Can you give us some more background information about TIC and what are your main responsibilities?
TIC was created by an act of parliament in September 1997. It is a successor organisation to the former Investment Promotion Committee, which itself was formed in September 1990. IPC, which is the organisation before TIC, was formed at the time when the new economic reforms; liberalisation of the economy and liberalisation of the financial sector, begun. It was felt that together with the liberalisation of the economy and putting the emphasis on private sector development there should be an agency that helps investments, both local and foreign to come in and be facilitated and assisted in order to set up their business. For that reason several administrative measures were begun at that time including the whole concept of building incentives to investors, having a centre where they can obtain information from a reliable database about the opportunities and also to explain various policies and information about the land, banking, borrowing, interest rates, all this information in one place so that they don't have to move from one place to an other. So, it is a typical investment promotion agency that is promoting Tanzania and assuring that those people who come to Tanzania have a soft landing. We make sure that they come here and find it easy to get the approvals so that set up time is cut down to minimum to enable them to begin making money and pay their taxes etc. The emphasis of IPC at the beginning was partly regulatory and I think this reflects the old idea of a public sector controlled economy. So, IPC used to require so much information from the investor and so many forms to be filled, I remember that time the form for an investment was about sixteen pages long. So, gradually it begun to look that instead of being an agency to attract investments, it started creating problems because of the amount of information required. Obviously, this doesn't go well with someone who is in a hurry, I mean even one month with a million dollars is a loss, and I could invest it somewhere else and make money. As a result of this, government decided in 1997 that they should reform this centre so that it becomes a place where emphasis is on promotion and facilitation, and to remove from the law all aspects of regulations that had been the case with ITC. The act number 26 of 1997 was passed in parliament and emphasis is now in promotion and facilitation, and just to give you an example, TIC doesn't require an investor to produce feasibility studies because whether they make money or not, is really their business. There is no reason to look at direct cash flows. We have a very simple four page form which is merely information that is required by the economy about how much capital is coming in, who are the shareholders, what are the products that are invested in, where are they located, very basic information that would be wanted by any organisation like us in order to be able to facilitate the investors. We are in our third year now, in a new location, and we are trying to, based on the Mauritius example, operate this centre as a one stop centre. In fact this morning I just received a lady from a registration company, she will be in charge of doing business research questions and licensing by providing the investor with a fast track to all various licenses but not by the investor going to city commission and tax clearance, all will be done by the employers here on behalf of the investors. We are already doing that for immigration because we have people from the immigration department and they are doing residence permits and work permits on a fast track method. At each ministry in this country we have an investment liaison officer, so for the key functions like immigration, labour, business registration, tax payments etc, we have people right here. They are from other departments, because they know the culture of the departments, but they have been brought to me to work here, and they go with the investors and the problems straight to the investment liaison officer in their ministries and departments and get problems sorted out really quickly. Normally we are able to serve any investor with all various permits and authorisations within 14 days. By then he must be out of here either constructing, setting up or at least having a lease hold on a building and decorating it.
The government also is trying to implement new policies and an example of a successful story is the mining sector where the new laws have attracted new investors. In which sectors do you see big changes happening in the future in terms of new policies and attracting new investors?
We have to look at the mining sector, which has attracted the largest quantity of capital to our country. You may recall the mining law of Tanzania 1998; a model copied by almost every African country these days, because it has been able to accelerate the mining investment. Now we are, if you take the figures of 1998-9, the leading recipients of mining capital in Africa past Ghana. And this has all happened within 5 years. Currently Tanzania is possessing 5 world class gold mines, The quality of the gold, extracted from the ground, is very high here. The production costs of gold are very low in Tanzania, one can still operate in gold business even if the price of gold is 1.60-1.70 USD. People come to me and ask why one comes to gold business since the price is depressed at the moment. I tell them that the low production costs enable, unless there is a catastrophe and price goes down to 1.60 USD which has not happened, profitable mining. This is why we have these 5 new gold mines.
The second sector which is going to be very exciting is tourism. Five years ago we had only one hundred thousands tourists, in 1999 we had half a million tourists. We want to reach one million in three years. And then, sky is the limit as they say, increase the amount along the infrastructure improvement in terms of transportation and a reliable air plane network.. It should then be very easy to attract the type of tourists who put quite a bit of money into the country's economy. We have the Ngorongoro, the crater conservation area, which is 70 km diameter. It was formed naturally from the volcanic activities and every living being there at that time, was trapped there and is still there. You go there after the rain and you find incredible wild life in their complete natural state. There are also historical things. It is very interesting not only to archaeologists but also to people who want to see where the first men of Africa; human beings 2 million years ago, lived. We have no problem with the content of the tourism because the attractions are there: Serengeti, Ngorongoro, Kilimanjaro, Lake Victoria and Lake Tanganyika. The only problem is the infrastructure. We have now come up with an idea to have the infrastructure built by the private sector, because it is not easy, in terms of resources, to have this government, who is already looking after education etc, and social sector competing with the infrastructure. Government cannot say that we are building thousands of roads now if we have no medicine in hospitals. It is a matter of priorities. Why can we not allow the private sector to build roads and then charge fees, tolls? This is the begging and we are going to market it very aggressively. In terms of return in profit, we feel that this is better than investing in factories. On the road to Arusha and to Ngorongoro, even at the current low condition of it, we have about 240 vehicles every day. In better condition, you can have thousands. With even a small fee you should be able to have a profit of thousands of USD per day. It is no use to wait the public sector to solve this problem, we need the private sector involved in this. Some of the best places in Dar es Salaam are only 5 minutes away but you cannot reach them easily, you need a ferry. If only you had a bridge, the whole new part of Dar es Salaam would be open for development. The official prices of housing here are high and most of them are in the Northern part of the city. But in the south there are a lot of space and land, very good beaches and recreation areas. Due to the lack of bridges, everybody and everything is in the northern part of the city and this makes the price of land very high while you could open the south. There are negotiations about building the bridges across the sea. This brings me to the third sector, infrastructure.
| Until we get the infrastructure going, very little is done because products and especially raw materials cannot be taken to the markets and regions. But Tanzania is in a very fascinating position, there is six land locked countries around it. If you can develop the infrastructure you then only need to use the geography to increase foreign currency inflows by being in a transit point for import and export countries, some of them being very rich like Congo.
Infrastructure also includes water, electricity and telecommunication, so what would you say are the investment targets and where do your main foreign investors come from?
The leading investor in Tanzania is the UK, for maybe historical reasons, mainly in tea, coffee, agriculture, and natural resources. Other countries, historical investors, are EU countries like France, Germany and Denmark. They mainly deal with cement, plastic, motor vehicles etc. The third is South-Africa. They are especially involved in the privatisation area, they bought our largest commercial bank NBC, and the majority shares in our largest brewery. Fourth is India, again for historical reasons, since the 19th century railways construction. Fifth is Japan, mainly in electronics, radios and music systems. Those are the biggest. Then there is Canada for mining reasons and Australia is coming up to. American investors take time because they need to be more informed. We have not been able to promote ourselves very effectively in the American market, but since last year's president visit and since we had the delegation of 60 people mainly business people, a lot of interest has been raised. The ambassador Charles Stith has done a fantastic job. Last month we had a seminar for American businessmen in London, and considering the responses by emails and direct talks, it has been a real breakthrough. USA has a booming economy which represents a lot of opportunities for us.
How much has been invested here in Tanzania in the recent past and what are your expectations for the years to come?
Over the last ten years, we have had an inflow of roughly four billion USD. Last year's average was 350 mill USD. In five years time we want to triple it, to attract one billion USD per year. For this we just need to market Tanzania properly. All we need is a more focused strategy that enables us to reach our targets. In stead of promoting Tanzania in general we must be able to say that in commercial farming we want to develop five commercial farms for grains so that this country doesn't need to import wheat, maze and rice etc. This can be done because the land and climate conditions are here. We have 60 million hectares of undeveloped land. You need to have concrete ideas like this and not just to say "Tanzania is good for investors". For example let's say that there is a farm. We could give them 50 000 hectares of land to grow rice and have a profit margin of 40 per cent of harvesting twice a year. We are developing a database for this kind of projects in the regions. For 2001 we will target 800 million USD. Talking about industries, right now we have a team creating 200 project profiles for the next three months by discussing with the private sector and also looking at new possibilities. We want to have a database of 200 workable projects. Some of them would be just expansions, because people forget that some investments are merely persuade existing investments to double the production for exportation. So this project of 200 profiles is for the industrial sector. We will do the same with tourism, agriculture, transportation and infrastructure, because those with capital would be happy to come and invest and once they are satisfied they go ahead. But if you sell the country in general by saying simply there is a lot of opportunities in tourism, it doesn't work with investors. You must say that we want three five star hotels in Dar es Salaam within the next three years, and to give concrete details about the construction costs of an average 200 bedroom hotel etc. I want my employers to do simulator projects with sensitivity analysis, so that the investor can have the figures ready.
How do you generate funds to promote investments and how many employees do you have?
We have forty people here, of which 60 % are professionals, but we want to increase this amount up to 70 % with 30% support staff. This is very difficult in our culture. We used to have tea girls to bring tea to secretaries, but now she is doing it herself. These are small things, but an example of how this culture is used to over employing staff. We are already beginning to see that people utilise their time better.
Our sources of funds come from three bodies. First they come from the government, because it is it's responsibility to attract investments into the country. The reward at the end is economic growth. The government cannot be excluded from this. They give us funds through the Ministry of Planning. Second source is the fees and charges on our services. We have had arguments about this, because there are some investment promotion agencies in Africa that don't charge anything. We feel that if you are delivering services it does not make sense to make it completely free for the private sector, because the private sector is willing to pay if there is value in the service. We have to weight ourselves by the product we are selling. I am not saying that our fees are not high, only that we still must print brochures and information, and our staff needs to travel around the city and the country to look for data and create these projects. We feel that this fees help us to be more efficient. We have found that some investors come here and discuss with local consultants who charge thousands of dollars. It is not necessary to spend all that money, 500 USD is enough to go through licenses, permits and authorisations. Last year we received about 160 million shillings, about 200 thousand USD, and if we had not received that, we would not have been able to provide all these services, because government funds are limited. Third way of funds are the donors. We have a very modest budget, not more than 600 thousand USD per year. We want to stay simple and clean, and to show that you can be clean but efficient.
What is the best advice you can give to our readers keeping in mind that they are businessmen and potential investors?
My message to investors from United States, Europe and everywhere else is that they need to come now and shape up this growth process. They can benefit a lot by being pioneers and receiving the government assistance and 100 % capital allowance, which are not going to be there for ever. Also, this country has such a strong geographical position that it can easily become a starting point for exports to SADC regions but also a link to Congo and Central-Africa. Tanzania being a member of both SADC and COMESA has unique opportunities. You can target markets of more than 240 million people. You are not just investing in Tanzania, but also on a regional bases. I recommend everybody to come here. The timing is right, we are flexible and shape the policies together with the private sector. Examples are there: profit margins here are five times bigger than in Europe. All is very new here, costs are low, standards are rising, so you can only go up! An investor can make a lot of money here and help our economy grow. |
