Dar es Salaam. The private sector in Tanzania wants a sta- ble and predictable regulatory environment which will enable investors, operators and custom- ers to make long-term decisions withconfidence.
Policy and regulatory instability for years have adversely affected the performance of businesses.
If regulators can ensure a sta- ble and possibly, a predictable regulatory regime despite chang- ing market and technological conditions, it can go a long wayin improving the business environ- ment.
At the same time a stable pol- icy environment in turn would encourage greater compliance and attract more informal enter- prises to formalise, according to former Tanzania Industries (CTI) Executive Director, Ms Christine Kilindu.
Sheisemphaticthatunpredict- able and regular policy changes for years have contributed to the failure of many industries from beingcompetitive.
“The government has been
OutgoingPresidentJakayaKikweteandhiswifeSalma(right)inspectvariouscashewnutgradeswhentheirvisitedRVFfaJuly2011.Withthemaresomemembersofstaffforthecashewnutprocessingcompany.PHOTO | COURTESY OF RICHARD-MWAIK
changing policies every now and then without adequate dialogue with the private sector. This has been costing the industries dear- ly,” said Ms Kilindu.
When industries are imposed with new or unexpected fees or charges, it impacts negatively. “They have to sit again and cal- culate new costs; they have to incur another advertising cost and many other costs. The gov- ernment needs to change and ensure policy stability,” notes Ms Kilindu.
The unstable policy environ- ment is at times caused also by multiple regulatory agencies which charge different fees and have different terms and condi- tions, thatoftenshiftground.
“Industries spend a lot of time making transactions to each and every regulatory body which are
toomanyandexpensive.”
“We urge the government to haveoneexchequerwhereindus- tries will be paying all regulatory charges. Then the exchequer will be disbursing the required fees to each regulatory body,” said Ms Kilindu.
The exchequer-should be one stop centre for collection and management of the regulatory feesandtaxes, shesuggests.
Multiple regulatory bodies which are also expensive to com- plywithmakelocalindustriesfail to compete with imports which arelessregulated.
“We don’t discourage impor- tation but we are appealing for a fair competition. The govern- ment must put strict measures to ensure that importers pay all the required taxes, there must be no room for tax evasion. On
the other hand local manufac- turers should not be harassed to pay unnecessary taxes,” said Ms Kilindu.
She is of the view that unpre- dictable and regular tax changes are a burden to formal busi- nesses. This in turn may be forc- ing many businesses to operate informally.
Most regulated cashew sector in theworld
According to a policy brief by Agricultural Non-State Actors Forum(ANSAF)-thecashewsec- torcomparedtosimilarsectorsis the most regulated in the world and also the highest export taxa- tion regime in the globe for cash- ew nuts. Yet this has not turned outtomakeitthemostprofitable. “It remains largely a producer of in shell cashew nuts for process- ingin Asia,”notesthebrief.
The challenges the sector has been facing often hurting incomes of farmers, the brief notes it is “symptomatic of deep rooted structural and regulatory issuesinthecashewsector.”
The brief is of the view that the government has clearly shown interest to develop the cashew sector but “institutions charged with management of the sector” more often than not are “unable to listen to the market, but are obliged to listen to short-term political factors” especially from localpoliticians.
What should be done for the benefit of the nation and farm- ers at large, is that the country should ensure it processes its cashewcropathomeby 100pc.
Thiswouldneedastablepolicy and regulatory regime that are transparent and responsive to market demands not political whims.
Tourismindustry
Tourism Confederation of
Tanzania(TCT)notesthatfailure to adequately interrogate conse- quences of regulatory changes before implementing them can bedevastatingfortheprivatesec- tor involved in travel and tour- ism.
Tourist budgeting cycles are mostly done for a year, including bookings. Changes midway, may result intocancellations.
“Abrupt policy changes with- out adequate warning which dis- rupt pricing and other require- ments can make a destination to be labelled as unreliable,” notes TCT Executive Director, Mr Richard Rugimbana, adding that, his body values the way the governmenthasbeenlisteningto theirconcerns.
The Global Competitivereport of 2014 ranked policy instabil- ity cited as one of the barriers for doingbusinessin Tanzania.
Casestudy
Before the 2014/2015 budget was presented, the govern- ment and the private sector had agreed on a 10 per cent excise duty increase on beer products. When the budget was read, the excise duty was increased by 20 percent.
For Tanzania Breweries Lim- ited, one of the leading taxpayers, the implication was “suspension of further capital investments budgeted for capacity expansion,
reduction of employment due to lower volumes particularly on the supply chain and will lead to potential loss of taxes due to vol- umedecline.”Thiswasaccording toastatementthebrewerissued.
Citizens’voices
Madison Kuboja: Developed countries invested heavily in manufacturing industries and also in infrastructure including rail transport. Our government must invest more in the industry and develop favourable macr- oeconomicpolicies.
J annesSiong’o
op an ethical workforce that can facilitate ease of doing business in Tanzania; many government employees are not ready for the free market, they have a strong sense of entitlement, of control-ling everything instead of pro-viding service/facilitating (work ethics and productivity in our fast changing world need a spe-cial focus.