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Tanzania investor confidence improves slightly on corruption crackdown

Thursday October 19 2017
Dar

An aerial view of Dar es Salaam. Tanzania’s competitiveness to investors slightly improves thanks to the crackdown on corruption. PHOTO FILE | NATION

By THE CITIZEN

Tanzania’s competitiveness to investors has slightly improved thanks to the crackdown on corruption, a new study shows, noting however that the country could do even better had it put emphasis on four more areas.

In its Global Competitiveness Report 2017-18, the World Economic Forum (Wef) puts Tanzania on position 113, an improvement from the 116th rank in the 2016-17 report.

Using 12 competitiveness factors, the current report assesses the competitiveness landscape of 137 economies, providing insight into the drivers of their productivity and prosperity.

The factors include institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

Presenting the report findings in Dar es Salaam Wednesday, Research on Poverty Alleviation (Repoa) director of commission works Lucas Katera said Tanzania is specifically doing bad in areas of infrastructure, financing and tax rates.

“Access to finance, inadequate infrastructure and tax rates emerged as serious problems,” said Dr Katera.

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The survey respondents – who are mostly executives of companies – were asked to select the five most problematic factors for doing business in their country and to rank them between 1 (most problematic) and 5.

In Tanzania, the five most problematic factors were access to finance, tax rates, inadequate infrastructure, inflation and corruption.

Rwanda remains the most competitive economy in East Africa. It is ranked first in the bloc and 58th globally. However, the country’s five most problematic areas include access to finance, tax rates, inadequate skilled workforce, inflation and inadequate infrastructure.

Kenya's position

Kenya comes on position two in the region and 91st globally, with its major problematic areas being corruption, access to financing, tax rates, inadequate supply of infrastructure and inflation.

Tanzania, according to the report, is currently enjoying a higher trust in fighting corruption. “It is important [for Tanzania] to address challenges while capitalising on comparative advantages,” said Dr Katera.

Uganda is on position 114 globally and fourth in East Africa while Burundi comes on position 129th globally and fifth in the region.

Like Tanzania, Rwanda is also doing well in fighting corruption compared to other EAC member states.

Tanzania further did well in political stability as it is among countries that have never experienced political violence, and it also did well in health factor.

“Tanzania has performed well in health because in recent years the country has been rolling out the national health insurance schemes for all which assures investors of finding labour force that is healthy and not always on sick bed,” he stressed.

In another development, he said that Tanzania performed well in the labour regulations simply because it allows investors to expatriate their own expertise without unnecessary restrictions and therefore gives them confidence.

Emphasis on infrastructure

Further, he noted that Tanzania allows foreign currency without unnecessary restrictions.

However, in another development, he noted that the country would do even better if it puts much emphasis on infrastructure, taxation, access to finance and innovation in education.

According to him, Tanzania still lagged behind in infrastructure because while it had done well in improving roads, and was coming up with the Standard Gauge Railway, cost of aviation transport was too high, energy not reliable among some other soft infrastructure.

He noted that a large part of the investors reached in the report were not happy with Tanzania’s taxation rates on grounds that it was too high while access to finance was the biggest challenge taking into account that while large scale investors wanted huge low interest rates over long period of time, financial institutions were looking for quick profits.

The issue of innovations was another bone of contention, with experts being of the view that higher learning institutions do not provide proper skills education to compete in the labour force both locally and globally.

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