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FY 1999 Country Commercial Guide: Tanzania

Report prepared by U.S. Embassy Dar Es Salaam, released July 1998.
Blue Bar tanzania99

CHAPTER I - EXECUTIVE SUMMARY

This Country Commercial Guide (CCG FY99) presents a comprehensive look at Tanzania's commercial environment, using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a Multi-Agency Task Force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. Government Agencies.

As one of the world's least developed nations, Tanzania is striving to consolidate 12 years of economic and seven years of political restructuring. While Tanzania continues to make a concerted effort to liberalize its underdeveloped economy, substantial barriers still exist for those firms wishing to invest in Tanzania. Bureaucratic intransigence, poor infrastructure, and an inflation rate of more than ten percent are just some hurdles interested investors must overcome to establish a permanent presence in Tanzania.

On the positive side, the Tanzanian government is still eager to attract foreign investors wishing to capitalize on one of the most politically stable countries in East Africa. Over the last 12 months, the Tanzanian government has continued its efforts to rid itself of its unwieldy and unprofitable parastatal corporations. In addition, the country continues to offer investment incentives to those individuals and firms wishing to invest in Tanzania. Furthermore, Tanzanian efforts to liberalize its foreign exchange control regime have allowed all sectors in the economy to expand their horizons and attract foreign capital.

While Tanzania still relies heavily on agriculture for the bulk of its GDP, other sectors have come to the forefront as investment possibilities. Since 1994, the government has gone out of its way to attract foreign investors in the telecommunications, tourism and mining sectors. In addition, a number of highly visible international businesses have settled in Tanzania to make Tanzania their East African headquarters. These firms plan to expand their operation with an eye toward exporting manufactured goods to other East and Southern African nations.

Historically, United States private investment has been limited in Tanzania. Recently, however, the Overseas Private Investment Corporation (OPIC) signed an agreement with the Tanzania Government that offers a basket of incentives to U.S. investors in the country.

Tanzania's major trading partners continue to be the United Kingdom, Germany, India, Japan, China, Kenya and Italy (with the United States lagging far behind). Recently, a number of American firms have set up shop in Tanzania, including a large multi-national manufacturing firm, a large U.S. based international bank, an internationally recognized hotel chain, a multi-national communications firm and a large U.S. - based tobacco company. In addition, over the last 24 months, Tanzania has increased its demand for American manufactured goods, as well as U.S. grown foodstuffs. Sectors with the leading prospects for U.S. exports to Tanzania include:

 

Politically, Tanzania is a multiparty democracy. In 1992, the Tanzanian Constitution was amended to allow for more than one political party, and the first multiparty elections were held in November 1995.

 

CHAPTER II - ECONOMIC TRENDS AND OUTLOOK

According to official Tanzanian statistics, Tanzania's average economic growth for FY 1997/98 was approximately 3.3 percent per annum. This marks a twenty percent decrease in growth from FY 1996/97, when economic growth figures indicated that the Tanzanian economy expanded by approximately 4.2 percent per annum. Over the last ten years, Tanzania has experienced positive economic growth averaging 3.5 percent per year.

Inflation, which was fairly high, dropped significantly to 17 percent by June 1997. Throughout 1997/98, inflation has been fairly stable at 13 percent per annum, and the Government of Tanzania is aiming at reducing it to a single digit by September 1998.

During the first half of the fiscal year 1997/ 98, government budgetary operations for Tanzania Mainland were impressive. The Government intensified its efforts in tax collection, with measures to curb tax evasion supplementing these efforts. In the face of a declining rate of inflation, government revenue during July- December 1997 was higher than revenue collected during the same period in the previous year. While there was improvement in government revenue collection, there was a decline in government expenditure, thus narrowing the fiscal deficit - a performance desired to supplement the tight monetary policy in fighting inflation. Although grants from foreign donors were below the expected level, the government was able to make net repayments to both foreign and domestic creditors.

The overall good revenue performance and the current expenditure control measures were needed to be sustained in order to attain the set fiscal targets and hence pave the way for the commencement of a formal program (Economic and Structural Adjustment Facility - ESAF) with the IMF.

The performance of parastatal organizations during the year remained poor. Concomitantly, The Presidential Parastatal Sector Reform Commission (PSRC) continues to scrutinize and privatize some of the nation's parastatal corporations, although at a much slower rate than many donors would like.

Regarding the money supply, the Tanzanian government has an improved performance in comparison with the last two years. Statistics for March 1998, indicate that money supply declined from Tanzania Shilling 931.9 billion at the end of February 1998, to 924.2 billion at the end of March, 1998. The contraction in money supply was mainly attributed to a decrease in net foreign assets of the banking system.

The Tanzanian government has made significant progress in opening the economy. One area in which the government seems to making headway is the liberalization of interest rates and the unification of exchange rates. Both are positive moves which should help the economy rebound in FY 1998.

Principal Growth Sectors

For the next ten years principal growth sectors will remain agriculture, industry, mining, and construction, as well as, trade, tourism, infrastructure and technology development.

Agriculture:

Although the rate of growth for agricultural sector was only 3 percent in 1998, Tanzania's economy continues to be dominated by agricultural production which accounted for approximately 54 percent of GDP. Output remains predominantly based on small holder production. Estate cultivation was centered on sisal, sugar, tea, and to a lesser extent coffee, tobacco, rice, wheat and wattle. Traditional exports such as coffee, cotton, sisal, cashew nuts, cloves, tea and tobacco remain the pillars of export income generation. At the urging of the international donor community, the Tanzanian government has recently placed a great deal of emphasis on agricultural export diversification, stressing the switch from traditional to non-traditional exports such as horticultural products, spices, fishery products and manufactured goods.

Industry:

During 1997/8, Tanzania's industrial sector remained weak, though small gains were posted in the production of cement, soft drinks, corrugated iron sheeting, food processing, chemicals, leather products and textiles. Tanzania's industrial sector contributed approximately 8 percent to the GDP of the nation in spite of disruptive power supply. Liquidity problems, poor management, lack of spare parts, insufficient capital to import raw materials and stiff outside competition from imported goods contributed to the low performance of the industrial sector.

Privatization and diversification of Tanzania's industrial sector is progressing at a slow but steady pace. The PSRC has listed 398 parastatal corporation for privatization, and by June 1998, 201 firms were already privatized.

Mining:

Mining continues to emerge as an important sector in Tanzania's developing economy and represents approximately 5 percent of the country's GDP. Tanzania is endowed with an assortment of mineral deposits including gold, diamonds, salt, gypsum, gemstones, iron ore, natural gas, phosphates, coal, nickel, and cobalt. Effective exploitation of these resources has been hampered by a lack of capital, poor infrastructure, bureaucratic inefficiency and limited technology.

Over the last few years, the Tanzanian Government has relaxed its regulatory control over this sector, removing a number of barriers which previously limited foreign ownership of mineral exploitation enterprises. Investor interest in exploiting Tanzania's mineral deposits remains high with a number of internationally capitalized projects moving forward at a steady pace. Mining is considered a priority sector by the Tanzanian government and as such, the Mining Act of 1996 is providing incentives to induce investment in this sector.

Construction:

The construction industry continues to grow at a rate of approximately 5 percent per annum. Growth in the construction industry offers increased opportunities to U.S. products and services in this field.

Tourism and Other Services:

Tanzania's tourism sector continues to grow at an impressive rate of more than 8 percent per annum. During 1997, Tanzania saw a marked increase in the amount of international investment in the tourism sector. Tourism has currently overtaken coffee, to be the first largest foreign currency earner for Tanzania. A number of well known internationally acclaimed hotels are under construction and are expected to be completed and operational during FY 1998. While most of Tanzania's tourism sector investment remains in the northern part of the country in what is known as the Northern Safari Circuit (Ngorongoro Crater, Serengeti Plains, Lake Manyara), a number of governmental initiatives are trying to open up the Southern Circuit (Selous Game Reserve, Mikumi and Ruaha National Parks) to both small and large scale investors. Unfortunately, Service facilities for this sector are in poor shape and desperately need outside investment to bring them up to international standards. Furthermore, while international interest in Tanzania's wildlife remains strong, Tanzania's underdeveloped infrastructure has limited economic development in this area. As such, firms wishing to invest in infrastructure improvements should consider Tanzania a viable investment option.

The contribution of various service sectors to GDP in 1997 were as follows: Trade: 16 percent; Transport and Communication: 5 percent; Business Finance Services: 6 percent; and other services: 7 percent.

Government Role in the Economy

Tanzania's socialist economic policies pursued between 1967 and 1985 effectively barred or strongly discouraged private sector growth. Credit rationing led to more than 80 per cent of the loanable funds being allocated to public sector firms. Equally damaging was the Tanzanian government's rationing of foreign exchange in favor of public enterprises while maintaining an overvalued currency. Furthermore, high inflation rates, large fiscal and trade deficits, and the unpredictability and insecurity of the policy environment discouraged many private investors from assuming the financial risks inherent in long term investments. As a result, those individuals who did decide to invest in Tanzania preferred to invest in commercial/trading activities which limited their risk and provided immediate returns.

Recently, changes in the foreign exchange system (including the introduction of foreign exchange shops and unification of multiple exchange rates in August 1993) have been accompanied by equally radical reform of domestic monetary policy. Real interest rates, first exposed to market forces in 1992, have positively affected the investment climate and are now market driven.

There were substantial structural reforms made to the financial sector following the report of a presidential commission of inquiry into the monetary and banking systems in July 1990. Banks can now be established as private sector institutions, and a number of foreign banks have opened up in Tanzania, including: Citibank of New York, Stanbic Bank of South Africa, and Standard Charter Bank of Great Britain, EuroAfrican Bank, Akiba Commercial Bank and Exim Bank.

Taken together, the monetary and financial sector changes have created a fairly stable macroeconomic framework for private sector development. The incentive structures which existed (borrowers favored over savers, importers over exporters) have been reversed, and demand pressures have been contained.

Under the new administration of President Benjamin Mkapa, the Tanzanian Government has set out to reverse the socialist policies which dated from independence and to reduce government interference in the economy. As such, the government has embarked on a policy of selling off government parastatal corporations. This effort has continued over the last twelve months with a number of large parastatal corporations going up for auction.

The Tanzanian government continues to provide incentives to outside investors wishing to invest substantial amounts of capital in Tanzania. In 1990, the government created the Investment Promotion Center (IPC) and charged it with promoting international investment in Tanzania, assisting potential investors, and providing investment incentives to individuals and companies wishing to set up shop in Tanzania. Unfortunately, IPC tax exemptions were granted non-transparently and excessively, leading to loss of government revenue. Concerted donor pressure to reform the IPC resulted in certain modifications. In 1995, the government introduced a uniform tax of 5 per cent on imported capital goods, thereby rationalizing (and encouraging) investment across the board while reducing the negative effect of excessive special exemptions. In 1997, an updated Investment Act was enacted by the Parliament. This new Act provides for a streamlined service to investors. IPC was changed to Tanzania Investment Center (TIC), by this act.

Tanzania Balance of Payment summary (in mil $)

 

Items

1996

1997

CURRENT ACCOUNT

-455.1

-469.6

Goods

-451.0

-453.6

Exports(fob)

761.7

818.6

Imports(fob)

1212.6

1272.2

-278.8

-304.0

 

Receipts

537.1

564.7

Payments

815.9

868.6

Income

-63.7

-87.4

Receipts

41.5

42.2

Payments

105.3

129.6

Current transfers

338.4

375.5

Inflows

370.7

407.8

Government

236.0

259.6

Private

134.7

148.2

Outflows

32.3

32.3

 

CAPITAL ACCOUNT

191.0

09.5

Capital transfers

191.0

209.5

Inflows

191.0

209.5

Outflows

0.0

0.0

Acquisition/disposals of non-produced assets

0.00

0.0

 

FINANCIAL ACCOUNT

6.5

160.7

Direct investment

150.0

100.0

Abroad

0.0

0.0

In Tanzania

150.0

100.0

Portfolio investment

0.0

0.0

Other investment

-143.5

60.7

Inflow of financial resources

318.5

397.1

Disbursement of Government loans

238.5

306.3

Trade credit and other financial flows

63.0

54.0

Disbursement of loans to other sectors

17.1

36.8

Outflow of financial resources

462.0

336.4

Repayment of Government loans

361.8

262.7

Trade credit and other financial flows

43.1

35.6

Repayment of loans by other sectors

57.1

38.1

Errors and omissions

33.8

-0.1

OVERALLBALANCE

-223.9

99.5

 

FINANCING

223.9

99.5

Reserve assets

-195.9

-119.2

LCFAR

23.3

6.0

Exceptional financing

396.5

212.7

Arrears

312.2

-3.3

Rescheduling

0.0

0.0

Debt forgiveness

0.0

0.0

Use of fund credit

-13.8

40.7

Grants/borrowing for BOP purposes

98.1

175.4

Financing gap

0.0

0.0

 

Figures for 1997 are estimates. 1997 BOP financing excludes data on rescheduling and debt forgiveness indicating that the overall deficit will be worse than indicated.

Infrastructure

Tanzania's reputation for extremely poor infrastructure is unfortunately accurate. The road network is trying to recover from 25 years of neglect and decay. Since 1988, a massive multi-donor roads program was established and is working to rehabilitate the trunk regional roads. Funds allocated for road maintenance have steadily increased in recent years. In rural areas most roads remain in poor condition, and seasonal washouts are commonplace in many parts of the country. As of June 1998, it takes two and a half days to travel by road from the capital, Dar es Salaam, to the second largest city, Mwanza (a total road distance of 1202 kms or 751 miles).

Tanzania has two railway systems which operate independently of one another and use different gauge track. The Tanzania Railways Corporation (TRC) operates the internal rail network that connects most of the major Tanzanian cities and agricultural areas. In addition, TRC operates the rail system that connects Tanzania with Uganda, Kenya, Burundi and Rwanda. The central railway line has been heavily affected by the 1997/98 El Nin~o floods. Parts of the railway are in need of major repair and were impassable from January up to July 1998, when this report was compiled. TRC hopes to complete repairing the railway by October 1998. The Tanzanian/Zambian Railway Authority (TAZARA), constructed in the early 1970's, connects the port of Dar es Salaam with Zambia. With the end of apartheid in South Africa, TAZARA and the port of Dar es Salaam have been forced to compete with the South African Railway system and the ports of Durban and Port Elizabeth. While this competition has improved the quality and service of both the port and TAZARA, it has drastically reduced the amount of income generated by both operations.

Tanzania's telecommunications infrastructure remains underdeveloped. Communication facilities are limited, and telephone service highly unpredictable, especially during the rainy seasons. International service is inconsistent, and calls remain very expensive. The Tanzania Telecommunications Company Ltd. (TTCL) had acquired a credit facility from the World Bank and is installing a high traffic exchange station for clients in Dar es Salaam and in up-country towns. This exercise which is still underway as of June 1998, is expected to improve the telecommunications service in the country.

For the past four years Tanzania has been experiencing a series of power (electricity) shortages in its main gridlines. These shortages are a result of the continuing effects of the regional drought of 1994/95. As Tanzania remains 95 percent dependent on hydro-electric power, this drought seriously hampered the Tanzania Electric Supply Company's (TANESCO) ability to generate sufficient power to meet the demands of the economy.

In the medium term, an emergency program funded by the international donor community to augment Tanzania's thermal power generation capacity has been established. Alongside this, the government is renegotiating with the Independent Power Tanzania Ltd (IPTL) an agreement on a 100 MegaWatts project already on ground, but with unfavorable terms to the Country. In addition, small hydroelectric power generating increases are expected to come on line as well. Over the long term, development of the Songo Songo Natural gas reserve and Mchuchuma coal fields will help alleviate Tanzania's heavy dependence on hydro-electric power generation.

 

CHAPTER III - POLITICAL ENVIRONMENT

Political System and Schedule for Election

Under President Mwinyi (1985-1995), the United Republic of Tanzania embarked on a path of political and economic transformation after 24 years of Julius Nyerere's socialist economic policies and single-party rule. The pace of reform in both spheres has been slow, but the momentum is in the right direction. Tanzania remains an island of stability, especially relative to its neighbors, a situation that augurs well for a successful transition to multi-party democracy and a free-market economy.

The most dramatic political change occurred in 1992, when the constitution was amended to permit opposition to the ruling Chama cha Mapinduzi (CCM) party. Currently, twelve new political parties have permanent registration for a total of thirteen nationally recognized political parties. Multi-party elections for the Union President, Union Parliament, Zanzibar President and the Zanzibar House of Representatives were conducted in October 1995, and CCM emerged victorious. However, the Zanzibar presidential seat is still disputed between CCM candidate President Salmin Amour, who is alleged to have altered the results, resulting in a narrow victory of 50.2 % against 49.8% of CUF's Seif Sheriff Hamad.

The United Republic of Tanzania is composed of the Zanzibar Islands (Unguja and Pemba) and the Tanzanian Mainland (formerly Tanganyika). The two sovereign states united in 1964. Zanzibar continues to maintain a semi-independent government within the Union, which maintains jurisdiction over most domestic issues, including economic and investment policy. In recent years, tension between Zanzibar and Tanganyika has been on the rise over the political impasse in Zanzibar. While these tensions persist, most experts do not believe that they will lead to serious violence.

Nature of Bilateral Relations with the U.S.

The U.S. and Tanzania maintain increasingly cordial relations. While the U.S. bilateral aid program in Tanzania, approximately US $20 million annually, is not insignificant, the United States is ranked thirteenth among major donors.

U.S. assistance to Tanzania is likely to decline in the future, partly as a result of overall aid cuts in foreign aid funding, and partly due to the problems of fiscal mismanagement in Tanzania.

Major Political Issues affecting the Business Climate

The Tanzanian political atmosphere remains stable, and the government has undertaken a measured but steady program towards multi-party democracy. Tanzania has been blessed with relative peace since independence; the economic decline in the 1970's and 1980's was a result of its centralized socialist economic policies rather than political or military turmoil.

The ongoing political changes in Tanzania point to a peaceful transition to a new political order and thus pose no significant threat to economic development. With the advent of multi-party system, and calls for a review of the current Union constitution, the future status of the Union of Tanganyika and Zanzibar remains unclear. The economic consequences of any potential split in the union would depend upon the nature of the decision to end the union. Although the environment in Tanzania is becoming increasingly politicized, the nature of the people with Tanzanian politics suggests that civil disturbances are unlikely and the union with Zanzibar will remain intact.

Additionally, an increasingly independent press follows the vigorous debate of such issues as corruption in government ranks; the wisdom of pursuing privatization; and divestiture of parastatals. Since the advent of political and economic reforms, there has been a proliferation of non-governmental organizations (NGO's). Over the long run, these NGO's should strengthen civil society and thereby enhance the political and economic reforms that Tanzania has undertaken since 1992.

 

CHAPTER IV - MARKETING U.S. PRODUCTS AND SERVICES

The best and most effective way of marketing in Tanzania is through an agent/distributor, a local representative or an existing local supplier. These arrangements have three distinct advantages:

enables firms to maintain continuity;

places the task of ensuring payment on the local partner and, as such, reduces risk and costs; and

provides protection to American suppliers inexperienced in Tanzanian business practices.

Distribution and Sales Channels

The following types of distribution and sales channels exist in Tanzania:

agents/distributors;

wholesalers;

retailers; most of whom have small retail shops which specialize in one type of product; and

importers with bonded warehouses who import (mostly cars and heavy duty vehicles and buses) to bonded houses until items are purchased by convertible currencies (Dollar, Pound sterling, D-Mark, Yen).

Use of Agents/Distributors; Finding a Partner

This is increasingly the preferred method of doing business in Tanzania. The Embassy will assist where possible in finding agents/distributors for U.S. firms interested in a relationship with a local partner.

Franchising

There are a number of local firms with franchising arrangements with U.S. firms. With the economic changes currently underway in Tanzania, this trading arrangement is expected to increase significantly.

Direct Marketing

Direct marketing in Tanzania must be conducted with caution, particularly when it comes to the question of payment. The agreement must have built-in protection to ensure payment. Tanzania has a poor track record when it comes to direct marketing and U.S. firms interested in pursuing this type of venture should do so with caution.

Joint Ventures/Licensing

With the advent of privatization and commercialization of parastatals, opportunities abound for joint ventures/licensing arrangements. Tanzania is possibly the most stable nation in East Africa and has access to Kenya, Uganda, Rwanda, Burundi, Zaire, Zambia, Malawi and Mozambique markets through its membership in the Southern African Development Community (SADC) and the Common Market for East & Southern Africa (COMESA). The recently revived East African Cooperation (EAC) also provides for smooth flow of trade between the countries once it starts operation by year 2000. Tanzania thus remains a viable option for firms interested in establishing a physical presence in East Africa.

Steps to Establish an Office

U.S. firms wishing to establish offices in Tanzania have two choices, namely, establishing a joint venture company or a wholly-owned U.S. subsidiary.

A joint venture operation offers unique advantages and disadvantages. A firm wishing to establish a joint venture in Tanzania can benefit from the advice and knowledge of a local partner who can provide unique and often critical information on the best way to navigate the confusing mix of governmental regulations and Tanzanian business customs. Corporate tax for joint ventures and wholly-owned foreign firms operating solely in Tanzania are subject to a 35 percent corporate tax. International firms with branch operations in Tanzania will also be accountable for a 5 percent withholding tax.

The drawback to joint venture operations are that Tanzanian business practices are radically different from those of the United States. This on occasion has led various joint venture operations into trouble as partners sometimes have difficulty bridging the business cultural gap. In addition, while joint venture partners can assist in navigating the sometimes confusing business waters of Tanzania, there have been occasional problems in the past stemming from unethical business practices by the local partner.

For both types of operations, the firms need the services of an attorney to draw up the articles and memorandum of associations, a necessary document for registration by the Registrar of Companies. Trading licenses have to be obtained separately through entirely different procedures. American companies which have been most successful at establishing themselves in Tanzania have used expatriate managers to oversee their operations and to help move the start - up process along.

Selling Factors/Techniques

Selling factors/techniques in Tanzania depend on the customers as follows:

Government/parastatal: These are dependent on issuance of tenders either annually or for specific goods and services. The procurement under this arrangement is by central tender boards. On certain unspecified occasions, procurement could be on direct solicitation.

Private companies/firms: Selling factors/techniques would be by direct solicitation or traditional sources of supplies.

Private organizations/NGO's: They tend to utilize foreign institutions which are either associated with or are based in their countries of origin.

Advertising and Trade Promotion (Including Listing of Major Newspapers

and Business Journals)

Advertising

The following media can be utilized for advertising:

Media Advertising Company Limited, (The Express) P. O. Box 6905, Dar es Salaam, Tanzania, (Phone 255-51-36150).

The Advertising Manager, Daily and Sunday News, P.O. Box 9033, Dar es Salaam, Tanzania, (Phone: 255-51-116072/5; Fax: 255-51-112881; Telex: 41071 NEWSTA-TZ).

Marketing Manager/controller, Business Times, P.O. Box 71439, Phone: 183094/95 Dar es Salaam, Tanzania.

Marketing Manager/controller, the Guardian, P.O. Box 31042, Phone: 700735-8, Fax: 700146 Dar es Salaam, Tanzania.

Marketing Manager/controller, The East African, P.O. Box 49010, Phone: 116667, Fax: 115566 Dar es Salaam, Tanzania.

The Democrat, P. O. Box 21122, Phone: 255-51-116341/8, Fax: 113112/118648, E-mail; dtv@raha.com, Dar Es Salaam, Tanzania.

The Commercial Newsletter, Tanzania Chamber of Commerce, Industry and Agriculture, P.O. Box 9713, Dar es Salaam, Tanzania, (Phone: 255-51-119436, Fax: 255-51-119437 Telex 41424 MICONSULT-TZ)..

Radio Tanzania Dar es Salaam, P.O. Box 9191, Dar es Salaam, Tanzania.

Radio Tumaini, P.O. Box 167, Dar es Salaam, Tanzania.

The Board of External Trade, P.O. Box 5402, Dar es Salaam, Tanzania, (Phone: 255-51-851700; Fax: 255-51-851700) - Their "Trade Currents" Journal.

Radio One, P.O. Box 163, Dar es Salaam, Tanzania, Phone: 0811-333255/ 700440.

Coastal Television Network (CTN), P.O. Box 8983, Dar es Salaam, Tanzania, (Phone 255-51-0812-780728, 0811-212222 ,185167, 180406).Fax: 185354.

Independent Television (ITV), P.O. Box 4374, Dar es Salaam, Tanzania, (Phone: 255-51- 75914) Fax : 255-51-75915. Advertising department YMCA building, Phone: 255-51-118611/2

Fax: 255-51-119373.

Dar es Salaam Television Network, P.O. Box 2122, Dar es Salaam, Tanzania, (Telex 41499).

Phone: 255-51-33318/9, /22302

Trade Promotion

Television Zanzibar (TVZ), P. O. Box 314, Zanzibar, Phone: 255-54-32753 Fax: 255-54-30118.

There are two trade fairs held annually in Tanzania:

The Dar es Salaam International Trade Fair, P.O. Box 5402, Dar es Salaam, Tanzania, (Telex 41408 Fax 255-51-112889) is organized by Board of External Trade every July. This trade fair attracts local and foreign participants and is considered the largest and most important trade fair in the country.

The Arusha Agricultural Show, P.O. Box 3010, Arusha, Tanzania, (Telex 42141 TFAAR-T) is organized by Tanganyika Farmers Association Limited in September. This trade fair caters to the agricultural sector and attracts local and foreign participants.

Pricing Product

In most cases, pricing is determined by market forces. The Tanzanian government has eliminated most price controls; however, the government still regulates the price of gasoline, diesel fuel and kerosene. Mark-up added to cost is the best pricing method for this market. The size of mark-up should be determined by the price of competitors and available substitutes.

Sales Service/Customer Support

After-sales service and customer support are considered crucial to marketing success in Tanzania. These include advertising; training key personnel in the product; keeping them abreast of all changes; providing them with calendars, diaries, key rings for free distribution to customers and maintaining a fairly well trained cadre of servicing technicians capable of advising customers, servicing their equipment and repairing it. Many firms in Tanzania do not give a high priority on customer support, and as such, suffer from the lack of customer loyalty.

Selling to the Government

Selling goods and services to the Tanzanian Government is through tenders which are called or issued annually at the beginning of each calendar year.

Protecting Your Product From IPR Infringement

Although trade marks, copyright and patent laws are in the statute books, the machinery for their automatic enforcement is nonexistent. As such, redress depends largely on the aggrieved party's legal pursuit of the issue. This process has been known to take years to complete.

Need for a Local Attorney

A local attorney is essential for the preparation of all the necessary legal documents required for registration of a company and for legal consultation as the need arises.

Performing due diligence/checking bona fides of banks/agents/customers

U.S. firms may use the Department of Commerce's program of International Company Profiles (ICP) for the Embassy to provide a report on performance and credibility of firms in Tanzania.

 

CHAPTER V - LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENT

Best prospects for non-agricultural goods and services are as follows:

.General industrial equipment

.Miscellaneous textile articles including used clothes

.Telecommunication equipment

.Aircraft and parts

.Construction equipment

.Travel/tourism service

.Computers/peripherals

Best prospects for agricultural goods:

.Corn (maize)

.Soya bean oil

.Wheat

Economic growth creates demand for industrial equipment

Rank of sector: 1st

Name of sector: General Industrial Equipment/Supplies

ITA Industry Code: GIE

Industrial machineries of different uses are demanded in various growing sectors of the economy. Exports of gas turbines of a power exceeding 5,000 kw contributed to about 25 per cent of U.S. exports to Tanzania in 1995. Major competitors in the general industrial equipment sector are the U.K., Canada, Japan, the Netherlands, Germany and South Africa.

 

Data Table

1997

1998

1999

Total market size

N/A

N/A

nA

Total local production

N/A

N/A

N/A

Total exports

NIL

NIL

NIL

Total imports

220

230

235

Imports from the U.S.

13

7

21

 

(Figures are in million U.S. Dollars and are unofficial estimates)

Used clothes trade grow steadily

Rank: 2nd

Name of sector: Misc. Textile articles

ITA Industry Code:

In a country like Tanzania with a per capital income of U.S. dollar 140, and the population of 30 million, the majority find used clothes more affordable to them than new garments. The U.S. has been the major source of Tanzania's used clothes. Other competitors are Italy, U.K., Germany, the Netherlands and Canada.

 

Data table

1997

1998

1999

Total Market size

NA

NA

NA

Total local production

Nil

Nil

Nil

Total exports

Nil

Nil

Nil

Total imports

35

38

40

Imports from the U.S.

9

11

15

 

(Figures are in million U.S. Dollars and are unofficial estimates)

Telecommunication Sector in Tanzania Acquires Financing for Improvement

Rank of Sector: 3rd

Name of Sector: Telecommunication equipment

ITA Industry Code: TEL

Rehabilitation of the telecommunication sector is being financed by the international donor community through the Tanzania Telecommunication Company, Limited (TTCL). In addition to international financing, the Tanzanian government is interested in attracting private investment in certain areas of the telecommunications sector, such as the cellular communications sub-sector. This interest will allow for substantial investment opportunities. A U.S. Company, ACG Telesystem, has already invested in Tanzania while a number of others are investigating the possibility of moving into the market. Major U.S. competitors for supplying the facilities include Japan, Germany and Great Britain. Cellular telephones have already been introduced in one of the four zones in Tanzania by Millicom Int, a joint venture project based in the United States and Europe. This venture has met with outstanding success and as a result the Tanzanian government is looking to expand outside investment in this sub-sector. A joint venture company between Malaysia and Tanzania known as TRITEL is providing similar services for the coastal zone. In addition to private sector development, the international donor community is sponsoring a five year, U.S.$ 250 million program to rehabilitate and expand the existing telephone network.

 

Data Table

1997

1998

1999

Total market size

N/A

N/A

N/A

Total local production

NIL

NIL

NIL

Total exports

NIL

NIL

NIL

Total imports

15.5

17.0

25

Imports from the U.S.

3.5

3.0

4.0

 

(Figures are in million U.S. Dollars and are unofficial estimates)

Aircraft and parts sales projected to increase

Rank: 4th

Name of sector: Aircraft/parts

ITA Industry Code: AIR

Opening up of the Tanzania economy has attracted foreign investors, some of them in air transportation. There are more than twenty air charter services in the United Republic of Tanzania, an increase from about five just eight years ago. The national flag barrier, Air Tanzania, is becoming less significant. Opportunities and prospects in this sector are bright with competitors mainly from U.K., France and the Netherlands.

 

Data table

1997

1998

1999

Total market size

N/A

N/A

N/A

Total local production

NIL

NIL

NIL

Total exports

NIL

NIL

NIL

Total imports

11

12

15

Imports from the U.S.

3.1

3.5

4.0

 

 

 

 

(Figures are in million U.S.$ and are unofficial estimates)

Expansion in Construction Industry to Continue

Rank of sector: 5th

Name of sector: Construction equipment

ITA Industry Code: CON

The construction industry in Tanzania is expected to grow as international donors and local financial institutions continue to finance major construction projects. Historically, U.S. manufactured equipment, for instance Caterpillars, has dominated the construction market. However, over the last few years, Germany, Japanese and Swedish manufactured equipment have made significant inroads.

 

Data Table

1997

1998

1999

Total market size

N/A

N/A

N/A

Total local production

NIL

NIL

NIL

Total exports

-0

-0

0

Total imports

66

74

90

Imports from the U.S .0.45 0.5 1.5

(Figures are in million U.S. Dollars and are unofficial estimates)

The Tourist Board Aims at Revitalizing the Industry

Rank of sector: 6th

Name of sector: Travel/tourism service

ITA Industry Code: TRA

Despite the fact that Tanzania already has a well-known tourism sector, the potential for continued growth remains high. While Tanzania's Northern Safari Circuit is rather well-developed, the Tanzanian government is interest in developing the Southern Circuit, too. Historically, the southern circuit has remained underdeveloped because of the lack of infrastructure; however, international donor financing of infrastructure rehabilitation projects has breathed new life in the Tanzanian governments initiative to develop the circuit. In addition, over the last few years the government has renounced its previous position that it should control the tourist market. As such, the tourism sector remains an open and viable option for serious investors. The establishment of Tanzania Tourism Board (TTB) to oversee tourism development in the country is a demonstration of the country's commitment to develop the sector.

Statistics for this sector are unavailable. Ranking has been done on estimation of the sector's potential.

Computerization Grows in Tanzania

Rank of Sector: 7th

Name of Sector: Computers/peripherals

ITA industry code: CPT

Most institutions in Tanzania are just starting to use computers. While U.S. manufactured computers have already been introduced to the market, room for expansion is increasing. Major supplying competitors are from the U.K. and Japan.

 

Data Table

1997

1998

1999

Total market size

N/A

N/A

N/A

Total local production

-0

-0

-0

Total exports

-0

-0

-0

Total imports

20

30

35

Imports from the U.S.

2.5

3.0

3.5

 

(Figures are in million U.S. Dollars and are unofficial estimates)

Best prospects for agricultural products

Corn importation for the refugee camps

Name of sector: Corn (maize)

PS/D commodity heading: 0440000

For the past two years Tanzania accommodated about 700,000 refugees from the troubled Central African States of Rwanda Burundi and Zaire. Although most of them returned home by the end of last year there has been a new influx of Burundi refugees fleeing the fighting in their country. Despite the country's production being more or less self-sufficient, importation of maize through relief agencies for the refugees was sound in 1997. It is expected that such importation will continue until the refugee problem is settled.

 

Data Table

1997

1998

1999

Total market size

909

511

0

Total local production

951

008

0

Total exports

5

8

0

Total imports15

18

30

 

Imports from the U.S.

4

4

5

 

(Figures are in million U.S. Dollars and are unofficial estimates)

Corn and soya beans oil

Name of sector: vegetable oil

PS/D Commodity heading: 4232000

Soya beans oil has gained popularity in the country due to its calorific value. Most of the product is imported through relief agencies for the refugees in the great lakes zone of central Africa.

 

Data Table

1997

1998

1999

Total market size

9

11

16

Total local production

2

3

3

Total exports

NIL

NIL

NIL

Total imports

7

8

13

Imports from the U.S.

3.7

2.0

2.0

 

 

 

 

(Figures are in million U.S. Dollars and are unofficial estimates)

Wheat

Name of sector: Cereals

PS/D commodity heading:

Imports of wheat from the U.S. to Tanzania have been rising significantly in the past two years. Other competitors for the supply of this product are from the Australia. Canada India and Argentina.

 

Data Table

1997

1998

1999

Total market size

35

40

42

Total local production

18

22

17

Total exports

NIL

NIL

NIL

Total imports

17

18

25

Imports from the U.S.

3

4

5

 

(Figures are in million U.S. Dollars and are unofficial estimates

Significant Investment Opportunities

Three main sectors are noted to have significant investment opportunities:

Mining: Establishing U.S. company or joint venture concerns with Tanzania companies in the gemstones, gold, ferrous metals and petroleum gas mining has been identified by the international investment community as having good potential.

Tourism: Over the last few years, outside investment in the tourism sectors seems to have increased greatly as a result of a concerted effort by the Tanzanian government to lure potential investors. Return on investment remains high and Tanzania's reputation as an outstanding vacation spot for European vacationers remains strong.

Fishing: Deep sea tuna fishing and other fishery projects are also other areas of investment with high export potential.

Privatization of government owned firms constitute another important investment opportunity for U.S. firms.

The Government of the United States acknowledges the contribution that outward foreign direct investment makes to the U.S. economy. U.S. foreign direct investment is increasingly viewed as a complement or even a necessary component of trade. For example, roughly 60 per cent of U.S. exports are sold by American firms that have operations abroad. Recognizing the benefits that U.S. outward investment brings to the U.S. economy, the Government of the United States undertakes initiatives, such as Overseas Private Investment Corporation (OPIC) programs, investment treaty negotiations and business facilitation programs, that support U.S. investors.

 

CHAPTER VI - TRADE REGULATIONS AND STANDARDS

Trade regulations in force include the requirement for pre-shipment inspections for goods whose value exceeds USD 5,000.00 at the point of origin to determine value and the payable duty and tax.

Recent trade reforms have abolished import and export licenses, except for goods deemed sensitive for health and security reasons.

There are no specific standard requirements other than those normally expected of different types of products.

Trade Barriers

All imports into mainland Tanzania are liable to payment of import duty and sales tax. Imports for members of diplomatic corps and specified U.N. agencies are exempted.

Textiles and some electronics and food items in Zanzibar are levied lower tariff than in the mainland Tanzania. Arrangements are underway to harmonize these tariff to have same rates applicable for both sides. For the purposes of determining payable duty and tax, the value of goods exceeding USD 5,000.00 will be assessed by either SGS or ITS. On the mainland, pre-shipment inspection companies determine the value of goods for purposes of duty and tax assessment. On Zanzibar, the government is proposing that a post-shipment inspection be performed to determine tax and tariff rates. However, this proposal has yet to be finalized and implemented.

Other Trade Barriers

Previously, Tanzania used non-tariff trade barriers to protect local industries and its internal market. However, after liberalization of trade, tariff barriers have been adjusted to serve this purpose. Exceptions include explosives, army goods, and other articles deemed to be sensitive to the security and health of Tanzania citizens.

Despite the existence of regulations and laws, the customs department is the greatest hindrance to importers throughout Tanzania. Clearance delays and extra-legal levies are commonplace when dealing with the Tanzanian Customs Department. These hindrances can cause unpredictable delays when importing goods into the country.

Customs Valuation

Customs valuation is based on the findings of the inspecting firm which is required to undertake pre-shipment inspections on all imported goods whose value exceeds USD 5,000.00. The Tanzanian government has contracted the Swiss firm SGS and ITS, to perform its pre-shipment inspections.

Import Licenses

Import licenses have been abolished except for goods which have to be monitored for health and security reasons.

Export Controls

There are no export controls other than for protected wild animals.

Import/Export Documentation

The documentation for imports are Import Declaration Forms (IDF) and import customs entry forms while CD3 forms and export customs entry forms are the documentation for exports.

Temporary Entry

The Customs Department permits entry of machinery, equipment and vehicles on temporary entry. Prior permission must, however, be obtained upon providing customs with a written request and a proof that the product in question will be taken out or duty and tax paid in case it is sold. Bonds and bank guarantees are required for most transit trade.

Labeling, Marking Requirement

Standard labeling and marking currently in force are acceptable.

Prohibited Imports

There are none, except Narcotics and Internationally prohibited drugs.

Standards (e.g. ISO 9000 Usage)

The Tanzania Bureau of Standards, a member of ISO, is issuing certification of standards to mainly manufactured products.

Free Trade Zones/Warehouses:

Free Trade Zones. Zanzibar, a part or the United Republic of Tanzania, has established three Free Trade Zones.

Warehouses. A number of warehouses are available in Dar es Salaam and these are used as transit depots for the land-locked countries of Uganda, Rwanda, Burundi, eastern Zaire, Zambia, Malawi and Mozambique.

Bonded warehouses are also available and are currently in use by importers who want to hold products and goods until duty and tax is paid by the buyers.

Special Import Provisions

Diplomats, diplomatic missions and certain NGO's are allowed duty free import provisions.

Membership in Free Trade Arrangements

Tanzania is a member of Southern Africa Development Community (SADC) and Common Market for East and Southern Africa (COMESA) and, the newly revived East African Co-operation (EAC).

 

CHAPTER VII - INVESTMENT CLIMATE

Tanzania enjoys the reputation of welcoming foreign and local investments. In August 1990, it promulgated the National Investment Promotion and Protection Act (NIPPA), which established the Investment Promotion Center (IPC). The IPC was designed to seek out, direct and assist foreign investment in Tanzania. NIPPA provided for priority investment areas, conferred qualified investors with generous incentives and attractive benefits and spelled out guarantees against nationalization, as well as provided assurances for disputes settlement. The investment act of 1997 updated the NIPPA. In this act, IPC was transformed to a new organization know as Tanzania Investment Center (TIC).

During 1985-1991 Tanzania underwent an intensive structural adjustment program initiated by the IMF and World Bank. This program was largely successful in bringing about a real gross domestic product growth of about 5 percent. Unfortunately, four years of successive drought and one year of El Nin~o floods have dampened the GDP growth rate. Hardest hit has been the agricultural sector, from which over 83 percent of Tanzania's 30 million people derive employment and sustenance. This sector is responsible for nearly 48 percent of foreign exchange earnings. Transportation and communication sectors were equally affected by too much rains in 1997/98.

Openness to Foreign Investment

Tanzania is formally open to all foreign investment, although many procedural barriers must be overcome by the successful investor. The TIC plays a role in promoting and supporting outside investment. A recent policy decision to tax imported capital equipment at a uniform, low rate of 5 per cent is calculated to enhance Tanzania's attractiveness to investors.

Right to Private Ownership and Establishment

The right to private ownership and establishment in Tanzania, is guaranteed by law and the Union Constitution. This right includes freedom to establish a company, to own property both movable and immovable, acquire property and dispose of property including business enterprises and intellectual property. However, access to land is difficult to obtain, costly, and with few exceptions, will be on the basis of leasehold rather than freehold.

Protection of Property Rights

The laws in Tanzania protect property rights, and facilitate the acquisition and disposal of property, including intellectual property. However, it is very difficult to obtain effective protection under these laws.

Adequacy of laws and regulation governing commercial transactions

There exists laws and regulations governing commercial transactions, for instance the law of contracts. The judiciary in Tanzania was not getting many cases of commercial nature until recently. High Court has established commercial courts this year and it is hoped that this will enable expeditious completion of commercial cases.

 

Foreign Trade Zones/Free Ports

A free port is in the process of being established in Zanzibar. Free economic zones have been established in three places in Zanzibar and Pemba islands.

Major tax issues affecting U.S. business

From July 1, 1998, the Tanzania Revenue Authority introduced a value added tax - VAT, at a standard rate of 20 per cent. The VAT will replace sales tax and stamp duties for businesses exceeding an annual turnover of shilling 20 million (About U.S. $ 30,000). Withholding tax on dividends has been reduced from 20 per cent to 5 percent and is charged before VAT.

Performance Requirements/Incentives

The Tanzanian Government has not instituted business, work, or performance requirements.

Transparency of the Regulatory System: Laws and Procedures

Tanzania has in place an extensive set of policies, regulations and procedures that greatly influence trade, commerce, employment and resource utilization. Many of these provisions are outdated and reflect conditions from the colonial era; many others reflect socialist-era circumstances and have yet to be adjusted to serve the needs of a liberal market based economy. Also, the justice system functions slowly and imperfectly and is easily influenced or manipulated by unscrupulous individuals. These factors increase the cost and difficulty of doing business in Tanzania, but can be overcome by diligence and on-the-ground knowledge.

Corruption

As in many third world countries, corruption is one of major setbacks encountered by foreign investors in Tanzania. The administration of President Mkapa has termed the elimination of corruption as a major priority item in Mkapa's election manifesto. Laws, regulations and penalties to combat corruption do exist, although effective enforcement is not at the level that foreign investors would like.

Areas in which corruption persists include Government procurement and customs clearance. Current efforts by the government to deal with corruption include establishment of a presidential Commission on corruption which was chaired by judge Joseph Warioba, former Prime Minister. As a way to combat corruption, the government has adopted the Commission's recommendations, but done little to apprehend those identified in the report as corrupt elements.

Giving or accepting a bribe is a criminal offence which leads to imprisonment. A bribe to a foreign official is equally a criminal act, and as such a bribe to a foreign official is not deductable from taxes.

Labor

Although labor is plentiful in Tanzania, it is largely unskilled. The few jobless but highly educated Tanzanians lacks experience and self motivation. There is a scarcity of people with management expertise.

Efficient Capital Markets and Portfolio Investment

For three decades after its independence in 1961, Tanzania followed a socialist/state-owned economic model. Capital Development and Market's Authority (CD&MA) was established in 1994, and the first stock exchange has been opened in Dar es salaam in March 1998. Currently, policies in place are geared at facilitating the free flow of financial resources though have hardly been tasted. While credit is allocated on market terms, it has been uneconomical to borrow from local sources due to prohibitive interest rates.

There are no laws or regulations in Tanzania that authorize private firms to adopt restrictive measures on foreign participation in their firms.

Conversion and Transfer Policies

Although Tanzania continues to be plagued by intermittent shortages of foreign exchange, the advent of Bureaux de Change (money exchange shops) in 1993 was designed to help facilitate the conversion and transfer of profits, dividends and other investment returns. Repatriations and externalizations which were held up for years can now, in principle, take few weeks. Unfortunately, bureaucratic infighting and corruption can adversely affect the amount of time it takes to obtain official permission to transfer/remit funds.

Compensation

There have been no recent cases of expropriation by the Tanzanian Government. The government has a past record of dealing fairly with compensation issues, although it has been slow and ponderous in dealing with these issues.

Expropriation

Tanzania's history of expropriation culminated in 1973 with the nationalization of European firms in the country. That expropriatory action took place under President Julius Nyerere, a long time advocate of socialism, who believed it was the government's responsibility to manage the market place. Under Tanzanian Second President Ali Hassan Mwinyi, Tanzania committed itself to free market reforms. During President Mwinyi's 10 year tenure (1985 - 1995), the government took no action to seriously undermine the international community's confidence that Tanzania will return to its policies of expropriating foreign interests. The new administration is seen to be following in the footsteps of the Mwinyi administration.

Disputes Settlement

There have been few disputes for settlement involving U.S. firms in Tanzania. From those few experiences, it has been very hard to enforce external arbitration award in Tanzania. A case is pending in High Court involving a U.S. firm with an overseas abirtration award against Tanzania government entity for more than two years. However, Tanzania is a member of both International Center for Settlement of Investment Desputes - ICSID, and Multilateral Investment Guarantee Agency -MIGA.

Political Violence

Under one-party rule, Tanzania has enjoyed political peace and tranquility for nearly 30 years. And most political observers believe that the chance for internecine conflict in Tanzania remains minimal.

Bilateral Investment Agreements

Tanzania has a bilateral investment agreement with the United Kingdom.

OPIC and Other Investment Insurance Programs

OPIC Insurance Program is available in Tanzania. Currently, several projects are under consideration for OPIC insurance. The two biggest OPIC-insured projects in Dar es Salaam are the Sheraton Hotel and ACG Telesystems. OPIC signed an updated incentive agreement with the Tanzania government on foreign government approvals in December 1996.

Capital Outflow Policy

Tanzania, one of the poorest country in the world, does not encourage capital outflow.

Major Foreign Investors

Since the establishment of the Investment Promotion Center in 1990, the institution has approved about 1025 projects worth approximately USD 3.1 billion. Investors from the United Kingdom, Germany, Italy, Thailand, India, Canada, South Africa and the U.S. constitute more than 90 percent of the total foreign investments in Tanzania. Sectors which have attracted foreign investors are manufacturing, tourism, agriculture, fisheries and, mining.

CHAPTER VIII - TRADE AND PROJECT FINANCING

Brief Description of Banking System

After nearly 25 years of government monopoly, the Tanzanian government passed legislation in August 1991 which allowed private banks back into Tanzania. As of June 1998, several private banks have registered with the central Bank of Tanzanian. The National Bank of Commerce (NBC ) which used to account for over 75 percent of the country's transactions, was split last year (1997) into NBC-1997 and the National Microfinance Bank - NMB. the two bank's shares are to be auctioned to the public soon.

Foreign Exchange Controls Affecting Trade

Export and import trade have been streamlined, import and export licenses have been abolished and exporters are now allowed to utilize all of their export earnings.

General Financing Availability

While NBC-1997, the National Microfinance Bank, Cooperative and Rural Development Bank, Stanbic and Standard Chartered Banks provide financial resources for exports to qualified firms, donor agencies also provide funding for imports. Availability of local financing is limited due to high interest rates and lower producer prices.

How to Finance Exports/Methods of Payment

While NBC-1997, the NMB, CRDB, Stanbic and Standard Chartered Banks provide export financing, high interest rates have impeded export business.

Normally, commercial banks provide overdraft facilities to exporters to be repaid in 30 to 90 days. Interest rates (ranging from 9-25 percent) depend on the number of days and the extent of the risk involved.

Types of Available Export Financing and Insurance

Local banks provide overdraft facilities to local exporters which are repayable between 30 to 90 days. OPIC insurance is available to Tanzania. A parastatal insurance company provides cover against loss, damage and destruction but, it does not provide financing for exports or imports.

Project Financing Available, Including Lending from Multilateral Institutions

and Types of Projects Supported

Project financing is available from Tanzania Development Finance Co. Ltd, Tanzania Investment Bank, Tanzania Venture Capital Fund, East African Development Bank, African Development Bank and International Finance Corporation.

Multilateral Development Banks

The International Bank for Reconstruction and Development (IBRD), a member of the World Bank group, makes long-term loans at market-related rates primarily to developing nations. The International Development Agency (IDA), the soft loan window of the World Bank, lends to the poorest of the developing countries. Both the IBRD and IDA work to promote broadly based economic growth and frequently focus on structural adjustment, sectoral reform and individual project lending. Typically the World Bank does not finance the entire cost of a project. Rather, it finances the components of a project purchased with foreign exchange, which on average is about 40 per cent of the total project cost. Each project may cover a wide variety of sectors and can involve anywhere from one to hundreds of separate contracts providing export business opportunities for suppliers world-wide.

Contacts:

U.S. Department of Commerce

Liaison to the U.S. Executive Director's Office

International Bank for Reconstruction and Development

1818 H. St., NW

Washington D.C. 20433

Telephone: (202) 458-0118; Fax: (202) 477-2967

Office of Multilateral Development Banks

U.S. Foreign Commercial Service

U.S. Department of Commerce

Room H-1107

Washington D.C. 20230

Telephone: (202) 482-3399

the African Development Bank (AFDB), headquartered in Abidjan, Cote d'Ivoire, is an international financial institution created by Africans in 1963 to promote the economic and social development of its member African countries. Founded with initial capital resources of USD 250 million, it has authorized capital today of over USD 22.3 billion. The bank belongs to the African Development Fund (ADF) and the Nigerian Trust Fund (NTF). The AFDB makes loans to development projects in 51 countries in Africa. The ADB provides development financing on concessionary terms to the poorer African member countries. The NTF was established by the Government of Nigeria in 1976 to assist in the development efforts of the poorer ADB members. The ADFB has 21 non-regional members. The United States joined in 1982.

Contacts

U.S. Department of Commerce

Liaison Office to the U.S. Executive Director's Office

African Development Bank

Ave. Joseph Anoma

01 B.P. 1387 Abidjan 01

Cote D'Ivoire

Telephone: (225) 21-46-16 ; Fax: (225) 22-24-37

Office of Multilateral Development Banks

U.S. & Foreign Commercial Service

U.S. Department of Commerce

Room H-1107

Washington, D.C. 20230

Telephone: (202) 482-3399; Fax: (202) 273-0927

List of Banks with Correspondent U.S. Banking Arrangements

The National Bank of Commerce (NBC-1997) has correspondent arrangements with Chase Manhattan Bank, Morgan Trust Guarantee and Citibank. Foreign banks like Trust Bank (T) Ltd. and Citibank have similar correspondent arrangements with U.S. banks. Citibank (Tz) Ltd. is the only U.S. bank currently operating in Tanzania. Tanzania Postal Bank has a money transfer arrangement with Western Union International of the U.S.

Trade and Project Financing is provided by the following financial institutions:

Tanganyika Development and Fax: 255-51-116418

Finance Company Limited (TDFL) Tlx: 41153 DEVFIN-TZ

P.O. Box 2478

Dar es Salaam, Tanzania

(Project financing)

 

Tanzania Investment Bank (TIB) Fax: 255-51-112887

P.O. Box 9373 Tlx: 41259

Dar es Salaam, Tanzania

(Project financing)

National Bank of Commerce (NBC) Fax: 255-51-112887

P.O. Box 1255Tlx: 41581 NATCMD-TZ

Dar es Salaam, Tanzania Phone: 255-51-111942/9

(Trade and project financing)

Tanzania Venture Capital Company

P.O. Box 2535

Dar es Salaam, Tanzania

(Project financing)

Cooperative and Rural Development Bank (CRDB)

P.O. Box 268Phone: 255-51-113181 or 115885 or 116467

Dar es Salaam, TanzaniaFax: 255-51 26518

Private Banks

Stanbic BankFax: 255-51-113742

P.O. Box 72647

Dar es Salaam, Tanzania

(Trade financing)

Standard Chartered BankFax: 255-51-113775

P.O. Box 9011Tlx: 41079

Dar es Salaam, TanzaniaPhone: 255-51-117346/50

(Trade financing)

CitibankPhone: 255-51-117601

Peugeot House

P.O. Box 71625

Dar es Salaam, TanzaniaFax: 255-51-117576

Trust BankPhone: 255-51-29185 or 116521

P.O. Box 9302Fax: 255-51-112379

Dar es Salaam, Tanzania

 

Greenland Bank

P.O. Box 1945Phone: 255 51 30148 or 0812 780607

Dar es Salaam, TanzaniaFax: 255 51 116451

Euro African Bank

P.O. Box 3054 Ph: 255 51 35427/24975/110928/110104

Dar es Salaam, TanzaniaFax: 255 51 113740/116422

First Adili Bank

P.O. Box 9271Phone: 255 51 113295

Dar es Salaam, TanzaniaFax: 255 51 113295/36741

 

CHAPTER IX - BUSINESS TRAVEL

Business Customs

Tanzanians are generally polite, helpful and warm-hearted. The private sector is slowly growing and maturing. Patience, specificity and flexibility are essential for success.

Travel Advisory and Visas

The Department of State's consular information sheet on Tanzania reflects current information on Tanzania entry requirements, areas of instability, medical facilities, crime, photography restrictions, air transport, drug penalties and information concerning the U.S. Embassy; including telephone, telex and fax numbers. Airport visas are available at a cost of USD 50.

Holidays

In 1999, Tanzania will observe the following official holidays:

January 1 (New Year), January 12 (Zanzibar Revolutionary Day), January (Idd-El-Fitr*), (Good Friday), (Easter Monday) April (Idd El Hajj*) April 26 (Union Day) May 1 (International Worker's Day), July 7 (Saba Saba), July (Maulid Day*), August 8 (Peasants Day), December 9 (Independence Day), December 25 (Christmas Day) and December 26 (Boxing Day).

* Subject to the sighting of the moon.

Business Infrastructure

Transportation: Many of Tanzania's urban centers are accessible by road transportation except during the rainy season (October to December in Western parts of Tanzania, and March to May for the rest of the country). Many of the primary roads are in poor condition. The roads from Dar es Salaam to Tunduma, Dodoma, Tanga and Arusha are paved. Dodoma to Iringa, Dodoma to Mwanza, Mwanza to Bukoba and Arusha to Dodoma are unpaved. The road from Dar es Salaam to Lindi and Mtwara is not paved making it extremely difficult to reach those areas by vehicle during the rainy seasons. Rural and feeder roads are virtually impassable during the rainy season.

Rental cars are available in all of Tanzania's urban centers including Arusha, Dar es Salaam, Iringa, Dodoma, Morogoro, Mwanza, Moshi, Mbeya, Tabora and Tanga.

Railway transport links Dar es Salaam to Kigoma (Central Line), Dar es Salaam to Mwanza via Morogoro, Dodoma, Tabora, Shinyanga (Central Line), Dar es Salaam to Tanga (Tanga Line) and Dar es Salaam to Arusha via Mombo, Same and Moshi (Tanga Line). Tanzania Zambia Railway Authority (TAZARA) links Dar es Salaam to Kapiri Mposhi (Zambia) via Ifakara, Makambako and Mbeya.

Dar es Salaam International Airport, Kilimanjaro International Airport and the Zanzibar Airport handle international air traffic. Current international carriers are KLM, Swiss Air, British Airways, Egypt Air, Ethiopian Airways, Royal Swazi, Kenya Airways, Air Zimbabwe, Gulf Air, Air India, Air Malawi, Uganda Airways, the Emirates and Alliance Airline, a joint venture between Tanzania, Uganda and South Africa.

Air Tanzania has international routes to Dubai and Saudi Arabia. Its regional routes include Kenya, Burundi, Malawi, Zambia, Zimbabwe and recently, South Africa. Domestic routes include Kilimanjaro, Mwanza, Mtwara, Songea, Tabora, Kigoma, Iringa, Tanga and Zanzibar. Ferry boats from Dar es Salaam to Zanzibar operate daily.

Boat transportation is provided on various lakes. Lake Victoria has services between Mwanza, Bukoba and Musoma. Lake Tanganyika has services to Bujumbura, Eastern Zaire and Zambia.

Freight is carried largely by trains and heavy duty vehicles between most of Tanzania's towns and Malawi and Zambia, and by heavy duty vehicles to Burundi and Rwanda.

Language: The official languages in Tanzania are Kiswahili and English. Virtually all major businessmen speak English, although once outside the business community, English is spoken less frequently.

Communication: Tanzania's telecommunications infrastructure within the country is poor and overburdened. International communications by phones, fax and telex are generally reliable, though they can be difficult to obtain, and comparatively expensive.

Housing: There are critical shortages of housing in all urban centers of Tanzania. Most visitors to urban centers stay in tourist hotels, although the amenities and comfort levels fall below U.S. standards. The expatriate communities in Arusha, Dodoma, Mwanza, Morogoro, Tanga and Dar es Salaam live in modern housing. Water and power is generally available but liable to frequent interruptions.

Health: The health services in Tanzania are inadequate. Tropical diseases and HIV are prevalent in the country. Malaria prophylaxis is strongly recommended.

Food: Food is available and plentiful in all the urban centers of Tanzania including an assortment of fresh tropical fruits and vegetables. Certain urban centers, such as Arusha, Moshi, Dar es Salaam and Tanga, carry imported goods from Kenya, Europe, South Africa and the United States.

 

CHAPTER X -APPENDICES

APPENDIX A - COUNTRY PROFILE

 

1997

1998

1999

Population

:29.7

30.5

31.3 (millions)

Growth Rate:

2.8

2.8

2.8 (Percentage)

 

Religions: Christianity, Islam, Animist

Government System: Multiparty Democracy with Executive Presidency

Language: Kiswahili and English (Official Languages)

Work Week: Monday to Friday

Sources: Central Statistics

APPENDIX B - DOMESTIC ECONOMY

 

  

 1997

 1998

 1999

 GDP (millions of USD)

 5,862.0

 5,300

 5,300

 GDP Growth Rate (percentage)

 4.2

 3.5

 4.5

 GDP per capita (USD)

 135.0

 140.0

 140

 Gov. Spending (as % of GDP)

 18.2

 18.4

 18.0

 Inflation (percentage)

 17

 13

 9

 Foreign Exchange Reserves (millions of USD)

 300

 320

 300

 Average Exchange Rate ($1.00 eqv T. Shs)

 640.0

 660

 700

 Foreign Debt (millions of USD)

 7,800

 8,940

 9,400

 Debt Service Ratio (percentage)

 30

 35

 30

 U.S. Economic Assistance (millions of USD)

 28

 20.0

 20

 U.S. Military Assistance (Million of USD)

 -

 0.225

 0.15

 Note: Figures for 1998 are estimates. Figures for 1999 are projections.

Sources: Planning Commission, Bank of Tanzania, U.S. AID

 

APPENDIX C - TRADE FIGURES (in millions of U.S. Dollars)

 

 

 1997

 1998

 1999

 Exports (fob)

 783

 648

 850

 Imports (cif)

 1400

 1500

 1,600

 U.S. Exports (fas)

 66

 70

 75

 U.S. Imports (cif)

 27

 29

 30

 U.S. Share of TZ Exports (%)

 Negligible

 Negligible

 Negligible

 U.S. Share of TZ Imports (%)

 4.7

 4.6

 4.7

 Note : Figures for 1998 are estimates. Figures for 1999 are projections.

 

Principal U.S. Exports (in millions of US Dollars)

 

Commodity

1995

1996

1997

Machinery

22.420

8.850

13.184

MISC Textile Articles

5.699

9.728

9.154

Electrical Equip

12.134

9.840

8.901

Milling; Malt; Starch

0.000

0.000

6.945

Specials other

4.047

2.289

4.800

Cereals

6.027

4.477

4.067

Aircraft,Spacecraft

1.125

1.220

3.166

Vehicles, (Railway excluded)

0.724

2.333

1.636

Organic Chemicals

0.398

0.412

1.228

Banking related

0.731

0.191

1.001

Text fabrics

0.000

1.226

0.974

Optic (NT8544); Med instr

0.386

1.074

0.959

Source: U.S. Department of Commerce

 

Principal U.S. Imports (in Millions of U.S. dollars)

 

Commodity

1995

1996

1997

Precious stones, Metals

6.220

5.798

8.010

Woven Apparel

3.013

3.604

6.692

Spices, Coffee and Tea

4.706

2.768

3.575

Fish and Seafood

1.763

1.339

3.094

Tobacco

0.000

0.400

0.936

MISC Grain, Seed, Fruit

0.528

0.661

0.702

Wood

0.484

0.565

0.535

Special other provision

0.398

0.332

0.437

Fats and Oils

0.127

0.365

0.434

Knit apparel

0.227

0.502

0.384

Arms and Ammunition

0.000

0.000

0.302

Furs

0.212

0.326

0.298

Source: U.S. Department of Commerce

APPENDIX D - INVESTMENT STATISTICS

The following investment information covers the period between September, 1990 to March, 1998.

 

Sector

Approved

New

Exp/Rehab

Local

Foreign

Joint Venture

 

Figures indicate number of projects.

Agric & Livestock

85

47

38

22

19

44

Natural Resources

68

55

13

27

14

27

Tourism

152

119

33

67

25

60

Manufacturing

523

391

134

285

83

155

Petroleum & Mining

38

34

4

11

5

22

Construction

43

38

5

22

9

12

Transport

56

36

20

19

8

29

Services

35

27

8

15

8

12

Computers

2

1

1

-

1

1

Decontrolled Areas(financial)

16

16

-

2

7

7

Telecomm

6

6

-

1

1

4

Energy

1

1

-

-

-

1

Grand Total

1025

771

254

471

180

374

 

 

 

 

 

 

 

 

 

Sector

 

Total Employment

(No. employed)

 

Total Investment

(in millions TSH)

Agric & Livestock

27089

77125

Natural Resources

21943

297517

Tourism

15199

205972

Manufacturing

84380

900135

Petroleum & Mining

4534

206119

Construction

3683

978402

Transport

4894

55463

Services

5529

61244

Computers

20

281

Decontrolled Areas(financial)

819

327574

Telecomm

394

18468

Energy

90

97800

Grand Total

168574

3256100

 

Note: Total approved investment to date translated in the United States Dollars is about U.S. 3.139 billion.

APPENDIX E - U.S. AND COUNTRY CONTACTS

Country Government Agencies

Organization: Tanzania Investment Center

Contact name: Mr. S. Sitta

Title: Director-General

Address: P.O. Box 938

Dar es Salaam, Tanzania

Phone: 255-51-113365 or 37264

Fax: 255-51-118253

Organization: Board of External Trade

Contact name: Mr. Mbaruk K. Mwandoro

Title: Director-General

Address: P.O. Box 5402

Dar es Salaam, Tanzania

Phone: 255-51-851700

Fax: 255-51-851700

Organization:Tanzania Revenue Authority

Contact name:Melkizedeck Sanare

Title:Commissioner General

Address:P. O. Box 9053

Dar es Salaam, Tanzania

Phone:255-51-119270 or 119343

Country Trade Associations/Chamber of Commerce

Organization: Dar es Salaam Merchants Chamber

Contact: The Chairman

Address: P.O. Box 12

Dar es Salaam, Tanzania

Phone: 255-51-122267

Organization: Dar es Salaam Chamber of Commerce

Contact name:Mr. Emilio Mzena

Title:Chairman

Address:P.O. Box 14

Dar es Salaam, Tanzania

Phone:255-51-21893/23759

Telex:41628 CHEMCO-TZ

Organization:Tanzania Chamber of Commerce, Industry and Agriculture

Contact name:Mr. M. M. Kalanje

Title:Executive Director

Address:P.O. Box 9713

Dar es Salaam, Tanzania

Phone:255-51-119436

Fax:255-51-119437

Telex:41424 MKONSULT

Organization:Confederation of Tanzania Industries

Contact name:Mr. Juma Mwapachu

Title:Chairman

Address:P.O. Box 71783

Dar es Salaam, Tanzania

Phone:255-51-115414

Telex:41587 INTERF-TZ

E-mail: Cti@intafrica.com

Country Market Research Firms

Name of firm: Tanzania Industrial Research and Development Organization (TIRDO)

Contact name:Dr. Asifa Petro Nanyaro

Title:Director-General

Address:Msasani, Uganda Avenue

P.O. Box 23235

Dar es Salaam, Tanzania

Phone:255-51-666034

Fax:255-51-668147

Country Commercial Banks

Bank Name:National Bank of Commerce(NBC 1997)

Address:P.O. Box 1863

Dar es Salaam, Tanzania

Phone:255-51-11059

Fax:255-51-112887 or 112888

Telex:41581-NATCMD-TZ

Bank Name:National Microfinance Bank (NMB)

Address:P.O. Box 9213

Dar es Salaam, Tanzania

Phone:255-51-114059

Fax:255-51- 114058

Bank Name:Cooperative and Rural Development Bank

Address:P.O. Box 268

Dar es Salaam, Tanzania

Phone:255-51-117441 up to 117444

Fax:255-51-116714 or 255-811-324984

Bank Name:Standard Chartered Bank

Address:P.O. Box 9011

Dar es Salaam, Tanzania

Phone:255-51-113774-9 or 117350-8

Fax:255-51-113775

Telex:41079

Bank Name:EXIM Bank (Tz) Ltd

Address:P.O. Box 1431

Dar es Salaam, Tanzania

Phone:255-51-119738 or 113090

Fax:255-51-119737

Bank Name:Stanbic Bank Tanzania Limited

Address:P.O. Box 72647

Dar es Salaam, Tanzania

Phone:255-51-112195

Fax:255-51-113742

Telex:41415

Bank Name: Citibank

Address:Peugeot House

7th Floor

P.O. Box 71625

Dar es Salaam, Tanzania

Phone:255-51-36222/113910

Bank Name:Greenland Bank

Address:Haji Brothers Building

P.O. Box 1945

Dar es Salaam, Tanzania

Phone:255 51 30148 or 0812-780607

Fax:255 51 116451

Bank Name:First Adili Bank

AddressPeugeot House

P.O. Box 9271

Dar es Salaam, Tanzania

Phone:255 51 11395

Fax:255 51 113295 or 36741

Bank Name:EuroAfrican Bank

Address:P.O. Box 3054

Dar es Salaam, Tanzania

Phone:255 51 35427/24975/110104

Fax:255 51 113740/116422

Bank Name:Tanzania Postal Bank

Address:P.O. Box 9300

Dar es Salaam, Tanzania

Phone:255-51-115567/110449

Fax:255-51-113724 or 114815

Bank Name:Peoples' Bank of Zanzibar

Address:P.O. Box 1173

Zanzibar, Tanzania

 

U.S. Embassy Trade Personnel

Contact:Benjamin Winford

Commercial Officer

Address:P.O. Box 9123

Dar es Salaam, Tanzania

Phone:255-51-666010

Fax:255-51-666701

Telex:41250 USA-TZ

 

Washington-Based USG Country Contacts

Contact:Ms. Debra Rogers

Tanzania Desk Officer

Address:U.S. Department of Commerce

Washington, D.C. 20008

Phone:(202)-482-5148

Fax: (202) 482-5198

 

Contact:Ricardo Zuniga

Tanzania Desk Officer

Address:U.S. Department of State

Washinton, D.C. 20521

Phone:(202) 647-8852

 

APPENDIX F - TRADE EVENT SCHEDULE

Dar es Salaam Annual International Trade Fair: July, 1999

Arusha Agricultural Show: September, 1999

Probable 1999 specialized Trade Events

Textile and Apparel Exhibition.

Information Management Technology.

Arts and Crafts Exhibition.

Tourism Exhibition.

Note: International Copyright, United States Government, 1997 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U. S. Copyright Law, Title17, United States Code.

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