The policy is on your side. The lenders need more.
Tanzania imports more than 90% of its medicines, and the government wants that to change. Local manufacturers get tax incentives, lower regulatory fees, faster processes and an advantage in public tenders.
For investors, that’s a real opportunity: a protected position in a growing market, and a base for the region. But policy support alone doesn’t finance a factory. Lenders fund numbers, not intentions. The projects that get built are the ones that turn government support into a business case a credit committee can approve.
The real worry
Most sponsors aren’t worried about whether local manufacturing is wanted. They’re worried about building a plant whose numbers don’t hold up: capacity sitting idle, government payments arriving late, imported materials getting more expensive, and incentives that were promised but never formalized.
Here’s what the opportunity looks like, and what it takes to make it bankable.
The support available to local manufacturers
Support | What it is |
|---|---|
Lower corporate tax | 20% instead of 30% for the first five years of production, for new pharmaceutical manufacturers with a performance agreement with the Government |
No import duty | 0% on raw materials, pharmaceuticals and capital goods |
Tender preference | Up to 15% price preference in government tenders, and some tenders limited to local suppliers |
Lower regulatory costs | Registering a locally made medicine costs TZS 1,000,000, against USD 2,000 for an imported one. Local manufacturers are exempt from annual retention fees |
Faster regulatory processes | Priority handling for local products |
What it means: the advantages are real, but several depend on formal steps. The tax rate, for example, needs a performance agreement with the Government. If it isn’t signed, it isn’t in the model.
What lenders look for
1. Proven demand, not market size
“Tanzania imports 90% of its medicines” is a starting point, not a sales forecast. Lenders want to see which products, which buyers and at what prices, including a realistic share of government tenders and private sales.
2. A realistic ramp-up
New plants rarely run near capacity in year one. A credible plan shows output building over time, with costs and cash needs that match.
3. A clear regulatory path
Lenders want to see the steps: factory approval, good manufacturing practice certification, and registration of each product. Every product needs registering before it can be sold. Delays here push revenue back, while the debt clock is already running.
4. Incentives in writing
Tax rates, tender advantages and other support should be confirmed in agreements, not assumed. Lenders discount anything that isn’t documented.
5. Cash flow that survives slow payments
Government buyers can pay slowly. A plant that depends on tenders needs enough working capital to wait. That’s one of the most common reasons sound projects run short of cash.
6. Protection against currency risk
Sales are mostly in Tanzanian shillings. Active ingredients, equipment and often the loans are in US dollars. Lenders will test what happens if the shilling weakens.
7. Governance and reporting
Experienced management, clear controls and reliable monthly reporting. For development finance institutions in particular, these are conditions, not extras.
Five numbers to stress-test
Before approaching lenders, test the model against:
- Capacity use in years one to three
- Share of government tenders won, and at what prices
- Payment days from public buyers
- Exchange rate movement on imported inputs and debt
- Registration timing for each product
If the project still works when these move against you, it’s bankable.
Where factory projects stall
- Incentives assumed, not secured. The model used the 20% tax rate, but the performance agreement was never concluded.
- Demand overestimated. National import figures were treated as the plant’s own sales forecast.
- Working capital underfunded. The factory won tenders, but slow payments drained cash within months.
- Registration lagged production. The plant was ready, but products weren’t yet approved, and loan repayments started anyway.
- Currency risk ignored. A weaker shilling raised input and debt costs faster than prices could follow.
What a bankable project looks like
- Demand mapped to products, buyers and prices.
- Incentives secured in signed agreements.
- A regulatory timeline built into the revenue forecast.
- Working capital funded for realistic payment delays.
- Currency risk measured and managed.
- A financial model that holds up under stress, with clear reporting to lenders from day one.
That’s what turns a good idea into a funded factory: a protected position in a market that wants local production, and a base for supplying the region.
How Glenrich helps
A factory project combines investment, tax, regulatory and financing decisions, all of which have to line up before a lender says yes. Glenrich helps you bring them together. Our investment advisory, tax and risk teams, working with our legal partners, guide you in three steps:
- Build the business case. We map demand, build a lender-ready financial model, and stress-test it against the risks credit committees focus on.
- Secure the advantages. We help you structure the project, plan incentives and performance agreements, and design tax-efficient financing.
- Report with confidence. After financing, we set up controls and reporting that meet lender and investor requirements, and track performance against plan.
Planning a pharmaceutical plant in Tanzania? Let’s talk.
We work with international clients by video call, in English, around your time zone.
Glenrich Consultants, Samora Tower, Dar es Salaam
Frequently asked questions
What tax incentives do pharmaceutical manufacturers get in Tanzania?
New pharmaceutical manufacturers with a Government performance agreement pay 20% corporate tax for five years instead of 30%. Raw materials, pharmaceuticals and capital goods carry 0% import duty.
Do local manufacturers get an advantage in government tenders?
Yes. Locally made products can receive a price preference of up to 15%, and some tenders are limited to local suppliers.
Are regulatory fees lower for local manufacturers?
Yes. Registering a locally made medicine costs TZS 1,000,000, against USD 2,000 for an imported product, and local manufacturers are exempt from annual retention fees.
What do lenders focus on most?
Proven demand, a realistic ramp-up, incentives in writing, enough working capital for slow payments, and currency risk.
Further reading
- Why Tanzania Could Be Your Base for East and Southern Africa
- Getting Profit Home From Tanzania: Tax and Transfer Pricing
About Glenrich
Glenrich Consultants is a finance and risk partner for investors and businesses in Tanzania. Our team of accountants, tax consultants, investment advisors and risk specialists supports clients from market entry through to compliance, reporting and protection, across Tanzania Mainland and Zanzibar.