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& DEVELOPMENT:

TANZANIA

FDI

Anika Varkey Nabeel Hussain PGDM 15| ASB

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TANZANIA

The United Republic of Tanzania

Located on the eastern coast of Africa.

Capital Currency

- Dodoma - Tanzanian shilling

A presidential constitutional republic. The 13th largest country in Africa. The 31st largest in the world.

2 TANZANIA  The United Republic of Tanzania  Located on the eastern coast of Africa.

FDI & Development: Tanzania

Q 1 Did FDI into Tanzania increase during the 1990’S? Did it fare better than that
Q 1
Did FDI into Tanzania increase during the 1990’S? Did it
fare better than that in the neighboring countries?
FDI & Development: Tanzania

Tanzania: In 1990’s

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From mid-1980’s 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 1990’s

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The privatization programmes began in earnest, market- oriented 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

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FDI Inward Flow 1980 - 2012 6 FDI & Development: Tanzania

FDI & Development: Tanzania

Share of Tanzania in FDI inflows into LDCs

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The acceleration of inflows between 1992 and 1996 improved considerably Tanzania’s FDI performance relative to that of other LDC’s, 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

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5.3 3.3 2.7 1.5 FDI & Development: Tanzania
5.3
3.3
2.7
1.5
FDI & Development: Tanzania

FDI Inward Flow 1980 - 2012

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FDI Inward Flow 1980 - 2012 9 Overall, during 1995- 2000, Tanzania received inflows of $1

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

Q 2 Which were the sectors attracting large FDI? FDI & Development: Tanzania
Q 2
Which were the sectors attracting large FDI?
FDI & Development: Tanzania

Major Sectors

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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

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Major Sectors 12 FDI & Development: Tanzania

FDI & Development: Tanzania

Major Sectors

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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

Q 3 In what way did FDI contribute to economic development in Tanzania? FDI & Development:
Q 3
In what way did FDI contribute to economic
development in Tanzania?
FDI & Development: Tanzania

FDI contribution to Economic Development

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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

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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

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Tanzania : Current Scenario 17 FDI & Development: Tanzania

FDI & Development: Tanzania

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