Africa-Press – Tanzania. THE government is currently working on a new investment legislation that would better regulate and strengthen the sector, which has recorded tremendous growth during the 60 years of independence.
The envisaged new legal reform will be key in pushing the sector’s further growth, as Tanzania looks to attract more foreign direct investments as well as spur domestic investments in line with its industrialisation drive.
According to the Minister of State in the Prime Minister’s Office (Investment), Mr Geofrey Mwambe the preparation of the new Act goes hand in hand with the preparation of a new national policy on investment development and national strategy on investment.
Reflecting on the sector’s growth during the 60 years of independence, Mr Mwambe touted tremendous strides, attributing the feats to legal reforms adopted down the years.
The minister stated that after the country gained her independence in 1961, it introduced the Foreign Investment Protection Act of 1963 until 1967, when it announced the Arusha Declaration during which the government supervised and operated major production activities.
This had attracted a low number of foreign investors. At that time, the government nationalised companies, businesses and social services institutions such as schools as well as focused on the introduction of new public companies such industries, farms and so on.
Due to economic challenges that occurred between 1970’s and 1980’s, the government decided to restore policies which fuelled individual’s investment from 1986. That decision contributed to increased annual economic growth to 4 per cent between 1986-1995 compared to annual growth of 2 per cent between 1981 and 1985.
The country made great efforts in the last three decades to improve the investment climate through legal reforms to attract both foreign and domestic investors.
Mr Mwambe explained that the improvements included enactment of the National Investment Promotion and Protection Act of 1990, which enabled establishment of the Investment Promotion Centre (IPC).
The National Investment Promotion and Protection Act of 1990 had replaced the Foreign Investment Protection Act of 1963.
Later on in 1996, the government came up with the National Investment Policy of 1996 and the National Investment Law of 1997. Due to those reforms, the country witnessed an upward trend in the number of investors in different sectors.
According to the minister, the high rise was measured with three key criteria in the investment cycle, namely Gross Capital Formation to GDP ratio, Foreign Direct Investments (FDIs) inflows and Fixed Capital Formation.
The minister said since the government started implementing the national policy on investment and Tanzania Investment Law in 1990’s, statistics indicate that the Gross Capital Formation to GDP ratio has grown from 14.7 per cent in 1997 to 39.7 per cent in 2019.
“The amount recorded is highest compared to average growth of between 21 and 22 per cent for African countries and between 23 and 25 per cent for developing countries,” Mr Mwambe stated.
The FDI has therefore, been increasing from 0.73 billion US dollars in 1996 to 2.18 billion US dollars in 2013 and to 1.01 billion US dollars.
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