Revitalising EPZs depends much on taxation approach

This intervention pricked the ears of observers who may have long forgotten that the issue even existed, as it was mooted sometime in the mid to late 1990s and attempts to implement it were conducted some years later.

AS number of organisations were created in that spirit, including an implementing authority, and land was set aside in Dar es Salaam and other places for the setting up of such industries.

There hasn’t been much progress on the matter since, though we have areas like Ubungo Commercial Park. The fact is that there are few industries in the Benjamin William Mkapa EPZ proper

There is also the Friendship Textile Mills, popularly known as Urafiki, where there is still a longstanding Chinese loan whose cancellation the Tanzanian government is understood to have been negotiating with China.

President Samia’s remarks had an air of realism that has for years been lacking in policy position taking, as to how central foreign investment is likely to be in the whole issue of job creation.

We have mostly looked inward, especially in the idea of self-employment of loans to empower women and youth, to few practical results.

This is largely because informal sector activities that succeed are often tied to households where surpluses are available in case of a difficult cycle in starting a business. That kind of facility can’t be guaranteed merely through or by loans.

In that the creation of EPZs is not an entirely new issue, the ringing realisation that this is a neglected sphere of government policy adds that sense of urgency and the need for workable solutions.

In that context, policy makers and implementers will no longer have the luxury of laying out conditions acceptable to us and wait for investors to come – and if they don’t they just forget about the issue in annual reports.

It should also not be about issuing statistics on proposed projects, not those which are up and running, or the level of realisation of proposed projects over a certain period of time.

Looking at the matter a little more closely, it is evident that the crucial point remains the issue of taxation and difficulties arising from the tax regime as a whole.

Export processing requires affordable taxes to enable competitiveness in foreign markets. However, if such goods have a market locally rather than being a surplus to our needs, and the wider application of taxes is onerously high rates, they could undermine those of industries not located in such zones or not under the “export processing” classification.

It mainly means that the tax incentive has to be part of wider investment attracting policy prerogatives, exactly what wasn’t assured in the earlier push for EPZs.

In that case, solving the EPZ policy conundrum would call for a tax regime that is conducive to investors without risk of being uncompetitive.