55642 BETTER REGULATION FOR GROWTH GOVERNANCE FRAMEWORKS AND TOOLS FOR EFFECTIVE REGULATORY REFORM REGULATORY CAPACITY REVIEW OF TANZANIA INVESTMENT CLIMATE ADVISORY SERVICES WORLD BANK GROUP WB208_RCRT.indd i 5/20/10 5:11:09 AM ©2010 The World Bank Group 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to repro- duce portions of the work promptly. For permission to photocopy or reprint any part of this work, please send a request with complete information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com. All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail: pubrights@worldbank.org. About the Investment Climate Advisory Services of the World Bank Group The Investment Climate Advisory Services (IC) of the World Bank Group helps governments implement reforms to improve their business environment, and encourage and retain investment, thus fostering competitive markets, growth and job creation. Funding is provided by the World Bank Group (IFC, MIGA, and the World Bank) and over 15 donor partners working through the multi- donor FIAS platform. The findings, interpretations and conclusions included in this note are those of the author and do not necessarily reflect the view of the Executive Directors of the World Bank Group or the governments they represent. Better Regulation for Growth Program The Better Regulation for Growth (BRG) Program was launched in 2007 by the Dutch Ministry of Foreign Affairs, the UK Depart- ment for International Development (DFID) and IC, the investment climate advisory services of the World Bank Group. The objective of the BRG Program is to review and synthesize experiences with regulatory governance initiatives in developing countries, and to develop and disseminate practical tools and guidance that will help developing countries design and implement effective regulatory reform programs. Reports and other documentation developed under the BRG Program are available at: www .ifc.org/brg WB208_RCRT.indd ii 5/20/10 5:11:12 AM Table of Contents Acknowledgment ................................................................................ vi Foreword ........................................................................................... vii Acronyms: Tanzania ...........................................................................viii Executive Summary ............................................................................ x Regulatory Reform in a National Context ............................................. 1 Economic development context .............................................................................1 Administrative and legal environment ....................................................................4 Recent regulatory reform initiatives ........................................................................7 National Policies and Institutions for Regulatory Reform .................... 13 Regulatory reform principles and policies .............................................................13 Institutions and drivers to promote regulatory reform .............................................15 Coordination between levels of government .........................................................17 National ­Local ................................................................................................17 National-International ........................................................................................18 Administrative Capacities for Making High Quality Regulation ........... 19 Administrative transparency and predictability ......................................................19 Provisions for transparency in making laws ..........................................................19 Provisions for consultation ..................................................................................20 Communication of regulation ..............................................................................22 Compliance and enforcement of regulation ..........................................................23 Public redress and appeals.................................................................................24 Policy instrument alternatives ..............................................................................24 Use of RIA for understanding regulatory effects .....................................................25 Building administrative skills for regulatory reform .................................................26 Updating Regulations ......................................................................... 27 Revisions of existing laws and regulations ............................................................27 Reducing administrative burdens .........................................................................28 Use of ICT to support regulatory reform ...............................................................31 Role of Donors .................................................................................. 32 Conclusions and Recommendations .................................................... 34 Assessment of strengths and weaknesses ..............................................................34 Policy options and recommendations ..................................................................34 iii WB208_RCRT.indd iii 5/20/10 5:11:12 AM APPENDIX A. Principles of Good Regulation ....................................... 37 APPENDIX B. Doing Business 2009: Economy Rankings for Sub-Saharan Africa ....................................................... 38 APPENDIX C. Business Registration and Licensing Agency (BRELA) .................................................................................. 39 Aim, roles and strategic objectives ......................................................................39 Agency structure ...............................................................................................40 APPENDIX D. The Judicial System in Tanzania..................................... 41 Judicial system in mainland tanzania ...................................................................41 Judicial system on zanzibar ................................................................................42 APPENDIX E. BEST Program Components and Expected Results ........... 43 iv WB208_RCRT.indd iv 5/20/10 5:11:12 AM List of Boxes and Table Boxes Box 1: The Legislative Process in Tanzania ...........................................................20 Box 2: Tanzania National Business Council ..........................................................22 Table Table 1: Commercial Legislation in Tanzania ..........................................................6 v WB208_RCRT.indd v 5/20/10 5:11:12 AM ACKNOWLEDGMENT This report was produced by Roy Pepper, consul- well as from interviews with many key stake- tant and former Lead Investment Policy Officer holders and experts on regulatory reform in in FIAS between 2002 and 2007. Delia Rodrigo Tanzania, including Adam Zuku, Augastine and Peter Ladegaard of the World Bank Group's Olal, Bede Lyimo, Darren Welch, Emmanuel Investment Climate Department designed the Kakwezi, Jacqueline Maleko, Margaret Ndaba, approach for the study and provided ad-hoc guid- Ms. Kalege, Robert Ntakamulenga and Vedastus ance and input. Manumbu. The report benefited from valuable comments Zai Fanai and Vanessa T. Co supported the pub- from Delia Rodrigo and Moses T. Kibirige as lication of the report. vi WB208_RCRT.indd vi 5/20/10 5:11:13 AM FOREWORD Regulatory reform has emerged as an important Uganda, Rwanda and Zambia), and represents an policy area in developing countries. For reforms attempt to apply assessment tools and the frame- to be beneficial, regulatory regimes need to be work developed by the Organization for Economic transparent, coherent, and comprehensive. They Cooperation and Development (OECD) in its must establish appropriate institutional frame- work on regulatory capacity and performance to works and liberalized business regulations; developing countries. enforce competition policy and law; and open external and internal markets to trade and The report is an input to the Investment Cli- investment. mate Advisory Services (IC) discussions aimed at helping governments improve regulatory This report analyses the institutional set-up and quality--that is, reform regulations to foster use of regulatory policy instruments in Tanzania. competition, innovation, economic growth, and It is one of five reports prepared on countries in social objectives. East and Southern Africa (the others are on Kenya, vii WB208_RCRT.indd vii 5/20/10 5:11:13 AM ACRONYMS: TANZANIA ADR Alternative Dispute Resolution BARA Business Activities Registration Act BEST Business Environment Strengthening for Tanzania BRELA Business Registrations and Licensing Agency BRU Better Regulation Unit BSC Steering Committee CCRO Customary Rights of Occupancy CDR Commercial Dispute Resolution CMA Commission for Mediation and Arbitration CVL Certificates of Village Land DANIDA Danish International Development Agency DFID U.K. Department for International Development EWURA Energy and Water Utilities Regulatory Authority IC Investment Climate Advisory Services ICT Information and Communication Technology IDA International Development Association IMTC Inter-Ministerial Technical Committee IPC Investment Promotion Centre LRCT Law Reform Commission of Tanzania LSRP Legal Sector Reform Program MOCAJ Ministry of Constitutional Affairs and Justice viii WB208_RCRT.indd viii 5/20/10 5:11:15 AM MPEE Ministry of Planning and Economic Empowerment MSME Micro, Small, and Medium Enterprises NSGPR National Strategy for Growth and Poverty Reduction (aka MKUKATA) OECD Organization for Economic Cooperation and Development PO-PSM Public Service Management of the President's Office PMO-RALG Prime Minister's Office ­ Regional Administration and Local Government PSCP Private Sector Competitiveness Project PSRP Public Sector Reform Program RBP Regulatory Best Practice RIA Regulatory Impact Analysis RITA Registry of Births, Deaths, Marriages, Insolvency and Estate Administration SADC South African Development Community SIDA Swedish International Development Cooperation Agency SME Small and Medium Enterprises SUMATRA Surface and Marine Transport Regulatory Authority TCAA Tanzania Civil Aviation Authority TCCIA Tanzania Chamber of Commerce, Industry and Agriculture TCRA Tanzania Communications Regulatory Authority TIC Tanzania Investment Centre TNBC Tanzania National Business Council TRA Tanzania Revenue Authority TRC Tripartite Review Committee TWG Technical Working Groups USAID U.S. Agency for International Development VAT Value Added Tax ix WB208_RCRT.indd ix 5/20/10 5:11:17 AM EXECUTIVE SUMMARY Like many developing countries, Tanzania needs per annum, per capita GDP growth rates over the a comprehensive regulatory reform agenda in last decade have resulted in only modest poverty response to both domestic and international fac- reduction. The current estimate is that 35 per- tors. Since the early 1990s, the government of cent of the population lives below the national Tanzania has reformed its economy, whereby poverty line. macro-economic stabilization, propelled by sound fiscal and monetary policies, has been accompa- Sustaining and increasing growth is one of the nied by wide-ranging structural reforms. Some of key challenges facing policymakers in Tanzania, these include privatization of state-owned enter- as is broadening the impact of growth, given the prises, liberalization of the agriculture sector, country's objective of halving poverty by 2015. efforts to improve the business environment, and Investment has been relatively high in the past in strengthening of public expenditure management Tanzania, and the private sector has typically and provision of public services. Increasing atten- accounted for more than two-thirds of domestic tion has been placed on building the institutional investment. Vision 2025, the Poverty Reduction foundations for a private enterprise economy and Strategy, and the National Strategy for Growth building synergy between different areas of public and Development all emphasize the private sec- policy. tor as the engine of growth. However, increases in overall investment since 2000 have been driven In that period, Tanzania has seen an acceleration almost entirely by increasing levels of public of economic growth from 0.4 percent in 1993 to investment, facilitated by increased flows of above 5 percent in recent years. Despite this donor assistance triggered by the reforms under- extended period of growth, Tanzania remains one taken by government. Private sector investment, of the poorest countries among the Least Devel- on the other hand, has only been growing slowly oped Countries, with a per capita income of $400 during the past decade, following rapid growth at in 2007. With population growth of 2.4 percent the beginning of the 1990s. x WB208_RCRT.indd x 5/20/10 5:11:18 AM In order to sustain economic growth in the future, DB2009 confirms that these reforms have private investment activity, both domestic and improved Tanzania's standing to some degree in foreign, will have to pick up. Government docu- comparison with its neighbors, but still leave the ments emphasize the importance of private sector country far behind international best practice. development for attaining national goals of accel- Excessive red tape and government interference in eration of growth, wealth creation, and poverty private sector activities remain the main con- reduction. They identify an "enabling business straints to private sector development in Tanzania. environment" as one of the key drivers of private One indicator of this is the large share of GDP sector development. As indicated in the World generated in the informal sector, and its con- Bank's 2003 Investment Climate Study, Tanzania tinuing growth: some 55 percent of GDP is faces significant and broad challenges in creating estimated to be generated within the informal an improved business environment. Factors sector, and more than 95 percent of enterprises ranked as "major or very severe constraints on in Tanzania are estimated to be informal to enterprise operations and growth" were, in order some degree. of importance: Regulatory reform is increasingly seen as an tax rates, essential element in the range of policy responses. The government is pursuing much of its regula- electricity, tory agenda through the Business Environment Strengthening for Tanzania (BEST) Program, cost of (and access to) finance, which deals with business registration, licens- ing, land allocation and labor reforms. It has tax administration, endorsed the need for broad regulatory gover- nance improvements through adoption of good corruption, regulation practices, such as Regulatory Impact Analysis (RIA), within the broader reform of macro-economic stability, and government and the public administration. customs administration. Against this background, the report suggests a set of short- and medium-term actions to improve Beyond this broad agenda of severe constraints, the capacities of the Tanzanian government to other constraints, including regulatory uncer- assure high-quality regulation. At the center of tainty and licensing were identified. The World these actions is the recommendation to build a Bank's Doing Business indicators provide more regulatory management system by adopting at detailed measures of regulations concerning the the highest political level a broad policy on regu- start-up and operation of business that tend to latory reform that establishes clear objectives, confirm the conclusion that regulatory barriers accountability, and frameworks for implementing are serious in Tanzania. Compared to its ranking regulation. As an integral part of this, the report of 150th in 2006, DB 2009 ranks Tanzania as recommends establishing a ministerial position 127th globally in the "ease of doing business" to champion regulatory reform at Cabinet level synthetic indicator and 14th in Sub-Saharan and to coordinate regulatory reform across gov- Africa, a significant improvement in a short ernment. An oversight technical unit should be period, but far behind international best practice. established to support the minister in these In DB2007, Tanzania was recognized as one of activities. the top 10 reformers globally, specifically in the areas of business startup, registration of property, The report recommends steps to be taken to investor protection, and trading across borders. improve the capacities to make new regulations xi WB208_RCRT.indd xi 5/20/10 5:11:18 AM and to keep existing regulations up to date. The The latter includes continued efforts to reduce former include such initiatives as: administrative burdens by establishing a central registry of administrative procedures and business designing and implementing a step-by-step licenses, and by initiating a comprehensive review program for regulatory impact assessments; of existing regulations. Particular attention should be directed towards compliance and enforcement improving transparency by establishing legal of regulations. Improvements on enforcement and requirements for consultation procedures compliance dimensions are among the most during the preparation of regulations; important challenges to Tanzania's regulatory man- agement system. The problems are the result of a promoting the systematic consideration of line of deficiencies in the regulatory process. A key regulatory alternatives; and effort will be to rationalize the whole enforcement capacities of central ministries, and to strengthen streamlining the current activities of legal the ex ante assessment of enforcement capacities of scrutiny of draft regulations. regulators and expected compliance issues. xii WB208_RCRT.indd xii 5/20/10 5:11:22 AM REGULATORY REFORM IN A NATIONAL CONTEXT Economic development context International Monetary Fund) that focused ini- tially on fiscal and trade measures to stabilize the At independence in 1961, Tanzania was one of economy and subsequently on liberalizing the the poorest countries in the world. Its govern- economy by removing constraints on private sec- ment chose a path of "African Socialism" and tor activities and abolishing controls on prices "self-reliance/ujamaa" to bring about national and the exchange and interest rates. The govern- development, whereby almost all productive and ment tolerated private activities, but there was service activities were put under the direct con- little effort made at that stage to reform the legal trol of the state. While the policy of socialism and and regulatory regimes governing economic ujamaa led to improvements in social develop- activity, and private enterprise concentrated in ment, especially in primary education and health trading and other short-term activities that services, economic growth stagnated as state-run required few fixed assets and minimal interaction enterprises became increasingly inefficient and with government agencies. This limited response ineffective. Urban and rural poverty increased, of the domestic private sector (and of the public and by the mid-1980s Tanzania was in the mid- enterprises) to these initial reforms led the gov- dle of a severe economic crisis, with a long-term ernment to recognize the need for foreign invest- growth trajectory that promised further poverty. ment.In 1990, the Investment Promotion Act established the Investment Promotion Centre 1986 marked a watershed for the Tanzanian (IPC). economy and the government's economic strat- egy. Since then, Tanzania has been carrying out Since the early 1990s, the government of Tanza- economic reforms designed to establish a robust nia has introduced a systemic and broad reform market economy. Reforms started with Struc- agenda, whereby macro-economic stabilization, tural Adjustment and Economic Recovery Pro- propelled by sound fiscal and monetary policies, grams (supported by the World Bank and the has been accompanied by wide ranging structural 1 WB208_RCRT.indd 1 5/20/10 5:11:22 AM reforms, including privatization of state-owned economic growth has been significantly above enterprises,1 liberalization of the agriculture sector, the average for sub-Saharan Africa. Indeed, efforts to improve the business environment, and with an average growth rate of 5.2 percent dur- strengthening of public expenditure management. ing that period, Tanzania was close to matching Increasing attention has been placed on building the average performance of South Asia (5.4 per- the institutional foundations for a private enter- cent) and South East Asia (5.6 percent) econo- prise economy and building synergy between dif- mies, both of which groups were regarded as ferent areas of public policy.2 In 1996, a major having the most robust growth performance effort to liberalize the financial sector was launched, globally. This reversal of a negative long term resulting in privatization of state-owned banks and growth trend experienced between 1961 and in licensing of private banks. The Tanzania Reve- 1985 and a gradual acceleration in growth since nue Authority was created to modernize tax then are closely linked to the gradual broaden- administration, make it efficient and user- ing and deepening of reforms that have taken friendly, promote voluntary tax compliance, and place, and the development of the private sector, strengthen the revenue base of the government. especially in the industry and service sectors. In 1998, the IPC was transformed into the Tan- zania Investment Centre (TIC), designed to be a Nonetheless, in spite of this extended period of one-stop-shop for investors. In 1999, the Busi- growth, Tanzania, with a per capita income of ness Registration and Licensing Authority $400 in 2007, remains one of the poorest coun- (BRELA) was established to handle business reg- tries among the Least Developed Countries.4 istration outside the mainstream of government With population growth of 2.4 percent per bureaucracy, with a view to cutting down on red- annum, per capita GDP growth rates over the tape and reducing start-up costs for businesses. last decade have resulted in only modest poverty In 2000, the BEST Program was started to carry reduction. The current estimate is that 35 per- out a broad and integrated reform of the business cent of the population lives below the national environment and reduce the cost of doing busi- poverty line, a lower percentage than many other ness. Regulatory reform has been increasingly poor countries, which reflects the fact that Tanza- viewed as an essential element in the spectrum of nia has a relatively equal income distribution.5 policies adopted to stimulate economic growth. Sustaining and increasing growth is one of the During the past decade and a half, Tanzania has key challenges facing policymakers in Tanzania, seen an acceleration of economic growth from as is broadening the impact of growth, given the 0.4 percent in 1993 to above 5 percent in recent country's objective of halving poverty by 2015. years.3 During the last five years, Tanzania's Vision 2025, the Poverty Reduction Strategy and the National Strategy for Growth and Pov- 1 The extent of the poor performance of public enterprises erty Reduction (NSGPR, aka MKUKATA) all was concealed for several years by various subsidies and bud- emphasize the private sector as the engine of get supports, but when it became obvious in 1993 it prompted creation of a Presidential Parastatal Reform Com- growth, and give priority to developing sectors mission that had a mandate to examine privatization where most of the poor are found and which options. have the greatest growth potential. Investment, 2 The importance of improving the operations of the public sector and the synergy between public and private sectors is as measured by gross domestic capital formation, demonstrated by the fact that the current government con- has been relatively high in the past in Tanzania. tains two Ministers of State in the President's Office, one for public service management and one for good governance. Total domestic investment, which includes both 3 Until the early 1990s, Tanzania's economic growth perfor- mance was characterized by fairly large year-to-year fluctua- 4 Average GNI for Sub-Saharan countries was $952 and for tions, and the sustained higher growth rates, even in the face LDCs was $578 in 2007. Source: World Bank; Tanzania of external shocks, are an indication of increased robustness Data-at-a-Glance. of the economy. 5 The Gini coefficient is estimated to be 0.34. 2 WB208_RCRT.indd 2 5/20/10 5:11:23 AM private and public investment, averaged around Climate Study,9 Tanzania faces significant and 23 percent of GDP6 in the 1990s, but the trend broad challenges in creating an improved busi- tapered off from more than 25 percent in the ness environment. The factors ranked as "major early 1990s to around 20 percent in 2000, or very severe constraints on enterprise opera- before recovering again to approximately 25 tions and growth" were, in order of importance, percent in 2005. While the private sector has tax rates,10 electricity, cost of (and access to) typically accounted for more than two-thirds of finance, tax administration, corruption,11 macro- domestic investment and public sector invest- economic stability and customs administration. ment has been highly variable, the recovery in overall investment since 2000 has been driven Beyond this broad agenda of severe constraints, almost entirely by increasing levels of public other constraints, including regulatory uncertainty investment,7 facilitated by increased flows of and licensing, were identified by a smaller share of donor assistance triggered by the reforms under- businesses. Given that the respondents to the ICA taken by government. survey had, by definition, been successful in navi- gating regulations governing entry and operation, Private sector investment, on the other hand, has the relative importance of regulatory barriers was only been growing slowly during the past decade, likely to have been underestimated in the ICA. following fairly rapid growth at the beginning of The World Bank's Doing Business indicators pro- the 1990s.8 However, it is clear that in order to vide more detailed measures12 of regulations con- sustain economic growth in the future, private cerning the start-up and operation of business that investment activity, both domestic and foreign, tend to confirm the conclusion that regulatory will have to pick up. MKUKATA emphasizes the barriers are serious in Tanzania. Compared to its importance of private sector development for attaining national goals of acceleration of growth, 9 World Bank (2004), Investment Climate Assessment: Improving Entreprise Performance and Growth in Tanzania, wealth creation, and poverty reduction. It identi- Washington, November fies an "enabling business environment" as one of 10 Tax rates are usually the number one constraint identified by the key drivers of private sector development. As enterprises in ICAs, but the percentage of enterprises rank- ing them as a problem was particularly high in Tanzania. indicated in the World Bank's 2004 Investment 11 Governance indicators prepared by the World Bank con- firm the importance of corruption in defining the business environment in Tanzania. Before 2000, Tanzania was 6 Considerably higher than the 15 percent average for sub- viewed as one of the 20 most corrupt countries in the Saharan Africa over the same period. world; since then, Tanzania's ranking has improved signifi- 7 Between 1999 and 2006, increase in aid inflows, together cantly, but it remains at the lower end of the international with improved revenue collection, supported an increase in spectrum (see Annex 1). Currently, according to Transpar- government spending from 16 percent of GDP in 1999/2000 ency International's Corruption Perception Index, Tanza- to 26 percent in 2005/06. National accounting statistics nia has a score of 3.0 (on a scale of 0 - 10), placing it 102nd suggest that this increase in government spending contrib- in the world and 16th in Africa, indicating that the country uted significantly to the acceleration in economic growth. In remains on the borderline between rampant and very seri- the short term, increased demand for goods and services by ous corruption. Similar results are provided by Global the government led to increased use of available capacity, but Integrity, which points to strong laws on the books in Tan- this is unlikely to be sustainable in the longer term. zania on corruption and public procurement but ranks the 8 Intensification of reforms since 1995, improvements in the country's performance on enforcement as very weak. The business environment and sector-specific reforms--especially Bank's time series data on governance also suggests that in the mining sector--triggered increases in foreign direct Tanzania's relative position has been unchanged to any sig- investment (FDI). FDI reached about US$542 million or 5 nificant degree in the areas of political voice, government percent of GDP by 1999, mainly because of large invest- effectiveness, rule of law and regulatory quality. ments in mining and privatization-related investments. Since 12 Even DB reports do not always convey the seriousness of then, FDI declined to US$375 million in 2005, which, at the situation in individual areas. Tanzania scores well, for 2.5 percent of GDP, is still quite high in comparison with example, in the area of contract enforcement, where it most other African countries. Sectors receiving the bulk of placed 35th, significantly better than Kenya (107th) and the FDI showed the highest growth rates, including mining, Uganda (119th). But the measure is based on procedures at manufacturing, and trade and tourism (which together the Commercial Court, where only a small fraction of cases attracted about 75 percent of FDI between 1999 and in Tanzania is filed, and on time taken to get a judgment 2001). once access to the court had been obtained. 3 WB208_RCRT.indd 3 5/20/10 5:11:23 AM ranking of 150th in 2006, DB 2009 ranks Tanzania is the Constitution,15 although its supremacy is as 127th globally in the "ease of doing business" not explicitly stated in the Constitution itself. The synthetic indicator and 14th in Sub-Saharan constitution provides for a bill of rights,16 although Africa,13 a significant improvement in a short period, there are also provisions for "claw-back," so that but far behind best practice internationally (see these rights are not absolute, but subject to legal Annex 1). regulation. The second tier of the hierarchy is stat- utes or acts of Parliament, which are published in In DB2007, Tanzania was recognized as one of the Government Gazette. The third source is case the top 10 reformers globally, specifically in the law, comprising cases from the High Court and areas of "business start-up," "registration of prop- Court of Appeal, which create precedents that erty," "investor protection," and "trading across bind lower courts. The fourth source is received borders." DB2009 confirms that these reforms law, which includes common law, doctrine of have improved Tanzania's standing to some degree equity and statutes applicable in English law before in comparison with its neighbors,14 but still leave 1920.17 And the fifth source of law is customary the country far behind international best prac- and Islamic law. Finally, international treaties and tice. Excessive red tape and government interfer- conventions are a source of domestic law as long as ence in private sector activities remain one of the they have been ratified by Parliament. main constraints to private sector development in Tanzania. One indicator of this is the large The United Republic of Tanzania is today a feder- share of GDP generated in the informal sector, alist state based on a multi-party parliamentary and its continuing growth: some 55 percent of democracy, with two components, Mainland GDP is estimated to be generated within the Tanzania and a semi-autonomous Zanzibar. informal sector, and more than 95 percent of However, between 1965 and 1992, Tanzania was enterprises in Tanzania are estimated to be infor- a single-party state and followed socialist eco- mal to some degree. nomic policies: in 1992, following the abandon- ment of socialism, constitutional reforms led to the establishment of opposition parties that were Administrative and legal environment authorized to contest the ruling party in elections. 15 Tanzania has had several constitutions since independence. Having been a British colony, Tanzania has The 1961 Independence Constitution was adopted upon adopted a legal system based primarily on Eng- independence, and between 1962 and 1965, the Republi- lish common law, on to which have been grafted can Constitution was in force: both of these were based upon the Lancaster-style constitutions negotiated at inde- customary law and Islamic law. Customary law is pendence by the British upon handover of power to African in effect only when it does not conflict with stat- states. In 1965, Tanzania adopted an Interim Constitution, having abolished the multi-party political system and utory law, while Islamic law is applicable to Mus- adopted a one-party state. The process of drafting a new lims under the Judicature and Applications of constitution took more than a decade, and it was only in Laws Act, which allows courts to apply Islamic 1977 that the current constitution, now modified by 14 amendments, was adopted. law in communities that follow such law in mat- 16 The bill of rights is found in part three of the first chapter; ters involving personal status and inheritance. articles 12 to 24 describe fundamental rights and freedoms, articles 25 to 28 impose duties and obligations to respect rights of others and society; article 29 establishes society's In terms of the hierarchy of legal, administrative, obligations to the individual; and article 30 limits the and regulatory instruments, the first source of law application of these rights. Individuals are permitted to challenge any law or act that contravenes these constitu- tional rights. 13 Rankings in Africa for Tanzania's regional competitors were 17 The Laws Revisions Act of 1994 Chapter Four of the laws 5th for Kenya, 7th for Zambia, 10th for Uganda, 17th for of Tanzania [R.E. 2002] established that all legislations pre- Rwanda and 20th for Madagascar. viously known as Ordinances, i.e. those which were enacted 14 Tanzania now compares favorably with Zambia and by the pre-independence colonial administration, as Orders Rwanda, but falls short of Kenya and Uganda. in Council, can now be legally recognized as Acts. 4 WB208_RCRT.indd 4 5/20/10 5:11:23 AM All state issues are controlled by the government purpose, as designated in article 146, is to "trans- of the United Republic of Tanzania and the Revo- fer authority to the people."24 Local authorities lutionary Government of Zanzibar. The govern- have been given power to involve the population ment of the United Republic has authority over in the planning and implementation of develop- all union matters in the Republic, as stipulated by ment programs within their areas, and have the Article 4 of the Constitution, and also administers responsibility for social development and provi- all non-union matters18 in Mainland Tanzania. sion of public services, maintenance of law and The Revolutionary Government of Zanzibar has order and promotion of local development authority on what is officially known as Tanzania through participatory processes. Tanzania's local Zanzibar19 over all non-union matters. The Revo- government system is based on devolution and lutionary Government of Zanzibar has a separate decentralization of functions and finances within Executive, Legislature (the House of Represen- a unitary state. The local governments are multi- tatives) and Judiciary, which operates from the sectoral units with a legal status and operating primary court level to the High Court of Zanzi- on the basis of specific powers conferred by leg- bar. These institutions are provided for under islation. Today, there are 22 urban councils (two the 1984 Constitution of Zanzibar. city councils, 12 municipal councils and 8 town councils), 92 rural district councils and over The central government of the United Republic 10,000 village councils. of Tanzania has three organs: the Executive (established under Chapter 2 of the Constitu- The Legislature, or the Parliament, of the tion), Legislature (established under Chapter 3) United Republic of Tanzania, consists of two and Judiciary (established under Chapter 5), parts ­ the president and the National Assem- whose functions and powers are laid out in the bly. The president exercises the authority vested 1977 Constitution. The Constitution provides in him by the Constitution to assent to bills by for legislative supremacy of Parliament and inde- Parliament in order to complete the enactment pendence of the Judiciary. process before they become law. The National Assembly, which is the principal legislative The Executive comprises the president,20 vice organ of the United Republic, has authority on president, president of Zanzibar,21 prime minis- behalf of the people to oversee and ensure ter22 and the Cabinet ministers. Cabinet minis- accountability of the government of the United ters are appointed by the president from among Republic. The Parliament is headed by the members of the National Assembly. The current speaker, who is assisted by the deputy speaker, Constitution, within Chapter 8, provides for and the clerk as the head of the Secretariat of the establishment of local authorities,23 whose the National Assembly. The National Assembly also has various standing committees to support 18 Non-union matters are those not listed in a schedule to the in its various functions. The National Assembly Constitution that defines a list of Union affairs. of Tanzania has a single chamber, with mem- 19 Commonly known as Zanzibar, comprising the islands of Unguya and Pemba. bers elected from various constituencies across 20 Who is the head of state, the head of government (leader of the Executive Branch) and commander-in-chief of the armed forces. the system, such as the Local Government Service Commis- 21 Who is the head of the Executive for Zanzibar, that is, the sion and the Local Government Loans Board. Central gov- Revolutionary Government of Zanzibar and is the chair- ernment took over responsibility for provision and manage- man of the Zanzibar Revolutionary Council. ment of basic services and for planning and implementation 22 Who is the leader of government business in the National of development projects at the local level. The result was Assembly and supervises and manages the day-to-day oper- rapid deterioration of service delivery and infrastructure. The ation of the Government of the United Republic. current system of local government was re-introduced in 23 Local government has undergone several important changes 1984, and in 1985 the Constitution was amended. over the past decades. In 1972, the central government abol- 24 Act 15 of 1984 established local government institutions ished local authorities along with all institutions supporting and their functions. 5 WB208_RCRT.indd 5 5/20/10 5:11:23 AM mainland Tanzania and Zanzibar. Under the Constitution, women's representation is pro- Table 1: Commercial Legislation vided for as a special category, in order to in Tanzania increase the participation of women in national politics. Elections are supervised by the National Banking and Credit Laws Electoral Commission which is established Bank of Tanzania Act, 2006 under the Constitution. Banking and Financial Institutions Act, 2006 Civil Procedure Codes The judiciary in Tanzania comprises various institutions concerned with the provision of legal Civil Procedure Code, 1966 services, administration of justice, and enforce- Commercial and Company Laws ment of laws. (For details, see Annex 4.) The Companies Act 2002 main institutions include the High Court of the Business Activities Registration Act, 2005 United Republic, the Judicial Services Commis- Export Processing Zones (Amendments) Act, 2006 sion for Mainland Tanzania, the High Court of Fair Competition Act, 2003 Zanzibar, Court of Appeal of the United Repub- Special Economic Zones Act, 2006 lic and the Special Constitutional Court of the Constitution United Republic, all of which are specified in Chapter 5 of the Constitution. Constitution of Tanzania Labor Laws Within the Executive, the Ministry of Justice Employment and Labor Relations Act, 2004 and Constitution Affairs25 has jurisdiction over legal matters, including supervising the Law Land and Building Laws Reform Commission of Tanzania (LRCT).26 The The Contractors Registration Act (Act No.17 - 1997), 1997 LRCT is a statutory body established by the Law The Written Laws Act (Miscellaneous Amendments) (Act Reform Commission of Tanzania Act, no. 11 of No. 18-1997), 1997 Architects and Quantity Surveyors Registration Act (Act 1980. The LRCT's mandate is to keep under No.16 - 1997), 1997 review all laws in Tanzania, review laws in order The Engineers Registration Act (Act No.15 - 1997), 1997 to bring them into line with current circum- Land Act, 1999 stances, eliminate anomalies and codify and sim- Securities Laws plify them, and to respond to requests from the attorney general. Capital Markets and Securities Act, 1994 Tax Laws There appears to be no complete and compre- Income Tax Act, 2004 hensive inventory of laws and regulations affect- Value Added Tax Act ing businesses in Tanzania. The World Bank's Trade Laws Doing Business database enumerates the major Export Processing Zones (Amendments) Act, 2006 commercial laws, as shown in Table 1 below: Source: World Bank, Doing Business Database. 25 http://www.tanzania.go.tz/justice.htm The site identifies the ministry's functions as follows: Overseeing Justice, the Judiciary, Human Rights, the Attorney General's Chambers, Constitutional Affairs, Administrator General's Office, Par- liamentary drafting, Law reform, Public prosecutions, Civil Research conducted in the course of developing a and International Law, Extraditions and Extra-Territorial draft policy27 for sectoral licensing identified Mutual Assistance in Criminal Matters, the Official Receiver Public Trustee, Deeds of Agreement, Adoption, Trustee 27 "National Sectoral Regulatory Licensing Policy," Technical Incorporation, and Registration of Births and Deaths. Working Group Draft for Submission to the Second Inter- 26 http://www.lrct.or.tz/ institutional Technical Committee Meeting, Oct. 6, 2008. 6 WB208_RCRT.indd 6 5/20/10 5:11:23 AM some 64 pieces of legislation (administered by Legal reform commenced in the first half of the more than 50 institutions) that provide the basis 1990s, through the Legal Sector Reform Program. for a large number of sectoral licensing regula- Widespread deficiencies in all areas of the judicial tions. These laws are also replicated into local system ­ criminal, civil, and commercial ­ have government licensing regimes through by-laws required a broad strategy and program. The Min- formulated at the district level. Since there are istry of Justice has pursued reforms across all 132 local government jurisdictions, the impli- aspects of the legal system. Under the overall pro- cation is that there are a very large number of gram, the country's commercial laws were revised, specific regulations and licenses applicable to updated, and simplified. In 1999, a commercial economic enterprises throughout Tanzania. court system was introduced. More recent judi- cial reform efforts have been pursued under a broader governance and rule of law program that Recent regulatory reform initiatives focuses on improved justice for the poor, includ- ing the government-supported Advancement of Tanzania has been engaged in economic the Legal and Institutional Framework for Eco- reforms for the last 20 years, as outlined briefly nomic Development Program (content, objec- in section 1.1. The deep economic crisis of the tives, etc), as well as the Commercial Dispute early 1980s resulted in the introduction of stabi- Resolution (CDR) component of the BEST pro- lization and growth policies, followed by liberal- gram (see below). According to the Bank consul- ization of the economy and the granting of tant working on the CDR component of the permission for private economic activities. Since BEST Project, a separate project for commercial the early 1990s, increasing attention has been legal reform is being proposed by the Investment given to structural and regulatory reforms. The Climate Facility, and is to involve the Interna- agenda has been and remains a broad one, involv- tional Finance Corporation and the U.K. Depart- ing a mix of "constructing" a market-based eco- ment for International Development (DFID). nomic system (whose construction had been deemed unnecessary and undesirable during the Taxation reform also started in the early 1990s, Socialist period) and "deconstructing" past policies when Tanzania was running a large recurrent fiscal (which included constraints and disincentives on deficit. In 1996, it established, as did many other activities and continued application of colonial- African countries, a Tax Revenue Authority to de- period laws and regulations). Reforms over the politicize and professionalize tax collection. But current decade, which have been reflected in the the government recognized that further reforms NSGPR include reform of the business environ- were necessary because tax revenues were only ment, legal reform, financial sector reform, public 12.4 percent of GDP, the lowest in Eastern and sector reform to improve the capacity and produc- Southern Africa. Tax avoidance was increasing tivity of the civil service, initiatives to combat cor- because of weaknesses in tax administration, which ruption, and decentralization and devolution of included the granting of excessive exemptions,29 central government powers to local authorities.28 and because of so much economic activity within the informal sector. From 1999 onwards, the Initially, regulatory reform was implemented International Development Association (IDA) within the individual reform programs for the financed a Tax Administration Project,30 under legal sector, financial sector, taxation, and the which efforts were made to improve the legal civil service. 28 Five major programs exist: Financial Sector Reform Pro- 29 See "Tax administration and tax reform: reflections on the gram (FSRP), Legal Sector Reform Program (LSRP), Pub- Tanzania experience, 1986-1996," Philip Mpango, Uni- lic Sector Reform Program (PSRP), Local Government versity of Dar es Salaam. Reform Program (LGRP) and Business Environment 30 Also supported by Denmark, the UK, Finland, Sweden, Strengthening Program for Tanzania (BEST). Germany, US, EU and UN Development Program. 7 WB208_RCRT.indd 7 5/20/10 5:11:24 AM framework and tax administration practices. A for the 1999/2000 -2001/2 fiscal years.32 These new Income Tax Act was passed in 2004, the East reforms were subsequently institutionalized in African Customs Act was drafted, and a Corpo- the 2001 Public Finance Act. rate Plan was formulated. Modern organizational models and management practices were intro- In 2000, the government launched a Public Sec- duced into the tax administration. The reforms tor Reform Program (PSRP), which envisaged an worked extremely well,31 to the point that Tanza- 11-year time horizon divided into three phases nia was characterized as an example for other with four core areas: countries to follow. The Tanzania Revenue Authority (TRA) is currently implementing its pay reform to raise and differentiate public Tax Modernization Program, which will continue sector salaries, in order to increase motiva- the strategy of increasing tax revenues without tion and reduce corruption;33 increasing tax rates. The program has four com- ponents: downsize the public sector through privatiza- tion; further improvements to the legal framework; rationalize the government bureaucracy and broadening the tax base; introduce performance monitoring systems to reduce the size of the bureaucracy; and strengthening the TRA to increase efficiency and effectiveness of tax administration; and decentralize powers to local governments to increase efficiency of service delivery and further improvements to the administrative effectiveness of developmental planning. infrastructure. The first stage of the PSRP, which ran from Public sector reform was started in 1993, with an 2000 until 2007, focused on cost containment emphasis on budget reforms on both revenue and and restructuring, with the overall objective of expenditure sides, civil service reform, and priva- having a small, affordable, and efficient gov- tization. The reforms led to reductions in the size ernment. Activities were concentrated upon of the civil service, controls on the overall wage bill and decompression of the salary structure, and the beginning of decentralization to local 32 For an evaluation of these reforms, see Daniel Ngowi, "Effects of Budgetary Process Reforms on Economic Gov- governments. Key reforms introduced during the ernance: Evidence from Tanzania," June 2005. This review 1990s included cash budgeting and Public Expen- gives the government credit for making the budget process diture Reviews, both introduced in 1997, and the more transparent and open to effective stakeholder involve- ment through structured consultations. Medium-Term Expenditure Framework, a three- 33 As indicated in section 1.1, corruption is a large problem year prospective spending plan first introduced and a major public issue in Tanzania. The Auditor General has estimated that over 20 percent of the government's bud- get is lost annually due to corruption, theft and fraud. The 31 Annual revenue increased from $1.1 billion in 2002-3 to establishment of the Presidential Commission of Inquiry $1.7 billion in 2005 ­ 06, increasing the share of the recur- Against Corruption (the Warioba Commission) in 1996 rent budget financed internally to 60 percent. The number was the starting point for current anti-corruption efforts. In of registered income tax payers increased from 190,000 in late 1996, publication of the "Warioba Report'' helped to 2003 to 290,000 in 2006, with the number of large taxpay- open up public discussion on corruption. In 1999, an Anti- ers (corporations) increasing from 100 to 286 in the same Corruption Strategy was formulated, which included a period. The amount of the previous year's income tax broad stakeholder-approach including government institu- arrears collected, as a percentage of total income tax arrears tions, the private sector, NGOs, and donors. Tanzania now at the beginning of the year, increased from 6 percent in has a comprehensive body of laws, regulations and oversight 2003 to 72 percent in 2005. Customs clearances made agencies intended to prevent, investigate and sanction cor- within 24 hours increased from 30 percent in 2003 to 95 rupt practices, but failures to enforce these rules and the percent in 2006, and VAT refunds made within one month weakness of institutions set up to deal with corruption are increased from 36 percent in 2003 to 62 percent in 2006. deemed responsible for current high levels of corruption. 8 WB208_RCRT.indd 8 5/20/10 5:11:24 AM redefining the roles and core functions of gov- Jakaya Kikwete."36 To this end, the phase II pro- ernment, downsizing government operations, gram is expected to do the following: and controlling government expenditure, espe- cially the wage bill. Performance management support service delivery by the ministries, systems were introduced into public institu- departments, and agencies; tions, including a more transparent staff per- formance review and appraisal system and the improve policy development processes and introduction of an open, competitive, and procedures; merit-based recruitment system. introduce a system of pay incentives and One important institutional development dur- rewards linked to improved accountability ing this period was the creation of more than 20 and responsiveness to the public; executive agencies (semi-autonomous bodies operating at "arms length" from their parent develop systems for managing public ser- ministries),34 with the intention of promoting vants; and independence, accountability, service quality and financial viability, while allowing parent support leadership development programs, ministries to concentrate on their strategic and and introduce programs for change manage- policy-making roles. One such agency was the ment and more effective reform coordination. Business Registrations and Licensing Agency (BRELA), which is of particular relevance to The government has emphasized reforms in local this report: it was established in October 1999 government as central to the whole program. In under the Government Executive Agencies Act keeping with Article 146 (1) of the Constitution, No. 30 of 1997, and officially inaugurated in reform measures taken to date include placing pri- December 1999.35 mary education, health, and public utilities under local government jurisdiction,37 increasing the fis- The objective of Phase II of the PSRP, launched in cal autonomy of local authorities, and restructur- early 2008, is to ensure that "delivery of quality ing and broadening their legislative and executive public services within priority sectors conforms to powers.38 The decentralization and devolution public expectations of value, satisfaction, and rel- programs are in their infancy, however. While evance by the end of 2012," according to President reforms have opened up an opportunity for com- munities to actively influence their own development,39 local governments generally remain 34 Including Tanzania Civil Aviation Authority, National Bureau of Statistics, Tanzania Meteorological Authority, 36 http://allafrica.com/stories/200802041257.html Government Chemist Laboratory, Tanzania Airports 37 Key central government departments have not yet been Authority, Business Registration and Licensing Authority, fully devolved, so that local governments look more like an Tanzania Revenue Authority, Surface and Marine Trans- appendage to the central government system than an inte- port Authority, Energy and Water Utilities Authority, gral part of the country's government system. 35 BRELA's mandate is to incorporate companies; its specific 38 For a brief description of the reform program, see "The Local roles include: Government Reform Program in Tanzania ­ Country Expe- administering companies and business names laws; rience," a paper by Brig. Gen. Hasssan Ngwilizi, MP, Minis- regulating business by administering business and indus- ter of State, President's Office, Regional Administration and trial licensing laws; Local Government, delivered at the Commonwealth administering intellectual property laws; and Advanced Seminar on Leadership and Change in the Public encouraging and facilitating local and foreign business Sector, Wellington, New Zealand, February 2002 investment. 39 Following enactment of the Regional Administration Act stimulating scientific and technological inventiveness of 1997, small Regional Secretariats were established to and innovation and encourage technology transfer. replace Regional Development Directorates that had protecting the development of creativity in artistic, liter- tended to duplicate the functions of the authorities them- ary works, and expression of folklore by protecting such selves. Regional Secretariats now serve as back-stopping work in conjunction with the owners of these rights. and support agencies for lower level local governments. 9 WB208_RCRT.indd 9 5/20/10 5:11:24 AM too weak to implement developmental programs, of businesses and thereby the cost and time bur- and their low revenue bases generally cannot dens for businesses; b) changing the culture of gov- sustain the necessary administrative machinery. ernment from control to efficient facilitation and Furthermore, duplication of infrastructure affects improved delivery and quality of public services; the quality of service delivery. Recently, for exam- and c) enhancing the ability of the private sector to ple, the government decreed that every ward should advocate for a better business environment. have a secondary school, although in low-density, poor districts with a shortage of teachers, a pooling The BEST program strategy includes a focus on of resources among wards would be a more efficient regulatory governance, involving a phased, step- allocation of resources. by-step approach to implementation of RIA and an emphasis on establishing the right institu- All these reform programs in Tanzania contain tional structures to address the stock and flow of policy-making activities that generate changes to regulation. Within this framework, the govern- legislation, regulations and administrative proce- ment has adopted RIA as the preferred technique dures and practices. Each of them has adopted its for assessing quantitative and qualitative impacts own methodologies for evaluating and assessing of laws and regulations on the investment cli- policy options, and in many cases these appear to mate. Also, the BEST Program is advocating the have been ad-hoc and subject to change. It was use of information and communication technol- not until the adoption of the BEST program ogy (ICT) in the delivery of public services to the (also known by its Swahili name MKUMBITA) business community. in 2000 that a more systemic approach was taken to the process and techniques of regulatory The BEST Program (phase 141) has provided sup- reform. The BEST program also was the first port to five components:42 reform program designed specifically to address the needs of the customer ­ the business com- 1) Achieving better regulation, with priority munity by improving the business environment given to simplifying and speeding up the pro- through a conducive regulatory environment.40 cess of business registration, formalization, and modernization of land administration The BEST Program was introduced to carry out a processes, tax reform, and labor laws with a broad and integrated reform of the business envi- view to creating flexible labor markets.43 ronment and to reduce the cost of doing business, 2) Simplifying and streamlining commercial in particular for small and medium enterprises dispute resolution,44 to lower the cost of con- (SMEs), through targeted interventions. The pro- tract enforcement and reduce the time taken gram began implementing a long-term (10-year) to resolve disputes. strategy aimed at improving the overall business environment by: a) reducing regulatory and 41 Designed to run from 2004 until June 2008. administrative constraints to entry and operation 42 See Annex 5 for details of the areas of focus and expected outcomes, for both Phase 1 and Phase 2 programs. 43 This component also includes reforms in agriculture and 40 Government documents emphasize that all private sector import/export transactions. businesses are the targets for an improved business environ- 44 Through capacity building, reform of court and legal pro- ment, but also stress the need for the program to benefit cedures, clearing the backlog of cases and introduction of SMEs in particular because they are seen as disadvantaged alternate dispute resolution mechanisms. Currently, the in relation to larger formal enterprises. In addition, the CDR component has eight broad outcomes: increased program focuses on regulatory reform that will encourage access to the Commercial Court; improvement of the civil formalization of currently informal enterprises. Govern- procedures; support to civil procedure reforms in the Judi- ment documents also stress that the government itself is to ciary; introduction of ADR; introduction of legal educa- be seen as a beneficiary, because the reforms are designed to tion programs for commercial law; improved operations of allow government agencies to establish more effective dia- the Tanganyika Law Society; support to the Land Division logue with the business community and to become more of the High Court; and training and capacity building for effective in carrying out their roles. commercial dispute resolution. 10 WB208_RCRT.indd 10 5/20/10 5:11:24 AM 3) Strengthening the Tanzania Investment Cen- TWGs provide stakeholder representation for the tre, so that it can more effectively serve the specific reforms that are part of the program and investing community. provide the basis for their involvement in devel- oping implementation plans. 4) Changing the culture and mindset of govern- ment functionaries towards private enterprise. Initially, the role of the BRU was to work with implementing sector ministries and develop- 5) Empowering private sector organizations to ment agencies and to take the lead in promoting deliver effective advocacy in support of a bet- and implementing the BEST Program reforms; ter investment climate. to ensure linkages between the five components of the program; to manage and account for the The BEST program was approved by the Cabinet resources provided under BEST; and to promote in July 2002 and started in December 2003 after the creation of a permanent "better regulation" consultations between government, the private function within the government.48 In other sector, and donors.45 After a year of work to estab- words, BRU was itself made responsible for lish implementation systems and management delivering the reforms. This Phase 1 program structures, Phase 1 program activities began in focused on revision of laws and regulations, January 2005, and in February 2005, the Better building technical capacity for regulatory best Regulation Unit (BRU) was established within practice, and building capacity in the ministries, the Ministry of Finance and Economic Planning presumably to take over the implementation of to implement and coordinate the four govern- their respective components at some point in the ment components. The fifth component, private future. sector advocacy, has been managed by BEST- AC,46 which is under the control of a joint public- During 2006, the BRU was restructured because private board. it was recognized that itwas not able or equipped to deliver results. It had neither the political clout The BEST Program has a three-tier implementa- nor the technical ability to take on the implemen- tion structure: Tripartite Review Committee tation of the various components. The new role (TRC); BEST Steering Committee (BSC); and for the BRU was to facilitate and provide support BEST Technical Working Groups (TWG). The services (such as procurement services) to the vari- TRC,47 comprising government, donors and pri- ous ministries that were made responsible for vate sector, has been the primary decision-making delivering the reforms. MOUs were signed body for the program, providing funding and between the BRU and ministries, confirming that budget approval for the work plans submitted by implementation of the components is the responsi- the BRU in collaboration with the implementing bility of the ministries. At the same time, with IDA ministries. It also monitors the implementation joining the BEST funding basket through its Pri- of the program on the basis of quarterly reports vate Sector Competitiveness Project (PSCP),49 new prepared by the BRU. The BSC, which comprises activities were incorporated into the BEST pro- government and private sector representatives, gram, primarily the BEST Zanzibar program and provides collective management of BRU's cross- the land reform component. In addition, BRU, sectoral mandate for regulatory reform. The formerly located in the Ministry of Planning, 45 The initial costs of BEST Phase I were estimated to be $25.4 million, of which $18 million was committed by the 48 The functions of BRU as described in "Practice of Reform- donors. The latest estimate of cost is $64 million. ing the Business Environment: the Case of the BEST Pro- 46 http://www.best-ac.org/index.html gram," paper prepared by Dr. Stergomena Tax-Bamwenda 47 The TRC is chaired by Permanent Secretary, President's and Dr. Betty Mlingi, for the Cairo International Confer- Office for Planning and Privatization. Membership of the ence, Nov 29 ­ Dec 1, 2005. TRC is listed at http://www.best.go.tz/trc.asp 49 IDA funding increased the basket by some $40 million. 11 WB208_RCRT.indd 11 5/20/10 5:11:25 AM Economy and Empowerment, was moved to the The Phase 2 program estimates funding needs to President's Office, Planning and Privatization. be $120 million between July 2008 and June 2013, some $9 million of which would be the In November 2007, a joint donor appraisal mis- cost of BRU. Currently, the five donors are con- sion looked at the potential for an extension of sidering an extension of their financial assistance, donor support until the 2012/13 fiscal year.50 and will conduct a Mid-Term Review in May 2009. It is probable that Phase 2 activities will be 50 The proposed extension was reflected in a Program Docu- divided into a Phase 2 and a Phase 3, so that an ment produced in August 2008, which included a progress report and program changes. See http://www.best.go.tz/ interim review in 2010 will be undertaken before achivement/BEST%20Prodoc_Final_Clean.pdf a final decision is made on continuing support. 12 WB208_RCRT.indd 12 5/20/10 5:11:25 AM NATIONAL POLICIES AND INSTITUTIONS FOR REGULATORY REFORM Regulatory reform principles point the creation of a regulatory framework that and policies produces "a business-friendly regime with simple, necessary and transparent rules and procedures Governments should be clear about why they are protecting public interests and enhancing busi- pursuing private sector development and reform- ness competitiveness." The document establishes ing regulation, and about the principles and that the government of Tanzania will: objectives of reform, as well as the responsibilities of groups involved in reform. The most effective implement a registration mechanism to ensure way to do this is to establish an explicit regulatory that all businesses are identified and classified reform policy, based on internationally accepted on the basis of international best practices; principles of good regulation (see Annex A). inform businesses of their rights and obliga- As detailed in the previous sections, Tanzania has tions; pursued numerous policy reforms that have regu- latory implications. However, to date, Tanzania establish a regular public-private dialogue has not adopted an explicit policy on broad regu- and conduct regular reviews of the regulatory latory reform or quality at the highest level of regime; government. The closest expression of a broad policy approach can be found in the draft policy introduce "sunset clauses" in business regula- on sectoral licensing reform51 published in Octo- tions; ber 2008. This document takes as its starting develop an ICT-based registration system; 51 "National Sectoral Regulatory Licensing Policy," Technical Working Group Draft for Submission to the Second Inter- ensure that costs of regulation will be limited Institutional Technical Committee Consultative Meeting, Prime Minister's Office, October 2008 to recovery of administrative costs; 13 WB208_RCRT.indd 13 5/20/10 5:11:25 AM use innovative enforcement mechanisms, and the private sector and to build a constructive including risk analysis; and partnership for policy reform that could lead to faster economic growth. establish a central unit to coordinate all regu- latory activities and institutions. During the past year, steps have been taken to pub- licize the government's commitment to regulatory This document remains under consideration by good practice. In June 2008, the President's Office, the government. Planning Commission issued "Principles of Good Regulation."53 The document laid out the main There are already various arrangements in place features of a "good regulation" approach, but was that are consistent with good regulatory principles. not a policy directive that required ministries and The Constitution provides for the participation of agencies to follow its concepts. In January 2009, citizens in governmental processes: Article 8 stipu- the BEST Program issued a brochure through the lates that the government shall be accountable to Prime Minister's Office titled "Regulatory Best the people and that they shall participate in the Practice and Regulatory Impact Analysis." affairs of government; Article 18 guarantees the rights of citizens to be informed about issues of The brochure defines RBP as follows: "this (RBP importance to society; and Article 21 guarantees requires any ministry that proposes new laws or regu- the rights of citizens to be involved, directly or lations that have cost implications for businesses, and/ through elected representatives, in matters per- or significant economic or social implications, to taining to governance and any matters affecting carry out meaningful consultation with stakeholders. individuals and society at large. The Constitution Such meaningful consultations include full analysis also provides for the Executive, through the Secre- of the potential costs and benefits of the proposals tary to the Cabinet, to notify and explain deci- underpinning new legislation and justification of sions taken by the government to persons and those proposals accordingly. It also requires them to public institutions concerned with such decisions consider alternatives to regulation (such as education (Article 60). or better enforcement of existing laws), to identify specific outcomes to be achieved as a result of the new As discussed in greater detail in section 3.1, the law, and to spell out methods, human resources and reform policies adopted by the government over budgets required for ensuring effective compliance as the past decade have been developed to a large well as monitoring for such compliance." and increasing extent within an atmosphere of public-private dialogue and consultation. Con- The brochure indicates that "RIA is a tool for policy- sultation involving stakeholders was first intro- making that helps governments to apply the principles duced for specific reform efforts, such as for tax of RBP. It involves a detailed analysis to ascertain reform (see Section 3.2), and was a central fea- whether or not the new regulation would have the ture of the development of the National Strategy desired impact. It helps to identify any possible side for Growth and Reduction of Poverty and Vision effects or hidden costs of compliance on the individual 2025.52 In 2002, a Tanzania National Business citizen or business. It also helps to clarify the costs of Council (TNBC) was created to serve as the joint enforcement for the State. The process involves pro- platform for dialogue between the government ducing a document, through which the results of anal- ysis are shared by all stakeholders involved in the 52 The Foreword of Vision 2025 summarized as follows: "The draft Development Vision was discussed by various societal consultations." The document stresses that RIA is groups, including Honorable Members of Parliament, all being introduced into government policy and political parties, leaders of various religious denominations, women and youth organizations, chambers of commerce and 53 http://www.best.go.tz/%5Cachivement%5CPRINCIPLES industry, farmers, professional associations, renowned per- % 2 0 O F G O O D % 2 0 R E G U L AT I O N % 2 0 2 - % 2 0 sonalities in our nation's history and ordinary Tanzanians." June%2008.pdf 14 WB208_RCRT.indd 14 5/20/10 5:11:27 AM lawmaking processes, and that Tanzania already supporter for reform. It was the original home has a basis for the RIA system, with the current for the BRU. process of decisionmaking incorporating most of the elements of the RIA process. It is clear that the The BRU was subsequently transferred to the RBP and RIA process, as described in the brochure, President's Office. The BRU's key responsibility is consistent with the OECD principles. However, is the facilitation of the BEST Program compo- the brochure should be interpreted as a statement nents. The unit has 16 staff; 7 staff members are of intent rather than as a description of actual prac- working on procurement, 3 on finance and bud- tice in Tanzania. geting, 4 are program officers working with the ministries that are responsible for the BEST com- ponents, and the unit has a lawyer and a specialist in monitoring and evaluation. BRU also has a Institutions and drivers to promote ICT specialist available on an "as needed" con- regulatory reform tract. With the exception of the BRU's head, the It is a commonplace to argue that regulatory current staff members do not have expertise in reform is dependent upon political stability and regulatory reform. Currently, if there is a demand predictability.54 In Tanzania, the political stability for RIA expertise within the components of the enjoyed since independence has not necessarily BEST Program, the expertise is provided by con- provided a political environment that is condu- sultants. In May 2009, a mid-term review will be cive to reform of business regulations. This is conducted of the BEST Program, with a view to because there have been many officials in govern- determining the Phase II project that is sched- ment, especially at the local government level, uled to run until 2012/13. The diagnostic report who do not fully appreciate the implications of on licensing strongly recommended that the BRU private-sector development. Competitiveness is should be viewed as the ideal potential candidate not yet mainstreamed across government and is to take on the role of a coordinating body to often seen as an issue for the Ministry champion- facilitate best practice in licensing reform and to ing the BEST program. ensure consistency in the application of licenses across sectors. The draft licensing policy issued As a result, introduction and implementation of by the prime minister's Office in December 2008 RBP/RIA in Tanzania has depended on a small stipulated that BRU should continue to support number of key institutional champions that have the licensing reform activities "until a formal per- become important strategic allies in the course manent supervisory institution is put in place of reform implementation. The Ministry of and has assumed its mandate." Finance has been instrumental in pushing for The policy added that BRU's capacity should be better regulation initiatives, including the intro- developed, if BRU assumes a role of "coordinat- duction of RIA. ing reforms and providing secretariat services to In addition, the Ministry of Planning, Econ- the oversight body that will be established to omy and Empowerment has been an important coordinate and vet regulatory reforms for good governance and expedient implementation. The oversight body will be a regular public-private 54 While continuity of governing party may be one definition sector Committee, chaired by a political appoin- of political stability and consistency, it has also been sug- tee, located in a high-powered government office, gested that regulatory reform can be pursued in countries that experience changes in governing party and philosophy preferably in the Prime Minister's Office, and as long as all the parties agree on the need for regulatory reporting regularly to the Prime Minister as Head reform. Italy, which pursued regulatory reform during the 1990s in an environment where governments changed of Government business on the status of reform annually, is often cited as an example. implementation measures from a results-based 15 WB208_RCRT.indd 15 5/20/10 5:11:27 AM perspective." This draft policy is currently under- As a result, the ministry is unable to provide the going stakeholder consultations, and no decision necessary quality control over legislation enacted, has been taken yet on developing BRU's capacity or to process legislation fast enough to meet the to undertake these responsibilities. needs of the reforming ministries. The Judiciary itself has focused on manpower and court reform, The Judiciary and the legal profession have a cru- seeking to increase the number of courts and cial role to play in creating a better business envi- judges. Moreover, it is more concerned with ronment by implementing an efficient process criminal justice issues than with commercial legal for developing sound laws and regulations. But, issues. Soft infrastructure reforms ­ procedural they are not playing an effective role as champi- laws, working practices and training ­ have been ons of business regulation reforms. A reforming seen as issues of secondary importance. In addi- government undertaking legal and regulatory tion, there is no discrete administrative cadre so reforms must be supported by a cadre of well- that the judges have to administer not only judi- trained and motivated government lawyers to cial functions but also all human resources and undertake and underwrite new laws and policy. infrastructure responsibilities.56 The Judiciary, Traditionally, the Ministry of Justice and Consti- which has been protective of its independence, tutional Affairs in Tanzania has been poorly has been somewhat suspicious of government- funded55 and weakly resourced, and has only in led reform. The governance structure of reform recent years established a planning and policy programs has contributed at times to this feeling: department to try and boost its spending and for example, the BEST program is managed by budget bidding capability. A recruitment freeze two government ministries who sit on a govern- in the 1990's and early 2000's has meant that the ing committee on which the Judiciary has no ministry is staffed by few senior staff and a large representation. The responsibility for the Com- junior cadre of law graduates, recruited straight mercial Dispute resolution component rests with out of universities. the ministries of Justice and Planning, not the Judiciary. Nonetheless, the ministry's portfolio is ambitious. It is tasked with reviewing all new laws drafted by The Cabinet Secretariat approval process for leg- other government departments in Tanzania, islative and policy issues already serves as a frame- which is a heavy workload since Tanzania is work for quality control and coordination, and it undergoing a program of vigorous reform. The is intended that the regulatory governance frame- ministry advises on both private and public sec- work will be introduced into that pre-existing tor agreements entered into by the government framework. Resolutions supporting the institu- and defends the government in court. In such a tionalization of RIA have been adopted by Per- resource-constrained situation, it is not surpris- manent Secretaries and MPs. The focal point for ing that the Legal Sector Reform Program­the RIA compliance has been established in the access to justice and rule of law program that the Office of the Cabinet Secretariat, and BRU is ministry is tasked with rolling out­has been at tasked with supporting the Cabinet Secretariat to the design and inception stage since 1993, and is champion the process of embedding RIA into the only now commencing implementation. policy-making process in Tanzania. 55 Historically, the Judiciary, recognized within the Constitu- However, it appears that the capacity of the Cab- tion as fully independent and one of the three pillars of the State, has received less than 0.5 percent of the budget: inet Secretariat is already severely stretched in while this may have been justifiable when the one-party terms of its customary activities. Currently, the system was in place and a fully functioning independent Judiciary was perceived as unnecessary, it has introduced 56 These court registrars are also responsible for engaging in severe resource constraints at a time when the judicial load policy, strategic thinking, and reform, so that their ability has increased. to do any of these things meaningfully is compromised. 16 WB208_RCRT.indd 16 5/20/10 5:11:27 AM Secretariat has only three officers who are Each district development council includes elected responsible for servicing the Cabinet and its members, but these bodies are only advisory. In processes, and has only two staff members Zanzibar, revolutionary committees are responsi- trained in regulatory good practice. Additional ble for regional administration. staff resources would be required to allow the Secretariat to take on the additional duties relat- Local government authorities exist for the purpose ing to RIA, and additional staff will also be of consolidating and giving more power to the required in the BRU to support RIA activities. people to competently participate in the planning and implementation of development programs within their respective areas and generally through- out the country. All local government authorities Coordination between levels are mandated to play two main functions of of government administration, law and order; and economic and development planning in their respective areas of The 1997 OECD report advises governments to jurisdiction. Tanzania's local government authori- "encourage reform at all levels of government." ties play an important role in the delivery of pub- This difficult task is increasingly important as lic services in Tanzania. They are responsible for regulatory responsibilities are shared among delivering three types of public services in Tanza- many levels of government, including suprana- nia Mainland: (1) concurrent functions; (2) exclu- tional, international, national, and sub-national sive local functions; and (3) delegated functions.57 levels. High quality regulation at one level can be undermined by poor regulatory policies and The Local Government Reform Program is practices at other levels, while, conversely, coor- intended to make local authorities more account- dination can vastly expand the benefits of reform. able for resource management and service deliv- The policies and mechanisms for coordination ery. The strategy is to limit the role of central between levels of administration are thus becom- government ministries to providing policy frame- ing increasingly important for the development works, setting guidelines, determining service and maintenance of an effective regulatory delivery standards, and providing overall coordi- framework. nation and support. National ­ Local Local government authorities in Tanzania fund their expenditures from three main sources, nota- Mainland Tanzania is divided into 21administra- bly intergovernmental transfers,58 own-source local tive regions, which are subdivided into 122 local authorities; Zanzibar and Pemba are divided into 57 Concurrent expenditure responsibilities are public services funded and regulated by the central government, but for five regions. Local government authorities are which the provision is devolved to the local government classified into two categories. Urban authorities level. These concurrent public services include the five are responsible for the administration and devel- grant-supported sectors, notably primary education; local health services; agriculture extension and livestock; water opment of urban areas, namely townships, munic- supply; and local road maintenance. Approximately three- ipalities, and Cities of Dar es Salaam and Mwanza. quarters of local government spending in Tanzania is for concurrent functions; the remainder is spent on exclusive Rural Authorities, commonly known as District local functions (such as refuse collection and other such Councils, form the second and much more local services) and local government administration. numerous category. There are over 10,000 elected 58 Intergovernmental transfers can be defined as funding received from other levels of government (typically, the Village Councils, the basic unit of local govern- central government). These transfers include recurrent sec- ment. Regional commissioners are appointed by toral block grants, sectoral basket funds and ministerial subventions, as well as local capital development grants. the central government, as are district commis- Recurrent block grants account for about two-thirds of all sioners and development directors for the districts. intergovernmental transfers. Recurrent block grants and 17 WB208_RCRT.indd 17 5/20/10 5:11:27 AM revenues, and local government borrowing. Inter- broadly responsible for coordinating inter-gov- governmental transfers fund account for roughly ernmental fiscal relations. 90 percent of all local government spending, while local governments' own-source revenues (includ- However, according to the Local Government ing local rates and other locally collected revenue Finances Act (1982), the Prime Minister's Office sources) account for approximately 10 percent of ­ Regional Administration and Local Govern- local financial resources. Local borrowing only ment (PMO-RALG) is responsible for "ensuring accounts for approximately 0.1 percent of local the proper management of the finance of the local spending. In sum, local government authorities government authorities." PMO-RALG ensures collect roughly 5 percent of all public revenues proper local financial management through the and are responsible for about 20 percent of public issuance of local budget guidelines, procedures, spending. and instructions on the development of the local budget. Other key line ministries are important The relationship between central and local gov- stakeholders in the local government finance sys- ernments on the Mainland is largely expressed tem, such as the Ministry of Finance, the Minis- through fiscal issues. No single central govern- try of Planning and Economic Empowerment ment agency or institution has a comprehensive (MPEE), and the Public Service Management of mandate over the management of local govern- the President's Office (PO-PSM). ment fiscal affairs; instead, different central gov- ernment ministries and agencies have responsi- Institutional mechanisms for coordination bilities for different aspects of the local government between the levels of government on regulation finance system. In accordance with the Public and regulatory policy appear to be lacking. Finance Act (2001), the Minister of Finance is National-International local capital development grants are supposed to be formu- la-based and disbursed directly from the Treasury to LGAs, Tanzania is a member of the East Africa Com- whereas most basket funds and subventions are more dis- cretionary in nature and disbursed indirectly to LGAs by munity and the South African Development line ministries. Community (SADC). 18 WB208_RCRT.indd 18 5/20/10 5:11:28 AM ADMINISTRATIVE CAPACITIES FOR MAKING HIGH QUALITY REGULATION Administrative transparency Provisions for transparency and predictability in making laws Transparency is an essential feature of a regula- The Constitution provides a basic framework for tory system because it establishes a stable and the law-making process. Articles 63 and 64 give accessible environment that promotes competi- the National Assembly the right to make laws, tion, trade, and investment. It also helps ensure and Article 89 authorizes the Assembly to adopt against undue influences by special interests. Standing Orders to prescribe procedures for the Transparency reinforces the legitimacy and fair- conduct of business in the Assembly and its com- ness of regulatory processes, but is not easy to mittees and sub-committees, including the dis- establish in practice. It involves a wide range of charge of functions of the Secretariat of the practices, including standardized processes for Assembly. Article 96 authorizes the Assembly to making and changing regulations; consultation establish Standing Committees, and Articles 97 with interested parties; plain language in draft- to 100 specify the procedures for securing Presi- ing; publication, codification, and other ways of dential assent to legislation. In addition, in 1984 making rules easy to find and understand; and Tanzania adopted a How to Legislate Act.59 implementation and appeal processes that are Although not specifically mentioned in the Con- predictable and consistent. In Tanzania, there has stitution, individual MPs are permitted to intro- been a tradition of more transparent, open, and duce legislation into the Assembly, in the same consultative procedures for making policy way as the government can. reforms in general. At the same time, there are continued constraints that hinder openness and participation by the public in Tanzanian regula- 59 See http://www.parliament.go.tz/bunge/Docs/FACTSHEET tory development. _1.pdf. 19 WB208_RCRT.indd 19 5/20/10 5:11:28 AM The formal policy-making process in Tanzania papers are handled. However, there appear to be centers on the Cabinet paper, which is initiated provisions within government procedures to by a ministry or government agency. At this stage, ensure that ministries other than the sponsoring the initiating ministry or agency is able to con- ministry are consulted before the finalization of duct consultations with stakeholders, whether any proposal to Cabinet. inside or outside government. Once the paper has been prepared and approved by the originat- Once the approved Cabinet position is converted ing ministry or agency, it is submitted to the into draft legislation, it is submitted to the Assem- Cabinet Secretariat and forwarded to the Inter- bly, where it is processed in accordance with Par- Ministerial Technical Committee (IMTC), which liamentary Standing Orders (see Box 1). is chaired by the Chief Secretary and consists of the Permanent Secretaries of all ministries. Once Provisions for consultation approved by the IMTC, the paper is submitted to the Cabinet for discussion and decision. To date, Consultation is a systematic attempt to discover the author has been unable to locate any formal the opinions of groups affected by regulation written instructions (such as those used in Uganda and to obtain data useful in regulatory develop- in the form of a Cabinet Handbook) that lay out ment and analysis. It may be general (e.g. adver- how the preparation and submission of Cabinet tisement for comment) or specifically targeted Box 1: The Legislative Process in Tanzania The legislative process involves four steps: Step 1: Preparation of a bill through the Cabinet decision-making process. (legislation may also be prepared and introduced into Parliament by an individual MP.) The initiating ministry or agency prepares a draft policy paper or bill, and consultations are held with other affected ministries, private sector organizations, such as TCCIA and CTI, and civic society organizations. Once Cabinet has given its approval, the government directs the chief parliamentary draftsman to prepare a bill or amendment to a bill. A 21-day public notice on the proposed bill is made before the first reading to allow public scrutiny and comments. Step 2: First Reading of the proposed bill. This step does not entail discussion on the bill, but rather is presentation of the bill by the government to the respective parliamentary committee. Individuals/ groups from civil society are generally invited to comment, although at this stage the parliamentary committee is not required to modify the proposed bill. At times, parliamentary standing committees invite individuals, including representatives for CSOs, to provide expert opinion on the proposed bill as part of their consideration of the bill. Step 3: Submission of the bill to the full Parliament by the chairperson of the standing committee of parliament. This step facilitates debate in Parliament. At this stage, a proposing ministry or any Member of Parliament may make additional proposals to change the bill. Step 4: Request to Parliament to approve the bill made by the proposing ministry or Member of Parliament. Step 5: Submission of an approved bill to the president of the United Republic of Tanzania for assent and later gazettement. CSOs may continue lobbying for change of the proposed bill at this stage. Source: adapted from "the Policy Process and Civil Society Access to that Process in Tanzania," November 2003, by Dr. Suma C Kaare, a paper commissioned by CIPE under the USAID-funded Tanzania Advocacy Partnership Program (TAPP). http://www.pacttz.org/downloads/Policy%20Process%20ESRF.pdf 20 WB208_RCRT.indd 20 5/20/10 5:11:32 AM (e.g. focus groups, working parties). Consulta- the policy process in Tanzania.61 Consultation tion can contribute to regulatory quality by procedures and structures have also been built bringing new ideas, perspectives, and data to the into specific reform programs, for example the attention of regulators; helping to balance oppos- Task Force on Tax Reform.62 ing interests and reduce the risk of capture; iden- tifying unintended effects and practical prob- In 2001, the TNBC was established to provide for lems; gathering information on compliance regular consultation on a broad range of economic issues; and providing a quality check on the issues between the public and private sectors. (See administration's assessment of costs and benefits. Box 2) The TNBC has provided for the Investors Consultation can also enhance voluntary com- Round Table (IRT) process through which bureau- pliance by creating a sense of "ownership" of cratic hurdles hindering private investments are the resulting regulations, reducing reliance on identified and addressed. The IRT serves as an enforcement and sanctions. advisory board on best practices in trade and investment to the top national leadership. Public consultation has been the hallmark of Tan- zania's policy development for many years. In the There are other organizations that participate in beginning, consultations tended to be ad-hoc, the consultation process on behalf of the private but in recent years they have become more struc- sector ­ chief among which are the Tanzania Busi- tured and planned, although various reviews of ness Forum and Tanzania Chamber of Commerce, consultation processes still refer to their informal- Industry and Agriculture (TCCIA).63 TCCIA was ity.60 Beginning in the mid-1990s, civil society formed as a result of discussions between leading has been identified as an active stakeholder in the business interests and the government, with the formulation, implementation, monitoring and latter recommending formation of a business evaluation of the performance/progress of major policy frameworks and processes. 61 The paper referenced in footnote 52 contains details of the processes at each level of government. 62 The aim of the task force is to promote transparency in tax Extensive consultations took place during the policy development, and harness the expertise of the vari- development of broad strategy statements, such ous stakeholders. The Task Force provides a forum for both the public and private sector to engage in open debate and as the NSGRP and Vision 2025, and consulta- dialogue as well as review presentations and submissions tions are part of the process of preparing Public regarding amending tax laws and the way that they are to be administered in the United Republic of Tanzania. The Expenditure Reviews, the Medium-term Expen- Task Force on Tax Reform was convened for the first time diture Framework, the National Poverty Eradica- in November 1996 and has since 1997 been held in the tion Strategy, the Poverty Reduction Strategy, the first half of the year in the run-up to the budget. The task force is hosted by the Ministry of Finance and chaired by Tanzania Assistance Strategy, the Public Expendi- the Deputy Secretary Policy and Resource Mobilization, it ture Reviews, the Private Sector Initiative under invites the opinions of all stakeholders from the govern- ment; companies; private sector; civil society; faith organi- the Public Sector Reform Program, as well as the zations; academic community; research institutions; and Local Government Reform Program. Since then, other economic specialists. various mechanisms and processes have been 63 TCCIA has opened 21 regional chambers of commerce and 92 district centers in Tanzania, in association with the institutionalized at the village, ward, municipal, Swedish International Development Cooperation Agency. district, regional and national levels to provide All 21Regional Chambers are non-profit, with nominal membership fees for its members. TCCIA currently has room for civil society access and participation in more than 8,000 members, and has established a wide net- work of organizations and associations, including an affili- ation with the Federation of Women Entrepreneurs of Tan- 60 For example, see "The Policy Process and Civil Society Access zania , whose own objectives are considered to complement to that Process in Tanzania," November 2003, by Dr. Suma TCCIA's. Services provided by TCCIA to the business C Kaare, a paper commissioned by CIPE under the USAID- community include business information, training, advo- funded Tanzania Advocacy Partnership Program (TAPP). cacy, business support initiatives (i.e. processing business http://www.pacttz.org/downloads/Policy%20Process%20 licenses) and business promotion activities, for instance, ESRF.pdf marketing programs, trade fairs, and mission. 21 WB208_RCRT.indd 21 5/20/10 5:11:32 AM association in order to organize consultations in a directed towards creation of public-private dia- more efficient way. Subsequently, the Confedera- logue conferences in each of the regions. tion of Tanzanian Industrialists was created to represent manufacturing interests. These apex There was extensive consultation between gov- organizations have undertaken initiatives to ernment, private sector and donors in the devel- improve their abilities to represent their member- opment of the BEST program itself. Phase 1 of ship in consultations. the program was launched in December 2003, following more than a year of discussions, through For example, TCCIA was the beneficiary of a a MOU between the government, the Tanzania USAID-financed project between 2002 and Private Sector Foundation and four bilateral 2005 that supported activities to build the donors. The private sector plays a role in the gov- capacity of regional business associations in six ernance of the program through membership on target regions64 of Tanzania in the areas of busi- the TRC, the Steering Committee (BSC), Sector ness association management, governance, and Committees and Technical Working Groups advocacy. The assistance was designed follow- (TWG). The BEST Program is itself supporting ing the conduct of diagnostics of 32 business efforts, through its Advocacy component,65 to associations (28 district/regional associations build the capacity of the private sector to partici- and 4 national associations) in five regions of pate effectively in consultations and lobbying for the country and in the capital, Dar es Salaam. policy change. In recent years, a number of The diagnostics revealed that most of the busi- umbrella private sector organizations have been ness associations and chambers were young, established, such as TPSF, TCCIA, CTI, TGNP, had a very small membership, severely limited VIBINDO. financial resources, and had not been active in advocacy. Activities, which covered training in Communication of regulation association management and advocacy, were Another dimension of transparency is the need Box 2: Tanzania National for the government to communicate effectively Business Council the existence and content of all regulations to the public and the business community. This means that regulations should be available to the public TNBC was established in September 2001 by Presidential Circular to provide a forum for public/ at reasonable cost, and in a language that can be private consultations. It is chaired by the president, easily understood. Communication is also essen- and its vice chairman is the president of the Private tial to achieving effective compliance. Sector Foundation. The TNBC holds two meetings each year to discuss The Tanzania Government Printer publishes the issues pertaining to private sector development and government's Official Gazette. The Official Gazette economic growth. To date, TNBC's consultations publishes bills, legislative enactments - before have been held at central government level only and after assent, subsidiary legislation, announce- and not at local or district level, thereby excluding ment of all official government appointments, the vast majority of enterprises. Efforts are under- way to facilitate regional TNBC meetings, to be and dates of entry into force of all legislation. All followed by district level meetings. these documents can be ordered through the Source: Adapted from "Practice of Reforming the Government Publications Agency. They can also Business Environment," August 2005. be found on various websites, including Parlia- ment, government's Public Administration, and the Tanzania Law Reform Commission. 64 The target regions were Iringa, Mbeya, Morogoro, Rukwa, Ruvuma, and Tanga. 65 http://www.best-ac.org/ 22 WB208_RCRT.indd 22 5/20/10 5:11:33 AM Legal materials can also be found in the Library Tanzania faces significant weaknesses in the of the Court of Appeal of Tanzania, the High enforcement of regulation, largely as a result of Court Library, the High Court Land Division inadequate capacity and manpower in regulatory Library, the Library of the Commercial Division agencies.66 This demonstrated in its starkest light of the High Court, the Attorney General's Office by the extent of informal business activity. Tanza- at the Ministry of Justice and Constitutional nia has taken a dual approach to this situation: Affairs, University of Dar Es Salaam, the National first, it has adopted legislation (BARA) that man- Archives, the Government Bookshop, Dar Es dates replacement of compulsory registration and Salaam Bookshop, the United Nations Informa- licensing with a voluntary registration approach tion Centre and more. Reported legal cases in that rests upon businesses formalizing their activ- Tanzania can be found in a number of Law ities on the basis that the official system offers Reports. Between 1957and 1977, cases reported advantages; and second, it is engaged in a reform from the High Court of Tanzania and the East that will centralize information gathering for var- African Court of Appeal appeared in East Africa ious registrations and licensing purposes in a Law Reports. Law Africa, a law report publishing single institution and a centralized registry within company, has updated the reports for cases from BRELA. the three East African jurisdictions, of Kenya, Uganda and Tanzania up to 2007. The Tanzania The National Sectoral Regulatory Licensing Policy Law Reports Editorial Board has recently pub- recommends that specific guidance be provided by lished Law reports covering 1999­2006. government on enforcement/compliance mecha- nisms, and indicates that "the government will pro- An ICT committee was established by the chief mote and enhance the culture of self-regulation and justice in 2008 to develop an implementation develop alternatives to enforcement based on educa- plan for ICT development. Also, under the BEST tion, sensitization and communication even in Program, consultancies have been awarded for instances where inspections and sanctions is the the design and implementation of online case law norm." It also specifies that Tanzania will adopt and legislation databases. innovative enforcement mechanisms, including risk analysis, to determine areas that should be Computerized registries are improving public subjected to inspection, sanctions as a deterrent to access to information relating to regulation and the degree that reflects the value of the infringe- registration of companies and land. ment, and a civic education program to encourage voluntary compliance.67 The draft policy docu- ment also stipulates that institutional capacity in Compliance and enforcement of regulation 66 "In Tanzania, there are a lot of existing laws and regulations that are neither complied with nor enforced to a satisfac- The adoption and communication of a law or tory level. In addition, compliance and enforcement costs regulation is only part of the regulatory process. to these laws and regulations are sometimes a great burden to both the regulated and the regulators." National Sectoral The law can achieve its intended objective only if Regulatory Licensing Policy," Technical Working Group it is adequately implemented, applied, complied Draft for Submission to the Second Inter-Institutional Technical Committee Consultative Meeting, Dar es Salaam, with and enforced. A low level of regulatory com- Oct. 6, 2008. pliance threatens the effectiveness of regulations, 67 The Background Papers to the policy draft recommended public policies, and ultimately the capacities and six ways of addressing enforcement: comprehensive risk assessment; avoidance of unnecessary inspections; redirec- credibility of governments in taking action. Com- tion of resources to promotion of voluntary compliance; pliance and enforcement issues can be considered fewer and simpler forms and reports; coordination of data needs across different institutions; and reduction in the in terms of processes and practices as well as insti- number of regulatory institutions through consolidation tutional structures. and rationalization. 23 WB208_RCRT.indd 23 5/20/10 5:11:33 AM regulatory agencies, in terms of both skilled per- Appeals can be taken through the courts, includ- sonnel and ICT systems, must be developed to ing to the High Court and Court of Appeal (Part allow such compliance improvements. Finally, the IV of the Constitution, Article 114).68 The Con- draft policy recommends the introduction of a stitution also makes provision for the establish- Monitoring and Evaluation framework for mea- ment of a Permanent Commission of Enquiry suring the impact and effectiveness of the reform. and a Ethics Secretariat (Chapter VI), which can conduct enquiries into conduct of any official or Public redress and appeals public leader Mechanisms to redress regulatory abuse must also be in place, not only as a fair and democratic Policy instrument alternatives safeguard in a rule-based society, but also as a feedback mechanism to improve regulations. Government intervention should be based on clear The first stage of seeking redress is to complain evidence that a problem exists and that govern- directly to the government agency that has taken ment action is needed. This should include assess- the decision.The second stage is to seek review ments of the size of the problem, likely government by the courts. There may be other institutions effectiveness, and costs of government interven- for redress, such as arbitration, mediation or an tion. It is good practice to consider both regulation Ombudsman. and alternative policy tools. A core administrative capacity for good regulation is the ability to choose The documents on business regulation and its the most efficient and effective policy tool, whether reform reviewed as part of this research are largely regulatory or non-regulatory. In the OECD, the silent on the issue of appeals and redress. How- range of policy tools and their use are expanding ever, procedures for appeal against administrative as experimentation occurs, learning is diffused, decisions do exist at various levels. Regulatory and understanding of the markets increases. decisions can generally be challenged in the first Guidelines for regulators in OECD countries instance by submission of a written appeal to the inceasingly require ministries and agencies to con- relevant minister. Different pieces of legislation sider whether "command and control" regulation provide different appeal avenues. In the case of is likely to be the most effective policy instrument tax appeals, Tanzania is now implementing a tax- or whether other options might succeed in payer's charter that enables taxpayers to complain achieving policy goals at lower cost. At the same about problems or malpractice to the TRA time, administrators, rule-makers and regulators offices. often face risks in using relatively untried tools. A clear leading role ­ supportive of innovation and More broadly, the Fair Competition Tribunal policy learning ­ must be taken by reform author- hears appeals against the decisions of the Compe- ities if alternatives to traditional regulations are tition Commission and decisions by other multi- to make serious headway into the policy system. sector regulatory authorities, namely the Energy To date, the use of regulatory alternatives in and Water Utilities Regulatory Authority OECD countries is, while increasing, still at a (EWURA), the Surface and Marine Transport relatively low level. Regulatory Authority (SUMATRA), Tanzania Communications Regulatory Authority (TCRA), Tanzania has a history of "command and control" Tanzania Civil Aviation Authority (TCAA) and regulation deriving to a large extent from its other similar bodies. The judgments and orders of the Fair Competition Tribunal are executed 68 Part VI of the Constitution establishes a Constitutional Court, which has limited jurisdiction in that it hears cases and enforced in the same manner as the judg- in which the governments of Tanzania and Zanzibar are in ments and orders of the High Court. dispute over an interpretation of the Constitution. 24 WB208_RCRT.indd 24 5/20/10 5:11:33 AM Socialist policies of the 1960s and 1970s, so that Permanent Secretaries, Members of Parliament there is not a natural inclination within govern- and the Secretary to the Cabinet, with the Cabi- ment to consider alternative approaches to regu- net Secretariat having been officially endorsed as lation. However, some efforts have been done in the RIA champion and extensive training of Cab- this sense with the introduction of RIA (see next inet Secretariat officers having been conducted. section 3.3). Widespread training and awareness activities have also taken place in participating ministries The one area where Tanzania has opted to forego and within the teaching fraternity at the Univer- regulation is in the registration and general sity of Dar es Salaam, and introductory training licensing of businesses. Until the enactment of capacity in RIA has been built in a local training the BARA in 2007, Tanzania relied upon the institution [Public Service College], which is now Business Licensing Act (No. 25), 1972, and the involved in delivery of RIA training for BEST." Company's Act, 2002, to collect information on the business sector, but at the cost of imposing In June 2008, a brochure "Principles of Good burdens on the registering enterprises. BARA Regulation" was published by the President's replaced the annual "pre-approval" system of ffice, Planning Commission.69 In addition to licensing with a one-off, non-conditional regis- stipulating the government's commitment to tration, and relies upon enterprises volunteering better regulation, the document (which was very to go through the registration process because similar to that produced in Uganda) indicated they consider that there are advantages in com- that a RIA should be carried out whenever "the pliance, whether they include access to informa- proposed new law has significant compliance tion or public services. costs for businesses or significant economic or social consequences" and that "a RIA is intended to ensure that any proposed law is necessary, has Use of RIA for understanding minimum side effects and is in proportion to the regulatory effects issue being addressed." It also indicated that "a RIA should in particular focus on the following RIA provides a systematic basis for choosing the themes: purpose and intended effect of the regu- best regulatory (or non-regulatory) alternative to lation; options for dealing with the problem; respond to a problem. A range of different benefits of each option; compliance costs on approaches to RIA exist, depending on policy pref- business and society; administrative costs on gov- erences and administrative capacities. At the core ernment; [and] summary and recommenda- of any RIA system, however, is: tions." The brochure also established general principles for consultation, enforcement and an assessment of selected types of impact of monitoring and evaluation. specific types of regulation; The brochure stipulates that "before deciding assessment methodology according to pre- upon a path of government-imposed regulation, a defined standards and procedures; and number of questions need to be asked. [...] Is regulation needed? What is the problem that a process of quality control by an indepen- needs addressing? Where is the market failure? Is dent government agency/unit. it a type of market failure that can be addressed without recourse to government regulation? What According to the Program Document of August 2008, BRU has made some progress on incorpo- 69 http://www.best.go.tz/%5Cachivement%5CPRINCIPL rating RIA into Tanzania's law and policy-making ES %20OFGOOD%20REGULATION%202-%20June% processes. "RIA has been formally approved by 2008 .pdf 25 WB208_RCRT.indd 25 5/20/10 5:11:33 AM are the costs, risks or benefits of maintaining the It appears that no evaluation of the experience status quo?" The brochure also offers various alter- was carried out for any of these RIAs. In spite of natives to regulation: "improving enforcement of the endorsement by government of the use of existing laws; improving public information and RIA, it is not clear whether other RIAs have been education to reduce exposure to risk; publicity conducted in general or on any of the other BEST campaigns to reward good behavior or embarrass program components. The BEST Web site does bad behavior; working with business associations not contain any information on RIAs that are to introduce standards that are enforced by the planned for the current year or beyond. industry itself; guidelines or codes of practice; and economic incentives to change behavior such as taxing cigarettes to discourage smoking." Building administrative skills According to the BRU Head, RIA has not been for regulatory reform applied to all the BEST Program components. It A skilled and well-trained civil service recruited is interesting that the original TOR for the licens- on the basis of merit is a prerequisite for develop- ing study required that a RIA be carried out on ing and maintaining high-quality regulations and BARA and its proposed regulations. But, follow- regulatory policies. Implementation of good reg- ing the production of the inception report, this ulatory practice requires civil servants to be requirement was replaced by a requirement to trained in consultation processes and in analyti- provide an analytical review of the BARA bill and cal approaches to policy options and choices. to recommend draft amendments to the bill. The rationale for this change is not explained in the The Tanzanian government is about to introduce consultant report. a performance appraisal system to support its civil service reforms and commitments to better In the case of the land component, a RIA was not service. No further details are available on the conducted for the development of the land pol- system, and against what group or individual per- icy, primarily because the policy development formance will be measured. was almost complete at the onset of the BEST program. However, a RIA was conducted as part Training programs for the civil servants are orga- of the development of the 2007 Land registration nized by and delivered through the Public Service bill, and RIAs may be conducted for secondary College, in keeping with training policy deter- legislation and regulations that are to be prepared mined by the Department of Policy Formation, in the near future. Public Service Management Unit, President's Office. More than 1,000 civil servants receive A RIA was conducted on two labor laws in 2004, training each year in a variety of skills. and discussed at one or more workshops with stakeholders involved in the reform process. The The Public Service College has had some dozen RIAs have not been widely publicized. They staff members trained in RIA methodologies. appear to have been qualitative and general, ori- These staff members have taught some short RIA ented to the consultation process. In addition, training courses for senior civil servants (mostly they did not contain detailed information on at the level of director and assistant director). costs or savings of the proposed reforms, nor Currently, it is not offering courses, and has no specify the institutional consequences of the immediate plans to mainstream RIA training in reform and implications for the operation of its civil servant induction courses or to market labor markets. the course content more broadly. 26 WB208_RCRT.indd 26 5/20/10 5:11:33 AM UPDATING REGULATIONS Revisions of existing laws 1972. The new act was the culmination of grad- and regulations ual reforms that had been made since 2000. Those reforms included the abolition of the flat Assessment of new regulations is not enough to rate development levy and other "nuisance taxes," ensure a high quality regulatory structure. As tech- and the abolition in 2004 of business license fees nology, the economy, and society change, existing for firms below the VAT registration threshold. regulations often become less relevant and effec- BARA replaces the former complex system of tive. Regulatory management should involve peri- annual "pre-approval" licensing with a one-time, odic reevaluation of whether existing regulations non-approval registration. still constitute the best available solution to the problems they seek to address. A systematic The BEST Zanzibar component is also reviewing approach is required to ensure that all regulation business entry laws applicable in Zanzibar, with a is regularly subjected to this reassessment. view to introducing similar reforms to those enacted on the Mainland. Under the BEST program, a number of laws have been subject to revision. Business registration, Under the land component, new Land Use Plan- commercial dispute resolution, land registration, ning and Urban Planning Acts were adopted in and labor laws have all been modified as part of 2007, and regulations governing the planning their BEST program components.70 systems are being drafted. In February 2007, the BARA was passed by Par- liament, to replace the Business Licensing Act of Before the official start-up of the BEST Program, a new Employment and Labor Relations Act and 70 The information on each component given in the para- a Labor Relations Institutions Act were introduced graphs below was taken from the "Reform Areas" brochure produced by the BEST Program and published by the Pres- in 2004. Under the program itself, further laws ident's Office, Planning Commission. have been re-drafted: Workers' Compensation 27 WB208_RCRT.indd 27 5/20/10 5:11:34 AM Act, Occupational Safety and Health Act, National the LSRP will concentrate on improving access Social Security Bill, and National Employment to justice especially for the poor and disadvan- Promotion and Services Bill. In May 2007, the taged. Human rights will also be an area of atten- Commission for Mediation and Arbitration tion, as the Commission for Human Rights and (CMA) was established, and in June 2007, the Good Governance will be strengthened. Other Labor Court Division of the High Court was priority areas are: respect of human rights by law inaugurated. Both of these bodies are active. enforcement agencies, and improved governance in the administrative system. Under the Commercial Dispute Resolution com- ponent of the BEST Program, steps are underway The Law Reform Commission (LRC) of Tanza- to revise the Civil Procedure Code of Tanzania, nia is charged with several statutory responsibili- other associated laws relating to the rules of proce- ties. The commission keeps all the laws of the dure of the Courts,71 and the management and United Republic of Tanzania under review with a administration of the Civil Court system, with a view to their systematic development and reform. view to providing the legal basis for more efficient, The commission can review any law or branch of equitable, and speedy resolution of commercial law and recommend ways and measures neces- disputes in Tanzania. In addition, Government sary in which that law or branch of the law of Notice No. 246 was passed to operationalize the Tanzania can be improved, or made simpler and Mwanza Commercial Court, and a feasibility be brought up date in line with the current cir- study is underway for establishing a commercial cumstances of Tanzania. In addition, the LRC court in Mbeya. revises and simplifies complex laws for public consumption. One major piece of work carried In addition to the legal components of the BEST out by the LRC has been the review of civil jus- Program, separate legal reforms have been pur- tice in 2006, which was used to frame the latest sued under the Legal Sector Reform Program tranche of the LSRP. (LSRP), which has also been supported by a donor pool. The reform program, which is orga- It is not clear from the available documentation nized around the theme of "access to justice for whether standards for legal reviews and legal the poor," was designed as long ago as 1993, and reform have been established, or whether any is only now in the first stages of implementation, form of RIA has been used to assess costs and because of long-standing staffing and financial benefits of reform. resource constraints faced by the Ministry of Jus- tice and Constitutional Affairs and the Judicia- The "Principles of Good Regulation" introduce ry.72 The focus of the LSRP is on modernizing the concept of "sunset provisions," so it can be the national legal framework. The objective is to considered to have been officially approved. How- increase the capacity of sector institutions as well ever, there are apparently no examples yet of as the knowledge and skills of legal professionals, where ministries have built such provisions into thereby enhancing the independence and effi- regulations. ciency of the judiciary in particular, but also of the personnel in the sector in general. Moreover, Reducing administrative burdens 71 During 2008, a review was carried out of the rules of the Court of Appeal under Appellate Jurisdiction Act of 1979. Regulatory paperwork and government formalities 72 Although the 1997 Constitution recognized the indepen- dence of the Judiciary, it has typically received a very small can be unnecessarily burdensome on regulated share of government budget resources (less than one-half groups if coordination between regulators is lack- percent). The judiciary has understandably been focused on manpower and infrastructure reform ­ numbers of ing, new technologies are not used to assist in infor- courts, judges and magistrates mation gathering, and unnecessary information is 28 WB208_RCRT.indd 28 5/20/10 5:11:34 AM sought by regulators. World-wide, governments are and sectoral licensing.75 In 2003, the MITM com- adopting programs to reduce the administrative missioned research into the existing licensing burdens associated with regulatory requirements. regime. The report76 found that the regime was a barrier to growth and investment because: As in the other countries in East and Southern Africa, business licensing reform has been a pri- compliance costs were high, producing incen- mary entry point for regulatory reform in Tanza- tives to avoid licensing procedures; nia. Business licensing, which was governed by the Business Licensing Act of 1972, was regarded MSMEs were disproportionately affected; as a major hindrance to business start-ups, the pre-approval system led to petty corrup- because of the conditions imposed on enter- tion; prises73 and the fact that it was used as a revenue generation device rather than as a meaningful implementation and enforcement costs tool for regulation. DB2009 calculated that it incurred by government were high; and took 29 days and cost half of per capita GDP to establish a business in the capital, and that it took poor-quality enforcement produced uncertain- over 300 days and cost 20 times per capita GDP ties and acted as a disincentive to investment. to obtain a construction permit (DB's surrogate In June 2004, MITM made recommendations for business licensing). The MKURABITA to: a) replace business licensing with a simplified report,74 which looked more broadly at the enter- system of universal business registration; b) repeal prise sector in Tanzania (and in particular at the Business Licensing Act (1972); and c) dis- SMEs and microenterprises), argued that busi- courage use of licensing by both central and local ness start-up procedures and costs, complicated governments to raise budget revenue. by the need to obtain a variety of approvals and specific sectoral licenses, were a major reason that BARA replaced the annual pre-approval system 98 percent of all business units in Tanzania stayed of licensing with a one-time registration system. in the informal sector. The new Act also provides the legal framework for introduction of a universal one-stop business As indicated in section 1.3, the government started registration system, with a centralized database the process of reform of business entry and licens- that integrates the various start-up processes and ing by creating BRELA in 1999. However, its ini- registries (similar reforms are being planned for tial role was merely to take the implementation of Zanzibar). BARA is being implemented through existing laws out of the ministries and house it in a preparation of a roadmap for modernization of single semi-autonomous agency, thereby separating BRELA, and preparation of a corporate strategy registration procedures from revenue generation and a feasibility study for a new BRELA front and direct ministerial involvement. In the follow- office.77 The plan is to consolidate existing ing years, there was a stream of reports and statistics that convinced the government of the need for 75 Commitments to reform were expressed in the 2004 Bud- reform of business start-up procedures and general get Speech and by Cabinet in the same year, when it man- dated implementation of sectoral licensing reform. 73 The 1972 Act required separate licenses for separate prem- 76 The research was carried out by the law firm of Majaar, ises and for different lines of business; allowed ministerial Rwechungara, Nguluma and Makani and the Tanzanian discretion to grant exemptions from licensing to individual Economic and Social Research Foundation (ESRF). businesses and to waive licensing fees; allowed the minister 77 Other related features of the start-up and licensing reform to restrict the number of licenses issued annually in any include modernization of the Registry of Births, Deaths, line of business; provided for a wide range of offenses Marriages, Insolvency and Estate Administration (RITA), against the Act and placed the burden of proof on the which involves digitalization of records and preparation of a accused; and prevented court review of any appeals. computerization strategy; a feasibility study for establishment 74 http://www.tanzania.go.tz/mkurabita/mkurabita_report_ of a national ID databank; and establishment of a national index.html database of MSMEs. 29 WB208_RCRT.indd 29 5/20/10 5:11:34 AM registries under a single integrated registry system The Ministry of Constitutional Affairs and Jus- that would permit enterprises to provide to tice (MOCAJ), working in collaboration with BRELA one set of information for all forms of BRU, the Judiciary, the Law Reform Commis- registration. sion of Tanzania and the Tanganyika Law Society, was given overall responsibility for producing the In addition, a diagnostic report on sectoral following principle outputs in the legal field: licensing has been carried out and a draft policy for licensing has been completed. Sector-specific capacity building activities and infrastructure business licenses are instruments through which development at the High Court (Commer- the government can influence the conduct of cial Division) of Tanzania; business operations in areas that are sensitive to social concerns for a wide range of reasons. The capacity building activities and infrastructure diagnostic report78 produced a policy framework development at the High Court (Land Divi- to guide development of a consistent policy sion) of Tanzania; approach towards licensing, created an inven- tory of all licensing legislation, and designed a assessment of alternative dispute resolution checklist to help structure in-depth reviews of in Tanzania and reintroduction of a wide- licensing provisions. The report was completed spread ADR training program; towards the end of 2006, and the reform process is still not instigated. The delays appear to stem introduction of a Commercial Continuing from the limited capacity of the BRU to oversee Legal Education Training Program; and reform activities, and from the absence of a strong commitment from or involvement of a capacity building at the Tanganyika Law Soci- central ministry. ety and the introduction of a code of conduct and ethics for advocates and of greater profes- The land administration component of BEST sional regulation. has focused on increasing the issuance of land titles, and reducing the costs to registrants: time The first joint assessment review of the BEST Pro- to complete land information search and regis- gram in September 2006 noted that progress on tration transactions has been reduced,79 and the Commercial Dispute Resolution component plans are underway to issue certificates of village so far had been disappointing. This was ascribed land (CVL) and certificates of customary rights to a number of interlinked challenges raised by of occupancy (CCROs), and to develop a land the stakeholders managing and implementing the registry. In the first phase of BEST, some reforms, by the structure of the program, by the 263,000 landed properties in urban areas were interventions of development partners, and as a registered and computerized as part of the pro- result of the application of concepts born of a gram to formalize property rights in unplanned business environment program to implement settlements. Under the BEST Zanzibar pro- judicial and legal reforms. gram, a diagnostic report on land reform needs has been carried out. The Ministry of Justice and Constitutional Affairs has struggled to understand its role within a busi- 78 "Final Report: Consulting Services for the Introduction of ness environment strengthening program. The a Regulatory Business Licensing System," Bannock Con- ministry has focused most of its reforming energy sulting Ltd, in association with Maajar, Rwechungura, Nguluma, Makani Advocates and the Economic and Social on the Legal Sector Reform Program, a reform Research Foundation, May 2006 package funded by a different donor `basket'. 79 Land search times have been reduced from 3 weeks to 5 days, and substantial increases in issuance of titles has This latter program's objective of "Access to Jus- occurred. See BEST Program document, p6. tice for the Poor" fits well within the governance 30 WB208_RCRT.indd 30 5/20/10 5:11:35 AM and rule of law portfolio of its funding donor Under the BEST umbrella, work began in 2002 agencies. The Commercial Dispute Resolution on computerizing the registries maintained by reforms, although ultimately concerned with BRELA. A final report, which was subjected to increasing justice to all, have not resonated as two stakeholder workshops in spring 2006, was strongly and have been perceived as pro-business delivered in July 2006. As of July 2008,82 com- rather than being pro-poor and pro-Tanzanian. puterization of the registries for companies and for business names was completed, with plans to introduce computerization of patents, industrial Use of ICT to support regulatory licensing, trade and service registration, and reform business activities registration in the foreseeable future. Once government procedures have been stream- lined and redesigned as part of regulatory reforms, In 2008, BRELA introduced a Web site83 as part use of computerized databases and registries can of its efforts to improve its services to the busi- lead to further improvements in regulatory per- ness community and the public. The site provides formance, particularly for enterprises that are a basic information on the processes required for long distance away from the agencies with which business names, company registration, trade and they have to deal. ICT can be used to provide services, patents and industrial licenses, and information to the users of government proce- allows businesses to download application forms. dures, and can also enable users and applicants to The site is still under construction: neither the submit requests for services in a structured and section on patents nor the "Frequently Asked consistent fashion. Use of ICT is increasingly seen Questions" page has any content as of January as an important way of combating corruption. 2009. Currently, application forms cannot be submitted to BRELA through the site, although The government of Tanzania has an explicit policy recent statements by BRELA management imply for introduction of e-government,80 responsibility that the eventual aim is to allow applications, for which is lodged in the President's Office for etc., to be made by computer. Public Service Management. The Cabinet adopted a national ICT policy81 in March 2003, and in Within the CDR component, a roadmap for ICT March 2004 set out key priorities towards imple- in the Tanzanian court system has been prepared. menting e-government. The key priorities were to: Subsequently, work is underway on devising an implementation plan for ADR. An integrated create a network infrastructure to allow gov- ICT strategy has been established for the courts ernment to communicate with itself; in Tanzania and modernization of the registries of the Dar es Salaam courts. Furthermore, an create an institutional framework for all online case law and legislative database has been e-government resources; and designed and is now under implementation, and computerized land registries are also being promulgate to public and private sectors the introduced. value of e-government and to promote spe- cific e-government services. 80 The first use of ICT within government was in the early 1990s as part of the effort to control public budgeting and 82 http://dailynews.habarileo.co.tz/magazine/index. expenditure. php?id=5641 81 http://www.tanzania.go.tz/policiesf.html 83 http://www.brela-tz.org/ 31 WB208_RCRT.indd 31 5/20/10 5:11:35 AM ROLE OF DONORS In economies where public revenue is scarce, and procedures and, through development of donors have often stepped in to finance the costs harmonized procedures, allowed implementation of regulatory reform programs. The financing based on unified procedures. Subsequently in horizon of donors has been variable: some donor- 2007, IDA joined the funding basket, and new assisted programs have been relatively short, harmonized procedures (essentially World Bank focused on achieving "quick wins," while others procedures) were introduced. According to inter- have been geared to capacity building and cre- views with current and past BEST staff, the need ation of a new approach to developing policies, to re-educate project participants in the new proce- laws and regulations that requires a long-term dures caused delays in implementing the program. commitment. Irrespective of the donor time There is another aspect of donor involvement in horizon, the issue of an exit strategy and the the program that requires attention: there appears transfer of program costs to the host government to be a tendency for the reporting to donors on remain important. expenditures and program progress to overshadow the reporting to domestic clients, and efforts need The BEST Program was initially supported by to be made to ensure that monitoring and evalua- the Danish International Development Agency tion activities feed into the government's overall (DANIDA), the Swedish International Develop- framework for development. ment Cooperation Agency (SIDA), the govern- ment of Netherlands, and DFID. One of the The large scale of donor resources has enabled benefits claimed for the program84 is that it the agenda to be very large, diverse and extended brought together donors with diverse policies over time ­ some $60 million to be implemented 84 Assessment contained in "Practice of Reforming the Busi- within a 10-year time frame. It can be argued ness Environment: the Case of the BEST Program," paper that the timeline allowed for project completion prepared by Dr. Stergomena Tax-Bamwenda and Dr. Betty Mlingi, for the Cairo International Conference, Nov 29 ­ is much more realistic than it was in Uganda, Dec 1, 2005 where the original program of only two years was 32 WB208_RCRT.indd 32 5/20/10 5:11:35 AM extended for a third year. It is clear from interna- will have to find resources to maintain the pro- tional experience that introduction of a broad gram in the long-term. In this regard, attention regulatory reform agenda takes a considerable also needs to be given to the design of rewards time. and incentive systems within the government to ensure that the objectives of the regulatory reform An exit strategy for donors, alternatively termed a program are supported. In addition, the large sustainability strategy for the country, is already scale and breadth of reforms under the BEST under consideration in the case of Tanzania, and program and other donor-supported initiatives is predicated upon the assumption that the gov- has placed severe strains on the BRU, which is ernment of Tanzania will progressively take on a currently functioning primarily as a project man- higher percentage of program costs as time goes agement unit rather than as a promoter and coor- by. This is a wise move, because the government dinator of good regulatory practice. 33 WB208_RCRT.indd 33 5/20/10 5:11:37 AM CONCLUSIONS AND RECOMMENDATIONS Assessment of strengths a "vocabulary" for effective discussion. Efforts are and weaknesses also being made to make consultations more inclusive. But the government has less capacity The government of Tanzania has established available to improve the quality of policy analysis within its various strategy documents a clear and options and to carry out even simple forms rationale for regulatory reform as a major part of of regulatory impact assessment. The BRU, con- its overall private sector development strategy and sumed as it is in the project implementation its strategies for formalizing and supporting small responsibilities under the BEST Program, does and largely informal enterprises. It is working not yet have the capacity to formulate a regula- across a wide area of regulatory reforms, includ- tory reform strategy or agenda for action. ing business entry (registration and licensing), and land, labor, and commercial laws. These are connected in various ways to reform programs Policy options and recommendations affecting general judicial issues, public sector and civil service reform, decentralization, and anti- This report suggests a set of short- and medium- corruption and e-government programs. term actions to improve the capacities of the Tanzanian government to assure high-quality The scale of reform programs puts pressure on regulation. It recommends adopting at the highest the government's capacity to manage and coordi- political level a broad policy on regulatory reform nate the programs. In the regulatory area, the that establishes clear objectives, accountability, government has made great progress in improv- and frameworks for implementing regulations. ing consultation mechanisms. Consultation pro- This would serve as a framework for determining cesses are well established in Tanzania. Efforts are how to move from piecemeal programs of regula- being made to improve the consultation process, tory reform directed to specific issues towards a particularly the capacity of private sector organi- coordinated approach to introducing good regula- zations to advocate for policy change and develop tory practice across government. 34 WB208_RCRT.indd 34 5/20/10 5:11:38 AM As an integral part of this, the report recom- promoting the systematic consideration of mends that the government review how best to regulatory alternatives; and establish ministerial responsibility for champi- oning regulatory reform at the Cabinet level and streamlining the current activities for legal to coordinate regulatory reform across govern- scrutiny of draft regulations. ment. The current government has established The latter should include continued efforts to two Ministers of State (one for good governance reduce administrative burdens by establishing a and the other for public service management) in central registry of administrative procedures and the president's office. The government should business licenses, and by initiating a comprehen- consider whether another Minister of State posi- sive review of existing regulations. The current tion with specific responsibility for championing proposals for licensing reform may provide a regulatory reform should be created, or whether good template for future activities. the existing ministerial positions can be rede- signed to include this responsibility. In either Particular attention should be directed towards case, an oversight technical unit should be estab- compliance and enforcement of regulations. In lished to support the responsible minister in general, it would appear that machinery for these activities. redress and appeals exists in Tanzania. To the extent that the machinery does not work well in It is clear that there is a very large law reform the case of regulatory issues, there would seem to agenda being pursued in Tanzania under the be several reasons. First, it has been suggested BEST Program and LSRP initiatives. It is also that members of the public do not always have obvious that the demands of the reform pro- information about their rights to information grams are imposing stresses, both to the staff and due process. Second, civil servants may deny within the Ministry of Justice, the LRC, and access to relevant information because the laws the Judiciary. In addition to capacity con- on official sources of information are clearer straints within the administration that result in about the penalties for providing information logjams and delays, it appears that commercial than about the obligation (which derives from legislation often gets displaced by other legisla- the Constitution) to supply information. Third, tive proposals that are more interesting to the in cases where regulations have been badly drafted legislators. or are incomplete or contradictory, appeals are The report recommends steps to be taken to difficult to frame. improve the capacities to make new regulations and to keep existing regulations up to date. Infor- Improvements of enforcement and compliance mation on laws and regulations affecting busi- are among the most important challenges to nesses is commonly available within Tanzania, Tanzania's regulatory management system, with but no systematic review of regulations has been serious problems generated by deficiencies done so far. Improving capacities to make new throughout the regulatory process. A key aspect regulations and keep existing ones up to date of inspection and compliance reform would be should include such initiatives as: to review and rationalize enforcement capacities and processes of central ministries. The draft designing and implementing a step-by-step policy on sectoral licensing offers a framework program for regulatory impact assessments; for compliance and enforcement that would, if accepted and implemented, introduce many of improving transparency by formally estab- the best regulatory principles. lishing legal requirements for consultation procedures during the preparation of regu- It does not appear that Tanzania has made lations; much progress to date in encouraging the use 35 WB208_RCRT.indd 35 5/20/10 5:11:38 AM of alternatives to regulation. Given that enforce- while attempting to develop information on eco- ment of regulations is still a significant problem nomic costs and benefits to the private sector. If in Tanzania (reflected in the business arena in the there is a wide gap between current analytical huge size of the informal sector that avoids regis- capacities and information and the sophisticated tration, taxation, and licensing), it is unlikely that RIA model, it is important to establish interme- policymakers will be comfortable with experiment- diate analyses and forms of RIA that can help ing with innovative non-regulatory approaches in bridge the gap over time. Otherwise, ministries which they have even less experience. The current and agencies required to do RIAs may be discour- mind-set of the government, reflected in its aged by the width of this gap. In other words, the approach to the informal sector, is to adjust regula- best may be the enemy of the good. It would tion to encourage compliance rather than to con- seem that more attention needs to be paid to this sider innovative alternatives. However, failure of issue within the Tanzania program. this reform model would probably encourage a different approach, and the government and BRU Serious efforts are underway at addressing red should be alert to possibilities to make effective use tape and administrative burdens faced by the of opportunities. business sector. Progress is being made, but more slowly than originally projected, and this is due In terms of the use of policy and regulatory tools, to a considerable extent to shortages of key skills application of RIA in Tanzania's policy and law- within government. making processes is clearly at an early stage, and RIA is not yet generally applied. Where RIA has The government of Tanzania has adopted a been used, it appears to have been an ad-hoc framework strategy introducing e-government choice rather than a part of an overall plan to throughout the public service. The first steps have introduce the technique. One of the challenges is been taken in a number of regulatory areas and how to develop RIA techniques in an environ- are expected to provide benefits for the business ment where the information required to address community, especially for those businesses that the questions is not readily available or can be are located well outside the capital. secured only by extraordinary efforts. Donor support for regulatory reform has been Faced with this challenge, governments in other important to date. Care needs to be taken to countries, such as Uganda, have often started by ensure that donor involvement does not reduce assessing the fiscal consequences of reform. They the incentives within the government for pro- then have moved on to assessing the institutional moting reform and building local capacity to and civil service personnel impacts of reform, implement reform programs. 36 WB208_RCRT.indd 36 5/20/10 5:11:39 AM APPENDIX A. PRINCIPLES OF GOOD REGULATION The 1997 OECD Report on Regulatory Reform includes a coordinated set of strategies for improving regulatory quality, many of which were based on the 1995 Recommendation of the OECD Council on Improving the Qual- ity of Government Regulation. These were: A. BUILDING A REGULATORY MANAGEMENT SYSTEM 1. Adopt regulatory reform policy at the highest political levels. 2. Establish explicit standards for regulatory quality and principles of regulatory decision-making. 3. Build regulatory management capacities. B. IMPROVING THE QUALITY OF NEW REGULATIONS 1. Regulatory Impact Analysis. 2. Systematic public consultation procedures with affected interests. 3. Using alternatives to regulation. 4. Improving regulatory coordination. C. UPGRADING THE QUALITY OF EXISTING REGULATIONS 1. Reviewing and updating existing regulations. 2. Reducing red tape and government formalities. The OECD report recommended adoption of a set of regulatory quality standards based on the OECD principles as follows: "Establish principles of "good regulation" to guide reform, drawing on the 1995 Recommendation on Improving (Continued ) the Quality of Government Regulation. Good regulation should: (i) be needed to serve clearly identified policy goals and effective in achieving those goals; (ii) have a sound legal basis; (iii) produce benefits that justify costs, considering the distribution of effects across society; (iv) minimize costs and market distortions; (v) promote inno- vation through market incentives and goal-based approaches; (vi) be clear, simple, and practical for users; (vii) be consistent with other regulations and policies; and (viii) be compatible as far as possible with competition, trade and investment-facilitating principles at domestic and international levels." Source: OECD Report to Ministers on Regulatory Reform,1997. 37 WB208_RCRT.indd 37 5/20/10 5:11:39 AM APPENDIX B. DOING BUSINESS 2009: ECONOMY RANKINGS FOR SUB-SAHARAN AFRICA Ease Trade of Business Constr. Property Investor Paying across Economy DB start­up permit Employment Regist. Credit Protection Tax borders Contracts Closure Global Ranking Kenya 82 109 9 68 119 5 88 158 148 107 76 Zambia 100 71 146 135 91 68 70 38 153 87 80 Uganda 111 129 81 11 167 109 126 70 145 117 57 Tanzania 127 109 172 140 142 84 88 109 103 33 111 Rwanda 139 60 90 93 60 145 170 56 168 48 181 SSA Ranking Kenya 5 14 1 10 16 2 14 36 26 19 10 Zambia 7 7 32 26 11 6 11 5 30 15 12 Uganda 10 21 14 1 41 14 20 15 24 21 2 Tanzania 14 14 42 28 27 7 14 21 9 1 19 Rwanda 17 5 16 13 5 27 43 10 40 4 34 38 WB208_RCRT.indd 38 5/20/10 5:11:39 AM APPENDIX C. BUSINESS REGISTRATION AND LICENSING AGENCY (BRELA) BRELA is a Government Executive Agency estab- stimulating scientific and technological lished under the Government Executive Agencies inventiveness and innovation and encourage Act No. 30 of 1997. It was established on the 28th technology transfer; and of October, 1999, by Government Notice No. 294A published on 8th October, 1999. It was offi- protecting the development of creativity in cially inaugurated on the 3rd December, 1999. artistic, literary works, and expression of folklore by protecting such work in conjunc- tion with rights owners. Aim, roles and strategic objectives Strategic Objectives: The strategic objectives of Aim: The aim of the agency is to ensure that busi- the agency are: nesses operate in accordance with the laid down regulations and sound commercial principles. ensuring that businesses comply with the laid down regulations to the satisfaction of the Roles: BRELA's specific roles include: government and the business community; administering laws relating to companies and improving service delivery by adopting mod- business names: ern business practices; regulating business by administering business building an efficient and effective workforce and industrial licensing laws; by adopting modern human resource man- agement policies; and administering intellectual property laws; achieving financial self-sufficiency and gener- encouraging and facilitating local and foreign ating surplus of income that supports the business investment; implementation of other strategic objectives. 39 WB208_RCRT.indd 39 5/20/10 5:11:40 AM Agency structure BRELA's institutional structure consists of the chief executive, four divisions and one unit, as The organizational structure of BRELA is based follows: upon the following considerations: Commercial Laws Division the need to have an appropriate span of con- trol for managers; Intellectual Property Division avoiding the involvement of too many tech- Licensing Division nical staff in supervisory activities at the expense of technical duties; Business Support Division the need to group related functions together Internal Audit Unit to avoid overlapping and duplication; The agency will establish zonal offices in phases the need to reduce the number of managerial as the level of business activity increases in selected levels to improve accessibility of top manage- zones. This will extend the customer base as well ment to all BRELA staff and to improve as bring the agency's services closer to users in the internal communication; and regions. the need to reduce operational overheads. Source: BRELA website 40 WB208_RCRT.indd 40 5/20/10 5:11:42 AM APPENDIX D. THE JUDICIAL SYSTEM IN TANZANIA Judicial system in mainland The High Court's Main Registry (which includes tanzania the sub-Registries) caters for all civil and crimi- nal matters. The High Court (mainland Tanza- The Judiciary in Tanzania has four tiers: the Court nia) has established 10 sub Registries in different of Appeal of the United Republic of Tanzania; the areas of the country, and has two specialized divi- High Courts for Mainland Tanzania and Tanza- sions, the Commercial Division and the Land nia Zanzibar; Magistrates Courts, which are at Division. two levels (the Resident Magistrate Courts and the District Court, both of which have concur- Subordinate Courts. These include the Resident rent jurisdiction); and Primary Courts, the lowest Magistrate Courts and the District Courts, which in the judicial hierarchy. both enjoy concurrent jurisdiction. These courts are established under the Magistrate Courts Act of Court of Appeal. The Court of Appeal of Tanza- 1984. The District Courts, unlike the Resident nia, established under Article 108 of the Consti- Magistrates Courts, are found throughout all dis- tution, is the highest Court in the hierarchy of tricts (the local government unit) in Tanzania, and judiciary in Tanzania and the court of final appeal. receive appeals from the Primary Courts, several It consists of the Chief Justice and other Justices of which are typically found in one district. The of Appeal. Resident Magistrates Courts are located in major towns, municipalities and cities. High Courts. The High Court of Tanzania, established under Article 107 of the Constitution, Primary Courts. The primary courts are the low- has unlimited original jurisdiction to entertain all est courts in the judicial hierarchy, and are estab- types of cases. (The High Courts exercise original lished under the Magistrates Courts Act of 1984. jurisdiction on matters of a constitutional nature They deal with criminal cases and civil cases. Civil and have powers to entertain election petitions.) cases on property and family law matters that 41 WB208_RCRT.indd 41 5/20/10 5:11:43 AM apply customary law and Islamic law must be ini- Court of Appeal. The Court of Appeal in Tanza- tiated at the level of the Primary Court, where the nia handles all matters from the High Court of Magistrates sit with lay assessors. The jury system Zanzibar. does not apply in Tanzania. High Court. The High Court of Zanzibar has Tribunals. There are various specialized tribunals the same structure as the High Court of Tanzania that form part of the judicial structure, including Mainland, and handles all appeals from the lower the District Land and Housing Tribunal, Tax Tri- subordinate courts. bunal and the Tax Appeals Tribunal, Labor Recon- ciliation Board, the Tanzania Industrial Court, and Magistrate's Court. These Courts have jurisdic- Military Tribunals for the Armed forces. Any party tion to entertain cases of different nature, except that feels dissatisfied with any decision of the Tribu- for cases under Islamic law, which are tried in the nals may seek judicial review at the High Court. Kadhi's courts. Kadhi's Appeal Court. The main role of the Kadhi's Appeal Court of Zanzibar is to hear all Judicial system on zanzibar appeals from the Kadhi's court, which adjudicates The High Court of Zanzibar has exclusive origi- on Islamic law. nal jurisdiction for all matters in Zanzibar, simi- lar to the case of the High Court on mainland Kadhi's Courts. These are the lowest courts in Tanzania. The Zanzibar court system is quite Zanzibar which adjudicate all Islamic family mat- similar to the Tanzania mainland system, except ters such as divorce, distribution of matrimonial that Zanzibar retains Islamic courts, which adju- assets, custody of children and inheritance but dicate Muslim family cases such as divorces, child only with Muslim families. custody, and inheritance. All other appeals from the High Court of Zanzibar go to the Court of Primary Courts. These have the same rank as Appeal of Tanzania. the Kadhi's Courts, and deal with criminal and civil cases of customary nature. 42 WB208_RCRT.indd 42 5/20/10 5:11:43 AM APPENDIX E. BEST PROGRAM COMPONENTS AND EXPECTED RESULTS Component Areas of Focus Activities Expected Results Better Regulation Removing unnecessary Passage of new Business Activities Simple and efficient business regulations Registration Act (BARA) to replace registration and deregistration Revising and Business Licensing Act 1972 system, with well-kept business simplifying outdated Modernization of BRELA infrastruc- statistics legislation and ture, procedures, and services, Simplified and transparent land regulations including computerization of acquisition procedures and Establishing a company records and integration of regulations, with improved access sustainable process for Business Names and Company to land mortgages and finance ensuring business- registries Modern labor legislation consistent friendly laws and Establishment of national MSME with international standards administrative database Harmonized local and central procedures Modernization of related registries government tax system Strengthening capacity (births, deaths, marriages, Reduced cost of doing business and for regulatory reform insolvency and estates) greater compliance with regulations Preparation of national policy on by businesses, especially SMEs/ sectoral licensing informal businesses Streamlining of sectoral licenses Increased investment in the Establishment of individual agriculture sector and greater identification database access by farmers to support services Simplified and efficient import and export procedures Revision of civil procedure laws Fundamentally reformed CDR system Improved Improved accessibility Operationalization of Commercial and ADR and greater effectiveness Commercial to the court system for Court in Mwanza, feasibility study Enhanced access to the Commer- Dispute Resolution formal and informal for Commercial Court in Mbeya cial Court businesses Computerization of Dar court Simplified Civil Procedure Code Speed and quality of registries (pilot), online case law Elimination/mitigation of the service provided by and legislation database "Injunction/Adjournment" culture court system to Alternate dispute resolution Clearance of the backlog of businesses improved Commercial Law Continuing commercial cases Education Program Increased integrity of the court system 43 WB208_RCRT.indd 43 5/20/10 5:11:43 AM Enhancement of Law Society to Improved enforcement of judgments become effective advocacy, Increased willingness of financial regulatory organization for lawyers institutions to provide loans to SMEs Improved High Court (Land Division) Tanzania Increased number and Improved Web site Better access to information on Investment Center value of local and Delivery of effective targeted investment opportunities foreign investment in Investment Promotion Strategy Increased investment by local Tanzania Promotion of sites and buildings businesses, especially SMEs, and Enhanced promotion Improved support to increased foreign investors of Tanzania as an number of investors investment destination Public Sector Improved "customer Changed mindset and orientation of Reform service" ethos for the public sector towards private services provided to sector growth the private sector by Better quality of services delivered the Public and Judicial to the private sector by government Service agencies Improved private sector compliance with business regulations Private Sector Improved capacity of Greater private sector influence in Advocacy private sector creating government policies and stakeholders to identify regulations regulatory problems Enhanced private sector contribution and solutions and to the economy advocate for an improved business environment Land Administration Reduction of cost and Review of legislation and enactment time to register land of new legislation transactions Decentralization of land administra- Use of land as tion services to local government collateral Establishment of secure land registry Formalization of urban Creation of surveying and mapping unplanned settlements infrastructure Clearance of backlog in land and housing disputes Survey, mapping and registration of housing plots in unplanned settlements in Dar and other priority cities Labor Reform Establishment of Preparation of legislation for OSH, effective, flexible and workers compensation, social socially responsible security, employment promotion labor market services Establishment of OSHA zonal offices and offices for Labor Court Resolution of backlog of labor cases Establishment of labor market information system BEST Zanzibar Improved regulatory Reform of companies, business environment for names, securities and insolvency business laws Digitalization of records and reengineering of registration processes Rationalization of licensing, taxation, and tax administration Reform of land registration and information system, including updating of land laws Revision of trade procedures Updating of ZIPA's corporate strategy 44 WB208_RCRT.indd 44 5/20/10 5:11:44 AM