In the wake of economic globalization, we continue to witness a flow of foreign investors into the United Republic of Tanzania. In Tanzania like in any other jurisdiction, land remains foremost vital natural resource and most jealously guarded of all. Geographically Tanzania has a land size of 947,303 square kilometers. All land is public and as such power is vested in the President of the United Republic of Tanzania to be a trustee for and on behalf of all the citizens of Tanzania. By virtue of the Land Act CAP 113 R.E. 2002 and its amendments (the "Land Act"), this public land is categorized into general land, reserve land and village land.
For the purpose of this article, our main focus shall be on general land where the Commissioner for Lands has been vested with administrative powers by the President to see into all land matters under this category of land.
Can a foreigner own land?
To begin with, the general rule is that a foreigner cannot own land under the laws of Tanzania unless it is for investment purposes. This is expressly provided under section 19 (2) of the Land Act and reinforced by section 20 (1) of the Land Act.
Section 20 (4) of the Land Act introduces a new definition of a foreign corporate body. It is explicit that under the Land Act, a body corporate with majority of its shareholders being foreigners is deemed as a foreign company. This is in addition to the provisions of the Companies Act where the place of incorporation determines the nationality of the company and therefore a company incorporated outside the United Republic of Tanzania is a foreign company.
Usually a land to be designated for investment purposes is identified, gazetted and allocated to the Tanzania Investment Centre which shall create derivative rights to investors for specified term that does not exceeding (99) ninety-nine years.
What is the role of Tanzania Investment Centre?
Tanzania Investment Center (the "TIC") is a statutory body established and created by the Tanzania Investment Act. The purpose of the TIC is to be a one stop center for foreign investors and a government agency its objective is to encourage, promote and facilitate investment and advise the government on investment policy.
Whereas the scope of application of the Investment Act is mainly based on business enterprises private individual investors may be assisted as well in procuring permits, authorizations, approvals, registrations, consents, licenses and any other matter required by law for a person to set up and operate. These rights, among others that are related to investment protection, are acquired through the certificate of incentives that is given to the investor who has not less than United States Dollars Five Hundred (USD 500,000) as investment capital for a non-citizen investor (USD 300,000 for a Tanzanian investor).
Can a foreigner apply for right of occupancy or derivative right?
Once the certificate of incentives is obtained, a foreign investor can apply for right of occupancy or derivative right of occupancy to the Commissioner for land on general land. The whole of section 25 (1) of the Land Act sets out a procedure in applying for right of occupancy to the Commissioner for Lands. An application shall be in a prescribed form and accompanied by a photograph; prescribed fee and signed by the applicant or a duly authorized representative or agent of the applicant. The application shall be delivered to the Commissioner or an authorized officer. The application may be accompanied with any information which may be prescribed or which the Commissioner may in writing require the applicant to supply; a declaration in the prescribed form of all rights and interests in land in Tanzania which the applicant has at the time of the application; any document of consent (where required by law). Particularly, section 25 (1) (h) of the Land Act requires a Certificate of Approval granted by the Tanzania Investment Centre to be evidenced in the same application made by a foreign investor.
One should note that a foreigner cannot be granted a right of occupancy or derivative right for residential purposes only, unless the use of such land shall be secondary or ancillary to the investment approved under the Investment Act as per Section 25 (1) (i) of the Act.
In the circumstances whereby an investor breaches the conditions of investment as agreed upon on granting a derivative right of occupancy on a land, the same may be terminated and reversion of interests or rights in and over the land shall revert to the Tanzania Investment Centre or any other authority as the Minister may prescribe in the "Gazette" as provided under section 20 (5) of the Act.
In the case of the President revoking a derivate right or a right of occupancy or the Tanzania Investment Center re-acquires land, then the Commissioner for Lands shall compensate the foreigner for the value of exhausted improvements on such land provided there was no contributory factor by the investor.
What are the alternatives for foreigners to enjoy land use?
Although, the only legal way for foreigners to own land is through obtaining derivative right or right of occupancy with approval from the Tanzania Investment Centre, there are other alternatives to enjoy land use without actually owning the land. Foreign investors may opt to enter into lease agreements for pieces of land with nationals who have registered titles. Prudence requires that you to consult with legal practitioners who are adept with matters of conveyancing. An official search may be conducted to ascertain whether the title exists in the Lessor's name and whether the title has any encumbrances. A legal practitioner will advise and negotiate on your behalf favorable terms of lease agreement as per your type of business.
Second alternative is by a foreign investor incorporating a local company under the Companies Act with other Tanzanian nationals as majority shareholders with 51 per cent or more of the company shares, however this needs to be accompanied by other legal instruments that can guarantee the foreign investor peaceful possession and ownership of the land and can hedge against any risks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.