May 2007 Document of the World Bank Report No. 42041-TZ Tanzania Subnational Costs of Doing Business in Tanzania An Assessment of Doing Business in Arusha, Dodoma, Iringa, Kigoma, Mtwara, Mwanza, and Zanzibar for T he Tanzania National Business CouncilFinance and Private Sector Development Africa Region P u b l i c D i s c l o s u r e A u t h o r i z e d P u b l i c D i s c l o s u r e A u t h o r i z e d P u b l i c D i s c l o s u r e A u t h o r i z e d P u b l i c D i s c l o s u r e A u t h o r i z e d
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Sub-National Costs of Doing Business in Tanzania (2007)
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8/6/2019 Sub-National Costs of Doing Business in Tanzania (2007)
Ki lowat t hourMillennium Development GoalMini steria l Procurement Management UnitMinisterial Tender B oardMegawatt
Nord ic Development FundNational Environmental Management CouncilNongovernmental organizationN e t present valueNational Strategy for G rowth and Reduction of PovertyNational Social Security Fund
Nordic Trust Fund
Operations and maintenanceProject AccountsProject ImplementationUnitPhotovoltaicResettlement Acti on PlanRura l Energy AgencyRura l Energy BoardRural Energy Fund
Rural Energy Working GroupRiskManagement Fund
Resettlement Policy FrameworkSupervisory Control and Data Acquisi tionSolar Home SystemSwedish Internationa l Development Cooperation Age ncySector Investment LoanState-owned enterprise
Statement o f expenditure
Small pow er producer
Small pow er projectsSm all Power Purchase Agreement
Small Power Purchase Ta ri ffSustainable Solar Ma rke t PackageTec hnic al assistanceTanzania E lectric Supply Company Ltd.
Tanganyika Wattle CompanyTanzania-Zambia Ra ilway Autho rityTanzania Chamber of Commerce for Industryand AgricultureTanzania Energy Developme nt and Access ProjectTanzania Investment CenterTax Identif ication Number
Tanzania Nationa l Business Council
Tanzania Revenue Author ityTanzanian shillin gTanzanian shillings per US $UnitedNations Framew ork Convention on Climate ChangeValue-added taxWo rki ng Group o n Small Power DevelopmentWhite-light-em itting diodeZanzibar Electri city Company, Ltd.
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Business Incorporation and Reg istration ............................................................ 82.1.1 Lega l Process .............................................................................................. 8
Business and Trade Licens ing ............................................................................ 9
2.2.1 Lega l Process .............................................................................................. 9
2.2.2 Results ....................................................................................................... 10Nation al Social Security Fund (NSSF) Registration ........................................ 11
2.32.3.1 Process ...................................................................................................... 11
Tax Registration wi th Tanzania Revenue Au thority (TRA) ............................. 122.4.1 Process ...................................................................................................... 12
Property Purchase and Transfer ........................................................................ 132.5.1 Process ...................................................................................................... 13
2.6 Connecting Power ............................................................................................. 15
2.6.1 Process ...................................................................................................... 15
2.7 Connecting Water ............................................................................................. 17
2.7.1 Process ...................................................................................................... 17
Obtaining a L oan............................................................................................... 182.8.1 Process ...................................................................................................... 18
3.1 Duration ............................................................................................................ 20Where i s the time spent? ........................................................................... 20
3.1.13.2 Costing the Time ............................................................................................... 21
Appendixes
Appendix 1 Starting a Business in Tanzania by Ci ty ...................................................... 24Appendix 2 Legal Process Associated wi th Registering a Business ............................... 31
Appendix 4 . Description o f Property Transfer Procedures............................................... 35Appendix 3 . Licensing Procedures ................................................................................... 34
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Tanzania i s a top 10 reformer fr om 175 countries in he Cos t o f Do in g Business Report2007. Despite the ambitious improveme nts that me rit top reform er status,' Tanzania i s
ranked in he bottom 50 countries, assessed globally at 142.
This report assesses some o f he more sign ificant D o in g Business Indicators includi ngho w easy i t s to register a business, ob tain a license, transfer prope rty, connect basic
utilities, and obtain an overdraft in 8 regions of Tanzania. The time and cost o fcomp leting these transactions play a significant ro le f or loc al investors in their decisiono f whether to operate in a country's f orm al sector, thus affe ctin g its investment and
gro wth performance.
The feature o f his methodology that distinguishes i t f rom that o f he global Doin g
Business survey was i t s focus: studyingh ow government of ficials and service providersin the regions understood, communicated, and implemented a set o f elevant laws and
regulations. The survey team tested the relevant regulations governing thebusinessenvironment in Tanzania by going through the procedures req uire d to start a business.
The easiest place t o set up a business in Tanzania i s Zanzibar. Fo llo win g the above-listedtransactions, i t wou ld take a Tanzanian in Zanzibar some 129 days, or 4 months, to
complete al l transactions. The m ost di ffic ult places in Tanzania are Kigoma and Mtwara,in which i t will take a Tanzanian over one-and-ha lf years, o r mo re than 500 days, tocomplete a ll transactions. M u ch o f his time is taken up with pro pe rty transfer,
connecting power, and securing the appropriate business licenses.
Registering the business name remains centralized in Dar es Salaam. This reality makesthe phy sica l distance between the region and from Dar es Salaam a maj or factor in
increasing the costs and durat ion associated with registration.
Whe n considered fro m a per capita inco me perspective, the opp ort uni ty costs associated
with spending this amount o f ime to start up a business are significant. Firms in Kigoma
struggle to pa y the 145% o f heir per capita incomes required to get their businessesrunning. Zanzibar and Mb eya pain t a more favorable picture, with the durations costingapproximately 35% and 53% o f heir respective per capita income. Ho wever, given these
costs, i t s itt le wonder that many f i r ms bypass form al channels when possible, o r chooseto rema in unregistered in the info rma l sector.
The government o f Tanzania i s committed to imp rov ing the investment climate for the
' On par with Ghana, Tanzania enacted 4 different reforms in 2006 across different business areas including ustice and trade
facilitation. One of he more ambitious reforms picke d upb y Do ing Business was the in troducti on of electronic data interchange andrisk-based nspections of customs. By using the D oing Business method, Tanzania reduced the time to clear imports b y 12 days.
8/6/2019 Sub-National Costs of Doing Business in Tanzania (2007)
priv ate sector. Howeve r, given the significant difference in cost and performance amongregions, loc al governments, and nation al agencies also have bo th the op portun ity andresp onsib ility to ensure that they create economic spaces wh ich facilita te a nd encourage
the formalization o f business act ivit y across the cou ntry.
This assessment s ntended for the Tanzania Nation al Business Cou ncil (TNBC), loc algovernments, and agency officials wh o d irectly facilitate firm operations within theregions. The most important objective o f his exercise i s to enable these actors to better
understand and mo re eff ecti vely assist Tanzania’s businesses to increase their investment,
enhance their productivity, a nd drive the country’s economic growth.
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The vast major ity o f people wh o escape fro m poverty do so by starting a business o rfinding work in an existingone. Evidence shows that countries in which i t s relativelyeasy to do business are associated with higher numbers o f obs.
The "doing business" assessment provides an index for measuring the ease o f doing
business across 175 developing and developed countries. Th e assessment prom otes
awareness o f and focus o n priva te sector needs, and oftentimes competit ion in reform
programs among countries. N o w 4 years old, the 2006 indicators lo ok at 10 key operatingareas for a firm, ranging fr om starting up and gettingcredit to closing the businesse2Therepo rt studies a theoretical firm. Data s based on research o f aws and regulations in acountry's m ain business city o r capital. Input and verificatio n are supplied by local
government officials, lawyers, business consultants, accountants, and othe r professionals
who rou tinely administer or advise on egal and regu latory requirements.
Despite ambitious improve ments that mer it top reform er status, Tanzania i s ranked in the
bottom 50 countries. I t s assessed glo ball y at 142 o f 175. A Tanzanian entrepreneur's
biggest leg al bottlenecks in setting up a business come during incorporation, whose costsare high; gettinga business license; and getting a comp any seal. I t s encouraging that,although its overall ranking s poor, Tanzania perfor ms better in some areas than the Sub-
Saharan Af ric an average. Fulfilling a l l the legal requirements t o start a business in Dar esSalaam takes appr oxima tely 35 days. Re gister ing a business takes lon ger in most
comparator countries: 36 days in Uganda, 48 days in China, 54 days in Kenya, and 71days in ndi a. Nevertheless, in Tanzania the monetary costs o f his process rem ainonerous at 161.3% o f per capita gross national income (GNI)-co nside rably more than in
any o f t s neighbors, let alone China or India, with wh ic h Tanzania seeks to compete.
One reason for Tanzania's imp rov ing performance is the pri ori ty the cou ntry gives to the
private sector agenda. The Tanzania Nation al Business Co unc il (TN BC) provides a
foru m for regular dialogue o n private sector development issues, an d through this forumaims to create a comp etitive pr iva te sector in Tanzania. Chaired by the President, T N B Ciden tifies constraints to enterprise gr ow th and recommends ways to address them. Thecost o f doi ng business in Tanzania (based on analysis done on ly f or D a r es Salaam) i s one
such issue discussed by the council.
Many o f he determinants o f what makes i t easy or cumbersome to do business l i e with
the loc al governments and councils that interpret and implement regulations and laws,rather than within theboundaries o f he capital. Therefore, the ease o f doing business canvary signif icantly by region within a diverse cou ntry such as Tanzania. An assessment o fthe subnational legal, regulatory, and administrative contexts for firm s w ou ld assistcentral policymakers to understand the details that influen ce fir ms ' operations across
Starting a business, de aling with icenses, emp loy ing workers, gettin g credit, registerin g property,
protectin g investors, pa ying taxes, enforcin g contracts, and closing a business.
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Tanzania's regions. T N B C recognized the region al variations and was in spired by thefrankness o f he glo bal report, which compares Tanzania's progress against that o f
countries such as Singapore and China. As a result, T N B C co mmissioned a subnationalsurvey o f he cost o f starting a business in eight major urban centers within the country,
excluding Dar es Salaam.
The global D oi ng Business 2007 repo rt compares the Tanzanian l aws and regulations thatgovern the relevant business environment with those o f other countries. In turn, the
subnational survey assesses, first, how these laws and regulations are understood,communicated, and implemented. Second, the survey assesses ho w they a ffect theconduct o f private sector activities in Tanzania's regions outside the ma in ci ty o f Dar es
Salaam. Mot ivat ed by the desire to pro mot e investment in the regions and encourageformalization o f business activity, T N B C has institutio nalized this region al focus o n the
priv ate sector within regio nal business councils.
This annual subnational Cost o f Do in g Business report, f irst, wil l complement the Doing
Business assessment3by gathering data on the re al time and costs o f setting up abusiness, one o f he natio nal report's 10 pr io rit y areas. Second, the subnational report will
insert evidence-based input in he regio nal business councils' dialogues and in the
broader, evidence-based dialogue betw een priva te and pu bli c sectors. This f i rs t
subnational study wi l l be repeated and expanded to i nclu de Tanzania's other regions,ultim ate ly producing an annual comprehensive nation al comparative re port o n the cost o f
do ing business in the country.
The most important objective o f his subnational report and related survey i s to help the
loc al governments and agency officials w ho d irec tly facilitate firm operations within the
regions to better understand and mo re effec tive ly hel p Tanzania's businesses increase
their investment, enhance their pro ductiv ity, and driv e the country's economic gro wth.
This pi lo t focused on eight regions w it h subsequent expansion across Tanzania.
8/6/2019 Sub-National Costs of Doing Business in Tanzania (2007)
The survey collects informatio n on real t ime and cost-both explicit and indirect-fsetting up a business in he major cit ies o f eight regions across TanzaniaS4 he surv ey
examines the interpretation o f he essentially comm on (with the except ion o f Zanzibar)legal and regulatory frameworks. I t also identifies key cognitive, administrative, and
logistica l bottlenecks that d elay comple tion or add to the costs o f settingup business
operations in the form al sector.
The distinguishing feature o f his methodology, compared with that o f he g lobal Doi ngBusiness survey, was i t s focus: studying ho w government offici als and service provide rs
in he subregions understood, communicated, and implemented a set o f elevant laws and
regulations common to 7 o f he 8 regions. (Business in Zanzibar i s governed by adifferent set o f aws than in Ma inl an d Tanzania.). The approach created three different
types o f business activities typi cally found in the regions: a grain milling firm, an autorepair business, and a small hotel with attached badrestaurant.
T o verify the relevant regulations governing the business environment in Tanzania, the
survey team went through the procedures required to start a business. Where i t was not
possible to experience the process, the team obtained detailed info rmation o n ho w tocomplete each o f he steps required to f orm ally c om ply with established national and
loca l laws.
In each o f he 8 regions, the team carried out the 7 procedures invo lve d in setting up a
business:
1. Incorp orate d a business2. Obtained relevan t business licenses
3. Registered employees for social security4. Registered for taxes5 . Boug ht and transferred prope rty
6. Connected po wer and water u tili tie s (changed accounts and insta lled newconnections)
7 . Opened a bank account and applied for a Tsh 5 mi l l i on overdraft .
The survey team visited 9 different offices in February 2007 to obtain information and
data o n the procedures and costs:
1. Regional chambers o f commerce2. Business registr ation office s/office rs (registration)
3. Mu nic ipa l tradinghusiness license offices/officers (licensing)4. Munic ipa l land offices/officers (buying and transferring property)
Arusha, Dodoma, Iringa, Kigoma , Mbeya, M twara, Mwanza, and Zanzibar.
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5. Tanzania Revenue Au tho rit y offi ces (taxation)6. Nat iona l Social Security Fundand Nat ion al Insurance Corpora tion (employment
issues)7 . Tanzania Electricity Supply Company (TANESCO ) and loc al water authority for
utility connections (account change and new connections)8. T w o banks with country-wide networks (for bank account and overdraft)
9. Others as advised by the various offices/officers.
The data collected was the veri fied by discussing the findings with 2-3 businesspersonsin each location wh o h ad set up businesses. The survey team then visited loca l business
associations (T CCIA s) and presented the preliminary firldings.
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Accord ing to the law, seven days should be a ll i t takes to incorporate and register abusiness in Tanzania. However, this i s n o t the case fo r f i r m s outside o f Dar.At least in
Mbeya or Mwanza, the forms can be f i l l ed out locally. However, the process i s s t i ll
centralized, so the forms sti l l must be submitted to the capital, calli ng fo r a costly and
sometimes lo ng our ney o n Tanzania’s roa d system. Thus, the length and cost o f
incorporating a business depends more o n the physical pr ox im it y to the ca pital thananything else. Instead o f 7 days, M be ya managed a speedy 10. In contrast, in Dodoma, acombination o f absent offi cial s and a pract ice o f n o for wa rdin g assistance means a firm
must spend 19 days to register.
2.1.I Legal Process
Figure 1shows the seven form al steps to inc orpo rate in Tanzania.
Figure 1. Seven steps to incorporate in Tanzania
Total cost betweon Tshs 108,200 and Tshs 338200 Fee PBYmWnl7 procedures, 7 dnyr
@ EN D 0
To comply with a l l these procedures, a firm must pay an average statutory cost o f Tshs106,200-Tshs 356,200.These costs comprise the registration fee o f Tshs 50,000-300,000depending o n the com pan y share capital; flat rate filing fee o f Tshs 45,000; and stamp
duty, wh ich varies according to the number o f copies o f he forms submitted: Tshs 6,200
for the Origina l Memorandu m and Art ic les o f Association, and Tshs 5,000 for each copy.
Reg istratio n requires seven steps. The multiple layers o f clearances or sequential stepsconta in rep lica tion (appendix 2).
2.1.2 Results
All businesses o n main lan d Tanzania are registered in D ar es Salaam and require between
10 and 23 days to complete the process. Eve n taking int o account the travel time betweenthe regio n andDar es Salaam by the cheapest form o f ransport available (usually busand/or tra in fr om Kigoma), there i s much regional variation. The global Do in g Business
report cannot pic k up region al variations.
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Figure 2. Business incorporation and registration: Results
25
20
-Ql,
d o
g'U
5
0
Zanzibar h i b c y a Ar L R ha M i w ar a 1)odorna Kigo ina Mwstiza I h g a
18
Ano the r factor that determines the time to register includes whether the loca l office i s
suppliedwith application forms (figure 2). InMbeya (10 days), the applicatio n forms fo rbusiness name clearance were available loca lly, a nd i t ook just 2 days to travel to and
f r om Dar es Salaam. O f hose surveyed, M be ya represents the mos t efficie nt place in
wh ic h to register. In five o f hese locations, business name clearance fo rms we re no tavailable loca lly. Inothers, there was o n ly one fo rm (in a fairl y fragile state), wh ic h had
to b e photocopied by the applicant(s), addi ng one day to the duration. In Mwanza, i t ook12 days to register, one reason bei ng that the application f or m to register must beobtained fro m the Tanzania Investment Center (TIC). In extreme cases, the situation was
worse. In Dodoma, the relevant of fici al was absent fr om his offic e for three days during
the survey perio d in February. One Regional Trade Officer to ld the enumerators that hisoffic e n o longe r facilitated business registration by forwa rding applications t o Da r es
Salaam or fol low ing up o n the registration.
2.2 Business and Trade Licensing
For mal requirements wou ld take 32 days, mostly spent wait ing for the Munic ipa l
Licen sing Committee (MLC ) to meet procedural requirements. Therefore, durationvaries widely among the regions, taking anywhere between 19 days in areas with n oM L C equirement to 136 days in Mtwara.
2.2.1 Legal Process
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Deal ing with the pro toc ol around licenses requires patience. In heory, the forma l
requirements shou ld take o n average 32 days, 21 o f wh ich are spent o n securing approvalfro m the Muni cipal Licensing Committee, whic h grants the business license. A llo wi ng 7days to complete the forms, most other steps take 2 days. The cost to the firm i s nil,
unless anticipated annual turnover is 20 m il li o n Tshs or above. In he lat ter case, the firm
would pay a fee o f Tshs 20,000. The process i s outl ined below.
1. Form completion. The applicant obtains application forms (Form 211 Rev.,
Ma rch 2004) f rom the Municipal Trade Officer and f i l l s in the requiredinformation. N o fee is required at this stage.
2. Form submission. Assuming the applicant is a l imited l iabil i ty company, i t
submits to the Trade Officer at the Ward level two completed application formsaccompanied by Memorandum o f Associat ion o f the company, Certificate o f
Incorporation, T ax Identificatio n Number (TIN), and Certificate and Tit le Deed orLease Agreement as evidence that the applicant has premises in wh ich to conduct
the business.
3. Assessment and payment if applicable. The Trade Officer at the Ward levelassesses the documents to estimate the anticipated annual turnover o f he intendedbusiness for purposes o f evyin g a license fee. Firmpays fee i f applicable.
4. Obtain approvals. All applications rel atin g to n onto urist hotels, guest houses, and
badrestaurant businesses requ ire the app roval o f the Ward Health Off icer (see
para. 14(ii) o Form 211 (Rev. Ma rch 2004)).
5. All applications (including for nontourist hotels, guest houses, barhestaurants)must obtain the approval o f he UrbanPlanning Officer.
6. Mu nic ipa l Licensing Committee approval and grant of license. Ha vin g obtained
all approvals above, the applicant submits al l documents t o the Mun icipa l TradeOfficer, who reviews them pr ior to a meet ing o f the Munic ipal Licensing
Committee, which grants the business license.
2.2.2 Results
Licenses are receive d with least delay in Mwanza and Iring a (figure 3). One reason is thatauthorities in bo th cities indicated that they did not require a Ward Committee meeting toapprove business license applications as all other locatio ns did.
T wo other factors tend to d elay licensing. P ro of o f ax payment across 2 separate quartersi s required in some regions such as Mtwara, in which i t took 136 days to obta in a license.In Arusha, D od om a (26 days), and Mb ey a (26 days), applicants ha d to photo copy thesingle application form at the o ffice because forms were no t available for distribution. In
Kigoma, i t too k 107 days to complete the process. In he absence o f a businessregistration or in corpor ation certificate, the Tanzania Revenue Au tho rity (TRA) officer in
Kigo ma refused to pro vide any informat ion on the TIN regis tration process.
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I Zanzibar Mbeya Arusha Mrwara Dodoma Kigorna M wa nz a Ir inga
21
2.3 National Social Security Fund (NS SF) Registration
Registrat ionwith the N SSF i s a two -da y process, with n o fees incurre d. Arusha, Mtw ara,
Mwanza, and Ir in ga meet this est imate. Mbeya's f ixed t im e prom ise o f 5 days extends i t s
dura tion to 7 days, the mos t t ime o f al l regions.
2.3.1 Process
1. The applicant obtains the fol lo win g forms fr om the local NS SF Comp lianceOff icer:
0 For m NS SFR .1 for the employer)
0 Fo rm NS SF R. 3A (one for each employee).
2. The ap plicant returns with the forms duly completed, w hi ch then are processed o n
th e same day and an NSSF number and/or certificate obtained.
2.3.2 Results
Arusha, Mtwa ra, M wanza, and Ir ing a al l complete the NSS F registrat ion process withinthe giv en theoretical 2 days (f igure 4). These four location s process applications o n th e
day that they are received fro m the applicants. In othe r cases, the agencies have chose n to
allocate a given tim e to the process duration. In Zanzibar, i t akes 4 days, because
applicants are requ ired to retu rn after a fixed 2 days. In Dod om a and Kigom a, applicants
return after 3 days. M be ya takes the longest-7 days-because app lican ts are asked to
retu rn after 5 days to co llect their numbers and/or certificates.
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I Zanz ibar Mbcyil AruuhA Mrwrrn Dodomv Kipoma Mvr lur Iring,
24
2.4 Tax Registration with Tanzania Revenue Authority (TRA)
Some tax registration form alit ies are dece ptively straightforward, consistin g o f ew short
steps with n o fees attached. In eal i ty i t can take up to 100 days to complete two key tax
registra tion steps, obtain ing a Tax Id entif icatio n Number and registering for the value-
added tax. .Mtwara, Kigoma, and I r inga are the most dif f ic ult c i t ies in wh ich to complete
tax registration. Across the board, tax registration appeared to be more a dec lara t ion o f
taxable income than registrat ion for informa tional purposes. I t of ten l ed to f i r m s being
taxed on anticipated rather than actual income. This outcome m ay create a n incentive for
infor ma l pract ice and mu lt ipl e business plans on f i rms' part.
2.4.1 Process
The steps be low out l ine the off ic ial procedure necessary to (a) obtain a Tax Ident i f icat ion
Number (TIN) and (b) register for th e value-added tax (VAT). Ea ch procedure takes 2days in heory, with no associated fees levied .
A. Obtaining a TIN:
1. Applicant obtains TIN application forms at the l oca l TRA off ice.
2. Applicant returns with the forms dulyfille d out and copies o f he Cer ti fi ca te o fIncorporat ionand Memorandum and Art ic les o f Association; and tw o passport photos
o f each director.
3. Application isprocessed, and TIN number i s issued o n th e same day.
B. Register ing for Value-Added Tax (VAT):
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complete this process in 38 days. The cost to the buyer i s 1% o f the sa le pr ice o f theproperty in stamp duty. The cost to the seller i s a valuatio n fee, an approval fee o f Tshs
5,000, and subsequent cap ita l gains tax.
1. Obtain appropriate forms. Obtain from the Commissioner for Lands or
authorized Officer Lan d Forms N o. 2gY5No. 30,6 and No. 35, the Agreement o fTransfer o f Right o f Occupancy. No ee is payable.
2. Submission for approval of disposition to the Municipal Land Officer. The
forms must be accompanied by a Sale Agreement prepared by the SelledLawyer,
Valuation Report approved by a Government Valuer, valuation approval fees
receipt, Current Land Rent Receipt (as evidence that no outstanding land rent i s
payable), current Annual Returns filed with the Registrar o f Companies (in casethe seller i s a l imited l iabi l i ty company), pro of o f payment o f Stamp Duty, and
p r oo f o f payment o f capita l gains tax. A Tshs. 5,000.00 approval fee i s evied.
3. Submission to the Zonal Land Registry for registrationlendorsement o f the
details o f he new owner in he Certif icate o f Tit le. No fee at thi s stage.
2.5.2 Results
I t appears that several o f he loca l offices generally are efficie nt within their o w n
mandates at com ple ting their own responsibilities, but the centralized system causes
significant additional delay ( f igure 6). Lo ca l processes in Mw an za (1 14 days), Irin ga (120
days), and Arush a (125) cou ld be completed within 40 days but then were d elayed at least
3 additional months for the title deeds to be processed in D a r es Salaam.
Mbeya7and Zanzibar appear to be the most ef ficie nt cities, taking 4 1 and 53 days to
complete the process, respectively. The process took longest in Dodoma, Kigoma, andMtwara, where the offices suffer from extreme backlogs. Furthermore, in Kig oma (268days), different treatment o f differe nt clients appeared to take place. There, the team
spoke with applicants who had been wai ting to see the relevantoff icia l fo r several weeks
with n o success. InMtwa ra, applicants often were advised by the Commissioner for
Lands of fice to stop the transfer process before obta ining the tit le deed. One storyinv olv ed a businessman who h ad insistedo n comp leting the process but had been wait ingfor h is t i t le deed to come from Dar es Salaam for over five years.
Not i fi ca tion o f dispo sition under Sec. 36 o f he Land Ac t o f 1999.
Appl icat ion for Approval o f Disposi t ion under Sec. 39 o f he Land Ac t No. 4 o f 1999.
I t must be noted, however, that the estimate by the Mbeya L and Off icer that i t would take seven days to
obtain a ti tle deed fro m Dar es Salaam seems very optimistic.
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Costs: Tshs 16,000 min. plus installation costs depending on distance to building.
Duration: 30-1 80 days.
A. Account Transfermame Change
1. Applicant writes a letter to the TA NES CO Office Manager requesting a name change
to the existing meter, attaching pro o f o f occupancy (t itle deed or lease agreement),new ma ilin g address, and pr oo f hat the previous account holde r has p ai d the last bill
in i l l .
2. TA NE SC O Office Ma na ger approves letter and supporting documents. Accou nt
change i s effected the same day. I t wil l be observed in he next billing cycle.
Costs: None.
Duration: 1 day.
2.6.2 Results
In Kigoma, Iringa, and Mbeya, i t was no t possible to get a power connection: K ig om a
had no poles or wires, and Ir inga had runout o f wires and meters (figure 7 ) . Mbeya had abacklog o f 20,000 applications due to the nonavai labi l ity o f wires. To tal days required
were 123, 103, and 101, respectively. How ever, the survey team was told o f a new
customer in Mbeya who had been connected within eight days after the process.
:igure 7. Connecting power: Results
Connect inn Pow er - results140
120
100
h
& n o
Ei
60
40
20
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Znnzthmr M b vY . 4 Aruwhr Mtvunra I h d o m a Kigomn M w ~ n r n Ir lnp'
33,u < < , O , I L C , I I I I I 0 \ % < < , U , , , L,<,ll.tF,
In a ll other locations, i t took between 36 and 41 days to receive a n ew connection (figure.Zanzibar i s the most efficient, requ iring on ly 13 days for n ew connection. Time totransfer ex isting connections ranged fro m a minimum o f 2 days in Mwanza to a
m a xi m um o f 5 days in Mtwara.
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Acti on s and documents require d to connect water:
1. Applicant makes written request for a new connection that includes detailed
directions to the location.2. Tech nician makes needs assessment. Technician visits the locatio n with the
applicant t o assess what i s needed to in sta ll the new conn ection (distance t o nearestwater mains, required materials). T echnician’s trav el costs are incu rred by the
applicant.3. Technician produces pro-forma invoice for the new connection installa tion costs.
Customer i s expected to ma ke a payment before the installa tion is started.
4. Technician installs meter to complete process.
Cost: M ate ria ls a nd labor costs to install.
Duration: 10 days.
B. Account Transfer
Actions and documents required to connect water:
1. Applicant obtains account transfer application form.
2. Applicant submits application with p r oo f o f occupancy or a lease agreement and
evidence that the previ ous account hold er has cleared the bill.3. Water autho rity approves and transfers the account.
Cost: None.
Duration: 2 days.
2.7.2 Results
Again, i t s faster to transfer an ex isting account (2-3 days) th an to get a ne w waterconnection (minimum o f 1-2 weeks) (figure 8). The process ofte n can be expedited onl yi f he customer him- or hersel f purchases the req uired mate rials and digs the trenches forwater pipes in advance.
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Although Dodom a and Mwa nza had roughly s imi lar costs in TZ S terms,’ Dodo ma’s cost
was almost 90% o f t s regional GDP compared to Mwanza’s 55%. I t s clear that Dodom a
is disadvantaged bot h by i t s lowe r income le vel and the fact that i t too k almost 50% moretime to register and start a business there than i t did in Mwanza.
“TZS” means Tanzanian shi l l ings p er US$.
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The central ization o f the business inco rporation and registration function in Dar esSalaam has a ma jor imp act on the t im e taken and nonstatutory costs incurred to complete
the process fo r those w ho are not in he ci ty. E ve n sole proprietorships must register their
businesses in Dar es Salaam. A s imple and ef jc ient solut ion to some of the informat ion
f lo w and s tandardization problems may l ie in the design and deployment o appropr iate
informa tion dat a transfer systems. International experience suggests that web-based
appl icat ions and a broader approach can pro v id e bet ter -qual i ty government serv ices,
Lringa is located in central Tanzania a pproximately 502 km f rom Dar es Salaam. The trip
f ro m Da r es Salaam to Ir ing a takes app roximately 8 hours by road. According to the 2002
Census, the town’s p opu lation was 106,668. Iring a’s t o w n center stretches along a hil lto poffer ing scenic views o f he Ruaha River and the val ley below. During June, July, and
August, night temperatures fall to near freezing. Economic activity revolves around
agriculture (primarily maize, onions, and tomatoes), vegetable, and dairy processing;
transportation (Iring a i s a t ruck ing hub); and general merchandise trading.
‘igure A I 6 Starting a business in Iringa, February 2007
Starting a Business in lringa (Feb 2007)
400
350
300
250
u)
z 200n
150
100
50
0
2%
28%
Duration:359 Days
Cost: 98% of per capita GDP
Registration License NSSF TIN VAT Property Power Water
Procedure
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Mtwa ra is located south o f Tanzania o n the border with Mozambique. The main t ow n i s
584 km f rom Dar es Salaam. Travel time i s approximately 1hour by air and 12 hours ona road o f vary ing qual i ty depending on the season. In 2002 the region’s popu lat ion was
estimated at 1.12 m ill i on .
M tw ar a has a deep-sea por t in a natural harbor. Ag ricultu re i s th e mainstay o f he town’s
and region’s economies. Cashews are i t s major cash crop. The region has faced
significan t development challenges due primarily to poor road and energy infrastructure.
However, the recent ly commiss ioned M na zi Ba y Gas to Elect r ic i ty Project i s ensuring a
rel iable powe r supply for in dustrial and commercial act iv i t ies inMtwara.
Figure A I 8 Starting a business in Mw ara, February 2007
600
500
400
v)
2 300c1
200
i o0
0
Starting a Business in Mtwara (Feb 2007)
Duration:509 Days
Cost: 139% of per capita GDP
9%
9%
28% 1%
10% 2%
I
Registration License NSSF TIN VA T Roperty Power Water
Procedure
Appendix 2. Legal Process Associated with Registering a Business
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registrat ionby filing Company FormsNos . 14(a) and 14(b) a ccompanied by
Memorandum and Art ic les o f Associat ion
Assessment an d advice o n registrat ion and
fi l l ing fees and stamp duty
Payment o f equi red fees
a f i le
Preparation an d Issuance o f Cert i ficate o f
Registrat ion
5 .
6.
1.
2.
3.
4.
5.
Preview o f documents
Issuing Registrat ion Number and opening
A name search i s conducted to establish availability and validity. N o fee i s
payableSubmission to the Reg istry Officer of, among other items, the Memorandum and
Art ic les o f Association o f the proposed com pany together with Company FormsNos. 14 (a) and 14 (b). Note that Form No. 14 (a) wil l contain informationdescribing details o f the f i rs t directors, secretary, and registered off ice o f theproposed company. Fo rm No. 14 (b) i s a confirmation by a director or secretary o f
the company as the case m a y be regarding compliance with the provisions o f the
Companies Ac t N o . 12 o f 2002.Docu men t review and fee assessment by Reg istry. The minimum i s Tshs.50,000.00 where the authorized share capital i s between Tshs. 20,000.00 and
500,000.00 whi le the maximum i s Tshs. 300,000.00 where the authorized share
capital i s more than Tshs. 30,000,000.00. Stamp Duty depends on the number o fcopies o f Memorandum and Artic les o f Association submitted to the RegistryOffi cer. Tshs. 6,200.00 is changeable on the ori gin al cop y and Tsh. 5,000.00 o neach copy. N ot e that the law does not provide fo r a minimum numbers o f copies
for purposes o f Stamp Duty. However, the practice i s to submit the original andsuch other copies as may be the numbers o f he shareholders o f he company or
for other regulato ry authorities o r banking institutions.
After the paymen ts an d receipt issuance, the documents wil l be forwarded to the
Registrar for review and approval. I f he documents ar e approved, the Registrar
will forward the documents to the Deputy Registrar, who assigns the documentsto the Registry Officer with instructions to open a f i l e and give a registrationnumber to the intended company.The Regis try Office r opens a file, issues a registrat ion number, and forwards thefil e to the Secretary.
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Appendix 4. Description of Property Transfer P rocedures
Estimated
duration to
completion (da)
7
1
1. The seller obtains Land Forms No. 29 being a n ot i f ication o f disposi tion under
Section 36 o f he Land Ac t, 1999 to the Commissioner for Lands or authorizedOfficer , Land For m No. 30 being Appl icat ion for Approval o f Disposi t ion under
Section 39 o f the Land Ac t No. 4 o f 1999 and Land Form N o. 3 5 being
Agreement o f Transfer o f Right o f Occupancy. N o fee i s payable o n obtaining the
said LandForms.
Detailed description
Seller causes valuation
o f property subject o f
sale.
2. The seller completes the forms referred to above and submits the same for
approval o f disposit ion to the Muni cipa l Land Officer. The forms must beaccompanied by a Sale Agreement (prepared by the SelledLawyer), Valuation
Report approved by a Government Valuer, v alu atio n approva l fees receipt, currentLand Rent Receipt (as evidence that no outstanding land rent is payable), currentAnnual Returns f i led with the Registrar o f Companies (where the seller i s alimited l iabi l i ty company), pro of o f payment o f Stamp Duty, p r oo f o f payment o f
Capital Gain Tax. At th is stage, the seller pays Tshs. 5,000.00 as approval fee.
Where (office) and
who (official)
Government Valuer. Not ethat even if valuat ion was
conductedby a PrivateValuer, i t must be
approved by a
Government Valuer.
3 . Having obtained the required approval from the Municipal Land Officer, the
Seller submits the documents to the Zonal Land Registry forregistratiodendorsement o f the details o f the new owner in the Certif icate o fTi t le. N o fee at this stage.
4. Note that the procedure i s the same regardless o f whether the property being
transferred is developed or empty plot .
30 % o f sale pric e if
prope rty subject o ftransfer is owne d
by a l im i ted
l iabi l i ty company
and 10% o f sale
p r i c e if proper ty
S I N
1.
-.
-. 1
Seller prepares Sale
Agreement for part ies to
sign and submit signed
agreement to Ta nzaniaRevenue Author i ty fo r
purposes o f Stamp Duty.
Seller must p ay capital
gains tax.
TRA’s off icer at Regional
level
TRA’s of f icer at Regional
level
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