Tanzania to target investment through Special Economic Zones

Mtwara TanzaniaMtwara, on Tanzania's Indian Ocean coast, has been selected to host one of three new Special Economic Zones. (Image source: John Mnamba/Wikimedia Commons)Tanzania has set aside 16,150 hectares of land for the development of Special Economic Zones (SEZs) in three of its cities in an attempt to encourage investment in the country

Investors into the SEZs will be exempted from tax payment for 10 years, according to the Tanzania Export Promotion Zones Authority (EPZA). Machinery, equipment, heavy duty vehicles, building and construction materials, as well as any other goods of capital nature used for the purpose of the development of the SEZs, will be exempted from paying taxes and duties.

Firms will also be exempted from payment of corporate tax, withholding tax on rent, dividends and interests, as well as exemption from payment of property tax in the first decade of investment. 

Investors will have to decide in which of the three cities – Mtwara, Kigoma or Bagamoyo – to set up their businesses.

Located 50 km south of Dar es Salaam, the port city of Bagamoyo has 10,500 hectares for the SEZs. The government has already acquired the land at a cost of US$75mn, paving the way for the development of a free port, a satellite city and an international airport.

"At least 3,000 hectares of this land has been set aside for social infrastructure such as residences, hospitals, schools and entertainment centres," observed Grace Lemunge, an investment manager with EPZA. Another 6,000 hectares has been allocated to industrial centres and commercial infrastructure with 500 hectares for a free port and 1,000 hectares for an airport.

The Bagamoyo SEZ is expected to attract firms involved in value addition. Industrial data shows that firms specialising in the value-addition of agricultural produce have been doing well in investment under the EPZA in the country for the past six years.

In Mtwara, also on the Indian Ocean coast, the land is owned by the government through the Tanzania Port Authority. Development of this facility is expected to boost trade in the Southern Corridor including Mozambique, Malawi and Zambia. It will also have a free port and industrial, technology and tourist parks.

For Kigoma – located on the shores of Lake Tanganyika, the government has been seeking investors for the construction of a port. Development of commercial and industrial parks in the city will be expected to spur trade with the DR Congo and Burundi.

Presently, EPZA has seven industrial parks and 24 stand-alone factories. These investments have attracted US$1.15bn in capital, creating 26,381 jobs and an annual turnover of US$357mn.

Investors in the new SEZs will also be allowed to bring in five people through an automatic immigration quota during the first five years.

The investor will own and operate the facility as a business over a period ranging from 10 to 30 years. Later, the facility will be transferred to the government under the Build, Operate and Transfer arrangement in this Public, Private Partnership (PPP).

Mwangi Mumero

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