Tanzania, United Republic of

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Investment Policy Reviews are intended to help countries improve their investment policies and to familiarize Governments and the international private sector with an individual country's investment environment. This publication was initiated at the request of the Government of Tanzania and it is hoped that the analysis and recommendations made will contribute to an improvement of policies, promote awareness of investment opportunities and serve as a catalyst for increased investment in to the United Republic of Tanzania.

The aim of this report is to assess how deforestation affects the economy of the United Republic of Tanzania, both by looking at the limited ecosystem goods and services currently reflected in GDP and by looking at the effects on the economy if the full suite of forest ecosystem services are taken into account. The findings show that investment in the forestry sector has a disproportionately positive impact on the incomes of rural households in comparison to stimulating output from other sectors, meaning that investment in forestry could contribute to alleviating poverty. Taking these findings together, this report presents a solid case for Tanzania to integrate REDD+ policies into key economic sectors such as energy, agriculture, livestock, industries, transport and water to address the drivers of deforestation and forest degradation while identifying how the implementation of REDD+ can be part of Tanzania’s broader economic and development strategy, as the country plans to move towards REDD+ results-based actions that could lead to results-based payments and then towards Green Economy pathways to sustainable development and poverty eradication in Tanzania.

Tanzania’s poverty rate remains high, and income inequality is increasing. This report analyses the trends in poverty and inequality and examines some of the potential explanations for the different growth patterns. The report goes on to examine four policy-areas that have a direct impact on the reduction of poverty and inequality, and makes recommendations on how to strengthen their impact. The four policy-areas are tax policy, social protection, agriculture and gender equality. The report examines different possible explanations for the change in the growth elasticities of poverty and inequality, including external shocks, public services expansion, changes in the sectoral distribution of growth and the role of official development assistance as well as measurement error. It finds that the changing composition of growth, especially the slowdown in the growth of agriculture, is likely to explain a part of the shift in the growth elasticity of poverty, while more research is needed to fully account for the changes in inequality. The report then considers four policy areas, where reforms could bring progress to reduce poverty and inequality in the short- to medium-term. The tax system is progressive and already makes a significant contribution to reducing income inequality. However, Tanzania collects less tax revenue than its peers, and some of its excise taxes disproportionately hurt the poor. To strengthen the inequality- and poverty reducing impact of the tax system, Tanzania could consider reducing exemptions on the Corporate Income Tax and expanding the use of the property tax. Tanzania could also consider the introduction of a wealth tax, and broaden the tax-base by lowering the threshold for VAT. The revenue collected should then be spent on targeted pro-poor interventions.

Convention for the establishment of the Lake Victoria Fisheries Organization (with annex and final act). Concluded at Kisumu, Kenya, on 30 June 1994

Grant Agreement-Mara Region Farmers’ Initiative Project (with schedules and General Conditions Applicable to Loan and Guarantee Agreements of the Fund dated 19 September 1986). Signed at Rome on 19 January 1996

Development Credit Agreement—Financial Institutions Development Project (with schedules and General Conditions Applicable to Development Credit Agreements dated 1 January 1985). Signed at Washington on 27 October 1995

Agreement concerning financial cooperation. Signed at Dar es Salaam on 28 October 1994

The preparation of National Accounts Statistics in the United Republic of Tanzania is undertaken by the Bureau of Statistics, President’s Office, Planning Commission, Dar-es-Salaam. Official estimates are published in a series of reports entitled "National Accounts of Tanzania". Reply to the United Nations national accounts questionnaire by the Bureau of Statistics.

Agreement for the promotion and protection of investments. Signed at Dar es Salaam on 7 January 1994

Development Credit Agreement (National Agriculture Extension Project - Phase II) between the United Republic of Tanzania and the International Development Association (with schedules and General Conditions Applicable to Development Credit Agreements dated 1 January 1985). Washington, 9 August 1996

Development Credit Agreement (Urban Sector Rehabilitation Project) between the United Republic of Tanzania and the International Development Association (with schedules and General Conditions Applicable to Development Credit Agreements dated 1 January 1985). Washington, 9 August 1996