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  • African PlatformUnited Republic of Tanzania

     

    Country information

    The economy of the country is developing favourably in terms of macroeconomic stability, growth, budget and balance of payments as well as food supply. Inflation continues to be stable, Government revenue exceeding target. The external balance is being supported by strong export growth of traditional and Non-Traditional exports led by minerals dominated by gold, fish and tourism. New Growth of the National economy recorded as follows:6.6% in 2004 / 7% in 2005
    Country Size: 975,000 sq km
    Population: 35.5 million
    Currency: Tanzanian Shillings (Tsh)
    Languages: Swahili and English
    Capital City: Dodoma
    GDP (US$): 9.4 billion
    Main Economic Sectors: Traditional:
    Coffee, Cotton, Sisal, Tea, Tobacco, Cashew nuts, Cloves

    Non-Traditional:
    Gold, Diamond, manufactured goods, cotton you, manufactured Coffee, manufactured Tobacco, Sisal, fish and fish products, Horticultural products.
    Main Exports: Coffee, manufactured Tobacco, Sisal, fish and fish products, Horticultural products.
    Main Imports: Capital goods, Intermediate goods, consumer goods
    Industry (Main Industries): Fish Industries, Textile Industries, Coffee Industries, Cashew nuts Industries, Tobacco Industries, Tea Industries, Sisal industries, Cement Industries, Paper Industries, Breweries industries, Leather industries, Aluminium industry, Mining industry
    Natural Resources: National parks, forestry, Lakes, Sea, minerals.

    Agriculture

    (Main Products):

    		 Maize, Rice, Potatoes, Millet, Sorghum, Dairy products, Coffee, Cotton Sisal, Tea, Tobacco, Cashew nuts, cloves, and Horticultural products.
    International Organization Member: Tanzania is a member in UN and All UN Agencies, AU, EAC SADC.
    Infrastructure: Tanzania has 3 seaports of Dar-es-Salaam, Tanga and Mtwara, 2 International Airports in DSM, and Kilimanjaro, and Domestic air ports in each region and few in some of the districts.All major towns are connected with Tarmac roads. Communication is through Tanzania Telecommunication TTCL and other mobile companies, Celtel, Voda Mobitel and Zantel.

    Livestock

    Cattle Population: 17.7 million
    Sheep Population: 3.5 million
    Goat Population: 12.5 million
    Cattle Off Take Rates: 10%
    Sheep Off Take Rates: 15%
    Goat Off Take Rates: 15%
    Livestock Policy: Currently under preparation by the Ministry of water and livestock Development to be ready 2006 after New Government is in place. The policy instruments and statements are measures to be taken by the Government to influence the direction and pattern on the livestock industry development.
    These instruments include:
    1. Livestock research, extension and Training,
    2. Monitoring and evaluation livestock development according to present indicators
    3. Collection and dissemination of livestock information
    4. Provision of basic infrastructures
    5. Quality Control of livestock, livestock inputs, and products
    6. Control of vectors and livestock diseases
    7. Provision of legal and regulatory framework
    8. Natural resources management
    9. Taxes and subsidies
    10. Mainstreaming of cross cutting issues
    Slaughter Facilities: The country has 21 regional abattoirs and more than 150 small slaughter houses. Only 2 of the 21 regional abattoirs are in good condition i.e. in Arusha and Dodoma regions. The rest including the small slaughter houses are in poor condition and need major rehabilitation.

    Industry profile

    Hides and skins

    Tanning

    Footwear

    SWOT analysis

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     Hides and skins

    Quantity Hides: 2.6 million
    Quantity Sheep: 0.88 million
    Quantity Goat: 3.1 million
    Annual Collection Level Hides: 1.6 million
    Annual Collection Level Sheep: 0.5 million
    Annual Collection Level Goat: 1.4 million
    Flaying Methods: Hand flaying using Knives: 99%
    Machine flaying: 1%
    Preservation Methods: Ground drying: 20%
    Frame Drying: 60%
    Salt Drying: 20%
    Grading Systems, available grades and percentage of Each: Hides 10% (i)  30% (2)  25% (4)  5%(Rej)
    Skins 20% (i)  40% (2)  25% (4) 5% (Rej)
    Hides & skins trade channels: The product starts from the butcher who sells the material to the district - licensed trade who in turn sells to the regional trader who sells to the exporter.
    Market (%): International markets: 95%
    Local Markets: 5%
    Major markets: India, Pakistan, China, Hong Kong
    Annual Export Value (US$): Estimated (2003) 6 million
    Average market Bovine price: 1.2/kg
    Average market Sheep price: 8.4/Doz
    Average market Goat price: 9.6/Doz

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     Tanning

    Number of Tanneries: 6
    Installed tanning capacity: 39,160,000 sq ft
    Tanneries in Operation: 2
    Utilized capacity: 8.8%
    Output of the industry: Wet blue - 1,958,000
    Number of employees: 60
    Market (%): Wet blue processed all exported to international market.

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     Footwear

    Number of Footwear Factories: 1
    In Operation: 1
    Manufacturing capacity: 500 pairs per day
    Number of employees: 45
    Market (%): International: 25% (Zaire/Rwanda)
    Local : 75%
    Estimated Annual Export Value (US$): Estimated (2003) 80,000

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     SWOT analysis

    Strengths:
    • Large and stable cattle, goat & sheep population
    • Availability of raw materials
    • Extensive under utilized capacity to add value
    • A 20% levy on raw hides/skins export for exclusive use on LDF
    • Entrepreneurial business sector driving the movement towards value addition
    • Comprehensive legislation and regulations on animal husbandry, slaughtering, grading and preservation of hides and skins
    Weaknesses:
    • Poor quality hides/skins
    • No Commercial incentives to improve quality
    • Poor flaying methods
    • Small size of hides due to type of breed
    • Poor market information
    • Over dependence on single market
    • Grossly in adequate enforcement no legislation and regulation
    Opportunities:
    • Renewed Govt Commitment to support the sector
    • Availability of international Cooperation to assist develop the raw hides/skins
    • Open access & foreign markets
    • Govt priority & ban export of live animals
    Threats:
    • Absence of solidarity among major private sectors in the sector
    • Lack of financial reward to herdsmen farmers likely to undermine move to up grade quality of hides/skins
    • Poor policing the existing laws and regulations
    • Major tanneries not operating
    • Major market-China may ban import of dry hides/skins

    Government policy

    Fiscal Policies: The objective of Tanzania fiscal policy is to ensure maximum collection of taxes to cover budgetary expenditure while at the same time establishing and maintaining a fiscal regime that will not only attract and mobilize investments but also make business practice attractive in Tanzania

    Value Added Tax (VAT): 20% on goods and services

    Export Levy on raw hides/skins: 20% based on fob value

    Import duty
    It is levied at an ad-valorem rate on the CIF Value of goods imported into the country. The current rate structure has four Tariff bands: -0%, 15%, and 25%

    Excise Duty: Duty rates are from 10% to 30%

    Suspended Duty
    A suspended duty ranges from 10% to 40% it is levied on few products to address the problem of dumping or on goods that impose unfair competition on local industries

    Other Taxes
    Stamp duty, motor vehicle Registration Tax, Transfer Tax, Fuel Tax, Airport Departure service charge, port departure service charge for further information:www.tra.go.tz

    Monetary

    Regulations:

    		 Foreign Exchange:
    Foreign - exchange restrictions have been eliminated to allow a conducive environment for attracting potential investors and simplifying international transactions. Currently there are 28 deposit money banks, including 13 foreign banks and other financial institutions and insurance companies.
    Trade regulations: Import procedures:
    • Importers in Tanzania are required to establish whether or not the goods to be imported are subject to pre shipment inspection (PSI)
    • Obtain and fill an Import Declaration form (IDF) from any commercial bank at a fee of US $ 10
    • 1.2% VALUE of fob Value must be paid to a designated commercial bank when submitting the (IDF)

    There are exceptions for some goods for (PSI) e.g. Gold, live animals and perishables, goods returned to the country after repair, household and personal effects, scrap metal, New motor vehicles etc.
    • Commercial banks are then obliged to pass the IDF and Pro. Invoice. PSI Importers should provide full contact details of actual suppliers
    • Then pre shipment Inspection,
    • Then Declaration forms, payment procedure and release of goods.

    Export Procedures:
    Once the exporter has obtained an order from a buyer abroad and an agreement has been reached to export goods to the buyer and mode of shipment determined, the following steps are necessary.

    Shipment by air:
    An airway bill is prepared by the carrier on presentation of the following.
    • A Commercial Invoice
    • An Exporter license/permit
    • Technical documents
    • Process a single Bill of Entry (SBE)
    • Goods are taken to the Airport

    Shipment by Sea:
    • Apply a license
    • Technical documents
    • Apply for shipping, space
    • Prepare a bill of Landing, Customs verification port charge Cargo loading (FOB)

    Bonded warehouse Facility:
    There are two classes of bonded warehouse
    • General bonded warehouse
    • Private warehouses used to warehouse goods, which are the property on the licenses www.tra.go.tz
     

    Investment environment

    Requirements For Foreign Investment / Joint ventures: Investments in Tanzania are guaranteed against nationalisation and expropriation. Tanzania is a signatory of several multilateral and bilateral agreements on protection and promotion of foreign investment. Among other international agreements and membership, Tanzania is a member of Multilateral Investment Guarantee Agency (MIGA) and International Centre for Settlement of Investment Disputes (ICSID).

    Business Registration and LicensesAn application for company registration can be forwarded to Tanzania Investment Corporation and it will be processed on behalf of the investors. The procedures and requirement for successful application are illustrated under establishing a business in Tanzania. Applications for business licences are also processed through TIC assistance.

    Registration with Tanzania Revenue Authority (TRA)

    Registration with Income Tax and VAT Department can be done at TIC offices through TRA officers stationed at the Centre. Requirements for successful registration are illustrated under Tax matters.

    Residence/Working Permits and Visas

    With the assistance of TIC through Immigration Department and Labour Division officers at the Centre, residence permits class "A" and "B" can be easily obtained as long as the requirements illustrated under establishing a business in Tanzania.

    Specialised businesses falling under the following areas will require additional approval and certification from the following authorities.For general information on requirement for foreign Investment or joint venture as well as Tax incentives and free Trade Zones, comprehensive information is available at Tanzania investment centre.
    Tax Incentives: In an effort to improve the investment climate in Tanzania, stable and predictable fiscal incentives have been put in place which provides soft landing platform for all investors during the initial period of project establishment in recognition of the fact that investors need to recover their investment costs first before paying taxes.

    In this regard investors pay very little or no taxes at all to established their projects in Tanzania. These fiscal tax incentives are structured according to Tanzania's Investment priorities in the areas of Lead and Priority sectors. All prospective investors are most welcome to take advantage of the generous incentives under the liberalized environment offered by the new investment regime - Tanzania Investment Act, 1997 (Act No. 26 of 1997)
    Free Trade Zones: The Export Processing Zone (EPZ) Act has enabled the establishment of EPZs throughout the country. EPZ incentive packages are managed by the National Development Corporation (NDC), independently from TIC. The government has established one EPZ business park for the purpose of attracting export industry investment, but EPZ benefits do not depend on location in a specific geographical area. Rather EPZ status reflects unique benefits offered to export industries. EPZ companies must export at least 70 percent of goods produced, and export at least US$100,000 to qualify to apply for EPZ status. EPZ status is available to both domestic and foreign investors, but is currently limited to "new export companies," thus excluding established exporters from benefiting.

    Companies investing within the EPZ park have access to ready-made buildings and reliable infrastructure, which limits the need for large capital investments in infrastructure. The EPZ policy places emphasis on products that use local materials such as textiles and garments, leather goods, agro-processing, and the lapidary industry. Historically, large job-creating investments (in the textile industry, for example) have received significant incentives packages.

    Incentives offered to EPZ exporters are numerous, and may include:
    • Exemption from corporate income tax for the first 10 years; after 10 years, a reduced tax of 25 percent rather than the ordinary 30 percent.
    • Exemption from withholding tax on dividends and interest for the first 10 years.  
    • Exemption from all taxes and levies imposed by local governments for goods and services produced or purchased in the EPZs.
    • Exemption from potential foreign exchange control and restrictions.  
    • Exemption from pre-shipment inspection requirements.
    • On-site Customs inspection in lieu of off-port inspection.
    • Remission of Customs duty, VAT, and any other tax payable on goods purchased for use as raw materials, equipment, and machinery, or goods and services related to manufacturing in the EPZs (except motor vehicles, spare parts, and consumables).
    • Provision of temporary visas at the point of entry to key technical, management, and training staff for a maximum of period of 30 days.
    • Access to high-quality infrastructure. Incentives, whether under the TIC or EPZ provisions, are granted on a case-by-case basis, following general guidelines. The Tanzanian Investment Act allows for the Minister of Trade to specify additional incentives and benefits in consultation with TIC's inter-ministerial board "for the purpose of promoting identified strategic or major investments."

    Institutional support

    Confederation of Tanzania Industries

    P.O.Box: 71783  
    City: Dar e Salaam
    Country: Tanzania, United Republic of
    Phone: 255-22-211 4954    
    Fax: 255-22-211 5414    
    Email: cti@cats-net.com
    Website: http://www.cats-net.com
    Activity:
     Chamber of Commerce  
    Presentation of the institute: The  Confederation of Tanzania Industries is an independent self financed, legally constituted organization that serves its members mainly by speaking out on their behalf and generally representing their interests.
    The main objectives are:
    • To present the views of members, and to cooperate with the Government and other bodies essential to the industry
    • To act as a prime source of information about manufacturing industries to its members
    • To collect and disseminate statistics to its members.

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    Board Of External Trade (BET)

    P.O.Box: 5402    
    City: Dar e Salaam
    Country: Tanzania, United Republic of
    Phone: 255-22-285 0239    
    Fax1: 255-22-285 0108 Fax2: 255-22-285 0238
    Email: betis@intafrica.com
    Website: http://www.bet.co.tz
    Activity:
     Other Government body  
    Presentation of the institute: Established in 1978 to co coordinate and harmonize expert development and promote activities in Tanzania
    Services Provided:
    • Market research and product development
    • Trade information
    • Trade fairs & exhibitions
    • Organisation buyer seller meeting
    • Export counselling

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    Ministry of Water and Livestock Development (MWLD)

    P.O.Box: 9152    
    City: Dar es Salaam
    Country: Tanzania, United Republic of
    Phone1: 255-22-286 6446 Phone2: 255-22-286 3858
    Fax: 255-22-286 2538    
    Website: http://www.dlveraha.com
    Activity:
     Ministries  
    Presentation of the institute: Responsible for production, and improvement of hides/skins in the country.

    Trade statistics

    Products

    Year

    Exports ( in USD)

    Raw hides and skins

    1999

    500,721

    Leather articles

    1999

    6,174

    Technical cooperation projects

    Commercialization of Hides and skins in Tanzania by improving collection and quality (CFC/FIGHS/07)

    Duration: 3 years
    Status: Ongoing
    Description: The hides and skins sector in Tanzania represents a rich source of raw materials. However, development of the sector is hampered by problems such as low collection of hides/skins as well as trade in low value added products. This project aims at assisting in overcoming these obstacles and improving collection of hides and skins as well as improving the image of leather and leather products emanating from Tanzania through improved quality, thus boosting trade. Small holder livestock producers and hides/skins merchants will be trained in flaying, curing, treatment and preservation of hides and skins. In this regard the demonstration centers will be established where farmers will receive practical training through demonstrations. These centers will be equipped with the flaying and lifting equipment, hides and skins treatment and curing materials.

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    Raw Hides/Skins Grading and pacing systems in selected Esalia countries

    Duration: 3 years
    Status: Completed
    Description: The quality of raw hides/skins in the region has been a major obstacle to the development of Africa leather sector. This project aims to overcome the problem and improve the image of Africa leather through the introduction of grading and pricing systems for raw hides/skins. The project had a backward integration through provision of training facilitaties for raw hides and skins producer and Tanner.

    Surveys and reports

    Tanzania Human Development Report

    Corporate Author(s): United Nations Development Program
    Year of Publication: February 2000
    Number of pages: 100 pages
    Language(s): English
    Also availabe at: http://www.tzonline.org/pdf/Tanzaniahumandevelopmentreport.pdf
    Abstract: This report attempts to profile current conditions in Tanzania's education sector and to expand the discussion to one about human capacity development, the pivotal role of formal education in that effort andthe role of all types of learning in building the country's future. In the process, the HDR reaches several conclusions that are summarized here.
    Publisher: UNDP
    Type of Document/Material: Report

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    Profile of Tanzania Leather and Footwear Sectors

    Corporate Author(s): UNIDO
    Year of Publication: October 2000
    Number of pages: 29 pages
    Language(s): English
    Also availabe at: http://www.unido-aaitpc.org/unido-aaitpc/new1/tanzania/ladhal.pdf
    Abstract: The Leather sector in Tanzania, despite having a history of over twenty years is for a variety of reasons not achieving its tremendous potential with only a few companies still operating. Tanzania by the early 80's had a total investment of over 100 million USD in 3 leather tanneries and one shoe-manufacturing unit. The main motivation for the government to invest in this sector (aside from the more obvious employment benefits) was to add value to Tanzanian exports, as well as develop products that could substitute imports. As with most parastatal organizations in Tanzania, economic liberalization greatly affected the survival of sector as most of these investments were never run commercially and concentrated more on employment generators rather than profit. Poor management, lack of technical expertise, as well as lack of working capital resulted in most mills achieving in some cases less than 10% capacity utilization. This trend continued until the mid 90's when most mills were shut down awaiting privatization. Despite having one of the largest livestock populations in Africa, the leather sector remains relatively inactive and is still very underdeveloped with huge opportunities for foreign investment.
    Publisher: UNIDO
    Type of Document/Material: Report

    Company profiles

    Company Name Products
    Afro Leather Industries Ltd. Wet Blue
    JAET Ltd. Belts - Chrome crust - Footwear - Lining leather - Footwear - Upper leather - Garment Leather - Industrial Gloves - Jackets - Coats - Large Leather Goods - Leathergoods Leather - Small Leather Goods
    Lake Trading Air/Frame dried - Pickled - Wet Blue - Wet salted
    Ngozi Centre Air/Frame dried - Wet salted
    P. M. Tito's (Twins) Leather Goods Belts - Jackets - Coats - Large Leather Goods - Small Leather Goods

    Environment and social responsibility

    Environment Legislation: National Environment management council NEMC. Established by and Act of parliament No 19 of 1983 to perform an advisory role to the govt on all matters relating to Environment management.

    FUNCTIONS:
    • Advice govt. on all technical matters for effective environmental management
    • Co-ordinate the technical activities of all bodies concerned in environmental matters.
    • Enforce environmental regulations (Norms, standards) guidelines and procedures
    • Assess, monitor and evaluate all activities that have an impact on the environment.
    • Promote and assist with environmental information, communication and capacity building.
    • Seek advancement of scientific knowledge of the root changes of the environment sound technologies.

    NATIONAL CLEANER PRODUCTION CENTRE:

    The objective of the National Cleaner production centre is to build National capacity in the field of cleaner production (CP).
    The programme builds capacity to provide four services:
    • In plant assessments,
    • Training
    • Information dissemination
    • Policy advice.
    Labour Laws: Compliance with ILO.
    Other: The Government prepared and implemented the Poverty Reduction Strategy {PRS}The other programs that were prepared and implemented include the. National strategy for growth and Reduction of poverty (NSGRP) Property and Business formalization programme (PBFP) and Private sector development strategy (PSDS).
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