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Anika Varkey
Nabeel Hussain
PGDM 15| ASB

TANZANIA
2

The United Republic of Tanzania

Located on the eastern coast of

Africa.

Capital

- Dodoma

Currency

- Tanzanian shilling

A presidential constitutional
republic.

The 13th largest country in

Africa.

The 31st largest in the world.

FDI & Development: Tanzania

Q1

Did FDI into Tanzania increase during the 1990S? Did it

fare better than that in the neighboring countries?

FDI & Development: Tanzania

Tanzania: In 1990s
4

From mid-1980s Tanzania government initiated a number of

investment related laws and policies in recognition of its
important role towards creating an enabling environment for the
private sector development.
Since 1986, Tanzania has began various economic reforms
which aimed to transform the economy from centrally
planned

public

owned

economy

into

market

driven

private sector led economy.

In the early 1990s growth was sluggish and inflation was high.
Inflation was nearing 40 per cent and the budget deficit was 5
per cent.

FDI & Development: Tanzania

Tanzania: In 1990s
5

The privatization programmes began in earnest, marketoriented reforms reached critical mass and sound foundations
for an enabling framework for FDI were put in place.
In 1992 the inflows increased to $12 million, to $50
million in 1994 and to above $150 million in 1995.
In 1996, FDI inflows stabilized at the high level of $150 million
and continued to grow, although at a slower pace, reaching
$193 million in 2000. This is a remarkable acceleration,
for a country that was receiving zero inflows just 10
years ago.
FDI & Development: Tanzania

FDI Inward Flow 1980 - 2012

6

FDI & Development: Tanzania

Share of Tanzania in FDI

inflows into LDCs
7

The acceleration of inflows between 1992 and 1996 improved

considerably Tanzanias FDI performance relative to that of other
LDCs, including neighboring countries.

Its share of FDI inflows into least developed countries

(LDCs) doubled from 2.7 per cent in 1991-1995 to 5.3 per
cent in 1996-1999.

The share of inflows into sub-Saharan Africa more than

doubled, from 1.5 to 3.3 per cent in the same period.

After 1996, although growing in absolute terms, inflows into

Tanzania did not keep pace with inflows into LDCs or sub-Saharan
Africa.
FDI & Development: Tanzania

Share of Tanzania in FDI

inflows into LDCs
8

5.3

2.7

3.3
1.5

FDI & Development: Tanzania

FDI Inward Flow 1980 - 2012

9

Overall, during 1995- 2000, Tanzania received inflows of $1 million

comparable to those of Uganda ($1.1 billion) and Mozambique
($0.9 billion).

FDI & Development: Tanzania

Q2

Which were the sectors attracting large FDI?

FDI & Development: Tanzania

Major Sectors
11

The largest sector for FDI is mining and the largest single
industry is gold.

Services are the second largest sector for FDI in Tanzania.

At the end of 1998, total cumulative FDI in mining was estimated

at $370 million.

Sectoral composition of the largest projects, based on total value,

is as follows: mining (65 per cent), services (19 per cent)
and manufacturing (16 per cent).

The largest source of FDI in the country is the United Kingdom,

followed by the United States, Ghana and South Africa.

FDI & Development: Tanzania

Major Sectors
12

FDI & Development: Tanzania

Major Sectors
13

Almost half of the total approvals during 1990-2000 were

in manufacturing - most projects are small and many may
never be implemented.
The largest manufacturing industry in terms of the number
of approved affiliates is food and beverages.
Only 3 per cent of approved affiliates are in mining, but among
those were a few large, capital-intensive projects.
The services sector is next in importance, with 38 per
cent of the approvals, in such industries as transport and
communications,

hotels

and

restaurants,

construction

and

financial services.
FDI & Development: Tanzania

Q3

In what way did FDI contribute to economic

development in Tanzania?

FDI & Development: Tanzania

FDI contribution to Economic

Development
15

In mining, FDI has served as an engine of growth and has helped

increase gold exports.
In banking, it has contributed to the modernization of the industry.
Foreign

investors

have

restructured

privatized

enterprises,

boosting their competitiveness.

They have typically contributed to the transfer of technology and
skills.

FDI & Development: Tanzania

FDI contribution to Economic

Development
16

Overall impacts of FDI include:

To the inflow of external resources (15 per cent in 1998);
A change from a negative to a positive contribution to the
balance of payments;
The contribution of foreign affiliates to overall exports and
inflows of hard currency from tourism;
An increased share of FDI in capital formation, and thus growth;
The diversification of the economy away from agriculture
towards mining and services.

FDI & Development: Tanzania

Tanzania : Current Scenario

17

FDI & Development: Tanzania

18