TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

TANZANIA
Trends and impacts of foreign investment in
developing country agriculture
from other economies as a norm, preferring in
many instances homebaked policy instruments
that are known to suffer from failure to create
change. Further, SSA governments have to
adopt best practices in the development of
economic strategies and strategic plans for
their implementation. There is little meaning in
redesigning the wheel as an excuse for adopting
sub-standard policy measures that compound
existing problems.
The agricultural sector in the United
Republic of Tanzania offers potential investors
opportunities not only in general commodity
trading, but also investment in technology for
supporting sectors such as irrigation works
and refrigerated facilities; farm implements
and agricultural inputs; fishing equipment and
processing plants, and agro-processing businesses.
As well as its huge potential in terms of national
endowments, the government has attempted
to increase investments mainly through fiscal
incentives. The United Republic of Tanzania also
has other features attractive to foreign investors,
such as potential access to regional markets like
those under EAC and COMESA (Common Market
for Eastern and Southern Africa) arrangements.
While much of the regulatory framework
impacting on the desirability to invest in the
United Republic of Tanzania was reformed with
the climate of liberalization and privatization
in the 1990s, many of the regulations are now
antiquated and require revision.
Many legislative revisions have been in the
pipeline for a considerable period, but have
yet to come into fruition. The government is
in the process of re-examining its trade and
investment legislation with mechanisms to involve
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stakeholders in the discussions on draft bills.
These reform initiatives need to be speeded up
and deepened.
The taxation regime is one example of a
significant constraint to production with multiple
duties in place at local and national level. It is
recommended that the system is harmonized
across the different crops and commodities to
prevent price distortion, with a lowering of taxes
and spreading of the tax base to remove the
disincentives to production.
As well as enhancing and strengthening
its existing attractive investment features, the
United Republic of Tanzania should also work
towards developing its weaker aspects. Despite
its large human resource pool, the dearth
of skilled workers and those with adequate
technical capacity represents an area in which
the government can promote private sector
participation for capacity building and training
schemes. The emphasis on technology transfer
could be shifted somewhat to the provision of
information on new technologies, and training
the relevant stakeholders on their use, costs
and appropriateness. Another problematic
factor, particularly as regards agribusiness, is its
infrastructure. Private sector (including foreign)
participation is particularly useful in this regard,
for example, in the development of its road
development strategy. Thus, while the United
Republic of Tanzania is strategically placed to
continue with its success in attracting FDI into
the country, many areas of the agricultural and
allied sectors are in need of reform, revision
and improvement in order to draw in a greater
percentage of that same FDI to the agricultural
sector specifically.