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BEHIND
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THE
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BORDER
” CONSTRAINTS ON AFRICAN
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ASIAN
TRADE AND INVESTMENT FLOWS217
rates as a serious problem than any other constraint. Despite being ranked the biggest concern, corporate income tax rates are similar to rates in other
developing countries however, value-added rates are slightly higher than those of comparator countries. Electricity came in second as the highest-ranked constraint to the investment climate. Sixty percent of firms rated the power sector as a serious problem, even though the cost of power is not excessively high in Tanzania compared to other countries in there- gion.
When broken down by firm size, concern was more widespread among larger enterprises the median firm reported losing 5 percent of production due to power shortages. Despite considerable progress achieved in developing the Tanzanian financial sector, access to and the cost of finance continue to be reported as important constraints.
Interest rates inTanzania are very close to those in neighboring countries however, access to finance seems to be more of a problem in this country. Another highly ranked constraint is the problem of corruption. In comparison to
other countries in the region, Tanzania does well on most measures of governance;
however,
in terms of corruption, it lags behind most comparator countries.
Sources: World Bank d, e,
and a for Senegal, South Africa, and Tanzania. Teal et al. 2006 for Ghana 20 40 60 80
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