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IV. TRADE POLICIES BY SECTOR
(1) INTRODUCTION
1. The economic reforms undertaken by Tanzania have affected all sectors of the economy.
Since the process of reform commenced in 1985, the Government has been retreating from
involvement in most economic activities and has progressively encouraging the emergence of a
private sector.
2. The process of privatization is also moving ahead in all sectors, although the privatization of
large parastatals has lagged because of the inherent difficulties associated with creating the
appropriate legal and regulatory framework necessary for the successful emergence of
private-sector-led activities.  The Government has also placed great importance on the social aspects
of privatization, which has slowed the process.
(2) AGRICULTURE AND RELATED ACTIVITIES
(i) General
3. Since the mid 1980s, the Tanzanian economy has undergone a fundamental transformation
that has seen the withdrawal of the Government from direct involvement in production, processing,
and marketing activities that can be performed by the private sector.  The Government has liberalizedthe marketing of agriculture products, and input prices have been decontrolled.  Subsidies to the
agriculture community have been removed and monopolies of cooperatives and marketing boards
have been eliminated.  The Government has retained only its policy formulation responsibilities.
4. Tanzania’s agriculture sector constitutes between 50% and 60% of GDP and is a major
contributor to foreign exchange earnings, providing more than 50% of all of Tanzania’s exports
(Table IV.1).  Major export crops include coffee, co tton, cashew nuts, tobacco, tea, sisal, pyrethrum,
oil seeds, flowers, cocoa, vegetables and fruit, and vanilla.
Table IV.1
Contribution of agriculture to Tanzania’s exports, 1991-97(T Sh billion and per cent)
1991 1992 1993 1994 1995 1996 1997
Agricultural exports 42.7 67.9 104.0 172.0 218.6 258.7 218.9
Other exports 33.3 56.1 77.2 93.2 171.8 196.7 219.3
Total 76.0 124.0 181.2 265.2 390.4 455.4 438.2
Percentage of total 56.2 54.8 57.4 64.9 56.0 56.8 50.0
Source :  Ministry of Agriculture and Co-operatives, (1998).  Basic Data:  Agriculture and Livestock Sector
1991/92-1997/98 .
5. In 1997, the National Agriculture Policy was formulated to take into account the changing
economic and social environment in Tanzania and to clearly outline objectives consistent with the
development of the private sector.1  The Agriculture Policy encourages private sector participation in
the production and trade of agricultural activities and outlines the Government's role as provider of
support services, market information, and regulatory regimes.  The specific objectives of the
Agricultural Policy include:
                                                     
1 Ministry of Agriculture and Cooperatives (1999a).WT/TPR/S/66 Trade Policy Review
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- to assure basic food security for the national standards of nutrition by increasing
output, quality, and availability of food commodities;
- to improve the standard of living in the rural areas through increased income
generation from agricultural and livestock production, processing, and marketing;
- to increase foreign exchange earnings by encouraging the production and increased
exportation of crops and livestock products;
- to produce and supply raw material;
- to develop and introduce new technologies for the increased productivity of labour
and land;
- to promote integrated and sustainable use and management of natural resources such
as land, soil, water, and vegetation in order to conserve the environment;
- to provide support services to the agriculture sector that cannot be provided
efficiently by the private sector;  and
- to promote specifically the access of women and youth to land, credit, education, and
information.
6. According to the Ministry of Agriculture and Cooperatives, production both of food and
export crops has generally improved.  Production declines, aside from those caused by severe climatic
conditions, have been experienced due to price increases for imported inputs, such as fertilizer and
agri-chemicals.
7. The performance of the cooperative sector in Tanzania, which has existed in one form or
another since independence has been very unsatisfactory.  The most recent cooperative sector reform
was enacted with the passage of the Cooperative Act of 1991.  This Act established cooperatives as
private sector entities with no further government involvement.  Operation and management of thesesocieties was given to the membership.
8. Heavy rains in the 1996/97 planting season followed by drought in the 1997/98 season led to
a precarious food security situation in Tanzania.  These conditions resulted in a serious food shortage,
of approximately 600,000 tonnes, in 1998/99 leading to a state of hunger for 1.1 million people in
various parts of Tanzania.  In order to improve food security, Tanzania stockpiles 150,000 tonnes in astrategic reserve.  Currently, however, the reserve is depleted.  The stockpile is bought and sold at
market prices.  In addition, export restrictions are currently in effect for white maize, rice, cereals,
beans, and wheat due to the severe concerns about food supply.
9. Government controlled regulatory boards have been transformed into crop boards.  These
private entities are responsible for instituting quality control standards that must be met in order forproducts to be exported.  Marketing boards for food stuffs have been eliminated.
10. As a result of agricultural sector reforms, all inputs have been decontrolled.  As the
availability of subsidized fertilizer has been eliminated, the consumption of fertilizer has decreased,
with negative impact on crop yields.  The Government has created the Agricultural Input Trust Fund
(AITF) to provide assistance to brokers of agricu ltural inputs and, indirectly, to farmers.  The fund
provides concessional rates for agricultural inputs but operates as a revolving fund, with recovery
rates around 90%.Tanzania WT/TPR/S/66
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Chart IV.1                                      
Average tariff rates on agricultural products by HS chapter, 1999
051015202530
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24Per cent
Source :  WTO Secretariat calculations, based on data prov ided by the Tanzanian authorities.Av erage rate
 (21.0% )
Chapter
01
020304 0506070809
10
11121314151617181920212223
24Description
Live animals
Meat and edible meat offalsFish and crustaceans, molluscs and other aquatic inv ertebratesDairy produce, birds eggs, natural honey, edible products  of animal origin  Products of animal origin, n.e.s.Liv e trees and other plants;  bulbs, roots and the like;  cut flow ersE dible v egetables and certain roots and tubersEdible fruit and nuts;  peel of citrus fruit or melonsCoffee, tea, mate and spices
Cereals
Products of the milling industry;  malt;  starches;  w heat glutenOil seeds and oleaginous fruits;  miscellaneous grains, seeds and fruitLacs;  gums, resins and other v egetable saps and extractsVegetable plaiting materials;  vegetable products n.e.s.Animal or v egetable fats and oils and other cleav age products;  prepared edible fats; etc.Preparations of meat, or fish or of crustaceans , molluscs or other aquatic invertebratesSugars and sugar confectioneryCocoa and cocoa preparationsPreparations of cereals, flour, starch or milk;  pastrycooks' productsPreparations of vegetables, fruit, nuts or other parts of plantsMiscellaneous edible preparationsBev erages, sp irits and  v inegarResidues and waste from the food industries;  prepared animal fodder
Tobacco and manufac ture d tobacco s ubs titutesWT/TPR/S/66 Trade Policy Review
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11. About 70% of Tanzania’s crop area is cultivated by hand hoe, approximately 20% by
ox-plough, and 10% by tractor.  As a consequence of attempts to promote mechanization and
modernization in agriculture, imports of all agricultural machinery, inputs, and seed are granted a
tariff waiver.  Export taxes amounting to 2% on agricultural products were eliminated in July 1998.
12. The average tariff rate for agricultural products is 21% (Chart IV.1).
(ii) Policy by product category
13. Traditional export crops include coffee, cashew nuts, cotton, tobacco, tea, sisal and
pyrethrum.  The production of these crops shows no clear trend;  annual fluctuations are largely
influenced by climatic circumstances, incidence of pests and diseases, and short-term price variations.
With only a small share of the international market (except for sisal and pyrethrum), increased
production of these commodities would not affect export prices.
14. Non-traditional export crops include those whose availability depends on surplus production,
primarily oilseeds, pulses, horticultural items, spices, and livestock.
(a) Coffee
15. Coffee is Tanzania’s most important export product constituting approximately 18% of
commodity exports.  Export earnings from coffee have dropped in the past few years as a result oflower world prices and reduced production.  In 1996, coffee exports totalled 64,000 tonnes, while in
1997, only 40,000 tonnes were shipped.
16. The area under coffee has more than doubled in the past 20 years, but annual production has
remained stagnant.  Production in the traditional co ffee growing regions has declined due to a variety
of agricultural and economic factors, such as old age trees and increased incidence of disease, and
because of the reduced use of inputs and the low returns to producers in the face of escalating costs.
(b) Cashew nuts
17. Cashew nuts were Tanzania’s second largest export commodity in 1998, constituting
approximately 18% of the total.  Production gr ew from 41,200 tonnes in 1991/92 to 81,700 tonnes in
1995/96.  As with other commodities, production fell in 1996/97 (to 65,400 tonnes) as a result of
climatic conditions.
18. In the period 1991-96, exports of cashew nuts increased from 19,000 tonnes to
121,200 tonnes.
2  In 1997, exports fell more than 50%, to 56,700 tonnes.
19. The Cashew Nuts Development Fund was created to address the significant reduction in the
use of inputs.  Like other crop boards, the fund places a levy on exports:  1% is levied to promote
processing capabilities;  another 1% goes to support research, extension and training services.
(c) Tobacco
20. Tobacco production has become an increasingly important cash crop for Tanzania;  it was, the
third most significant exported commodity in 1998, constituting about 9% of exports.  Tobacco
exports in 1991 amounted to 8,600 tonnes and reached 24,000 tonnes in 1996, before falling
somewhat in 1997.
                                                     
2 Ministry of Agriculture and Cooperatives (1999b).Tanzania WT/TPR/S/66
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21. Production grew from 23,000 tonnes in 1991/92  to 35,400 tonnes in 1996/97.  Increased
production of tobacco has been limited by the low level of expenditure on technology and inputs.  The
Tanzanian Government has expressed concerns about the environmental impact of tobacco curing but
has committed to work with farmers to alleviate some of the problems associated with tobacco
production.
(d) Cotton
22. In previous years cotton was one of Tanzania's largest export crops.  Exports in 1995
amounted to 70,900 tonnes, grew to 89,700 tonnes in 1996, but fell to 70,600 tonnes in 1997.  In
1998, cotton was Tanzania's fourth largest export commodity, accounting for 8% of total exports.
23. Cotton production in recent years has been on an upward trend, but suffered a setback in the
past few growing seasons due to climatic conditions.  Yields have been lower than in other Africancountries, which the Government ascribes to the low use of inputs such as fertilizer and pesticides.
24. The Cotton Board, one of a number of industry crop boards, promotes the sector and oversees
quality control.  It places a levy of 2% on exports in order to promote processing capabilities and to
support research, extension and training services.
25. The Tanzanian Government controls a ginning company, which is scheduled to be privatized
by the Parastatal Sector Reform Commission (PSR C).  The processing firm purchases inputs at
market rates and does not operate under any government subsidization.
(e) Tea
26. Tea production increased from 18 tonnes in 1990/91 to 25.5 tonnes in 1994/95, but suffered a
setback during 1995-97.  Nonetheless in 1998 it was Tanzania's fifth largest export crop, accounting
for 5% of the total.  Most tea production is exported.
27. Since the liberalization of the tea industry in 1997, numerous new companies have begun
blending and packing operations, which previously were under the monopoly of the Tanzania Tea
Blenders.
(f) Oilseeds
28. Tanzania grows both industrial (castor) and edible oilseeds (sunflower, groundnuts, sesame,
copra, cottonseeds and soya bean).  There is a small processing sector in Tanzania, but imports ofsubsidized oilseed from the European Union has undermined the viability of Tanzania’s producers
and processors.
(g) Pulses
29. Pulses include cowpeas, pigeon peas, green beans, common beans, yellow grams, and lentils.
Tanzanian producers have been unable to take advantage of the export potential of these productslargely because of inadequate research and extension services combined with disorganized domestic
and export marketing systems.
(h) Spices
30. Zanzibar, at the heart of Tanzania’s spice production, grows black sweet and hot pepper,
chillies, ginger, onions, coriander, garlic onions, cinnamon, vanilla, and cardamom.  The exportWT/TPR/S/66 Trade Policy Review
Page 52
prospects are especially good for cardamom, onions, and dry pepper.  Market information is not
readily available and inadequate storage technology has made the spice market subject to seasonal
variation.
(i) Fruit, vegetables, and horticultural products
31. Tanzania’s climatic conditions can accommodate the production of a wide range of fruit,
vegetables, and flowers.  The most important fruit  include pineapples, passion fruit, citrus fruit,
mangoes, peaches, pears, and bananas.  International markets for these products offer good
opportunities for Tanzania producers.
32. Tanzania has a small horticultural industry, which started in the Arusha region in 1987.  Some
development can be attributed to expansion by horticultural producers just across the border in Kenya.
This sector is viewed as promising, although diff iculties of transportation are still being encountered.
Currently, most horticultural products are being trucked from the Arusha region to Nairobi for
shipment to international markets.
(j) Livestock farming
33. Approximately 60 million hectares of rangelands are ideal for livestock grazing.  According
to an agricultural census carried out in 1994/95, the livestock sector contributes about 18% to GDP, ofwhich beef constitutes 40%, dairy 30%, and other livestock the remaining 30%.  The livestock sector
as a whole contributes approximately 30% to agricultural GDP.  Grazing capacity is estimated to be
20 million animal units.
34. Livestock exports are limited to cross-border trade.  Meat exports to the European Union have
been barred because of Tanzania’s inability to meet standards of quality.  Tanzania last received a
certification from the EU in 1967.
(k) Dairy
35. Milk production has not kept pace with population growth and per capita milk consumption
has declined slightly from 22 to 20 litres.  Per capita consumption in Tanzania is among the lowest in
Africa and far behind the world average of 105 litres.
36. Traditional small producers provide approximately 70% of domestically produced milk, with
the balance coming from dairy farms.  Approximately 15 million litres of milk is imported annually tomake up the shortfall.
37. Although Tanzania’s dairy producers face numerous domestic difficulties, it is reported that a
significant disincentive for further reform is that the industry is being undermined by imports of
subsidized production from other countries.
(l) Fisheries
38. In 1997, fisheries contributed approximately 3% to Tanzania’s GDP.  Fish is the main source
of protein for nearly one third of the country’s population and provides employment for about
80,000 fisherman;  an additional 500,000 derive their economic livelihood from the sector.  The valueTanzania WT/TPR/S/66
Page 53
of fisheries exports in 1998 was approximately US$84 million (Table IV.2).3  The volume of
exported fishery products has risen significantly since 1994 (Chart IV.2).
Table IV.2
Fisheries exports, 1994-98
(Tonnes, T Sh and U.S. dollars)
Value (f.o.b)
YearWeight
('000 tonnes)(T Sh million) (US$ million)Royalty
(T Sh million)
1994 12.6 9,772.9 18.7 22.5
1995 17.3 11,932.0 20.2 629.6
1996 25.5 24,837.7 42.3 1,513.5
1997 32.1 41,879.8 68.3 2,512.7
1998 46.7 54,837.0 83.8 3,290.2
Source: Government of Tanzania.
0 5 10 15 20 25 30 35 40 45 5019941995199619971998
Source :  Ministry of Natural Resources and Tourism.Weight (thousand tonnes)Chart IV.2
Tanzania's fishery exports, 1994-98
39. Tanzania is well endowed with water resources, sharing three of the largest inland lakes in
Africa (Lake Victoria, Lake Tanganyika, and Lake Nyasa), a diverse river system, numerous
wetlands, and an ocean coast line.
                                                     
3 Ministry of Natural Resources and Tourism (1997).WT/TPR/S/66 Trade Policy Review
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40. In 1997, the Government issued a National Fisheries Sector Policy and Strategy Statement to
better conserve, manage, and develop the sector on a sustainable basis.  The Fisheries Act (1970) is
the major legal instrument for fisheries policy.  Other instruments include the Territorial Sea and
Exclusive Economic Zone Act (1989), the Tanzania Fisheries Research Institute Act (1980), and the
Marine Parks and Reserves Act (1994).  Most of these laws are acknowledged by the Government to
be in need of revision and updating.
41. The Tanzania fishery is operated wholly by the private sector.  Primary fishing is reserved for
Tanzanian nationals, and export of unprocessed fish is prohibited.  There are, however, no restrictions
on foreign direct investment in the secondary or tertiary sectors, such as fish processing facilities.
The Tanzanian fishery currently supports approximately 12 processing facilities.
42. Sanitary and phytosanitary issues are a major obstacle to Tanzania’s ability to export
increasing quantities of fish products.  Exports of Nile perch collapsed recently as a result of a ban
imposed by the European Union.  The EU has alleged that pesticide levels in Lake Victoria are unsafe
for human consumption.  Prior to the ban, 80% of Nile perch was destined for the EU market.
43. The crustacean fishery (shrimps and prawns) is not subject to the same restrictions;  both
foreign and domestic fleets are licensed by the Tanzanian Government.  Licences are granted withoutconsideration of nationality.  Tanzania has been unable to sell crustaceans to the U.S. market due to
prohibitions related to the use of turtle excluder devices.
(m) Forestry
44. Tanzania has about 33.5 million hectares of forests and woodlands.  Almost two thirds
consists of woodlands on public property, which lack proper management. About 13 million hectares
are identified as forest reserves, of which 80,000 hectares are under plantation forestry.  Deforestation
continues to be a serious problem:  estimates suggest that between 130,000 and 500,000 hectares arelost per annum to agriculture, overgrazing, and other exploitative activities.
45. Tanzania’s forestry sector is estimated to  contribute approximately 3% to GDP and
constitutes approximately 10% of Tanzania’s exports (Table IV.3).  These statistics on forestry’s
contribution to the Tanzanian economy have been relatively consistent since 1989.
4  Employment in
the forestry sector amounts to about 700,000 person years in both formal and informal activities.
46. The Ministry of Natural Resources and Tourism is responsible for implementation of the
National Forest Policy.  The overall goal of the policy is to enhance the contribution of the forest
sector to the sustainable development of Tanzania and the conservation and management of its natural
resources.
47. The Ministry is responsible for the regulation of trade in forestry products.  Lumber from all
species can be exported, but current restrictions limit the export of all logs except those from teak and
pau rosa.  Charcoal exports are also prohibited.  The Ministry grants licences for product exports.
Tanzania does not impose any restriction on foreign direct investment in the forestry sector.
                                                     
4 Ministry of Natural Resources and Tourism, (1998).Tanzania WT/TPR/S/66
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Table IV.3
Summary of exports of forestry and beekeeping, 1995-99
1995/96 1996/97 1997/98 1998/99
Products VolumeValue
US$'000VolumeValue
US$'000VolumeValue
US$'000VolumeValue
US$'000
Logs 5,295.0 m3908.30 2178.0 m3436.00 9,525 m36,191.60 3,896.52 m3717.95
Timber 130.0 m314.50 51.0 m35.70 8,630.8 m31,035.70 8,065.86 m3684.46
Timber ebony 74.2 m3923.90 28.6 m3355.00 107.5 m31,357.60 122.26 m31,193.20
Flooring wood
tiles863.7 m32,613.50 329.7 m3998.00 1,125.5 m33,405.60 67.76 m3128.40
Wood curvings
ebony165,493 pcs. 557.80 52,197 pcs. 105.00 264,512
pcs.891.50 253,124 pcs. 967.64
O t h e r . . . .. . . .. . . . 3 , 6 4 5 . 3 4  m3481.20
Tree seeds 15.6 t. 144.78 .. .. .. .. 215.85 kg. 11.64
Beeswax 202.0 t. 677.90 202.0 t. 678.00 316 t. 1,044.80 332.00 t. 1,202.70
Honey .. .. 2.46 t. 2.10 225 t. 274.90 39.00 t. 35.53
Total 5,840.68 2,578.96 14,180.80 5,422.72
.. Not available.
Source: Department of Forestry and Beekeeping.
48. Tanzania’s wood products industry reports that quality requirements are keeping its products
from the export market.
49. Tanzania is a member of the International Tropical Timber Organization.  It is also a member
of CITES, the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
(3) MINING , AND ENERGY
(i) Mining
50. Gold and diamonds have traditionally been the primary minerals produced in Tanzania.
However, other minerals produced in the country include gemstones, phosphates, salt, coal, kaolin,
building materials (gypsum and limestone), and tin (Table IV.4).
51. The Government’s vision for the mineral sector for the next 10-30 years is to have a strong,
vibrant, well organized private-led sector.  Encouragement is being given to both small- andlarge-scale mining with emphasis on safety and environmental concerns (Chart IV.3).  The
Government target is for the mining sector to co ntribute at least 10% to GDP;  the current level is
approximately 1.5%.  The mining sector’s perfor mance has improved somewhat since 1994 when its
contribution to GDP was less than 1%.
(a) Gold
52. Gold production has taken place in Tanzania since the beginning of the century.  Production
has varied considerably and at times has been entirely from individual prospectors or artisanal minersworking with hand tools.  In the 1950s and 1960s, mechanized mining produced an increased yield,
but as recently as 1995, there was no steady production of gold from any mechanized mine.WT/TPR/S/66 Trade Policy Review
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Table IV.4
Mineral production, 1993-98
Mineral 1993 1994 1995 1996 1997 1998
Diamonds (carats) 40,847 25,540 49,538 126,670 123,090 97,830
Gold (kg.) 3,370 2,861 320 318 232 427
Gemstones (kg.) 32,979 48,507 111,404 142,160 509,489 48,518
Salt (tonnes) 83,400 84,289 105,000 86,700 72,511 75,000
Phosphate (tonnes) 2,219 0 6,686 717 2,120 0
T i n  ( t o n n e s ) 1 2930 0 0
Gypsum (tonnes) 52,243 53,000 42,000 55,430 46,320 59,066
Coal (tonnes) 40,248 45,027 43,200 520,000 28,448 0
Kaolin (tonnes) 474 541 596 1,332 898 0
Limestone (tonnes) 1,617,991 1,740,000 1,062,081 1,200,000 .. 1,181,233
Graphite (tonnes) .. 100 6,700 0 .. 0
.. Not available.
Source: Tanzania Ministry of Energy and Minerals.
Chart IV.3                                               
Large-scale mineral rights granted, 1990-98
11 1030
1340
2157
91872
59132
100192351
321
27 94 1 513 11
050100150200250300350400
1990 1991 1992 1993 1994 1995 1996 1997 1998Number of licences granted
Source :     Ministr y of Ener gy and Minerals.Reconnaissance Prospecting Mining
53. Gold exploration has grown rapidly during the 1990s focusing on the area around
Lake Victoria.  Major projects in this area include projects by Resolute Ltd/Ashanti Goldfields,Kahama Mining, Afrika Mashariki, Randgold Re sources/Pangea, Anglo-American/Pangea/Madaba,
Ashanti Goldfields, East Africa Mines, Anglo American, and Anglo American/Kabanga Nickel.Tanzania WT/TPR/S/66
Page 57
54. The expected capital investment for the gold mining sector is over US$600 million, most of
which will be realized in the next two to three years.  The estimated gold resources for these mines is
approximately 25 million troy ounces with annual production estimated to be around
1 million ounces.5  Basic refining capacity will be onsite for most of the mines, and bullion with 90%
purity will be exported in the form of gold brick.
55. Tanzania has faced significant problems with the smuggling of gold and gemstones, which
undermines the collection of tax revenues and leads to underreporting of mineral exports.  Efforts are
being undertaken to address smuggling through better enforcement of licensing and the simplification
of export procedures.
56. The viability of Tanzania’s gold mines is highly dependent on international gold prices.
Recent price declines have not yet affected the operational plans for gold mines in the process ofcommencing operations, but any further depression of gold prices could jeopardize Tanzania’s
encouraging prospects in this sector.
57. Gold exports in 1998 totalled US$3.3 million (Table IV.5).  By 2002, when additional gold
mines are expected to be producing, export ear nings are expected to rise to approximately
US$250-300 million.
Table IV.5
Mineral exports 1993-98
1993
Quantity1994
Quantity1995
Quantity1996
Quantity1997
Quantity1998
Quantity
Mineral (US$ million) (US$ million) (US$ million) (US$ million) (US$ million) (US$ million)
Diamonds 1 (carats) 39,885
(5.3)22,567
(2.9)44,492
(4.3)126,670
(15.5)123,089.70
(16.6)95,337
(11.1)
Diamonds 2 (carats) 73,674
(0.1)1,703
(0.1)9,541
(0.2)8,027
(0.2)2,100
(0.1)..
Gold (kg.) 3,364
(31.4)2,803
(27.39)322
(3.29)301
(2.78)232
(1,997)427
(3.34)
Gemstones (kg.) 32,979
(3.9)48,507
(6.46)94,296
(7.28)137,165
(9.87)124,570
(7.94)48,518
(8.13)
Salt (tonnes) 6,755
(0.6)1,596
(0.1)0
(0)143,331
(1.2)1,030
(0.06)..
Phosphate (tonnes) 3,541
(0.1)0
(0)1,149
(0.04)235
(0.007)2,120
(0.07)600
(0.02)
Tin (tonnes) 12
(0.05)6
(0.018)3
(0.003)0
(0)0
(0)..
Gypsum (tonnes) 3,000
(0.009)400
(0.003)500
(0.008)30
(0.001)0
(0)..
Graphite (tonnes) .. .. 100
(0.09)163
(0.12)1,465
(0.8)..
Total (US$ million) (41.5) (36.9) (15.2) (29.7) (27.51) (22.6)
.. Not available.
Source: Tanzania Ministry of Energy and Minerals.
                                                     
5 Ministry of Energy and Minerals (1998a).WT/TPR/S/66 Trade Policy Review
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(b) Diamonds
58. Tanzania has been a significant producer of diamonds for several decades.  The major
diamond producer is Mwadui Mine near Shinyanga.  Tanzania’s share of world supply decreased
from about 1% in the 1970s to 0.1% in the 1990s.6  Export earnings have fluctuated in the past few
years with exports of about US$11.1 million in 1998, down from a high of US$16.6 million in 1997.
Projections indicate that earnings will stay flat, at about US$13 million in the next two to three years.
(c) Gemstones
Coloured gemstones (excluding diamonds) are an increasingly important mineral product for
Tanzania.  The country is best known for Tanzanite, but it also produces ruby, sapphire, emerald,
garnet, tourmaline, and other gemstones.  In 1989, about 10 tonnes of precious and semi-precious
stones were produced.  Most of production continue s to be smuggled, but the export value rose from
US$90,000 in 1981 to US$8.1 million in 1998.
(ii) Energy
(a) Electricity
59. Ninety percent of energy in Tanzania comes from wood fuel.  Only 10% of Tanzania’s
population have access to electricity.  Per capita usage is among the lowest in Southern Africa atabout 57 kWh.  Electricity consumption in Tanzania has been rising since 1991, as have imports of
electricity because of insufficient capacity (Table IV.6).
60. Tanzania’s economy suffers from power shortages and periodic power failures.  Some of the
recent shortages can be attributed to difficulties  faced by TANESCO, the state-owned utility, due to
the drought, which has reduced the output from a number of Tanzania’s hydroelectric generation
facilities.  However, even without the drought, Tanzania’s power system has been increasingly unable
to meet the power demands of the country’s growing economy.  TANESCO’s problems have been
compounded as it has been able to collect electricity tariffs on only about 50% of the power it
produces.
Table IV.6
Electricity consumption 1991-98
(kWh million)
Source 1991 1992 1993 1994 1995 1996 1997 1998
Hydro 1,712.98 1,649.00 1,796.66 1,499.38 1,538.78 1,747.76 1,449.16 2,077.62
Thermal 95.57 269.34 180.81 293.15 309.74 211.30 485.00 24.79
Imports .. .. .. .. 32.38 32.73 44.00 45.04
Total 1,808.55 1,918.34 1,977.47 1,792.53 1,880.89 1,991.79 1,978.16 2,147.45
.. Not available.
Source:  TANESCO.
61. Efforts are under way to reform TANESCO’s operations and to introduce private sector
participation.  Plans for the privatization of power distribution are being developed first, due to the
greater economies of scale that can be achieved.  But a regulatory framework does not yet exist and isnot likely to be in place for another two to three years.  A major issue related to privatization will be
                                                     
6 Ministry of Energy and Minerals (1998b).Tanzania WT/TPR/S/66
Page 59
how to address the problems of rural electrification.  Consideration is being given to the creation of a
Rural Electrification Fund.
62. Currently, the Minister of Energy and Minerals is responsible for energy regulation.  There
are five tiers of electricity tariffs:  light industry;  heavy industry;  household;  street lighting;  and
bulk sales to Zanzibar (Table IV.7).  The manufacturing sector in Tanzania complains, on an ongoing
basis, that power costs are too high, particularly in comparison to those in neighbouring countries.Such high costs can be a considerable obstacle to the development of the manufacturing sector.
Table IV.7
Electricity consumption, 1992-98
(Per cent)
Consumer category 1992 1993 1994 1995 1996 1997 1998
General 53.90 54.20 56.49 54.33 59.85 58.00 59.00
Low voltage 9.65 8.70 9.63 4.16 16.76 18.00 16.00
High voltage 31.74 33.20 29.29 31.70 18.37 19.00 18.90
Public light 0.93 0.80 0.90 0.62 0.18 1.00 0.10
Bulk sales to Zanzibar 3.77 3.10 3.69 5.08 4.84 4.00 6.00
Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source:  TANESCO.
63. A gas to electricity project at Songo Songo Island, valued at US$350 million, is being
developed and will come on line in 2002.  This and other plant modernization will expand Tanzania’s
generating capacity.  Another natural gas discovery has been made at Mnazi Bay, but commercialdevelopment is in not currently being contemplated.
64. Tanzania is continuing discussions with neighbouring countries with respect to a regional
power grid.  The EAC countries (Tanzania, Kenya, and Uganda) are in the planning stages of such an
arrangement.  Tanzania is also part of discussions with respect to the Southern Africa Power Pool,
which is developing an interconnection to Zambia.
(b) Petroleum
65. The liberalization of the petroleum sector is an important part of the efforts to increase the
efficiency of the economy.  Tanzania does not produce any petroleum so all petroleum is imported
and is subject to customs and excise duties, with significant exceptions.
66. Tanzania has one oil refinery, which is a joint venture (50-50) with AGIP of Italy.  The
Tanzania-Italian Petroleum Refinery (TIPER) has required ongoing government subsidies to continue
its operations.  The Government is considering various options in order to end this subsidizationwhich is scheduled to terminate on 1 January 2000.
67. Distribution of petroleum is in the hands of the private sector.  Although wholesale price
controls exist for imported products and those out of the refinery, retail prices for petroleum were
decontrolled in June 1999.
(4) M
ANUFACTURING
68. Tanzania’s manufacturing sector is underdeveloped.  The sector is dominated by food
processing and beverages, agri-business, light manufacturing, construction, soaps and detergents,
leather, packaging, textiles, and footwear.WT/TPR/S/66 Trade Policy Review
Page 60
69. According to the Bank of Tanzania, the manufacturing sector contributes approximately 8%
to GDP, up from about 6.4% 1995.  Both figures suggest a troubled sector:  in 1976, the Bank
estimated that 13% of GDP came from manufacturing.
70. Tanzania’s manufactured exports have fluctuated dramatically in the last decade (Chart IV.4).
Between 1995 and 1997, export values averaged over T Sh 60 billion. However, in 1998, exports fell
dramatically, to T Sh 24 billion.
01020304050607080
1990 1991 1992 1993 1994 1995 1996 1997 1998T Sh billionChart IV.4
Manufactured exports, 1990-98
Source :   Bank of Tanzania, available at http://www.bot-tz.org/Statistics/qreviews/table4_6-htm.
71. The average tariff on manufactured products is 16.5% (Chart IV.5).
72. The Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) has expressed
concern about the lack of clarity and predictability of Tanzania’s trade policy.  More specifically,
however, there is ongoing concern about Tanzania’s deteriorating terms of trade and the resulting
problems arising from increased foreign compet ition in a variety of product categories.
73. The high cost of electricity is cited by both the TCCIA and the Confederation of Tanzanian
Industry (CTI) as being a major hindrance to the development of a more vibrant manufacturing sector.
Higher power costs, along with higher rates of taxation, particularly in comparison to neighbouring
countries, contributes to the difficulties of the manufacturing sector and the consequent low capacity
utilization.Tanzania WT/TPR/S/66
Page 61
051015202530
Source :  WTO Secretariat calculations, based on data provided by the Tanzanian authorities.Average tariff rates by ISIC categories (per cent)
Average rate 
(16.5%)
ISIC        Description
311-312   Food products
313          Beverages314          Tobacco321          Textiles322          Clothing
323          Leather products
324          Footwear331          Wood products332          Furniture and                   fixturesISIC   Description
369      Other non-metallic mineral products
371      Iron and steel372      Non-ferrous metal381      Fabricated metal products382      Non-electrical machinery including 
            computers 
383      Electrical machinery384      Transport equipment385      Professional and scientific equipment 390      Other manufactured productsISIC   Description
341     Paper products
342     Printing and publishing351     Industrial chemicals352     Other chemical products353     Petroleum refineries354     Petroleum and coal products355     Rubber products356     Plastic products361     Pottery and china362     Glass and glass productsChart IV.5
Tariffs on manufactured products, 1999
(5) SERVICES
74. The services sector makes a significant co ntribution to Tanzania’s GDP;  tourism is
overwhelmingly the largest component.  The World Bank estimates that the sector constitutes almost
40% of Tanzania’s GDP although other estimates vary considerably.7
75. Tanzanian's GATS Schedule of Specific Commitments is limited to tourism and travel-related
services (Table IV.8).
                                                     
7 The World Bank (1999).WT/TPR/S/66 Trade Policy Review
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Table  IV.8
Tanzania's GATS specific commitments
Mode of supply:  (1) Cross-border supply;  (2) Consumption abroad;  (3) Commercial presence;  (4) Presence of natural persons
Sector or subsector Limitations on market accessLimitations on
national treatmentAdditional
commitments
TOURISM AND TRAVEL
RELATED SERVICES
Hotels of four stars and above (1) None (1) None
(2) None (2) None
(3) Acquisitions of domestic firms and mergers by
foreigners are subject to approval(3) Unbound
The acquisition of land by foreigners or domestic
companies which are deemed foreign because of
foreign equity ownership is subject to approval
(4) Unbound except for measures concerning senior
managers that possess skills not available in
Tanzania(4) Unbound
Source: WTO document GATS/SC/84, 15 April 1994.
(i) Financial services
(a) Banks and financial institutions
76. In 1967, Tanzania nationalized commercial banks;  until the early 1990s, virtually all
financial institutions were wholly owned by the Government.  The operations of the banks were under
the direction of the Government and competition was non-existent.  As a result, the performance ofthe financial sector was unsatisfactory.
77. As the Government came to recognize the critic al role of the financial sector in the economic
reform process, as well as its role in assuring macroeconomic stability, a major financial sector reform
was initiated with the Banking and Financial Institutions Act of 1991.  As a result, private sector
banking commenced in 1993.
78. Reform of the banking sector is continuing with plans to privatize the National Bank of
Commerce (NBC) and the National MicroFinance Bank (NMB).  There are also plans for the
privatization of the People’s Bank of Zanzibar, which operates as a quasi-central bank to the
Government of Zanzibar. The Cooperative and Ru ral Development Bank (CRDB), which operates
primarily in the rural areas and provides agricultural financing, is the last of the most significantcommercial banks that are under government control.  It will also eventually be privatized.
79. Since 1996, the financial sector has expanded significantly.  In June 1998, the sector
comprised 19 licensed commercial banks (17 operating), nine non-bank financial institutions, 105
foreign exchange bureaux, and a number of informal intermediaries such as the Savings and Credit
Cooperatives Societies (SACCOS).  The six largest banks, NBC, CRDB, Citibank, NMB, Standard
Chartered, and Stanbic hold 90% of all assets.
80. The Bank of Tanzania is responsible for supervision of banks and other financial institutions
as outlined in the Bank of Tanzania Act of 1995.  In order to ensure the safety and soundness of the
financial sector, the regulatory and supervisory environment has been modernized in line with the
Basle Committee’s Core Principles for effective banking supervision.Tanzania WT/TPR/S/66
Page 63
81. In general, this activity involves ensuring that commercial banks and other financial
institutions conduct  their business on a sound prudential basis and according to the various laws and
regulations in force.  It includes the supervision of banking conduct and the licensing of financial
institutions.  Minimum core requirements for commencing operations are T Sh 1,000,000 for
commercial banks and T Sh 500,000 for non-bank financial institutions.  In order to encourage the
development of the financial service sector outside Dar es Salaam, the statutory minimum core capitalrequirement is lower for regional financial institutions.  Currently, only the Kilimanjaro Cooperative
Bank is in operation, but additional licences have been granted.
82. According to the Banking and Financial Instit utions Act of 1991, and the BOT Act, the main
responsibilities of the Bank of Tanzania are:
- implementation of prudential controls concerning capital adequacy, liquidity,
concentration of credit and risk diversification, asset classification and provisioning,
and prohibited activities;
- licensing of banks and financial institutions;
- facilitation and monitoring of a Deposit Insurance Fund, for the protection of small
depositors;  and
- modification and monitoring of the minimum reserve requirements and foreign
exchange  exposure.
83. The BOT is closely cooperating with the central banks of Kenya and Uganda, the other
members of the Monetary Affairs Committee of the East Africa Commission in harmonizing banking
supervision practices across the region.
(b) Insurance services
84. The insurance market in Tanzania is regulated by the Insurance Act of 1996.  The Act brought
to an end the government monopoly in insurance services, which had existed since 1967.  The
National Insurance Company (NIC) is a parastatal organization scheduled to be privatized, although
no timeframe has been established.
85. Responsibility for the insurance sector rests with the Insurance Supervisory Department
within the Ministry of Finance.  The Commissioner for Insurance is responsible for the generaladministration of the Act;  a Deputy Commissioner is responsible for its administration in Zanzibar.
A National Insurance Board, appointed by the Minister of Finance, has responsibility for advising and
assisting the Insurance Commissioner.  Eventually, as  called for in the Act, the regulatory function
will be carried out by the Insurance Commissioner independent of the policy-making role, which will
be maintained by the Department of Finance.
86. The act requires that at least one third of the controlling interest of any insurer be held by
citizens of Tanzania  No such restriction applies to brokers or agents, which can be non-Tanzanians.
87. The Insurance Act calls for minimum paid up capit al levels to be maintained by an insurer
(Table IV.9).
88. Insurance services are provided by 11 registered insurance companies in Tanzania:  the
National Insurance Company, the Jubilee Insura nce Company, Royal & Sun Alliance Insurance,
Alliance Insurance Corporation, Heritage A.I.I.  Insurance, Reliance Insurance Company, TudorWT/TPR/S/66 Trade Policy Review
Page 64
Insurance Corporation, Lion of Tanzania Insurance Company, Imperial Insurance Company, Zanzibar
Insurance Corporation, and Phoenix of Tanzania Assurance Company.
89. Reinsurance services are not currently available in Tanzania.  As a consequence, all
reinsurance is placed outside Tanzania, either with regional reinsurance entities or with private
reinsurers.  The Insurance Act grants the President the authority to establish a National Reinsurance
Corporation in which all Tanzanian insurers would be required to reinsure a portion of their insurance,but this provision has not been implemented.
Table IV.9
Capital requirement for insurers and brokers
(T Sh million)
Type of business Minimum level (T Sh million)
Long-term (life) insurance business 500
General insurance (marine and non-marine) 500
Composite insurance (combination of long-term and general) 1,000
Non-marine insurance 250
Marine insurance 250
Insurance brokers 10
Loss adjusters, insurance surveyors, motor assessors, risk managers 2
Source: Tanzanian authorities.
(ii) Tourism, restaurant, hotels
90. The Tanzanian Government recognizes the role that an expanding tourism sector can play in
economic development and as a source of foreign currency earnings.  Tanzania’s Ministry of Natural
Resource and Tourism estimates that the tourism sector constitutes 16.5% of Tanzania’s GDP and
employs approximately 132,000 Tanzanians.  In 1998, tourism generated gross earnings of US$570
million (Chart IV.6).
91. The tourism sector is underdeveloped and efforts are being focused both on the supply and
demand side.  Tanzania’s Ministry of Natural Resources and Tourism is working to further develop
tourism infrastructure and is undertaking tourism promotion efforts in Europe and Japan to promote
Tanzania as a tourist destination.  The Ministry’s objective is to develop a high quality tourism sector,
while maintaining relatively low volumes, set at approximately 1 million tourist visits per year by theyear 2010.  In 1998, 482,000 tourists visited Tanzania, spending an average of US$1,200 per tourist
(Table IV.10).
92. Travel agent services are restricted to Tanzanian nationals.
93. Tanzania is a member of the World Tourism Organisation.Tanzania WT/TPR/S/66
Page 65
0100200300400500600
1991 1992 1993 1994 1995 1996 1997 1998Source :  National Bureau of Statistics, Tourism Department.Chart IV.6
Tourist service earnings in Tanzania, 1991-98
US$ million
Table IV.10
Tourism in Tanzania, 1991-98
(Number and U.S. dollars)
1991 1992 1993 1994 1995 1996 1997 1998
Number of tourists 186,800 201,744 230,166 261,595 295,312 326,188 360,000 482,331
Tourist in hotels 171,856 187,621 216,356 238,546 268,152 296,193 345,00 457,331
Earnings (US$ million) 94.73 120.04 146.84 192.10 259.44 322.37 392.41 570.00
Average earnings per
tourist (US$)507.00 595.00 637.90 734.30 878.50 988.00 1,090.00 1,181.81
Average number of
days per tourist7.00 7.00 7.10 7.10 7.20 7.30 7.50 7.60
Average expenditure
per tourist per day
(US$)72.42 85.00 89.80 103.40 122.00 135.00 145.00 155.50
Number of hotels 205 207 198 208 210 212 213 215
Number of rooms 5,484 6,150 6,100 6,335 6,935 6,970 7,470 7,500
Number of beds 9,878 10,963 10,860 11,345 12,145 12,348 13,248 13,400
Number of tourist
nights (million)1.0 1.1 1.3 1.4 1.7 1.9 2.2 2.9
Average room
occupancy per year (%)55.50 56.00 56.10 55.80 57.10 56.40 56.30 59.90
Total number of
employees in tourism
industry45,000 50,000 66,000 86,000 96,000 100,000 110,000 132,000
Source: National Bureau of Statistics, Tourism Department.WT/TPR/S/66 Trade Policy Review
Page 66
(iii) Telecommunications
94. Tanzania’s telecommunications sector is undergoing significant changes as the Government
increasingly recognizes that the telecom infrastruc ture plays a vital role in all aspects of economic
development, but particularly for export developmen t and tourism.  Since liberalization in the sector
commenced in 1993, licences have been issued for basic telephone services, data communications,
mobile cellular telephone, radio paging, internal wiring and installation of customer premisesequipment, as well as importation and distributi on of telecommunications and radio communications
equipment.
95. The Ministry of Commerce and Transport is responsible for policy related to the development
of the telecommunications sector.  In 1996, the Ministry issued the National Telecommunications
Policy (NTP), which outlines the objectives and strategies for the period 1997-2020.  The NTP isaimed at ensuring the accelerated development of an efficient telecommunications network that can
provide an info-communications infrastructure and universal access to telecommunications services
by all sectors of the national economy and segments of the populations.
96. Tanzania’s telephone density is 0.32 telephones per 100 inhabitants, well below the average
for neighbouring Kenya, (0.92) and far below the average for the Southern African DevelopmentCommunity (SADC) with 3.4 telephones per 100 in habitants.  Tanzania intends to increase
"teledensity" to 5-6% within the next ten to 15 years.
97. The Tanzania Communications Commission (TCC) acts as the regulator for the sector.  The
TCC was created under the Tanzania Communications  Act No. 18 of 1993;  it is an independent,
quasi-governmental body, operating under the guidance of the Ministry of Communications and
Transport, whose functions are to regulate and monitor the telecommunications sector and foster
competition through the licensing of operators and franchise holders.  In addition, the TCC isresponsible for defining interconnection and tariff policies as well as allocating and monitoring radio
frequencies.
98. The TCC is responsible for all radio and telecommunications standards, in collaboration with
the Tanzania Broadcasting Corporation and the Tanzania Bureau of Standards.  In practice,
International Telecommunications Union (ITU) standards are applied in Tanzania.  Tanzania providestype approval, but other standard setting activities have been difficult without the availability of
laboratory facilities.  The TCC is not responsible  for computer hardware standards issues, although
there is recognition that convergence among various technologies may require their future
involvement.
99. The Tanzania Telecommunications Incorporation Act of 1993 established the Tanzania
Telecommunications Corporation, Lt d. (TTCL), which is a wholly state-owned operating company.
Previously, telecommunications services had been provided by the Department of Posts and
Telecommunications.  The commercialization of the company and the separation of postal and
telecommunications operators were initial steps in  preparing the company for success as a private
sector entity.
100. TTCL operates as a monopoly with international and domestic basic voice services on the
mainland.  Although TTCL initially was also granted monopoly rights for basic services in Zanzibar,
the Government of Zanzibar created the Zanz ibar Telecommunications Corporation (ZANTEL) in
1996, which has an operating licence for local and international voice and data services both in
Zanzibar and on the mainland.  ZANTEL is jointly owned by the Government of Zanzibar (24%) and
by other local and Middle Eastern investors.Tanzania WT/TPR/S/66
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101. Privatization of TTCL is currently under way w ith plans for 35% of TTCL to be offered to
private investors.  The privatization will most likel y take the form of the sale of a minority ownership
stake and transfer of management control to a strategic international investor.  The Government
closed the expression of interest period for the privatization tender on 31 July 1999.  An official
timetable for privatization has not been set.  Five per cent of TTCL will be reserved for workers and
another 10% will be reserved for institutional investors, primarily the parastatal pension fund.  Plansfor the privatization also call for TTCL to be listed  on the Tanzania stock exchange.  The Presidential
Parastatal Sector Reform Commission has oversight responsibility for the privatization of TTCL;  it
has indicated that as part of the privatization process it will negotiate a price cap on basic service
tariffs with a strategic partner.
102. Because of the need for significant capital investment in TTCL to carry out a modernization
effort, the successful bidder for TTCL will be granted a period of exclusivity, which will maintain a
monopoly in basic services for a period of three to four years.  Further divestiture of TTCL will be
carried out by the Government after this period of exclusivity, although a specific timeframe has yet
to be determined.
103. TTCL already faces significant competition from value-added service providers that have
been granted licences to operate in Tanzania.  On the mainland, three companies are offering
value-added services and three more cellular licences have recently been granted.  The initial cellular
licencees are Mobitel, Tritel, and Planitel.  Mobitel, which first commenced operations in 1994, is
25% owned by TTCL.  TTCL is expected to divest its interest in Mobitel as it has received its own
cellular licence.
104. Despite competition in value-added services, providers are still required to use TTCL’s
international gateway.  One significant exception to this is the operating licence granted to ZANTEL,which was given authority to establish its own gateway in Zanzibar.  As a consequence, TTCL’s
attractiveness to bidders in the privatization process will be lessened as value-added service providers
on the mainland will be able to circumvent TTCL and use ZANTEL’s gateway, since its licence also
permits it to provide service on the mainland.
105. There are three public data communications operators:  DATEL, which is a joint venture
between TTCL and Nexus International;  Wilken Afsat Tanzania Ltd.;  and SITA group.  Data service
providers have been granted permission to bypass TTCL for their international services.  Four
companies have been licensed by TCC to provide national radio paging services.
106. Foreign ownership up to 51% is permitted in  any of the above non-basic telecom service
categories.  Local-participation requirements exist for the telecommunications sector, althoughMinistry officials indicate that they have been waived in the past permitting 100% foreign ownership,
particularly with respect to the start up of value- added service providers.  Nonetheless, the regulatory
agency (TCC) indicates that licence applications ar e subject to a 35% local participation requirement
for approval.
107. Tanzania has not made any specific services  commitments in the GATS with respect to
telecommunications, but Ministry of Communications and Transport officials indicate that they intend
to do so as a means of "locking in" liberalization measures that have already been implemented.
(iv) Transportation
108. Tanzania’s transportation sector is characterized by fragmented functional responsibilities
involving many departments under different ministries, which constrains the smooth and effectiveWT/TPR/S/66 Trade Policy Review
Page 68
development of the sector.  Furthermore, the sector is grossly inadequate to meet current and future
needs of a growing economy.
109. The Government is currently drafting a National Transportation Policy.  It is planning to
remove itself from the operation of any transportation services and focus its efforts on the planning,
policy setting, and monitoring of transportation services.  The private sector is expected to provide
transport services and to participate in provision and management of infrastructure.  New legislationand regulatory regimes will be enacted to cover with standards of performance, safety, protection of
infrastructure, environment, and protection of consumers against monopolistic practices.
(a) Land transport
110. Tanzania’s road network consists of approximately 85,000 km,  of which only 5% is paved.
Significant capital investment is needed to improve the road network.
111. Provision of passenger road transport services for inter-city, urban and rural routes is
presently dominated by local providers.
112. Tanzania has two railway systems on the mainland, the Tanzania Railways Corporation
(TRC) (2,605 km) and Tanzania Zambia Railway Authority (TAZARA) (960 km).  Together, the two
railways link 14 of the 20 regions on the mainland, and neighbouring countries.  TRC and TAZARAdo not operate on identical gauge, making the provision of integrated services difficult.  The lack of a
standard gauge also exacerbates transportation to SADC countries.  TRC is fully owned by the
Tanzania Government, while TAZARA is owned jointly by Tanzania and Zambia.  TRC is in the
process of being privatized.  The timetable established by the Presidential Parastatal Sector Reform
Commission calls for the divestiture to be completed by the 2
nd quarter of 2000.
(b) Air transport
113. Domestic air travel is important for Tanzania because of the long distances between major
regions.  The liberalization of the industry in 1992, as part of ongoing economic reforms, has created
opportunities for private participation.  Precision Air, a private airline is providing scheduled services
that were previously reserved for Air Tanzania.  The number of licensed domestic charter operators
increased from 16 in 1992 to 26 in 1999.  Tanzania does not impose any restrictions on foreign
entities establishing and providing aviation services.  However, cabotage is not permitted.
114. Air Tanzania Corporation (ATC) is a wholly state-owned airline.  Although the Government
intends to privatize ATC, no timetable has been established.  The privatization has encountered
difficulties related to a joint venture with South Africa Airlines (SAA) and Uganda Air, which will
necessitate the untangling of international route permits granted to the joint venture called
"Alliance Air".
115. Tanzania has three major international airports, in Dar es Salaam, Kilimanjaro, and Zanzibar.
There are more than 60 additional airports, including airstrips servicing domestic and international
traffic.  Most of Tanzania’s airports are owned and operated by the Government.  Plans call for
private sector participation in the hope that injections of more capital will improve airport services.
Kilimanajaro International Airport has already been privatized and is being operated under aconcessional agreement.
116. The Government has created the Tanzania Aviation Authority (TAA) as an independent
Executive Agency.  Once operational the agency will be responsible for the air traffic control systems
and will also have regulatory responsibilities with respect to the aviation sector.  Tanzania is aTanzania WT/TPR/S/66
Page 69
signatory to the Chicago Convention, and abides by the standards and practices of the International
Civil Aviation Organization.
117. There are several international freight service providers operating in Tanzania.  Tanzania does
not place any restrictions on the transport of freight from the country.  The development of a Tanzania
horticultural sector is viewed to be dependent on the expansion of air cargo services.  Currently, most
horticultural products are trucked to Nairobi for air shipment to international markets.
118. On 3 November 1999, the United States and Tanzania signed the first ever Open Skies
agreement involving an African country.  Open Skies agreements permit unrestricted air service by
the airlines of each country to, from, and beyond the other's territory, eliminating restrictions on how
often carriers can fly, the kind of aircraft they can use, and the prices they can charge.  The agreement
took effect immediately, with the exception of unrestricted rights for passenger charters, which will be
phased in over two years.
(c) Maritime transport
119. The maritime industry is largely controlled by the private sector with the significant exception
of the Tanzania Harbours Authority (THA), and maritime services provided on inland waterways by
the Tanzania Railway Corporation (TRC).  In order to improve port services, the THA has been splitinto 14 business units to be privatized as separate entities.  The Presidential Parastatal Sector Reform
Commission has decided that the THA will continue to exist as the landlord for port-related services,
but that all commercial activities will be privatized.  The current expectation is that the process will
not be completed until 2001 or later.  Similar privatization efforts are currently under way with
respect to TRC’s maritime services.
120. Four major seaports that can accommodate deep -sea and coastal transport:  Dar es Salaam,
Mtwara, Tanga, and Zanzibar.  Inland shipping is undertaken on Lake Victoria, Lake Tanganyika, andLake Nyasa.  Inland shipping is underdeveloped, which constrains the smooth flow of traffic from
landlocked countries.
121. All shipping activities in Tanzania are coordinated by the Tanzania Central Freight Bureau
(TFCB).  TFCB operates as a quasi-business regulator overseeing ocean freight rates.
122. Tanzania does not have a national maritime fleet.WT/TPR/S/66 Trade Policy Review
Page 70
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