Africa Market Update - April 2015

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MARKET UPDATE – AFRICA | March 2015 02. Tanzania 8 | StratLink Africa Ltd. www.stratlinkglobal.com
MARKET UPDATE – AFRICA | March 2015 POLITICAL OUTLOOK Tempestuous Ride for Tanzania Preparations for the much awaited referendum hit a snag after the government suspended issuance of national identity cards citing shortage of funds and human capital. Noting that this came in quick succession to the suspension of biometric voter registration in parts of the country, the country’s political risk profile is likely to be impacted negatively as questions abound over the state of preparedness for carrying out free and fair referendum and election in 2015. Widening Rift as the Hour Draws Nigh The rift continues to widen over contentious issues pertaining the April 2015 referendum with the main opposition party (CHADEMA) calling for a boycott of the exercise. The opposition umbrella body (Ukawa Group) pulled out of the constitution review process following the unresolved question of having the document provide for a two or three tier government structure for the country going forward. The country is bound to remain in heightened political temperatures ahead of the referendum and the October 2015 election. Investors will be keenly following the passage or rejection of the new constitution and the aftermath given the impasse between the government and the Ukawa Group. Improved Donor Aid Props Outlook Donors, including World Bank and Africa Development Bank, have released 8.8% (USD 44.0 Mln) of the withheld donor support for the financial year 2014/15 following graft allegations involving top government officials. The move is likely to signal confidence in the remedial measures taken by the government and thereby elevate Tanzania’s short-term risk. Improvement in the country’s fiscal position, especially ahead of an election, could serve to mitigate growing risk. ECONOMIC OUTLOOK Majority of Sectors Report Strong Private Sector Credit Growth Credit to the transport and communication, trade, manufacturing, construction and hospitality sectors surged by double digits yearon-year to January 2015 pointing at high investment focus on the respective areas. The sectors are also likely to be benefiting from declining investor interest in agriculture (based on trends in credit flow to the sector). We expect below target growth by the agriculture sector to continue occasioning a shift in investment focus towards the service and construction sectors. The country is bound to remain in heightened political temperatures ahead of the referendum and the October 2015 election. BUSINESS ENVIRONMENT Employment Regulation Raffles Feathers On March 19th, 2015, parliament passed a new law effectively setting restrictions on employment of foreigners. The new law prescribes that companies hiring foreigners must satisfy authorities that the skills sought are not locally available. Whereas the new legislation is aimed at widening accessibility of employment opportunities to locals, it hazards posing a negative net effect to the economy. Integration: Further Within or Without? The new legislation is bound to fan further perception that Tanzania is on the periphery of regional integration efforts as it could decelerate the realization of free movement of persons as envisioned by the East African Community Common Market Protocol. In 2014, concern was rife that Tanzania was being left out of vital integration efforts as Kenya, Uganda and Rwanda signed a Defence Pact and Single Tourist Visa Pact in January 2014. In February 2015, Uganda did away with work permit fees for Rwandese and Kenyan nationals. Adult (15 Yrs +) Literacy Levels Source: World Bank, UNICEF, StratLink Africa www.stratlinkglobal.com StratLink Africa Ltd.| 9
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Africa Market Update - April 2015

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