From independence in 1961, Tanzania followed state-centered socialist policies. With the initiation of economic reforms in 1986, investment interest in Tanzania has grown considerably in all sectors. Under the Tanzania Investment Promotion Policy of 1990 the Investment Promotion Center was established and by 1997, it had approved about 1,025 projects worth $3.1 billion. The operations of foreign banks were authorized in 1991, and the banking industry was substantially reformed to make it more competitive. In 1992, the Zanzibar Investment Promotion Agency (ZIPA) Act established the Tanzania Investment Center (TIC) as a one-stop shop for facilitating and coordinating private-sector investment, and for issuing certificates of incentives to qualifying investors. The incentive package includes 100% capital allowances in computing gains and profits of an enterprise; 0% import duty on capital equipment in "lead" sectors (mining, oil and gas, tourism, and infrastructure development), and 5% import duty on equipment for projects in "priority" sectors (agriculture, aviation, commercial buildings, development banks, export processing, special regions, human resources development, manufacturing, natural resources, radio and TV broadcasting, and tourism); and an automatic permit to employ up to five foreign nationals. The Tanzania Investment Act of 1997 was strengthened by the Land Act of 1999 and the Village Land Act of 1999, which provide the right to acquire land in urban and rural areas, respectively. As a further impetus for reform, the Tanzanian government has taken steps to qualify under the US Africa Growth and Opportunity Act (AGOA), effective 2001, that mandates tariff-free and quota-free access to the US market for countries making market-based reforms.
From 1997 to 2001, annual foreign direct investment (FDI) inflows increased steadily from $157.8 million to an estimated $202.7 million in 2001, averaging $182 million a year, according to the Bank of Tanzania data.
The 10 leading countries that have invested in Tanzania are the United Kingdom ($401,549), the United States ($242,489), Kenya ($135,789), Canada ($108,154), South Africa ($176,928), China ($112,131), Germany ($58,744), Italy ($47,743), the Netherlands ($53,564), and India ($39,658). Foreign investment has mainly gone into mining, manufactures, agriculture, and tourism.