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PRESENTATION ON INVESTMENT CLIMATE AND OPPORTUNTIES IN TANZANIA

UNITED REPUBLIC OF TANZANIA TANZANIA INVESTMENT CENTRE (TIC). PRESENTATION ON INVESTMENT CLIMATE AND OPPORTUNTIES IN TANZANIA Presented by: Mr. Revocatus Arbogast , On Behalf of Executive Director, Tanzania Investment Centre. AGENDA. Tanzania Economy Why Tanzania Market Access

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PRESENTATION ON INVESTMENT CLIMATE AND OPPORTUNTIES IN TANZANIA

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  1. UNITED REPUBLIC OF TANZANIA TANZANIA INVESTMENT CENTRE (TIC) PRESENTATION ON INVESTMENT CLIMATE AND OPPORTUNTIES IN TANZANIA Presented by: Mr. RevocatusArbogast, On Behalf of Executive Director, Tanzania Investment Centre

  2. AGENDA • Tanzania Economy • Why Tanzania • Market Access • Investment Facilitation Services • Institutions which support investment • Investment Incentives • Trend of Investments • Investment opportunities • Conclusion

  3. T A N Z A N I A’S E C O N O M Y Population: 41.9 Million (2010 est.) GDP Per Capita $ 660 (2010 Est.) Population Growth Rate 2.9 % (2010 est.) Real GDP Growth Rate 6.4% (2011 ) Labour Force: 20.38 million (2010 est.) Inflation 12.7% (2011) Agriculture Employs 80% of the Workforce Source: NBS/BOT

  4. WHY TANZANIA? TANZANIA

  5. 1. Peace & Political Stability Tanzania is politically stable, we have enjoyed political stability since independence in 1961, it is free from tribal or religious confrontation. We have elected National assembly and elected President who serve for the maximum of two Presidential term. 2. Strategic Location of Tanzania Tanzania’s strategic geographical location and easy connectivity business locations worldwide is a motivating factor to investors. Has 3 major ports (Tanga, DSM and Mtwara – providing service to neighboring landlocked countries) 3. Attractive Investment Fiscal Regime Tanzania has Stable and Predictable Fiscal Investment Regime - providing a Soft Landing to all investors. It recognizes that investors need to recover their Investment Costs first before paying corporation tax

  6. 4. Free Repatriation of Funds . Transfer of funds is allowed through any authorized bank in freely convertible currency of net profits, repayment of foreign loans, royalties, fees charges in respect of foreign technology, remittance of proceeds and payment of emoluments, etc 5. Investment guarantee Investors in Tanzania are guaranteed against nationalization and expropriation. Tanzania is a signatory of several multilateral and bilateral agreements on protection and promotion of investment. Among other international agreements and membership, Tanzania is a member of Multilateral Investment Guarantee Agency (MIGA) and Africa Trade Insurance Agency (ATIA) 6. Settlement of Disputes Tanzania is a member of International Center for Settlement of Investment Disputes, A dispute which is not settled through negotiations may be submitted to arbitration in accordance with the rules of procedure for arbitration of the International Center for Settlement of Investment Disputes 6

  7. 7. Access to credit from domestic sources . Foreign investor may, in relation to the business enterprises which he operates obtain credit from domestic bank and financial institutions up to the limit established by the bank of Tanzania 7

  8. REGIONAL AND INTERNATIONAL MARKETS Tanzania enjoys Preferential Market Access with; Japan, Canada etc Negotiated EBA – European Union AGOA (USA) Africa Growth and Opportunity Act Over 6,000 items EAST AFRICA About 130M People China Over 4,000 Items SADC 300m People

  9. INVESTMENT FACILITATION SERVICES Senior Government officials from the following Ministries/Government Departments have been stationed at TIC to assist investors to obtain various licenses and permits they need in order to start business. • Immigration • Registrar of Companies • Business License • Land • Labour • Tanzania Revenue Authority

  10. OUR COMMITMENT TO INVESTORS Application Maximum Time taken • Company Registration 3days • Industrial License 1day • Business license 1day • Certificate of incentives 7days • Resident Permit Class ‘A’ 14days • Resident Permit Class ‘B’ 14days • Special Pass 1day

  11. OUR COMMITMENT TO INVESTORS Application Maximum Time taken • Meeting with TIC staff Immediately • Arranging appointments 24hours • Preparation and confirmation 3days of itinerary for Potential investors

  12. NATIONAL INVESTMENT STEERING COMMITTEE (NISC) • In an effort to improve the business environment and foster economic growth through increased investment the Government formed a National Investment Steering Committee chaired by the Hon. Prime Minister. • Other members of the committee are Minister of Finance, Minister of Industries and Trade, Minister of Agriculture, Minister of Lands, Attorney General, Governor of the Bank of Tanzania and the Executive Director TIC (Secretary). • This committee is entrusted with the role of investment policy formulation and solving problems of investors on a fast track basis.

  13. NATIONAL BUSINESS COUNCIL • The Government has established the National Business Council to enhance Govt./Private sector “smart partnership”. • The Business Council is chaired by the President and the Executive Director of Tanzania Private Sector Foundation is the secretary. • The business council through Investors round table discussion advise the Government areas that need improvement

  14. INCENTIVES UNDER THE TIA, 1997 A) Tax incentives • Exemption of import duty on projects capital/deemed capital goods by 90% • Reduced Value Added Tax (VAT) on projects capital goods including deemed capital goods to 10% B) Non Tax incentives • Automatic immigration quota of up to 5 expatriates at the initial stage of the projects • Unconditional transferability through any authorized dealer bank in freely convertible currency of ; net profit, loan payment (servicing a foreign loan) royalties , fees and charges in respect of any technology transfer agreement, payment of emoluments and other benefits to foreign personnel. C) Strategic investor status In addition to existing investment incentives a potential investor may apply for a strategic investor status to seek additional investment incentives

  15. TREND OF REGISTERED INVESTMENT

  16. TREND OF PROJECTS REGISTERED WITH TIC FROM 2005 TO 2011 Number of Projects Source: TIC data

  17. OWNERSHIP OF PROJECTS REGISTERED BY TIC 1990 - 2011 Source; Tanzania Investment Centre, 2011

  18. TEN LEADING COUNTRIES THAT HAVE INVESTED IN TANZANIA (BY VALUE IN MILLION US$ ) 1990 –2011 Source: TIC Database

  19. FDI INFLOWS TO TANZANIA FROM 2006 - 2011 Source: UNCTAD - World Investment Report – 2012

  20. INVESTMENT PROJECTS FROM SWEDEN IN TANZANIA, 1990 -2012 • Tourism - 16 • Transportation-Cargo - 15 • Manufacturing - 14 • Agriculture - 4 • Construction - 4 • Telecommunication - 2 • Natural resources - 1 • Services - 1 • Human Resources - 1 • Energy - 1 • Finance - 1 • TOTAL Projects 60 TOTAL Investment US$ 494 M

  21. Swedish Projects • TANELEC-Manufactures of Electrical Equip • Bagamoyo Eco Energy-Under Establishment for Sugar, Power and Bio fuels (PPP) • Tanzania Portland Cement-Largest Cement • Scania (Tanzania) Ltd-Workshop and Show room • Basic Transmission Ltd-Digital TV transmission (From Analogue to Digital)

  22. INVESTMENT OPPORTUNITIES (Agriculture & Agribusiness)

  23. GOVERNMENT AND THE INTERNATIONAL COMMUNITY HAVE JOINED FORCES TO PROMOTE SAGCOT • The Southern Agricultural Growth Corridor of Tanzania (SAGCOT) is an international public private partnership which aims to transform the area’s agricultural productivity • It was launched at the World Economic Forum on Africa in May 2010 • Members of the partnership represent government, global business, the Tanzanian private sector, farmers, foundations and donor institutions • By catalysing large volumes of responsible private investment, the initiative aims to deliver rapid and sustainable agricultural growth • Investors in SAGCOT will benefit as public, private and donor organisations focus their investments, infrastructure developments and outgrower training on the corridor

  24. Opportunities for Investors in the Rice Sector

  25. TANZANIA OFFERS IDEAL AGRO-CLIMATIC CONDITIONS FOR RICE CULTIVATION AND A READILY AVAILABLE MARKET Tanzania’s rice competitive advantage ABUNDANT UNUSED LAND & RICH SOILS • Tanzania is slightly more than twice the size of California • Tanzania has 44 million ha of arable land • Only 9.5 million ha of the arable land is under cultivation • Rich alluvial clay soils, suitable for rice • Rainfall ranges from 200mm and 1600mm of rain per annum • Large river systems permanently fed by the highlands of the Great Lakes region • Tanzania has predominantly tropical climate AMPLE WATER & IDEAL CLIMATE • Local market of approximately 42 million people and regional markets with approximately 370 million people • Local rice imports of $16 million in 2011 • EAC rice imports of $180 million in 2011 • SADC rice imports of $660 million in 2011 LOCAL & REGIONAL MARKET POTENTIAL Source: FAO, Trade Map

  26. Opportunities for Investors in the Sugar Sector

  27. MORE THAN 300,000 TONS OF SUGAR SUPPLY GAP IN TANZANIA, SET TO INCREASE EXPONENTIALLY • The primary market opportunity for sugar producers in Tanzania is local: as existing sugar estates reach peak production, the supply gap is set to increase at an estimated 6% per annum from the current 300,000 tons / year, driven by economic and population growth 300,000 tons sugar deficit in Tanzania (1000 tons) • As incomesrise, sugar consumption in Tanzaniaisexpected to increaserapidlyfrom the currentlowlevels of per capita consumption • Despiterapid production growth of existingestatesfollowingprivatizations in the late 1990’s, supplycould not keep up with demand over the last decade • The supply gap is set to increase as existingestatesreachtheir full capacity: the Sugar Board of Tanzaniaestimatesthatcurrentproducerscouldpeakat 400,000 tons by 2020 • RegionalMarkets-East Africa >600,000 tons supply gap by 2020 Per capita sugar consumption 2010/11 est. Demand incl. industrial Estimated sugar demand >300,000 tons current supply gap Production World average per capita sugar consumption +18 kg/yr Source: Sugar Board of Tanzania, Illovo, Mtibwa, TPC, FAO

  28. TARGET SUGAR ZONES HAVE BEEN EARMARKED FOR SUGAR PRODUCTION BY THE GOVERNMENT Map of existing and proposed new sugar estates • There are 4 existing estates in Tanzania, producing a total of 300,000 tons of sugar per year and reaching their full capacity • In order to fill the local and regional sugar gap, the Government of Tanzania is looking to develop an additional 3 – 5 large sugar projects and working to prepare additional sites for sugar investments • 2 immediate site opportunities are described in annex, namely Ruipa and Mkulazi TPC sugarmill Kagera sugarmill Wami site Mtibwasugarmill Mkulazi site Ruipa site Kilomberosugarmill New target sugar zones Established mill Source: Sugar Board of Tanzania

  29. Opportunities for Investors in the Livestock Sector

  30. SIGNIFICANT GROWTH AND INVESTMENT OPPORTUNITIES EXIST ACROSS THE LIVESTOCK PRODUCTION CHAIN • Currently only 2% of all livestock are raised on commercial farms • Few animals are fattened before being slaughtered Raising & fattening • The training of local traders can create a useful network for buying livestock from rural areas Live animal trading • Only four abattoirs operate in Tanzania – insufficient to meet growing demand for hygienic & quality meat • Approximately 4mil steers at age 2-4years may be available for fattening/slaughtering at any one time Significant investment opportunities across the production chain Slaughtering • Less than 1% of all meat is processed locally, at the same time vast quantities of processed meat are imported from Kenya Meat processing • Less than 5% of all hides are processed to leather • A 40% export levy on unprocessed skins creates a significant competitive advantage for local firms Leather processing • More than 700MT of quality meat are imported to Tanzania every year • Local, regional and global meat demand is rising Retailing & marketing

  31. NARCO is a parastatal organization with the responsibility of producing beef cattle for Domestic and Export markets. National Ranching Company (NARCO) has eight (8) existing core ranches comprising of an area of 230,384 hectares with nearly 45,000 heads of cattle, 3,025 sheep and 2,000 goats. National Ranching Company ranches have the total capacity of 92,500 animals. NARCO cattle are raised on natural pastures and mineral water. The company has a total of 124 non core ranches with total area of 289,069 hectares which are sub-leased to private livestock keepers. Investment opportunities are in Kongwa Ranch (Dodoma), Misenyi Ranch (Kagera), Mabare (Kagera), Kagoma (Kagera) and Kalumbo (Rukwa)

  32. INVESTMENT OPPORTUNITIES (Energy)

  33. Power Generation and Distribution • The Government plan is to increase generation of electricity to 2,780 MW by 2015. • An enabling legislation and Institutional framework is now in place to allow the private sector to engage in the Electricity Generation, Transmission and Distribution sector.

  34. WIND ENERGY • Wind energy resources provide a renewable energy, which is friendly to the environment. There exist adequate wind energy resources in Tanzania. • The analysed wind speed data revealed that the wind energy potential in Tanzania is fairly high.

  35. ENERGY PROJECTS • Tanzania has extensive unexploited hydroelectric resources. • These include identified sites that have been studied to feasibility study namely:- • Ruhudji (358MW), • Rumakali (222MW) and • Songwe River (>300 MW)which forms part of the physical boundary between the United Republic of Tanzania and the Republic of Malawi. • The total unexploited hydroelectric power potential is estimated to be at least 4500 MW.

  36. TANESCO PROJECTS Rehabilitation and expansion projects request a total of US Dollar 130,228,630 for 6 regions of Mbeya, Kagera, Singida, Manyara, Ruvuma, and Rukwa.

  37. INVESTMENT OPPORTUNITIES (Extractive industry)

  38. MINING Mining Investment is now the second contributor to GDP after Tourism.

  39. OPPORTUNITIES IN MINING • To develop open cast and underground • mining • To extract Precious / Base Metals, Industrial • Minerals and Hydro Carbon Minerals etc • Cutting and Polishing of minerals • Refining, Processing and Smelting of • minerals

  40. OIL AND GAS OPPORTUNITIES IN TANZANIA Hydrocarbon exploration in Tanzania, a number of available blocks in sedimentary basin both onshore and offshore Currently, open acreage include the Rufiji basin, inland rift basins of L. Rukwa, L. Tanganyika, L. Nyasa, and the Ruhuhu Karoo Basin. 40

  41. DOWN STREAM INVESTMENT OPPORTUNITIES IN THE GAS SUBSECTOR • Fertilizers and Petrochemicals production • Compressed Natural Gas (CNG) for vehicles • Piped Natural Gas (PNG)/CNG for households (Millions of forest hectors are burnt every year) • Liquefied Petroleum Gas (LPG) Production

  42. INVESTMENT OPPORTUNITIES (Ports)

  43. PORT PROJECTS AVAILABLE FOR INVESTMENT • Strengthening and Deepening of Berths 1-7, • Dar es Salaam Port • Development of Mbegani Port at Bagamoyo • Development of Mwambani Port in Tanga • Development of Kisarawe Cargo Freight • Station (KCFS) • Expansion and Modernization of Mtwara Port • Development of Dar HarbourWater Front

  44. R A I L W A Y S • Investment Opportunities exists in • Rehabilitation of existing railway lines • Construct new railway lines • Upgrade & construct strategic line

  45. AIRPORT PROJECTS

  46. AIRPORTS PROJECTS • Rehabilitation and Extension of Existing Terminal II Building as a short term measure and • Construction of a complete new Terminal III Building to cater as medium and long terms measure at JK Nyerere International Airport • Rehabilitation and construction of pavements [runway, apron, taxiways and access road] and • construction of terminal building and security improvements at Arusha Airport. • Construction of Airport pavements on access roads, passenger apron, cargo apron, taxiways and • Construction of new PAX. Terminal and Cargo Building at Mwanza Airport.

  47. EXPORT PROCESSING ZONES PROJECTS

  48. EPZA PROJECTS • Establishment of EPZ and SEZ Industrial Parks • Establishment of Tourism Park • Establishment of Free Port Facilities • Establishment of Free Trade Zone • Science and technological Parks • International Business Centre • Construction of Industrial Sheds at the BWM-SEZ

  49. C O N C L U S I O N Welcome to invest in Tanzania. Tanzania Investment Centre and Zanzibar Investment Promotion Authority will take you step by step to conform with the legal and regulatory requirement, until your investment project is fully established as per your plans.

  50. THANK YOU FOR YOUR ATTENTION Contacts Executive Director Tanzania Investment Centre P.O.Box 938 Dar es Salaam Tel: +255 22 2116328-32 Fax: +255 22 2118253 Email: information@tic.co.tz Website: www.tic.co.tz

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