Government finalises Public Investment Bill revisions

Tanzania has concluded revisions to its Public Investment Bill, a legislative overhaul designed to modernize the country's foreign direct investment (FDI) framework after years of investor friction over project delays and unclear approval thresholds. The finalized bill represents a critical reset for East Africa's second-largest economy, which has struggled to compete with Kenya and Uganda for regional capital flows.

## What changed in Tanzania's investment framework?

The revised bill introduces streamlined approval timelines for projects valued above $10 million, reducing processing delays from 6–12 months to a target 90 days. It clarifies equity ownership rules, local content requirements, and sectoral restrictions—areas where vagueness previously deterred mid-market investors. The framework now explicitly permits 100% foreign ownership in priority sectors (mining, manufacturing, renewable energy, agribusiness) while maintaining majority Tanzanian stakes in telecommunications, financial services, and utilities. A new Investment Facilitation Agency, operating under a single-window system, consolidates licensing across environment, labor, and trade authorities.

The bill also introduces binding dispute resolution via international arbitration (ICSID), addressing long-standing investor concerns about litigation risk in domestic courts. Tax stability clauses lock in corporate rates for 10-year project cycles, though this does not freeze customs or excise duties.

## Why does this matter now?

Tanzania's FDI inflows dropped 23% year-on-year in 2023–2024, falling to $1.2 billion as investors redirected capital to more predictable markets. The government's 2025–2030 National Five-Year Development Plan targets $45 billion in cumulative FDI, contingent on legal certainty. Rising competition from Rwanda and Ethiopia—both aggressively marketing tech and logistics hubs—forced Dar es Salaam's hand.

The finalized bill signals intent to professionalize investment administration, moving beyond the ad-hoc project-by-project negotiations that characterized the previous regime. This aligns with Tanzania's regional commitments under the African Continental Free Trade Area (AfCFTA) and East African Community trade liberalization targets.

## Which sectors benefit most?

Mining and natural resource extraction gain explicit fast-track status, critical as Tanzania pursues lithium, rare earth, and graphite deposits for global battery supply chains. Renewable energy developers gain 25-year power purchase agreement guarantees—a game-changer for the $8+ billion solar and wind pipeline. Manufacturing-for-export receives duty drawback enhancements and special economic zone (SEZ) privileges. Agricultural processing and agritech attract new incentives, including land lease protections to 50 years.

Conversely, telecommunications and finance remain restricted to joint ventures with local majorities, frustrating global operators seeking greenfield entry.

## What are the remaining risks?

Parliamentary approval is not yet confirmed; political opposition to foreign equity thresholds in certain sectors could delay final passage into 2026. Implementation risk looms large—the Investment Facilitation Agency must be operationalized with trained staff and digital systems, a capability gap Tanzania has struggled with historically. Currency volatility (Tanzania Shilling depreciated 18% against USD in 2024) may erode project economics for foreign investors. Finally, disputes over "local content" definitions in supply chains remain unresolved, creating post-signing negotiation friction.

The bill is a structural improvement, but execution determines whether capital actually flows.

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