How Tanzania Fiscal regime can incentivize Private Sector employers to participate in National Skills Development initiatives

What is apparent is the fact that SDL rates in Tanzania at all times from 2001/02 have been very high. This has been for so long the cry of Private sector employers as it increases the cost of doing business through increased cost of labor in the country, while also seeming not to fund skills development directly.

Since skills development is a national agenda, Private sector employers should not only be on the receiving end but actively play a part in enhancing skills development initiatives in Tanzania. Employers should be incentivized to promote workplace training programs such as apprenticeships and internships as these will complement ongoing Skills development initiatives in Tanzania. For example, according to the Five-Year Development Plan Three (FYDPIII), the country’s focus is to increase access to post-basic-learning opportunities such as workplace learning programs, including formal apprenticeships and internships. 
In regards to addressing unemployment challenges, the national focus is to lower the unemployment rate to 8% by the year 2025/26 from the current 9.7% (2019/2020)

To be precise, the FYDPII envisages addressing unemployment challenges in Tanzania through availing internship and apprenticeship opportunities to University and TVET students. Increasing the number of apprenticeship training at workplaces (annually) from 745(2019/20) to 5000(2025/26) is one of the country’s targets as stipulated in the Plan

Take note, currently, the number of graduates with internship training was 30,000 as of 2019/20 while the target is to reach 150,000 by 2025/26

Consecutively, for those with apprenticeship training, the target is 231,000(2025/26) from the current 46,200(2019/20) graduates. How can these targets be attained if private-sector employers are not part of the interventions?

Now, considering the imperativeness of the matter and the pivotal role of Private Sector employers, the ATE proposes to the Government through the Ministry of Finance and Planning to provide appropriate incentives to employers by amending Section 19 of the VETA Act to exempt “apprentice emoluments” incurred by employers who engage graduates from Universities and TVET institutions through the government employment agency (TAESA) or Labor division under the Prime Minister’s Office Labour, Youth, Employment and Persons with Disability (PMO- LYED) from the computation and or contribution of an employer’s Skills Development Levy to enable them to actively participate in these government plans or efforts to address skills mismatch/gap in the country.

The proposal is in line with development partners’ efforts to advocate for TVET employability skills through various projects implemented in coordination with the Prime Minister’s Office (PMO) and other stakeholders such as NACTIVET and ATE. Ultimately, the
proposal aims at lowering private sector employers’ wage bill (for the period 2011 to 2016, it has been growing by 32%, over and above the total average wage bill (29.1%).

Finally, the proposal is parallel to the 2022 Budget theme of increasing productivity for growth, as sharpening graduates’ practical skills will increase their productivity at the workplace.

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