Some quarters say that the situation has created a short term sense of policy uncertainty in the market. Some members of the American Chamber of Commerce – Tanzania (AmCham-Tanzania) said last week that the uncertainty has had several short term negative implications to businesses and the national economy at large.
However by large the members agree that in the long term the country is heading in the right direction as long as some minor changes are made to some policy areas.
One of them attributed the current tight liquidity in the economy to the strict policy adaptation. Speaking at the AmCham-Tanzania breakfast meeting on Thursday, PwC Partner Rishit Shah said the current policies had suppressed domestic demand but this was a short term market reaction.
This has also brought in tight liquidity conditions.
A cross-section of participants at the meeting said they were eagerly waiting for the forthcoming budget, with fingers crossed that it would shed light on government’s top priorities. They are also looking forward to the financial plan for answers to some policy and institutional issues that have stalled.
“In the absence of a comprehensive account of the strategy that is driving the new administration’s policy, we have outlined the following areas as the perceived priorities of the government,” reads the AmCham-Tanzania Policy Update seen by The Banker.
The listed priorities include fiscal discipline in government, empowering local businesses, free education for all and improvement of roads, airports, railways and ports. Others are review of dormant and industrial assets and re-privatisation as well as promoting value addition in farming, mineral and natural resource sectors.
“This is derived from public pronouncements and actions taken by the administration in the first quarter (of 2016),” the update further notes.
Commenting on the need for the need of policy reform at the meeting, Shah said the extractive sector had been the main source of FDI in recent years, but now was subject of significant uncertainty. One should ask the question why no new major mine has opened up in Tanzania in the last 10 years?
He also said that the uncertainty on immigration policy was also not healthy for luring mostly foreign capital noting that the government should make conditions more favourable for the sector to lure more investments. According to him, the undertaking of infrastructure projects would play a key economic role in the growth of the country and he was happy to see the Government giving this a priority.
Speaking at the meeting, the executive director of Tanzania Private Sector Foundation, Godfrey Simbeye, said Dr Magufuli had been the missing link in efforts that started in 2003 seeking to improve the business climate.
“The President met the private sector on December 3, 2015, hardly a month after he was sworn in on November 5, 2015, whereby he made it clear that the government would support the private sector and showed readiness to work with businesspeople,” Simbeye noted in his presentation titled: The Current Business Environment in Tanzania.
The Permanent Secretary in the Ministry of Industry, Trade and Investment, Dr Adelhelm Meru, said easing conditions of doing business was also strategically vital for the government.
He told AmCham members that Tanzania had all the reasons to support businesses to thrive since their performance was pivotal in attaining the Vision 2025, which advocates a conducive business environment as one of the pillars for attainment of middle income status.
Speaking on condition of anonymity, a senior AmCham member said corporate Tanzania was concerned by lack of a comprehensive account of the strategy driving the administration’s policy of new pace, tone and tempo. He said the policy has so far proved to be disruptive with both positive and negative effects.
“As for the positive, the new administration has sent a clear signal of zero tolerance on corruption and lack of accountability, which have been among problematic factors for doing business in Tanzania,” he explained.
“As for the negative, the new administration has not clearly communicated to stakeholders inside and outside government on its vision and how it plans to implement it. As a result, key stakeholders remain uncertain about its strategy, focus and priorities,” he said.