Interview: Charles John Poul Mwijage, Minister of Industry, Trade and Investment
What are the biggest obstacles for manufacturers doing business in Tanzania?
CHARLES JOHN POUL MWIJAGE: In general, people in the manufacturing sector have challenges related to imports. There is difficulty competing with similar products imported from abroad. First, a large amount of goods available in Tanzania are highly subsidised by their country of origin. Also, some of these products are produced by internationally recognised industries that are both mature, experienced, and possess advanced machinery and skilled labourers. In Tanzania, industries are in their infancy, but still aim to compete.
Additionally, other types of products arriving as imports are admittedly of lower standards, so there is a strong push by the ministry and government to improve and ensure that local factories and industries are producing high-quality products. As improvements occur, prices will naturally rise due to the costs involved in manufacturing, storage and distribution.
Tanzania is embarking upon a programme to widen the tax base, ensuring that manufacturers pay the proper amount of taxes due to the Tanzania Revenue Authority (TRA). An additional related issue is that at the point of entry into the market and country, imports are being under-declared and in some cases, smuggled. Legitimate manufacturers have challenges competing with smuggled, low-cost counterfeit goods.
What reforms are currently planned to further improve the business environment?
MWIJAGE: In recent years, Tanzania has already made strides in reducing unfair competition, under-declaration and smuggling. It has been a joint effort, working alongside the TRA, the Tanzania Police Force and the Tanzania Bureau of Standards to ensure importers are adhering to the highest of legal standards. Making inroads with respect to importation remains difficult because of the more than 1400 km of coastline and porous land borders with half a dozen countries.
How would you rate the attractiveness of Tanzania’s fiscal framework for manufacturers?
MWIJAGE: Tanzania remains a solid investment destination for both local and foreign investors within the EAC, and government statistics on foreign direct investment inflows prove this. As it is a large country economically and geographically, Tanzania remains a gateway to a number of the EAC countries; easily trading with neighbours Mozambique, Malawi and the Democratic Republic of the Congo, as well as directly trading with Zimbabwe. Furthermore, there is cross-border trading with Kenya, which often utilises the ports of Tanga and Dar es Salaam. This is especially the case with liquefied petroleum gas (LPG), of which Tanzania boasts large LPG storage facilities.
Overall, political stability results in a conducive business environment and investment climate. For instance, the country has an abundance of natural resources, of which only a small fraction has been extracted. This includes the areas of precious metals mining and ultra-deepwater gas reserves, as well as ramping up the production of crude oil.
Moreover, the ease of doing business and responsiveness has improved. Under the auspices of the Tanzania Investment Centre, potential investors have witnessed a reduction in the time required to register a business as well as the number of documents and procedures required to do so, shortening some procedures to two to three days.
The country also remains attractive because of the fifth-phase government’s drive to root out corruption, which runs parallel to enforcing tax collection. Multinationals that are present here will not operate unless there are fair competition policies in place and zero corruption. This ensures the investment climate invites foreign investors and multinationals by providing them with peace of mind. Since 2015 the government has ensured business ethics are implemented within the industry and manufacturing arenas.
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