Introduction
The Government of Tanzania through the Minister for Natural Resources and Tourism, in the exercise of his legislative power under Section 121(c) and (f) of the Wildlife Conservation Act, Cap. 283, has issued new Regulations, “The Wildlife Conservation (Special Wildlife Investment Concession Areas) Regulations, 2021, G.N. No. 397 of 2021” to regulate investment in Special Wildlife Investment Concession Areas (SWICA) and its attendant incidents, namely; wildlife conservation and local content. The Regulations revokes the old Regulations, “The Wildlife Conservation (Special Wildlife Investment Concession Areas) Regulations of 2020, G.N. No. 28 of 2020.” This update, therefore, reviews the new Regulations to highlight the important procedural and compliance issues as well as provide necessary general legal information to our esteemed clients.
Power of the Minister to Designate Special Wildlife Concession Areas
Regulation 3 vests power to the Minister for Natural Resources and Tourism to designate areas of land within game reserves and game-controlled areas to be SWICA for the purposes of investment in wildlife tourism, conservation, and local content. The Minister, before designating, may receive and consider recommendations of the Board of Directors of Tanzania Wildlife Management Authority.
Criteria for Designation of Special Wildlife Investment Concession Areas
It is not every area in game reserves and game-controlled area can be designated as SWICA. To qualify for designation, Regulation 5 direct that such an intended area must enable the investors to: provide wider options to clients with regard to consumptive and non-consumptive activities; practice innovative tourism investments and diversification; be granted a concession for a period as determined under the Regulations with an appropriate exit clause in the contract in case of underperformance; develop and market the tourism products and be capable to maintain the quality of the protected areas; use their capital to develop appropriate tourism infrastructure, enhance conservation and socio-economic benefits and generate substantial revenue; and utilize wildlife resources through offering sustainable multiple forms of wildlife utilization activities
and develop a tourism circuit. To achieve this end, Regulation 6 obliges the Minister to carry out a feasibility study for purposes of identifying viable solicited projects on SWICA.
Powers of the Conservation Commissioner in Managing Swica
Regulation 7 provides for mandatory powers of the Conservation Commissioner (CC) with regards to the general management of concessions, such as to advise the Board of Directors of Tanzania Wildlife Management Authority on the investment proposals, procurement, contracts and project implementation; ensuring that the projects are properly monitored and evaluated in accordance with the concession contracts; undertake concession planning; processing applications for concessions; negotiating on behalf of the Tanzania Wildlife Management Authority (TWMA) with the applicant on the terms, conditions and other issues of concessions; gathering and reconciling all concession files; conducting revenue audit of concessionaires; and developing and managing the concession database. In addition, Regulation 7 obliges the CC to assess concessionaires by assigning scores on specific parameters as per the First Schedule (the First Schedule provides for Monitoring Performance of Concessionaires Scores Parameters) for the purpose of monitoring performance of concession areas.
Eligibility Requirements for Applications and Approvals of Investments in Swica
Regulation 9 sets out eligibility requirements for the grant and approval of applications for investments in SWICA. The applicant must meet the following prescribed statutory requirements.
In the case of a local company, the minimum investment capital must not be less than Tanzanian Shillings equivalent to US$20 Million but where a local company is 100% owned by Tanzanians, the minimum investment capital shall be not less than Tanzania Shillings equivalent to US$ 10 million.
In the case of a foreign-owned company, the minimum investment capital is not less than Tanzanian Shillings equivalent to US$ 50 million. The applicant must be a person/company that is proven to have high capability to support public efforts in the conservation of wildlife resources; and who commits to providing security for the performance of the contract.
Invitation of Concession Applications and Mode of Application
Regulation 10, 11 and 12 require CC to issue public notice vide media publication of wide circulation, electronic media; or any other appropriate means inviting applications for investment in designated SWICA through Solicited Proposals. The notice must contain advertisement details, information relating to fees and charges and selection processes. An applicant for investments in SWICA shall then apply to the TWMA for concessions through solicited proposals.
The application shall be in a prescribed form and submitted to the CC accompanying by copies of the relevant company documentation such as Tax clearance certificate, updated proof of financial capability, an audited financial statement for the past 5 years in the case of an existing company, business plan, proof of payment of application fee, and any other document or information as the TWMA may require.
It should be noted that application and approvals of applications through Unsolicited Proposals has different procedures and some additional requirements as per Regulation 17, 18, 19, 20, 21, 22 and 23. This is because Unsolicited Proposals involve persons who intend to invest and operate in SWICA other than that advertised through a public notice under Regulation 10. The additional requirements and different procedures include submission of serious pre-feasibility study and ministerial approval before the designation of SWICA.
Assessment and Notification
For applications effected through solicited proposal, Regulation 13 requires the CC, within 14 days from the date of receipt of an application, to register receipt of the same and conduct a preliminary assessment of an application.
Thereafter the CC shall determine whether the application complies with the requirements of Regulations, then, notify the applicant in writing accordingly. The CC has powers to reject the application and notify the applicant of reasons for such rejection. However, for those applications effected through Unsolicited Proposals, Regulation 19, 20 and 21, among others, requires the CC to carry out an intensive assessment of pre-feasibility study within 21 days of receipt of an application, and issue a preliminary response revealing whether the intended investment project is of interest to the Government.
Approval of Applications, Negotiations and Award of Concession
For applications lodged through Solicited Proposals, Regulation 16 gives power to the Board of Directors of TAWMA to approve recommendations of the report submitted by CC or such recommendations of any of the proposals and refer the reports back to the CC with instructions to re-evaluate or re-assess the proposals or undertake any other appropriate action. In case the Board approves the recommendations then negotiations and award of contract will take effect. For applications effected through Unsolicited Proposals, Regulation 22 and 23 require the TWMA, after its Board’s approval, to submit the recommendations to the Minister for designation.
The Minister has the power to reject or approve the recommendations. Regulation 24, 25, 26, 27 and 28 provide for, among others, negotiation with respect to an award of concession between the concessionaire and negotiation team appointed by the CC, filing of a report with recommendations to the Minister for approval and award of concession.
Integrity Pledge, Tenure of Concession Contract and Review of Concession Contract
Regulation 32 requires the concessionaire upon being awarded a concession contract, to sign an Integrity Pledge as prescribed in the Regulations that Relate to Natural Wealth and Resources in the United Republic of Tanzania.
The validity or tenure of a concession contract is for a period not exceeding 30 years as determined by the TAWMA based on nature and type of investment; cost of investment and return; and such other relevant factors as per Regulation 33. Upon termination or expiration of a concession contract, all immovable assets in the SWICA will be vested in the TWMA. Besides, a concession contract may be reviewed by the TWMA for the purposes of safeguarding the sustainable wellbeing of the natural resources for which the concession agreement relates (Regulation 34).
Fees and Charges Concessionaire
Regulation 35 enumerates fees payable by a concessionaire to TAWMA. The Fees include: An annual rental fee (calculated based on a progressive sliding scale from projected turnover and profit), however, a local company that is 100% owned by Tanzanians is required to pay 50% only of the calculated annual rental fee.
Additionally, payment of a royalty of not less than 4% of the total investment turnover before breakeven and thereafter royalty of not less than 8% after break-even up to the completion of tenure of the concession – all these shall be payable on a monthly basis.
Other Fees such as Application fees as may be determined by Board; concession user right transfer application fee of Tanzanian Shillings equivalent to US$5,000; and user right transfer fee equivalent to 1% of the investment capital, shall be payable upon approval of the transfer. The TWMA has the mandate to reviewing the prescribed fees and charges over time.
Pubic Interest and Benefits
Regulations 36, 37 and 38 incorporates provisions on public interest and benefits. The TWMA is obliged, before signing a concession contract, to ensure that the interests of the people and Tanzanians are fully secured by ensuring that all Government taxes are fully paid. More importantly, TWMA is required to ensure participation of Tanzanians through labour, business, technology, supply of goods and services and research capability is fully considered but also TWMA must regulate compliances of corporate social responsibilities to the local communities. Also, TMWA must ensure that the utilization of resources in the SWICA guarantee returns into the Tanzanian economy from the earnings accrued or derived from such use.
More significant, is Regulation 38 that requires all earnings from dealings in SWICA to be retained in the banks and financial institutions established and registered in Tanzania. It is unlawful to keep earnings in banks or financial institutions outside Tanzania save for distributed profits under repatriated schemes in accordance with the laws of Tanzania.
Local Content Requirements
The regulations put a mandatory requirement for a concessionaire to adhere to local content requirements during the carrying out activities under the Concession Agreement. (Regulation 39).
Transfer and Cancellation of User Right of Grant of Concessions
Regulation 40 prohibits the transfer of a user right over a concession allocated to any concessionaire unless prior Minister’s written consent is sought and obtained, and the purported transfer fully complies with the requirements of Regulation 40.
Regulation 41 vests power to the Minister, at any time before the expiration of the tenure of a concession contract, to cancel the allocation of a special concession area. However, the Minister is obliged to observe principles of natural justice (right to be heard) and due process of the law before exercising his power under this Regulation.
Appeals
Regulation 42 provides for an avenue to any person who is aggrieved by the decision of the TWMA in the exercise of its mandate under the Regulations to appeal to the Minister within a period of 60 days from the date of receiving the decision. The Minister is obliged, within 30 days, to decide the matter, and his decision is final.
Conclusion
It can safely be noted that the new Regulations attempt to place Foreign Direct Investment (FDI) at the center of investment in wildlife tourism especially investment in special wildlife investment concession areas – while at the same time safeguarding the interest of Tanzania through local content and corporate social responsibilities requirements. It is with no doubt that these Regulations will be beneficial to all parties to the upcoming concession contracts, hence spurring viable investment projects in wildlife tourism from local and foreign investors, altogether.
