To remove bureaucratic processes that saw investment procedures go at a snail’s pace in the past and hinder ease of doing business in the country, the government has taken several measures to rectify, amend or enact new laws and regulations.
Among the laws caught in this web of changes is the old Tanzania Investment Act No. 26 of 1997 which has been repealed and struck out of the book of statutes with the new comer being the Tanzania Investment Act No. 10 of 2022 which entered the book of statutes in December, 2022.
In this article, what we intend to provide a quick review of the said law and its applicability in relation to the present world. In doing so, we shall revisit relevant provisions of the said new law and in the process; sometimes we shall do a comparative analysis of the repelled old law, namely Act No. 26 of 1997.
First and foremost, the Act has been divided into five parts, namely preliminary provisions and interpretations, Investment Centre and its duties, related condition for investment, rights and duties of government and Investors and lastly, miscellaneous provisions (other conditions).
The first part introduces relevant issues like definitions of terms that are used in the statute and identify the intended beneficiaries or stakeholders of this act and defines people or entities that are bound by this law.
Under section 2 (2) of the Act, it provides for two investors that are covered by this law. The first is foreign investor and the second is local investor. The law defines foreign investor as a foreign person or entity whose capital to be invested in our country should be not less than $US 500,000 while local investor is a citizen of the United Republic of Tanzania or entity registered in Tanzania with majority shares being held by the locals. One thing to note is that this new Act has minimized the local investor capital from $US100,000 to $US 50,000 while the requirement of capital for foreign investor has remained the same like in the old law.
Motive behind this decrease of capital requirements for local investors is to encourage participation of more local investors in building our economy. The capital stated in the statutes can be measured not only on the monetary terms only but also assets or properties are counted as capital goods.
On the second part of the statute, the Act has retained the Tanzania Investment Center (TIC) which is a government agency and among others, it now has the capacity to own property, sue and be sued and also do anything that an institute has powers to do but subject to its duties.
Also, TIC has powers to advise the government on matters related to investment policy. This center is not a new creation as it was also recognized by the old law.
The act also introduces the National Committee for Investment which now has recognized members according to their positions. The Prime Minister is the Chairman of the Committee and other members include ministers responsible for finance, land, local government, foreign affairs as well as the Governor of Bank of Tanzania, Commissioner for Revenue and others.
The task of this committee is to ensure favorable conditions for investors, to make different investments in Tanzania, lead the investment policy and give directives as to attain perfect national plan and policy with regard to investment, supervise larger projects with positive results to the nation and also create strategic plans and opportunities for special or specific investment.
Section 6 (1) of the Tanzania Investment Act provides for the functions of the Investment Centre which in a nutshell are initiating and supporting measures that enhance investment climate in the country; collect, collate, analyse and disseminate information about investment opportunities and sources of investment capital.
Also, it is mandated to advise investors upon request, provide and develop investment sites, estates or land together with associated facilities and also assist and make sure that all investors acquire relevant permits, registration, approval and enable certificates provided by the Center to have full effect.
Another new issue that the Act has provided is that TIC will introduce new Integrated Electronic System whereby the said system shall connect several important institutes or agencies in one system to make it easy for one to acquire different licenses, permits, approval and consent which are required by investors. This is known as One Stop Center.
Once this system comes into full operation, it will assist and attract different investors since previously one had to go to more than five offices to be able to start an operation.
For example, one had to visit Business Registration and Licencing Authority offices, Tanzania Revenue Authority, Immigration Department, respective local government authority and even governmental agencies.
But with this new system, all these can be administered easily in the said system, something which is very beneficial to an investor as it is less time-consuming than before.
The third part relates to conditions with regard to investment. For example, under section 18, it introduces timeframe for approval from other institutions which was a stumbling block before since there were many red tapes and routines in acquiring different permits and approvals.
The law provides that the Minister in charge of TIC can request an approval or permit from another institution or agency in relation to investment purpose. The law also provides that if the same is not replied within seven days, then the said approval shall be deemed to be granted, otherwise if rejected then appeal to the relevant ministry shall be lodged. Further application as for certificate of incentive shall be issued by TIC and the said application can either be first application or continuing application.
The forth part deals with rights and duties of the investor and the government. One of the rights that can be found in this part is that the investor can seek loan from inside and outside the United Republic of Tanzania.
In case of a loan being sought in Tanzania, the government has a duty to assist the investor to achieve his or her purpose. The investor is required to adhere to the law and its regulation at the time of investment.
Also, the investor is required to file returns as required by the law and also to discharge his or her duties while making sure that the general public or customers are protected. Further, the investors are guaranteed and protected against nationalization of their capital against their will.
In the last part, it deals with other conditions in which the Act stipulates other issue like dispute resolution of whereby it provides mode to resolve disputes against the center and against the decision rendered by the center.
Section 33(2) of the Act identifies that any dispute against the TIC shall be resolved first through mediation and if not settled, then one can seek for alternative dispute resolution as provided by the laws of United Republic of Tanzania or International Arbitration in respect of investment or any mutual understanding agreements in h\which Tanzania is a signatory.
Now, something to take note is that this law encourages all disputes to be resolved at mediation stage since adjudication consumes a lot of time in court or arbitration. Further, the government does not want to bind the investor only to use local system to resolve disputes. Instead, parties may agree to refer the dispute to other jurisdictions depending on their understanding.
To sum up, the radical changes to support growth of investment sector are as follows: firstly, by reducing investment capital for local investors, secondly by introducing the integrated electronic system which makes it easier for one to establish or invest in Tanzania through TIC, thirdly providing a form of timeframe for other institutions and agencies to act upon request from the TIC via the responsible minister and if not within seven day the same to be regarded as an automatic acceptance or approval.
Lastly, the expansion of the committee with different ministers brings upon an easy way and perfect route for one to prefer investing in Tanzania to other country.
We call upon different state agencies to adhere to the law since no matter how beautiful a law is, if the state agencies do not adhere to the same or act bonafidely, the spirit within the said statutes shall be killed and the law shall not achieve the purpose for which it was enacted.