market opportunities in-tanzania-for-us-firms

Written by: US Commercial Services on July 26, 2013 — Tanzania returned to strong 7% GDP growth in 2010, helped by consistent stable macroeconomic policies. Inflation declined below the double digits of 2009, though increased again in early 2011 due to growing fuel and food prices.

Exports performed particularly well in 2010; gold alone brought in 1.4 billion US dollars, overtaking the tourism sector which contributed 1.3 billion US dollars. Also, in 2010 the industrial sector contributed significantly to foreign earnings for the first time, generating $900 million.

The agricultural sector — the mainstay of the country’s economy employing about 80% of the population — contributed 480 million US dollars. Transit goods earnings contributed 380 million USD. Tanzania’s 2010 GDP per capita reached 600 USD, doubling from 300 USD in 2006.

Tanzania’s main trading partners are the EU, China, India and neighboring Southern African Development Community (SADC) and East African Community (EAC) countries. Tanzania’s exports to the U.S. are 

dominated by agricultural commodities, minerals, and textiles while imports from the US include wheat, agricultural / transport equipment, chemicals, used clothes and machinery.

Basic economic statistics (2009/2010 figures):

  • GDP: USD 20.49 billion
  • Real GDP Growth rate: 7 percent
  • GDP per capita: USD 600
  • Inflation: 6.6 percent as of February 2011
  • Total Exports: USD 2925.8 million
  • Total Imports: USD 5834.1 million
  • Exports to the United States of America: USD 49.3 million
  • Imports from the United States of America: USD 154 million
  • Mean Exchange Rate: Tsh 1,470 per USD
  • Population Total: 41.8 million people

(Source: Bank of Tanzania (BOT) and National Bureau of Statistics (NBS))

Market Opportunities

Tanzania experienced a steady rise of foreign direct investment over the last decade, although investment decreased in 2009 as a result of the global financial crisis. In 2009, the value of Foreign Direct Investment (FDI) was USD 650 million compared to USD 744 million in 2008 (the highest figure recorded in Tanzania in the past eight years). In the last decade the total FDI stock in Tanzania exceeded USD 6 billion, making the country a leading FDI destination in the East Africa region. Tanzania’s strategic location makes it a natural East African hub for investors seeking to exploit not only resources but also a growing market of 527 million consumers in East and Southern Africa.

Best prospect sectors include:

  • Telecommunications and Information Technology
  • Construction and Real Estate Development
  • Tourism
  • Petroleum, Gas and Energy
  • Aviation Infrastructure
  • Agribusiness and Food Processing
  • Mining of gold, diamonds, gemstones and other minerals

In addition, U.S. consumer goods and franchise concepts are increasingly attractive to the Tanzanian market. With an estimated population of 40.7 million, about 20% urban, Tanzania offers a sizeable market in urban areas, despite low per capita income.

Tanzania embarked on a liberalization program in the early nineties. Major privatization success stories included Tanzania Breweries Limited (TBL), Tanzania Cigarette Company (TCC), Tanga Cement Limited (SIMBA), Tanzania Tea Packers Limited (TATEPA) and Swissport Tanzania Limited (formerly known as the Dar es Salaam Airport Handling Company-DAHACO), all of which feature foreign investment and are listed on the Dar es Salaam Stock Exchange (DSE). Public enterprises for which privatization efforts were unsuccessful include the Tanzania Electric Supply Company (TANESCO), Tanzania Telecommunications Company Limited (TTCL), Air Tanzania Corporation Limited (ATCL), Tanzanian Railways Limited (TRL), the Tanzania Zambia Railway Authority (TAZARA), and business units under the Tanzania Port Authority (TPA).

Tanzania has abundant natural resources, particularly for agriculture, mining, energy and tourism. The country has 44 million hectares of arable land, with only about 5% currently under cultivation. Resources include diamonds, gemstones, gold, coal, iron, nickel, forest products, domesticated livestock, wildlife, fisheries and marine products, natural gas and possibly oil. Primary exports in terms of value include tobacco and gold, while key imports are capital and consumer goods.

Article via: