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In the current global economic equilibrium, the Chinese strength and economic muscles need not be emphasized. That is so because China is almost now a leading economic powerhouse, with a huge economy which, sooner or later will surpass that of the USA. And most importantly China has surplus capital to invest elsewhere. For the last fifteen years or so, Tanzania has witnessed the inflow of investment from China particularly in construction, transport, industrialization, hospitality, importation of capital goods and to a small extent banking. Also, there has been a surge of importation of various merchandise from China from clothing to mobile phones. China has almost dominated the public transport sector through the importation of buses. In short, therefore, Chinese Investors are now playing an important role in the Tanzanian economy. The purpose of this legal guide is to provide in a nutshell some important legal matters that Chinese and other oriental investors ought to know while venturing to invest in Tanzania and when they are already operational, regard being that the legal systems of two countries are quite different, hence causing some confusion and difficulties to Chinese investors.
The Country and its Governance System.
Thus the Legendglobe Attorneys banking team is well equipped to deal with all challenges and will be able to provide the following legal intervention and solutions;
Foreign Investors employees who are not TANZANIAN need to obtain working and resident permits after applying the same from the immigration department (for residence permits) and Labor Department (working permits). This must be done prior to starting work, However the regulation provides quotas for employment of foreigners that may be granted automatically upon payment of relevance fees. There are several agents who undertake the process including lawyers.
Local and foreign workers (employees) must have employment contracts that comply with Tanzania Labor Laws. These employment agreements must be prepared carefully to avoid future conflict in their implementation. In Tanzania employees are not fired or terminated at will. Procedures are to be followed. But first and foremost, there must be good reasons to do so. It is advisable to seek legal assistance during preparation of employment contracts and whenever it is necessary to terminate an employee, to avoid successful litigation by the respective employee.
The legal tender in Tanzania is a Tanzanian shilling. The lowest denomination is a shilling and the highest in a ten thousand shilling note. Almost all major currencies in the world are exchangeable in Tanzania through commercial banks and bureau de changes. They include USD, EURO, BRITISH Pound, and Japanese Yen. Also, East African currencies and South Africa Rand are also exchangeable. Chinese money (Renminbi) is yet to become popular like other major currencies.
In Tanzania there is a very vibrant banking sector composed of commercial banks and financial institutions providing a multitude of banking services under a very strict supervision of the B.O.T under the Bank of Tanzania Act and the Banking and Financial Institution Act and the regulations made under them. Because of this good and strict supervision there are hardly any bank failures in Tanzania. Banks are licensed to operate in Tanzania by the Central Bank upon compliance with the provided legal requirements.
There are only one or two banks from China that operate in Tanzania. Lending practices and other banking operations are tailored in the British and American systems. Thus for instance one cannot borrow without having a tangible security, unless it is a very special circumstance. Major banks include CRDB BANK PLC, NMB BANK PLC, NBC LIMITED, EXIM BANK TANZANIA LIMITED and STANDARD CHARTERED LIMITED. There are more than 40 banks and financial institutions that operate in Tanzania. Most of them are privately owned. For opening accounts, banks may need the BRELA documents, business licenses, and directors’ identification documents.
There is also a robust insurance Industry that is regulated by Tanzania Insurance Regulatory Authority with several operators. Third party Insurance is compulsory for all vehicles operating in Tanzania except for government vehicles. Insurance companies are licensed by TIRA upon compliance with the conditions as provided.
Furthermore there are several International Financial Consulting services companies operating in Tanzania. These include Pricewaterhousecoopers (PWC), Deloitte and Touche, and Ernest Young from where one can obtain tax and financial consulting services, including corporate audits. There are also many local small firms that provide such services. There is only one stock exchange (Dar es Salaam Stock Exchange) where shares and other financial securities are traded.
In Tanzania, there is a well-functioning criminal justice system. There is a well-functioning Police Force with stations all over the country that deals with prevention of crimes, ensuring security of the people and their properties and arresting the culprits and investigating crimes. Certain conducts are deemed to be crimes and will attract the attention of police for necessary action. These include fighting in public, assaulting a person causing breach of peace i.e. bringing chaos in public places, hunting wild animals for trophy without necessary permits, having a firearm without permit, driving without a driving license, destroying property of another person or killing and wounding another person in whatever manner. If anything like this is done to a person, a report must be made at a police station that may lead to arrest, eventual prosecution and imprisonment in the prison.
For foreign investors land for investment will only be acquired from the Tanzania Investment Center as derivative rights for use for the specified period. Land for such use is scattered all over the country. There is also land available in special export Economic Zones established in various places in the country. To acquire land from the Tanzania Investment center an investor must register with the center first. As discussed above land is allocated at a fee and annual payment of land rents and tax.
Most commercial disputes are solved through the country court system which functions very well and effectively. The lowest court is the Primary Court followed by the District Court, then High Court. The Highest court is the Court of Appeal. There are also specialized courts, the most important being the High Court Commercial Division, which deals with Commercial Disputes, the High Court Labor Division deals with labor related matters and the High Court Land Division that deals with land and Investment related matters. Also, there is a commission for Mediation and Arbitration that deals with Labor related matters at a lower level. Tax Revenue Appeals Tribunal and Tax Revenue Appeal Board are for tax matters, Competition Tribunal for all competition and regulatory matters from various regulatory authorities and procurement Board for procurement disputes. There are elaborate mechanisms/procedures to approach the relevant Court or Tribunals of which it is almost necessary to use legal expertise. Legal practice offices are scattered all over the country with varied legal costs.
Legendglobe Attorneys is a medium sized firm, specializing in advisory, regulatory, compliance legal services and commercial litigation management, consisting of three principals and staff with experience in the specified areas ranging more than 25 years. The resumes may be provided on request. The firm is willing to provide to clients its general commercial and business terms to enable them to make informed decisions based on their budgets and needs. The firm’s principals have the history of working for high end local and international clients thus acquiring vast, robust and deep knowledge in the areas specified above.