Top Risks in Doing Business in Tanzania – East African Film Network

By Abdi Ali
Published February 19, 2020

Business Interruption ranks as the top most risk in doing business in Tanzania.

Allianz Global Corporate & Specialty (AGCS), a corporate insurance carrier and risk consultancy provider, says in its 9th annual survey on top business risk says this interruption (67%) is caused by factors ranging from ‘critical infrastructure blackouts, fire, explosion or natural catastrophes to digital supply chains or even political violence’.

Coming in second and third positions on the AGCS’s Allianz Risk Barometer, respectively, are changes in legislation and regulation (61%) and Cyber incidents (39%).

“Businesses in Tanzania are concerned about business interruption as it is the country’s top risk in 2020,” says Thusang Mahlangu, Chief Executive Officer of AGCS Africa. “The top risks in Tanzania are in line with the top three global risks, which show that businesses in that country have similar concerns as other companies around the world.”

So how does one explain why Business Interruption ranks as the topmost risk in Tanzania in 2020?

“Digital supply chains and platforms today allow for full transparency and traceability of goods but a fire at a data center, a technical glitch or a hack could bring large BI losses for multiple companies that all rely and share the same system, which cannot switch back to manual processes,” says Raymond Hogendoorn, Global Head of Property and Engineering Claims at AGCS.

‘Changes in legislation and regulation’, says AGCS that has for the very first time included Tanzania in its Allianz Risk Barometer report, ‘are big risks to companies, underlining the US-China trade war, Brexit, the African Continental Free Trade Area (AfCFTA) as increasing concerns for companies in Tanzania.’

“Trade policy is becoming just another political tool for many different policy ends, such as economic diplomacy, geopolitical influence or environmental policy,” explains Ludovic Subran, Chief Economist of Allianz.

AGCS says that ranking Cyber incidents risk in the third place in Tanzania ‘is in line with its move to the top risk globally’. I

“Incidents are becoming more damaging, increasingly targeting large companies with sophisticated attacks and hefty extortion demands. Five years ago, a typical ransomware demand would have been in the tens of thousands of dollars. Now they can be in the millions,” says Marek Stanislawski, Deputy Global Head of Cyber, AGCS.“Many incidents are the results of human error and can be mitigated by staff awareness trainings which are not yet a routine practice across companies.”

Also ranked among top 10 business risks in Tanzania is Climate change.

“There is a growing awareness among companies that the negative effects of global warming above two degrees Celsius will have a dramatic impact,” says Chris Bonnet, Head of ESG Business Services at AGCS. “Failure to take action will trigger regulatory action and influence decisions from customers, shareholders and business partners. Ignoring climate risk is more costly than grappling with it. Therefore, every company has to define its role, stance and pace for its climate change transition – and risk managers need to play a key role in this process alongside other functions.”