Privatization in Tanzania
Country Fact Sheet

Privatization Background
Institutional Framework
Privatization Status
Outlook
More Info
  Privatization Laws
  FDI Information in IPAnet
  Doing Business Guides in IPAnet
Relevant Web Sites
  Presidential Parastatal Sector Reform Commission
Map of Tanzania
 
For Further Information Contact
Presidential Parastatal Sector Reform Commission
2nd Floor, Sukari House
Sokoine Drive, Ohio Street
P.O. Box 9252
Dar-es-Salaam, Tanzania
Tel: 255 51 34296, 115482, 116268
Fax: 255 51 33046/ 39481

 
 Source Documents

Privatization Background Back to the top

In February 1967, a decision was made to put all the strategic commercial activities of the economy under state control, leading to the establishment of numerous parastatal enterprises in all sectors. However, it has turned out to be impossible for the Government to manage its investments in parastatals without difficulties, both financial and managerial. The heavy reliance of the parastatals on the exchequer caused a lot of concern and hence the need for change of policy. In January 1992, the parastatal sector reform policy was first pronounced as a national policy by the Government. In 1996, the Government adopted a milestone decision to include utilities and infrastructure ventures in the privatization agenda. Following a recent far-reaching reexamination of the modalities of privatization undertaken in consultation with the World Bank, the approach followed by the Parastatal Sector Reform Commission (PSRC) has been substantially revamped. The new guidelines for the preparation and execution of Public Enterprise divestiture (PE) transactions, that were adopted by Government of Tanzania last year and that were published and widely disseminated to stakeholders, are now being used for all PE transactions under preparation by PSRC, including the major transactions. The aim is to have bidders follow a careful pre-qualification and due diligence process, during which the details of the eventual offer would be developed; thus the bids, once received, would be judged on well-defined criteria, mainly price, obviating the need for extensive negotiations with the winning bidder.

Institutional Framework for Privatization Back to the top

The Presidential Parastatal Sector Reform Commission (PSRC) is an autonomous body of the Government, established under the Public Corporations Act of 1992, as amended in 1993 and 1999. Its purpose is to co-ordinate implementation of the Government's economic reform efforts in the form of privatization.

The privatization program is supported by a World Bank Privatization and Private Sector Development Project. The project provides finance to technical assistance and advisory services for preparation and execution of divestiture transactions. The project also includes the establishment of new regulatory institutions. The draft reulatory legislation has recently been submitted to Parliament to create two multi-sector regulatory authorities.

Privatization Program Status Back to the top

A comprehensive privatization program of parastatals was announced in May 1993. Ultimately more than 400 loss-making companies were put up for sale. Privatization has recently gained momentum, with about half the commercial parastatal entities removed from government control. Particularly important progress has been made in the banking sector, as the sales agreement for the National Bank of Commerce was signed in March 2000. There are about 165 remaining units for either divestiture or liquidation covering some PE s in the producive sectors(agriculture, industry and trade) as well as major PEs in the infrastructure and utilities. Since the re-examination of the modalities of privatization by PSRC, one of the large parastatal monopolies, the container terminal of the Tanzania Harbour Authority, has been removed from government control through a ten-year lease agreement (signed in May 2000). With regard to the Tanzania Telecommunications Corporation Ltd. (TTCL), six entrants completed the due diligence process, out of which three submitted bids in May. That privatization transaction closed in February 2001 with the selection of the winning bidder, a consortium of Detecom (Germany) and MSI (Netherlands).

Outlook Back to the top

In recent years, Tanzania has experienced an improved macroeconomic performance, coupled with substantial progress in privatization efforts, despite some delays in carrying out individual divestment transactions. A recent revision in the approach to privatization, while causing some initial delays, should reduce considerably the time needed for the finalization of negotiations for the sale of state-owned enterprises in the future.

Sources Back to the top

Department of Public Enterprises; Making Privatization Work in Tanzania; Privatization and Deregulation in Tanzania.