VZCZCXYZ0000
RR RUEHWEB

DE RUEHDR #0032/01 0151213
ZNR UUUUU ZZH (TAO)
R 151213Z JAN 08
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 7220
INFO RUEHNR/AMEMBASSY NAIROBI 0886
RUEHKM/AMEMBASSY KAMPALA 3114
RUEHLGB/AMEMBASSY KIGALI 1060
RUEHJB/AMEMBASSY BUJUMBURA 2624
RUEHSA/AMEMBASSY PRETORIA 3609
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHDC
RUCPCIM/CIMS NTDB WASHDC

UNCLAS DAR ES SALAAM 000032 
 
SIPDIS 
 
SIPDIS 
DEPT FOR EB/IFD/OIA JNHATCHER AND AMKAMBARA 
DEPT ALSO AF/EPS, AF/E FOR JLIDDLE 
TREASURY FOR DO/JWALLACE 
PASS TO USTR FOR WJACKSON 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB KTDB OPIC PGOV USTR TZ
SUBJECT:  TANZANIA:  INVESTMENT CLIMATE STATEMENT 2008 
 
REF:  07 SECSTATE 158802 
 
Following is the 2008 Investment Climate Statement (ICS) for 
Tanzania.  The ICS will also be transmitted to ES/IFD/OIA via e-mail 
and included in Chapter 6 of the 2008 Country Commercial Guide for 
Tanzania. 
 
------------------------------- 
Openness to Foreign Investment 
------------------------------- 
The Government of Tanzania (GOT) has a favorable attitude toward 
foreign direct investment (FDI) and made significant efforts to 
encourage foreign investments.  According to the United Nations 
Conference on Trade and Development (UNCTAD) World Investment Report 
2007, Tanzania had the highest inflows of FDI in the East Africa 
region in 2006.  There is no restriction in foreign exchange and 
foreign investors are not denied national treatment.  The GOT has 
lent its support to an open investment regime, mobilization of 
private capital initiatives (PCI), and further liberalization of the 
financial sector in line with the World Bank's recommendations.  An 
increased number of privatized public enterprises have been awarded 
to foreign investors. 
 
The Tanzanian Investment Center (TIC), established by the Tanzanian 
Investment Act of 1997, is the focal point for all investors' 
inquiries and facilitates project start-ups.  TIC continues to 
improve investment facilitation services, provide joint venture 
opportunities between local and foreign investors, and disseminate 
investment information.  The TIC received the highest positive 
scores on the UNIDO Africa Foreign Investor Survey 2005.  Companies 
holding TIC certificates of incentive are allowed 100  foreign 
ownership; VAT and import duty exemptions; and repatriation of 100 
of profits, dividends, and capital after tax and other obligations. 
 
The GOT demonstrated its pro-investment attitude anew in September 
2007 when President Jakaya Kikwete led a trade and investment 
mission to the United States to promote Tanzania's investment 
opportunities for the second year in a row.  The mission included 
Government agencies and private sector investors from the 
manufacturing, tourism, transport, minerals and agriculture sectors. 
 In 2007 the GOT also undertook official investment promotion trips 
to Germany, China, Indonesia, the United Arab Emirates, India, 
Sweden, Italy, Japan, South Korea, the United Kingdom, Australia, 
Malaysia, Egypt, and Iran. 
 
Among investment and trade opportunities in Tanzania that remain 
undeveloped are the energy sector, including coal reserves and 
natural gas deposits; and the transportation sector.  The GOT 
accepts foreign investment in Built, Operate and Transfer (BOT) 
projects and has launched a concession system aimed at attracting 
foreign investors to build infrastructure.  Investment Tax 
Incentives are stable and predictable. 
 
Land ownership remains restrictive in Tanzania.  Occupation of land 
by non-citizens is restricted to land for investment purposes 
regardless of the sector.  Under the 
1990 Land Act, however, a foreign investor may occupy land up to 99 
years through derivatives rights. 
 
In February 2005, the GOT established the Better Regulation Unit 
(BRU) to manage the implementation of the Business Environment 
Strengthening for Tanzania (BEST) program.  In June 2006, Tanzanian 
Parliament passed a law to establish Special Economic Zones (SEZs) 
to augment investments in the light industry, agro-processing 
industry and agriculture sectors.  Green field foreign direct 
investments are allowed through this SEZ legislation.  The GOT 
continues to promote Export Processing Zones (EPZ) to attract 
investments in agribusiness, textiles and electronics and Spatial 
Development Initiatives (SDI).  The EPZs are tax free zones. 
 
Investments on the Dar es Salaam Stock Exchange (DSE) are open to 
foreign investors, but capped at 60 percent.  Foreign investors are 
barred from participating in government securities.  The financial 
sector has expanded with an increase in foreign-affiliated financial 
institutions and banks operating in Tanzania.  As of August 2007, 
the Bank of Tanzania listed a total of 23 Commercial Banks licensed 
and operating in Tanzania, over half of which are foreign-affiliated 
banks.  Competition among these foreign commercial banks has 
resulted in significant improvement in the efficiency and quality of 
financial services provisions. 
 
Kenya, Tanzania, and Uganda signed a Customs Union Protocol in 2004, 
putting in place a three-tier tariff system paving the way for a 
common market within the East African Community (EAC).  Rwanda and 
Burundi acceded to the EAC on June 18, 2007 and became full members 
on July 1, 2007.  EAC member states agree to allow zero-rated entry 
of raw materials from other EAC members, levy a 10% duty on 
semi-processed goods, and levy a 25% duty on finished goods. 
Although the EAC member countries continue to discuss economic 
integration, non-tariff barriers--such as the administration of 
duties and other taxes, and corruption--remain a problem. 
 
--------------------------------- 
Conversion and Transfer Policies 
--------------------------------- 
Regulations permit unconditional transfers through any authorized 
bank in freely convertible currency of net profits, repayment of 
foreign loans, royalties, fees charged for foreign technology and 
remittance of proceeds.  The only official limit on transfers of 
foreign currency is on cash carried by individuals traveling abroad, 
which cannot exceed USD 10,000 over a period of forty days. 
Tanzania occasionally experiences shortages of foreign exchange, but 
this problem has been greatly eased by the growth of bureau de 
changes returns.  Bureaucratic hurdles continue to impact the length 
of time it takes to process and effect a transfer, which can range 
from days to weeks. 
 
-------------------------------- 
Expropriation and Compensation 
-------------------------------- 
The GOT may expropriate property only for the purpose of national 
interest and after due process.  The Tanzanian Investment Law 
guarantees: 
- Payment of fair, adequate and prompt compensation; 
- A right of access to the Court or a right to arbitration for the 
determination of the investor's interest or right and the amount of 
compensation; 
- Any compensation payable under this section shall be paid promptly 
and authorization for its repatriation in convertible currency, 
where applicable, shall be issued. 
 
GOT authorities do not discriminate against U.S. investments, 
companies or representatives in expropriation.  Since 1985, the 
Government of Tanzania has not expropriated any foreign 
investments. 
 
------------------- 
Dispute Settlement 
------------------- 
Tanzania is a member of both the International Center for the 
Settlement of Investment Disputes (ICSID) and the Multilateral 
Investment Guarantee Agency (MIGA).  The ICSID was established under 
the auspices of the World Bank by the Convention on the Settlement 
of Investment Disputes Between States and Nationals of Other States. 
 The MIGA is also World Bank-affiliated and issues guarantees 
against non-commercial risk to enterprises that invest in member 
countries.  GOT regulations maintain that a dispute between a 
foreign investor and the Tanzanian Investment Center (TIC) which is 
not settled through negotiations may be submitted to arbitration. 
There are four options open to the parties: 
 
- Arbitration in accordance with the rules and procedures of the 
International Center for Settlement of Investment Disputes, 
 
- within the framework of the bilateral or multilateral agreement on 
investment protection to which the Government and the country of 
which the investor is a national are parties. 
 
- Arbitration in accordance with the World Bank's Multilateral 
Investment Guarantee Agency (MIGA), in which Tanzania is a 
signatory, 
 
- Or in accordance with any other international machinery for 
settlement of investment disputes agreed upon by the parties. 
 
The Commercial Court of Tanzania was established in 1999 as a 
division of the High Court under the 1999 amendments of the Civil 
Procedure Code Act of 1966 and the Law Reform Commission of Tanzania 
Act of 1980. 
---------------------------------------- 
Performance Requirements and Incentives 
---------------------------------------- 
The GOT uses Trade-related Investment Measures (TRIMs) to promote 
development objectives, encourage investments in line with national 
priorities to attract and regulate foreign investment.  Trade 
development instruments that Tanzania has adopted include Export 
Processing Zones (EPZs); Investment Code and Rules; Export 
Development/Promotion and Export Facilitation. 
 
EPZs were established by the EPZ Act 2002 and are open to both 
domestic and foreign investors.  In July 2006, Dr. Adelhelm Meru was 
appointed the first Director General of the Export Processing Zones 
Authority (EPZA), which is housed in the Ministry of Industry, 
Trade, and Marketing.  The EPZA is charged with designating suitable 
areas for the location of EPZs throughout Tanzania.  The EPZA also 
oversees incentive packages directed at increasing investment.  The 
incentives include exemption of corporate tax; withholding taxes on 
rent, dividends and interest; the remission of customs duty, 
value-added tax (VAT) and other taxes on raw materials and goods of 
capital nature; as well as the exemption from VAT on utilities, 
wharf charges, and levies imposed by local authorities--all for a 
period of ten years. 
 
Tanzania is still in transition from a largely public sector economy 
to one in which the private sector is taking the leading role.  The 
Investment Code, as a trade policy instrument, seeks to compensate 
for distortions which impede the flow of foreign investments due to 
market imperfections.  It is a necessary interim instrument for 
stimulating both foreign and domestic investments especially in 
agriculture and industry (where the level of domestic investments is 
still low) while initiating measures for strengthening the enabling 
the business environment and working for the emergence of a vibrant 
market economy.  As part of the Investment Code, Tanzania offers a 
well-balanced package of investment benefits and incentives that are 
applied uniformly to all investors (domestic and foreign 
investors): 
 
- Zero Custom Duty and deferred VAT on capital goods for investments 
in sectors such as mining, export processing zones, infrastructure, 
road construction, bridges, railways, airports, generation of 
electricity, telecommunications and water services. 
 
- 100% Capital allowance deduction in the years of income for the 
above mentioned types of investments. 
 
- No remittance restrictions.  The GOT does not restrict the right 
of a foreign investor to repatriate returns from an investment. 
 
- Investments in Tanzania are guaranteed against nationalization and 
expropriation.  Any dispute arising between the Government and 
investors can be settled through negotiations or may be submitted 
for arbitration before the international organizations. 
 
- Allowing interest deduction on capital loans; removal of the 
5-year limit for carrying forward losses of investors. 
 
- Five percent Customs Duty and VAT tax deferral on capital goods 
for priority sectors including livestock, aviation, commercial 
buildings, commercial development and micro finance banks, export 
oriented projects, geographical special development areas, human 
resources development, manufacturing, natural resources including 
fisheries, rehabilitation and expansion projects, tourism and tour 
operators, transport, radio and television broadcasting. 
 
The Zanzibar Investment Promotion Agency (ZIPA) and the Zanzibar 
Free Economic Zones Authority (ZAFREZA) offer roughly equivalent 
incentives as those offered by the Mainland's TIC and EPZ policies. 
 
--------------------------------------------- 
Right to Private Ownership and Establishment 
--------------------------------------------- - 
Tanzanian regulations allow foreign and domestic private entities to 
establish and own business enterprises and engage in legal forms of 
remunerative activity.  The Business Registration and Licensing Act 
established licensing regulations for business operations.  It 
provides the right to freely establish private entities, to own 
property both movable and immovable, and to acquire and dispose of 
property including interest in business enterprises and intellectual 
property. 
 
Under Tanzanian law, occupation of land by non- citizens is 
restricted to lands for investment purposes under the Tanzania 
Investment Act 1997 and the revised new Land Act 1999.  Land in 
Tanzania is government property and citizens or non-citizens only 
lease the land from the government for 33, 66, or 99 years depending 
on the nature of the investment.  The law does not allow individual 
Tanzanians to sell land to foreigners.  Foreigners can only lease 
land in Tanzania through the Tanzania Investment Center (TIC). 
 
------------------------------ 
Protection of Property Rights 
------------------------------ 
Movable Property and Land Rights:  Secured interests in property, 
both movable and real, are recognized and enforced under different 
laws in Tanzania.  There is no one comprehensive law to secure 
property rights. 
 
The concept of mortgage exists and the Ministry of Lands and Human 
Settlements Development handles registration of mortgages and rights 
of occupancies.  The Office of the Registrar of Titles is 
responsible for issuing titles and registering mortgage deeds. 
Title deeds are recognized as mortgage for securing loans from banks 
and upon failure to pay back the loans the banks can sell an 
attached plot. 
 
Intellectual Property Rights:  Adherence to key international 
agreements on intellectual property rights in Tanzania began only in 
recent years.  In 1999, Tanzania passed the Copyright and 
Neighboring Rights Act Number 7 of 1999, the current legislation in 
Tanzania addressing the protection of intellectual property rights 
(IPR) and protection for expressions of folklore.  This legislation 
conforms to international copyright and property rights conventions 
and provides adequate protection for intellectual property, patents, 
copyrights, trademarks and trade secrets.  This is one of the steps 
Tanzania has taken to implement and enforce the WTO Trade-Related 
aspects of Intellectual Property Rights (TRIPS).  This law provides 
one of the means under which Tanzanians and foreign nationals may 
secure, exercise, and enforce exclusive intellectual property 
rights.  The Act also establishes the Copyrights Society of Tanzania 
(COSOTA) which has the duty and powers to promote and enforce these 
rights, collect and distribute royalties on behalf of its members, 
maintain registers of works, productions and association of its 
members, search to identify and publicize rights of owners and 
defend them. 
 
The establishment of both the Commercial Court of Tanzania (in 1999) 
and a special Land Court (under section 167 of Lands Ordinance 
number 4 of 1999), as special divisions of the High Court, has been 
a positive step towards protection and effective enforcement of 
property rights. 
 
The Commercial Court deals with efficient litigation of commercial 
cases including those related to infringements of IPR and trade in 
counterfeit and pirated goods.  Several cases have already been 
heard and decisions rendered from these high court divisions. 
Although the GOT has made efforts to address the deficiencies in 
commercial cases, the Commercial Court still lacks expertise in 
commercial law, including intellectual property rights and 
international business or financial transactions. 
 
The Tanzanian Fair Competition Commission (FCC) has initiated 
amendments to the outdated Merchandise Marks Act, which provides the 
legal framework for handling counterfeits.  The amendments provide 
for the appointment by the Minister of Trade of a Chief Inspector to 
conduct investigations into suspected importers or shops.  The FCC 
has taken positive steps towards combating counterfeits.  In just 
one month (October 2007) the FCC confiscated and destroyed 303 
cartons of counterfeit kiwi shoe polish worth about USD 20, 000; 
counterfeit Britmax fluorescence tube lights worth USD 18,000; and 
counterfeit electric extension cables worth over USD 48,000. 
 
Tanzania has not yet signed or ratified the WIPO internet treaties. 
 
-------------------------------------- 
Transparency of the Regulatory System 
-------------------------------------- 
The GOT has made progress in formulating policies and effective laws 
to foster competition.  Tanzania has enacted three laws to govern 
competition and regulate economic activity: the Fair Trade Practices 
Act 1994, the Energy and Water Utilities Regulatory Act (EWURA) 
2001, and the Surface and Marine Transport Regulatory Act (SUMATRA) 
¶2001. The GOT is expediting the implementation of a Competition Law 
under the coordination of the Fair Commission for Trade and related 
regulatory institutions and promotes consumer protection through 
broad-based public awareness on consumer's rights and obligations. 
 
The current institutionalization of the public-private sector 
dialogue through various forums such the Investors Round Table (IRT) 
process, ensures that the bureaucratic hurdles hindering private 
investments are addressed.  Since the adoption of the IRT process in 
July 2002, Government Ministries, Departments and Agencies have 
broadened reforms.  The IRT serves as an advisory board on best 
practices in trade and investment to the top national leadership. 
 
Tanzania is implementing a taxpayer's charter that enables taxpayers 
to complain against problems or malpractice within the Tanzania 
Revenue Authority (TRA) officers.  The tax policy reform agenda 
includes abolition of nuisance taxes, harmonization of regulatory 
framework, clear incentive regime and gradual reduction in rate 
structure.  The GOT has broadened tax incentives and incorporated 
them in the relevant tax laws to attract more investments.  The 
current tax policy does not impede or distort investment. 
 
The GOT established a Law Reform Commission (LRC) to take and keep 
under review laws and regulations, and to examine the legal and 
regulatory requirements relating to trade and investments.  The GOT 
is also modernizing the business-licensing regime to reduce 
impediments to investment.  The Tanzania Investment Center (TIC) has 
become a 'one-stop shop' that provides fast track assistance to 
obtain approvals and permits such as work permits, industrial 
license and trading licenses. 
 
The judicial system continues to function slowly and imperfectly and 
is easily influenced by privileged individuals.  These factors 
increase the cost and difficulty of doing business in Tanzania.  In 
order to overcome shortfalls in the judicial system, the GOT is 
adopting anti-corruption measures and legal reforms to reduce 
bureaucratic snags and redundant laws and regulations. 
 
--------------------------------------------- ------ 
Efficient Capital Markets and Portfolio Investment 
--------------------------------------------- ------ 
The Capital Markets and Securities Authority (CMSA) Act of 1994 
facilitates the free flow of capital or financial resources to 
support the product and factor markets.  The CMSA opened the Dar es 
Salaam Stock Exchange (DSE) to foreigners.  The DSE improves access 
to medium and long-term capital, and concurrently promotes a wider 
ownership of stocks and other equities.  Corporate enterprises can 
recapitalize and grow when listed on DSE.  Individuals can invest in 
shares and gain profitable returns; the maximum limit for foreign 
participation is 60 percent.  Foreigners are not allowed to 
participate in government securities. 
 
Foreign investors can get credit on the local market for capital 
injection within the country and for importation of capital goods 
for use within the country.  While credit is allocated on market 
terms, it has been uneconomical to borrow from local 
sources/commercial banks due to high interest rates.  Bank lending 
rates range from 14 percent to 24 percent for ordinary borrowers. 
Corporate borrowers can negotiate lower rates.   The Multilateral 
Investment Guarantee Agency (MIGA)'s Guarantees against political 
risk, International Finance Corporation (IFC) facilities, U.S. Exim 
Bank are available for financing projects. 
 
The financial sector has expanded with a significant increase in the 
number of foreign-affiliated financial institutions and banks 
operating in Tanzania.  By August 2007, there were a total of 23 
Commercial Banks licensed and operating in Tanzania, of which more 
than half are foreign-affiliated banks.  The private sector players 
have access to a variety of commercial credit instruments including 
documentary credits (letters of credits), overdrafts, term loans, 
and guarantees. 
 
The Central Bank in Tanzania (the Bank of Tanzania or BoT) 
administers and provides special export credit guarantees from which 
joint venture initiatives between local and foreign investors can 
benefit.  In November 2006, EXIM Bank (Tanzania) Ltd obtained a new 
credit line from PROPARCO, the private sector arm of the Agence 
Francaise De 
Development (AFD), the official French Development Institution. 
This line increased EXIM Bank's capacity to support long-term 
foreign currency lending both in Euros and US dollars to SMEs and 
corporations.  In Tanzania, PROPARCO's operations represent a total 
of USD 36 million, mainly to banks, the tea and manufacturing 
sectors. 
 
Foreign investors can open accounts and make deposits in registered 
private commercial banks.  Interest earned by non-residents or 
foreign investors from deposits in banks registered by the Central 
Bank of Tanzania is exempt from income tax, in accordance with the 
Income Tax Act 2004.  Foreign exchange regulations have been 
eliminated to allow an enabling environment to attract investors and 
simplify international transactions.  Profits, dividends, and 
capital can be readily repatriated.  Several venture capitals have 
been established to meet the demand for equity injections into 
growing businesses. 
 
The Banking and Financial Institution Act 2006 established a Credit 
Reference Bureau and permits banks and financial institutions to 
release information to licensed reference bureaus in accordance with 
regulations and allows credit reference bureaus to provide to any 
person, upon legitimate business request, a credit report. 
International reserves at the BoT stood at almost 2 billion US 
dollars in 2006, which is the highest for over 30 years and 
equivalent to almost seven months of imports.  This has helped BoT 
to intervene whenever minor fluctuations have led to a slight 
depreciation of the Tanzanian Shilling. 
 
------------------- 
Political Violence 
------------------- 
Tanzania is one of the most politically stable countries in Africa 
and the prospects for serious and sustained violence are very low. 
Since gaining independence, Tanzania has enjoyed a remarkable degree 
of peace and stability.  In 1992, the constitution was amended to 
allow for multiple political parties; in 1995, the first multi-party 
election 
took place. 
 
As the country underwent the transition from a socialist to a 
democratic entity beginning in 1992, occasional conflicts took 
place, particularly during election campaigns.  In 
2001, demonstrators clashed with police on Pemba (Zanzibar) and 
several persons were killed.  However, the 2005 general elections 
were primarily peaceful and marked by an absence of major violence. 
In January 2007, the two main political parties on Zanzibar opened a 
dialogue and most observers expect that further clashes on Zanzibar 
are unlikely; the chance for conflict on the Mainland remains 
remote. 
 
----------- 
Corruption 
----------- 
Corruption is one of the areas of major concern encountered by 
foreign investors.  The administration of President Kikwete, who 
took office in December 2005, has made the fight against corruption 
one of its priority areas.  While giving or receiving a bribe 
(including bribes to a foreign official) is a criminal offense in 
Tanzania, the enforcement of laws, regulations and penalties to 
combat corruption has overall been largely ineffective.  Areas where 
corruption persists include government procurement, privatization, 
taxation, ports, and customs clearance. 
 
The Customs Department, the Port Authority, and the Tanzania Revenue 
Authority (TRA) remain a great hindrance to importers throughout 
Tanzania.  Unpredictable and lengthy clearance delays and bribes to 
expedite service are commonplace.  In late December 2007, amidst the 
elections crisis in Kenya which closed Kenyan ports and caused many 
businesses to consider Dar es Salaam Port as an alternative, the TRA 
announced new plans to reduce delays by fully automating the customs 
system and hastening cargo clearances. 
 
While Transparency International (TI) has consistently rated 
Tanzania as one of the worst countries in the world for corrupt 
business practices, TI's 2007 Corruption Perceptions Index (CPI) 
again showed a slight improvement in Tanzania's anti-bribery 
activities.  (Note: The CPI score tracks perceptions of corruption 
seen by business and country analysts, ranging from zero as highly 
corrupt, to 10, not corrupt).  The CPI showed Tanzania edging up 
from 1.9 points in 1999 to 2.5 in 2006, and 3.2 in 2007. 
 
The GOT launched the National Anti-Corruption Strategy (NACS) and 
sector-specific action plans for all ministries, independent 
government departments, executive agencies and local authorities on 
December 10, 2006.  The Anti-Corruption Bill was passed on April 17, 
2007 and became operational on July 1, 2007.  It is commonly 
referred to as the Prevention and Combating of Corruption Bureau 
(PCCB) Act.  On January 9, 2008, Tanzanian President Jakaya Kikwete 
ousted the Governor of the Bank of Tanzania (BoT) in response to a 
special audit report on the BoT's repayment of Tanzania's external 
debts.  In what will be the first major corruption case for the 
PCCB, Kikwete directed the Attorney General, the Inspector General 
of Police and the Director of the PCCB to investigate all companies 
and individuals who were involved in the scandal, and to take 
appropriate action. 
 
-------------------------------- 
Bilateral Investment Agreements 
-------------------------------- 
Currently, the United States of America and Tanzania do not have a 
bilateral investment agreement. 
 
On November 27, 2007, the East African Community (EAC) member 
states--including Tanzania--signed an interim economic partnership 
agreement (EPA) with the European Union.  Tanzania is also a member 
of the Southern Africa Development Community (SADC), and the GOT has 
said it will consider economic partnerships with both the EAC and 
SADC.  Tanzania quit the Common Market for Eastern and Southern 
Africa (COMESA) in 2000. 
 
--------------------------------------------- - 
OPIC and Other Investment Insurance Programs 
--------------------------------------------- - 
The U.S. Overseas Private Investment Corporation's (OPIC) program is 
available to citizens of the United States; corporations, 
partnerships, or other associations created under the laws of the 
United States; foreign corporations at least 95 percent owned by 
U.S. investors; and foreign entities that are 100 percent 
U.S.-owned. 
 
OPIC signed an incentive agreement with the GOT in December 1996. 
While the number of U.S. subsidiaries and affiliated companies that 
could qualify for OPIC financing remains small, a few companies have 
used OPIC programs in Tanzania.  OPIC insurance products cover three 
political risks: 
 
-- Currency Inconvertibility - deterioration in the investor's 
ability to convert profits, debt service and other investment 
returns from local currency into U.S.  Dollars and to transfer those 
U.S. Dollars out of host country. 
 
-- Expropriation - loss of an investment due to expropriation, 
nationalization or confiscation by the host government; and 
 
-- Political Violence - loss of assets or income due to war, 
revolution, insurrection or politically motivated civil strife, 
terrorism and sabotage. 
 
Tanzania is an active member of the Multilateral Investment 
Guarantee Agency (MIGA), a member of the World Bank Group, that 
promotes foreign direct investment in developing countries by 
offering political risk insurance (guarantees) to investors and 
lenders, and by providing technical assistance to help developing 
countries attract and retain foreign investment. 
 
The Export-Import Bank (Ex-Im Bank) of the United States, the 
official export credit agency of the United States, supports the 
purchases of U.S. goods and services by creditworthy Tanzanian 
buyers that cannot obtain credit through traditional trade finance 
sources.  The agency offers export credit insurance and guarantees 
of commercial loans.  The Ex-Im Bank helps U.S. companies sustain 
and create jobs by financing U.S. exports.  The Ex-Im Bank has 
established a cooperative agreement with the EXIM Bank of Tanzania 
Limited to facilitate access to guarantees by investors within 
Tanzania. 
 
Tanzania is also a member of the International Center for Settlement 
of Investment Disputes (ICSID).  Investments in Tanzania are 
guaranteed against nationalization and expropriation. 
 
 
------- 
Labor 
------- 
Private companies can hire or fire employees whose performance is 
not desirable.  The limited availability of skilled labor remains a 
major problem for businesses in Tanzania.  There are no legal 
requirements to use specific employment agencies for recruitment and 
no imposed conditions on employment of host country nationals.  The 
applicable labor laws are the Employment Ordinance Act CAP.366; 
Security of Employment Act CAP 574 No. 62; Workmen's Compensation 
Ordinance CAP 263; and Severance Allowance Act CAP 487 No.47 of 
¶1962. 
 
The labor and immigration formalities allow foreign investors to 
recruit up to 5 expatriates; more work permits can be granted on 
meeting specified conditions.  As an incentive under the EPZ Act, 
the GOT can provide work permits for management and technical staff 
when these skills are unavailable locally.  The number of such 
personnel is determined in consultation with the Ministry of Labor. 
 
The Ministry of Labor published a government order on November 16, 
2007 establishing new minimum wage requirements.  The new law, which 
went into effect January 1, 2008, divides the labor force into eight 
sectors: health services; agricultural services; trade industries, 
and commercial services; transport and communication services; 
mining services; fishing and marine services; domestic and 
hospitality services; and private security services.  The law, which 
sets a different minimum wage for each subsector, was ordered by the 
Minister of Labor under recommendation by the newly-formed Minimum 
Wage Board. 
 
Partly in response to objections filed by the Confederation of 
Tanzania Industries (CTI), in December 2007 the Ministry of Labor 
issued an amendment to the order, lowering the minimum wage for 
companies employing 300 plus workers and exporting 25 percent or 
more of its products to 80,000 Tsh from the 150,000 Tsh originally 
established in the order.  Companies in the Export Processing Zones 
(EPZs) and Special Economic Zones (SECs) and labor-intensive 
industries such as textiles, will benefit from this 
amendment--although the established rate is still a 40% increase 
over the previous universal minimum wage of 48,000 Tsh. 
 
While there continues to be a deficit of skilled labor, the number 
of university graduates in Tanzania, especially in business 
management and IT, is growing.  However, many foreign investors 
still find that local labor is not sufficient to fill management and 
administrative positions. 
 
 
-------------------------------------- 
Foreign Trade Zones/Free Trade Zones 
-------------------------------------- 
 
Refer to EPZ information above.  Efforts are progressing to make 
Zanzibar Port a free port.  In addition, free economic zones have 
been established in three areas of Pemba and Zanzibar.  Tanga and 
Kigoma ports will also soon become free trade zones. 
 
 
------------------------------------- 
Foreign Direct Investment Statistics 
------------------------------------- 
 
 
The Bank of Tanzania (BOT) reported Foreign Direct Investment (FDI) 
trends in Tanzania as follows: 
 
Year 2000: USD 463.4 million 
2001: USD 467.2 million 
2002: USD 430 million 
2003: USD 526.8 million 
2004: USD 469.9 million 
2005: USD 325 million 
2006: USD 501.5 million 
 
FDI into Tanzania has been principally in the mining, manufacturing, 
tourism, construction and transportation sectors.  In 2006, the 
value of FDI increased to USD 501.5 million from USD 325 million in 
¶2005.  The increase was mainly due to investment for expansion in 
the mining sector. 
 
GREEN