Introducing Tanzania as a potential market for Finnish companies

Abstract

It is becoming clear that Africa offers huge market and investment possibilities with its one billion people. The purpose of the study was to introduce Tanzania as a future market for Finnish companies. Analyzing the operational environment and the investment and market potential in the area were the key objectives of this study. Theory about internationalization and operational environment analysis were used to describe the process of expanding abroad from the point of view of Finnish SMEs. The study was conducted in co-operation with Fincorona; a consulting firm that helps Finnish companies to expand into the African market.

The study was carried out by collecting both secondary and primary data. To start with, Tanzania was analyzed as a country and by four chosen industry sectors that were mining, renewable energy, telecom and construction. In addition to literature and other publications, information was collected by interviewing respondents of seven Finnish organizations operating in Tanzania and five respondents of Tanzanian companies. All participants in both researches were asked to identify the most significant risks in Tanzania´s operational environment, market and investment opportunities and the obstacles that may prevent Finnish companies from expanding to Tanzania.

The research indicated significant investment and market opportunities in various sectors including the booming telecom sector, growing forestry, mining IT, construction and energy sectors. Secondly, the research findings indicated that the most significant risks related to Tanzania´s operational environment are the lack of knowledge about legislation and bureaucracy, liability of foreignness, poor infrastructure and cultural differences. Many significant risks can be prevented by acquiring an adequate level of information, establishing reliable networks with local and international companies and making a long-term business implementation plan with a comprehensive risk analysis.

Despite the challenges, Finnish Department of Trade should encourage Finnish companies into new markets such as Tanzania and collaborate with the local Investment Centers to motivate and facilitate the entry of new Finnish companies into the country. Information about Tanzania can be found from various online sources, the Finnish Embassy, the Finnish companies already operating in Tanzania and from consulting firms such as Fincorona and Finpro.