Incorporated But Doomed? The Sustainability Challenge Facing Tanzania’s Newly Registered Companies.

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In Tanzania, companies and businesses are formally registered by the Business Registrations and Licensing Agency (BRELA). BRELA is the Government Agency established under the Executive Agencies Act to facilitate orderly and fair conduct of business and provision of business Registrations, Licences and regulatory services for creating a conducive business environment in the country. According to the Report of the Controller and Auditor General on the Financial and Compliance Audit for the Financial Year Ended 30 June 2023, BRELA registered a total of 14,701 companies, surpassing its target of 13,100—an achievement representing 112% performance. This also marks a 17% increase compared to the 12,583 companies registered in the 2021/22 financial year.

This growth reflects a positive trend and is largely attributed to several key factors highlighted by BRELA, including but not limited to:

• Enhanced performance through the strengthening of electronic registration and licensing systems, which has led to an increase in the number of registrations and licenses issued;
• Public education initiatives that have raised awareness among citizens about the importance of formalizing their businesses in compliance with national laws;
• Improved working environments that have boosted employee morale and performance within the Agency;
• Enhanced service delivery across various operational areas;
• Targeted training programs for employees to address gaps in registration, licensing services, and customer service;
• Educative inspections focusing on industrial and business licenses to identify non-compliant businesses and assist them in achieving compliance; and
• Provision of essential information on companies, business names, and trademarks to meet public needs and support investigative authorities. As of 30 June 2023, BRELA had provided information relating to 43,919 companies, 10,011 business names, and 1,200 trade and service marks.

In view of the BRELA’s Strategic Plan 2021/22 – 2025/26 published in July, 2021[2],  the objectives for the period from 2021/22 to 2025/26 are that 80% of companies’ registrations completed within three 3 working days by June 2026; and 80% of business names registrations completed within three 3 working days by June 2026.

These statistics clearly indicate that more Tanzanians are taking the step to formalise their businesses by incorporating their companies with BRELA.

The Tanzania Investment Report 2024 on Foreign Private Investment, jointly prepared by the Bank of Tanzania, the Tanzania Investment Centre (TIC), and the National Bureau of Statistics, was released on 28 February 2025. The report indicates that Foreign Direct Investment (FDI) inflows to Tanzania have continued to follow an upward trajectory, in contrast to the declining trends observed both globally and regionally, particularly across Africa.

FDI inflows increased by 14.7 percent, reaching USD 1,648.91 million in 2023, with investments spread across various sectors of the economy. This performance was largely underpinned by factors such as strong macroeconomic stability, the Government’s reform measures aimed at enhancing the business and investment climate, improvements in transport infrastructure, and the availability of a more reliable power supply.

Despite the impressive growth in the number of companies being registered with BRELA, a significant blind spot remains largely unexplored by many stakeholders: what happens after incorporation? While statistics on new registrations are encouraging, there is limited discourse on the post-registration journey of these companies. Are these companies surviving? Are they sustainable? This article seeks to shine a light on this overlooked area by posing three critical questions designed to prompt deeper reflection. The aim is to shift the conversation beyond just the volume of registrations and toward the long-term sustainability of Tanzanian businesses.

We often celebrate the numbers at the point of registration, but we rarely talk about what happens next. My desktop review of the Government Gazettes, where company winding-up notices are published as per the requirement of the Companies Act of Tanzania, reveals a concerning trend. Between October 2024 and March 2025, over 100 companies were at various stages of liquidation as indicated in my article below. What’s more, most of these companies have been incorporated within the past five years. This raises an important and often overlooked issue: Are we placing too much emphasis on incorporation, while overlooking sustainability? If newly registered companies are struggling to stay afloat within such a short span, we need to ask ourselves—are we missing a key piece of the puzzle in our push for formalisation?

My review of the respective Government Gazettes revealed the number of companies at various stages of liquidation. The names of the companies have been omitted, as they were deemed unnecessary for this context. Instead, we have included only the number of companies at each stage of the liquidation process as highlighted below.

Table A: October – December 2024 Liquidation Statistics

Table B: January – March 2025 Liquidation Statistics

Liquidation Profile: Newly Incorporated Companies Top the List

According to my desktop review of the above-mentioned Government Gazettes, as well as public company records, most of the companies undergoing liquidation were incorporated within the last five years. This suggests a concerning trend regarding the short lifespan of many newly registered entities. A deeper look into the sectoral distribution reveals that a significant number of these liquidated companies operated in the entertainment and hospitality sectors that are often highly sensitive to shifts in economic conditions and consumer behavior. These were closely followed by businesses in the consultancy and ICT services sectors, which may face sustainability challenges due to market saturation, evolving client demands, or insufficient differentiation in their service offerings. The data highlights a potential need for enhanced support mechanisms, such as business incubation, financial literacy, and sector-specific resilience strategies, to improve the sustainability of newly formed companies in Tanzania.

Leading Liquidation Factors

According to my research, the most commonly cited reason for liquidation relates to financial challenges. A significant number of companies have identified financial incapacity as the primary driver behind their decision to wind up operations—ranging from persistent cash flow constraints and unsustainable debt levels to limited access to financing and declining revenues. These financial hurdles have made it increasingly difficult for many businesses to meet their ongoing obligations and maintain operational continuity.

Rethinking the Approach and Conclusion

Perhaps the increase in the number of registered companies by the BRELA can be attributed to the successful campaigns led by BRELA, the TIC, and other relevant authorities responsible for promoting investment and encouraging business formalisation. However, the growing number of companies undergoing wind-up proceedings suggests that the sustainability of newly incorporated entities remains a challenge—one that must be addressed alongside efforts to encourage formal registration. It is indeed encouraging to witness the increasing number of new entrants into the market. But more important—and perhaps more inspiring—is the need to ensure that these new businesses are supported to achieve their objectives and grow, rather than become short-lived ventures. The aim should not merely be to register companies, but also to create an enabling environment that allows them to thrive and sustain.

[2]https://www.brela.go.tz/uploads/documents/sw-1651386584 BRELA%20STRATEGIC%20PLAN%202022%20weblink.pdf.

Read more analysis by Amiri Sharifu