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In conjunction with EY, this chapter explores the taxation system and Tanzania’s efforts to build an investor-friendly environment. It also contains a viewpoint with Joseph Sheffu, Country Managing Partner, EY.

As Tanzania seeks middle-income status, strengthening the education system has become a high priority. The past 20 years have seen substantial progress in improving access to education and enrolment rates. In 2015 the government abolished fees for public secondary schools, which led to a surge in enrolment, while service provision by the private sector has also expanded significantly. International partners and private contractors are playing an important role in supporting universal education, particularly with regards to raising educational quality. Although Tanzania’s education targets are still a way off, efforts to progress towards them are well under way. Tanzania is gearing up for an overhaul of its health care sector that could prove transformational by ensuring universal insurance coverage and greatly broadening the opportunities for outside service providers. The past decade-and-a-half has seen considerable successes in public health, with major communicable diseases brought under control and steady rises in expenditure. Primary care has also grown, bringing the system closer to citizens. However, gaps remain and provision has lagged behind the changing demographics of an urbanising country and an increasingly dynamic economy. The government’s latest strategy looks to address these shortcomings and build a more efficient system that focuses resources on those in greatest need. This chapter contains interviews with Sulaiman Shahabuddin, Regional CEO, Aga Khan Health Services, East Africa; and Dr Matshidiso Moeti, Regional Director for Africa, World Health Organisation.

Tanzania’s tourism industry is expected to be among one of the world’s fastest growing over the next decade. With 1.28m tourist arrivals in 2016, the country is already one of the most-visited destinations in sub-Saharan Africa, and attractions such as the Serengeti National Park and Zanzibar have an increasingly prominent global profile. The government aims to attract 3m annual visitors by 2022, and is in the process of drawing up the first new national tourism strategy in nearly two decades, which is expected to include a focus on high-value segments and infrastructure development. Private investment in hotels and resorts is driving growth, while government infrastructure investment is opening up new areas of the country to tourism. However, the industry continues to face challenges, including the recent imposition of value-added tax and the effects of austerity on business demand. This chapter contains an interview with Nura-Lisa Karamagi, CEO, Hotels Association of Tanzania.

Agriculture is undoubtedly the largest and most important sector of the Tanzanian economy, with the country benefitting from a diverse production base that includes livestock, staple food crops and a variety of cash crops. The sector’s contribution to GDP has more than tripled in the last 10 years, supported by rising cash crop production, an emerging agro-processing segment and strong domestic demand for processed food. At the same time, however, farmers and other sector stakeholders face considerable challenges in modernising the industry to increase yields, exports and value-added processing. Nonetheless, the diversity of the sector leaves it well positioned to benefit from substantial investment inflows in the coming years, with budget announcements highlighting its critical importance to employment, exports and industralisation. This chapter contains interviews with Charles John Tizeba, Minister of Agriculture; and Aranyak Sanyal, East Africa Cluster Head, Olam International.

As a direct beneficiary of the government’s current economic strategy, which focuses on major infrastructure, housing and energy investment, and a key player in the ongoing shift of government functions from Dar es Salaam to Dodoma, the construction industry is undergoing significant expansion in both absolute and relative terms. The pace of growth has been fast, with the overall sector valuation jumping from $1.6bn in 2010 to $6bn by 2015, and its contribution GDP growing from 7.4% in 2006 to 13.6% in 2015 on mainland Tanzania, and from 7.7% to 9.5% on the Zanzibar archipelago. The government is betting that short-term struggles caused by rooting out corruption will pay dividends over the long term by providing a more predictable operating environment in which domestic builders can thrive. Tanzania has relatively young real estate sector, with large-scale commercial development only taking off in the 1990s. While public sector actors historically handled the largest projects in the country, private sector players are now playing an increasingly important role in developing residential, office and commercial space. However, the industry in mainland Tanzania is growing more slowly than the economy overall, with its contribution to GDP declining steadily in the past 10 years, from 6.1% in 2006 to 3.2% in 2015. Cost sensitivity remains a significant concern, not only directly in terms of house sales, but also indirectly in terms of demand for formal retail and commercial space, since approximately three-quarters of the population live on $2 or less per day. As a result, the country will most likely have to depend on government intervention and innovative financing to help address demand at the lower end of the real estate market, while higher-end residential and commercial spaces are left in the hands of private sector developers. This chapter contains an interview with Dhruv Jog, Managing Director, Advent Construction.

Tanzania’s telecoms industry is considered as a model for development in sub-Saharan Africa. The sector has recorded rapid growth in activity, supported by some of the lowest user tariffs in Africa, speedy smartphone and mobile broadband uptake, and steady investment in infrastructure and next-generation service expansion. However, sustaining growth will require telecoms operators to navigate a handful of obstacles, including one of the highest tax rates in Africa, as well as a recent push by the government to expedite required initial public offerings on the Dar es Salaam Stock Exchange. Although these challenges could weigh on future revenues, the country’s relatively low levels of mobile broadband penetration, combined with demand for cashless banking services and new investment in infrastructure, should keep telecoms growing steadily over the medium term. Improvements in and expansion of ICT services have accelerated in Tanzania over the last decade, supported by new submarine cable connectivity, successful completion of a National ICT Broadband Backbone project and rising investment in mobile broadband networks. However, the country’s large rural population and substantial small and medium-sized enterprise segment means that internet penetration remains low and ICT services are out of reach for most businesses. Steadily rising demand for next-generation services and rapid growth in e-government and e-payment systems could see that change in the coming years, with internet adoption, mobile broadband network coverage and digital financial services set to continue on a strong growth path into 2018. This chapter contains an interview with James Kilaba, Director-General, Tanzania Communications Regulatory Authority.