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COVID-19: Legal considerations for businesses Tanzania

25 March 2020
– 22 Minute Read


The World Health Organization (WHO) categorized the severe acute respiratory syndrome Coronavirus 2 (COVID-19) as a pandemic. Pursuant to this, on 17 March 2020, the Prime Minister of Tanzania announced bold measures to contain the spread of the virus in Tanzania which include school closure and suspension of sports activities.

We live in increasingly turbulent and unpredictable times, and whilst it is early, the impact on our already fragile economy and businesses will be significant.

To assist our clients, we have highlighted below certain areas and issues to be considered by businesses, investors and transaction teams during this period.


In this briefing, we discuss the following potential legal issues that may arise as a result of the COVID-19 crisis on businesses operating in Tanzania:

  • The potential difficulty and impossibility in performing existing contractual obligations and the operation of the ‘force majeure’ provisions in mitigating liabilities resulting from delayed or non-performance of these contractual obligations.
  • The effects of the crisis on existing employment relationships, our guidance for employers during the affected period and any possible government measures that may be implemented to mitigate the socio-economic effects of the crisis.
  • The impact of the crisis on the operations of businesses in Tanzania, our guidance for business owners during the affected period and any possible government stimuli to stabilize and maintain the integrity of the business/economic environment.
  • The challenges businesses may face in complying with their tax obligations during the affected period and our guidance for businesses in mitigating potential tax liabilities.
  • The imminent impact on the real estate sector, the relationships between landlords and tenants and our guidance for the parties likely to be affected.
  • The handling of personal data and sensitive personal data by businesses as data controllers and processors, and our guidance on compliance with legal requirements in relation to data protection.
  • The impact of the crisis on the supply and pricing of essential goods owing to consumer panic and restrictions from a competition perspective.
  • The potential effects of the crisis on the telecommunication industry, due to increased traffic, resulting from changes in business operations and potential lockdown; and our guidance for both telecommunication and general businesses.
  • Insurance considerations for business.

Contractual Obligations

Owing to the travel, import, export, transport restrictions and other measures being taken by governments across the world, there is a high likelihood that contracts entered into by parties may either be temporarily or permanently impossible to perform. In general, non-performance of obligations under a contract amounts to a breach of contract under the Law of Contract Act cap 345 R.E 2002 (the LCA)

However, a ‘force majeure’ clause, operating under the common law doctrine of ‘frustration’ may offer relief to contractual parties subject to various conditions, which we discuss here. Force majeure is a clause commonly found in commercial agreements, which states that one or both parties will not be liable for any delay in performance or non-performance of its obligations upon the occurrence of certain supervening events. The clause acts as a shield for parties that are unable to perform their obligations. However, the burden of proof lies on the person alleging non-performance or delayed performance on grounds of force majeure. The affected party must demonstrate impossibility of performance, show that the impossibility is linked to COVID-19 and that they could not reasonably foresee its occurrence. Reliance on a force majeure clause does not necessarily mean termination of the contract altogether and depending on the drafting of the clause, the performance of the contract can be suspended or be otherwise postponed for a certain prescribed period. This is not a concept enshrined in law, but is borne out of the contractual terms and conditions agreed by the parties. Force Majeure provisions cannot be implied.

During contract negotiations, parties generally agree on the events that constitute a force majeure event and COVID-19, despite being declared a pandemic, may not necessarily be covered under existing contracts. Consequently, it is important that contractual parties undertake various measures to mitigate potential contractual liabilities in the event that the effects of COVID-19 makes the contracts temporarily or permanently impossible to perform.

Guidance for Contractual Parties

  • New Contracts: Depending on your contractual position (for example, as a supplier or a customer), ensure that your new contracts contain a force majeure clause and carefully consider the specifics of that clause, including whether the definition of force majeure should include pandemics, curtailment of transportation services or utilities, or supervening legislation or regulation which makes performance impossible, as a supervening event. Ensure that the clause provides for a notification requirement and deals with the issues that may arise if a force majeure event (such as COVID-19) occurs e.g. care of the project pending completion works. On the other hand, you may also rely on breach of contract where the contract does not contain a ‘force majeure clause’ and the counterparty does not or delays the performance of their contractual obligations.
  • Existing Contracts: Parties should review their existing contracts to identify whether the force majeure clause (if present) covers pandemics such as COVID-19 and the notification requirements and remedies agreed between parties. In the event that the contracts do not have provision for pandemics, parties should initiate mitigation measures such as amending/varying or entering into consensual agreements on potential liabilities that may arise. In addition, businesses should initiate the force majeure requirements under their existing contracts such as notifying their counterparties, in the event of delayed or impossibility of performance.
  • Commercial Mitigation: Parties should take pro-active steps to mitigate their commercial risks as a result of COVID-19 event and prepare for the interruption of their operations or those of their commercial counterparties arising from impossibility to perform existing contracts.

Note: We believe that a proper assessment of the impact of COVID-19 on the contractual obligations of parties requires a case-by-case/contract-by-contract analysis and companies should conduct a full review of their contracts to assess their risk.

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We believe that COVID-19 will have various effects on the existing employment contracts/relationships, as well as on independent contractor arrangements. We highlight the various legal issues that are likely to arise amid the outbreak as follows:

  • Sick Leave: WHO and Government agencies have been recommending 14-day quarantine periods for people likely/suspected of having been in contact with the virus. The Employment and Labour Relations Act No. 6 of 2004 (the ELRA) stipulates that only employees who have been in employment for six consecutive months are entitled to sick leave. It further provides that an employee is entitled to a total of at least 126 days in a leave cycle of 36 months.  The ELRA requires that the employer pay the employee who is genuinely ill full pay for a period up to 63 days, as if the employee had been at work during that time. In the second phase, also of 63 days, the amount drops to half and the employer is not bound to pay the genuinely ill employee more than half the employee’s normal renumeration. An employer shall not be required to pay an employee for sick leave if the employee fails to produce a medical certificate or the employee is entitled to paid sick leave under any law, or collective agreement. If the Act is followed, it would mean that employees who self-quarantine will be entitled to a fully paid sick leave during the period, only if they produce a medical certificate and have been in employment for six consecutive months. Employers will, in our view, need to adopt a practical approach to this and, when requiring employees who are not visibly ill to self-isolate, may need to dispense with the requirement of a medical certificate and pay the relevant employee.
  • Annual Leave: Employees are entitled to 28 consecutive days within a leave cycle of 12 consecutive months of employment with the same employer on full pay. Annual leave can be taken at a time agreed between the employer and employee. Where an employee has exhausted her/his sick leave entitlement, the employee may be required to take annual leave although, again, in these uncertain times, we would recommend a pragmatic approach in this regard.
  • Workplace Safety: The Occupational Health and Safety Act 2003 (the OHSA) imposes a duty on employers to ensure the safety, health and welfare at work for all employees and rehabilitation of affected employees. The OHSA therefore imposes a legal obligation on employers to take various measures to protect their employees from the spread of COVID-19. Section 56 of OHSA specifically provides that employers must provide washing facilities and importantly at least one wash basin, including hot water where necessary, shall be provided together with soap and means of drying for every fifteen persons employed. It is possible that an employer which fails to take adequate measures to prevent the spread of COVID-19 amongst its employees (by, amongst other things, failing to implement measures for effective social distancing) could be found to be in breach of OHSA and attract liability thereunder.
  • Salary Reductions: An employer cannot unilaterally change the terms and conditions of an employee’s engagement where such a change is detrimental to the employee. If an employer wishes to implement salary reductions, it would need to obtain the employee’s written consent. Where an employer unilaterally implements such changes, the employee may succeed in a claim for breach of fundamental term of employment contract.
  • Redundancy: It is likely that a number of employers will need to declare certain positions   The ELRA contains specific provisions on the procedure that must be followed when declaring positions redundant and the COVID-19 pandemic does not change this. The associated tax implications of any payouts required to be made would also need to be considered.
  • Place of Work: The ELRA requires that employment contracts should state the place of work and it is likely that many existing employment contracts have place of work provisions. Where employees opt to work from home or remotely because of the outbreak, this should be specifically agreed between the employer and employee.
  • Performance: Certain employment contracts may require their employees to travel for work and we anticipate that such employees may be unable to perform these employment obligations due to the prevalence of travel restrictions and territorial lock downs across the world. However, this should also be weighed against an employer’s obligation to provide a safe working environment and, in our view, employers should adhere to government mandated travel restrictions in planning employee travel.

Guidance for Employers:

  • Sick Leave: Employers may, in writing, temporarily waiving the sick-leave provision and providing a fully paid 14-day sick leave for employees who may require to be in self-quarantine.
  • Place of Work: Employers should, in writing, allow employees to work at home to mitigate the risk of spread of COVID-19 at the workplace. In addition, as far as it is practical, employers should deploy online means of conducting business between its employees and clients. However, we recognize that this guiding point may be difficult for employees who may not be able to work remotely such as industrial employees. In these circumstances, employers, while adhering to any specific government guidance or directives, will need to consider how best to maintain productivity, while at the same time, doing everything reasonably necessary to prevent the spread of the virus amongst its workforce.
  • Workplace Safety: Employers should conduct training, prepare information charts and regularly circulate safety/health information to its employees with respect to COVID-19. Employers should also provide health and safety materials at the work place such as sanitizers, for use by employees to be legally compliant with workplace safety laws.
  • Redundancy: Employers must ensure that they follow the specific provisions outlined in law in effecting a redundancy. The most important part of a redundancy exercise is ensuring transparency throughout the process. The employer must give notice of intention to retrench as soon as it is contemplated. The employer must also disclose all relevant information on the intended redundancy for the purpose of proper consultation. Where employees are members of a trade union, a notice and disclosure of information must be made to the relevant trade union.
  • Salary Reviews: To the extent possible, we would recommend no changes to a salary structure. If the employer has no option, the employer must obtain the employees’ consent to legally reduce their salary.
  • Reduction in Hours of Work: To the extent such a reduction in working hours will be associated with a salary reduction, the employer must obtain the consent of its employees.
  • Forced Leave: Depending on the employer’s policies and employment contracts, it may be possible to require employees to take annual leave at a specific time.

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Business Operations

Due to the globalization and interconnectedness of the business world today, the measures taken by governments across the world are likely to result in minimal movement of people and goods, affecting business operations in Tanzania. As COVID-19 appears to have originated in China, often referred to as the “factory of the world”, the impact on supply chains is likely to be significant.

A reduction in the movement of people and goods means that we are likely to experience (at least temporarily) reduced foreign investment, transactions and supplies. In addition, the stalled economic environment is likely to lead to business failures, insolvency cases, debt and mortgage repayment default, layoffs/redundancies, profit warnings by public companies as well as lack of credit access due to the strain caused on financial institutions by loan defaults and diminished cash flows/deposits. Further, we anticipate, in a worst-case scenario, that the shutdown/slowdown of government services will make it difficult for businesses to obtain relevant permits and approvals and to comply with other statutory obligations.

We briefly highlight below measures that businesses can take and recommended rescue measures that the government can take to mitigate the ripple effects of COVID-19 on business operations:

Guidance for Businesses

  • Conduct a proper review and assessment of your business to understand the risk and potential impact of COVID-19 on your operations and financials and take appropriate mitigating measures.
  • Review all your contractual obligations and communicate with your contract counterparties on the potential impact of the crisis on your performance of the contract obligations and possibly reach a consensual agreement on future performance.
  • Review your financial obligations under existing loan agreements and your ability to perform those obligations in light of an imminent reduction in revenue/profits and engage with lenders on possible variation of existing terms.
  • Review your cash flow practices, immediately take measures to ensure the survival of the business in a low business environment, and in what is likely to be a strained credit market.
  • Review your reliance on government permits, authorisations and licences and plan ahead for the renewal or extension of these consents.
  • Ensure that you consult your relationship partner at Bowmans before taking any mitigation measures that may result in legal liabilities such as layoffs/redundancies, non-performance of contracts.

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Tax Implications

Notwithstanding the crisis, businesses are still required to comply with their tax obligations under the Tax Laws unless there is a change in law or policy by the government. We highlight various mitigating measures under the existing tax framework that businesses can take in order to be compliant:

Guidance for Businesses

  • Extension of time to submit returns: Where a business is unable or foresees challenges in submitting tax returns due to operational challenges, the Tax Administration Act (the TAA) allows for the extension of time to submit the returns. Businesses requiring this extension should make the application in writing to the Tanzania Revenue Authority (the TRA) at least fifteen (15) days before the due date. This further exempts the business from late submission penalties. However, we note that an extension of time to submit returns does not alter the date for payment of the taxes due.
  • Extension of time to pay tax: Where a business is unable or foresees challenges in paying their taxes in time, the TAA allows for the extension of time to pay the taxes. Businesses requiring this extension should apply in writing to TRA seeking either an extension of time or an arrangement to pay the taxes in instalments to avoid incurring late payment interest.
  • Objections/Appeals to Tax Decisions: The TAA imposes time limits for the lodging of objections against TRA’s tax decisions and appeals to both the High Court and Court of Appeal. We recommend that aggrieved tax payers should lodge their cases subject to further directions by the respective registries. 

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Real Estate

We believe that the effects of the COVID-19 will be felt in the Tanzanian real estate sector. We anticipate the following issues to arise for both landlords and tenants; and highlight various mitigation measures below:

  • Potential closure of the Lands and Document Registries: This will have an impact on transactions due to challenges in the registration of instruments/documents and related matters. Further, borrowers may see delays in obtaining facilities from banks, as the bank will not be able to perfect the securities obtained from the borrower.
  • Default of Lease/Rent Obligations: The crisis may lead to the country being potentially locked down and accordingly, commercial tenants may not be able to access their leased premises. In such a scenario, in order for a commercial tenant to withhold payment of rental obligations, they would need to prove frustration. There would need to be clear cut events which would allow the tenant to rely on the doctrine of frustration, to withhold the payment of rental obligations. Nonetheless, the ability of the commercial tenants to rely on the doctrine of frustration would be governed by the terms of the underlying lease.
  • Suspension and Keep Open Clauses: In some commercial leases, there may be direct clauses with respect to suspension of rent upon the occurrence of a certain event. In addition, the leases may contain “keep open” clauses, which the tenant may not be able to perform during a lockdown.
  • Landlord representations: We also note that landlords should err with caution in making representations to their tenants during this time, owing to the doctrine of promissory estoppel. For example, a landlord making a representation on the possibility of suspension of rent during the subsistence of a lockdown, would be bound by such a representation and may not later claim for unpaid rent from the tenant.
  • Construction: The effects of the crisis will likely lead to difficulties in the performance of construction contracts and businesses in the construction will need to undertake mitigation measures to eliminate or reduce potential losses and liabilities.

Guidance for Businesses

  • It would be advisable for commercial tenants to review the terms of their lease, to see if there are any clauses with respect to either withholding or suspension of rent. If the leases provide for either the withholding of rent or suspension of rent, then the provision would need to be analyzed to assess if it can be operationalized during this time. If the leases are silent on this, it is advisable for commercial tenants to continue to perform their obligations, to avoid being in breach of the terms of the lease.
  • Landlords should seek legal advice from their relationship partner at Bowmans before making any representations to their tenants, as these may become binding due to the doctrine of promissory estoppel.
  • The terms of existing building contracts would need to be reviewed to see if the force majeure events cover pandemics and assess if, in particular COVID- 19 may directly make it impossible for the parties to perform their obligations. For new building contracts, parties may include provisions to deal with the allocation of risk of delays caused by pandemics. For new Joint Contracts Tribunal (JCT), it may be wise for parties to include bespoke amendments to allocate the risks of any delays caused by pandemics or rely on the existing time extension clause, allowing the contractor extra time to complete construction works, in the event the government or local authority exercises statutory powers that may directly affect the execution of works.

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Data Protection

Information that will be collected will include information about the health status of an individual including whether they tested positive or negative, travel information, information about those individuals who have self-isolated and in certain instances, information about family members who have self-isolated or who have shown symptoms.

Tanzania does not have any specific data protection legislation in place, although a draft Bill in this regard is currently under consideration.  However, the right to privacy is recognized under Article 16 of the Constitution of the United Republic of Tanzania 1977 (the Constitution). The Constitution requires the enactment of law that stipulates how privacy rights may be protected, pursued or interfered with by the government of Tanzania. Further, there are sectoral laws that provide for the duty of confidentiality. This includes those relating to the privileged information obtained out of relationships such as that of doctor-patient.

We recommend the following guidance for businesses:

Guidance for Businesses

  • Businesses should only collect information of their employees if it is strictly necessary and essential to its operations and safety of the work place.
  • Where businesses collect the health information of their employees, they should ensure that they have in place appropriate data security measures such as encryption to protect the data collected.
  • Where businesses wish to transfer the health data of their employees outside the country, they should ensure that they have appropriate data security measures for the transfer and that the recipient of the data has appropriate safeguards and commits to the security of the data.
  • Businesses should check their privacy notices and employment contracts to ensure that the proposed collection and processing activities align with their contractual documentation. In the absence of any documents, privacy notices should be put in place to address the proposed activities.

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Essential Goods

In the various countries where there has been an outbreak of COVID-19, there has been consumer panic that has led to a run on essential products. We believe there is also a likelihood of suppliers overpricing essential goods, creating artificial shortages of supplies to the detriment of fair competition among businesses. These actions are likely to hurt businesses that depend on the affected supplies leading to reduced profitability, supply chain disruptions and other consequences. It will be important for companies to bear in mind their obligations to treat customers fairly and not engage in any prohibited anti-competitive dealings during this period. We have already seen the Competition Authority of Kenya impose sanctions on retailers which, in its view, “unconscionably” inflated the price of certain high-demand goods. Consequences such as these cannot be ruled out in Tanzania.

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Increased home stays and remote conduct of business and transactions due to the COVID-19 pandemic means that the country’s telecommunications sector will be burdened and strained in the coming weeks. We are likely to see increased phone calls, messages, use of the internet and heavy media consumption. This may result in operational strains for telecommunication businesses in their compliance with the statutory duty to provide quality service and may invite scrutiny from the Tanzania Communications Regulatory Authority (TCRA)

Guidance for Telecommunication Businesses

  • Telecommunication businesses should monitor their networks and traffic to ensure that they comply with the statutory license conditions on quality of service.
  • Telecommunication businesses should stay in constant communication with the TCRA on any abnormal spikes of traffic and work together with the TCRA to mitigate any potential network failures/outages.
  • Telecommunication business should ensure that there are efficient and effective processes in place for the resolution of complaints, should they arise.
  • Mobile Network operators should work closely with banks to ensure that the mobile payment systems interconnected with the telecommunication sector are able top continue to provide mobile payment solutions.

Guidance for General Businesses

  • Where a business implements ‘work-at-home’ policies and online means of business, it should ensure that existing contracts with telecommunication/internet companies offer adequate performance warranties to ensure their continuity and minimizes disruptions in operations during the affected period.
  • Businesses that do not have existing contracts should enter into new agreements for the provision of internet/telecommunication businesses with the necessary warranties to ensure their continuity and minimizes disruptions in operations during the affected period.

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Insurance Considerations

Insurers (both health and travel) may have to prepare to pay out more than they anticipated in light of the outbreak of COVID-19 especially since measures of controlling and preventing the spread of the virus are only being developed/ learned over time.

Guidance for Businesses

  • Businesses may also have to consider taking out insurance to cover the risks that may arise due to the outbreak of the COVID-19. For example, those involved in the exporting of goods and labour may now incur increased or considerable delays or even failure to deliver. These losses/ inconveniences may be mitigated by taking out some sort of insurance cover.


We have only discussed a few consequences of the COVID-19 on the Tanzanian business environment. As our world copes with this pandemic, developments on legal issues affecting business will occur rapidly. Our dedicated teams at Bowmans, in Tanzania and in our offices in Africa, will keep you updated on the impact of COVID-19 in the coming days and weeks, as the developments occur.