Q: What has changed in Tanzania?

A: We started reform more than 10 years ago and carried out reforms in every sector. We privatised a lot of public corporations and generally the whole economy was reformed. In politics, we went to a multi-party system of democracy. Initially, our reform programme was considered ambitious but we went step-by-step and we have progressed a long way.

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When we started out, GDP growth was less than 3%; now we have GDP growth of 6.2% so it’s quite an achievement. About 75%-80% of the public corporations have been privatised and they are working a lot better than they used to. In fact, previously some of them were not working at all and some had to be liquidated. They have now been turned around, they are producing goods and giving employment, and the government is getting its share from taxes and dividends. It’s a success story.

How have things changed for foreign investors?

The country is becoming more attractive for investors. We have put in place an investment centre [the Tanzania Investment Centre, TIC], which was originally just a centre where would-be investors would report. They would still have to go to various ministries to get approvals and licences to start a business and hire people.

After the establishment of TIC, we made it a one-stop centre and we passed a law to that effect. Now the investor comes to the centre to give over his papers and will be told to come back to the centre to collect the results of his requests; usually it’s done within 14 days. This has encouraged a lot of investors to come to the country.

What incentives are available for investors?

We have improved the incentive package, especially for priority or risky areas. This has encouraged investors to venture into the more difficult areas, such as gold mining. A lot of people are prospecting for minerals, particularly gold and diamonds but also gemstones. We now have four mines open and a fifth one is coming on stream.

We also consider infrastructure a priority sector, particularly roads, and there is a strong package of incentives for investors.

Tourism is also coming along very well. When the reforms started, there were hardly any hotels of international standard; now we have a number. Tourism is increasing but we are not looking for mass tourism. We want to encourage quality tourism. We do not want the kind of tourism that will destroy the environment.

How does the government interact with business?

We have a budget consultative committee including private business people, so that when the government is trying to change taxes we can ask the business community for their advice on areas where they think it will impact negatively, and take this into consideration This has given a lot of encouragement to the business community.

The president [Benjamin Mkapa] also chairs a National Business Council, enabling various groups from the business and investment community to meet with him and air their views about where they think the government could improve. For example, if you were importing materials and found that they were getting stuck in the harbour, the government would try to address the situation. Anything that is affecting the smooth running of business can be aired at the council.

The TIC usually clears most of investors’ problems but if they come across a problem that needs a political solution, there is a National Investment Steering Committee, chaired by myself. The executive director of the TIC [Samuel Sitta] can bring the matter to my attention and I will call the relevant ministers to seek a solution.

What kinds of problems does the National Investment Steering Committee solve?

There is a waterfront project in Dar Es Salaam, which is a new kind of investment for the country. This is an area where people go at the weekends. It comes under the jurisdiction of the local government and so the councillors had to be brought into the picture. This cannot be done technically, it needs a lot of political input. I had to go to the councillors meeting and explain why it is important. They asked: ‘What will happen to our coastline or beach?’ I told them: ‘You will get a better coastline or beach so you don’t lose anything.’ After that they were convinced.

It’s worthwhile spending time on this kind of investment project, after all why are you a prime minister if you cannot solve some of these problems? They are really important for the economy of the country [the waterfront project will add 2% to GDP and Barclays is considering locating its offices there]. I am happy to have meetings into the middle of the night if it is to do with the future of the country.

Has Tanzania completely broken with its socialist past?

We are socialist with an open market just like the Labour government in the UK. We have opened up the economy and liberalised everything and we are more liberal than countries such as South Africa. In Tanzania, you can repatriate your profits and your dividends and there is no exchange control.

What is the government doing about corruption?

Since the president first came to power eight years ago, the motto that he put forward to the people was that we would fight corruption with all our might – and this we have really done. First, we set up a commission to understand why there was corruption, in which areas it was most prevalent and what we could do about it. The commission did its job and the government was given areas in which it should fight the corruption.

An anti-corruption bureau was there before but it wasn’t that strong. Now it has been strengthened in terms of personnel; the personnel are better trained and better paid. We have branches in all regions of the country.

Investors who were in Tanzania before can see the difference. We cannot say we have wiped out corruption but at least it is not what it was. One good thing is the education that has gone into the people, whereby they now point their fingers at anyone who is corrupt and the government can take action.

What are your views on regional trade groupings such as the forthcoming East African Common Market?

These are very important and I want to go beyond regional groups. African countries can do a lot of trade among themselves, although we do run into problems of competition because in the countries in Europe big multinationals are producing goods with sophisticated technology on a huge scale. The cost of production is very low, so when you want to sell some of your goods to, say, Zambia maybe Zambia can get the same goods cheaper from the UK.

But this doesn’t stop us thinking of our own markets and this is an area of priority. How we can look to our markets rather than outside is important.

How is the NEPAD initiative faring?

A NEPAD [New Partnership for Africa’s Development], as a programme, looks very attractive but the implementation could be a problem because it depends on resources that are not there. Developed countries have pledged substantial money but I don’t know whether it will be forthcoming. NEPAD is looking at how we can enhance economic development so that poverty can be eradicated. But the programmes must belong to the developing countries. If they are not owned by them, they may not succeed.

What is the most attractive aspect of Tanzania to investors?

There are many attractive things but political stability is important for investors. We have been stable since our independence and that’s why Tanzania has been a safe haven for refugees. It’s an indication of the stability that the country has enjoyed. We have had multi-party democracy for 10 years and we will continue in that direction. In addition, our policies have been tested and the government is geared to continue with those polices. We are very predictable.

Our reforms have been put into acts of parliament so that they cannot be played around with and we are always available to discuss things with investors if the need arises.

Q: What has changed in Tanzania?

A: We started reform more than 10 years ago and carried out reforms in every sector. We privatised a lot of public corporations and generally the whole economy was reformed. In politics, we went to a multi-party system of democracy. Initially, our reform programme was considered ambitious but we went step-by-step and we have progressed a long way.

When we started out, GDP growth was less than 3%; now we have GDP growth of 6.2% so it’s quite an achievement. About 75%-80% of the public corporations have been privatised and they are working a lot better than they used to. In fact, previously some of them were not working at all and some had to be liquidated. They have now been turned around, they are producing goods and giving employment, and the government is getting its share from taxes and dividends. It’s a success story.

How have things changed for foreign investors?

The country is becoming more attractive for investors. We have put in place an investment centre [the Tanzania Investment Centre, TIC], which was originally just a centre where would-be investors would report. They would still have to go to various ministries to get approvals and licences to start a business and hire people.

After the establishment of TIC, we made it a one-stop centre and we passed a law to that effect. Now the investor comes to the centre to give over his papers and will be told to come back to the centre to collect the results of his requests; usually it’s done within 14 days. This has encouraged a lot of investors to come to the country.

What incentives are available for investors?

We have improved the incentive package, especially for priority or risky areas. This has encouraged investors to venture into the more difficult areas, such as gold mining. A lot of people are prospecting for minerals, particularly gold and diamonds but also gemstones. We now have four mines open and a fifth one is coming on stream.

We also consider infrastructure a priority sector, particularly roads, and there is a strong package of incentives for investors.

Tourism is also coming along very well. When the reforms started, there were hardly any hotels of international standard; now we have a number. Tourism is increasing but we are not looking for mass tourism. We want to encourage quality tourism. We do not want the kind of tourism that will destroy the environment.

How does the government interact with business?

We have a budget consultative committee including private business people, so that when the government is trying to change taxes we can ask the business community for their advice on areas where they think it will impact negatively, and take this into consideration This has given a lot of encouragement to the business community.

The president [Benjamin Mkapa] also chairs a National Business Council, enabling various groups from the business and investment community to meet with him and air their views about where they think the government could improve. For example, if you were importing materials and found that they were getting stuck in the harbour, the government would try to address the situation. Anything that is affecting the smooth running of business can be aired at the council.

The TIC usually clears most of investors’ problems but if they come across a problem that needs a political solution, there is a National Investment Steering Committee, chaired by myself. The executive director of the TIC [Samuel Sitta] can bring the matter to my attention and I will call the relevant ministers to seek a solution.

What kinds of problems does the National Investment Steering Committee solve?

There is a waterfront project in Dar Es Salaam, which is a new kind of investment for the country. This is an area where people go at the weekends. It comes under the jurisdiction of the local government and so the councillors had to be brought into the picture. This cannot be done technically, it needs a lot of political input. I had to go to the councillors meeting and explain why it is important. They asked: ‘What will happen to our coastline or beach?’ I told them: ‘You will get a better coastline or beach so you don’t lose anything.’ After that they were convinced.

It’s worthwhile spending time on this kind of investment project, after all why are you a prime minister if you cannot solve some of these problems? They are really important for the economy of the country [the waterfront project will add 2% to GDP and Barclays is considering locating its offices there]. I am happy to have meetings into the middle of the night if it is to do with the future of the country.

Has Tanzania completely broken with its socialist past?

We are socialist with an open market just like the Labour government in the UK. We have opened up the economy and liberalised everything and we are more liberal than countries such as South Africa. In Tanzania, you can repatriate your profits and your dividends and there is no exchange control.

What is the government doing about corruption?

Since the president first came to power eight years ago, the motto that he put forward to the people was that we would fight corruption with all our might – and this we have really done. First, we set up a commission to understand why there was corruption, in which areas it was most prevalent and what we could do about it. The commission did its job and the government was given areas in which it should fight the corruption.

An anti-corruption bureau was there before but it wasn’t that strong. Now it has been strengthened in terms of personnel; the personnel are better trained and better paid. We have branches in all regions of the country.

Investors who were in Tanzania before can see the difference. We cannot say we have wiped out corruption but at least it is not what it was. One good thing is the education that has gone into the people, whereby they now point their fingers at anyone who is corrupt and the government can take action.

What are your views on regional trade groupings such as the forthcoming East African Common Market?

These are very important and I want to go beyond regional groups. African countries can do a lot of trade among themselves, although we do run into problems of competition because in the countries in Europe big multinationals are producing goods with sophisticated technology on a huge scale. The cost of production is very low, so when you want to sell some of your goods to, say, Zambia maybe Zambia can get the same goods cheaper from the UK.

But this doesn’t stop us thinking of our own markets and this is an area of priority. How we can look to our markets rather than outside is important.

How is the NEPAD initiative faring?

A NEPAD [New Partnership for Africa’s Development], as a programme, looks very attractive but the implementation could be a problem because it depends on resources that are not there. Developed countries have pledged substantial money but I don’t know whether it will be forthcoming. NEPAD is looking at how we can enhance economic development so that poverty can be eradicated. But the programmes must belong to the developing countries. If they are not owned by them, they may not succeed.

What is the most attractive aspect of Tanzania to investors?

There are many attractive things but political stability is important for investors. We have been stable since our independence and that’s why Tanzania has been a safe haven for refugees. It’s an indication of the stability that the country has enjoyed. We have had multi-party democracy for 10 years and we will continue in that direction. In addition, our policies have been tested and the government is geared to continue with those polices. We are very predictable.

Our reforms have been put into acts of parliament so that they cannot be played around with and we are always available to discuss things with investors if the need arises.