TANZANIA TOURISM POLICY

Over the last 10 years, Tanzania has had a very strong and prosperous tourism development as it acts as a major source of foreign exchange. The industry is credited for being one that offers employment opportunities either directly or indirectly through its multiplier effect. The sector directly accounts for about 16% of the GDP and nearly 25% of total export earnings.

It directly supported an estimated 198,000 jobs in 2003. Foreign exchange receipts from tourism grew from US $259.44 million in 1995 to $746.02 million in 2004. Tourist arrivals have also shown a steady increase from 295,312 in 1995 to 582,807 in 2004.

These positive developments in the sector are the results of the economic reform programme, under which the government among others has undertaken the following measures: -

• The abolition of Local Government nuisance taxes in 2002/2004 budgets.
• VAT has been rationalized in the 2004/2005 budgets. There has been increased threshold of registration from Tsh: 20.0 million to Tsh: 40.0 million to improve compliance and administration costs of collection.
• Income Tax Act was passed by Parliament in April 2004 after stakeholders’ consultants. The Act was operationalized on 1st July 2004. The main characteristic of the Act is self assessment by Tax Payers, and;
• Widening the tax base.

The reforms have led to the improvement of tourism services, including air transport, road infrastructure, financial and communications sectors etc. The government has also assisted in the formation of the Tourism Confederation of Tanzania (TCT), a private sector body that is intended to be the representative and voice of the tourism private sector interests.

After carrying out social and economic reforms the government has embarked on efforts to improve services so as to attain high level of efficiency and effectiveness. Tanzania has undertaken institutional and administrative capacity reforms whereby some government departments or institutions have been turned into autonomous Executive Agencies while others have been merged or scrapped off altogether.

It is hoped that these changes will go a long way towards reducing the “high transaction costs” facing stakeholders, creation of a more favourable social and economic environment, relatively free of fear and risk of policy reversal, responsive to market oriented price signals in the commodity and factors markets; and conducive to the exploitation of investment opportunities.

As if these are not enough, the government has put in place an incentive package that is second to none: a one-stop shop-Tanzania Investment Centre (TIC) – where applications for investment, business registration, work and resident permits and tax issues are all handled under one roof. TIC process application for investment whose minimum capital is not less than US $300,000 if foreign-owned or partnership between foreign and local investors and US $100,000 if locally owned.

Cognisance to the fact that private investment – both local and international – is the main engine for economic growth, the government embarked on economic reforms that have seen herself disentangled from running the economy. This has been achieved by privatisation of parastatals, policy reforms in various areas to accommodate private sector participation in investments and investment promotion of the country.

Being a politically and labour stable country, where peace and security – two most precious social needs required by investors and which elude most Third World country’s especially in Africa – abound, investors are flocking into the country attracted by the various investment incentives offered, to the extent that the country is now dubbed “The Land of Opportunities”. Foreign Direct Investments (FDI) flowing into Tanzania has put the country among the leading top ten African investment destinations in the continent in which there is oil and minerals.

Tanzania is a country of not only abundant tourist attractions but also a tourism investment giant. The country has now become one of the world’s investor friendly destinations in the Sub Saharan Africa. This is because: -

• Tanzania has abundant tourism resources that are mostly under-utilised.
• Tanzania has enjoyed peace and stability since independence in 1961.
• Tanzania is home to the worlds’ famous best tourism brands such as Serengeti, Zanzibar and Kilimanjaro. Additional popular destinations such as Selous Game Reserve, Ruaha, Mafia, Pemba, etc. are also found in Tanzania.
• It offers a well balanced package that include:
  • VAT deferrement on ground transport run by Tour Operators.
  • Recognition of private property and protection against any non-commercial risks.
  • The ease of obtaining other permits such as Residence/Work Permit, industrial license, trading license etc.
  • Automatic permit of employing 5 foreign nationals on the project holding Certificate of incentive.
  • Tanzania is a signatory of the Multilateral Insurance Guarantee Agency (MIGA) for protection of foreign investments from non-commercial risks.
• Geographical location: Tanzania is well positioned geographically, as a gateway to six land locked countries, and a larger market within the regional economic groupings to which we belong such as the East African Community and the Southern African Development Community (SDAC).
• Tanzania is comparatively free of ideological confrontation; ethnic strife and labour disputes, hence pose no threat to investors.
• Tanzania is a cosmopolitan and peaceful place where people of all races live in harmony.
• The Tanzanian shilling is convertible to US dollars and other major international currencies within Tanzania;
• Numerous multilateral funding institutions are active in Tanzania, including the World Bank, the International Monetary Fund, the International Finance Corporation and the Commonwealth Development Corporation.