From tourism, Tanzania switches on to industrial revolution

The Tanzania budget has targeted industrial and infrastructural development as key areas of the economy for the first year of the fifth phase of government under President John Magufuli.

President Magufuli’s government in its first year in power has targeted to bring about and industrial revolution which the president said would speed up and raise Tanzania’s economy, taking over from mining, whose prices of gold had dwindled before the global markets.

Under the past government of President Jakaya Kikwete, tourism and mining were the leading economic sectors.

Tourism gains stood at US$ 2 billion per year, while mining closely touched US$1.28 billion during the past three years.

Tanzania plans to raise spending by 31 percent to 29.53 trillion Tanzanian shillings ($13.53 billion) for its 2016/17 fiscal year budget, focusing on industrial projects and infrastructure and, the Finance Minister Dr. Phillip Mpango said in his annual budget speech Wednesday evening.

Dr. Mpango said geographical location advantages based industry; labour endowment based industry; urbanization based industry; STI and ICT based industry; and human development are the key areas which the Tanzania government is taking advantage to develop manufacturing and food processing industries.

Through this budget, the government has planned to attract private investors in manufacturing industries, expecting to increase the number of industries from the existing 49,243 manufacturing industries to a bigger figure.

Infrastructural development had focused the implementation of key projects on surface transport. The government has allocated U$ 143 million to renovate the German built Central Railway Line, running from the Port of Dar es Salaam to Kigoma on Lake Tanganyika, neighbor to Congo, Rwanda and Burundi.

Dr. Mpango said the government had imposed Value Added Tax (VAT) on tourism services including supplies of tourist guiding, game driving, water safaris, animal or bird watching, park fees and ground transport services.

“This measure was put in abeyance during the inception of the new VAT Act in July 2015 in order to provide for the operators to conclude their contractual obligations entered with tourists in a year”, he said.

“The Value Added Tax is imposed on similar services in the neighbouring countries like Kenya, Rwanda and South Africa”, the Tanzanian Finance Minister said in his annual budget speech.

Other areas whose duties were raised and likely to affect tourism are alcohols and soft drinks. The government raised excise duty on soft drinks, alcoholic and non-alcoholic drinks in its plans to increase internal revenue.