Tanzania was created by the union of the former colonial territory of Tanganyika and Zanzibar. The country is situated in East Africa and is bordered by Rwanda, Uganda, Kenya, Burundi, the Democratic Republic of Congo, Zambia, Malawi and Mozambique. Dar es Salaam is the country’s capital and most important port. Arusha, Dodoma and Mwanza are other important cities.
After gaining its independence from Britain in 1961, Tanganyika initially followed a British parliamentary form of government. In 1962 a presidential form of government replaced it.
Julius Nyerere was elected to the position of president in 1964. He took steps to form a unified state and his efforts led to the adoption of the Interim Constitution of the United Republic of Tanzania and a union between the former Tanganyika colony and the islands of Zanzibar.
The union was cemented in 1977 with the merger of Tanzania’s ruling party Tanzanian African National Union and the main representatives of Zanzibar – Afro Shirazi Party to form a new party called the Chama Cha Mapinduzi or Revolutionary Party. The adoption of the permanent constitution with the provision that allowed Zanzibar to elect representatives to the National Assembly further strengthened these ties. The union has been shaky at times with some instances of violence and the relative poverty of the mainland inhabitants in comparison to those citizens living on the islands. The Swahili language has proved to be the unifying factor.
Ndugu Ali Hassan Mwinyi became president in 1985 and started a process of political and economic reform moving away from the socialist economic policies of President Nyerere. One of the political reform objectives was realised in 1992 when the constitution was amended and a multi-party system was introduced.
Benjamin William Mkapa was elected president in 1995 and continued with these reforms and presides over a relatively stable political environment. He has promoted a culture of human rights and non-racial policies. The press enjoys the benefits of freedom of speech and is allowed to employ a critical reporting style.
Tanzania’s economy is a reflection of its relatively stable political situation. The economy has progressed steadily since the implementation of macroeconomic stabilisation and structural reform programme in the mid-nineties.
The agricultural sector in particular has benefited from this programme with the liberalisation of production and marketing structures and product prices. In 2002 this sector contributed 44.7% of the country’s GDP. The country’s inflation continues to improve as a result of foreign assistance and fiscal consolidation and resulted in a stronger balance of payments position. It is an indication, however, of the degree to which the country is dependent on foreign assistance.
Progress with privatisation has been mixed and although a number of significant enterprises have been successfully privatized, the country’s utilities remain in the hands of the state. There are also disturbing signs of corruption in the judiciary and bureaucracy, but the government is seeking to address these problems in efforts to improve the investment climate and achieve short-term economic progress.
In 2001 the country attracted FDI worth US$224.4 million. In 2002 the country’s GDP amounted to US$9.4 billion and industry accounted for 16% while services made up 39.4%. Tanzania was rated 164th on the Human Development Index in 2005.
The main sectors are agriculture, tourism, telecommunications, mining, fishing, forestry, manufacturing and the energy industries.
Agriculture plays an important economic role, which, accounts for half of the country's GDP, provides 85% of exports, and employs 90% of the work force. However, only 4% of the land is cultivated due to the country's topography and climatic conditions. The raising of livestock takes place in those areas with low rainfall as they have no tsetse flies. The main cash crops include coffee, cotton, cashew nuts, sisal, tobacco, tea, coconuts and cloves, pyrethrum, corn, wheat, cassava, bananas, fruits, vegetables, cattle, sheep and goats.
The agricultural sector is proving to be the source of many opportunities. The government is eager to attract investment to this sector with the motivation that the country could become a major grain producer if the correct irrigation infrastructure is developed. The Tanzania Investment Centre has played a facilitating role in this regard and in 2000 123 projects were undertaken and realised TShs 264,775 million.
Tourism occurs not only on the beautiful islands with their extensive beaches, spices and Arab architecture, but also on the mainland. The wildlife parks of Tanzania have proved to be very popular with tourists. Tourism continues to expand with significant foreign investment in hotels and other tourist facilities.
The Indian Ocean and Lake Tanganyika have proved to be plentiful in fish fueling the domestic fishing industry. Fishing is an important contributor to GDP.
Mining has attracted international interest with a large amount invested in exploration for gold, base metals and diamonds. Companies from Australia, South Africa and Canada have invested in the gold sector as Tanzania is becoming one of Africa’s major producers.
Tanzania has many energy resources which include natural gas, biomass, hydropower, geothermal, coal, solar and wind power. Much of this energy potential remains unexploited although the government hopes to change this situation and is promoting the expansion of this industry. This is part of an active policy by the government to replace imported petroleum products with locally produced products. A project involving the construction of a natural gas pipeline from Songo-Songo to Dar es Salaam is to be primary source of energy in the future.
Telecommunications in the country are extensive with separate organisations catering for the fixed telecoms needs of the mainland and the islands. BMI-TechKnowledge has provides a report on the state of the telecommunications industry as well as key industry players.
In the manufacturing sector, products such as salt, soda ash, cement, shoes, apparel, wood products and fertilizer are produced.
The UNIDO is engaged in various programmes with the Tanzanian government which aim at the development of industry in the country. Upon review of the implementation of these programmes, the UNIDO has expressed its satisfaction with progress made and has cited areas of commendation such as a marked increase in the export of fish to the EU.
The Tanzanian government has sought to attract foreign investment with the Investment Act of 1997 forming part of this process. It led to the creation of the Tanzania Investment Centre which identifies possible investment opportunities and aids the potential investor in navigating any procedural barriers that might exist.
Tanzania established its own stock exchange in 1998 called the Dar es Salaam Stock Exchange.
The government has carried out the second phase of its privatisation programme and opportunities exist in the utilities sector. The energy, manufacturing, natural resources and capital market sectors are also promising. The government has extended the privatisation programme to the transport sector and announced the sale of 75% of the national air carrier in May 2002.
Legislation guarantees the right to private ownership and the right of establishment. While there is legislation to protect property rights, US investment authorities have stated that it is difficult to gain protection under these laws. Laws protecting trade and commerce can often be more of a hinderance than a help, many still reflect the socialist policies of the early government while others are outdated. The judiciary is slow and reportedly easily manipulated.
The Government’s agenda on promoting investment has resulted in increasing number of foreign direct investments in the country, and, economic and structural reforms that have led to significant progress in establishing a functioning market economy. Institutional support for priority investment projects is freely available from the Tanzania Investment Centre (TIC) and other Government institutions.
The Tanzanian government has taken active steps to invest the country's transport infrastructure, by implementing a programme to uphold the building good quality roads. There is a sustained programme for building good quality roads. Two railway networks link fourteen out of twenty cities and the neighbouring country of Zambia. There are also international and domestic airports connecting Tanzania to the rest of the global community. The three major ports of Dar es Salaam, Tanga and Mtwara operate as hubs for traffic that stems from it, and destined to land locked neighbouring countries of Uganda, Burundi, Rwanda, Zambia, Malawi, and Democratic Republic of Congo.
A large number of market opportunities are available for foreign companies in Tanzania. With a population of over 34.5 million consumers, a fast growing economy, and high levels of domestic investment spending, the Tanzanian market remains an important target destination for local and foreign products and services. Tanzania is also a member of two distinct market communities, Southern Africa Development Community (SADC) and the East African Community (EAC), possessing about 304 million consumers.
Tanzania has aimed to provide competitive fiscal administration on foreign trade, and as a result, has signed double taxation treaties with Denmark, India, Italy, Norway, Sweden, Kenya, Uganda, Zambia and Finland. Tanzania continues to participate in negotiations with South Africa, Republic of Korea, Zimbabwe, United Arab Emirates, Russia, Seychelles, Mauritius, Egypt, Yugoslavia and Oman over double taxation treaties.
Coffee is the country’s main export product, while sisal and tea also earn significant amounts of foreign currency. Manufactured goods, cotton, cashew nuts, minerals and tobacco products are exported mainly to India, the UK, Germany, Japan, the Netherlands and Belgium.
The country imports products such as consumer goods, machinery and transport equipment, crude oil and industrial raw materials. They are supplied these products by South Africa, Japan, the USA, India and Japan among others.
As of 2005, Tanzania's main trading partners have been China, India, South Africa, Canada, the Netherlands, United Arab Emirates, Kenya, United Kingdom, Germany and Bahrain.
Mainland Tanzania has two separate rail systems with different gauges. Each rail system starts in Dar es Salaam and is administered by a separate authority. The Central Railway links to the countries of Kenya, Burundi, Rwanda and Uganda and also serves a portion of eastern DRC. Tazara Railway links to Tanzania’s southern neighbours through Zambia. Although the systems are extensive, they are both badly in need of repair.
Roads in the country are in a poor condition with the majority remaining untarred. In 1990 a programme was launched with the assistance of the World Bank to repair the roads and spur economic development.
Assistance from the Japanese government has aided in the modernisation of the telecommunications system.
Electricity requirements are catered for by hydro-electric facilities on the Rufiji-Ruaha and Pangani rivers.
Dar es Salaam is the most important port in the country with eleven deep water berths. It serves not only Tanzania, but also caters for the needs of some of the country’s landlocked neighbours. The World Bank has provided financing for a modernisation programme for the harbour.
Tanzania boasts relatively good medical services. At least 90% of the population enjoys easy access to health care. Medical clinics are well equipped for primary healthcare although there is a shortage of doctors. It is advised to travel to Kenya or South Africa for serious illness.
The IMF has provided the funding for an immunisation programme. The government successfully implemented the programme which sought to immunise at least 75% of children under the age of two against measles. The government has also embarked upon a programme to control the spread of the HIV/AIDS disease.
Infectious diseases that visitors need to be aware include malaria, tuberculosis, cholera, hepatitis A, typhoid fever, yellow fever (regional), schistosomiasis and dengue fever.
International flights to Dar es Salaam are available from London, Nairobi and other neighbouring countries. Arusha and Zanzibar are other direct international destinations. Domestic air travel is convenient with a large number of airports in the country.
The condition of the road and rail networks is not good
The Tanzania Investment Centre is able to provide the potential investor with an invaluable service as an investment facilitator.
Licenses are necessary for the mining, telecommunications, broadcasting, fishing, tourism, banking or insurance industries.
Commercial courts have also been established in an effort to ensure the resolution of business disputes.
Although the political situation in the country is relatively stable, there have been isolated incidents of violence. These have not effected business and are not a material threat to doing business in the country.
The judiciary is reported to be easily manipulated. There have been reports of incidents of corruption in government procurement offices and customs clearance
The political future of the country is unclear as many analysts are unsure of the continued existence of the political union between the mainland and the islands. There is however no indication that economic ties between the two will be ended. The IMF is also optimistic for the economic future of the country with projected growth for 2002 at 5.5%
