Browsing: NTBs

The 2022 Tanzania Foreign Exchange Regulations will have implications on Traders and investors not only in Tanzania but also the EAC. www.theexchange.africa

These foreign exchange controls and restrictions will pose challenges for international businesses and foreign investors in Tanzania.

When introducing approvals and making them necessary for just about every kind of transaction, foreign exchange restrictions add a level of complexity to investors’ business model and implementation strategy.

The Tanzania Foreign Exchange Regulations require authorisations and justifications for several areas including exporting, importing or simply where a non-resident is directly investing in Tanzania.

While there could be a problem with income being paid outside of Tanzania for activities that are taking place in Tanzania, putting foreign exchange controls rarely constitutes the answer to encourage investors to keep their funds in the country.

Because EAC products have been denied preferential market access as a result of trade sanctions, intra-EAC trade is currently at a low of 15 per cent, which will worsen employment opportunities, market access, and the economies of scale of our sectors for East Africans as a whole.

NTBs not only increase the time and cost of doing business across borders, but they also reduce the competitiveness of EAC-produced goods.

NTBs persist and grow because of the lack of an effective EAC trade dispute settlement system (the EAC Trade Remedies Committee) and the poor speed of resolution of NTBs by the EAC Reginal Monitoring Committee (EMC).

Dr. Mathuki has hit the ground running and having come from being at the helm of the East African Business Council (EABC), a regional business arm of the EAC, he understands the struggles that the common trader faces while doing business within the bloc.  This makes him an ideal leader as he makes decisions based on the experiences he has been encountering when he was on the other side of the table.  

Dr. Mathuki has now vowed to improve trade in the region which currently stands at 15 per cent by removing some of the challenges threatening the stability of regional trade.  According to him, some of the persistent NTBs include restricted market access for goods and un-harmonized charges that continue to frustrate intra-EAC trade. He says that investment by increasing transaction costs and curtailing movement of goods are contributing to the low intra-EAC trade.  “EAC intra-regional trade is under 20 per cent, and it is my mission to ensure that this grows to at least 50 per cent in the next five years,” he said. 

While the African Continental Free Trade Area (AfCFTA) has become a reality, developing robust infrastructure is crucial to its operationalisation and success. 

For maximum benefit, member states to the trade agreement must be connected physically and digitally through hard infrastructure and connected in the harmonisation and coordination of processes through soft infrastructure. 

The pact connecting 1.3 billion people across the 55 African countries with a combined gross domestic product (GDP) valued at US$3.4 trillion faces huge challenges that need quick responses. These responses range from the dependence of African economies on commodity production and exports, the lack of diversification which has caused a mismatch between supply and demand, tariffs and non-tariff barriers (NTBs), inefficient transport infrastructure and poor trade logistics to high-security risk among others.