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Invest in Tanzania: Focus Tabora May 2013 INVEST in TANZANIA: FOCUS TABORA

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Invest in Tanzania: Focus Tabora May 2013 INVEST in TANZANIA: FOCUS TABORA Tabora Invest in Tanzania: Focus Tabora May 2013 INVEST IN TANZANIA: FOCUS TABORA April 2013 Millennium Cities Initiative, The Earth Institute Columbia University, New York, 2013 The Millennium Cities Initiative series of investor’s guides Invest in Kenya: Focus Kisumu, 2007 Invest in Ghana: Focus Kumasi, 2008 Invest in Malawi: Focus Blantyre, 2011 Invest in Ethiopia: Focus Mekelle, 2012 Invest in Tanzania: Focus Tabora, 2013 DISCLAIMER This publication is for informational This publication does not constitute an purposes only and is meant to be purely offer, solicitation, or recommendation for educational. While our objective is to the sale or purchase of any security, provide useful, general information, product, or service. Information, opinions the Millennium Cities Initiative and other and views contained in this publication participants to this publication make no should not be treated as investment, representations or assurances as to the tax or legal advice. Before making any accuracy, completeness, or timeliness of decision or taking any action, you should the information. The information is consult a professional advisor who has provided without warranty of any kind, been informed of all facts relevant to express or implied. your particular circumstances. Invest in Tanzania: Focus Tabora © Columbia University, 2013. All rights reserved. Printed in Canada. ii PREFACE Tanzania, along with 189 other countries, Another key selection criterion was the adopted the Millennium Declaration in willingness of the cities to demonstrate 2000, which set out the Millennium their commitment to the project by pledg- Development Goals (MDGs) to be achieved ing the equivalent of 15% of the external by 2015. The MDG process is spearheaded funding to cover some of the local costs of in Tanzania by the Ministry of Finance implementation. In the case of Tabora, the and Economic Affairs. fifth Millennium city to have an investors’ guide prepared for it, the Millennium Village This Guide is part of the Millennium effort is Mbola, in the neighbouring Uyui district in and was prepared by the Millennium Cities mid-western Tanzania. Initiative (MCI), which is an initiative of The Earth Institute at Columbia University, The idea behind this Guide is to offer the undertaken in cooperation with the reader a brief description of investment MDG Support Team at the United Nations opportunities in the Tabora area, supple- Development Programme. The MCI is mented by a description of the investment guided by Jeffrey D. Sachs and directed by climate and of the broader context of Susan Blaustein. Its present efforts focus Tanzania and East Africa. The MCI does on helping eleven cities in eight African not believe that serious investors can be countries to achieve the MDGS, through attracted to an area through a purely integrated development strategies that ‘promotional’ approach, one that promotes encompass social-sector priorities and the positive while hiding the negative. So goals to attract increased productive pri- the Guide is written to be credible. The vate investment, both domestic and for- challenges that potential investors would face eign. The Millennium cities are: Mekelle, are described along with the opportunities Ethiopia; Accra and Kumasi, Ghana; they may be missing if they ignore Tabora. Kisumu, Kenya; Blantyre, Malawi; Bamako and Segou, Mali; Akure and Kaduna, The Guide is intended to make Tabora and Nigeria; Louga, Senegal; and Tabora, what Tabora has to offer better known to Tanzania. For more on the MCI, see the investors worldwide. Although we have MCI website: http://mci.ei.columbia.edu. had the foreign investor primarily in mind, we believe that the Guide will be of use Under the Regional Partnership to to domestic investors in Tanzania as well. Promote Trade and Investment in While by no means the sole driver of Sub-Saharan Africa, funded by the growth and development, foreign direct Government of Finland, three of the investment does have a distinctive contri- above-mentioned cities, i.e., Mekelle, bution to make. Not only does it bring Ethiopia; Kumasi, Ghana; and Tabora, scarce capital, it also brings know-how, Tanzania, are receiving additional assis- technology and access to foreign markets. tance to support their efforts to attract Furthermore, it helps improve the competi- more productive private investment. tiveness of domestic enterprises, which The cities were chosen in part for their must be the foundation of all growth. proximity to the Millennium Villages www.earth.columbia.edu/ We hope that our investor readers find millenniumvillages/ ]. this Guide a useful practical tool. iii ACKNOWLEDGEMENTS This Guide was prepared by the Our thanks are also owed to the compa- Millennium Cities Initiative (MCI) of nies and government agencies that partici- Columbia University (see Preface), under pated in the workshop in Tabora, as well the responsibility of Susan Blaustein, as to investors and government officials Director, and Karin Millett, Senior who provided further inputs to the Guide. Researcher/Advisor, MCI. While we cannot acknowledge all contrib- utors individually, we should particularly We are grateful to the Regional like to thank Mkama Bwire, Rashid Juma, Commissioner of the Tabora Region, Fatma Ramadhan Kalingonji, Fred Kananura, Abbakar Mwassa, as well as to officials of Willbard Kente, Lucas P. Kusare, Leonard the Tabora municipality and the Tabora Kushoka, Damas Kuya, Jasper Kwesiga, Urban district for their cooperation in this Japhary Lyimo, Young Il Mah, Rudolf project and in the MCI’s work in Tabora Mashele, William Masubi, Augustino more generally. And we thank the District Mbulumi, John Mchele, Dick Mlimuka, Commissioner, Suleiman Omar Kumchaya; Frank O. Mmasi, Daniel Moshy, Esther the Lord Mayor, Gulam Hussein Remtullah L. Mwangamila, Zena Mwangati, Ditrick Dewji; and the Municipal Director, Mwinuka, Abdallah Nassor, Philbert Sipora J. Liana, for their participation in Ndege, Philip Ndilahomba, Samwel the workshop held in Tabora on 11 and 12 Neligwa, Dotto Ngereza, Gerson Nyadzi, October 2012. We thank as well Vishwas Mukesh and Farida Patel, Andrew Soko, P. Govitrikar, our international consultant, Eustard R. Tibategeza, and Thomas Tukay. who drafted the Guide and conducted the workshop in Tabora; Deo Damian Msilu, The preparation of the Guide was helped the MCI Coordinator in Tabora, who substantially by an MCI report on invest- organized the feedback workshop and ment opportunities in Tabora prepared provided inputs to the Guide; and Joy by KPMG International. The report is Morabu, the Regional Coordinator for available at http://mci.ei.columbia. Eastern and Southern Africa, who helped edu/research-publications/investment- conduct the workshop and also provided working-paper-series/ . inputs to the Guide. Photographs for the Guide were provided by the Tanzania Tourism Board, the Ugalla Game Project, and Deo Damian Msilu. Nelson Vigneault designed the Guide. iv TABLE OF CONTENTS ii Disclaimer 59 III. Taxes and laws iii Preface 59 1. Taxation in Tanzania iv Acknowledgements 59 • Taxes on profits and income 1 Table of contents 61 • Taxes on goods and services 3 Executive summary 62 • Taxes on international trade 4 Maps 5 Tanzania and Tabora in brief 63 2. Legal framework for investment 63 • Legal and judicial system 7 I. The broader context 64 • Investment law 65 • Incorporation and exit 7 1. A sketch of Tanzania 66 • Priorities and restrictions and East Africa 67 • Investment protection, investor 7 • The country treatment & dispute settlement 11 • The region: East Africa 69 • Land 12 2. The economy 69 • Foreign exchange and 14 • Markets for investors performance requirements 17 • Trade 19 • Foreign direct investment 71 IV. Investors and 19 • Aid, debt and reserves investment climate 71 1. Investor assessment of the 21 II. Investing in Tabora investment climate 21 1. Introduction 73 2. Foreign investors in Tanzania 22 2. Opportunities for investors 23 • Main areas of interest to 75 Appendices potential investors 75 A.Tabora firms interested 38 • Other areas of interest to in foreign collaboration potential investors 39 3. Incentives, special zones and 76 B. Pointers to further information related matters 39 • Incentives in Tanzania 79 C. Public holidays in Tanzania, 2013 41 • Incentives in Tabora 42 • Investment and tax treaties 80 Sources consulted 43 • Special zones 44 4. The business environment 44 • Infrastructure 53 • Human resources 55 • Doing business in Tanzania 57 5. Tabora as an investment location: A summary for investors 1 The miombo woodlands in the Tabora region are eminently suit- able for producing high-quality hardwood and for hardwood products there is a substantial market. My own 10-year experience in this sector suggests, for example, that there is much unmet demand, both foreign and domestic, for hardwood furniture. What is lacking in Tabora is the modern machinery that can turn hardwood into furniture and other consumer products. For investors who can bring in such machinery, there are many opportunities in timber processing. Abdallah Nassor, Managing Director, Tabora Msitu Products Co. Ltd. As a place to invest in, Tabora has many advantages. Its location not only makes it the centre of a grow- ing market of some 15 million con- sumers in western Tanzania, it also makes it a good place to access the adjacent parts of neighbouring countries: Zambia, Burundi, Rwanda, and the Democratic Republic of the Congo. In addition, as this guide documents, the region has abundant natural
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