Tanzania Investment Report 2009

Stock of Foreign Private Investments (FPI) Continues to grow but with declining inflows…

The stock of FPI in Tanzania continued to depict a consistent growth trend during the past four years. Between 2005 and 2008, the stock of FPI grew by 32.3 percent to USD 6,572.8 million in 2008, representing an annual growth of 8.8 percent. In 2007, the stock of FPI recorded a sharp increase as it grew at 22.4 percent as compared to only 6.7 percent in 2009. The surge is due to high growth of stock of investments in the manufacturing, finance, and transport sectors. FDI has continued to dominate accounting for more than 90.0 percent of Total FPI during the period under review. Foreign portfolio equity investment (FPEI) continued to record a negligible share of FPI partly on account of the restrictions on capital and financial account as well as underdevelopment of the capital and securities market. The stock of Other Investments (OI) has consistently exhibited a downward trend during the period between 2005 and 2008. Its share of total FPI has declined by 3.8 percent to 4.6 percent in 2008.

The flow of foreign private investments (FPI) decreased from USD 1,145.9 million to USD 713.5 million between 2005 and 2008. The decrease is partly due to the fall in the FDI inflows from USD 935.5 million in 2005 to USD 400.1 million in 2008 following low investments recorded under direct equity, retained earnings and loans from related companies. However, between 2005 and 2006, there was a notable decline in FPI flows by almost 50.0 percent owing to negative retained earnings reported by most companies, drastic fall in loans from related companies and volatility of short-term loans.

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