Dealing with Licenses
It is a fact of civilized society that, where there are markets, there must also be some market regulation. National, regional, and local institutions of government are obliged to ensure that private enterprises play by a set of shared rules. Public institutions should require businesses to engage in lawful activity; to pay their employees wages; to observe general rules of health, environmental consciousness, and safety on behalf of their
employees, their customers, and their neighbors; and to contribute, by way of paying taxes, to the state’s ability to provide core infrastructure, security, and social services. Indeed, some regulation by government is necessary, important, and good.
Too much regulation, though, is a problem, as the World Bank’s Doing Business initiative has exhaustively exhibited in recent years. It is now well established that countries offering a business-friendly regulatory environment grow faster. Such an environment consist of a relatively simple and clear set of rules for launching and operating a business that are easily accessed through such mechanisms as “one-stop shops.” It also involves a willingness of government to refrain from regulating certain aspects of the market. For example, countries that do not bestow national and local authorities with duplicative or ultra-discretionary licensing powers, unduly restrict the right of employers to hire and fire at will, or perpetuate an unwieldy and complicated tax regime, are considered more business-friendly than those that do the opposite.
This chapter addresses the general licensing and regulatory environment in Tanzania as faced by many enterprises over the course of their operations. In short, conditions are poor. The World Bank ranks Tanzania among the worst in the world with respect to Dealing with Licenses – 170th out of 178 countries it surveyed in 2007. The details of the licensing regime have been substantially documented, most recently through a USAID-sponsored investor roadmap in 2004 and a government-sponsored business licensing review in 2006. The government has identified licensing reform as a priority, as evidenced by the formation of a Better Regulation Unit within the Ministry of Planning, Economy, and Empowerment (MPEE) and the enactment in 2007 of the Business Activities Registration Act. But a great deal of work remains in order to reduce unnecessary government interference with private sector operations.
As detailed in this chapter, certain areas of Tanzania’s business environment, such as foreign investment, have made considerable progress with respect to simplifying and streamlining regulations. Others, such as the registration of real and movable property for the purpose of accessing credit, remain mired in non-productive, unduly burdensome licensing and regulatory requirements. In some cases, such as the emergence of micro-enterprise lenders, there may not be enough regulation – that is, a lack of meaningful oversight may be leading to a system wrought with poor or even abusive habits.
Perhaps most importantly, as Tanzania continues its march toward an improved legal and regulatory structure, which substantially includes the decentralization of many state functions, the central issue is that of administrative capacity and competence. In other words, state, regional, and local officials may have sound regulations to work with, worthy oversight objectives, or at least the will to do their best work, but lack the skills and resources to fulfill these obligations as needed.
