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TANZANIA DTIS 2017 | IV Contents x ACKNOWLEDGMENTS xii EXECUTIVE SUMMARY xxvi ABBREVIATIONS 2 CHAPTER 1: INTRODUCTION 4 Notes 6 CHAPTER 2: MACROECONOMIC OVERVIEW, BUSINESS- ENABLING ENVIRONMENT, AND THE 2005 DTIS LESSONS LEARNED 6 Macroeconomic Overview 10 Business-Enabling Environment 11 Trading Across Borders 13 Trade and Poverty 13 Implementation of the 2005 DTIS Action Matrix 14 Poor Follow-Up on the 2005 DTIS 15 Lessons from the 2005 DTIS 16 Policy Vision of the Administration and the DTIS Update 16 DTIS Update Focus Areas 17 Notes 17 References 18 CHAPTER 3: TRADE POLICY AND TRADE PERFORMANCE 19 General Duty Schedules and Tariffs 20 Tariff Policy and the Use of Rebates 20 Incentive Regime 21 Export Duties 21 Regional Integration 23 Trade Performance 21 Trade in Services 22 Characteristics of Exporters in Tanzania 23 Trade Costs 25 Recommendations 26 Notes 26 References Contents | V 28 CHAPTER 4: BORDER MANAGEMENT, TRADE LOGISTICS, AND TRANSPORT 29 Tanzania’s Trade Logistics and Trading Across Borders Performance 33 Trade Facilitation Agreements 35 Border Management Agencies 36 Tanzanian Customs Integrated System 37 National Single Window and TANCIS 37 Single Window: Coordination, Transparency, Security, and Information Technology 37 Port Community System 38 Other Border Management Agencies 38 Transparency, Information, and Communication Mechanisms 39 Port Efficiency and Border Clearances 40 Release Time at the Tanzania Borders 41 Dar es Salaam and Kilimanjaro Airports 42 Namanga Land Border with Kenya 42 One-Stop Border Post Framework for the EAC 43 Small-Scale Trade 43 Dar es Salaam Maritime Gateway Project 44 The Great Lakes Trade Facilitation Program 44 EAC Operation to Accelerate Regional Integration in the East Africa 44 Role of the Private Sector in Trade Facilitation and Logistics 45 Availability, Quality, and Performance of Logistics Services 45 Recommendations 46 Notes 47 References 48 CHAPTER 5: AGRICULTURE: TRADE AND REGULATORY POLICIES 53 Recent Sector Performance 58 Agricultural Policy and Institutional Framework 58 Export Licenses 59 Agricultural Tariffs and Taxes 62 Agricultural Inputs—Regulatory Environment 69 Standards and Technical Regulations 70 Sanitary and Phytosanitary Measures 71 Radiation Testing for Agriculture and Foodstuff Imports and Exports 72 Selected Agricultural Sectors: Growth and Structural Change 72 Maize 74 Rice 75 Sugar 76 Cashew 78 Fisheries 78 Addressing Constraints to Growth 79 Notes 80 References 84 CHAPTER 6: EXTRACTIVE INDUSTRIES 86 Institutional Framework TANZANIA DTIS 2017 | VI 87 Market Structure and Trends 87 Large-Scale Mining 92 Artisanal and Small-Scale Mining 96 Gas Sector 98 Development Challenges 98 Weak Business-Enabling Environment Constraints in the EI sector and its Links 99 Unclear Regulatory Framework to Create Upstream Links 101 Downstream Beneficiating Policies May Have Unintended Consequences 105 The State-Owned Companies’ Conflicting Roles and The Financial Self- Sustainability is Not Guaranteed 106 Formalization of the ASM Sector is Proving Difficult 109 Lack of Regional Coordination Limits the Opportunities to Create Links from the EI Sector 111 Addressing the Constraints 111 Recommendations 114 Notes 116 References 119 Annex 6A 120 CHAPTER 7: TOURISM 121 Tourism Growth Trends, Market Segments, and Sector Assets 121 Growth Trends 121 Market Segments and Sector Assets 123 Tourism Policy and Institutional Framework 124 Development Challenges 124 Policies and Governance 128 Increasing Economic Links 136 Human Resource Development 137 Finance and Land 138 Business-Enabling Environment 140 Air and Land Access 140 Addressing Constraints to Growth 140 Existing World Bank Projects and Programs 140 Priority DTIS 2017 142 Notes 142 References 144 CHAPTER 8: ZANZIBAR 146 Business-Enabling Environment 148 Zanzibar Trade 149 Agriculture 150 Cloves and Spices 151 Essential Oil Distillery in Pemba 152 Performance of Livestock Subsector 153 Fisheries Subsector 153 Seaweed Subsector 155 Tourism Sector 156 Regional Integration Contents | VII 156 Regional Labor Mobility 157 Access 157 Enhanced Links 157 Development Constraints 157 Supply Side Constraints 158 Demand Constraints 159 Small-Scale Tourism 160 Notes 160 References BOXES 15 2.1: Implementation Challenges Identified in the FYDP II: Lessons Learned 21 3.1: Example of Effective Rate of Protection 20 3.2: Intra-Regional EAC Trade Mirror Trade Data 34 4.1: WTO Trade Facilitation 53 5.1: Applying Risk Assessment, Risk Management, and Risk Communication 54 5.2: The Tanzania Agriculture and Food Security Investment Plan 58 5.3: Procedures for Obtaining an Export Permit for Staple Foods 60 5.4: Limitations on Export Marketing: The Example of Coffee 61 5.5: The EAC Simplified Trade Regime 61 5.6: Local Taxes and Levies: The Case of Maize in Southern Tanzania 71 5.7: Obtaining a Radioactivity Analysis Certificate 75 5.8: Tanzania Rice Tariffs Fluctuating from 2005 to 2015 99 6.1: Coal Mining License Reallocation 100 6.2: Joint Ventures: A Policy Tool to Create Upstream Links 102 6.3: Policy Options to Move Downstream in the EI Value Chain 103 6.4: Copper and Gold concentrate export ban 104 6.5: Why Domestic Gas Allocation Should Not Be Changed after an Agreement: The Case of Egypt 110 6.6: The Zambia-Tanzania-Kenya Interconnector: To Facilitate Power Trade Between the SAPP and the EAPP 112 6.7: The Mtwara Development Corridor: A Potential Driver for Regional Integration 126 7.1: Understanding GATS Terminology 132 7.2: Nomad Tanzania 139 7.3: Tanzania Major Taxes and Fees 147 8.1: Zanzibar Business Licensing System 148 8.2: Zanzibar Fiscal and Other Incentives FIGURES 7 2.1: Growth continues to outpace East African Community comparators, 2011–16 7 2.2: Growth contribution by major sectors, 2004–14 8 2.3: Inflation remained low, Feb 2012–Feb 2017 8 2.4: Narrowing current account deficit, Jun 2013–Jan 2017 10 2.5: Real GDP and inflation, 1980–2015 11 2.6: Doing Business Indicators, 2010–16 11 2.7: Doing business indicators: Overall, Tanzania and selected countries, 2016 TANZANIA DTIS 2017 | VIII 12 2.9: Documentary Compliance Costs for Imports and Exports, Tanzania and Selected Countries, 2016 12 2.8: Doing business indicators: Trading across border, Tanzania and selected countries, 2016 12 2.10: Border Compliance Costs for Imports and Exports, Tanzania and Selected Countries, 2016 23 3.1: Openness to Trade, 2014–15 23 3.2: Share in World Exports of Goods and Services, 2004–14 18 3.3: Exports by Sector, US$ million, 2005–15 18 3.4: Share of Total Exports by Sector, 2005–15 18 3.5: Gold exports and price, 2005–15 19 3.6: Growth Decomposition in Agricultural Exports, 2005–15 22 3.7: Compound Annual Growth Rate in Services Exports, 2005–13 24 3.9: Bilateral Trade Costs with Major Trading Partners, 2005–13 24 3.8: Progress on Reducing Trade Costs, 2005–13 25 3.10: Change in Bilateral Trade Costs, 2005–13 25 3.11: Bilateral Trade Costs, Agriculture, 2005–13 25 3.12: Bilateral Trade Costs, Manufacturing, 2005–13 30 4.1: Logistics Performance Index, Tanzania and Selected countries 2007–16 31 4.2: Doing Business Trading Across Borders Indicator, Tanzania and Selected Countries 32 4.3: Doing Business Overall Indicator, Tanzania and Selected Countries 33 4.4: Trading Across Borders, Time to Trade Subindicators, 2016 41 4.5: Dar es Salaam Port: Share of Containers by “Risk” Channel, Apr 2014–Dec 2015 41 4.7: Dar es Salaam and Kilimanjaro Airports: Imports by “Risk” Channel, May 2014–Dec 2015 41 4.6: Dar es Salaam Port: Release Time by “Risk” Channel, Apr 2014–Dec 2015 41 4.8: Dar es Salaam and Kilimanjaro Airports: Release Time by Risk Channel, days, May 2014–Dec 2015 42 4.9: Namanga Land Border with Kenya: Imports by Risk Channel, days, Nov 2014–Dec 2015 42 4.10: Namanga Land Border with Kenya: Release Time by Risk Channel, days, Nov 2014–Dec 2015 55 5.1: Tanzania’s Agriculture Trade Balance, 2006–15 55 5.2: Agriculture, Share of Merchandise Exports, 2006–15 65 5.3: Fertilizer Use in Tanzania, 2005–14 74 5.4: Rice Production, Area, and Yields, FY2005–13 78 5.5: