Investing in Tanzania's Sustainable Future: The Role of AfCFTA and Responsible Investment

December 29, 2023

In today's global economic landscape, responsible investment stands as a critical driver of sustainable structural transformation and socio-economic development. This holds especially true in the African context, where Foreign Direct Investment (FDI) plays a pivotal role, particularly in the face of challenges like inadequate domestic investment and inconsistent official development assistance. Responsible investment goes beyond the mere infusion of capital into a region; it embraces a holistic approach that considers the broader impact of investments on the economy, environment, and society. It strives to chart a sustainable and equitable path toward development, nurturing businesses and communities while safeguarding the environment.

At the forefront of this endeavor, the African Continental Free Trade Area (AfCFTA) emerges as a game-changer for Africa's economic landscape. Responding to Africa's untapped potential, this flagship project of the African Union's "The Africa We Want" agenda represents the world's largest free trade area, boasting a market of 1.3 billion people and a combined GDP of approximately US$ 3.4 trillion. It signifies Africa's determination to claim its rightful place as a global powerhouse. Beyond economics, AfCFTA aspires to create a more equitable continent, with the potential to uplift 30 million people out of extreme poverty by reducing trade barriers, fostering economic integration, and stimulating investments across the continent.

But how does AfCFTA plan to translate this promise of prosperity into a tangible reality?

Africa, with its diverse sectors and abundant resources, presents a wealth of opportunities. The AfCFTA Investment Protocol stands as the crucial linchpin securing these opportunities, offering protections to investors and ensuring fair treatment. It facilitates the free flow of funds, providing the necessary security for both domestic and international investors. In this endeavor, Investment Promotion Agencies play an unsung but pivotal role, tirelessly working to showcase the continent's investment potential. They simplify bureaucratic processes, actively engage with potential investors, and bridge the gap between government policies and private sector interests. These agencies are now more essential than ever under the AfCFTA.

And where does Tanzania fit into this narrative?

Situated at the heart of Africa, Tanzania shines as a land of immense promise. Within its breathtaking landscapes and vibrant culture lies a vision—an aspiration to invest in Tanzania's dream. This dream transcends mere economic growth; it revolves around providing prosperity for its people and our planet, all while ensuring that no one is left behind. To realise this dream through investments, the Tanzania Investment Centre has crafted a market intelligence tool called the SDG Investor Map. This tool empowers the private sector with data and insights to drive responsible investment. It follows UNDP's 8-step methodology, considering Tanzania's unique market conditions and providing investors with crucial information, including ticket size, indicative rates of return, and market entry points. In alignment with #Agenda2030, Tanzania continues to forge a path where everyone can invest in Tanzania's dream, recognising the expanding financial gap required to finance the Sustainable Development Goals.

When all is said and done, responsible investment remains the cornerstone of Tanzania's dream, propelling each dimension of its vision. It serves as the catalyst propelling the nation toward sustainable growth, prosperity for its people, and environmental preservation. One vital element in realising this dream is the AfCFTA's Investment Protocol, which ensures a predictable and transparent regulatory framework for investments across the continent.

Our message is clear: Together, we've made remarkable progress. Tanzania is already seizing the opportunities presented by AfCFTA, with exports to various African nations. These achievements were facilitated by UNDP's efforts to build export capabilities in priority sectors identified in the AfCFTA National Implementation Strategy.
Tanzania's journey with AfCFTA exemplifies the power of partnerships, commitment, and inclusivity. Yet, we acknowledge that we are not done; our journey continues together.

This blogpost was written by UNDP Tanzania Trade and Investment Expert, Miriam Mondosha