Ever since 2005 was announced the year of Africa, the Turkish business world has worked efficiently to discover new markets across the continent, becoming an active player in gaining a niche in this market and setting sights on Tanzania, an important gateway to east Africa and a crucial country for Turkey's business world. The establishment of the Turkish Embassy in Tanzania in 2009 and initiatives taken by Turkish Airlines (THY), offering flights to the city of Dar es Salaam on June 14, 2010 and Kilimanjaro on Dec. 4, 2012, major efforts are being made by the government to strengthen the development of Turkish-Tanzanian relations in every aspect of bilateral relations.
With a population estimated at 50 million as of 2016, this East African nation has made great strides in launching economic and structural reforms. These reforms in return assisted the country in its relatively stable and high-growth performance over the past decade with an annual average of 6.9 percent, mainly contributed by the sectors of construction, mining and services.
According to the president of the Turkey-Tanzania Business Council of the Foreign Economic Relations' Board (DEİK) Aytaç Muhittin Dinçer, "In the last decade, Tanzania has become one of the top performing countries in sub-Saharan Africa in terms of economic performance. We believe that relations between these two countries will develop rapidly as a result of our president's visit."
Back in 1986, new economic reform programs jump started the sluggish economy, transforming the Tanzanian market and liberalizing trade, currency and domestic interest rates. The implementation of large-scale privatization practices led to a significant reduction in the number of employees in the public sector, ushering in the performance-based wage system. While approximately 40 percent of household incomes in Tanzania come from borrowing practices, reform in the political, economic and public administration sectors transformed the Tanzanian market amid the implementation of political, economic and public administration sector reform. Agriculture, which accounts for about half of Tanzania's Gross Domestic Product (GDP), is worth roughly $45.63 billion and is the source of income for 80 percent of the population, making it the largest sector of the Tanzanian economy. Additionally, the agricultural sector, which is the main source of food and raw materials, is also an important source of exports.
Tanzania, which is a country with the lowest economic risk rates in Sub-Saharan Africa, is one of the leading African countries receiving foreign direct investments, and was the third-largest foreign direct investment (FDI) recipient in Africa in 2014. Moreover, the FDI granted to Tanzania covered half of the country's current account deficit and roughly 6.5 percent of the GDP. The vast majority of investments are concentrated in the mining, manufacturing, agriculture and tourism sectors. Regarding FDIs made to Tanzania, the first orders are from the U.K., the U.S., Kenya, Canada, South Africa, China, Germany, Italy, the Netherlands and India. Areas with investment potential in the country include agriculture, tourism, mining, food processing, education, health, fashion, manufacturing, carpentry, energy and infrastructure such as roads and bridges. Moreover, there are no laws or practices in Tanzania that restrict or impede direct foreign investments. To the contrary, firms do not restrict foreign participation, allowing foreign investors to benefit from local assistance.
Dinçer pointed out that Tanzania has many investment opportunities for the Turkish private sector and noted that the country could be a profitable investment for Turkey in terms of mining and renewable energy, pharmaceuticals, textiles, construction and building materials, production and sales of agricultural machinery, and the meat and fishery sectors, while taking into consideration sectors where Turkey is comparatively superior over Tanzania.
Dinçer, saying the trade volume between the two countries has increased in recent years, indicated that council officials believe the relations between the two countries will develop rapidly as a result of the visit of President Erdoğan. The trade volume between Turkey and Tanzania stood at $66 million in 2009, while it was $150 million in 2015. Comparatively, Turkey's trade volume with Tanzania in the 1990s was below $10 million, but has since followed the upward trend in general, having fluctuated around an annual average of $65 million since 2008. Indicating that in the last 15 years with the exception of a few, that the foreign trade balance has been in Turkey's favor, Dinçer said: "This is an opportunity to increase the existing and potential demand and to increase our exports as a result of the fact that the country is a gateway to East African countries. In this context, signing of the free trade agreements and preferential trade agreements and the signing of double taxation is expected. By signing these agreements, trade between the two countries will increase." Furthermore, Dinçer added that, within this scope, the 2nd term meeting of Turkey-Tanzania Joint Economic Commission (KEK) was held in Ankara on Jan. 12, saying a preliminary agreement was signed for an agreement to prevent double taxation between the two countries. He also said, as in all African countries, Tanzania has financing problems in the realization phase of its projects, noting: "In order to solve this problem, it is necessary to develop cooperation between the Turkish Export Credit Bank (Türk Eximbank) and the African Export-Import Bank (Afreximbank), and it is necessary for Türk Eximbank to increase the financing rates for the projects of Turkish investors while developing new financing solutions," he added.
In December 2016, Tanzania's annual inflation rate rose to 5 percent compared to 4.8 percent in the previous month. It was the highest inflation rate since July, mainly boosted by rising food prices. The inflation rate in Tanzania averaged 7.35 percent from 1999 until 2016, reaching an all-time high of 19.80 percent in December 2011 and a record low of 3.40 percent in January 2003. Tanzania is ranked 108th in the 2011 World Economic Freedom Index Yearbook, which measures the extent to which countries adopt the principles of a small state, strong private sector, broad ownership rights, legal order and low taxes. Additionally, Tanzania is ranked 15th out of 46 countries in Sub-Saharan Africa in the aforementioned index.
Furthermore, Tanzania is a member of the East African Community (EAC) Customs Union. Along with the Republic of Tanzania, the Republic of Kenya, the Republic of Uganda, the Republic of Rwanda and the Republic of Burundi, the members of the EAC are part of a regional intergovernmental organization with headquarters in the Tanzanian city of Arusha. The EAC seeks to expand and deepen its political, economic and social cooperative ties in the interest of all member states. Additionally, the EAC countries passed on to the customs union application in 2005. On Nov. 20, 2009, member countries signed the Common Market Protocol, which entered into force on July 1, 2010.