General Information

Economic Indicators

Trade Indicators

Economic Overview

Tanzania has been involved in considerable structural adjustment since the late 1980s. Agricultural marketing has been liberalised, foreign exchange controls have been lifted and a new attractive investment code has been developed. This has resulted in overall steady economic growth.

Agriculture dominates the economy, providing 56% of GDP in 1996 and 80% of employment. Cash crops, including coffee (which dominates exports), tea, cotton, cashews, sisal, cloves, and pyrethrum account for the vast majority of export earnings. The volume of ail major crops - both cash and goods, which have been marketed through official channels - has increased over the past few years.

The government has sold a number of manufacturing companies to the private sector and there has been an increase in mining activity but manufacturing and mining between them still account for less than 8% of GDP. 1 Tanzania's industrial sector is one of the smallest in Africa, and is restrained in part by a chronic power shortage. 2

The main industrial activities include producing raw materials, import substitutes, and processed agricultural products. In terms of mineral resources and the largely untapped tourism sector, Tanzania could become a viable and attractive market for foreign investment and services particularly in the rapidly growing tourism sector. 3

The revision of the mining investment code in 1997, combined with considerable gold finds by Australian and Canadian firms in particular, has led to a rapid growth in FDI "and strong growth is expected in mining to 2000 and beyond". 4

Regulatory Environment

All imports into mainland Tanzania are liable to payment of import duty and sales tax. imports for members of diplomatic corps and specified UN agencies are exempted. 5

Tanzania is committed to the reduction and harmonisation of trade tariffs as part of its membership of the Southern African Development Community (SADC) and the Tripartite Commission for East African Cooperation (EAC).

Current Process of Liberalisation

The Tanzanian government continues to provide incentives to outside investors wishing to invest substantial amounts of capital in Tanzania. In 1990, the government created the Investment Promotion Centre (IPC) and charged it with promoting international investment in Tanzania, assisting potential investors, and providing investment incentives to individuals and companies wishing to set up shop in Tanzania. In 1995, the government introduced a uniform tax of 5% on imported capital goods, thereby rationalising and encouraging investment across the board while reducing the negative effect of excessive special exemptions. 6

Significant measures have been taken to liberalise the Tanzanian economy along market lines and encourage both foreign and domestic private investment. Beginning in 1986, the Government of Tanzania embarked on an adjustment program to dismantle state economic controls and encourage more active participation of the private sector in the economy. The program included a comprehensive package of policies to reduce the budget deficit and improve monetary control, substantially depreciated the overvalued exchange rate, liberalised the trade regime, removed most price controls, eased restrictions on the marketing of food crops, freed interest rates, and initiated a restructuring of the financial sector. 7

The Tanzanian Government agreed to a new 3 year Enhanced Structural Adjustment Facility (ESAF) arrangement with the IMF in November 1996. Tanzania also embarked on a major restructuring of state-owned enterprises. The program aims at privatising some 425 parastatals. 8

1. Country Profile...1999-2000, p. 20.
2. TradePort...; Country Profile...1999-2000 (The Economist Intelligence Unit, London, 1999), p. 18.
3. Ibid., p. 28; Trade Port....
4. Country Profile... 1999-2000, p.23.
5. Trade Compass Country Commercial Guides,
   (http://www.tradecompass.com/library/books/com_guide/).
6. Ibid...
7. TradePort....
8. Ibid...