Licensing Laws and Implications for Private Investment: The Case of Tanzania*

Abstract

Abstract: This paper investigates the licensing provisions in the Electricity Ordinance of Tanganyika that are believed to influence private sector investment. There were three main strands to the analytical methodology — textual analysis, actual practice and perceptions of key stakeholders. The findings suggest that there is sufficient evidence to support the belief that the existing licensing laws in Tanzania do not provide the necessary features for attracting private investment, namely clarity, efficiency and transparency. More specifically the Electricity Ordinance of 1931 is so much outdated that it is not fit for amendment; instead it should be considered for revocation and a new law be enacted. The new law should: (a) provide for a clear licensing procedure in the sense that it should specify what activities need licence; who can apply for licence; where one can apply for licence; what documents to fill; (b) provide for efficiency‐enforcing provisions such as stipulating the time frame for the regulator to finish processing an application; (c) provide for a transparent licensing procedure in the sense that it should prescribe a large amount of openness — publishing of applications and that minutes be on open display as required in Uganda and Zimbabwe. The proposed multi‐sector regulator for utilities is a step in the right direction for it reduces the chances for regulatory capture, thus reinforcing transparency in the dealings of the regulator.

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