Blueprint for Regulatory Reforms to Improve the Business Environment

The Tanzania Business Action Plan Blue Print (the Blueprint) has two parts:

• Blueprint for Regulatory Reforms to Improve the Business Environment in Tanzania, 2018; and

• Blueprint Action Plan (BAP), 2019. The Blueprint provides the Government’s main framework for enabling a holistic review of the business enabling environment (BEE) in order to improve the  business climate in Tanzania. The Blueprint lays down the foundation to achieve an industrial economy by putting in place a framework for addressing regulatory hurdles and create a smart, functional and fair business regulatory regime in Tanzania.

The official implementation of BAP is expected to commence in July 2019. The main objective of BAP is to highlight challenging areas, consider indicative costs, timeframeand institutions responsiblefor implementation of the proposed reforms to improve the BEE. As part of the Government’s efforts to improve the BEEand for better implementation of BAP, the President of Tanzania met with the businesscommunity on 7thJune 2019, in Dar es Salaamand the key issues raised by the business menwere:

• Challenges when dealing with the Tanzania Revenue Authority (TRA) and the Police –therewere complaints that the TRAand the police have in some instances been harassing businessowners, issued over-estimated tax assessments and illegal business lock-downs.

• Unfair tax regime and exemptions –it was proposed that the Government needs to review the tax regime to make it friendly, proper trainings on taxation should be provided, bureaucracy and corruption should be dealt with. It was recommended that the Government should grant tax exemptions during the initial stages of a business to allow the business owners to focus on building the business as opposed to using capital to pay taxes.

• Multiple fees and charges –multiple fees and charges imposed by several government authorities are a roadblock tothe business environment in the country. It was discussed that such fees and charges should be paid through a central portal and other unnecessaryfees and charges should be removed.

• VAT refunds –this was also raised as a key issue which plays a key role in restraining businesses inTanzania. VAT refunds are not being processed within a reasonable time causing most of the business capital to be stuck in the processof refunds.

• Involvement of locals –the businesscommunity raised a concern that despite being able to bid and provide services in Tanzania, most of the contracts (including government contracts) are being awarded to foreign entities. Even with local content requirements under the legislations and contracts, there has been poor involvement of local entities in such contracts and the Government needs to put more emphasis on this issue.

• Government’s delays in honouring contracts –businesspersons who have contracts with various Government authorities complained that their payments are being delayed (despitehaving express contracts stating when they should be paid) leading to defaults on their bank loans and payment of hefty interest and penalties for such defaults.

• Transparency –there is lack of transparency in the decision making by various Government authorities especially in matters relating to award of contracts.

• Tanzania Investment Centre (TIC) being a true central hub –the businesscommunity requested that the TIC should be thecentral hub for all licences and permits that a person is required to get in order to operate in the country. It’schallenging to most businesspeople especially foreign investors who have to travel to multiple Government authorities to obtain various permits.

• Amendment and uniformity of laws and operations of the Government authorities –the businessmen argued that Government authorities need to work jointly to assist investors as opposed to giving conflicting decisions/directions which leaves the investors without assistance. There is a need to have clear and open communication between Government authorities to assist in business operations.

• Work and residence permits –the businessmen stated that there are bureaucracies and delays in processing of work and residence permits which has in numerous occasions led to delay in projects because the relevant experts are unable to enter into the country to commence their assignments.

• Stabilization of laws –it was discussed during the meeting with the President that constant changes in the laws is challenging to most businesses and there was a request that the laws should be stable to enable businesses to plan for a long term.

The key objectives of BAP in improvising BEE are:

• Adopting and implementing activities to promote and ensure efficient regulatory procedures, licensing and approvals;

• Simplifying the business-regulatory regime to avoid duplications and overlaps of mandates within the regulatory agencies;

• Promoting transparency within regulatory authorities by using Information and Communication Technology (ICT) platforms to provide timely the requisite information on service and processes required;

• Establishing an effective M&E framework to ensure effective implementation of the Blueprint; and

• Implementing an inclusive approach geared on ensuring all the stakeholders are consulted in decision making by the Government authorities.