-director General Charles Itembe on the current performances and future plans;
QUESTION: Can you explain the performances of EPZA during the financial year 2021/2022?
ANSWER: EPZA performance during the 2021/22 financial year has continued to demonstrate recovery from the COVID pandemic that had negatively impacted the investment climate globally.
A total of 25 new investments valued at $75million (174.90billion/-) were registered during the year, up from 17 investments registered during the previous year.
These investments will generate 4,883 new jobs, earn $118million (275.15billion/-) in export earnings and enable value addition among others.
The deliberate efforts by the government to improve the investment climate and to market the country as an investment and tourism destination is another key attributing factor to the growing number of investments in SEZ/EPZ.
Benjamin Mkapa Special Economic Zone installed at 62 acres in Ubungo Dar es Salaam remained to be the only fully operational Special Economic Zone with capital investment of $29.15 million (68billion/-).
It currently offers 4,761 permanent and temporary jobs, and has annual exports valued at $70million (163.21billion/-).
Other designated SEZs are mostly in the land acquisition stage. They include Bagamoyo SEZ, Tanga SEZ, Manyoni SEZ, Ruvuma SEZ and Nala SEZ.
Q: What were top EPZA’s priorities in the 2021/22 financial year and what have been the statuses of their achievements?
A: EPZA Priorities during 2021/22 went in line with the third National Five Year Development Plan 2021/22 to 2025/26 by focusing on SEZ development to cater for the growing demand of serviced land from new investors and existing investors seeking to expand their operations.
Another priority was to improve investor facilitation services through automation of key business processes so as to remain competitive and modern in the investment world.
Key activities that were implemented during the year after taking into account the budget ceiling that was provided includes implementation of National Flagship SEZ Projects of Bagamoyo SEZ and Kurasini SEZ by undertaking the development of on-site infrastructure; Predevelopment activities in Manyara SEZ development (i.e. undertaking of feasibility study and preparation of Master plan)
On record, the following key outputs were achieved during the period; Completion of detailed design of onsite infrastructure road network in the compensated area within Bagamoyo SEZ.
This is the area where 11 Factory Sheds are being developed, currently at various stages of development however the area lacks requisite road facilities. Procurement of contractors for actual construction of the road network is in the final stages.
Following change in goal posts of Kurasini SEZ- the Authority has extended efforts to acquire land in Dodoma and plans are underway to develop Nala SEZ in Dodoma about 1500 acres which will be developed as one of the anchor projects of the central development corridor.
As part of spreading special economic Zones Development across the country, the Authority undertook development of Manyara SEZ with phase one starting with feasibility study and preparation of Masterplan and the work began since the last quarter of 2022, and will be completed in December 2022
EPZA has partnered with TradeMark East Africa (TMEA) whereby the latter is financing the designing and development of EPZA online portal that will interface and integrate with the other systems within and outside EPZA with a view to improving investor’s facilitation services.
Automation work by the Consultancy Firm- Infowise, is ongoing to be completed by December 2022.
Q: Can you tell us the major export destinations of goods produced within EPZ/SEZ during 2021/22 and what types of goods were mostly exported?
A: The major export goods during the year in terms of the value of exports are agro-processed goods (agriculture, forestry, livestock and horticulture subsectors) which altogether accounted for 78 percent of exported goods during the year.
The destination markets and the respective products are China for Sesame, India, Vietnam, Qatar and Oman for pulses (pigeon peas, lentils, and mung beans), UAE and Europe for Instant Coffee, Europe and Australia for Avocados and Avocado oil.
Jordan, Kuwait, UAE and Qatar for processed meat, Europe (Netherlands, Italy and France) for Flowers, Vegetables and Fruits and China for Timber Veneer.
Other major exports during the year in terms of the value of exports are manufactured garments, mostly jeans which accounted for 15 percent of the total value of goods exported during the year.
Destination markets for EPZ garments are the United States of America owing to the AGOA preferential trade agreement. The remaining about 7 percent is scattered across various products like Minerals such as Gold, Copper, lead and aluminum products.
Q: What are the major plans for EPZA in the 2022/23 financial year?
A: The EPZA Budget priorities for 2022/2023 are geared towards delivering on the key aspects of; making available serviced land to both new and existing investors, improving services to existing investors through rehabilitation of the existing facility of Benjamin Mkapa SEZ, and Promoting the participation of the private sector and other Government institutions (LGAs, Pension Funds) in the development of Special Economic Zone infrastructure.
Accordingly, the key activities after taking into account the Government budget ceiling for the year are:
Implementation of Flagship SEZ Projects of Bagamoyo SEZ and Tanga SEZ by undertaking predevelopment activities (Bagamoyo SEZ- Updating Masterplan and feasibility Study to match current demands and dynamics, Tanga SEZ- preparing Feasibility Study and Masterplan);
Rehabilitation of the onsite infrastructure within the Benjamin William Mkapa SEZ, Carrying out predevelopment activities for Mara SEZ (Feasibility Study) and Development of onsite infrastructure for the proposed Nala SEZ in Dodoma.
Another role is engagement in all investment promotions in collaboration with Tanzania Investment Center (TIC) and Zanzibar Investment Promotion Authority (ZIPA).
Q: What are the major challenges EPZA is facing in the implementation of its plans?
A: The main challenge is inadequate funding for the development of Special Economic Zones to have serviced land for investment. A Serviced industrial plot is a designated plot for industrial use that is fully furnished with the requisite infrastructure for the plug-and-play establishment of industries or factories.
Such facilities are a key in attracting and retaining investments in SEZ/EPZs. Currently, most areas identified for EPZ/SEZ investment are in the land acquisition stage and require substantial compensation and delays attract interest on late payment.
Furthermore, the costs of land acquisition keep on accruing because the value of lands inflates every year. This is a major problem in the implementation of the EPZ/SEZ program.
The initiatives by EPZA to overcome the challenge include a strategic partnership with the private sector in SEZ development, Mobilizing Local Government Authorities to participate in the development of SEZ infrastructure, and alternative sources of financing SEZ development such as project finance whereby the project assets and or future revenues are the basis for raising funds.
Another challenge is the administration of the incentive regime provided as per the SEZ legal framework. There is an urgent need for harmonization of the SEZ legal framework at the EAC level so that there is more clarity and predictability of policy and legal framework by investors looking to invest in the SEZ scheme.
Q: and is the key component in attracting both local and foreign investors in both EPZs and SEZs. How is EPZA positioning on this to ensure that it is not a barrier for investors?
A: Absolutely, one of the top requirements from investors looking to invest in EPZ/SEZ schemes is serviced land. It is our primary responsibility as EPZA to ensure that our country remains competitive and attractive to Investors by making available serviced industrial land.
In carrying out this responsibility, the Authority acquires land by paying compensation, undertaking pre-development activities including Feasibility Study, Strategic Environmental Impact Assessment (SEIA), preparation of Master Plan, undertaking the detailed design of onsite infrastructure and finally construction of basic onsite infrastructure.
This includes but not limited to roads network, water and sewage system and electricity such that an area is ready for Investment. Examples, where such initiatives are actively ongoing at various stages, include Bagamoyo SEZ, Manyara SEZ, Nala SEZ- Dodoma, Mtwara FPZ, Tanga SEZ and Bunda SEZ.
As mentioned earlier, the development of special economic zones from land acquisition stage to serviced land stage is an investment with substantial resource requirements financially. Therefore we are mobilizing efforts in SEZ development to complement the central government’s efforts to include private sector and Local government authorities.
Success stories on LGAs participation in SEZ development include Nyamhongolo SEZ-Mwanza, Nyashimbi and Buzwagi SEZ in Shinyanga and Kigoma SEZ in Kigoma. These efforts aim at speeding up the development of serviced land to cater for EPZ/SEZ investors.
Q: What incentives are in place to investors interested to invest in EPZs/SEZs designated areas in Tanzania?
A: Generally, an investment proposal would be evaluated to determine its eligibility for licensing under SEZ/EPZ scheme (hence incentives) based on the prescribed criteria as per the SEZ Act, Cap 420, RE of 2012 and EPZ Act, Cap 373, R.E 2012 which provides for the legal framework governing investment in Special Economic Zones. Some General Criteria Include:
a) Minimum investment capital requirements USD 100,000 for Local Company and USD 500,000 for Foreign Company.
b) Minimum Export Turnover Requirements USD 500,000 and USD 100,000 for Foreign and Local investors respectively.
c) EPZ Scheme: at least 80% of production is exported
d) A new Investment, with demonstrable skills and tech transfer in the long run and generation of employment.
However, incentives for eligible investments include fiscal and procedural such as tax breaks (exemption from corporation tax, withholding tax, property tax for a period of 10 years), exemption from payment of Customs and Import duties including VAT on qualifying capital goods.
Others are exemption from stamp duty obligations, entitlement to immigration quota for expatriates, VAT exemption on utility charges, exemption from pre-shipment or destination inspection requirements, on-site customs inspection and treatment of goods destined into special economic zones as transit cargo.
Q: How does EPZA view the AfCFTA market for Tanzanian producers and how ready the authority is to ensure full exploitation of these benefits?
A: The AfCFTA promises to be a game changer by unlocking the trade barriers among the African nations and boosting inter-Africa trade.
EPZA recognizes that for the Country to reap the benefits of the agreement there is an urgent need to expand the manufacturing base of the country so that the country doesn’t end up being a market for goods manufactured from other African states.
To achieve this EPZA is aggressively pursuing its mandate of making available serviced industrial land, as this will attract Investments (both local and Foreign).
The idea is to make the most out of the Country’s comparative advantage in terms of the availability of raw materials, geographical position, preferential trade agreements like AGOA, and political stability to market the country well as an investment destination of choice.
For example, Tanzania is currently experiencing strong interest from International Textile and Apparel companies seeking to take advantage of the country’s market access preferences and low-cost labor, but it is unable to provide serviced industrial land and factory buildings to accommodate them.
If Tanzania cannot offer serviced land and factory sheds ready for investors to move in, install their machines, and begin operation, many of these investors will look elsewhere with ready-made serviced land and support services.
Considering the substantial resource requirements of SEZ development from land acquisition to construction of onsite infrastructure, EPZA cannot do this alone.
Therefore, some of the initiatives by EPZA is to join all hands on deck include, Mobilizing Local Government Authorities to participate in the development of SEZ, Seeking partnership with the private sector in SEZ development and advocating project finance whereby the project assets and or/future revenues are the basis for raising funds.
To-date, there is some good progress towards making available serviced land as noted earlier in some of the projects like Manyara SEZ whereby the masterplan in the final stages, Bagamoyo SEZ whereby review of the masterplan is ongoing to be completed in December 2022 with the next step being infrastructure development.
Some of the SEZ development initiatives by the local government include Nyamhongolo SEZ (Mwanza), Kigoma SEZ (Kigoma), Nyashimbi and Buzwagi SEZ (Shinyanga). More recent private sector initiatives include the Mkinga Economic Zone being developed in Tanga.
Q: What are EPZA’s perspectives regarding the Bagamoyo Special Economic Zone and what it is in its future?
A: Most people tend to think of the Bagamoyo SEZ project as just a port project while in reality, it encompasses several project components in totality.
The strategic development theme of Bagamoyo SEZ is the construction of a world class port as a transport logistics hub and gateway for international trade with a linked industrial platform for value addition and manufacturing process.
The project will spearhead the social-economic transformation of Tanzania through export-led industrialization with the development of Bagamoyo Port at Mbegani to become the primary hub port and gateway for global (International and inter Africa) trade in manufactured goods on the Eastern Sea-Board of Africa by 2030.
Given the magnitude of the project it is envisaged that its development will be in phases with both the public and private sector having an important role to play. The strategic location of Bagamoyo SEZ with its proximity to the planned Bagamoyo port makes the project a unique and attractive investment opportunity.
I therefore take this opportunity to invite interested investors in SEZ infrastructure development to seize this opportunity and present their interest in the Ministry of Investment, Industry and Trade through EPZA being the co-implementing agent.
Currently, the government through EPZA is updating the project master plan that is dated over 10 years in order to accommodate recent developments and dynamics.
Once the development of the Master Plan is completely done, all other developments in the area will be in-line with the new revised master plan.