The Business Environment Key Issue Discussion GBS Annual Review 23 November 2009

Introduction  Macroeconomic stability and strong economic growth.  But sluggish progress of reforms to improve the business environment.  Presentation organised around 4 key messages, drawing on results of recent comparative surveys.  Objective of the session is to agree on concrete actions

Message #1  Tanzania is slipping down the Ease of Doing Business rankings and losing ground against its neighbours.

M1a: Tanzania’s record against the continent’s top performers

M1b: Tanzania’s record against its neighbours in the EAC

M1c: Drilling into the data Tanzania: Change Ease of Doing Business Starting a Business Dealing with Construction permits Employing Workers Registering property145 0 Getting credit Protecting investors Paying Taxes Trading Across Borders Enforcing Contracts31 0 Closing a business113 0

Message #2  The high costs of doing business not only deters new investment but also reduces the competitiveness of Tanzanian firms and Tanzanian exports.

M2a: The % of manufacturing firms that export from Tanzania is low.

M2b: High Cost of Exports RankDocuments for export (number) Time for export (days) Cost to export (US$ per container) Documents for import (number) Time for import (days) Cost to import (US$ per container) Tanzania103524$1,262731$1,475 Uganda145639$3,090737$3,290 Kenya148929$2,055826$2,190 Rwanda168942$3, $5,070 Burundi170947$2, $3,705 Thailand10414$ $ 795 Mauritius20517$ $ 677 Malaysia29718$ $ 450 China48721$ $ 545 South Africa147830$1,445935$1,721

M2c: Other Business Environment constraints (power, finance)

M2d: Power outages in Tz relative to neighbouring economies (2006)

Message #3  The Government of Tanzania needs to reassure domestic and international investors of its commitment to investment climate reforms, particularly during this Global Economic Downturn

M3: Falling investor confidence  Tanzania Investment Centre reports fall in number of registered investment projects.  “Toxic actions” by Government ministries in the headlines  Uncertainty created has increased the level of perceived risk of investing in Tz  Good reputations hard won are easily lost.

Message #4  Slow progress in implementation of Investment climate reforms - coupled with vocal complaints from the business community over their treatment at the hands of officials - threaten to undermine the case for GBS

Conclusions  Need to secure agreement on concrete steps that the GoT will take over S/M/L-term to improve the Business Environment  Strong leadership is critical  Seriousness of response taken to 2010 DB survey is encouraging.  Look forward to hearing the outcome of the task force deliberations from PS MITM.

Asante Sana