Yes we should create an enabling environment for inclusive businesses

02Oct 2019
Editor
The Guardian
Yes we should create an enabling environment for inclusive businesses

CHANGES are in the air to meet a number of demands of the local and foreign business community, as well as taking note of studies on the country’s investment climate.

CHANGES are in the air to meet a number of demands of the local and foreign business community, as well as taking note of studies on the country’s investment climate. The government has announced that it is has set out a series of amendments to the Investment Act of 1997 with a view to improving the business environment in the country as demanded by stakeholders.

This position has lately been expressed by the Minister of State in the Prime Minister’s Office (Investment), Angela Kairuki, who said the proposed changes will scrap red tape in business registration, along with some nuisance taxes. It is apparent that the cabinet has already approved the proposed changes, in line with what President John Magufuli has been insisting in recent months. He is on record to object to bureaucratic red tape chasing away much-needed investments and impeding progress towards becoming a semi-industrialised economy within the next six years or so.

The changes are likely to be adopted by the legislature in its next sitting in November, though there is still a plurality of voices on the wider policy parameters, not just on taxes and licences. The latter seems to be the easier part as the government forgoes bits of revenues to push investments, which is altogether positive. But the problem about attracting investments is much wider, and what some important representatives of foreign investors for instance have been saying is a predictable policy climate, meaning over the medium term. Minister Kairuki would say we’ve made progress.

What the government appears to have achieved so far in its efforts to improve the country’s investment climate is ending soliciting bribes that used to frustrate many investors (but there are those who relish such situations to fleece the country). It is now tackling systemic drawbacks in the regulatory environment where licensing and taxation come up, but it is unclear if this move actually responds to what British High Commissioner Sarah Cooke was pointing out back in May this year. She said a severe lack of confidence for business prospects was likely “over the next two years” if nothing was done to improve predictability of the business environment.

Still some things that High Commissioner Cooke mentioned are already being addressed, as she specifically stated that “British investors in the country yearn for policy predictability, less bureaucracy and faster approval of new investments or projects.” The issue about red tape is part of the proposed changes, which means approval of projects will be quickened, apparently at the expense of the National Environmental Management Council (NEMC) whose onerous supervisory and permit issuance procedures have been a matter of concern even for decades.

Mussa Sima, the Deputy Minister of State at the Vice President’s Office (Union and Environment), had to urge that investors make sure that they consult the National Environmental Management Council (NEMC) to familiarize themselves with environment regulations before commencing implementation of their projects.

Otherwise the concern until that point was possible conflicts with regard to the use of land, between investors and local governments or land authorities. This is what the Tanzania Investment Centre is supposed to resolve before a piece of land is allowed for use by investors. Opening regional liaison offices for TIC and placing six months from registration or commencement of a project to tax eligibility is also likely to go well with business climate observers.