It is important that Tanzania sustains its productivity drive and encourage innovation to continue to sustain the local market as well as enhance international competitiveness, NMB Managing Director Ineke Bussemaker (pictured), told The Banker recently.
Apart from helping banks and other companies to cope with the rising costs, the government must also offer more support for innovation and internationalisation activities.
“The 2016 budget should continue to help Tanzanian firms with their restructuring journey, focus on the shift from a value-adding to a value-creating economy in order to develop a strong core of Tanzanian businesses to compete globally at the higher end of the value chain,” she pointed out.
In an economy like Tanzania, enhancing productivity must go hand-in-hand with creation of new value through new products and services, new markets or new business models.
Therefore, the focus of the 2016/17 financial year should likely be on longer term business sustainability with a more balanced shift of initiatives from value addition to value creation to enhance Tanzania enterprises’ domestic and international resilience and competitiveness.
Together with the establishment of the East Africa Community (EAC) and trade pact with European Union (EU), this provides a unique opportunity for Tanzania to enhance its global competitiveness, she observed.
“All in all, I think the 2016 budget should provide an indication of Tanzania’s economic priorities and mid and long-term strategies to address both domestic and international business concerns,” she said.
Bussemaker said the 2016/17 budget must also look at the measures to assist firms spur value creation and cope with short-term challenges to sustain growth.
As businesses face rising rental and labour costs and SMEs face tougher competition, it is critical to help local companies continue with their restructuring journey, she said.
For example, she noted, more efforts should be made to promote the perception of ‘Made in Tanzania’ products and services as being high-tech, high-quality and high-value.
This should be done both locally and overseas.
She articulated that the 2016 budget should therefore nurse local SMEs to prominence and empower them to venture into overseas markets, help differentiate Tanzania from its competitors and present unique propositions to global businesses.
The NMB boss stated that the government has to introduce a well-tailored set of tax incentives for local enterprises to encourage productivity adoption, innovation related activities and internationalisation.
This includes customising Productivity and Innovation Credit (PIC) to cater for different stages of growth of businesses, giving incentives to grow and keep Tanzania brands within Tanzania, and broadening the scope of the research and development (R&D) incentives.
“I think Tanzania should strengthen its market connectivity and position itself more competitively as a regional business hub. Having a simple system and greater level of tax certainty does make Tanzania even more attractive as a regional centre,” she underscored.
In particular, Tanzania should continue to promote itself as an attractive finance and treasury centre, and hub for high value activities such as financial services and R&D, clarified Bussemaker.
According to her, there should be individual income tax rebate, with a cap on the rebate amount, so as to render more help to lower income taxpayers. This would provide some relief to the rising cost of living, the NMB boss said.
She suggested that fiscal year 2016/17 should also devote more resources into education and skills upgrading. More programmes should be introduced as part of the SkillsFuture initiative to help working individuals upgrade their skills despite slowing economic growth.
She urged that more career counsellors should be groomed to provide advice to the industry and steps should be taken to provide easier financing for higher education for deserving students in the form of grants or lower interest rate.