Govt amends law to allow access to IPOs

Dodoma. In an unprecedented move, the government is amending the Electronic and Postal Communications Act (Epoca), 2010 with a view to allowing investors to take part in Initial Public Offerings (IPOs) for telecommunication companies.

The Act, which was amended in the Finance Act, 2016 requires telecommunication companies to offload 25 per cent of their shares to Tanzanians only via IPOs and so far, it is only Vodacom Tanzania Public Limited Company (PLC) that has completed the IPO process though, it has remained tightlipped on the outcome.

Pundits have, however, a view that the liquidity in the market falls short of what is required to accommodate the IPOs for all telecommunication companies, including Airtel, Tigo, Tanzania Telecommunications Company Limited (TTCL), Halotel Tanzania, Zantel and Smart.

Presenting the Finance Bill, 2017 for the second and third reading in the House yesterday, the minister of Finance and Planning, Dr Phillip Mpango, proposed that the Epoca be immediately amended to accommodate Tanzanians, companies owned by them and those owned in joint ventures by Tanzanian and foreign investors to take part in the pending IPOs.

Similarly, East African citizens and companies as well as those (citizens and companies) operated by people from outside East Africa will now be able to buy shares in the coming IPOs.

“In the same vein, I propose that we exempt small companies (those that own Application Service Licences only) from the rule of offloading their shares to the public via IPOs and that the Epoca should only apply to large companies that have Network Facility or Network Service Licences,” said Dr Mpango.

The proposal also seeks to empower the Capital Markets and Securities Authority (CMSA) to advise the Finance and Planning minister on how to help a company that will fail to raise all planned money in an IPO on how the goal can be reached,” he said.

Dr Mpando also wants to amend the Bank of Tanzania (BoT) Act (Cap 197) with a view to compelling all government and public authorities to open and deposit all their money with the BoT.

President John Magufuli first directed all public institutions to deposit their money with the BoT in February last year and since then, at least Sh900 billion is said to have been transferred from commercial banks to the central bank, creating liquidity challenges in the banking sector.

Yesterday, the issue did not go unchallenged, with the deputy shadow minister of Finance and Planning, Mr David Silinde, saying the move would turn the BoT into a competitor with commercial banks.

“The BoT is required to be the regulator for the banking sector. Forcing all public institutions to deposit all their money with the BoT turns the latter into a competitor with commercial banks,” he said, calling upon the government to reconsider the proposal.

However, the Parliamentary Budget Committee supports the move.

“We thank the government for heeding our advice on this,” said committee chairperson Hawa Ghasia.

Dr Mpango is also transferring the powers of collecting tax from billboards from municipal councils to Tanzania Revenue Authority (TRA), while Property Tax also remains a job for the taxman.

However, the opposition believes the move is a deliberate move by the government to ‘kill’ the Decentralisation by Devolution (D by D) approach to running the country.

“The government started with property tax and now, it is again transferring the duty of collecting tax on billboards from municipal councils to the central government. This is a deliberate attempt to kill the D by D approach,” said Mr Silinde.

It is the opposition’s view that the government is hell bent on ensuring that the municipal councils are always short of money since most of the otherwise rich municipal counclis are currently controlled by the opposition (including Dar es Salaam, Mbeya, Arusha and Moshi).

To ensure all tax leakages are filled, the government is also promoting the use of an electronic system – the Government e-payment Gateway system – which all ministries and other public institutions will be required to use.

The government is also amending the Tax Administration Act with a view to making close follow ups on activities of master of ceremonies (MCs) and caterers.

These will be recognised and be given special identity cards just like other small-scale business operators, including food vendors, small-scale second hand clothes sellers, sellers of agricultural products such as vegetables, bananas and fruits, among others, will be given special identity cards as the government seeks to identify them so that they could be given special places, where to conduct their businesses.

In a rejoinder, however, the opposition put the government to task over a tendency of using the traffic police as tax collectors.

According to Mr Silinde, vehicle owners/drivers complain about the tendency to penalise them irrespective of the gravity of the traffic offence.

“We want the government to come out clean on this. People are waiting to know whether the traffic police department is now a section within TRA or not,” he noted.