Tanzania Investment Update; Hospitality and Tourism Industry Revocation of Hunting Licenses and Hotels Repossession
- The Government revokes all hunting licenses granted to companies in the year 2017.
- Orders fresh tender process to ensue.
- Plan to repossess some privatized tourist hotels.
The 5thphase Government of the United Republic of Tanzania has vowed to put a halt into many matters of national interests, but on top that list is the stronghold on natural resources and how the indigenous Tanzanians benefit from such natural resources. This stance has been a key factor behind the recent tussles in the mineral sector, which has witnessed the Government introducing a myriad of new laws, regulations and rules to safeguard that objective; including the newly enacted The Natural Wealth and Resources (Permanent Sovereignty) Act, 2017 and the Natural Wealth and Resources Contracts (Review and Renegotiations of Unconscionable Terms) Act, 2017.
In a move that is in line with the recent updates as aforesaid, the newly appointed Minister for Natural Resources and Tourism, Hon. Dr. Hamis Kigwangalla on the 23rd October, 2017 stated that his Ministry had effectively revoked all licenses granted in the year 2017 to hunting companies. In the same footing the Minister has ordered for the repossession of around 10 hotels out of 17 which were privatized sometimes ago.
Breakthrough Attorneys’ Investment Law Department prepared this investment updateon matters of interest to tourism and hospitality industry in Tanzania as well as a call on aspiring investors to be alert with the developing opportunities.
2.0 The Revocation of Licenses for Hunting Companies
According to the Tanzania Law, the Government usually declares hunting blocks in specified game areas, either open games or within Wildlife Management Areas (WMAs) and invites capable tourist hunting companies to bid for the investment and operations of such blocks. Usually, the invitation for tenders is open and participatory and further, the successful bidder is appointed based on many factors, including capacity and development strategy. Granted licenses are usually long term (5 years) with most blocks hunting licenses’ having been granted in 2013. Such licenses are due to expire in 2018.
According to the Minister’s statement, the newly allocated licenses (in the year 2017) were wrongly granted by the Ministry for not following a proper tender (auction) procedure pursuant to the law. In essence all those licenses are revoked and the Ministry’s officials have been ordered to re-advertise the hunting blocks.
The move seemingly has its pros and cons. The pros being that it ensures a transparency and level free field for all interested stakeholders to get a chance to apply for licenses without there being the opportunity for foul play, corruption and graft. The downside of this move is the fact that the already granted investors whose licenses are revoked, are left hanging to dry without no imminent promise of compensation or assurance despite the process being garbled by the authorities concerned and not them.
In the long run, this move will bolster an investment strong environment which would pull in more investors for the transparency and straightforwardness. However, at the moment, the same may add on a few points for investors who keenly watch on the reforms dust to settle before fully landing and investing freely. (For more on this and the entire investment process in the tourism hunting industry see our previous articles
3.0 Hospitality Industry; Repossession of Hotels
The Minister also ordered the Permanent Secretary to the Ministry of Natural Resources and Tourism to initiate the process of repossessing 10 out of 17 original hotels which were privatized in the 1990’s and 2000s. The Permanent Secretary has been ordered to touch base with the Treasury Registrar to carry out the exercise within the next 60 days from the 23rd October, 2017.
The essence of the decision by the Minister is alleged breach of development terms imbedded in the privatization agreements. According to the Minister, the investors in those 10 hotels have failed to develop the said hotels in the framework agreed and hence the call for the repossession.
What is not clear at the moment is the aftermath of the repossession and the swiftness of the repossession process. Given the length of thespell that the hotels have been privatized, it is predicted that stiff legal battles may ensue, lest parties discuss peaceful repossession process rather than a forceful one. As regards the aftermath, it is not certain whether the Government intends to re-invite open investment for the hotels again or would move to manage the same itself. The latter option has incited quite an upheaval of doubts from many people in the country regarding the ability of the Government to run the hospitality industry with the original failures cited in examples.
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