Tanzania Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Currently, the EU’s relations with Tanzania focus mainly on development cooperation in the areas of rural development, energy and governance and political dialogue. To a much lesser extent, attention is paid to trade and investment issues, which is evidenced by the fact that the Economic Partnership Agreement (EPA) negotiated between the EU and the East African Community (EAC: Burundi, Kenya, Rwanda, Tanzania and Uganda) has still not been ratified in 2014, mainly due to reluctance and delays on the part of Tanzania.

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 797.2 762.5 836.1 839.5 855.8
Imports into the EU (million EUR) 504.7 460.7 423.6 634.8 456.5
Balance with the EU (million EUR) -292.5 -301.7 -412.5 -204.8 -399.3

Source: European Commission

Trade relations with the Czech Republic

The Czech Republic provides Tanzania with preferential access to the market. The preferences are non-reciprocal and take the form of duty exemption. Tanzanian exports to the Czech Republic consist mainly of agricultural commodities. The preference helps Tanzania especially in the areas of agricultural and fishery products such as fish and tobacco. Nevertheless, Tanzania’s trade balance with the Czech Republic is in favor of the Czech Republic, thanks to the export of telecommunications and computer equipment.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.2 0.4 0.3 0.3 ON
Imports to the Czech Republic (billion CZK) 0.3 0.2 0.1 0.1 ON
Balance with the Czech Republic (billion CZK) 0.1 -0.1 -0.1 -0.2 ON

Source: businesscarriers.com

Trade relations with countries outside the EU

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 3,037.2 2,885.7 3,735.2 4,742.7 4,961.6
Imports to countries outside the EU (million EUR) 5,914.3 6,748.1 7,048.7 6,069.0 8,062.6
Balance with non-EU countries (million EUR) -2,877.1 -3,862.4 -3,313.5 -1,326.3 -3 101.0

Source: EIU, Eurostat

Foreign direct investment

In 2021, the government resumed negotiations with China Merchants Holdings on plans for the Bagamoyo port project, which stalled under President Magufuli. Negotiations with the Chinese side (China Sichuan Hongda) on a USD 3 billion investment in the coal mine in Mchuchuma and the iron ore mine in Liganga have also been renewed. Terms of trade are not public.

Tanzania is building a new railway, a 2,115 MW hydroelectric plant in the national park and a pipeline from the Lake Albert oil fields. Negotiations have also been renewed on the USD 30 billion construction of an export hub in south-eastern Tanzania (Lindi) for liquefied gas. In order for the country to be able to meet the increased demand for cement, China’s Huaxin has invested US$145 million to renovate its factory, which will allow them to produce million tons of cement per year.

Agriculture contributes 27% to total GDP and 24% to Tanzanian exports. The government announced its intention to achieve independence from sugar imports by 2025, so in 2021 several investments were added to the sugar industry. These are, for example, Kilombero Sugar, Bagamoyo Sugar and Mkulazi Holdings.

Tanzania is the fourth largest producer of gold and metals and their export is a significant part of the trade exchange. 2021 saw an easing of strained relations with major mining companies that had suffered under the former president. In 2021, Canadian Barrick invested in new machines and extending the life of mines in North Mara and Bulyanhul. Other companies such as Shanta Gold have also invested in their mines and increased production. It is estimated that there are approximately 600,000 small mines operating in the country, which have so far evaded taxes and smuggled their goods out of the country.

In addition to gold and iron ore, the mining of nickel, which is in demand for the production of electric cars, is also important in Tanzania.

FTAs and treaties

Treaties with the EU

Negotiations on an Economic Partnership Agreement (EPA) with the East African Community (EAC: Burundi, Kenya, Rwanda, Tanzania and Uganda) were completed in October 2014. The EPA includes provisions on trade, customs, sanitary and phytosanitary measures, sustainable development of agriculture and fisheries. The agreement should increase the EU’s share of total EAC imports from 10.6% to 12.6%. The EAC-EU EPA provides immediate duty-free and quota-free access to the EU market for all EAC exports and a partial and gradual opening of the EAC market to EU imports. safeguards allowing each party to reimpose tariffs if imports from the other threaten to disrupt its economy. The EPA contains detailed provisions on sustainable agriculture and food security and sustainable use of fisheries resources. A chapter on economic and development cooperation is included. The parties undertake to conclude negotiations on the environment and sustainable development, services, investment and private sector development within five years of the entry into force of the agreement. Several articles refer to institutional arrangements and dispute settlement mechanisms. The EPA falls under the Cotonou Agreement: Violation of one of its “fundamental elements” involving human rights, democratic principles and the rule of law could result in the suspension of the EPA’s trade preference for the country concerned. The signing of the EPA agreement has been suspended due to discussions within the EAC. Violation of one of its “fundamental elements” involving human rights, democratic principles and the rule of law could result in the suspension of the EPA’s trade preference for the country concerned. The signing of the EPA agreement has been suspended due to discussions within the EAC.

Contracts with the Czech Republic

In connection with the entry of the Czech Republic into the EU, Tanzania agreed to the termination of the trade agreement from 1986. Although the Czech Republic does not have a double taxation agreement or an investment protection agreement with Tanzania, this fact does not prevent the development of trade relations, as evidenced by the growing exports of the Czech Republic to Tanzania also has a positive trade balance.

Developmental cooperation

Tanzania is a recipient of development aid and is still dependent on it despite the government’s efforts.

The Czech Republic occasionally provides funding within the program of small local projects. Small local projects (hereinafter referred to as “MLP”) are an instrument of bilateral development cooperation of the Czech Republic under the responsibility of the Ministry of Foreign Affairs of the Czech Republic. The aim of the MLP is to support the development activities of smaller scale local entities of the given countries. Activities of a smaller scale mean, for example, the supply of equipment or material or technology (also of Czech origin), training, support of development activities of local institutions and organizations, participation in partial parts of a larger, for example, international project. MLPs are carried out by local implementers directly in the developing country. The proposal for a foreign development cooperation project must be prepared in the current version of the identification form, which applicants will receive after contacting the relevant Embassy of the Czech Republic. The duly completed form must then be sent back to the embassy.

More information about the possibilities of involvement in small local projects can be obtained at:

https://www.mzv.cz/jnp/cz/zahranicni_vztahy/rozvojova_spoluprace/dvoustranna_zrs_cr/sektory_projekty/male_lokalni_projekty/index

Prospective fields of study (MOP)

Healthcare and pharmaceutical industry

Expenditure on healthcare shows growth, with donor contributions currently having the main share. However, with the advent of the current administration, the priority of healthcare is also reflected in government spending, and the country plans to become a center for medical tourism. Opportunities in the field of healthcare are also represented by the current growth in pharmaceutical consumption at the level of USD 35 million, with a total market size of USD 490. 95% of medicines on the Tanzanian market come from imports, there is a lack of local production. This is an opportunity for Czech companies, as well as supplies of medical equipment and devices. Veterinary medicines are also in short supply.

Construction industry

The construction sector has been growing at the level of 8% in recent years and this growth is expected to continue with increased dynamics in the coming years. The reason is mainly the government’s commitment to spend 13% of the state budget on investment projects. Growth will rely on investments in the construction of the still insufficient infrastructure (roads, bridges, railways, ports), the construction of residential housing and commercial buildings, the construction of the port of Bagamoyo and the expansion of the capacity of the port of Tanga. The expansion of transport capacities offers opportunities for the supply of equipment to logistics centers that follow the development of ports. There is already an unsatisfied demand for housing at the level of 3 million apartments. As the population grows, the current situation will worsen even further.

Agricultural and food industry

The country lacks agricultural equipment (tractors and various attachments). Most food is exported from the country without further processing. An opportunity for Czech companies would be production lines for the processing of fruit and vegetables. Due to the large areas with uneven rainfall, other possibilities are found in smart irrigation or smart fertilization. The production of fodder for farm animals is also insufficient. Due to the possibilities of Lake Victoria, there are also possibilities associated with the breeding of freshwater fish (seeds, feed, etc.).

Energy industry

The energy system is insufficient and in a very poor condition and is far from sufficient to cover the high demand, which is growing at an annual rate of 10-15%. The development plan of the Ministry of Energy envisages the dynamic growth of installed energy and the development of the distribution system in such a way that access to electricity increases from 30% to 50% in 2025. The development of the energy sector should contribute to the development of the energy sector as well as the extensive natural gas reserves of 50 trillion cubic feet, so the potential of geothermal energy, which is estimated at 5,000MW. Other opportunities are connected with the future gasification of Tanzania in all areas, including the modification of motor vehicles for LPG or with the future development of geothermal power plants. A 1,400 km oil pipeline from Uganda to Tanzania is also to be built in the next five years at an investment of USD 4 billion.

Tanzania Trade