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INTRODUCTIONThe Government of the United Republic of

Tanzania is committed to the continued development of a liberalised market economy with the private sector as the engine of growth.

Objective: becoming a middle class country by 2025 (Vision 2025),

Role of State in developing market economyVarious strategic reforms are implemented to

create an enabling environment for the private sector to grow and become the engine of sustainable economic development.(1960’s, 1970’s, 1980’s, 1990’s to 2009) 2

Various Reforms ImplementedReforms implemented to strengthen Business

Environment by GoT with support of DPs -Privatization(PSRP)- World Bank and

others -BEST- DFID, Netherland, SIDA, CIDA,

World Bank(Since 2002 to date) -SELF- (ADB) -USAID

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BEST -PROGRAMMESpecifically aimed at strengthening Business

Environment in Tanzania.BEST is facilitating ongoing reforms in the

following Components( USD 157 Millions)(a)Achieving Better Regulations Business Licencing Reforms, Land Law Reforms

, Labour law reforms, Taxation Reforms, Agriculture Reforms, Import/Export

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BEST -PROGRAMME(b)Commercial Dispute Resolution Capacity Building, Reforming Courts and Legal

Procedures, Clearing Case Backlog, Alternative Dispute Resolution Mechanism

(c)Change of Government Culture Intervention to improve Service Delivery the

Public to the private sector.

(d)Tanzania Investment Centre Support to strengthen the Tanzania Investment

Centre

(e) Private Sector Advocacy Enhance Private sector participation in

Government policy and legislation reforms 5

Specific BEST I-Programme Challenges Some achievement but still some

challengesThe programme did not adequately detail the

sequencing and institutional arrangements for required specific reforms

BEST phase I was designed n 2002, and remained static hence failed to address new challenges emerging

Scope and administrative processes were not clearly documented and well introduced.

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Tanzania Doing Business RankingTanzania:

2010 2009 Change

Ease of Doing Business 131 126 -5

Starting a Business 120 111 -9

Dealing with Construction permits 178 175 -3

Employing Workers 131 133 +2

Registering property 145 145 0

Getting credit 87 84 -3

Protecting investors 93 88 -5

Paying Taxes 119 113 -6

Trading Across Borders 108 105 -3

Enforcing Contracts 31 31 0

Closing a business 113 113 0

Tanzania Ease of Doing Business Ranking Despite the macroeconomic achievements

and strong growth in recent years, cost of doing business in the country remains high as observed by the private sector. This has been reported via different reports locally and internationally.

Tanzania’s record against the continent’s top performers shows a downward trend over the last three years

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Tanzania’s record against the continent’s top performers

2006 2007 2008 2009 2010

Mauritius 32 32 29 24 17South Africa 28 29 35 32 34Botswana 44 48 52 39 45Namibia 39 42 48 54 66Rwanda 158 158 148 143 67Zambia 92 102 101 99 90Tanzania 150 142 124 126 131

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General Problems in Various ReformsDid not address key issues but addressed

secondary issuesLack of proper sequencing (Critical path)No ownership in program Design Effective use of Business for ReformCapacity GapsNo Linkages with main Public Sector and

Local Government ReformsParallelism

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Performance of the Other Former Best ReformersCountry 2009 2010 Change

Mozambique

140 135 +5

Senegal 152 157 -5

Uganda 106 112 -6

Burkina Faso

155 147 +8

Tanzania 127 131 -4

Why this situation for the whole group of former Best Performers?

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Performance of the other former best reformers

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TANZANIA TRADE WITH EAC

Tanzania Export to EAC has increased from $106.5 million in 2007 to $315.5million in 2008.

Tanzania Export to Kenya has increased from $ 101.1 million in 2007 to $235 million in 2008

Tanzania Export to Uganda has increased from $ 46.1 million in 2007 to $ 53.8 million in 2008

This shows a favorable Balance of Trade (Source: BOT)

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TANZANIA TRADE WITH EAC(Source: BOT)

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TANZANIA TRADE WITH KENYA Tanzania Export to Kenya has increased from

$ 101.1 million in 2007 to $235 million in 2008

Tanzania import from Kenya was $ 100.1 million in 2007 and $ 197.9 in 2008

This shows a favorable Balance of Trade with Kenya in 2007 and 2008

(Source: BOT)

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TANZANIA TRADE WITH KENYA(Source: BOT)

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Balance of Trade with Kenya (Source: BOT)

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Historical Look at FDI in the NeighborhoodFDI Inflows 1990’s and 2004-07

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0100200300400500600700800

1990-2000

2004 2005 2006 2007

Tanzania

Uganda

Kenya

Ruwanda

Brundi

Historical Look at FDI in the NeighborhoodFDI Inflows 1990’s and 2004-07 Cont..NOTE: The figure above compares historical

FDI inflows for our neighbors. FDI Flow of Kenya in 2007 reflects French Telecom’s acquisition of majority share of Kenya Telecom.

Tanzania is doing better than other East African Countries in FDI inflow (FDI Inflows in the 1990’s and 2004-07 data from UNCTAD, World Investment Report 2008).

This situation has direct relationship with reforms on business environment that Tanzania has been implementing 19

Historical Look at FDI in the NeighborhoodFDI Inflows 1990’s and 2004-07 Cont..Though Tanzania is leading in FDI inflow in

EAC, Doing Business 2010 report on ease in doing Business has ranked Tanzania 131 while Kenya 95 and Uganda 112

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Historical Look at FDI in the Neighborhood(2)Stock of FDI in 2007(US$ millions)

Data: UNCTAD World Investment Report 2008

Tanzania occupies 54.2 % of total FDI flow to East African Region. As Tanzania has seen a longer period of political stability, its success in attracting FDI is line with a number of studies that have concluded that political stability is the most prominent element to decide FDI.

Tanzania US$ 5,942 MilUganda 2,909

Kenya 1,892

Rwanda 170 Burundi 48

Example of SME Contribution in Investment

Growth in SMEs is an indication of the increase of local participation in investment.

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0

100

200

300

400

500

600

'00 '01 '02 '03 '04 '05 '06 '07 '08

Micro Manufacturing Enterprises (Oil Extractors) are growing(Example of SME contribution in Investment)

Sunflower Production Jumped since 2006 Source : MAFSC

SMEs Production of Sunflower oil has increased, and this has attracted the production of sunflower seeds which has increased by 500% in last 4 years.

TO SUMMARIZE THE INTRODUCTION

Tanzania with support from her DPs has been implementing a number of reforms.

Tanzania is doing better than other East African Countries in FDI inflow

Tanzania is currently enjoying increase in export to its neighbours with favourable balance of payments.

However, Tanzania is dropping in the Ease of Doing Business rankings.

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To improve Business Environment Tanzania in a Practical Way

Need for a well focused strategy :To deal with primary issuesTo create ownership by all stakeholdersTo Streamline the programme with clear

definition of roles To provide Capacity building to all

stakeholdersLinked to Sector strategic plans/MTEFLinked to all institutional levels (LGAs)

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STRATEGY FOR IMPROVING THE DOING BUSINESS ENVIRONMENTThe Government has read and discussed the

recent trend of Tanzania ranking in various ease of doing business reports

In order to improve the Business Environment, a comprehensive strategy is being developed.

Task Teams have been formed to diagnose the core causes and come up with recommendations on how to improve Business Environment

Each Task Team is lead by a Permanent Secretary from a lead Ministry and draw members from related institutions and the private sector.

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REFORM AREAS AND RESPONSIBLE INSTITUTIONS

Starting Business and Closing Business

Dealing with Construction Permit

Employing WorkersRegistering PropertyGetting CreditProtecting InvestorsPaying TaxesTrading Across

bordersEnforcing Contracts

PS-MITM

PS-PMO RALG

PS-MLPS-MLHHSGovernor-BOTPS-MOCAJPS-MOFEAPS-Home AffairsPS-MOCAJ

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CONCLUSION AND WAY FORWARDAs observed by the private sector cost of doing

business in the country remains high In response to that, the Government has set up

task forces to review public business support policies, regulations and administrative procedures.

Recommendations will be used to formulate a comprehensive Government led programme to ensure that Tanzania Doing Business Environment is ranked favourably locally and internationally in the near future.

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The Expected output will be as followsMILESTONE CONTENTS

1. Government Strategy Strategic interventions and actions to be taken in;1.Quick Wins – mostly administrative huddles to be addressed through a normal Government Circular2.Short Term – Actions to be cleared through Finance Bill by the next Budget3.Medium Term – Policy, Legal and Business reengineering reforms

1. Doing Business Environment Improvement Program

Clear Prioritised Program with time and Cost indication entrenched in the normal government reform programs

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Next StepsLead by Government and involve all other Key

Stakeholders including Private Sector and LGAs. Civil Society will be invited to commentTo be finalized in march, 2010 with clear short, medium and long term measures

Will be streamlined to Government operations to avoid parallel structures

Some required actions may demand reviewing and/or harmonizing some policies regulation/procedures.

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Next Steps Cont…Will guide future sector strategic

plans/MTEFs and budget allocationsCapacity Building in all Government and

LGAs to facilitate DB.Work in progress with Great ownership.Since the new strategy is institutionalized

and mainstreamed, it call for more GBS financing

More resourcesCreate Independent Monitoring Group

(Helleina kind)31

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