TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

foreign participation set at 60 percent. 5 This
law is currently under review to bring it in line
with international standards, and to comply
with the International Organization of Securities
Commissions (IOSCO) Multilateral Memorandum
of Understanding. 6
As the government cannot fund capital
investment, or provide new equity to revive
enterprises in many cases, these reforms are
expected to strengthen the development of
capital markets so as to enable investors/
companies to raise funds and increase the public
accountability of businesses. 7
The regulatory framework allows for
unconditional transferability, via authorized banks
and in freely convertible currency, of net profits;
the repayment of foreign loans; charges in respect
of foreign technology, etc. 8 Regulation of the
financial sector is the responsibility of the Bank of
Tanzania whose authority was enhanced by the
Banking and Financial Institutions Act of 1991.
Tanzania’s competition policy seeks to mitigate
restrictive business practices which ultimately result
in high prices, poor quality and limitations on the
availability of certain products. The policy promotes
free trade and access to markets by prohibiting
anti-competitive behaviour and the abuse of
dominant market position. 9 The objective of the
competition policy has been identified as being
“to address the problem of the concentration
of economic power arising from market
imperfections, monopolistic behaviour in economic
activities and consequent restrictive business
practices”. 10 The Fair Competition Commission
5 Investment Climate Tanzania, available at
http://www.state.gov/e/eeb/ifd/2006/62039.htm
6 http://www.cmsa-tz.org/lagislation/legisla_pipeline.htm
7 http://www.psrctz.com
8 Wetzel H, FY 2004 Country Commercial Guide for
Tanzania, International Market Research Reports, US
Foreign and Commercial Service and US Department of
State.
9 National Trade Policy Background Papers: Trade Policy for
a Competitive Economy and Export-led Growth, Ministry
of Industry and Trade, Dar-es-Salaam 2003, at p. 81.
10 National Trade Policy Background Papers: Trade Policy for
a Competitive Economy and Export-led Growth, Ministry
of Industry and Trade, Dar-es-Salaam 2003, at p. 81.
Part 3: Policies for attracting FDI and impacts
on national economic development
(FCC) was established by the Fair Trade Practices
Act of 1994 (amended in 2000), to monitor
compliance with competitive equality standards.
Tanzania’s BEST programme (Business
Environment Strengthening for Tanzania) was
designed to reduce the difficulties associated
with operating a business in the country;
improve government services, and reformulate
the regulatory framework. Other programmes
to enhance agricultural productivity include the
Agricultural Sector Development Programme
(ASDP) and the Integrated Road Projects (IRP)
to open up transport networks including rural
roads in key agricultural areas. 11 An Export Credit
Guarantee Scheme (ECGS) has also been set up
by the government in partnership with the Bank
of Tanzania which is responsible for administering
the scheme. 12 Investors in EPZs (export processing
zones) have benefited from this mechanism as
well as buyers and exporters of crops.
3. Investment in the United
Republic of Tanzania
In 2009, the government continued to make
reforms aimed at reducing the costs of doing
business through the Tanzania National Business
Council and the programmes under Business
Environment Strengthening for Tanzania (BEST)
and Business and Property Formalization (BPF).
According to the World Bank Report Doing
Business, the United Republic of Tanzania
made progress on indicators related to business
contracts and employment. In general, the
country’s ranking rose slightly from 127 out
of 181 countries reducing the costs of doing
business in 2008, to 126 out of 183 in 2009.
In 2009, a total of 572 projects valued at
Tshs.2 970 730.10 million were registered with an
employment potential of 56 615 people, compared
to 871 projects worth about Tshs.8 billion, with
11 Investment Opportunities – Tanzania: Investors Guide’,
Agricultural Sector Profile, Tanzania Investment Centre,
Dar-es-Salaam.
12 SADC Trade Industry and Investment Review 2006:
Country Profiles - Tanzania, available at http://www.
sadcreview.com/country_profiles/frprofiles.htm
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