Venue: Hyatt Regency Hotel
Monday, June 17, 2019
Thank you to the Honorable Minister of State in the Prime Minister’s Office, Angellah Kairuki, for initiating this dialogue and to the American Chamber of Commerce in Tanzania for its active participation and cooperation to make this event a reality.
I am pleased to be here with you all today to highlight the important factors to facilitate mutually beneficial trade and investment relationships between the United States and Tanzania. When Minister Kairuki suggested this dialogue, the United States Embassy quickly agreed to host today’s event because of the importance we place on our economic engagement with Tanzania.
In fact, advancing trade and commercial ties with African countries to increase American and African prosperity is the number one priority in the United States’ Africa Strategy. Foreign investment and a robust private sector is a necessity if the Government of Tanzania wants to meet its goal to become a self- reliant middle-income country by 2025.
Furthermore, today’s dialogue coincides with tomorrow’s launch in Mozambique of the of a U.S. Presidential Initiative “Prosper Africa” – a whole-of-government economic initiative aimed to double two-way trade and investment between the United States and Africa. “Prosper Africa” will bring together technical and legal expertise as well as private sector and government agencies, all working to increase access to power in Africa.
The United States is not just looking to do business in Tanzania, but with Tanzanian partners. Trade should be free, fair, reciprocal, and adhere to international trade rules and provide additional investment opportunities. This is about creating jobs for both for Americans and for Tanzanians. We support policy reforms that increase openness and competitiveness in Tanzania and work toward greater prosperity and higher living standards. In America’s economic dealings, we ask only for reciprocity, never for subservience.
Actions speak louder than words. In order to attract and keep foreign investors, including American investors, the Government of Tanzania must move beyond dialogue to making concrete actions to encourage investment.
Initial assessments of the 2019/2020 Budget unveiled last week reveal a handful of new incentives for investors, such as the reduction of the corporate income tax for local manufacturers of sanitary pads, and reduction or elimination of import VAT on inputs for manufacturing agricultural and horticultural products, soap, and diapers. These incentives are a start, but they stop short of a meaningful signal that Tanzania is “open for business”. While we are here today, investors in this room have an opportunity to propose potential incentives the government could offer to spur new investment.
We encourage the enforcement of the sanctity of contracts as Tanzania hopes to attract more foreign direct investment (FDI) inflows. U.S. companies look primarily for predictable policies, an administrative ease of doing business and adhesion to rule of law when considering investments. Any successful entrepreneur will tell you that he or she must plan for the long-term to ensure their success. To operate successfully and to thrive, businesses need a legal, regulatory and taxation framework that is consistent and transparent. They need an environment where the rules of engagement will not abruptly change mid-stream. There are American companies in Tanzania, many in the room today that are serious about doing business here, but seek resolution to long-standing issues such as the length of time it takes to obtain permits, pay taxes, and ever-changing regulations and fees. For example, despite multiple submissions to TRA and audits by various government departments, companies are owned millions of dollars in VAT and other tax refunds. Others spend valuable time following up with numerous offices on a single administrative requirement only to obtain no resolution to their issues.
Importance of the Private Sector
Only the private sector can generate the number of jobs required to boost economic growth in Tanzania. Policy reforms that support the private sector help to remove obstacles for doing business and unleash the private sector and employment growth.
The private sector is critical in economic development and must be viewed, valued and cultivated as a respected partner. However, unfortunately, the Government of Tanzania has lost credibility with the private sector. There is a credibility gap between the Government’s stated support and tangible steps taken to enhance the business environment for domestic and foreign businesses. This is evident in the fact that Tanzania slipped 12 places over three years in the World Bank’s “East of Doing Business Rankings” and Foreign Direct Investment declined from 3.9 percent of GDP in 2016 to 2.3 percent in 2017.
We understand that the Government of Tanzania wants to attract and to increase investment, but in order to do this successfully and to retain investment, it must create a business environment based on mutual trust between the government and the private sector.
Value Added of American Businesses
American business are uniquely qualified to bring the best in innovation and technology. Our business culture prides itself on developing a well-trained local workforce and strengthening communities through corporate social responsibility. We support a highly ethical business environment that legally prohibits bribery. This business culture enhances transparency and creates greater business opportunities for all.
The United States Government, Tanzania’s largest bilateral development donor, supports private sector engagement in Tanzania through the creation of public private partnerships that foster a stable investment climate and innovation. The Tanzanian people benefit from a strong private sector that is encouraged to invest in the workforce.
I will stop here, as we are here for a dialogue and you are not here today to just hear from me. Today’s dialogue with the Government of Tanzania is a beginning for what we hope will be more engagement. And more importantly, we want today’s dialogue to produce long-term tangible results. We look forward to our continued partnership with the Government of Tanzania in its implementation of concrete reforms to support American businesses and to address their concerns. Thank you.