1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

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TA N Z A N I A I N V E S T M E N T C L I M A T E I nvestment Incentive s In August 1997 the National A s s e m b ly repealed the National I nvestment (Promotion and Protection) Act of 1990 and enacted the Tanzania Investment Act (1997) to replace it. I n c e n t i ves under the new Act are : • Favourable investment allowances and deductions on industrial buildings, plant and machinery and on agricultural e x p e n d i t u re. • Total exemption from import duty and sales tax on import e d c apital assets for projects relating to mining, i n f r a s t r u c t u re (i.e. road construction, b r i d g e s , r a i lw ay s , a i r p o rt s , generation of e l e c t r i c i t y,water serv i c e s ,back-up services to mining) and EPZs. • Import duty for investment in other sectors of the economy is five percent on the pro j e c t ’s imported capital assets. • Straight line accelerated depreciation is allowed on cap i t a l go o d s . • T h e re is unlimited/indefinite carry - over of all business losses against future pro f i t s . • A ny ap p roved investment has the right to employ up to five fo reign nationals on it pro j e c t .For mining, h oweve r, the amount of fo reigners which can be employed is not limited. • Investors are at liberty to export both capital and pro f i t s outside of Ta n z a n i a . • T h e re is a 20 year tax holiday for certain mining activities. I n c e n t i ves for companies investing in oil ex p l o r a t i o n : • Long exploration periods of four (initial), four (first extension) and three (second extension), totalling 11 ye a r s . • Relative ly large exploration are a s . • Maximum Tanzania Pe t roleum Development Corporation (TPDC) participation is capped at 20 perc e n t . • Corporate income tax and royalties paid for by T P D C. • T h reshold rates of return for A dditional Profit Tax at 20 p e rcent for first tranche and 30 percent for the second tranche. • Separate incentives in order to encourage deep sea (gre a t e r than 200m water depth) are under consideration by the government and T P D C. I nvestment is treated favo u r a b ly under Ta n z a n i a ’s corporate tax s y s t e m . M a ny tax incentives relate dire c t ly to capital outlay s , f rom full write-off for clearing and planting of agricultural land in the year of inve s t m e n t ,to extensive depreciation allow a n c e s . E x p o rt incentive s : At present exporters are benefiting from the liberalisation of e x p o rt licensing, and the duty drawback scheme. A fe a s i b i l i t y study for the establishment of EPZs in Tanzania was carried out during 1996, and the draft regulations and organisation of EPZs a re under pre p a r a t i o n . Z a n z i b a r: The government of Zanzibar offers the same incentives to i nve s t o r s . F u rt h e r m o re, EPZs are in place in Zanzibar and companies established in EPZs are offe red 10 years corporate tax holiday and duty exemption on imports of raw materials and c apital equipment. Ta x a t i o n M e a s u res have been implemented to combat tax evasion and to s t reamline customs pro c e d u re s . Corporate tax: 30 perc e n t Individual tax: ( m a x i mum rate) 35 perc e n t Withholding tax on dividends and p rofit-sharing tax for non-re s i d e n t s : 10 perc e n t . A new value-added tax was introduced in 1997, replacing the old sales tax, at a rate of 20 perc e n t . E x c h a n ge contro l s Fo reign exchange controls we re re m oved by the Fo re i g n Exchange Act (1992),and Bureau de change regulations of 1992, and Tanzania accepted the obligations of the IMFs A rticle VIII in 1 9 9 6 . Residents are now permitted to hold fo reign curre n c y a c c o u n t s . C apital transfers are however still subject to ap p rov a l by the Bank of Ta n z a n i a . To ensure eventual repatriation of cap i t a l ,all inward inve s t m e n t s into Tanzania should be re g i s t e red with the Tanzania Inve s t m e n t C e n t re. I nvestments in Zanzibar should either be re g i s t e re d with the Zanzibar Investment Promotion Agency or Zanzibar F ree Economic Zones A u t h o r i t y. I nvestors are allowed to re t a i n 100 percent of their net fo reign exchange earnings for purposes of remittance of dividends, p rofits and settlement of external o b l i g a t i o n s . B o rrowing of funds from local banks by nonresidents is allowe d . Institutions invo l ved in investment pro m o t i o n The Tanzania Investment Centre, established in 1991, p ro c e s s e s i nvestment proposals and assists investors with ap p l i c a t i o n p ro c e d u re s . Their mandate is to be the focal point for the implementation of the National Investment Policy and to p ro m o t e, c o o rdinate and monitor domestic and fo re i g n i nve s t m e n t s . Zanzibar operates a separate Investment Promotion A g e n c y ( Z I PA) which was established in 1991. To benefit from the i n c e n t i ve schemes offe red by Zanzibar, i nvestors should contact Z I PA first. I nvestment code The Tanzania Investment Act (1997) outlines provisions and i n c e n t i ves for investment in areas of national priority. E x t e n s i ve guarantees are provided to investors under the I nvestment Promotion Centre ’s Certificate of A p p rov a l ,such as guarantees re g a rding ownership of pro p e rt i e s ,dispensation of a s s e t s , repatriation of income and others. Tanzania is also a member of MIGA and ICSID. I nvestments in Zanzibar are regulated by the National I nvestment Promotion Act of 1986 (under rev i s i o n ) ,o u t l i n i n g p rovisions and incentives for investments in areas of national p r i o r i t y. The Economic Zones Act (1992) governs EPZs. I n a ddition to the guarantees provided by Ta n z a n i a , Z a n z i b a r guarantees against compulsory acquisition by gove r n m e n t , except on payment of full compensation. I N V E S TM E N T O P P O R T U N I T I E S A N D P R O J E C T S I nvestment Opport u n i t i e s The government has identified the fo l l owing priority areas fo r i nve s t m e n t : m a nu f a c t u r i n g ,a g r i c u l t u re, p e t roleum and mining, c o n s t r u c t i o n ,t r a n s p o rt ,transit trade, computer and other high t e c h n o l o gy businesses, tourism and natural re s o u rc e s . I nvestment opportunities in Zanzibar include: l a b o u r- i n t e n s i ve industries and assembly plants, construction and housing, h o t e l and tourism, t r a n s p o rt by sea and air, human re s o u rc e d evelopment schemes, transit trade and warehousing and offs h o re activities. P ro j e c t s U n fo rt u n a t e ly we we re unable to obtain a list of projects fo r i nve s t m e n t . 94
TA N Z A N I A S TATISTICS (USDm, unless otherwise stated) 1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6 1997 1 ) Population (millions) 2 5 . 3 2 6 . 0 2 6 . 7 2 7 . 5 2 8 . 3 2 8 . 8 Nominal GDP at market prices 4 , 6 0 1 . 4 4 , 2 5 7 . 7 4 , 5 1 1 . 5 5 , 2 2 5 . 2 6 , 4 9 6 . 2 7 , 3 3 3 . 1 Real GDP growth rate, % 1 . 8 0 . 4 1 . 4 3 . 6 4 . 2 4 . 0 GDP per capita (market prices), U S D 1 8 3 . 7 1 6 5 . 4 1 7 0 . 4 1 9 3 . 2 3 2 . 3 2 4 5 . 1 Consumption as % of GDP 1 0 2 . 4 1 0 3 . 2 1 0 3 . 2 1 0 1 . 2 9 9 . 2 9 8 . 3 G ross domestic savings as % of GDP 2 . 2 4 . 0 2 . 6 4 . 6 5 . 0 4 . 1 G ross investment as % of GDP 2 7 . 0 2 4 . 9 2 4 . 4 1 9 . 6 1 6 . 5 1 3 . 8 Inflation rate, % 2 1 . 8 2 5 . 3 3 4 . 1 2 7 . 5 2 1 . 0 1 6 . 1 M e rchandise exports as % of GDP 8 . 7 1 0 . 3 1 1 . 5 1 3 . 0 1 1 . 7 9 . 8 M e rchandise imports as % of GDP 2 8 . 6 2 9 . 8 2 9 . 0 2 5 . 5 1 8 . 7 1 5 . 9 C apital account of balance of payments 2 9 8 . 1 2 0 0 . 6 2 6 3 . 6 1 9 2 . 0 1 9 1 . 0 3 4 6 . 9 Fo reign direct investment as % of GDP 0 . 3 0 . 5 1 . 1 2 . 3 2 . 3 2 . 0 O verall balance on balance of pay m e n t s - 2 3 2 . 1 - 6 3 3 . 8 - 4 4 6 . 7 - 3 7 3 . 7 - 2 2 3 . 9 - 2 2 1 . 6 Average exchange rate: TZS to USD 2 9 7 . 7 4 0 5 . 3 5 0 9 . 6 5 7 4 . 8 5 8 0 . 0 6 1 2 . 1 Foreign exchange reserves expressed 12.4 6.0 9.5 6.5 10.6 16.4 in terms of weeks of import cove r Total external debt as % of GDP 1 7 3 . 2 1 9 5 . 3 2 0 2 . 4 2 1 4 . 7 1 1 3 . 6 9 2 . 6 Total external debt service as % of export s 4 1 . 2 2 9 . 2 2 1 . 6 1 8 . 3 1 9 . 7 2 4 . 1 Budget deficit as % of GDP (year ending Ju n e ) 3 . 0 5 . 0 - 5 . 0 - 2 . 0 1 . 5 0 . 2 Central bank discount rate (end of ye a r ) ,% 2 2 . 0 2 7 . 0 6 7 . 5 5 0 . 0 4 0 . 8 1 7 . 5 Prime lending rate (average for ye a r ) ,% 3 1 . 0 3 9 . 0 3 9 . 0 4 8 . 0 3 2 . 0 2 1 . 0 G rowth rate of M2 money supply, % 6 . 1 4 . 7 1 0 . 3 2 0 . 8 4 . 0 5 . 9 Domestic credit to government 2 4 5 . 4 3 8 3 . 6 3 4 5 . 9 5 0 7 . 4 4 9 6 . 7 3 8 3 . 4 Domestic credit to private sector 2 3 1 . 4 2 3 1 . 4 3 4 1 . 2 2 9 7 . 1 1 8 5 . 7 2 5 9 . 9 Source: Bank of Tanzania (1998) N o t e :2) Figures for 1997 are prov i s i o n a l USEFUL A D D R E S S E S I nvestment Promotion A ge n c i e s Tanzania Investment Centre, P O Box 9242, Dar es Salaam,Te l :+ 255 - 51 - 113365 ,116328- 32 ,F a x : +255-51-118 253 Zanzibar Investment Promotion A g e n c y, P O Box 228,6 Zanzibar,Te l : +255-54-33026 / 331169, F a x :+ 255 - 54 - 32737 Zanzibar Free Economic Zones A u t h o r i t y, P O Box 305, Z a n z i b a r,Te l :+ 255 - 54 - 33697 ,F a x :+ 255 - 54 - 33698 Consulting Firms Coopers & Ly b r a n d ,P O Box 45, Dar es Salaam,Te l :+255-51-11 19 19 M a s s awe Ernst & Yo u n g ,P O Box 247, Dar es Salaam,Te l :+255-51-239 61, 38014 ,380 16, F a x :+255-51-11 49 20 Tanna Somalya & Co, ( C o rrespondent firm to Price Wa t e r h o u s e ),P O Box 948, Dar es Salaam,Te l : +255-51-11 71 81, F a x :+255-51-11 26 60 95
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1998 SOUTHERN AFRICA ECONOMIC SUMMI
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CONTENTS I N D E X Abbreviations 2
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THE SADC FINANCE AND INVESTMENT SEC
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c u rre n t ly exists in SADC gover
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REGIONAL MAC RO-ECONOMIC HIGHLIGHTS
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Southern Africa and Competitive n e
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had agreed to accept the general fr
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A NG OL A of GDP in 1996. E x p o r
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A NG OL A Projects for Possible Inv
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A recent event in the political sce
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B O T S WA N A B OT S WANA STOCK MA
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B O T S WA N A P rotection of Inve
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scheduled for 23 May 1998. Eight po
Page 27 and 28: L E S O T H O The money market is d
Page 29 and 30: L E S O T H O L E S OT H O :P ROJEC
Page 31 and 32: p a r l i a m e n t a ry elections,
Page 33 and 34: M a l awi Stock Exchange The stock
Page 35 and 36: M A L AW I I nvestment Code The Inv
Page 37 and 38: M A L AW I S TAT I S T I C S(USDm u
Page 39 and 40: M au r i t i u s c o u n t ry is se
Page 41 and 42: M au r i t i u s Mauritian Investme
Page 43 and 44: M au r i t i u s Ta x a t i o n Tax
Page 45 and 46: c u rre n t ly holds 129 seats in P
Page 47 and 48: M O Z A M B IQ U E combined with a
Page 49 and 50: The current status of the project i
Page 51 and 52: M O Z A M B IQ U E dermersal fish f
Page 53 and 54: After talks between the South Afric
Page 55 and 56: N A M I B I A Namibia does not impo
Page 57 and 58: N A M I B I A I nvestment Code A c
Page 59 and 60: Johannesburg Stock Exchange. G E N
Page 61 and 62: S O U T H A F RI C A that some East
Page 63 and 64: S O U TH A F R I C A cities of Joha
Page 65 and 66: S O U TH A F R I C A INDUSTRIAL FIN
Page 67 and 68: S O U T H A F R I C A * M a c h i n
Page 69 and 70: p rocessing industries,t e x t i l
Page 71 and 72: S WA Z I L A N D Swaziland Stock Ma
Page 73 and 74: S WA Z I L A N D The Ministry of En
Page 75 and 76: Snow capped peaks of Kilimanjaro. G
Page 77: TA N Z A N I A exchange rate, the s
Page 81 and 82: Z A M B I A the supply of water for
Page 83 and 84: Z A M B I A Fo reign Tr a d e Zambi
Page 85 and 86: Z A M B I A Other institutions incl
Page 87 and 88: Victoria Falls. G E N E R A L I N F
Page 89 and 90: Z I M BA BW E Z i m b a b we Stock
Page 91 and 92: Z I M BA BW E - No restrictions on
Page 93 and 94: LIST OF SOURCES S o u rces containi
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1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

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