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COUNTRY PROFILETANZANIAFull Name:Area:Government Capital:Commercial Capital:Main Languages:Currency:Head of State:United Republic of Tanzania945,087 km2DodomaDar es SalaamSalaamKiswahili (official), English(official), many local languagesTanzanian shilling (TZS)President Jakaya Kikwete

The ICT Africa marketplaceInformation & Communication TechnologiesEast Africa and the Indian Oceanwww.novatech-proinvest-eu.orgCountry Profile: Tanzaniawww.proinvest-eu.orgThe Novatech 2007 Regional Investment Conference in Nairobi, Kenya is acomponent of the Pro Invest programme which is a common initiative of theEuropean Commission (EC) and institutions from the ACP states (Africa, theCaribbean and the Pacific).This overview of the ICT sector has been prepared by BK Consultants on behalf ofthe organizers. The authors accept sole responsibility for the profile which does notnecessarily reflect the views of the organizers: Pro Invest, the Centre for thedevelopment of Enterprise (CDE), the African Union (AU) and the Common Marketfor Eastern and Southern Africa (COMESA).TABLE OF CONTENTSPage1.2.3.4.BUSINESS OVERVIEW. 31.1 Key Economic Indicators.31.2 Economic Context.31.3 Population and Labour Force.31.4 General Institutional and Regulatory Framework.41.5 Operating Costs.41.6 General educational level.41.7 Infrastructure Services .4ICT SECTOR . 62.1 Overview.62.2 Telecommunications .62.3 Internet .72.4 Regulatory framework and sector regulation.82.5 Opportunities.8INVESTMENT ENVIRONMENT. 93.1 Investment Framework .93.2 Investment Incentives .93.3 Access to Finance.103.4 Residential and Work Visas.113.5 Promotional Assistance.11LIST OF KEY CONTACTS . 122

The ICT Africa marketplaceInformation & Communication TechnologiesEast Africa and the Indian .orgCountry Profile: Tanzania1.BUSINESS OVERVIEWThe United Republic of Tanzania comprises both mainland Tanzania and the semi-autonomous Zanzibararchipelago, consisting of Unguja (commonly known as Zanzibar), Pemba and several islets.1.1 Key Economic IndicatorsTable 1 shows the recent trend for selected key economic indictors using the most up-to-date availableinformation. More general country information is provided in the websites referred to in Section 4.0 at theend of this report.Table 1: Key Economic Indicators 2003-062003200420052006Area- Mainland- ZanzibarPopulation (mn.)Population Growth (%)GDP (US bn. at current prices)GDP per capita (US at current prices)GDP growth at constant prices (%)Current account balance (US bn.)Inflation Rate (%)Exchange Rate: annual averageTanzanian shilling per US 35.9002.0%10.2762865.7%(0.486)4.4%945,000 km22,654 )7.5%1038.421089.331251.901128.93n. a. not availableSources: UN Development Indicators, Bank of Tanzania1.2 Economic ContextIn 2006, total Gross Domestic Product (GDP) amounted to some US 12.96 billion at current prices, but morethan 25 percent of this amount was represented by non-monetary (including subsistence) activities.Currently, real GDP is growing at around 6-7 percent per annum. With an estimated population growth ofbelow 2 percent, the per capita income growth rate is also improving, although slowly. GDP per personamounted to an estimated 339 in 2006.In 2004, the agricultural sector accounted for 46 percent of the total GDP. The next largest sectors arefinancial and business services accounting for 13 percent; trade, hotels and restaurants for 11 percent; publicadministration and other services representing 9 percent; and manufacturing accounting for 7 percent.The high rates of economic growth in recent years are expected to continue with the Government projectinga growth rate of over 7 percent for 2007. Tanzania has qualified for substantial debt relief under the HighlyIndebted Poor Countries (HIPC) initiative and the Government has overhauled its policy environment, whichis expected to open up opportunities and stimulate growth in the economy.1.3 Population and Labour ForceTanzania’s population was measured at 35.2 million persons in the 2002 Census, of which some 34.2 millionwere resident in mainland Tanzania and approximately one million in Zanzibar. Since then, the totalpopulation is estimated to have increased to 38.2 million in 2006. The majority of the population continues tolive in rural areas (81.6 percent according to the Census) but this situation is changing with the continuinginflux into the urban areas. The overall population density is around 40 persons per km2 (but almost tentimes that level in Zanzibar).Tanzania has a total labour force (aged 10 years and above) of approximately 19 million people, of whomunder half are gainfully occupied. Of those employed, over 80 percent work in traditional agriculture.Almost half the unemployed live in urban areas.3

The ICT Africa marketplaceInformation & Communication TechnologiesEast Africa and the Indian Oceanwww.novatech-proinvest-eu.orgCountry Profile: Tanzaniawww.proinvest-eu.org1.4 General Institutional and Regulatory FrameworkThe Tanzanian legal system is based on English common law, and the 1977 Union and 1985 ZanzibarConstitutions (as amended).Investment in Tanzania is governed by the Tanzanian Investment Act No.26 of 1997. Under this Act, theTanzanian Investment Centre (TIC) was established to coordinate, encourage, promote and facilitateinvestment in Tanzania. Zanzibar has separate legislation governing investment, namely, the InvestmentPromotion Act of 1986, and the Zanzibar Investment Promotion Agency (ZIPA) facilitates investmentinflows. The two pieces of legislation are similar and are underpinned by an adherence to the Constitution ofthe Union. Tanzania has an impressive track record of attracting Foreign Direct Investment (FDI). Thecountry received a billion US dollars in FDI during the period 1995 to 2000. This reflects both the availableinvestment opportunities as well as the positive restructuring of the investment regime that has taken place inrecent years.Land tenureLand in both mainland Tanzania and Zanzibar belongs to the Government and is available to commercialoperators at long-term leases of up to 99 years. Recent changes in the Land Agreement have been initiated,allowing the leasehold to be used as collateral for bank loans.In an effort to further promote growth and development of the private sector, the Government is running theBusiness Environment Strengthening for Tanzania (BEST) Programme which aims to improve the enablingenvironment for private sector development. The BEST programme will reduce the administrative andregulatory burden of doing business in Tanzania and will improve governmental and judicial service deliveryto the private sector through targeted interventions.1.5 Operating CostsAverage operating costs for basic inputs are much lower in Tanzania than in most other SADC countries.The minimum monthly wage is the equivalent of US 42 per month. Electricity and water costs are also lowby international standards but power supply can be affected by interruptions necessitating the use of stand-bygenerators, particularly in remote areas.While much of the necessary building materials and fittings for tourism-related projects would need to beimported, the general waiving of import duties on such materials for approved projects (see Section 4.2),coupled with relatively low labour costs, would reduce overall construction costs.1.6 General educational levelTanzania has a large labour pool. However, the skill level requires upgrading due to the low rates ofenrolment in secondary and vocational education. In particular, there is an inadequate supply of qualityhuman resources at middle and senior management levels. In order to improve the supply of skilled labour,there is a skills development levy at 6 percent of payroll.The Ministry of Labour has begun reforming employment law and regulation in Tanzania which willsimplify employment issues, such as making termination of employment a great deal easier for foreigninvestors.1.7 Infrastructure Services1.7.1 International air accessThere are direct flights from Europe, the Middle East and other parts of Africa to Dar es Salaam, Kilimanjaroand Zanzibar international airports. International airlines serving Dar es Salaam include Air India, BritishAirways, Egyptair, Ethiopian Airlines, Emirates, Zambia Airways, Gulf Air, KLM, Kenya Airways, SouthAfrican Airways (SAA) and Swiss International. The national airline, Air Tanzania is also beginning to offerinternational destinations.1.7.2 Domestic air servicesReliable and frequent internal air access throughout Tanzania is offered by Air Tanzania, Precision Air,ZanAir and other local companies. Scheduled services are provided between Dar es Salaam, Arusha,4

The ICT Africa marketplaceInformation & Communication TechnologiesEast Africa and the Indian Oceanwww.novatech-proinvest-eu.orgCountry Profile: Tanzaniawww.proinvest-eu.orgMwanza, Tabora, Kigoma, Mtwara and Zanzibar (Unguja and Pemba) while charter flights connect localairfields and smaller destinations. Recent developments include a new terminal for Zanzibar internationalairport while a new airport to serve the Southern Circuit is planned.1.7.3 RoadsMain roads between cities and towns are generally in good condition. More remote locations can be reachedvia gravel roads.1.7.4 Sea AccessThe main passenger terminal at the Port of Dar es Salaam is used by both cruise ships and ferry boats and iscurrently being upgraded. There are fast ferry connections to Zanzibar.5

The ICT Africa marketplaceInformation & Communication TechnologiesEast Africa and the Indian Oceanwww.novatech-proinvest-eu.orgCountry Profile: Tanzania2.www.proinvest-eu.orgICT SECTOR2.1 OverviewTanzania was one of the first African countries to pose clear lines on the telecommunications sector and toopen up the market to mobile telephony. Even though this country is amongst the poorest in the world, theprogression of the ICT sector has been very fast.The demand for mobile telephony and internet has been constantly increasing. One might note that the teledensity has for example increased from 5% in 2004 to 10,5% in 2006. Additionally, Internet was introducedto the Tanzanian market in 1995, and one now finds 20 Internet Service Providers as well as an estimated330,000 Internet Users in Tanzania. This enormous development would not have been possible if it hadn’tbeen for the willingness from the part of the Government in terms of liberalisation and regulations measures.2.2 TelecommunicationsUntil February 2005, the historical operator, Tanzania Telecommunication Corporation LTD (TTLC),had the monopoly on national and international calls.On Zanzibar it is the company Zantel (Zanzibar Telecommunication Company Limited) that operatesexclusively, but 90% of the fixed telephone lines belong to the TTCL.The process of privatizing the TTLC began in 2001 and the Tanzanian state has slowly been selling of itsparts. The state now only possesses 36% of the company, while the German-Dutch telecom Group MSIDetecon has purchased 35%. 14% is owned by national financial institutions, 10% by international banks andthe remaining 5% by TTCL employees.The TTCL has a unique licence, allowing the company to offer services of fixed and mobile telephony,VSAT as well as internet services. The company intends to install a WCDMA network (Wide Code DivisionMultiple Access) in order to improve the standard of the fixed lines. Officially, the TTCL counts 1,500,000 subscribers i.e. a tele-density of 0,4% and 240,000 lines (butonly 146,419 are operational). Additionally, 55,000 of the lines are installed in Dar es Salaam.TTCL also introduced a mobile service from the end of 2006 and so far it has attained 41,148subscribers. The market share of TTCL is est