The first is to make fiscal stability stable and predictable. In a report issued less than a year ago, EU businesses were asked their key challenges in working and investing in Tanzania. You may have guessed that ‘tax policy and administration’ was the number one issue, with 94% of the surveyed firms saying it was their primary bottleneck.

Fiscal policy, particularly tax policy is always a balancing act. With an economy like Tanzania with half of it being informal, conventional measure simply won’t cut it. The measures must incentivise formalisation while raising enough revenues to keep the exchequer afloat.
There has been progress in making tax paying easy with the use of technology in recent years, with technology implementation effectively transforming tax paying in Tanzania, albeit with some glitches along the way. If there are any improvements from a procedural perspective, they would be around the capacity of the TRA’s network and the challenges that come with the system being overloaded; but Tanzania is heading in the right direction.

From a tax-payer engagement perspective, we are beginning to see some deliberate effort to include us into the debate. In January this year, there was a national tax dialogue led by the Minister of Finance to discuss challenges around paying taxes. Initiatives like these will go a long way to foster voluntary compliance, and also enrich the quality of legislation coming through our parliament.

However, from a policy perspective, there are some salient points to address. The majority of the investment coming from the EU will be cross-country investments, and we currently do not have a many current double tax agreements with European countries. In addition, there are specific change of control provisions that make offshore investments and disposals tricky. This certainly has to be looked at given the declining FDI trend since 2015.

Connected to policy, though not fiscal, is the need make regulators ‘facilitators’, rather than ‘frustrators’ of businesses. This is where a well-coordinated Tanzania Investment Centre (TIC), Business Registration and Licensing Authority (BRELA), Fair Competition Commission (FCC) and other regulatory bodies must come in. The mindset must be that of facilitation as opposed to just being a watchdog.

Having resources and potential is fantastic, but the game changer is how quickly one executes in taping into those resources. With the world and its technology changing so fast, it is important to know that the resources will not be relevant forever. At the moment, three projects will have a significant impact of FDI flows into Tanzania. The EACOP project, the LNG project and the Kabanga Nickel Project. All of the projects have their financing linked to European entities or parent companies.

The key message here is that these big projects require timely execution to get off the ground. The changing geopolitical demands, including climate politics may mean that if there is a significant delay in getting the investment in place, the projects may not pick up, resulting in an incredible loss of transformative economic potential.

There has to be a sense of urgency in execution of some of these major projects. Indeed, there has to be a sense of urgency broadly, whether that is with a TRA official getting clearances or finalising audits as quickly as possible, or a traffic police working hard to ensure the road is clear for cargo passing to make its way.

The European Union offers a fantastic opportunity for Tanzania. Our history with European investment means that these waters are not unchartered. There appears to be a political will with the Global Gateway for the EU to contribute to narrowing the global investment gap worldwide. We just need to intensify the economic cooperation for us to be able to attract, not just investment, but also markets into that part of the world.