a middle income country. As such the performance of the banking and
financial markets, access to credit, the business and investment climate and
related reforms, and government priorities in productive sectors like
agriculture, transport and logistics, tourism, ICT, mining, and industries are
all good indicators of economic growth and more specifically, the growth of the
Tanzania private sector.
Hastening economic recovery through increased credit to the
private sector
President Samia initiated the Policy Measures to increase Credit
to Private Sector and Lower Interest Rates in order to increase credit to the
private sector and lower interest rates, thereby hastening recovery of the
economy. These included
1. Reduction of Statutory Minimum Reserve (SMR) requirement. This
measure intended to increase lending to agriculture, which is the mainstay of
Tanzanians. It has enabled interest rates to the agriculture sector to go below
10% spurring economic growth.
2. We also saw relaxation of agent banking eligibility criteria by
abolishing the regulatory requirement of business experience of at least 18
months for applicants of agent banking business to only require a National ID
Card. This policy measure has led to an increase in loanable funds to banks
through deposit mobilization.
3. The introduction of the special loan of TZS 1.0 trillion to
banks and other financial institutions for on-lending to the private sector
whereby, Banks and other financial institutions are able to lend at 3 percent
per annum for pre-financing or refinancing of new loans to the private sector.
This measure has increased liquidity to banks and reduced lending rates.
As of February 2023, we saw credit growth to the private sector at
an all-time high of 21% compared to a growth rate of 3.2% in Q3 of 2021. This
will have significant growth to the economy as more businesses will access
finance for expansion.
Record breaking profits from the banking sector
The banking sector touches almost all areas of our economy,
therefore its performance is one of the best economic indicators. Tanzania
banks play an important role in capital formation, which is essential for the
economic development of a country. An analysis of leading commercial banks in
Tanzania, which make up over 95 percent of the banking sector’s profitability,
showed a significant increase from over Sh760 billion in 2021 to Sh1.16
Trillion in the year ending 2022. The increase in profitability – coupled with
a reduction in levels of Non-Performing Loans (NPLs), increase in mobile money
transactions and an increase in both customers’ deposits and loans and advances
is a testimony of a growing economy and financial inclusion that lies on the
basis of the good business environment currently experienced in the country.
Tanzania as an investment destination through improved investment
climate
Under her leadership, President Samia Suluhu Hassan has focused on
implementing various reforms to improve the business and investment climate
which has regained investor confidence.
Among the investment reforms included the enactment and the
gazzetting of the new Tanzania Investment Act. Which among other things reduced
the capital investment threshold requirement from 100,000 to USD 50,000 for
local investors; this move will enable more local companies in all sectors of
the economy whether starting, expanding or rehabilitating their businesses to
access the certificate of Incentives provided by TIC. These incentives include
both fiscal relief of import duty on a project deemed capital at 75 percent and
0 percent of import duty on capital goods and non-fiscal such as using TIC
investment facilitation services.
The new law further shortened the time for obtaining an investment
licence from 14 to 7 working days; and granted access to international
arbitration to the parties to settle disputes either in accordance with
Tanzanian arbitration laws or the International Centre for the Settlement of
Investment Disputes. This has given the much needed confidence to international
investors.
Other reforms on investments included speedy acquisition of
permits, investment licences specifically from 24 days to currently 3 days and
resolved land acquisition issues by putting systems in place. Work permit
issuance process for foreign workers and investors; streamlining Tanzania
Investment Center (TIC) operations.
Another great move taken by president Samia was to move the
investment portfolio (TIC) under the president’s office. This move will enhance
efficiency and fast track a lot of investment decisions.
These initiatives have contributed significantly to the increase
of registered investment, for instance for the year 2021 TIC registered 256
investment projects worth 3.8 billion from 203 projects worth 1.1 billion in
the year ending 2020.
This increase translates into widening the tax base and enabling
implementation of social economic development, and transfer technology and
skills.
Improved Business environment and leading to increased Tax
Collection
In implementing the Blueprint for regulatory reforms in enabling
the business environments, a number of milestones have been recorded so far
which included; removing over 232 nuisance taxes and levies that were thwarting
growth of businesses.
Section 7(1) of the Tanzania Shipping Agencies Act has been
amended to limit TASAC’s former exclusive authority on clearing and forwarding
of import and export of minerals, machinery, equipment, and petroleum, which
severely impacted business operations by causing input delays in our
industries. It also put many clearing and forwarding agents out of business.
Since the amendment, we have seen a recovery of business as well as new
entrants into the market.
So far the Sixth Government has already concluded and signed
agreements with 10 countries on Avoidance of Double Taxation and Prevention of
Tax Evasion. These agreements also serve to promote foreign investment, which
might otherwise be discouraged if companies were forced to pay locally and in
their country of fiscal residence for taxable activities. They reduce the tax burdens
of foreign investors and provide legal security to investors.
TPSF has witnessed improved efficiency and professionalism in
revenue collection and administration. These include enhancing fairness and
efficiency in tax assessment; ensuring timely VAT refunds and digitalization of
tax system including the online self-service platform that allows the taxpayers
to file returns, initiate payments and access other tax services; cargo
tracking system; electronic single window that allows taxpayers to lodge their
trade transactions quickly and also the use the Electronic Fiscal Management
Systems for verification of claims.
The government amended the Tax Revenue Appeals Act (CAP 408) to
accommodate alternative dispute resolution mechanisms and hence reducing bureaucracy
in addressing tax appeals.
“As Tanzania’s private sector, we applaud H.E Samia Suluhu Hassan
and her government for spearheading measures to strengthen the business and
investment climate. We have seen a record-breaking performance in all the sectors
of the economy, from the banking sector which has made over Sh1.16 trillion in
profits, to an increased performance on the capital markets, recovery of the
tourism sector, to a record increase in investment projects, and other social
economic achievements.” Ms Angelina Ngalula Chairperson of
TPSF
No comments :
Post a Comment