AfDB Support Tanzania Business and Investment Environment Reforms with USD 55 M

The African Development Bank (AfDB) has approved a USD 55 million facility to strengthen the implementation of reforms to enhance Tanzania’s economic competitiveness and private sector participation in the country’s growth.

These critical reforms will lead to a more vibrant economy, which will improve the living conditions of Tanzanians, particularly the poor and vulnerable, and including women and youth. 

“Tanzania’s private sector is dominated by small enterprises mostly in smallholder agriculture and small informal non-farm businesses,” said Abdoulaye Coulibaly, the Bank’s Director of Governance and Public Financial Management Department.

“By strengthening the regulatory framework, the country’s private sector will have the required incentives to fully participate in the economy, particularly in cross-sector growth-enhancing and transformational investment opportunities.”

Constraints to doing business in Tanzania include high compliance costs, lengthy pre-approval procedures, multiple and duplicate processes for business registration, loopholes in some laws and regulations applied by regulators during inspections, and high regulatory costs at the national and local levels.

Support from the Bank’s African Development Fund will bolster ongoing reforms being undertaken by the government of Tanzania that have been identified as critical for the participation of local and foreign investors across different sectors of the economy. 

Tanzania’s main development challenge has been to make economic growth more inclusive and broad-based – to create employment and equal opportunities across age, geography, and gender.

The Bank’s support will finance the second phase of the Good Governance and Private Sector Development Program (GGPSDP) that will help close the 2019/20 financing gap and make key government agencies more effective.

GGPSDP II will build on strong results from GGPSDP I and support ongoing efforts to reduce the cost of doing business, reduce fees on permits, licenses and registration certificates in key institutions (Prior action), phase rollout of the online Business Registration and Licensing Agency registration portal (BRELA).

The reform program aligns with Tanzania’s Vision 2025 and its second five-year development plan (2016/17 – 2020/21). It is also consistent with pillar II of the Tanzania Country Strategy Paper (2016-2020) – Strengthening Governance and Accountability, as well as two AfDB High5 Priorities: Industrialize Africa and Improve the quality of life of the people of Africa. 

AfDB Tanzania

Already in July 2018, the Bank announced a USD 40 million budget support loan to Tanzania, to promote the country’s transition towards inclusive and resilient private sector-led economic growth agenda, backed by improved economic and financial governance.

AfDB in Tanzania Tanzania is the second largest beneficiary of ADF, the concessionary funding window of AfDB. Over the past 5 years, the focus of AfDB in Tanzania has been mostly on infrastructure development and governance.