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Tanzania became the first investment choice in Africa for foreign investors

Tanzania President Samia Suluhu Hassan stated that her country’s economic prowess has become a major source of attraction to foreign investors. Indeed, Tanzania’s surge in foreign investments positions the nation for growth and prosperity in East Africa. It is very interesting to see how much economic and political progress Tanzania has made since the Nyerere years.

If there is one thing that Tanzania has successfully done over the years, it is to maintain peace and political stability. Tanzania is certainly a stable and peaceful country with a strong democratic tradition.

The Tanzanian political elite developed an institutional culture where trust in their political institutions has become the bedrock of the functioning of their political system. As a result, it strengthened the legitimacy of its political institutions and the peaceful transition of political power. Hence, political stability has become the credo of Tanzania and this makes it an attractive destination for investors who are looking for a secure environment in which to do business.

Beyond the long-established tradition of political stability, the Tanzanian government has made a number of reforms in recent years to make the country more business-friendly. These reforms have included simplifying the regulatory environment, reducing taxes, and improving infrastructure.

Foreign investment in Tanzania has been on the rise in recent years. In 2022, the country received a record $1.2 billion in foreign direct investment (FDI). The top five leading sources of FDI to Tanzania are China, the USA, Mauritius, Spain, and India. Mining, tourism, agriculture, and manufacturing are the key sectors that attract foreign investors in Tanzania.

The economic prosperity that Tanzania is currently enjoying was well-crafted. It didn’t happen randomly. It was not the mere doing of President Suluhu Hassan. It was years of sound economic policies that put Tanzania on the path economic development.

As a matter of fact, in 1997, the Tanzanian government passed the Tanzania Investment Act, which provides a number of incentives for foreign investors, including tax breaks, duty exemptions, and guarantees on the repatriation of profits. In 2002, the Tanzanian government passed The Companies Act, which makes it easy to set up a company in Tanzania, and it provides a clear framework for the operation of businesses. Still in 2002, The Intellectual Property Act was implemented. This law protects intellectual property rights, such as patents, trademarks, and copyrights, which made Tanzania one of the first African countries to protect intellectual property legally. In 2003, the Competition Act was passed, which promotes fair competition in the marketplace, and it prohibits anti-competitive practices. In 2004, the Tanzanian government passed the Labor Act, which protects the rights of workers and employers, and it provides a clear framework for the resolution of labor disputes.

These examples of business-friendly laws show how Tanzania developed itself in becoming a safe haven for foreign investors, and more importantly, a land where the rule of law is applied and property rights are protected.

Of course, Tanzania still has its fair share of challenges that need to be improved. Corruption is one of those challenges. While the country has made significant progress in relying on the rule of law, it must be said that the full application of the rule of law is not yet entirely embedded, and this can deter investors. But investors do recognize that Tanzania has laws that protect property, and this is an important factor to consider when investing in a foreign land.

The second major challenge that must be addressed is the inadequate infrastructure. Tanzania's infrastructure is not as developed as some other countries in Africa, which can make it difficult for foreign investors to transport goods and services.

Despite these challenges, Tanzania remains a promising investment destination. The country has a number of attractive features, including a young and growing population, abundant natural resources, and a business-friendly government. If Tanzania can address the challenges it faces, it is likely to continue to attract foreign investment in the years to come.


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