The chairman of the CEO Roundtable, Mr Ali Mufuruki
In Summary
This will likely raise concern about the country’s
ability to attract investments required to boost growth and create
much-needed jobs.
Dar es Salaam. Tanzania’s competitiveness has
dropped five places in a year, signalling further deterioration in the
productivity of the economy.
This will likely raise concern about the country’s
ability to attract investments required to boost growth and create
much-needed jobs.
According to a new report released this week,
Tanzania is only better off than 23 countries on the global
attractiveness ladder, which lumps it with countries said to be tough to
live, work and do business in.
The World Economic Forum’s global competitiveness
index (GCI), which measures how productive a country is on the basis of a
set of institutions and policies, ranks Tanzania at position 125 of the
148 countries surveyed. That places it 59 slots below Rwanda and 29
below Kenya, which are the top performers in the East African Community
bloc at position 66 and 96 respectively in the world ranking.
Tanzania’s poor showing is attributed to factors
such as weak and wanting institutions, worsening corruption and
policy-making that has become less transparent.
The other shortcomings include underdeveloped
infrastructure, poor health indicators, little uptake of Information and
Communication Technologies and low enrolment in secondary schools and
universities.
“The Global Competitiveness Report 2013-2014 finds
highly innovative countries with strong institutions continue to top
international competitiveness ranking,” the Switzerland-based
organisation said in a statement.
Tanzania, which is globally ranked 5th and 35th in
female participation in the labour force and redundancy costs
respectively, held position 120 in the GCI last year and in 2011.
The local private sector sees the country’s
competitiveness declining further in the future largely due to the
government’s refusal to consult and engage key stakeholders on critical
matters. Business executives and investors accuse the government of
arbitrary policy changes, off-the-cuff decisions, inability to think
long term and operational inconveniences such as over-regulation.
According to renowned economist Ibrahim Lipumba, a
country’s level of competitiveness should not be taken for granted
since it has far reaching implications. National competitiveness, he
adds, is important in attracting and effectively utilising domestic and
foreign investment to boost growth and generate employment.
The chairman of the CEO Roundtable, Mr Ali
Mufuruki, told The Citizen on Sunday he was not surprised that
Tanzania’s ranking had slipped yet again this year and called for closer
consultation between the government and the private sector.
He wants the authorities to stop solo
decision-making on important matters of fiscal policy, as was the case
in this year’s budget. This way of doing things has rolled back a number
of hard-won reforms, he says.
Businesses are not only required to renew their licences every
year now but also pay annual fees and cope with higher land rents.
Treasury has reintroduced and raised withholding tax, imposed simcard
tax on mobile phone owners and introduced a levy on mobile money
transfers, among other unpopular charges.
Mr Mufuruki added: “By adding new taxes on sectors
that are contributing a giant share of the government revenue, the
minister is literally punishing the goose that lays the golden egg.
Besides scaring off new investors and discouraging innovation in the ICT
field, some jobs will be lost as a result of these unfortunate
policies.”
According to Mr Rene Meza, the managing director
of Vodacom Tanzania, the government should consult sectoral players more
pro-actively on matters affecting them, including regulations and
taxation.
Creating an investor-friendly environment with
policies, regulations and laws that encourage foreign investors to
accelerate their investments and expand their business would greatly
boost Tanzania’s economy. The new taxation scheme that was introduced in
the last budget, he added, had adversely affected various industries
and eroded the confidence of foreign investors.
“An area of concern is also Tanzania’s low level
of technology adoption, with very low penetration of Internet as
compared to other emerging economies in the region,” he noted.
“Additional taxes in the ICT sector will simply represent additional
challenges for Tanzania to accelerate its economic growth.”
Switzerland is the most competitive country in the
world. In Sub-Saharan Africa, Mauritius has overtaken South Africa as
the most competitive country. The two countries are numbers 45 and 53 in
the world respectively.
Other top performers in Africa are Botswana
(74th), Morocco (77th), Seychelles (80th), Tunisia (83rd), Namibia
(90th), Zambia (93rd) and Algeria (100th).
source: The citizen 