FOR TANZANIA TO CONTINUE GROWING ITS ECONOMY, IT IS IMPERATIVE THAT THE INVESTMENT CLIMATE IS AS ATTRACTIVE AS POSSIBLE

Tanzania's President Dr John Magufuli speaking to representatives of the business community in Tanzania in June 2019.

As another year draws to a close, it is only natural to reflect on the past year, while looking ahead to what 2021 may bring.

A notable moment from 2020 for Tanzania was undoubtedly the country reaching its ambitious target of becoming a lower-middle-income economy, five years ahead of schedule this summer.

The World Bank updates the classifications each year in July, and according to the organisation Tanzania was among only seven countries that moved up a category this year.

Economists praised this moment as “a step forward” in the national development process.

As many know, since 2016, the Tanzanian government has embarked on an ambitious programme to transform the country into a middle-income economy by 2025.

Looking ahead to 2021, it is worth remembering that gaining lower-middle-income status is only one part of Tanzania’s broader development goals. The Tanzania Development Vision 2025 is much broader and envisions the country as being a middle-income country by 2025, characterised by high-quality livelihoods, a well-educated society and a strong economy with sustainable growth.

If Tanzania is going to continue growing its economy, it is imperative that the investment climate is as attractive as possible.

Tanzania is becoming an increasingly attractive place for business. The country’s World Bank Doing Business score has steadily improved over the last five years, increasing from 49.7 in 2015 to 54.5 in 2020.

Nonetheless, the country cannot become complacent.

There are many factors that contribute to building a strong business environment, the most obvious being introducing policies that entice new companies to the country.

The government has made great progress in these areas, including cracking down on corruption and reducing certain obstacles to entering the country’s economy.

Another important element of an attractive business environment is, however, ensuring there are provisions for a market exit, as investors similarly consider their potential market exit strategy when contemplating new investment opportunities.

The risk of potentially becoming trapped, without a viable route out, could deter initial investments.

Building a business environment that has both easy entry and exit opportunities will help further strengthen the Tanzanian economy’s appeal, enticing more entrepreneurs to the market. This in turn will create more job opportunities and help the economy grow.

Tanzania has made strong inroads in 2020. Let’s hope the Tanzanian economy continues to grow into 2021.

Amaniel Ngowi,

UDSM.