INVESTMENT UPDATE: A LOOK INTO THE TOURISM SECTOR IN TANZANIA: POLICY, LAW, INCENTIVES, AND STRATEGIES

• 2022/2023 budgetary changes in the tourism Industry.
• Tourism Industry recovery from Covid-19 and Post Royal Tour.
• Challenges facing Tourism Industry in Tanzania.
• Why should you Invest in Tanzania?
• Non-fiscal Incentives and fiscal incentives.

1.0 Introduction

The tourism sector in Tanzania has experienced staggering development in steering the Tanzanian economy. The tourism sector has grown significantly and contributed considerably to Tanzania’s economic growth. On average the tourism sector contributes 17.2% of the national GDP.

Tanzania is a truly magnificent country, packed with unspoiled environments and a variety of national parks. The landscape of Tanzania is broad and fascinating. Ranging from humid rainforests to snowy mountain peaks and everything in between, it’s a varied nation that plays host to so much biodiversity. Tanzanian people are friendly and welcoming, and their culture is rich and fascinating.

Two of the world’s most famous natural landmarks are in Tanzania. These are Mount Kilimanjaro and the Serengeti. Each one is a unique world treasure, filled with amazing sights and experiences. (Helen Soto, Sustainable Tourism)

Between 2016 and 2019 International tourist arrivals increased by 18.9%, while foreign exchange receipts from international tourism grew by 25% during the same period. Statistics show that Tanzania is ranked tenth among fifty African countries in tourism growth. Until April 2020, tourism earnings accounted for more than 24% of the total share of exports, making tourism the second largest foreign exchange earner after agriculture. The major source markets for Tanzania’s international tourism are the USA (13.2%) and the UK (9.5%). Other countries include:  In the period between January to July 2022, Tanzania registered 742,133 tourists, a 62.7% increase compared to the same period last 2021.

FLOW OF TOURISTS IN TANZANIA, JANUARY TO JULY 2022.

 

Source: Immigration Service Department – August 2022

Breakthrough Advisory has prepared this update on the Tourism sector in Tanzania highlighting the development of this sector within the past two years, challenges as well as investment opportunities.

2.0 Budgetary changes in the Tourism Industry.

The Minister of Natural Resources and Tourism, Ambassador Pindi Chana on behalf of the Ministry projected an increased injection of funding in the tourism sector that would give the much-needed boost to domestic tourism to mold the sector and up its contribution to the economy. This budget plan will heavily benefit the tourism sector by enabling the diversification of tourism products and a general implementation towards the improvement of tourism infrastructure. 

In the 2022/23 budget for the Ministry of Natural Resources and Tourism. 

1. A total of TZS 624.1 billion has been allocated to the Tourism sector compared to the TZS 571.6 billion allocated to the tourism sector in the previous year of 2021/22 an increase of TZS 52.4 billion. The Tanzanian Government is determined to develop and promote sustainable growth in the tourism sector by anticipating continued post-pandemic growth.
2. The 2022/23 Budget for the tourism sector has shown a lot of positives in pushing the sector into different miles. Among other things the Ministry of Natural Resources and Tourism has put efforts into assuring the investment environment is friendly and tourist attractions are well known in and outside the country.
3. The Ministry managed to secure the 65th UNWTO Commission for Africa to be hosted in Tanzania on 7th October 2022. The location of the Commission will be Arusha, a region with significant tourist attractions and business activities. The theme of the meeting hosted focuses on “Rebuild Africa’s Tourism Resilience for Inclusive Socio-economic Development”.
4. The Ministry also reviewed The Tourism Act, 2008 Cap 365 and gazette the amendments by removing the Tourism board’s authority on granting licenses to Agents in Tourism Sector. The grant of license is now through an electronic system known as MMRT Portal. The introduction of the MMRT Portal has stimulated more licenses to be granted to agents in the Tourism Sector. The MMRT Portal has impacted the Tourism sector through its cost reduction in fees and time, which is a good indication of an improved favorable business environment.

Read our general analysis of the 2022/2023 budget highlighting the overall revenue and expenditure estimates.

3.0 Tourism Industry recovery from Covid-19 and Post Royal Tour.

Like many other countries during the peak of Covid 19 pandemic, Tanzania’s tourism sector was also affected. An intervention by the government and industry players to rescue the sector appeared to be on the right track. Industry players believed that recovery for the multi-million-dollar sector would be a herculean task, needing the full participation of all stakeholders. Tanzania opted for an earlier opening of the skies and easing of other restrictions the totem provide some relief to the Tourism sector and rescue the economy. 

Besides, generating 25% of the foreign exchange earnings, the sector also supports nearly 1.6 million direct and indirect jobs across the country. The industry was hit hard by Covid-19, earnings from the sector in 2020 dropped from the projected sum of $2.6 million (TZS 6 trillion) projected to $598 million (TZS 1.4 trillion).

The ongoing tourism recovery efforts have been boosted by the opening of skies in the international region. The resumption of flights is a major boost to the tourism sector which was devastated by Covid-19. 

Additionally, President Samia Suluhu Hassan guided the filming and recording of the Royal Tour film in August last year. The documentary is set to promote Tanzania’s tourism position among other African destinations to the global audience and then raise travel and tourism awareness for recovery from the impacts of the COVID-19 pandemic

At the 65^th World Tourism Organization meeting, The Prime Minister, Hon. Kassim Majaliwa revealed that In the year 2021, Tanzania earned USD 1.3 Billion from Tourism Industry. He further explained that the number of tourists visiting the country increased by 48.6%. Statistics show that in the year 2021, Tanzania received 922,692 tourists from various countries compared to the year 2020 when Tanzania received only 620,867 earning revenue of USD 714.59The Prime Minister further said that it is Tanzanians’ vision that upon reaching 2025, the number of tourists visiting the country to reach 5,000,000 tourists, and earned revenue to be at USD 6 Billion.

Challenges facing Tourism Industry in Tanzania.

1. Poaching of wildlife has reduced the number of animals in National parks and Game reserves.
2. Inadequate supply of skilled manpower to handle wildlife and hotel management tourists has negatively affected the quality of customer service rendered to tourists.
3. Inadequate capital for investment to set up roads, and good accommodation facilities, and to carry out research.
4. Low levels of advertisement have made people unaware of the existence of tourist attractions in different countries, reducing the number of intending visitors and tourists.
5. The high population growth rate has resulted in increased demand for land leading to deforestation and the destruction of wildlife habitats.

4. Why should you Invest in Tanzania?

With the recent improvements in the National budget apportioned for the Tourism sector, the review of the laws affecting the Tourism sector, and the recent initiatives to promote tourism around the Globe, investors stand a chance to benefit from investments that complement the industry as explained below 

1. Tanzania’s untapped tourism potential. There are vast investment opportunities, natural and cultural attractions. The country is known for its abundant wildlife resources, cultural heritage resources, forest resources, unexploited beaches, and marine resources. Tanzania has an exceptionally beautiful and interesting destination, with 16 National Parks, 31 Game Reserves, 44 Game Controlled Areas, 4 Ramsar Sites, 33 Wildlife Management Areas, 16 Nature Reserves, 2 Marine Parks, and 16 famous historical and cultural sites. 
2. Strategic Location. that unique geographical location makes the country an unchallenged gateway to regional and international viable markets for landlocked countries.
3. Peace and Stability. Tanzania is free of ideological confrontations, ethnic problems, and many other issues that can put the country’s peace at stake.
4. Stable Investment Environment. The pro-investment attitude of the government is demonstrated by the innovative investment legislation, the increasing number of foreign direct investments, and the budgetary changes.

Non-fiscal Incentives and fiscal incentives.

• Zero percent import duty and VAT exemption on capital goods
• The recognition of private property and protection against any non-commercial risks
• Allowed to repatriate all your profits, gains, and dividends from an investment after tax.
• Favourable investment allowances and deductions.

Tourism sector is one of the sectors listed in the Tanzania Investment Centre (TIC), and therefore entitled to the incentives provided by TIC. Investors in Tourism Sector do enjoy Tax Exemption on Import duty provided under the East African Customs Management Act during the importation of specially designed vehicles for tourist transportation. 

 

Important Notice: 

 This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employ employ employees, fees, and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.