Working Together to Implement Policies for Growth
This article was originally published in the IESC Third Quarter Progress Report.
July 2017 – While business licenses and taxes bring in government revenues, which fund services to citizens, high taxes and fees mean only 3.9 percent of the estimated 3 million micro, small and medium businesses in Tanzania register their business.
Lucas Mwakabungu, Chairperson for the Iringa Chamber of Commerce, Industry and Agriculture, says “there are 30 taxes for a single business – this is very discouraging for private sector organizations.” The organization advocates for the needs of small businesses to the local government.
“We face a lot of challenges as business development is very poor. Getting a business registered, a tax identification number and a business license (locally) takes three months.” But Mwakabungu is heartened by a recent initiative.
Feed the Future Tanzania Enabling Growth Through Investment and Enterprise Program, running from 2016 – 2020, designed a tool to help the local government rank the need for reform of policies that may hamper economic growth, such as complicated business registration processes and taxes owed to several departments.
The Policy Reform Priority-setting Tool was introduced to the Iringa, Mbeya and Morogoro municipal governments and the regional chambers of commerce in May 2017, and in Zanzibar in March 2017. The program facilitates public and private policy dialogue between local Tanzanian enterprises and the public sector. The recommendations for policy reform are then ranked using the tool.
Enock Ndondole, Director of Shadeco Ltd. sunflower oil processing mill in Iringa, knows advocacy works. As Vice Chairman of the Tanzania Sunflower Processing Association (TASUPA), he lobbied the local government to reduce the 5 percent tax charged when farmers bring products to market to 3 percent. Higher taxes and production costs mean Tanzanian-produced oil cannot compete with imported oil.
“Tanzania imports 60 percent of edible oil…, but sunflower grows in all the ecological regions,” says Ndondole, who wants policies that support Tanzanian sunflower farmers. The association also lobbied the government to add a 10 percent tax on imported sunflower oil – aiding the competitiveness of Tanzanian farmers. But he thinks there is more work to do.
Iringa Chamber of Commerce Chairperson Mwakabungu and Ndondole participated in the first public/private dialogue session in May 2017. Between the three regions 69 policy recommendations were made. Business and government technical working groups will use the policy tool to decide which are feasible to reform.
“I think there is some change now that the public sector slowly appreciates the private sector,” said Ndondole. “There is a growing mutual collaboration.”
Feed the Future is the U.S. Government’s global hunger and food security initiative. With a focus on smallholder farmers, particularly women, Feed the Future supports partner countries in developing their agriculture sectors to spur economic growth and trade that increase incomes and reduce hunger, poverty and undernutrition. USAID is the lead U.S. Government agency working to end extreme global poverty and enable resilient, democratic societies to realize their potential.