Global Invest

Tanzania is an Attractive Destination for Young Globe-Hopping Entrepreneurs

The East African nation of Tanzania has been successfully working on economic reforms to develop an attractive business environment for investments.
— by William Bell

Globalization has brought many well-recognized advantages to the business environment, including new revenue opportunities. However, the advantages extend beyond economics. The outreach of multinationals into countries on every continent has spurred a number of under-developed countries to work towards economic and business reforms in order to become partners in the global economy. Tanzania is one of those countries. Steadily striving to make the country more investor and business friendly, it is a country with enormous opportunities as it works to improve its infrastructure, increase foreign investments, and become a regional trading hub.

Tanzania is most widely known for its glorious national parks and breathtaking natural sites. Located in East Africa, in the African Great Lakes Region, it is home to the Serengeti National Park, Mt. Kilimanjaro, Lake Victoria, and other wildlife refuges. It offers exotic and historic Zanzibar and is bordered by Kenya, Burundi, Rwanda, Zambia, the Democratic Republic of Congo, Mozambique, and Malawi. Tanzania is also a model country in the region due to the democratic progress it has made. The President is elected by popular vote and governs under a constitution.

Vast Economic Potential
Economically, the country is largely, but not solely, agricultural. The main economic drivers of growth are transport, telecommunications, trade, manufacturing and construction, and financial intermediation. Its main exports include gold, precious metals, raw tobacco, coffee, manganese, fish fillets, and numerous agricultural products. The largest imports are refined petroleum, gas turbines, wheat, palm oil, delivery trucks and cars, telephones, and number of construction related products, reflecting the country’s extensive effort to build up its infrastructure and industries.

The top U.S. exports to Tanzania are aircraft, machinery, electrical machinery, pharmaceuticals, and textiles. The U.S. government works with Tanzania in areas of food security and nutrition, women’s and children’s health, energy development, and sustainable development. The country’s economic status has been boosted by the discovery of large natural gas resources. The bulk of Tanzania’s exports to the U.S. are minerals, agricultural products, and textiles. Tanzanian coffee beans are sold in many U.S. gourmet coffee shops because they are considered one of the finer beans.

The U.S. Embassy states, “Tanzania is a country with a long history of stability and vast economic potential, as well as an important gateway to the East African Community.” The Tanzanian government is anxious to attract new foreign investors who can bring capital, expertise, and connections. Tanzania is also close to India and other fast-growing Asian countries, making it a natural destination for investors.

Getting Started
In 2005, the American Business Association (ABA) was established to promote U.S.-Tanzania trade and investment. That led to the emergence of the American Chamber of Commerce (AmCham Tanzania), a good contact point for U.S. businesses interested in doing business in the country. AmCham-Tanzania is a member of the East African Business Council which advocates for the private sector in East Africa. The U.S. Embassy is located in Tanzania’s largest city, Dar Es Salaam. Tanzania’s top trading partners are China, the European Union, India, the South African Development Community, and the East African Community countries. The Tanzanian Investment Center is the starting point for all investor inquiries and has the responsibility of facilitating project startups.

To gain access to the South Korean market, you will need to make local contacts or form partnerships with U.S. or South Korean businesses. Attending trade fairs and missions is a good way to begin forming the all-important network of contacts.
Tanzania is now eligible for AGOA status. AGOA is the acronym for the African Growth and Opportunity Act that was signed into law in May 2000 by President Clinton. The AGOA has the stated purpose of expanding U.S. trade and investment with sub-Saharan Africa and stimulating economic growth in the area. It is also intended to facilitate the region’s integration into the global economy, which is precisely what Tanzania has been striving to accomplish. The AGOA status conveys substantial trade preferences. The status combined with the Generalized System of Preferences means most of Tanzania’s marketable goods can enter the U.S. duty-free, giving U.S. businesses a great opportunity to import products at lower cost. Tanzania also qualifies for various apparel and textile benefits.

Blending Social Progress and Business Success
Understanding the economic and trade status of Tanzania is a first step. However, listing imports and exports does not truly convey the opportunities to blend social progress and business success by doing business with Tanzania. The country is anxious to continue advancing economically and to raise the economic status of its citizens. This gives U.S. companies a prime opportunity to exercise social responsibility while expanding business opportunities. A good example is the Marvelous Flotea Company, Ltd. This Tanzanian company works to alleviate poverty by transforming locally produced items into high quality products by using technology, local talent, and innovative designs. The goal is to train and employ disadvantaged women in the textile sector.

Marvelous Flotea converts everyday items, made from local resources like bone, cowrie shells, brass, and so on, into art objects. Textile products are also designed and embroidered. The company worked with an American product design specialist for two years to adapt the products so they were more attractive to the American market. The products were exported and sold to wholesalers and retailers in the U.S., Germany, Italy, and Australia. This success story sends the message that U.S. businesses can use creativity, innovative ideas, and fresh approaches to create opportunities.

Tanzania offers U.S. businesses many opportunities in different ways. It takes about a month to register and open a business in Tanzania, but there are plenty of trade opportunities through importing and exporting. The resources provided offer a good starting point for reading and understanding the Tanzanian business environment. One of the country’s many nice features for U.S. businesses is the fact the national language is Swahili, but the second official language is English. It is a friendly country that is bonded by national pride and a strong national identity. There is no doubt this is one of the African countries on the move as it works to find its place on the world stage.