BUSINESS AND THE ECONOMY

93rd freest economy
Tanzania has been rated the 93rd freest economy in the world with an ‘Economic Freedom Index’ placing of 58.3 out of 100 – 1.8 points higher than in the previous year. The economy registered improved scores in six of the ten economic freedoms tracked in terms of the Index. Tanzania is ranked 11th out of 46 countries in sub-Saharan Africa, and the third out of the four East African Community members ranked. Globally, Hong Kong is leading with an index of 90.0. Zimbabwe and North Korea are the ‘at the bottom.

The report on the Index says: ‘Tanzania scores above the world average in fiscal freedom, investment freedom, and government size,’ reads the Report. Foreign and domestic investors receive equal treatment, although poor infrastructure, government control and corruption remain deterrents. Government spending is moderate, and tax administration has been centralized and modernized.” As in many other sub-Saharan nations, the Judiciary is underdeveloped and subject to the political whims of the Executive. Corruption is a pervasive problem throughout Government – despite feeble attempts at reform over the past decade. The overall freedom to conduct business is seriously limited by Tanzania’s regulatory environment. However, starting a business has improved somewhat, taking an average of 29 days, compared to the world average of 38 days.

Obtaining a business license takes more than the world average of 18 procedures and 225 days… costs are high. Bankruptcy proceedings are fairly straightforward – but still lengthy. Tanzania’s weighted average tariff rate was 7.2 per cent in 2006. Adding to the cost of doing business is motley of negatives that include import and export restrictions; taxes and fees; registration and licensing processes; prohibitive tariffs; inefficient/slow customs implementation, and weak enforcement of intellectual property rights. Ten points were deducted from Tanzania’s trade freedom score to account for non-tariff barriers.

Tanzania has moderate tax rates. Both the top income tax rate and the top corporate tax rate are 30 per cent. Other taxes include a value-added tax (VAT), a property tax, and an excise tax on petroleum products.
In recent years, overall tax revenues as a percentage of GDP have been 12.0 per cent. On the other hand, total government expenditures, including consumption and transfer payments, are low. After five years of growth, government spending in the most recent year equaled 23.5 per cent of GDP! Inflation is relatively high, averaging 6.8 per cent between 2005 and 2007 – and 11-13 per cent currently.’

“World Bank has disappointed us” – Mkulo
Finance and Economic Affairs Minister, Mustafa Mkulo has expressed dismay at the World Bank disclosure of classified information about Tanzania in a public statement. The government reaction was conveyed in a Bank statement which said Tanzania was not doing enough to stamp out grand-corruption, among other things. Mkulo told ‘The Guardian’ in an interview that traditionally, such comments “are not expected to be made in public” because that was not a proper way of disclosing information or making comments. The Minister was specifically referring to information furnished by the World Bank regarding a slight drop of 0.1 per cent by the government on Public Management and Institutions, being one of the specified four rating categories before a country qualified for a soft loan.

However, the World Bank insisted that the decision to make the report public was a shift in policy, aimed at eliminating unnecessary secrecy when dealing with financial communications with various beneficiaries. ‘A sound open policy on the disclosure of information was fundamental to the fulfillment of many roles. “Our intention is to strike the right balance between maximum disclosure and our legitimate concerns to protect certain types of confidential information,” the World Bank information spokesman said.

According to the World Bank Communication Officer in Dar es Salaam, Nicodemus Odhiambo, more ‘open-policy implementation’ would be experienced in future functioning of the Bank to sustain transparency. “Under the new arrangement the general public will have access to non confidential information such as the Quarterly Management Reports, Country Portfolios and Performance Reviews, Implementation Status and Results reports (excluding staff comments), Mission aide-memoirs and Minutes of Concept Review and Decision Meetings,” Odhiambo said. “
“This new approach is consistent with our business model, which recognizes that transparency is critical for enhancing governance, accountability, and development effectiveness,” he insisted.

Minister Mkulo said Tanzania was ranked 4th in the evaluation which covered 34 different countries in Sub Saharan Africa, after scoring above average, equivalent to 3.8 points in a scale of one to six points. Tanzania scored 4.3 points in Economic Management; 3.8 points in Structural Policies; and, 3.7 points on Policies for Social Inclusion/Equity and Public Management and Institutions.

The ranking places heavy emphasis on public finance management and reforms – the Guardian.

Africa`s Governor of the Year
Bank of Tanzania Governor Prof Benno Ndulu has won the 1909 award of the ‘Central Bank Governor of the Year for Africa’ award by the London-based ‘Emerging Markets’ daily newspaper – the newspaper of record for the World Bank, IMF and African Development Bank meetings for the past 18 years. The Governor won the award because of his ‘impeccable performance since he assumed the leadership of the Bank in January 2008.’


Improved Ibrahim Index Rating

The Ibrahim Index attempts to rate the quality of governance of African countries using statistics on 84 criteria arranged in four categories; Safety and Rule of Law; Participation and Human Rights; Sustainable Economic Opportunity; and Human Development.

In the latest ranking, Tanzania has improved by two points to 59.2, and continues to outrank its neighbours – Zambia (55.3), Kenya (53.7) and Uganda (53.6). It is well ahead of Zimbabwe (31.2) and Nigeria (46.5) but still some way behind South Africa (69.4) and Botswana (73.6).

The Mo Ibrahim Foundation held a celebration in Dar-es-Salaam in November to celebrate Africa and promote good governance, including performances from Angelique Kidjo and Youssou N’Dour.

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