Friday, August 21, 2015

New policy on private sector in the offing

Outgoing East African Business Council chairman

Outgoing East African Business Council chairman Felix Mosha speaks in Dar es Salam yesterday during a workshop to get views of the private sector on the draft Private Sector Development Policy. PHOTO | EMMANUEL HERMAN 

By Veneranda Sumila The Citizen Reporter

Dar es Salaam. Tanzania is in final stages of drafting a private sector development policy and strategy which seeks to create a conducive business environment among businesses.

Stakeholders say such a policy is crucial if the country is to attain its middle income status come the year 2025.

Speaking during a stakeholders meeting in Dar es Salaam, Tanzania Private Sector Foundation (TPSF) Executive Director Godfrey Simbeye said the private sector is characterised by many challenges which can only be solved with a strong policy statement.

“We believe the policy will address issues that range from poor infrastructure, multiple taxes, lack of business capital and policy instability…the policy will guide the private sector on how to operate,” said Mr Simbeye.

The policy will also include the issue of dialogue between the government and private sectors. “Currently, the government meets us when it so wishes to…. the aim is to make this compulsory so that we meet with the government according to stipulated policy,” he said.

TPSF also wants the government to make it compulsory for all businesses to be members of the umbrella association.

This, among other things, will help to track businesses and help them to formalize.

For his part Mugisha Kamugisha said that if Tanzania is aiming to be a middle income country - with a per capital income of $3,000 – come 2025, the economy must be able to grow by about 15 per cent.

An agricultural stakeholder, who introduced himself by only one name Mr Karega said that the agriculture sector is failing to grow because of policy uncertainty which makes investment in agriculture unpredictable. He said that stabilizing policies and making them more predictable is key to encouraging investment in the agriculture sector.

“The government also needs to guarantee investors by ensuring that investors have access to market, once this is guaranteed investment in the agriculture sector will flourish,” said Mr Kirega.


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Saturday, August 22, 2015

Govt buys 26pc shares to retake General Tyre

General Tyre (Continental AG) Representative,

General Tyre (Continental AG) Representative, Michael Strain (Left) and Treasury Registrar, Lawrence Mafuru exchange documents in Dar es Salaam yesterday after the government purchasing 26 shares owned by the U.S based company. Center is Chief Secretary, Ambassador Ombeni Sefue. PHOTO|VENANCE NESTORY 

By Ludger Kasumuni

Dar es Salaam. The government has taken back General Tyre East Africa Limited (GTEA) after purchasing 26 shares owned by US-based company, Continental AG, at a price of one million US Dollars (Sh2.1 billion).

Speaking at a signing ceremony for transferring the shares from Continental AG yesterday, Chief Secretary Ombeni Sefue said that after purchasing the shares, the government now owns the firm by 100 per cent, paving the way for the resumption of tyre production in full capacity.

Mr Sefue signed the document on behalf of the government, while Mr Chapple Thomas, legal adviser of Continental AG, signed on behalf of Continental AG.

The GTEA which stopped production in 2007 remained closed for several years, whereby in 2012 the government assigned the National Development Corporation (NDC) to assess assets of the company and prepare a business plan for revitalising it since it was the only trye making factory in East Africa. “NDC is continuing with the task of reactivating GTEA, including attracting competent investors to enable the factory to produce tyres on a large scale which would meet local and export demand. NDC has already conducted a market survey within East Africa and found that there is a lucrative market though there is a massive importation of tyres from Far East countries.

He said between 1969 and 2007 the government owned 74 per cent shares, while the US-based General Tyre International company (GTIC) had 24 per cent shares.

“Production started in 1971 with a target of producing 320,000 tyres annually. Since that period it has been using a General Tyre Brand. In 1987, all shares which were owned by GTIC were bought by Continental AG,” he said.


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Sunday, August 23, 2015

Bending over backwards for China?

President Jakaya Kikwete and his Chinese

President Jakaya Kikwete and his Chinese counterpart Xi Jinping in Dar es Salaam during the latter’s tour of the country in 2013. PHOTO | FILE 

By Palesa Thinane-Epondo

Johannesburg. South Africa’s education minister has announced that Mandarin, the group of related Chinese dialects that together are spoken by nearly a billion people—more native speakers than for any other language—will be phased in as an optional and examinable subject in public schools from January 2016. Angie Motshekga’s office feels the move will bring South Africans closer to China, it’s biggest trading partner, but has been scant on details; almost like throwing a grenade in the dark and taking cover.

And in the absence of a clear rationale, the reaction by South Africans has been anything but kind, almost viscerally so. Why is our government bending over backwards for China? Do we have any say in it or is it just being rammed down our throats? Aren’t we just aiding the new colonialists? Who is really benefiting? Do the Chinese even learn African languages? Will we have to learn another language when China is no longer our major trading partner?

The powerful teachers’ union was especially succinct: over our dead body. The backlash is valid and expected, and the government has to package its message better, and fast, before the opposition is set in stone.

But amidst all the furore, is there a chance that it might actually be a good move, even if not for the reason you would expect? First, the more general view. Learning an extra language, even Chinese, does open up new doors, and few parents would be impervious to the chance of more opportunities to their children. If this is communicated better, it could have a chance of securing the difficult buy-in of those it is targeted at.

And South Africa’s sluggish economy certainly needs all the help it can get, if it is to thrive in a highly competitive global environment.

But at what cost? China’s veritable march across the continent has been well documented and remains the subject of much discussion. And despite all the talk of partnerships and shared history, China has never really hidden the fact that the economic objective ranks highest. Beijing’s business interest in Africa remains evident.

So how about we view this their way, and get better at it than them?

The Chinese are already learning some African languages, from Lingala and Kiswahili to seSotho. This is because they understand that being able to communicate with the locals makes it much easier to gain their confidence, and achieve their broader objectives. Nelson Mandela alluded to it: “If you talk to a man in a language he understands, that goes to his head.

If you talk to him in his language, that goes to his heart.” This is why black people are easily mesmerised when a person from a different race speaks their language—it is a bit puzzling considering that across the continent Africans are proficient in the languages of our former colonial masters.

The Chinese workforce in Africa has no illusion that it will take time to win the trust of the locals, and while they already have African governments in their pockets, they can also be very patient when they need to be—Who would have thought China would in our lifetime threaten to become the world’s largest economy?

Chinese methods may be questionable, such as the second-tier status of human rights, but they seem to work economically. Should Africa therefore adopt the ways of the East wholesome? Hardly, but we can borrow those that work, and adapt them to our economic circumstances on the continent.

Patience is one: backed by deliberate consistent effort it yields outsized returns. The other is cultural. Far from viewing Mandarin inculcation as backward, we can instead look to see the value of teaching African languages that are already spoken widely across the continent, such as Setwana, Kiswahili, Yoruba, IsiZulu and even French and Portuguese. This would go a long way in fostering cultural and social cohesion amongst Africans, and may strengthen pan African social and economic partnerships. Also, this would greatly strengthen the cause of African multinationals, further helping the fledgling integration effort and help the continental collective.

In an ideal world, Africa would build its empire on its own terms—we already have the natural resources, brilliant scholars and thought leaders, innovative businesses and driven entrepreneurs. But the reality is that we do not exist in a vacuum, and we have to learn to use the system to our advantage. Do we have to choose Mandarin over our African languages or vice versa? Not necessarily—the more knowledge we acquire, the more we strengthen our hand globally, allowing us to venture out with the skills and confidence to sell ourselves as even more credible partners to the world.

The writer is an avid traveller and commentator on socio-economic issues in Africa. She is based in Johannesburg.


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Thursday, August 20, 2015

Overnight borrowing cost falls

Dr.Charles Kimei. CEO and President, CRDB Bank,

Dr.Charles Kimei. CEO and President, CRDB Bank, Tanzania. 

By Veneranda Sumula The Citizen Reporter

Dar es Salaam. The cost of overnight borrowing among banks fell significantly early this week as the circulation of cash improved in the market.

The interbank weighted average rate fell to 4.40 per cent on Tuesday from an average of 20 per cent early this month.

Liquidity improvement in the market has been contributed by the fact that commercial banks and corporate clients have finished to fulfill annual tax obligations.

Increased money circulation also means that the government expenditure normalised after the new financial year began.

“Now we are seeing more deposits from government agencies, meaning the government has started to release funds and pay its loans to various institutions: private and public,” said CRDB Bank trader Evarist Maganga.

He said by having liquid in the market appetite of borrowing among banks has decreased as every bank has enough cash in circulation.

The cost of borrowing among banks increased drastically starting June reaching to an average of 27.97 per cent, the highest since April 2012.

Stakeholders were worried that if the increase was sustained banks would have opted to pass it on to consumers, increasing interest rates.

Banks borrow money from and lend to each other through the interbank lending market when they seek to manage liquidity as well as satisfy other financial regulatory requirements including having the required reserve levels.

The interbank rates are one of the factors that determine interest rates on the credit market as commercial banks use them and those of the Treasury bills for benchmarking.


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Thursday, August 20, 2015

Commodity exchange to raise agriculture share to economy

A woman packs cashew nuts. The crop will be

A woman packs cashew nuts. The crop will be traded on the Commodity Exchange Market. PHOTO|FILE 

By Alawi Masare BusinessWeek Reporter

Dar es Salaam. Contribution of agriculture to Tanzania’s economy is seen rising soon when the Commodity Exchange market starts.

Agriculture, the current biggest contributor, may accelerate its share as the exchange will provide reliable market and mechanism for price discovery for the produce to be trading.

The Capital Markets and Securities Authority (CMSA) is finalizing preparations for the exchange which will facilitate trading of various commodities mainly agriculture in an orderly and organized fashion with clear rules.

That will make the agriculture sector a business like others and attract investment.

“So far, we do not have specific projection figures as to how much agriculture contributions to GDP will increase, but having a reliable market and the fact that warehouse receipts will enable owners to use them as collateral, are factors which will accelerate output,” says Mr Charles Shirima, CMSA principal public relations officer.

“We are now in the process to appoint a consultant who will conduct a study that, among other things, will assess warehouse facilities and identify those to be accredited as the exchange’s site delivery. All in all, transaction cost will reduce and prices will increase in a transparent manner. The share of agriculture to GDP will definitely rise,” he adds.

Agriculture accounts for about 28 per cent of the GDP and employs about 70 per cent of the Tanzanian workforce.

The exchange demands formation of a trading company and Tanzania Mercantile Exchange Public Limited Company has already been incorporated.

Local private sector institutions including cooperatives and farmers’ organizations will hold 51 per cent stake in the Tanzania Mercantile Exchange Public Limited Company established as a vehicle for the Commodity Exchange Market set to commence this year, chief secretary Ombeni Sefue, was recently quoted as saying by the media.

The regulator will engage a consultant in September for the preparation of the business plan, CMSA says.

From the experience gained from India, Ethiopia, China, South Africa and Malawi, it has been observed that commodities like cashew nuts, sunflower, sesame, coffee, maize, tobacco, tea, rice, sisal, oil seeds, pigeon peas, wheat, sorghum, timber, cardamom and others would well fit in the planned commodity exchange.

However, CMSA says Tanzania will start with four selected commodities which are already operational in the current warehouse receipt system.

They include cashew nuts, sesame, sunflower and paddy/rice.

“Other products can be increased as the exchange gains confidence and positive results and as the warehouse receipt system coverage widens,” says Ms Nasama Masinda, CMSA chief executive officer.

She says the country’s “Kilimo Kwanza” initiative will not realise its objectives without a viable and properly functioning commodity exchange market.

Dr Bharat Kulkarni, director of the India-based Stalwart Management Consultancy, told participants including government officials in the recent training workshop that the commodity exchange market would positively contribute to the country’s exports and economy at large.

He mentioned an example of MCX in India and ECX in Ethiopia which, in just three years, grew their daily turnover to $2.5 billion and $10 million respectively.

“The market has a big role in the economy and its performance can be measured through exports and growth of the minimum price of several products,” he says.

President Jakaya Kikwete has already signed into law the Commodity Exchange Bill passed by Parliament recently.

Regulations are being prepared and expectations are that the exchange starts before the end of this year.


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Thursday, August 20, 2015

Plea for next government to invest amply in transport sector

China’s Zen Hua 21, carrying two ship to shore

China’s Zen Hua 21, carrying two ship to shore gantry and seven rubber-tyred gantry cranes for the Tanzania International Container Terminal berths at the Port of Dar es Salaam in September last year. A sustained investment to spur the performance of the country’s major port is all the business community needs – irrespective of who wins in the October General Election. PHOTO|FILE 

By Veneranda Sumila BusinessWeek Reporter

Dar es Salaam. For the first time in the history of multiparty politics in Tanzania, the opposition political parties have decided to field one candidate at all levels in this year’s General Election.

In a country where for a long time the ruling party has had a smooth ride, this year’s elections give pundits, including investors, a difficult moment of predicting the shape of the coming government – which will ultimately impact on social, economic and political policies.

However, investors in the transport sector are still hopeful that whatever happens, Tanzania’s peaceful nature will see them keep injecting their money in the economy for the general good of the country’s economic development endeavours.

Though conceding that the peacefulness of the elections is key to their decisions, decision makers in some key companies believe they will keep injecting their money in the country’s economy.

“We will not reduce our activities due to the election. On the contrary we are on a drive to improve port performance to the levels never witnessed before…We are keen to invest further in Tanzania and ready to talk with the government to extend our agreement,” the chief executive officer for the Tanzania International Container Terminal Services Ltd (Ticts) Mr Paul Wallace, told BusinessWeek.

The company has invested around Sh50 billion during the last few years and has plans to invest a further Sh80 billion in the next 12 months. The money will go towards purchasing of new cranes and equipment which will enable Ticts to handle the larger vessels that will dock at Tanzania’s major seaport upon completion of the ongoing berth dredging exercise.

“With such plans, there is no way we can talk of reducing our activities due to the election,” said Mr Wallace.

However, Ticts urges the next government to continue investing heavily in infrastructure for the port to be competitive.

“My belief is that the Ministry of Transport is very active and had done a great deal to improve communication and efficiency at our ports. As a result, priority issues continue to be addressed. Similar investments shall be made to other infrastructure including rail network, roads and ports,” he said.

In April this year, the government announced that the Port of Dar es Salaam will undergo a massive upgrade during the next few years so as to put it abreast with the increasing traffic passing through the country’s major gateway.

The World Bank (WB), the UK’s Department for International Development and TradeMark East Africa (TMEA) will inject a total of $596 million (about Sh1.25 trillion on the prevailing exchange rate) in the project that seeks to upgrade the Port of Dar es Salaam during the next few years.

The money will go towards the deepening and strengthening of berths 1-7, the dredging of the entrance channel and turning basin in the port.

This is the investment that Ticts believes needs to be sustained by whoever forms the next government.

Because the port is of key national importance and also serves as a window to global trade for the neighbouring land-locked countries, Ticts believes that as larger vessels come the country need to construct deep-water capacity with longer berth lengths and then buy bigger new cranes which can effectively service this larger tonnage.

“We are seeing a lot of consolidation of services within container shipping lines who wants to achieve economies of scale, they are now operating larger tonnage and several partners then sharing vessels so building lots of new, smaller terminals all at the same time does not add value,” said Mr Wallace.

He also urges the coming government to continue with plans of constructing the Bagamoyo port due to its importance on the country’s economic development.

According to Ticts, Bagamoyo lends itself well towards industrial development.

“Should that region be port-connected then that is another benefit as we need to migrate truck volumes to other modes such as coastal feeder and rail to reduce road congestion, support the environment and improve safety – we need to reduce the number of traffic accidents.”

Aviation

Similar sentiments were echoed by investors in the aviation sector who believe they would continue to irrespective of who carries the day during the October tripartite lections.

A director with one of the airlines who preferred anonymity told BusinessWeek the sector investors’ only hope is that the general election should usher in a leader who will have interest in aviation.

“The outgoing top government officials had little interest in aviation and that is why Air Tanzania Limited went from bad to worse, with not even a single plane being bought in the past ten years,” he said.

He expects that the next government will subsidise aviation by removing taxes and take over the burden of financing the operations of the Civil Aviation Authority from operators.

“Air operators pay very many taxes which translate into higher fares….I hope that the next government will never create new taxes or have intentions to increase the existing ones. Aviation or air transport will require government support for a long time before it can stand on its own,” he said

In doing so, the next government must borrow a leaf from what countries like the United Arab Emirates, the Emirate of Dubai, Qatar Saudi Arabia are doing with regard to supporting Etihad, Emirates, Qatar Airlines and Saudia airlines respectively.

“So in short, we expect policy stability as well as peace and tranquility from whoever wins the presidency,” he said.

The growth of the aviation sector, according to experts is championed by active top government officials and the army.

The army is supposed to be the key trainer of pilots and engineers.

“Even if we buy planes now, we won’t get enough pilots and maintenance engineers since the army is no longer playing its role of training experts. Many pilots in the world have their backgrounds in the army,” he said.

Freight forwarders

Tanzania’s freight forwarders wish that the next government will continue to work on eliminating challenges they have been facing if the sector is to make a meaningful contribution to the country’s economic development endeavours.

The Taffa president Stephen Ngatunga told BusinessWeek that the next government must work on challenges including bureaucracy from shipping agents, exorbitant fees charged by ship owners and their agents, high container booking charges, costs and bureaucracy connected to the renewal of freight forwarding licences, countless identity cards for clearing agents to enter the port premises and an immediate revival of the Port Improvement Committee (PIC).

Freight forwarders are key in tax collection and according to Tanzania Freight Forwarders Association president Stephen Ngatunga they collect more than 51 per cent of the total revenue collected by TRA.

“We are not afraid of the next government. We are ready to work with any government that will come into power.”


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Thursday, August 20, 2015

$105bn lost as jumbos killed in Tanzania

 

By Veneranda Sumila The Citizen Reporter

Dar es Salaam. Tanzania lost more than $105.15 billion in the past five years due to poaching, a latest report reveals.

The report by the African Wildlife Foundation (AWF) showed that Tanzania lost 60 per cent of its elephants in the past five years. The country had as low as 43,330 jumbos in 2014 from 109,051 in 2009.

According to AWF a single elephant can generate $1.6 million in tourism revenue if left to live out its normal lifespan.

This means 65,721 elephants were killed in the past five years. According to the report, they could have generated $105.15 billion if they were left to live.

On the contrary, local traders and poachers generated as low as $2,800 when they sold ivory.

Tanzania’s permanent secretary in the ministry of Natural Resources and Tourism, Dr Adelhelm Meru, has warned that poaching could affect as many as 3.8 million tourism jobs across Africa.

Those to be hit include guides, drivers and hotel and restaurant staff. “While poachers are profiting from these beloved species, tourism could suffer,” Dr Meru said.

According to him, Tanzania has 700,000 tourism-related jobs and predicts that the number could double, if “large-scale killings of wildlife” are stopped. “If the current situation is unchecked, these jobs will vanish into thin air.” The study titled ‘Poaching steals from us all -- the elephant crisis in Tanzania’ suggests that Tanzania is “the largest source of poached ivory in the world”.

It said between 2009 and 2011 “Tanzania was a country of export for 37 per cent of large ivory seizures”.


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