February 2021: Update on recent development for investors across East Africa
Droit des sociétés
In this article, we summarise the key legislative amendments made by the Written Laws (Miscellaneous Amendments) (No.2) Act of 2021 (the 2021 Written Laws) which became operational on 14 July 2021. These changes may directly or indirectly impact investors and locals doing business in Tanzania in sectors such as telecommunications, natural resources, insurance, competition law and other related matters.
The objective of these amendments is to provide smooth and expeditious implementation of agreements entered into by the Government of Tanzania (the Government) that provide for the execution of special arrangements approved by the Cabinet, and to create favourable conditions for the performance of Government projects.
The 2021 Written Laws amends a total of 14 laws, including:
We have set out below the amendments to the abovementioned laws.
Section 6 - Application for licence
The EPOCA has been amended by adding section 6F(7). The implication of this amendment is such that an application for a licence issued by the Tanzania Communications Regulatory Authority (TCRA) will not prejudice an agreement providing for a special arrangement which has been approved by the Cabinet. This means that if the agreement between the Government and the private party provides that the applicant would be exempted from certain requirements of the law when applying for a TCRA licence, then the applicant will not be required to adhere to such requirements.
Section 57 - Prohibition of human activities in certain areas
Prior to the 2021 Written Laws it was prohibited to conduct human activities of a permanent nature or activities likely to compromise the conservation of oceans or natural lakes, rivers, water dams or reservoirs if such activities were carried out within 60 metres of the area.
The amendment to the EMA introduces an exemption to this prohibition provided that the exemption is contained in an agreement which provides for a special arrangement approved by the Cabinet. Because of this amendment, conducting human activities of a permanent nature can now be carried out within 60 metres of oceans or natural lakes, rivers, water dams and reservoirs.
Section 12 - Exemption of agreements by the Fair Competition Commission
This section provides for the exemptions that can be granted by the Fair Competition Commission in relation to agreements. As a general rule, the period of exemption under this section does not exceed 5 years. The amendment brought about by the 2021 Written Laws states that the period may now exceed 5 years provided that there is an agreement, relating to the grant of exemption, that provides for a special arrangement which has been approved by the Cabinet.
Section 14 – Exceptions
The amendment brought about by the 2021 Written Laws protects an agreement which provides for a special arrangement which is entered into for the purpose of limiting the restrictions on misuse of market power and procedures required for mergers and acquisitions as provided under sections 10 and 11 of the FCA. This means that certain restrictions imposed by sections 10 and 11 of the FCA will now be exempted if set out in an agreement providing for a special arrangement that has been approved by the Cabinet.
Section 133 – Insurance held by Tanzanian insurer
Prior to the amendment, it was prohibited to use non-Tanzanian insurers when dealing with ground, marine and air cargo insurance covers for importation into Tanzania. This meant that such dealings had to be carried out by a Tanzanian insurer. Non-Tanzanian insurers could be procured with the prior written approval of the Commissioner of Insurance.
The amendment brought about by the 2021 Written Laws allows importers to obtain insurance cover from foreign insurers for their specific projects if they have entered into an agreement providing for a special arrangement with the Government and the arrangement has been approved by the Cabinet.
Section 2 – Application
Prior to the amendment, the Acts applied to natural wealth and resources in both Mainland Tanzania and Zanzibar. However, the amendment brought about by the 2021 Written Laws states that the Acts will not apply where there is an agreement that provides for special arrangement relating to transportation of natural resources that are not exploited in Mainland Tanzania and Zanzibar and such arrangement has been approved by the Cabinet.
Having enquired with the relevant sources, our interpretation is that as a result of the amendment, the Acts will not apply to cross-national projects that involve the transportation of natural resources that are not exploited in Mainland Tanzania and Zanzibar.
Section 140 – Modification of licence
Section 140 gives the Energy and Water Utilities Regulatory Authority (EWURA) powers to modify the terms and conditions of a licence, it may do so on its own motion or by way of application from a licensee.
The amendment has the effect of limiting powers EWURA has to modify terms and conditions of a licence. EWURA will not be able to exercise its powers to modify the terms and conditions of any agreement that provides a special arrangement to transport natural resources and where such arrangement has been approved by the Cabinet.
Section 141 – Renewal of licence
A licensee is required to renew his licence at least two years before it expires. The amendment seems to extend the life of a licence until such time when the renewal application is either granted or refused by EWURA. The amendment makes it clear that the licence will continue to be in force until the grant or refusal of the application for renewal.