Topic 4: Business regulatory environment in Tanzania
Medium-sized businesses play a crucial role in driving economic growth. In so doing, they navigate a multifaced regulatory landscape comprising various financial, legal, and operational requirements.
Indeed. for a medium-sized business to achieve sustainable growth, it is critical to ensure compliance with policies and regulations. In this chapter, you will learn about the roles of govemnment and non govemment agencies, as well as the policies and regulations that apply in promoting and controlling medium-sized business activities. The competences developed will orient you to comply with policies and regulations governing and supporting the establishment and operation of medium-sized businesses in Tanzania.
Roles of government and non-government agencies in regulating and supporting husinesses in Tanzania
Govemment and non-govemment agencies play complementary roles in regulating and supporting medium-sized businesses in Tanzania. This is done through the provision of essential services such as information, and financial assistance. By so doing, they enable creation of environment that is conducive for medium-sized businesses and hence, contribute to the country’s economic development. In this chapter some of govemment and non-govemment agencies regulating and supporting businesses in Tanzania are discussed.
Government agencies
Govemment agencies ensure properpolicies and regulations that are developed to impact or support the business performance due to their strategy. It is important for business stakeholders to have knowledge of the laws and regulations goveming the business environment in Tanzania.
Different types of laws and regulations that can affeet business include labour and consumer protection, environmental protection, social and business legislation, and tax legislation. Additionally, there are specific laws and regulations for specific sectors such as transport, food and beverage industries, agricultural sector.
Some of the govemment agencies supporting and regulating businesses in Tanzania are the Tanzania Investment Centre (TIC). Zanzibar Investment Promotion Authority (ZIPA). Tanzania Revenue Authority (TRA), Tanzania Trade Development Authority (TanTrade), Small Industries Development Organisation (SIDO), Micro, Small and Medium Industrial Development Agency (SMIDA). and Fair Competition Commission (FCC).
These agencies are described as follows:
Tanzania Investment Centre
The Tanzania Investment Centre (TIC) was established in 1997 under the Tanzania Investment Act (1997), Cap 38, Revised Edition (R. E) 2022 as the primary agency responsible for promoting and facilitating investments in Tanzania Its key activities are geared towards coordinating. promoting, and facilitating investment in Tanzania and advising the govemment on policy matters to create a competitive, attractive, and sustainable investment climate.
Its mandate includes attracting domestic and foreign investors, facilitating business registration and licensing, and providing advisory services to investors.
For medium-sized businesses, the Centre offers support in navigating the investment landseape, including assistance in obtaining investment certificates, permits, and licenses. In addition, TIC plays a significant role in creating an enabling environment for medium-sized businesses to succeed by providing information on investment opportunities in the country, incentives, and regulations.
Zanzibar Investment Promotion Authority
Zanzibar Investment Promotion Authority (ZIPA) was established in 1986. It was initially a department under the Ministry of Finance and Economic Affairs of Zanzibar. ZIPA officially became an Authority under Act No. 4 of 2018. It is responsible for promoting and facilitating investments in Zanzibar. The authority is also mandated to ensure a conducive business environment, processing approval for new investments, facilitation of incentives and all necessary permits to investors.
Further. ZIPA provides institutional support for economic development and ensures coherent economic and business policy formulation in Zanzibar.
The Tanzania Revenue Authority
The Tanzania Revenue Authority (TRA) was established by Act of Parliament No. 11 of 1995, and started its operations on 1″July 1996. In carrying out its statutory functions, TRA is regulated by law, and i responsible for overseeing tax administration and revenue collection in Tanzania. Medium- sized businesses are subject to various tax obligations, including corporate tax, Value-Added Tax (VAT). and payroll taxes.
TRA plays a vital role in ensuring compliance with tax laws and regulations, providing guidance and assistance to medium-sized businesses in fulfilling their tax obligations. In keeping up with technological advancements, TRA offers online platforms and services for tax registration, tiling. and payment, streamlining tax processes. and enhancing compliance among medium-sized businesses. In Zanzibar. the Zanzibar Revenue Authority (ZRA) works hand in hand with TRA to enhance tax administration.
Tax compliance by medium-sized enterprises allows the government to carry out its functions like provision of education, health and infrastructure development effectively. This in turn helps to mitigate medium-sized business challenges hence improving their performance.
Small Industries Development Organisation
Small Industries Development Organisation (SIDO) was established under the Act No. 28 of 1973. Since its establishment in October 1973 under the then Ministry of Trade. Industry, and Marketing. SIDO has played a significant role in nurturing medium- sized businesses in Tanzania.
Originally tasked with developing the small industry sector, SIDO has also evolved to provide comprehensive support to medium-sized enterprise development by providing access to infrastructure, technology, and skills development.
Moreover, SIDO collaborates closely with other government agencies and international donors, including Tanzania Bureau of Standards (TBS). Swedish International Development Cooperation Agency (SIDA), and the World Bank (WB) to implement programs aimed at supporting businesses in Tanzania. These initiatives encompass technology development and transfer which has significantly contributed. to the growth and competitiveness of medium-sized enterprises in Tanzania.
Generally, SIDO capitalizes on strategic interventions and partnerships to remain a key catalyst for the development of businesses in Tanzania, and fostering economic growth in the country.
Micro, Small, and Medium Industrial Development Agency
The Micro, Small, and Medium Industrial Development Agency (SMIDA) was established by Act No. 2 of 2018 as an industrial development agency under the Ministry of Trade and Industries implementing almost the same activities as SIDO in Zanzibar. The core functions of the Agency are to advise, develop. coordinate. promote, and offer every form of support to micro, small, and medium-sized industries in Zanzibar. Its support spans from the early stage of formalisation, marketing of the product to graduation of SMEs to large industry category.
In addition, SMIDA facilitates affordable credit schemes and other financial and non-financial services through the Small and Medium Industrial Development Fund (SMIDF) in Zanzibar. Fair Competition Commission
The Fair Competition Commission (FCC) was established under Act No. 8 of 2003 with a crucial role in ensuring fair and competitive market practices in Tanzania. FCC is mandated to intervene in markets to prevent anti-competitive behaviour, market dominance, price fixing, and other practices that could harm businesses and disrupt market stability. By curbing such practices, the FCC fosters an environment where medium-sized enterprises and other businesses can compete fairly in the market. Further, the FCC’s oversight extends to addressing abuse of domination
and serutinizing mergers and acquisitions that lead to market concentration which are detrimental to medium-sized businesses.
Through these interventions, the FCC safeguards enterprises by ensuring they have equitable opportunities to grow and succeed in the marketplace.
The roles of government agencies in promoting businesses.