Investing in Mining
Investing in Mining

The Government of Tanzania (GOT) generally has a favorable attitude toward foreign direct investment (FDI) and has had considerable success in attracting FDI. In 2012, FDI into Tanzania rose to over USD 1.1 billion, the highest in East Africa. The legacy of socialist policies endures in certain sectors, however, and some officials remain suspicious of foreign investors and free competition. There are no laws or regulations that limit or prohibit foreign investment, participation, or control, and firms generally do not restrict foreign participation.

Agriculture

Agriculture has been destroyed by both internal and external factors. However, revival of the sector can provide European companies with a number of primary products desirable by their citizens and the world over. This is essentially coffee, cotton, tea, cashew nuts, cocoa, vanilla. These products account for about 48 percent of Tanzania's GDP, provide 65 percent of total export earnings and are by far the largest employer. The sectors annual growth rate declined from 4% in 1999 to 3% in 2000 as a result of low short and main rainfall seasons, pests and inadequate availability and distribution of inputs.

The introduction of free market economy in 1985 has had a positive effect on the sector through introduction of semi-mechanized methods and new technologies especially in such sub sectors as cutflower and agro-processing industries. The growth of other sub sectors, e.g., agricultural equipment, farm implements, agricultural inputs etc.is still characterized by import dependence. Investment in mechanized and intensive agriculture has not born fruits due to non-implementation of land law reforms that is expected to go hand in hand with the open economy. However, the government is in the final stage of submitting the land law reform bill to Parliament this year. It is expected that such reforms will attract more investors in agriculture.

In addition, the revival of agriculture is the only way to fill the pockets of majority of Tanzanians and hence increasing their purchasing power and demand for imported goods.

In terms of dynamic sub sectors in agriculture, the cut-flowers has had a multiplier effect in both imports and exports. The sub sector that was introduced some seven years ago has attracted investments in new technology on irrigation systems, greenhouses and refrigerated trucks. Kilimanjaro Airport Development Company (KADCO) which manages Kilimanjaro International Airport (KIA), the gateway for cut flowers in the north of the country has a plan for construction of cold storage facility for cut-flowers in year 2002.

The other contributors to the agricultural sector are fish especially Nile Perch in Lake Victoria that has attracted a number of fish filleting plants, "organic coffee" and pigeon peas in Arusha and Kilimanjaro regions that are being promoted by TechnoServe, as well as other non traditional crops.

In general, the agricultural sector offers European companies a big opportunity for technology investment in the areas of farm implements, agro-processing industries, agricultural machineries, irrigation equipment, fishing equipment, agricultural inputs as well as general commodity trading.

Information Technology

The IT sector has been the fastest growing sector in Tanzania for the past 10 years. The advent of the Internet has impacted growth across all sectors but notably in the accelerated growth of the computer market. In recognition of this phenomenon, the government removed duty on computers and peripherals in year 2000. The competitiveness of the market has widened the range of products on offer and lowered prices. All major brand names, Compaq, IBM, Apple, HP are represented by licensed distributors.

The Tanzania Telephone Company (TTCL) has been partly acquired by Dutch and German firms (MSI and Detecon). It has introduced new product lines and improved efficiency. There are four companies (DATEL, WILKINS, SIMBANET, TTCL) that are licensed for data communication. In addition, there are four cell phone providers (Mobitel, VodaCom, Zantel and Celtel), five TV stations (ITV, TVT, DTV, CTN, CEN) and 12 FM radio stations that offer a range of communication services to the public.

The IT sector, with its tremendous growth rate brings a big opportunity for business in Tanzania. The mushrooming number of Internet cafes in urban centers offers a big opportunity for computers, especially refurbished ones that are available in abundance in developed countries. In addition, most middle level managers and small businesses are taking advantage of the lower prices and are now computerizing offices and providing computer training in schools. This is potentially a big market for IT companies.

Environment and Energy

Tanzania has ratified several international and regional conventions with regard to environment regulations. However, like many developing countries, Tanzania is faced with fundamental environmental and energy challenges which have a big impact in the growth of the economy. Water pollution in coastal and inland waterways, industrial pollution in urban areas and de-forestations are the main environmental tyrannies facing Tanzania. Indeed, the country has not been able to take advantage of the available technologies to create a sustainable environmentally friendly situation The National Environment Management Council (NEMC) continues to offer technical assistance and raise awareness on rational resource use and environmental protection to government and general public.

Four management systems for assistance on adoption of environmentally sustainable natural resources management practices have been identified, namely : 1) the network of national parks, 2) the national system of game reserves as a second network of protected areas, 3) community-based approaches in areas adjacent to protected areas on lands owned by communities and supported by local districts and 4) coastal resources at both the national and local levels.

With regard to Energy, petrol fuel, hydro electric and coal are major sources of commercial energy in the country. Charcoal which results from tree burning is also widely used in urban areas with a very big price of environment degradation. The trend of energy consumption in Tanzania is dominated by biomass that accounts for 90%, petrol accounts for 8% and electricity accounts for 1.2%. Other energy sources such as coal, solar and wind accounts for less than 1%. The growth rate of the energy sector was 4% in 1999 and 5% in 2000 as a result of increase in production of electricity and demand by consumers particularly the industrial ones.

The opportunities available for the environment and energy sector are in the areas of : (i) petroleum-Tanzania Petroleum Development Corporation in collaboration with international companies, Dublin International, CANOP (T) Ltd and Ndovu Resources continue research and exploration in southern regions and along the coastal line (ii) solar - Global Environment Facility (GEF) sponsored data collection for preparation of solar development programme. Negotiations are in progress on reducing duties on solar equipment; (iii) natural gas - negotiations are ongoing on how to utilize natural gas found in deposits in the south coastal areas; (iv) wind: research on establishing speed of wind has been completed and potential areas are identified for wing energy and (v) geothermal on which research is on going and a private company, First Energy in collaboration with investors is working on possibility of starting an electricity generation project.

Health

The Health sector is faced by many challenges especially in the advent of HIV disease and immunity of chloroquine medicine to malaria. Statistics for 1996 to 1999 indicate that there has been little change in number of patients reporting and admitted in hospitals.

Malaria, AIDS, diarrhea and acute respiratory diseases are major causes and leading diseases for admissions and deaths. Medical services have been highly improved to ensure availability of drugs and essential medical equipment in hospitals and health centers. By year 2000, Tanzania had 179 hospitals, 529 health centers and 4005 dispensaries. In terms of ownership, government owned 60% of all health facilities, 20% was owned by the private sector, 15% by religious institutions and 5% by public institutions.

Tanzania imports almost 90% of its pharmaceuticals and medical equipment. Both imports and manufacturing of pharmaceuticals are regulated by the Tanzania Pharmacy Board. The three pharmaceutical manufacturing companies, Keko Pharmaceutical Industry, Shellys Pharmaceutical Industries and Mansoor Daya Industries of Dar es Salaam are faced with cheap competing products mainly from India, China and other Far East countries.

Sales opportunities available in the health sector are in hospital equipment, research and production facilities, drugs and pharmaceuticals, preventive facilities e.g., condoms, mosquito nets, etc

Construction

The Tanzania Statistics Bureau does not keep data on construction activities in the economy. The available data is on construction of public works under the Ministry of Works. However, with the advent of the market economy, there are construction activities in the private sector that is not captured and could provide very significant information for income and job creation.

The Registration Board of Contractors registers contractors of various categories, monitors performance of contractors and building capacity in line with the current liberalized economical environment. The Board also registers and accredits engineers in the country while Tanzania Association of Consultants keeps a register of consultants. The two organizations provide a forum for construction issues. The National Construction Council is a regulatory body for civil engineering contractors. It approves the classification and registers/de-register contractors.

Tanzania recognizes that rural districts in Tanzania are the hub of agricultural production and home to 80% of the country's population. In view of that, the development objectives focus on a regional roads programme down to the district level, which is responsible for supporting road maintenance to 60% of the country's roads. The objectives envisage, among other things, increasing the percentage of district roads rehabilitated/maintained by the private sector from 5% of all district roads (1997) to 80% in 2003. Additionally, over 1,000 Tanzanian contractors and consultants will receive both direct and indirect assistance in management and execution of road rehabilitation and road maintenance contracts.

The biggest opportunity available for the construction industry is in facilitation of importation of construction equipment for hire to small contractors. Small road contractors in Tanzania would benefit from the facility since they are unable to invest on equipment of their own.

Consumer Goods

Local industry accounts for some 15 percent of consumer goods used in Tanzania. It is mainly limited to the processing of agricultural products and light consumer goods. The gap of 85% is imported from South Africa, Kenya, the Middle East, India, the Far East (Singapore, Malaysia and South Korea, China, Japan and USA, UK countries). The increased trade, resulting from open market policy, has been well received but has also brought some concerns as some low quality products such as milk and milk products, fruit and fruit juices, toys, etc. from the international market are dumped in the Tanzanian market. The Tanzania Bureau of Standard has intervened and in some instances averted dumping of these products in Tanzania.

With a population of about 35 million, the slow pace of industrialization coupled with adoption of regional integration in East and sub-Saharan Africa, Tanzania's dependence on imported consumer goods is likely to remain for the coming 20 years or so. However, recent government effort in facilitating Export Processing Zones is expected to revamp the agro processing and increase agricultural goods for export and the internal market.

EAHP seeks to increase access to finance and improving management skills of the small and medium size sectors. It is expected that after provision of such services the small manufacturing enterprises will be able to contribute to the economy by increasing supply of goods.

Financial Services

Tanzania Finance and Enterprise Development (TFED) project (1993 – 1997) assisted the government of Tanzania to lay down a framework for reforms and ultimately liberalized the financial sector. Before 1995, public/state banks dominated the market. Interest rates were very high, investments were made with no basis for economic/financial viability, cost of borrowing was very high and lending to the private sector was limited to short term loan products.

Reforms of the financial sector exposed the public banks and the government to free market forces. Treasury Bills interest rates leveled to market rates, inefficient banks were closed or restructured while others were sold and acquired by efficient venturers and to top it all new local banks and foreign multinational banks entered the market. The list of banks operating in Tanzania is as shown below:

· Foreign banks:

  • (1) Citibank (USA) (2) Barclays Bank (UK) (3) Standard Chartered Bank (SA) (3) Amalgamated Bank of South Africa – bought National Bank of Commerce (4) Stanbic Bank (South Africa) (5) Kenya Commercial Bank (6) Malaysia Bank (7) Habib Bank (Pakistan) (8) East African Development Bank (9) United Bank of Africa (10) Euro Africa Bank

· National Banks:

(1) CRDB Bank (2) Akiba Commercial Bank (3) Tanzania Investment Bank (4) AZANIA Bankcorp (5) National Micro Finance Bank (6) CF Bank (7) EXIM (T) Bank (8) National Bureau de Change (9) Tanzania Postal Bank (10) Kilimanjaro Cooperative Bank and (11) 3 small community banks in Dar es Salaam, Mwanga and Mufindi

· Other Financial Institutions:

  • (1) Tanzania Development and Finance Limited (2) Capital Finance Ltd. (3) Fedha Fund Ltd (4) Savings and Finance Ltd

· Non Financial Institutions that offers some financial services:

  • (1) Social Action Trust Fund (SATF) – Seed fund of $ 10 million given by USAID to lend to large enterprises in private sector (2) Risk Management and Profit Sharing Fund (RMPS) – Seed Fund of $ 2 million given by USAID to lend to Small and Medium Enterprises (3) Mtaji Fund – Seed fund of $600,000 given by SNV – Netherlands (4) Small Enterprise Loans Fund (SELF) – Seed Fund of $8 million loaned to government from ADF for lending to Micro Finance Institutions and about 12 NGOs that are donor funded.
  • The opportunities available for the sector are mainly linkage to sound investors as well as providing services to the growing number of community banks that require technology for efficient delivery of services. The biggest constraint for growth of commercial banks is savings mobilization as most banks are not yet able to serve the rural market. At present the commercial banks' network is limited to urban and peri-urban areas only. The lack of a development bank has been the biggest setback to financial institutions' contribution to the growth of economy as some sectors, e.g., agriculture, manufacturing, real estate, etc., requires long term loans that are not provided by commercial banks.

Mining

  • Though agriculture is the backbone of the economy, at present, mining is the engine of economic growth. The sector had a growth rate of 14% in year 2000 compared with 9% in previous year. During 2000 for example, income generated by mining sector increased 130% from $80.4 million in 1999 to $ 185.1 million. In 2000 Tanzania's mineral exports accounted to 27% of total exports. Production of gold and gemstones contributed to greater extent to the growth of the sector.
  • Gold mines are located in the northwest regions of Mwanza and Shinyanga as well as Mara region to the East of Lake Victoria. In year 2000 sales from gold export recorded an increase of 208% compared to 1999. Export sales of diamond from Williamson Diamonds at Mwadui recorded an increase of 70% from $ 43.75 million compared to $25.76 in 1999. Big international companies that are involved in mineral prospecting include Kahama Gold Mines Corporation, Ashanti Goldfields Limited, Resolute Limited, Afrika Mashariki Gold Mine, Anglo – American Minerals, Tanganyika Gold Mines, Pangaea Minerals, Kiwira Coal Mines as well as Williamson Diamonds Limited.
  • In the year 2000, recorded production of gemstones was 151,000 kgs compared to 92,000 kgs in the previous year, an increase of 58%. Most of the gemstones are exported unprocessed thus fetching very low prices in the world markets. Gemstones that are abundant in the south, north and north east coast offer great potential, though full potential of the sub sector has not been realized. In the southern areas of Tanzania, at Tunduru and Songea districts, precious gemstones such as saphire, alexandrites, ruby etc are abundant in alluvial soils. Matombo mountains and Mahenge areas in Morogoro region, are rich with deposits of ruby known all over the world as Matombo ruby. Areas of Tanga regions along Umba river are known by their potential for green garnets while the Arusha region at Mererani and Mbughuni produce the famous tanzanite, a rare ruby found in Tanzania only. Other gemstones that are found in the area includes rhodolite and tsavorite. Except for the tanzanite mining that has both mechanized and semi-mechanized production, mining of all other gemstones found in alluvial soils are controlled by approximately 50,000 small miners who uses hand tools and equipment. Actual statistics on contribution of gemstone to the economy are hard to find as a large part of the business is conducted outside official marketing channels. However, the government is now introducing regulation that will enable miners to disclose their transaction for verification and taxation.
  • Tanzania also boasts of deposits of coal, tin, phosphates, nickel, cobalt, copper, gypsum and pouzzolana. Exploration is ongoing to determine economic viability of large scale mining of the three minerals.
  • The opportunity for mining is in finding investors especially in locations e.g., Muheza and Chunya with gold deposits that lack a serious investor or venture partner who can collaborate with artisanal miners. As for small miners, the opportunity is on market linkage to international buyers as well as assistance on sourcing hand tools and small equipment such as water pumps, generators, compressors, etc.

Textiles

  • Tanzania produces raw cotton and textiles. Cotton is the fifth largest agricultural export commodity contributing 3% of total exports in 2000 after coffee(15%), raw cashewnut (9%), tobacco (7%) and tea (6%). However, the textile industry that was vibrant in the 1970's has lagged behind after market liberalization. This situation forced the government to sell ginneries and textile industries that were previously under public ownership and management in order to revamp the sector. As a result, Urafiki, Ubungo, Mwanza and Musoma textiles industries are all under new ownership. Production of textile was 74,000 sq. metres in 2000 compared with 50,000 sq.m. in 1999; an increase of 48%.
  • Private textile industries such as Sunflag and A-T Textiles (located in Arusha) as well as KTM of Dar es Salaam have been operating efficiently and currently are the largest contributor to the growth of the textile sector. Two of the companies have since been able to take advantage of the African Growth Opportunity Act (AGOA) and have started shipping textile products to USA this year.
  • The opportunities available in the textile sector are related to the AGOA and the capitalization process that will be undertaken by the private owners. The latter is envisaged to result to demand for linkage to suppliers of technology.

Tourism

  • Tourism is one of Tanzania's dynamic sectors that has shown significant growth in recent years. Tanzania's tourism policy that favours "selective" to "mass" tourism mainly for purposes of ecology conservation has in a way resulted to limited earnings albeit with a sound economic purpose. Revenue from tourism increased a paltry 0.8% in the year 2000 compared to the previous year.
  • Tanzania has a wide range of tourist attractions with a potential for the best tourism industry in Africa. The Serengeti and Ngorongoro national park, with the crater in the rift valley, provides sanctuary to millions of animal species that attract tourists from the world over. The Selous National Park, the largest national park in the Africa is only surpassed by Serengeti for concentration of wild animals. Selous is a beautiful park used for eco tourism and bird watching. Mount Kilimanjaro, the tallest point in Africa, is a world attraction offering mountain climbing tourism. Other national parks like Mikumi, Manyara, Sadani, Katavi are all good tourist attractions. The Island of Zanzibar and the whole coastal area of the mainland have beaches of world class. Zanzibar itself has a wide coastal area for scuba diving that attracts tourists from all over the world. Cultural tourism centers have been established in Arusha, Kilimanjaro, Tanga and Mbeya regions.
  • Opportunities available in the tourism sector are agency services, camping equipment, vehicles, hotel equipment, diving equipment, tourist boats, mountain climbing equipment as well as tour promotion services e.g., web designing etc

Transportation

Tanzania's position on the world map makes it an obvious operator of land, marine and air transportation modes. Tanzania has 85,000 kms of roads out of which 13,630 are tarmac roads and 30,000 kms of rural roads. Tanzania also has 4,460 kms of two railway lines systems one running from Dar es Salaam to Mwanza, with a junction to Kigoma, Arusha and Tanga and another exclusively running from Dar es Salaam to Zambia. On waterways, Tanzania has a fleet of vessels in the inland waterways in lakes Victoria, Tanganyika and Nyasa and coastal shipping services. The country has four major costal ports at Dar es Salaam, Tanga, Mtwara and Zanzibar. In addition, the country has two international airports at Dar es Salaam and Kilimanjaro, and a number of other small airport and air strips.

  • All roads are under the authority of Tanzania Road Agency (TANROADS) that was given a mandate to operate a Road Fund for construction and maintenance of main roads and rural roads. Urban roads are under local government authorities. Road transportation services are provided almost entirely by the private sector with a higher growth rate than others. The Tanzania Railways Corporation (TRC) - under going privatization - and Tanzania Zambia Railways Authority operate railway lines with TRC operating the 2,600 km meter gauge railway that was owned by the former East African Railways and TAZARA operating 1,860 kms of standard gauge railways running from Dar es Salaam to Kapiri Mposhi in Zambia. The habours are operated by the Tanzania Habours Authority (under privatization). Air transport services are provided by both the public and private sector. However, the Air Tanzania Corporation (ATC) – national flag carrier airline is in the process of being sold to private operators.
  • The sector brings a big potential for European companies especially in the area of inland cargo transportation equipment for road services and marine transportation in both inland and coastal waterways. Other available opportunities are in passenger transportation equipment, small and medium air transportation equipment as well as traffic monitoring equipment
  • Investing in Mining

  • Investments in Infrastructure

  • Investments in Consumer Goods

  • Investments in Gas Explorations

recommend to friends
  • Google+
  • PrintFriendly