Thursday, June 14, 2018

Tanzania’s 10m poorest are engaged in farming, Tizeba says

Minister for Agriculture, Food Security and

Minister for Agriculture, Food Security and Cooperatives, Dr Charles Tizeba, talks to cotton farmers at Makundusi District in Serengeti, Mara Region during a past visit. PHOTO| FILE 

By Ludger Kasumuni @TheCitizenTZ

Dar es Salaam. At least 10 million of Tanzanians who are employed in Agriculture are the poorest of the poor, constituting 80 percent of poor people, according to 2018/19 budget speech of the minister of Agriculture, Dr Charles Tizeba.

In his speech delivered during the House meeting last month Dr Tizeba said that the government was working hard to ensure that such 10 million people do jump to approach the middle class in the forthcoming years.

“Agriculture is currently employing more than 65 percent of Tanzanians, and out of them 10 million people are the poorest, constituting 80 per cent of people employed in this sector,” the minister said.

According to him, the country has set a target of wiping out them by 2025 under the newly launched Second Phase of Agricultural Sector Development Programme (ASDP).

It is also important to note that existence of 10 million poorest people in this sector which is regarded as the mainstay of the economy has been associated with its sluggish growth of agricultural sector, recording a growth rate of not more than 4.3 per cent between 2013/14 and 2017/18 financial years.

Government budgetary figures for the same ministry have indicated that the sector recorded a growth rate of 4.1 per cent in 2013/14, 3.4 per cent in 2014/15 percent, 2.3 per cent in 2015/16, 2.1 percent in 2016/17 and 3.1 per cent in 2017/`18 per cent.

This clearly shows that the cherished high level of national economic growth of over seven per cent a year has not been translated into agriculture sector.

As far as contribution of agriculture to Gross Domestic Product (GDP), the minister said its contribution jumped from 29.1 percent in 2016 to 30.1 per cent in 2017 showing that the sector is in the smooth growth process.

Other budgetary figures released by the same ministry in previous years show the following figures on contribution of agriculture to GDP

But experts have raised counter arguments that there is lack of linkage between macro-economic growth rate and growth of agriculture.

One of them, Prof Honest Ngowi of economics based at Mzumbe University’s Dar es Salaam, who last week said that agriculture cannot transform the country into an industrial economy at the current level of growth at about three percent and it has been receiving relatively low budget allocation against the 2003 Maputo declaration of African states that resolved to set aside at least 10 per cent of their national budgets to agricultural sector.

The Repoa Director of Strategic Research and senior lecturer of economics based at the University of Dar es Salaam, Dr Abel Kinyondo says that agriculture in the country has less competitive strength to make Tanzanian products fetch lucrative prices in the global trade because there is chronic problem of low productivity.

When contributing to such budget proposals, several legislators also expressed concern over insufficient attention paid to the government to transform agricultural sector.

Regarding the challenge of maintaining an adequate food security, the minister said that the government was determined to improve storage facilities and revamp farm productivity countrywide under ASDP II.

The minister said the country is expecting to release a positive national report on Food Security situation by July this year, leaning on favourable weather conditions.

According to the budget speech, Dr Tizeba, said from May to June this year the ministry had begun to carry out the national food security situation for releasing a latest report.

From the same minister’s speech it has come clear that the country’s food security situation is still depending on the fortunes of whether that is why when the weather is good, food security is also positive and vice versa.

Under the 2018/19 budget, the responsible minister said that the country has attained a food security of 120 per cent due to favourable rains spreading countrywide.

Releasing the figures on the past food security situation, the minister said in 2016/17 the country experienced a shortage of 271,977 tonnes, while in the previous financial year the country faced food shortage of 172,841 tonnes. The shortages in that period were attributed to shortage of rains to a large extent,” said the minister.

Under the budget for 2018/19 the ministry of agriculture projects to spend a total of Sh162.2 billion against Sh165 billion projected in 2017/18 financial year.

Out of the Sh162.2 billion set aside for 2018/19 financial year, Sh119.5 billion is planned for development budget and Sh64.1billion for recurrent expenditure.

The budget also clearly shows that projections for the 2018/19 have been lowered because of the failure to allocate substantial earmarked funds for both development and recurrent expenditures in the 2017/18 financial year.

The responsible minister has also identified the major challenges facing the sector especially poor infrastructure to support the sector, declining outputs for some crops, weak co-operative organisations and weak financial services for that sector.

Under the same budget the ministry has identified eight areas of priorities, including increasing productivity and monitoring crop production.

Other areas are; pests control, development of special crops, improved investment climate, assessment of sector performance, improving the cross-cutting issues and lining up the ministry with migration to Dodoma.

Under the same budget the responsible minister promises to improve productivity of traditional crops like coffee, cashew-nuts, tea, cotton, sisal, pyrethrum and all food crops that play significant role in cushioning inflation.

Other promises include improvement of extension services, training institutes, improve supply of quality seeds supply, distribution of pesticides and insecticides and monitoring their quality.

The minister also promises to improve Tanzania Fertilizers Regulatory Authority and Bulk Procurement System of agricultural inputs and improvement Agricultural Seeds Agency, improve Tanzania Official Seeds Certification Institute and the eight agricultural research institutes.


Thursday, June 14, 2018

Billions set aside for research in Tanzania

The government is expected to spend about Sh10

The government is expected to spend about Sh10 billion on research into industrial development during the 2018/19 financial year. PHOTO | FILE 

By Louis Kolumbia @Collouis1999

Dar es Salaam. The government is expected to spend Sh10 billion for carrying out research on development of industrial activities during the 2018/19 fiscal year.

Tabling the budget estimates of the ministry of Industries, Trade and Investments in Parliament in Dodoma last month, the docket minister, Mr Charles Mwijage said research activities will be implemented by the three institutions in the ministry.

He named the institutions as the Tanzania Industrial Research and Development Organization (Tirdo), the Tanzania Engineering and Manufacturing Design Organization (Temdo) and the Centre for Agricultural Mechanization and Rural Technology (Camartec).

Mr Mwijage said the funds allocated for implementing research activities during the coming fiscal year was Sh3.5 billion more as compared to Sh6.5 billion set aside for a similar purpose in the 2017/18 fiscal year.

During the 2018/19 financial year, he said Tirdo is expected to ensure industrial production, coal, fuel and gas conform to international standards, leather environmental impacts are reduced and that accreditation for food, environment, chemistry and engineering equipment laboratories is improved.

According to him, Tirdo is also expected to verify accreditation of iron and steel metallurgy laboratories, servicing environment, equipment used in food and chemistry laboratories and implementation of other projects intended to invent new technology in the country.

Furthermore, he said during the said fiscal year, Temdo is expected to build capacity to small and medium entrepreneurs and encourage them to start industries to be charged with production and assembling of machineries.

He said Temdo is also required to improve workshops and architecture offices, review laws and regulations for respective institutions and build capacity of staffs by organizing short term and medium trainings.

Mr Mwijage told the parliament that Temdo will implement programs that will ensure value addition is realized to agricultural products, cold rooms for preservation of products is invented and innovation of technology that encourage use of local raw materials in production of ceramic tiles is encouraged.

“Temdo is also expected to research and reveal actual demands of locally produced technology and create enabling climate in introduction of One District One Factory (ODOF) systems,” he said.

According to him, during the coming financial year, Camartec is expected to continue research on invention of new technology that will increase efficiency and reduce manual works in agricultural activities.

He noted that inventing new agricultural technology, designing regulations for inspection and trials to agricultural technologies and strengthening centres for research infrastructure will be among prioritized functions of Camartec.

However, unlike the 2017/18 fiscal year when government allocated Sh122. 215 billion budget, the ministry has received Sh143.334 billion budget in the 2018/19 fiscal year.

While the government has allocated Sh93.025 billion to fund development projects in the coming fiscal year out of the Sh143.334 billion budget, Sh73.84 billion was set aside during the 2017/18 financial year, meaning funds set to serve that purpose have increased by Sh26.45 billion.

Furthermore, analysis on the 2017/18 budget shows that while the government expected to raise Sh73.575 billion domestically, Sh265.309 million of funds intended to fund development projects were expected to be collected from foreign sources.

The coming fiscal year budget shows that while the ministry expected to collect Sh90.5 billion from domestic sources, Sh2.525 billion was expected to be garnered among the foreign sources.

However, review in the implementation of the 2017/18 budget shows that the ministry received Sh47.268 billion out of the total budget as of April 9, 2018.

Mr Mwijage told the parliament that Sh32.64 billion was disbursed for recurrent expenditures and that only Sh14.627 billion funded development projects.

“Institutions in the ministry of Industries, Trade and Investment received Sh11.6 billion of the total development funds disbursed. The remaining Sh3.026 billion funds for development projects was dished to the ministry,” he said.

Debating the ministry’s 2018/19 budget, Babati Rural Member of Parliament (MP), Mr Jitu Soni (CCM), who suggested that more funds to pumped industrial research, noting that the ministry’s research institutions should receive enough money for execution of their activities.

“This is the only way of protecting local industries. Through intensive industrial research companies can lower their production costs and enable them to lower their prices,” he said.

“Low prices of locally produced items will increase their market competition against imported products,” he added.

Mr Soni said investors will be forced to commit business suicide by forcing them to sell their industrial products at higher prices as compared to imported products. “The government should also consider development of other sectors which support industrial growth and prosperity including; agriculture, livestock and fisheries,” he said.

Observation made by Mr Soni was echoed by Mbinga Urban lawmaker, Mr Sixtus Mapunda (CCM), who suggested that there were a need for introduction of an industrial mapping.

“Industrial mapping should enable the government know types of crops which should be grown at certain parts of the country and that then government’s investment decision should be based on what researchers have unveiled in the mapping,” he said.

According to him, research was inevitable exercise if the country was to realize industrialization agenda which he referred as the national strategy.

But, Ndanda Constituency legislator, Mr Cecil Mwambe (Chadema), observed that inadequate disbursement of funds from treasury greatly hindered the ministry of Industries, Trade and Investment to implement various development projects including research.

He blamed the ministry of Finance and Planning for inadequate and untimely disbursement of funds for the projects.

“Treasury is the one limiting the progress of this ministry. The treasury has no good has no good will to the Industries, Trade and Investment minister and deputy minister,” he said, questioning.

“How comes the ministry is provided with 14 per cent of funds for implementing development projects in two years of the implementation of industrialization agenda.”

He cited report made by the Industries, Trade and Environment Parliamentary Committee which established that the ministry received five per cent of allocated funds for development projects in the 2016/17 fiscal.

According to him, report suggests that nine per cent of the funds was dished in the 2017/18 financial year.

Mr Mwambe said it was illogical for the ministry entrusted with the realization of the industrialization strategy to be given with such inadequate funds, yet expecting the country will realize the intended outcome.


Thursday, June 14, 2018

BANKING TIP: Throwing light on personal finance to change your life

Kelvin Mkwawa

Kelvin Mkwawa 

There is never a better time to start your personal finance education. Being financial literacy is the cornerstone to living healthy, happy, and successful life.

You can always improve your financial status so it is never too late to learn few simple finance tips that will add value to your life.

This article is a continuation of last week’s one;

Last week I shared three financial tips that will help you to be financial stable; don’t ever co-sign a loan, make savings a habit, and review your bank account transactions frequently.

This week, I will share five more personal finance tips that will change your life:

Spend within your means

It is well known that most of us spend more than our income which leads to debt and stressful life. We need to start learning how to live within our means; during the last three years of the fifth phase Government of H.E. John Pombe Magufuli, it has shown that most of us are not used to live within our income. We can learn how to spend within our means; this does not mean buying less and cheap stuff rather plan our spending wisely. Learn to spend within your income and you will avoid a lot of money problems.

Don’t borrow money you can’t afford

In an ideal World, everyone would have enough money for his/her needs but that is not the case so some of us will need to borrow money to cater our needs. But unhealthy borrowing can cause you serious problems in such that can affect your finances hence your life. Don’t borrow excessively and if you borrow, make sure it is within your limit and can repay it easily.

Don’t lend money you can’t afford to lose

Here is the rule of thumb on lending money to people; If you can’t afford to lose it, don’t lend it. For example, if someone wants to borrow some money from you and want to use that money in a near future, don’t lend it.

My advice when you decide to lend to someone, is not to expect to get your money back; this will save you the headache of chasing someone to pay you back and prepare you for the worse financially.

Have an emergency fund

We never know what could happen to us and life happens (i.e. loss of a job, car breakdown etc.) to us anytime so we should be prepared. Emergency fund is very important because it can keep you afloat in a time of need without having to rely on expensive short-term loans.

So how much should you save for your emergency fund? A good rule of thumb is to have an emergency fund that will cover six (6) months of your living expenses. It is never late to start building your emergency fund so start saving now!

Seek a financial advisor

Even when you barely have any assets or enough money, it’s always good to seek advice on your finances. A Financial advisor will help you to identify your financial goals and steer you in the right direction on how to get there. Don’t wait until you have a crisis to seek financial advice, do it now.

To conclude, I want to reiterate that you do not have to be wealthy to be in a control of your finances. In today’s world, financial literacy is needed more than ever; whether you are poor or rich, managing your finances is imperative to have a financial stability life.

I know in the beginning it might be hard to plan and live your life per your financial goals, but slowly you will be able to ensure every life choice you make, brings you closer to your financial goals.

If you are still reading this, I want to assume that you have decided to take your financial life more seriously, so start now!


Thursday, June 14, 2018

Bonds issuance for financing development in Tanzania


My last week’s article was about us being more innovative in engineering our finances, as is, finance play a key role in development – finance and socio-economic development are intertwined.

My focus was on the enhanced use of financial instruments, especially bonds and now because interest rates and other financial market conditions supports raising finances via issuance of bonds.

By the way what is a bond? a bond is a debt security/instrument of indebtedness of the bond issuer to the holders where the issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay them interest (the coupon) and/or to repay the principal at the maturity date.

Bonds can be issued by various private and public sector economic agents – i.e. central governments can issue sovereign bonds, or treasury bonds which are general obligation bonds, or can issue project-specific bonds i.e. bonds issued to finance specific infrastructure or industrial development projects.

Currently, we have general obligations treasury bonds, which are also listed in the stock exchange, worth about Sh9.2 trillion.

Local governments and municipalities can also issue bonds – municipal bonds, which can either be general obligation bonds – general obligation means a type of municipal bond that is secured by a local government’s pledge to use various legally available revenue resources, including taxes, levies, royalties, or any other sources to repay bond holders.

A local government may also issue a revenue specific bond for infrastructure development under the so-called Municipal Revenue bonds – these are bonds issued specifically for specific identified projects that can be repaid through a variety stream of revenue sources or cash flows emanating from the particular project financed by proceeds from bonds issuance (this can be a bus stand, or a local market, or water irrigation project, etc) – so, as opposed to the general obligation bonds, Revenue bonds are backed by a specific revenue stream, while holders of General Obligation bonds are relying on the full faith and credit of the issuing local government or municipality.

Government agents – such as water authorities, energy authorities, ports authorities, roads authorities, airport authorities, universities, housing agents, etc can also issue bonds – TanRoads, Tarura, TRL, Tanesco, Dawasco, TAA, TPA, etc may issue infrastructure bonds for their various construction or rehabilitation projects. For example, TAA could issue Airport bonds for expansion of airport terminals; or NHC may issue housing revenue bonds for low cost sustainable neighborhoods housing projects; Universities may issue students housing and dormitories bonds backed by projected rental incomes; etc.

Private sector corporate entities can as well issue bonds, and so far, that have been the case, though in small scale, our current corporate bonds market is only about Sh120 billion.

I have just read an article where the City of San Francisco, in the state of California in the US on June 8 is proposing to issue a municipal bond worth $425 Ais a general obligation bond, with benefits listed as: (i) moderately positive economic impact; (ii) will partly help finance $2.5 billion repair on the sea-wall; (iii) will create about 145 new jobs in the city; (iv) will raise the city’s GDP by about $19 billion over a 24-year period; and (v) will increase annual property tax by $13 per $100,000 assessed value.

The article concludes by saying, project benefits outweighs costs of raising finance via the Seawall bonds – hence, once authorized by the city board of supervisors and approved by two-third of voters the bonds will be good to go. On that same day, several US states and local governments were scheduled to sell about $3.4 billion in municipal bonds, and 12 universities were to issue students housing/dormitories bonds backed by projected rental income.

One of the mentioned benefit for these bonds was to give bondholders more control on the local projects while at the same time allowing local investors the opportunity to directly invest in bonds that finance socially beneficial projects – that way democratizing development ownership.

Imagining, my thinking is that these things are not difficult to implement, but probably are difficult to decide.

Once decides and put the proper legal/regulatory framework, the rest can be handled.

I am hopeful that slowly (as it is with the central government), probably one day municipalities, local governments, government agents, etc may also consider pursuing the mandates of issuing bonds where both domestic and international players can freely access. Key to this is that funds accessed via issuance of bonds – i.e. municipal bonds could not be misused or abused, rather should be channelled directly into the financing of the much-needed economic infrastructure.

Also meeting financial and contractual obligations in timely manner, competence in public finance and project management, as well as good governance and transparency are part and parcel of the process.

As I conclude: roads, ports, railways, airports, bridges, canals, recreational parks, etc in developed countries were/are largely financed with funds raised via capital markets i.e. bonds.

From records of history, big infrastructure projects have been financed with such funds -- mainly because national budgets are often unable to support the required infrastructure expenditure.

Country’s balance sheets in many cases lacks the fiscal space to accommodate the substantial financial outlays required for infrastructure development – that’s where capital markets development becomes a necessity for our growth and development agenda.

Next week’s piece will be about: if we assume for a minute that it true our borrowing and debt levels are that much high (following recent political debates on the matter), and if tax revenue collection has its own limitations as we know it has, could equity financing be a significant part of socio-economic development equation? If yes, then how? I will explain...


Thursday, June 14, 2018

Help private sector to perform well, govt told

President John Magufuli greets Tanzania Private

President John Magufuli greets Tanzania Private Sector Foundation chairman Reginald Mengi during the Tanzania National Business Council’s 11th meeting last year. File Photo. 

By Alex Malanga @ChiefMalanga

Dar es Salaam. Private sector operators say that, despite the fact that the Tanzanian economy is encouragingly growing at the relatively healthy rate of 6.8 per cent per year, the government still has a long way to go to ensure that the growth is not only sustainable, but is actually sustained on the ground.

This was said at the 11th meeting of the Tanzania National Business Council (TNBC) held at the State House in the nation’s commercial capital Dar es Salaam.

“We are doing well – but not that well, compared to our counterparts Ethiopia and Ivory Coast,” said Tanzania Private Sector Foundation (TPSF) chairman, Reginald Mengi.

The economic growth rates of Ethiopia and Ivory Coast’s stand at 8.2 per cent and 7.6 per cent respectively, according to Mr Mengi.

“I believe that, if well supported, the private sector is one of the main drivers which would keep the cycle of economy moving,” noted Mr Mengi

Members of the private sector at the meeting identified six aspects they wish the government to work on. These include the inordinately high corporate tax, lack of capital and delays in debt payments to local suppliers of goods and services. Others are delays in refunds of 15 per cent additional import duty on industrial sugar, and the tax burden in general, which is the result of an unfair taxation system.

In the event, Mr Mengi called for the reduction of corporate tax from the current 30 per cent to 10 per cent.

“In so doing, it would leverage on the mushrooming of businesses – and, eventually, money circulation,” Mr Mengi argued.

The Coca Cola Company managing director, Basil Gadzios, urged the government of Tanzania to pay the debts it owes to local suppliers of goods and services as a matter of course.

Noting that over Sh35 billion in tax refunds have not been paid to food, beverages and pharmaceutical industries as existing regulations require.

“Our biggest problem is the duty on industrial sugar. We humbly request for the ‘omission’ of 15 per cent refundable duty,” he pointed out.

In earlier days, importers of industrial sugar were being charged 10 per cent duty. But the government steeply hiked that to 25 per cent in the FY-2015/16 budget estimates.

For his part, the chairman of the Confederation of Tanzania Industries (CTI), Dr Samuel Nyantahe, said the additional 15 per cent duty on imported industrial sugar was an administrative burden to industries.

“This increases costs of production, and makes our products less competitive in the global market,” Dr Nyantahe lamented.

So far, the chairman said, more than Sh3.5 billion has been cumulatively paid as bank interest.

To address the capital woes challenge, Dr Nyantahe called on the President John Magufuli government to capitalize the TIB Development Bank so that it can finance domestic manufacturing.

The TPSF executive director, Godfrey Simbeye, lamented the country’s highly unfavorable revenue collection system, and urged replacement of the presumptive tax system should with a self-assessment system.

For his part, the chairman of the Tanzania Association of Tour Operators (Tato), Mr Wilbad Chambulo, said Tanzania’s multiplicity of taxes seriously undermines the country’s high-potential tourism sector – sourly noting that Tourism is the victim of at least 39 different taxes.

Assuring traders and investors alike, Prime Minister Majaliwa Kassim Majaliwa said the government would keep on supporting the private sector through the right policies and regulatory frameworks – and also establish a business-friendly environment.

“I am going to meet with my ministers to discuss the issues of concern” as raised, the premier pledged.


Thursday, June 14, 2018

Skills development levy hits employers

Confederation of Tanzania Industries chairman

Confederation of Tanzania Industries chairman Samuel Nyantahe speaks at a past event. PHOTO|FILE 

By Alex Malanga @ChiefMalanga

Dar es Salaam. The Confederation of Tanzania Industries (CTI) has proposed reduction of the Skills Development Levy (SDL) from the current 4.5 per cent to 3.5 per cent.

The call was made in a document titled ‘CTI Matrix Proposals for the Task Force on Tax Reform for the 2018/19 Financial Year.’

This comes at a time when the Parliament is almost in the middle of what has come to be known as the national budget session for the 2018/19 financial year that starts next July 1.

The Vocational Education and Training Levy Act (2001), makes it mandatory for private employers to pay SDL.

Concerted efforts by CTI have been focused at seeing to the levy being gradually reduced to two per cent in due course of time.

Created 27 years ago, CTI is a membership business association which advocates the creation of an optimal business environment in Tanzania.

Among other things, the Confederation strives to lessen the cost of doing business – with all the attendant benefits that include increased investments, jobs creation, and all-inclusive socio-economic development.

A high SDL increases the cost of doing business for domestic manufacturers compared to manufacturers beyond Tanzania’s borders.

Four member countries of the East African Community (EAC) –Uganda, Rwanda, Burundi and South Sudan – do not charge skills development levies. Another member, Kenya, charges two per cent – which applies only to the tourism sector.

“The current rate (4.5 per cent) in Tanzania contributes to the lower overall competitiveness in the skills delivery system in the region and the world,” reads the CTI document in part.

“In the event, it reduces business profits – and, hence, tax revenues for the government.”

The CTI acting director for policy and advocacy, Akida Mnyenyelwa, said a level playing field is of paramount importance in seeking to increase economic productivity and, as a consequence, government revenues.

“Reducing the SDL means reducing the tax burden on employers, promoting competitiveness of domestic industries and increasing jobs creation,” reads the CTI document, a copy of which has been availed to BusinessWeek.

According to international practice, one to two per cent payroll levy is the ideal.

This rate would no doubt enhance compliance... And, “with increased compliance, the measure coul generate more government revenue in the long run,” CTI says.

For many years the Association of Tanzania Employers (Ate) has also been dancing to the same tune, pushing for the government to slash the SDL to two per cent.

In 2016, the government agreed to a reduction of the levy from 5 per cent to the current 4.5 per cent.


Thursday, June 14, 2018

Operators want tax cuts in air transport business


By Alex Malanga @ChiefMalanga

Dar es Salaam. As the marathon parliamentary budget session this year drags on in the nation’s capital city Dodoma, airline operators are hoping that, come Budget Day on June 14 this year – and the new budget for the 2018/19 financial year that commences on July 1 this year will bring relief in the forms of reduced operating costs and improved infrastructure.

As it is, the current operation costs are a burden. These include – but are not limited to – aircraft landing and parking charges, departure and navigation charges, as well as passenger service charges.

Others are insurance charges and a value-added tax (VAT; 18 per cent) on spare parts, fuel and aircraft-leasing.

According to Tanzania Airports Authority (TAA), aircraft landing charges at the airports in Dar es Salaam, Kilimanjaro, Zanzibar and Pemba stand at $5 (about Sh11, 300 at the prevailing exchange rate) for every 1,000kg of aircraft weight.

Parking charges for an aircraft of up to 20,000kg in weight are Sh1, 000 per 12 hours for locally registered airlines – and $5 (about Sh11, 300) for foreign-registered airlines.

Charges for an aircraft of a weight ranging from 20,000kg to 60,000kg is Sh1,000 for six hours, and $5 for local- and foreign-registered airlines respectively.

Most of the air operators in the country have not shown any signs of growth for many years now. This is ostensibly due to the high operating costs that are contributed to by taxes, fees and other charges, says the Fastjet general manager (GM), Derrick Luembe.

As the GM puts it, had the relevant officials in Tanzania “closely looked into the indirect and induced benefits of the industry, they would have had a different approach when imposing taxes, fees and other charges on sectoral operators.

“Cuts in charges is of paramount importance as the players in the aviation industry would then be in a position to provide the quality services and also be able to grow,” Mr Luembe told BusinessWeek.

While figures are not available for now, contribution of the aviation industry to Tanzania’s gross domestic product (GDP) is relatively high, and every effort should be made to enable the industry to grow.

Mr Luembe argued that reduction in levies would be counter-balanced by the provision of additional flights and services.

This would create competitiveness – and passenger fares and freight charges would come down as a direct result, thereby attracting more Tanzanians to fly and airfreight their goods more cheaply and with greater efficiency.

This would also create more jobs – direct and indirect – with the expanded fleets, Mr Lupembe reasoned.

“We would like to have a harmonised budget for FY-2018/19 which takes into consideration the fact that the aviation industry is an economic growth enabler that needs to be assisted in achieving its goals of providing affordable services to people and businesses across the board,” he noted.

It’s the hope of entrepreneurs and other stakeholders that the government shows its appreciation of what the aviation industry is doing for the economy.

But, inordinately-high operational costs are a huge challenge to the sector, says the managing director of the national flag carrier in the business, Air-Tanzania Company Limited (ATCL), Mr Ladislaus Matindi, who spoke to BusinessWeek by telephone.

Noting that airlines the world over must strictly adhere to safety and security regulations, Mr Matindi stressed that doing this is not cheap. Hence the need to cut down on operational costs – doing so not only in the aviation industry, but also in other sectors of the economy...

This would spur productive activities – and, hence, boost economic growth.

“If we are to do business and perform well, then other sectors of the economy should also be performing well so that the Tanzanian people can have money in their pockets to afford the cost of flying,” the ATCL chief contends. The PrecisionAir Company chief executive officer, Ms Sauda Rajab, was quoted as calling upon the government last year “to create conducive operating environments … Multiple charges impede growth of the aviation industry.”

For starters, Ms Rajab proposed immediate removal of the value-added tax on aircraft leasing.


Thursday, June 14, 2018

Industrialists seek tax cuts in beer, spirits


By Alex Malanga @ChiefMalanga

The Confederation of Tanzania Industries (CTI) has called on the government to improve the business environment for manufactures of beers and spirits.

In the event, the Confederation proposes maintaining the current excise duty rates on beer and spirits, but reduce excise duty on ready-to-drink (RTD) products to Sh765 a litre.

Currently, RTDs are charged as spirits – at Sh3,481 per litre – when they have the same alcohol content as beer: six per cent.

CTI also calls for the removal of the excise duty on beer produced from 100 per cent local raw materials.

“Maintaining the current excise duty structure on beer and spirits would be healthy for the industry and government revenue, as well as for Tanzanian consumers, employees and farmers,” a statement availed to BusinessWeek reads in part.

On the issue of maintaining jobs, Serengeti Breweries Limited (SBL) has a workforce of 800 employees, according to CTI.

The beer industry aids growth of the agricultural sector via contract farming involving with local farmers. As it is, SBL have a network of 300 farmers, which it looks forward to expanding with time.

Further increases of excise duty on beer and spirits would negatively affect prices, leading to declines in sales volumes -- thereby pushing down government revenues.

For instance, excise duty increases have resulted in significant beer market decline in the past, notably in 2013 and 2015.

These fluctuations resulted in the loss of income to farmers and households in the supply chain, as well as encouraging production and consumption of unregulated and potentially harmful alcoholic beverages.

In any case, CTI is optimistic that reduction in excise duty on RTDs would likely lower their prices, thus boosting consumption and sales volumes.

It was also likely to address the problem of illicit alcohol consumption – hence also increasing government revenue from the licensed beverages.

“With a reduced excise tax rate of Sh765, annual sales volumes of RTDs such as ‘Smirnoff Ice Black’ are expected to increase significantly, leading to at least four times the total tax to the government on this product alone” CTI argues in its proposals to the government.

Regarding excise duty on beer produced from 100 per cent local raw materials, CTI says removal of the duty was likely increase demand for beer made from such local raw materials.

It would also reduce consumption of unregulated alcohol.

“Waiver of the excise duty would also support Tanzania’s agro-industrialisation, and allow beer manufacturers to expand their farmers’ programme – thereby promoting the socio-economic wellbeing of farmers and their communities,” CTI optimistically states.


Thursday, June 14, 2018

MANAGING TAX RISKS : Some quick wins in taxation


Today the Minister of Finance and Planning unveils the 2018/19 government budget. As usual, there are several and different expectations. For an individual like me in the tax space, I do expect tax reforms.

Tax reforms that would reflect the country’s desire to industrialize. Tanzania aims to become a semi-industrialized country by 2025. Within the next seven years! By that time the contribution of manufacturing to the national economy must reach a minimum of 40 per cent of the GDP.

But industrialisation needs a strong business enabling environment. Tanzania’s ranking in the ease of doing business has not been good. The tax regime is an important facet of the business environment. Recently the Minister of Industry, Trade and Investment unveiled the Blueprint for Regulatory Reforms to Improve the Business Environment, popularly known as “Blueprint”.

One paragraph in the Preface to the Blueprint reads as follows: “This Blueprint provides a guide to achieving the industrialization dream of creating, in the shortest period possible, the required business enabling environment (BEE) for the government and the private sector to work hand in hand in realiding the dream. It seeks to put in place a framework to enable the review of BEE for [an] improved business climate in Tanzania.” This is surely a very bold statement.

The document proposes several areas that need reforms. There are reforms that can be made now, called “Quick Wins”. And there are reforms that can be made in the medium terms. The proposed reforms are cross-cutting.

The Blueprint proposes several tax specific Quick Wins including the following:

(a)Tax disputes: Review the requirement to deposit one-third of disputed tax for an objection against a tax assessment to be admitted. For industries such as construction, this requirement has a huge implication since the amounts involved in the sector are inherently very huge.

(b)Mainland and Zanzibar VATs: Harmonise the VAT laws in Tanzania. The differences in the VAT laws applicable to the two sides of the Union poses a number of challenges to businesses.

(c)Underestimation penalty: Rationalise the income tax underestimation penalty. Charging the penalty on the whole profit instead of just the excess profit (understatement) is rather unnecessarily punitive.

(d)Imported fresh milk: Introduce fiscal measures to protect local producers of fresh milk. Fresh milk, either imported or locally produced, is exempt from the VAT. This makes locally produced milk uncompetitive as producers cannot claim VAT they pay on some of their inputs.

(e)Horticultural inputs and equipment: Expand the current VAT exemption list in the VAT law to accommodate a range of modern horticultural inputs and equipment including dam liners for irrigation technology, spare parts for greenhouses, biological control agents, agro-nets, plant protection substances, storage and post-harvest and cooling equipment.

Of course, there are several tax reforms areas not covered by the Blueprint. The Skills Development Levy (SDL) impedes employment.

PAYE at 30 percent kicks in for a monthly salary exceeding Sh720,000 (about USD325). This threshold has been there for the last 14 years and its review is overdue. What about the Workers Compensation Fund (WCF)? Isn’t it possible for the roles of WCF to be taken over by the two social security funds - NSSF and PSSSF? Shouldn’t the SMEs have a special tax regime? The current VAT registration threshold and the presumptive tax regime do not accommodate SMEs appropriately. Should there be a tax amnesty regime?

It will be interesting to hear how the government intends to address the Quick Wins proposed in the Blueprint but also these other areas.

Mr. Maurus is a Partner with Auditax International


Thursday, June 14, 2018

DIGITAL MARKETING: Storytelling in the digital world

Innocent Swai

Innocent Swai 

Bad ideas just like good ones can be very useful. Why are we chasing good ideas only? After all, it has been said that not “all that glitters is gold.” It is a well-known saying, meaning that appearances can be deceiving.

It’s not everything that looks valuable actually has value.

This can be applied to products, services, places and whatever is associated with people that promises to be more than reality.

The classic example is the mineral pyrite, which sparkles like gold but contains only 0.25 per cent of gold.

Glitter is a metaphor for things having shiny and expensive appearances while gold is a metaphor which is valuable.

Another metaphor is elevator pitch. It has evolved into much broader variety of contexts within digital platforms. You might come across a question like

“what makes your product/ service different?,” in case you don’t feel confident about your ability to convert that into genuine interest, then craft your elevator pitch promptly.

Learning the art of pitching is key to reaching out consumers and retaining them. Sometimes in the process of learning, things go wrong. What can you do in such circumstances?

Perfection is not about damage control but also about accepting reality. Letting go when things go wrong.

Brands’ must go out of their ways to figure out best ways to correct their flaws. It reaches a time when improvisation matters the most. Rather than being rigid when things go sideways with your pitch, taking a risk to improvise how you do your pitching is much better option than sticking to what is not working. Improvising is about having a two-way conversation with your audience which is natural and authentic. There have been occasions, where other brands’ make exaggerated claims for a short term gain which kills a brand’s trust. Most failing brand campaigns are due to practicing unethical marketing.

However, consumers have taken the issue into their own hands, resulting in brand pitching in a reverse marketing.

Building trust and investing in ethical and reverse marketing is a long-game plan of action designed to achieve an authentic brand image for your consumers.

As such ethical marketing has to do with doing the right thing. In order to approach the ethical marketing process authentically, brands must be prepared to look at everything like their messaging across different platforms, what is needed to change them? How do they present themselves through their online channels? etc.

The era of elevator pitch is becoming the hallmark of sales in multiple platforms. Conversely, selling is the psychology of persuasion; it’s about how to reach and move your audience.

It requires a nuanced and sophisticated skill set, and without sugarcoating, it’s the difference between success and failure for your brand.

The author Daniel Pink, in his book To Sell Is Human is telling us rather than being shy from from the idea of selling, we better know that we are all salespeople. Selling must be part of your repertoire.

Mr Swai is a content director for MobiAd Africa Tanzania Ltd.


Thursday, June 14, 2018

Director: Don’t cry over delayed donor funding

Iringa Urban District Commissioner Richard

Iringa Urban District Commissioner Richard Kasesela displays a book on leadership and development. With him is KAS resident director Daniel El Noshokaty who presented the book recently in Dar es Salaam. PHOTO|COURTESY 

By Ludger Kasumuni @TheCitizenTZ

Dar es Salaam. The resident director of the German non-foundation Konrad Adenaur Stiftung (KAS), Mr Daniel El-Noshokaty, has criticised the government’s repeated complaints that donor funds have not been forthcoming in full and at the right time – and there are some unfulfilled budget commitments.

Speaking on the sidelines of a workshop in Dar es Salaam that discussed a ‘new economic order’ for Tanzania on Friday, Mr El-Noshokaty wondered why the government has repeatedly been complaining during parliamentary budget sessions in the National Assembly that pledged donor funds have not been disbursed in the set timeframe.

“I think there is a real need for the government to set realistic budgets. After all, the promised funds from donors are just budgetary support,” said the KAS official who was answering questions from BusinessWeek.

For three consecutive years the Finance minister of the day has been complaining in the National Assembly during the tabling of budget proposals for debate that donor commitments to help fill gaps in the budget have been declining – and that, in most cases, there have delays in disbursing pledged funds.

According to the FY-2015/16 government budget report, the government had targeted to collect Sh2.9 trillion from donors for the 2014/15 financial year budget… But, up until April 2015, it had received only Sh408 billion, which was 44 per cent of the pledged amount of Sh922 billion in total.

“Grants and concessional loans were expected to amount to 70 per cent of the annual targets by June 30, 2015. The annual targets are not expected to be met due to the slow implementation of development projects – and failure of some development partners to fulfill their commitments,” reads part of the FY-2015/16 budget report.

Likewise, according to the FY-2016/17 budget report, the finance Minister of the day, Dr Philip Mpango, pointed out that, under the FY-2015/16 budget implementation, the government targeted to collect a total of Sh22.4 trillion in revenues, out of which donors pledged to contribute Sh2.3 trillion. But, up and until April 2016, the received funds amounted to Sh1.5 trillion: 65 per cent of the estimates. Ditto for FY-2017/18, whose budget speech in the august House by the same minister revealed that the government planned to collect Sh3.2 trillion in the 2016/17 financial year from donors towards an estimated budget of Sh29.5 trillion. But it had collected only Sh2.6 trillion from them up to April 2016.

“Disbursement of grants and external concessional loans were Sh2,340 billion, equivalent to 65.0 per cent of the annual development partners (DPs) commitments in Sh3,600.8 billion for2016/17 budget,” reads part of the minister’s budget speed of the current financial year.

During the workshop organized jointly by KAS and the Civic Education Teachers Association, a senior business law lecturer based at St Augustine University, Reverend Charles Kitima said that the FY-2017/18 budget implementation still left gaps that made it unrealistic – especially in its failure to strengthen the private sector.

“The budget has not contributed much to industrialization nor to the creation of middle-income citizens. Smallholder farmers who have been banned from exporting the commodities they themselves produce are suffering a lot from a high poverty incidence,” said Dr Kitima.

The KAS project manager in Tanzania, Dr Stephanie Brinkel, was of the view that, for the national budget to contribute positively to increased economic welfare for many people, it should depend more on local resources.

Dr Brinkel counseled that Tanzania must institute an economic model that would bring about positive effects on the people through appropriately formulated national budgets.


Thursday, June 14, 2018

Soft drinks producers want tax relief to avoid turbulence


By Alex Malanga @ChiefMalanga

Dar es Salaam. Last year, the carbonated soft drinks industry in Tanzania sent packing home some 725 employees as a result of a steep decline in sales volumes, the Confederation of Tanzania Industries (CTI) has revealed.

This came hard on the heels of the decline in prices for carbonated soft drinks due to its elasticity in demand.

To increase sales, the industry had to roll back its selling prices to the year-2012 prices.

“The industry needs a breathing space to grow again – and, hence contributing more revenue to the government in terms of value-added tax (VAT) and corporate tax,” CTI told The Citizen.

“Prices for soft drinks are very elastic. Any small change in the price does have a huge impact resulting in decreases in terms of sales and volumes,” the Confederation said, explaining that it is on those grounds that the industry held up the price for five years.

In that event, CTI in its tax reform proposals for the 2018/19 financial year proposes that the current excise duty on carbonated soft drinks of Sh61 per litre is maintained.

It is worrisome that an increase in excise duty would lead to a price increase that would further reduce sales volumes – and, by extension, investor confidence. If the sector is to grow – and, thus, help the government to garner revenue while creating employment in the value chain stakes – the tax system must be friendly, and be seen to be friendly.

“Mushrooming of the sector will have the multiplier effect up and down the value chain, including increased demand for inputs: sugar and packaging, to name just two.

Failure to do this, CTI warned, would lead to loss of government revenue even as it would fuel the proliferation of substandard soft drink products. All the member-countries of the Southern African Development Community (SADC) who had imposed excise duty on soft drinks – with the exception of Tanzania and Angola (3 per cent) – have removed the duty thereon.

These include Zambia, Zimbabwe, Namibia, South Africa and Malawi, all of which removed excise duty on soft drinks in the last few years, resulting in growth of the industry hand-in-hand with government revenues. Stakeholders in the industry are optimistic that the government will not in its FY-2018/19 budget go down a path that is likely to make the lives of its poor subjects even more difficult, observers say.

They are of the view that measures by the government to boost its coffers should not be a blow to people who can barely make ends meet.

In that regard, CTI also believes that a good tax system should meet basic conditions by being fair, adequate, simple, transparent and administrative-ease. Companies and consumers alike believe that an effective tax system should be one that encourages growth of industries, and attracts investments.

“The current taxation system still faces a number of challenges and, hence, the need for reforms,” says CTI, “This will ensure an increase in government revenue collections while, at the same time, it gives the private sector optimal conditions for growth – thereby creating jobs and prosperity for the country.”


Thursday, June 14, 2018

Predictable policies needed to industrialise Tanzania, say manufacturers


By Alex Malanga @ChiefMalanga

Dar es Salaam. Manufacturers of food and beverages in Tanzania have raised six issues which should be addressed by the government in so far as they relate to the national budget for the 2018/19 financial year that commences on July 1 this year.

Among the issues are policy unpredictability, delays in the issuance of chemical import permits, and high value-added tax rate (VAT).

Others are corporate tax, high import duty on industrial sugar and the lack of a proper system for the verification of industrial sugar imports.

Speaking to BusinessWeek in Dar es Salaam, the Shelys Pharmaceuticals procurement executive, James John, called for “a clear tax payment system.

“We are required to pay VAT on packaging materials and raw materials despite being exempted by law,” lamented Mr John.

“It sometimes takes us more than a week to make follows-up on the matter, thus plunging us into extra storage charges levied by the Ports Authority after a grace period of the first seven days.”

The port charges are $40 (about Sh89, 200) per 40ft high cube container per day. Up until March 22 this year, Shelys Pharmaceuticals had paid a total of Sh150 million in storage charges alone to the Azam Inland Container Depot (ICD).

In addition to that, it had to pay Sh7 million as warehousing rent to the Tanzania Revenue Authority (TRA). The company has some 150 tonnes of imported industrial sugar stranded at the Azam ICD since last November ostensibly for verification by the government to ensure that the sugar is not diverted to household use. Mr John also cried foul over delay in the issuing of chemical import permit, calling on the government Chemist Laboratory Agency to speed up its testing process to two days, instead of the current seven days.

For his part, the director general of the Iringa Food and Logistics Company, Arif Ibrahim, calls for reduction of VAT from the current 18 per cent to 16 per cent, the rate that is levied in Kenya next-door, a fellow member country of the East African Community.

Mr Ibrahim was also of the view that the current corporate tax of 30 per cent be reduced to 25 per cent or lower… And, while at it, the government should also scrap the service levy, withholding tax on dividends – and the 15 per cent refundable import duty on industrial sugar.

At the end of the day, the government should be left with the 10 per cent import duty on sugar “if it truly wants to do away with the inconveniences that the industry is grappling with,” Mr Ibrahim told BusinessWeek.

His sentiments were echoed by the corporate affairs director of the Bakhresa Group, Hussein Sufian, who said that the 15 per cent refundable import duty adversely affects the firms’ cash flow.

By way of elaboration, Mr Sufian said the duty “increases the cost of doing business, as firms are compelled to use borrowed funds. In which case refund delays translate into more interest to be paid for failing to pay loan on time.

“Why should we suffer at the expense of others,” he rhetorized, suggesting that the government should penalize dishonest players.

Iringa Food and Logistics Company and Shelys Pharmaceuticals recently suspended production due to unavailability of industrial sugar.

In the event, more than 190 employees were likely to lose their jobs, according to senior executives of the two firms.

“The industry is being hurt by policy unpredictability. In that case, we cannot be competitive enough in the global market,” warned Mr Ibrahim.


Thursday, June 14, 2018

FRANCHISE: Determining brand’s readiness to franchise

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

By Wambugu Wa Gichohi

In determining your brand’s readiness to franchise, you run some questions through your current operations.

The answers will reveal what you need to do before attempting to franchise. We continue exploring if your existing corporate culture supports growth through franchising.

Are you ready to treat prospective franchisees in your army as partners, without ceding control of your business? They really are your partners-they invest their time and money to join your army.

So, you need to treat them as such through regular communication, consultation and incorporating their innovations into your product development process. The franchisee council is your most important forum though which to achieve this.

Do you enjoy “being a General”? Failing franchisees taint the franchise network. In the army, generals lead from the front, pulling their soldiers along. In franchising, the franchisor needs similar traits, being a master-motivator able to excite franchisees and pull them forward.

The last area to explore is the franchise opportunity availed by your brand, which must make commercial sense to both you and prospective franchisees. Several questions need a run through here;

Does a franchise operation look financially viable to you? Run numbers to determine the point at which the franchised units reach critical mass-that number where royalties from “x” franchise units overtake profits from investment in an additional company-owned outlet. If “x” is too high, continue with the brick and mortar outlets as you re-strategise, but certainly a time comes when critical mass is needed to grow the business to the next level through franchising.

You will need to remodel your outlets to attain the number “x” sooner. Such remodeling might include reducing the size of outlets and improving deliver to reduce costs while improving profits, thereby achieving a lower “x” faster.

Is the business know-how easily transferable to previously inexperienced parties? Ease of skills transfer is at the heart of franchising success.

If running the franchise requires some specialized skill, then a prerequisite on the franchisee profile when recruiting would be possession of such a skill, e.g. when franchising a firm of accountants, a basic requirement on the franchisee profile would be qualification as a CPA.

Where no specialised skill is required, experience shows that it is easy to recruit and train individuals with zero experience in the business line as they have no preconceived ideas, unlike experienced ones who you would need to un-train then retrain and they would always fall back on their old ways-do old dogs learn new tricks really? A further consideration should be the period of training.

Since franchisees have families to support and cannot stay for too long in training without running their units, short training periods are preferred.

Where long periods are necessary an alternative approach is to allow franchisees to run training units as their own, taking home all revenue and paying all costs, but this requires the franchisor to incorporate their profit from the training centre into the joining fees paid prior to training prospective franchisees.

Will franchisees who employ good effort achieve above average results? This goes back to the brand’s history.

As franchisees seek to fulfil their personal and financial goals by investing in your franchise, the franchise opportunity needs to be in such a way that franchisees can meet and exceed their financial expectations after paying off all business expenses.

The writer is a franchise consultant helping indigenous East African brands to franchise, multinational franchise brands to settle in East Africa and governments to create a franchise-friendly business environment.

E-mail: or


Friday, June 8, 2018

Capture informal trade to maximise business opportunities in Africa

Vendors hawk wares. PHOTO |FILE

Vendors hawk wares. PHOTO |FILE 

By Ben Leo

Anyone who aims to maximise their business opportunities in Africa will have to capture the informal trade.

Even in nations like South Africa, the informal sector makes up a large portion of the economy – involving 2.9 million people (well over 17 per cent of total employment in the country).

Although road-side traders, open-air markets and hawkers may not sound particularly important to large, well-established companies, these tiny local vendors are how the large majority of consumers in Africa acquire their goods.

And while consumer habits may be changing with rapid industrialisation and income growth, informal markets will remain an economic pillar for many years to come. But how do you understand informal markets when they are so often “invisible”—poorly documented, unregulated and sometimes difficult to access?

The sheer scale of the informal sector in Africa inevitably makes it a vital concern for commerce.

A 2017 IMF Paper found that Sub-Saharan Africa’s informal economy remains among the largest in the world, with informal borrowing and trade accounting, on average, for 40 per cent of total economic output.

In countries like Benin, Tanzania and Nigeria, the informal sector accounts for more than half of the national economy.

In urban centres, micro-businesses exist shoulder-to-shoulder with large formal enterprises like supermarkets and shopping malls.

But the informal market dominates in secondary cities, towns and villages. Consumer product companies should not see these places as dead zones—but rather as under-served markets with significant (if previously unknown) potential.

The issue for these companies, though, is knowing where (and to whom) they could be selling via the informal sector. Typically, they have a strong understanding of where their distributors are already taking product in Africa, and how many units they are placing at the end of the supply chain. However, these same companies struggle to know who would be buying their product if they had the opportunity.

Africa’s consumer class is swelling, including in rural areas. The companies that can identify this latent demand and capture these emerging consumers will achieve the greatest growth in Africa.

Geospatial data analytics is one way to bring these “blind spots” into focus and help consumer-focused companies maximize their potential.

A data-driven approach should jettison vague assumptions about consumers in Africa, and rely on a combination of robust information to produce accurate, sought-after insights about very specific areas.

For example, Fraym would begin by establishing an ideal consumer profile through the use of several datasets on family size, age, employment status, disposable income and, crucially, spending habits in relation to particular goods categories.

Then we would combine this comprehensive data with satellite imagery to further enrich the picture of the target area, and its inhabitants.

With such an approach, we can bring together a sense of what consumers look like, how much they spend, and where they move and concentrate—providing more precise, local-level insight into an informal market than has ever previously been feasible.

Even in inaccessible areas where information is sparse, proven reliable forecasting can be achieved through the application of sophisticated machine learning models to the existing data, drawing on similar case studies to produce dependable estimates of where people are and how they behave as consumers.

Africa is a vast continent with space for both formal and informal trade. To really seize the opportunity, though, a well-rounded understanding of local markets is necessary.

The granular data and insights achieved through geospatial data analytics provide consumer-focused companies with the nuanced and hyper-local knowledge that they need.

With that knowledge, companies can optimise their distribution, set appropriate targets, unlock new areas, and overcome early barriers to entry.

Those who lean forward on these data-driven approaches will see outsized growth in Africa in the years to come.

Ben Leo is CEO of Fraym. Fraym is a geospatial data company that delivers hyper-local insights for 50+ African countries.

Their platform helps fast-growing companies, development organizations, and government agencies answer high-priority questions about where to focus and how to reach specific populations. The company’s leadership has focused on the African continent for decades, holding senior positions in The White House, the African Development Bank, the Center for Global Development, and the ONE Campaign. From offices in Lagos, Nigeria, Nairobi, Kenya, and Washington, D.C., Fraym is committed to empowering African businesses and communities through precise, localized data.


Thursday, June 7, 2018

MANAGING TAX RISKS: Of Tanzania tax regime and industrialisation


The Budget for 2018/19 will be read in the next few days: Thursday next week to be precise. Industrialisation has been the key priority of the 5th- phase government.

Tanzania aims to become a semi-industrialised country by 2025. By that time the contribution of manufacturing to the national economy must reach a minimum of 40 percent of the GDP. And the desire is not just in any industry.

But on industries that use local raw materials, produce goods for mass consumption and create decent employment to Tanzanians.

The industries will work better if agriculture, livestock, and fishing sectors also work better.

The industries are also dependent on healthy and developed workforce (human capital). We also need financial capital.

We can also not escape the power of technology. It is not so difficult to see how all these fit with industrialisation.

Some researchers cite obstacles imposed by the agricultural sector, lack of human capital and little knowledge of technology and some of the key reasons the import substitution policies in sub-Saharan Africa (Tanzania included) failed in the past.

But the structure of our economy is dominated by SMEs and the informal sector. Currently, sectors that are expected support industrialization are heavy dominated by SMEs and informal sector.

For industrialisation to succeed, we need suitable tax policies. Policies that will nurture SMEs and the encourage informal sector to formalize.

The question, I think, is what are these suitable tax policies? It is not always easy to answer this question.

And to determine whether a particular tax policy is suitable or not is mostly a “postmortem” exercise.

Laffer Curve?

In mid-1970’s, to stimulate production in the US, most economists advocated for more government spending to stimulate demand for products. But the supply-side economist, Arthur Laffer, offered a different view. Laffer argued that the problem isn’t too little demand but rather the burden of heavy taxes and regulations that create impediments to production, which impacts government revenue. The more a production activity is taxed, the less of it is generated. Likewise, the less an activity is taxed, the more of it is generated. For every type of tax, there is a threshold rate above which the incentive to produce more diminishes, thereby reducing the amount of revenue the government receives. The more money is taken from a business in the form of taxes, the less money it has to invest in the business. Investors in the industries are less likely to risk their capital if a larger percentage of their profits are taken.

Currently, our corporate income tax rate is 30 per cent of taxable profit, regardless of the size of the company. VAT registration kicks in at an annual turnover of Sh100 million. Skills and development levy at 4.5 per cent of employment cost also triggers if one employs four or more people. The current presumptive tax upper cap of Shs20 million annual turnover is too low. This sort of tax environment is not suitable for SMEs and may well be working against the efforts to formalise the informal sector. Last week I saw an interesting piece of an article containing tax proposals for SMEs circulating in the social media. The article proposes an increase in VAT registration threshold to Shs500 million, reduction of corporate tax to 15 per cent for companies with less than Sh500 million annual turnover and a 3 percent flat rate presumptive tax of for companies or sole proprietorships with annual turnover below Sh100 million. It also proposes the removal of SDL on companies below VAT registration threshold and with fewer than 50 employees.

Obviously, these may seem to be radical changes but certainly, they do merit consideration by policymakers.

Mr. Maurus is a Partner with Auditax International


Thursday, June 7, 2018

YOUR BUSINESS IS OUR BUSINESS: Equator line an exotic tourist attraction site


The other day, I was more than astonished to read somewhere that Kenya and Uganda next-door are minting millions in foreign exchange from being two of the thirteen countries across which the Equator Line ‘passes.’

These are Brazil; Colombia; Congo Republic (Brazzaville); DRC (Kinshasa); Ecuador; Gabon; Indonesia; Kenya; Kiribati; Maldives; Sao Tome & Principe; Somalia, and Uganda – named here strictly in alphabetical order.

The Earth’s Equator is about 40,075km (24,901 miles) long, of which 78.7 per cent of which lies across water, and 21.3 per cent over land.

Coming down to (Planet) Earth, ‘the Equator is a line notionally drawn on the earth equidistant from the North and South Poles, thus dividing the earth into northern and southern hemispheres – and constituting the parallel of latitude 0°.

Apparently Kenyan and Ugandan authorities have literally painted lines along the Equator across sections of their lands. Uganda has also created the ‘Uganda Equator Monument’ at Kayabwe town in Mpigi district

Both the lines and monuments have become world-famous, attracting tourists in hordes.

The Equator in Kenya runs across Nanyuki and Nyahururu towns, as well as over Mount Kenya and Mount Elgon.

Reportedly, tourists come from far-off lands to Kenya and Uganda, where they make a beeline for the human-painted Equator line and the .

Uganda Equator.’ Their intention, wish and hope is to stand astraddle the painted line – one foot planted in the Northern Hemisphere; the other in the Southern Hemisphere – and take ‘selfies.’

They post the snapshots on the WWW for their countryfolk and the world to see them strutting simultaneously along both hemispheres… Boy!

As the (mean) Sisters of Fate would have it, Tanzania isn’t positioned to exploit the Equator as a tourist attraction.

The nearest that the country could be said to be ‘touched’ by the Equator is that the imaginary line cuts across the northern portion of Lake Victoria, whose waters also wash the Tanzanian shore to the south…

Tanzania is also denied the opportunity to gainfully exploit the other world-famous line, the Greenwich Meridian.

Running north-south – slicing the globe in two: the Western and Eastern Hemispheres – the Greenwich Meridian is thousands of kilometres too far to be exploited as a tourist attraction by Tanzania.

So-named because it passes through Britain’s Greenwich station, the Meridian became the benchmark for global timekeeping to which all other world time zones are referenced.

Greenwich Mean Time (GMT) means ‘the mean solar time at the Royal Observatory in Greenwich that was adopted as the standard time in a Zone that includes the British Isles.’

In the event, hundreds of thousands of tourists from the world over visit the Greenwich Meridian – if only because it separates East from West. [Please, please, please, this has nothing to do with the ‘Capitalist’ West and/or the ‘Commie’ East; it’s mostly geographical…].

Tanzania can never take a leaf out of Kenya’s or Uganda’s books on ‘Equatorial Tourism’ – and still less from Greenwich Tourism.

But, wait a minute… Tanzania is coming up with a relatively extraordinary idea of a lodge, the ‘Oligilai Maasai Lodge,’ in the middle of the Kilimanjaro and Meru mountains, built using ‘native’ materials and 1920s style!

This… Sorry I’ve run out of editorial space! Till next time… Cheers!


Thursday, June 7, 2018

The art of navigating the market

Innocent Swai

Innocent Swai 

By Innocent Swai

Today’s marketplace is not static. It’s changing all the time, requiring businesses to constantly adapt with speed of light.

However, there are some practices if adopted, they can give your brand an edge. It does not matter if your business is just starting out or your brand is figuring how to out-innovate the competition.

There are two approaches in doing business or any other project. The first one is top down innovation. It’s not a joke, this approach is on its deathbed.

The brands’ positioned for winning customers are those that have discovered and stopped from relying solely on their internal R&D teams to drive their innovation in the market.

Just think about it. How can just few employees seated in a corporate Head Office beat an innovative company that is soliciting input from the millions of engaged consumers which they can connect to via various digital platforms?

There is a concept known as dispersed innovation which is replacing the “top down” innovation approach.

As you might be aware, stimulating brand innovation can be accomplished by letting your employees bounce into each other as often as possible. If your brand can make it easy for people to connect, they will do so and the impact will result in more creative productivity.

When it comes to dispersed innovation, a good example is YouTube. While it can serve in many forms and lots of functions, one form is educating people in different concepts. Conversely, YouTube functions can be to discover new talents at an incredibly efficient process. There could be a pool of artists, hence utilising economies of scale and expanding your brand greatly for doing great work by directors and producers whererever they are. This is dispersed innovation at its best among the masses.

The common idea to disintermediate the top down innovation process that has always dominated many industries like education and music.

Dispersed innovation has revolutionised the ability to identify innovation in the hands of the consumer.

The second one is the bottom-up innovation. It’s a flexible model which allows innovation to happen by using feedback from different stakeholders like employees, customers, etc.

The lessons gained from crowdsourcing are taken into consideration, then refined and improved, ready for consumption or any other creative output.

The form or function of bottom-up innovation is used to draw attention that provides curation for great products that consumers otherwise would not have access to. The brands which are taking a bottom-up innovation approach are revolutionizing their niche markets for the better.

How will consumers learn about your brand if you can’t afford to engage them? Or at least be visible in front of them? Hence, the reason why the top down innovation approach is dying, and the future looks bright for the bottom-up down innovation approach.

If your brand wants to increase innovation, make make your business lean, that means being structureless and procedure-free as much as attainable.

Mr Swai is content director for MobiAd Africa Tanzania Ltd, or visit www.mobiadafricad


Thursday, June 7, 2018

FRANCHISE : What you need to do before franchising

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

In determining your brand’s readiness to franchise, you run some questions through your current operations.

The answers will reveal what you need to do before attempting to franchise. We continue exploring if your existing corporate culture supports growth through franchising.

Do you have self-discipline to follow the narrow path to franchising success? Franchisees hate decisions that impact negatively on their profitability.

They seek to be sheltered from unexpected happenings and see unexpected change as a threat. As the franchisor, you have to keep focused on a carefully thought-out franchise roll out plan.

Do you have a clear passion for excellence across the business? Franchisees won’t join a mediocre operation. However big your brand’s fame may be, it would be foolhardy to imagine that you can franchise a disjointed “one-man show” type of business that stops operations when the owner catches a cold or travels out of town. In franchising, service excellence rules supreme.

Are you open, a team-player, do you share information and do you consult regularly? Truth is that most traditional businesspeople don’t, yet to succeed in franchising, you have to be open with your franchisees on all aspects of your business, share as much information as is necessary to profitably run the franchised units and regularly consult them through the franchisee council for them to feel part of your franchise family.

Personal contact is also key as it breeds personal relationships with franchisees, leading to better business results.

Do you dream of growing your brand into the market leader? On the racecourse, everyone wishes to back the winning horse. So do prospective franchisees who expect nothing short of brilliant ideas from you to outsmart competition.

So, you must always be unsettled and ready to implement disruptive innovations to move your brand to the lead.

Are you looking at the short-term or long-term returns from franchising? Franchising is a long-term strategy, try other models if seeking short-term returns. Depending on your industry, it could take a minimum of three years, some even more, before you see real returns from franchising.

Do you enjoy training people and seeing them grow? For you to replicate your success in your franchisees, you will have to invest considerable resources in training them. You move from managing your daily sales etc. to training people and placing them into business. Make sure you can tolerate slow learners as they sometime turn out to be your best performers.

You will need to hand over your original business to a manager for you to train others, or you will appoint a franchise champion to run the franchise show. In both scenarios, both you and the franchise champion will need to be well trained to franchise and in return you will need to be at peace with coaching and placing others into business.

Are you ready to stop all else to make putting others into business as your future career? The franchise manager you may appoint as indicated above cannot do a better job than you. At the end of the day he doesn’t own the show. So, you would need to do it yourself, thereby setting a new career path for yourself.

The writer is a franchise consultant helping indigenous East African brands to franchise, multinational brands to settle in the region and governments to create a franchise-friendly business environment.

E-mail: or


Thursday, June 7, 2018

UK company to start mining graphite in Mahenge next year

Graphite mining. PHOTO | FILE

Graphite mining. PHOTO | FILE 

By Alfred Zacharia @azacharia3

Dar es Salaam. Armadale Capital Plc plans to start mining high-grade graphite at the Mahenge Liandu Project in Morogoro early next year.

The notice was published in its final results for the year ended December 31, 2017, stressing rapid advancement decision to mine the graphite in the first quarter of 2019.

The project is located in Ulanga District, close to existing transport infrastructure. It is 10km south of the Mahenge town and about 76km via a well-maintained road to Ifakara.

Armadale director Nick Johansen said in the statement that since 2017 the company saw potentials of pure graphite at the area after conducting a through feasibility study and other early processes.

“Early exploration and definition drill programmes, metallurgical test work, feasibility studies, permitting activities and commercial marketing are all being conducted concurrently to ensure we meet this ambitious target and start delivering returns for our shareholders,” he said. The quality is exceptional, with concentrate purity of up to 99.1 per cent Total Graphitic Carbon (TGC) produced using low-cost processing methods, and desirable flake size distribution and graphite expandability attributed to the material from Mahenge Liandu.

“We are passionate about beginning the formal marketing process of our product within markets including the high growth battery industry.”

Mr Johansen explained that it is with this in mind, together with a project which has consistently demonstrated its considerable economic and strategic value, that the company looks forward to providing investors with additional news over the coming months as they are gearing up to make a formal decision to mine in the quarter one of 2019.

The project is expected to produce an average of 49,000tpa of high quality graphite products for a 32 year mine life.

Again, operational cost stands at $408 per tonne and is based on an average life of mine grade of 12.5 per cent TGC.

The project has a pre-tax of 122 per cent with a low development capital expenditure of $35 million with the maximum drawdown during the construction of the project is $34.9 million and the after-tax payback period is 1.2 years

There remains significant scope to further improve returns, with staged expansions as the current mine plan is based on 25 per cent of the total resource.


Thursday, June 7, 2018

Role of stock markets in financing infrastructure


By Moremi Marwa

Improving infrastructure is not only critical for our economic growth but an essential tool for ensuring the improved wellbeing of our people.

In whatever form – whether transport infrastructure or energy-related infrastructure, or telecommunication infrastructure, or agriculture infrastructure or health infrastructure or trading infrastructure, or water infrastructure, etc all are important, all the way.

Empirical researches indicate that there is a strong link between infrastructure development and economic growth, that’s how it is, everywhere.

According to the African Development Bank (AfDB) recent report, road access in Africa is less than 35 per cent as compared to 50 per cent in other developing places. In agriculture, just about 5 per cent of agriculture in the Africa have access to irrigation, compare to about 40 per cent in Asia or 15 per cent in Latin America.

Africa’s average national electrification rate of 45 per cent, is poorly compared to 80 per cent in Asia and 98 percent recorded in Latin America.

The total electricity generated for Africa’s one billion population is equivalent to what is being produced and consumed by single nations in Europe i.e Italy, or France, or the Netherland, etc.

The above statistics applies similarly to us, and according to AfDB, the amount of capital required to close the infrastructure gap in Africa is estimated to be in the region of $93 billion annually for the next five years. Where will this money come from? Will China, or the BRICS Development Bank or the Asia Infrastructure Investment Bank or some other foreign financial institutions fill this funding gap? Our experience, when it comes to foreign developing finance and grants indicates that the answer may be largely, no.

We have been through this cycle and experience again and again. What we need is smarter financial innovation and financial engineering approaches, and appreciate the role of domestic finance or capital markets in financing our development, this includes infrastructure.

What we need to hear is our politicians and policy makers talk about infrastructure bonds, we need to hear about investment and savings mobilisation vehicles for financing infrastructure development, we need to hear municipal bonds for financing local governments and municipals infrastructure, we need to hear a government agent responsible for agriculture infrastructure engaging the capital markets in their intent to issue a bond for an water irrigation projects, etc.

Sourcing funds to finance a sizeable infrastructure projects has always been fraught with difficulties, this is the case for us, as it is for other countries in the state like ours. One major challenge is that the multilateral development finance institutions, which are dominated by the western developed countries, often imposing stringent policy conditions to loans.

But it also appears that the funding required to close the infrastructure gaps in a timely fashion can no longer be simply in existence on some of the traditional development financial institutions’ balance sheets.

Another issue is that the major lenders have historically been more active in financing social infrastructure such as health and education.

Their approach to development in Africa has by and large been related to “poverty alleviation” not so much on “economic development”.

As it turns out, financing social infrastructure for poverty alleviation objectives aren’t the same as financing economic infrastructure which plays a critical role in spurring economic growth, which in this moment in time, has not been accorded serious attention that it deserves.

While social infrastructures are equally relevant and important for economic development, however, economic infrastructure is even more urgent. The process of wealth creation and capital accumulation are facilitated more by investments in economic infrastructure.

The fact is, the old approach of countries relying heavily on multilateral and regional development finance institutions to fund infrastructure has been recently challenged by other facts. It is also incapable of closing the financing gap of the size we learn.

In fact, neither the old nor the new institutions have the risk appetite for the kind of investments needed. If we continue to rely on these institutions, then the pace for closing the infrastructure gap might continuously be very slow.

The current move that geo-economic relations are largely based on trade and investment, as it is with encouraging our countries to look inwardly for solutions related to financing our development, instead of the tradition aid and assistance model, looks like the best approach worth embracing – difficult and daunting as it might look.

Furthermore, recent economic challenges in some developed countries have made traditional development finance institutions hesitate to provide resources for the huge but critical infrastructure investment as required.

Given such experience, the game-changing infrastructure projects that can make a dent in the bridging the infrastructure deficit and move economies to a higher growth path need to come from own resources.

And, the place to start would be the domestic financial markets, especially the capital markets, which are so been overlooked or ignored or less appreciated by policy makers, or the corridors of powers.

But, if seriously considered this aspect of finance and its role in our economic development have the possibility to elevating us significantly – it will give us the sense of ownership, it will enable us to achieve our policy/agenda of economic empowerment, it will facilitate and fast track our economic inclusion agenda, it will result into or domestic savings be intermediated to finance our significant our economic infrastructure projects.

And, of course no one is arguing that foreign investors and financiers – i.e. development finance institutions, institutional investors, etc will not have access to these financial instruments, if we decide to let them.


Thursday, June 7, 2018

What is in phase two of agriculture plan


By The Citizen Reporter @TheCitizenTZ

Dar es Salaam. The government’s second phase of the Agricultural Sector Development Programme launched this week is expected to address the challenges and gaps experienced the first phase through its eight key principles.

The initiative aims to address critical constraints and challenges to sector performance and to speed up agriculture GDP, improve growth of smallholder incomes and ensure food security by 2025.

Its implementation will be guided by the following key principles outlined in the document.

Its implementation will be guided by the following key principles outlined in the document.

Smallholder commercialization

The programme focuses on the support to farmers to graduate from subsistence farming to semi-subsistence/semi-commercial status, practicing farming as a business.

“Smallholder farmers have to begin producing for the market and be supported to forge strong and dynamic linkages with commercial input and output supply chains in order to connect with a growing agro-industrial sector and expanding food demand from urban consumers,” states the document.

Whilst the focus will be clearly on the smallholder sub-sector, greater inclusive private sector participation will also be encouraged, both in commercial agricultural production and in marketing, agro-processing and farm input supply chains.

Investment in rural infrastructure, agro-processing, especially in grain milling and packaging and sustainable utilisation of natural resources will get special attention to expand the market for priority crops.

Result-based focused support

Based on lessons learned from ASDP-1, key innovations integrated in ASDP II include, among others, impact orientation and concentration of resources on high potential commodity value chain within agro-ecological zones and selected districts to achieve results, and scale-up.

While targeting market-oriented smallholders, a phased approach is being proposed to build and consolidate impact.

Districts which were not covered in the first phase will be covered in subsequent phases and therefore growth-inducing interventions will reach all regions and districts over time.

Productivity increase for sustainable food security and nutrition, farmer income and economic growth

The programme promotes surplus food production and quality (crops, livestock and fish) in districts that have the potential to do so.

Food deficit or low potential areas will benefit from the surplus generated from selected priority districts enabled by enhanced marketing policies and private sector marketing.

The focus of the programme is to maximize food self-sufficiency, but also export of commodities for which Tanzania has a comparative advantage in regional and international markets.

Priority is given to investments focusing on expansion of irrigation, development of rangelands, control of livestock diseases, aquaculture development, mechanisation, research and development, access to improved agricultural technologies and related inputs and appropriate support services.

Increasing management of resources by beneficiaries

Although some progress has been made in the first phase of the ASDP, ASDP II reinforces this principle through a more structured planning, implementation and monitoring and evaluation arrangements and supporting financing mechanisms.

It places decision-making control over resource allocations in the hands of farmer groups, cooperatives and agribusinesses based on transparent processes.

Pluralism in service provision

ASDP II aims to push for a wider choice in service providers to broaden knowledge support by integrating agribusiness services.

Performance-based contracts for private agribusiness advisory service provision will enable linking of public funding from service delivery and complementing public technical services implemented by local government services.

Sustainability and diversification

Under the ASDP II, there will be a commodity focus, but intertwined with strategic diversification.

While focusing on priority Commodity Value Chain, crop rotations and promoting intensive animal husbandry systems to use efficiently crop residues, sustainable soil and water management systems and efficient use of irrigation systems will be promoted.

The initiative will also introduce processes and mechanisms to achieve market-driven diversification and sustainability.

The expansion in irrigated agriculture opens up an opportunity for crop intensification, one of which could be diversification into high value crops, such as horticulture.

Focus will also be directed towards developing livestock diseases free zones, improve water availability for livestock, improving access to grazing lands, improvement of genetic potential of the existing stock, increasing supply of improved stock, commercialisation of the livestock industry and aquaculture and fisheries development.

Food and nutrition security

Nutrition remains an area of concern as little progress has been recorded on nutritional status over the past decade, especially in rural areas.

The programme has built in flexibility to accommodate interventions to improve the nutritional status of rural households and protect them from the impact of natural disasters, along with improving the capacity of institutions that provide services for sustainable productivity growth and quality.

Gender and youth mainstreaming

While it is recognised that gender and youth is a cross-cutting area which needs to be addressed at all levels, sectors, and in both technical and management areas, the ASDP II contributes its share by undertaking both socio-economic and gender/youth analysis.

Differentiation of groups by wealth, vulnerability, age and possibly other socio-economic characteristics is required to ensure that more vulnerable groups also benefit from the program.

Resilience, including to climate variability and change

ASDP II interventions will be undertaken with climate change considerations factored into the interventions, including climate smart agriculture in sustainable landscapes and appropriate climate change mitigation strategies.

Extremes in temperature and precipitation will be the focus of research and technology development.

Farmers’ adaptive capacities will be strengthened to ensure the impact is understood and integrated into their farming systems/activities.

A menu of response options to mitigate the impact of climate change on agriculture, including conservation agriculture will be developed, tested and shared.


Thursday, May 31, 2018

Global chatbot business forecast to grow by $113m

An example of a Chatbot being developed by

An example of a Chatbot being developed by Mwananchi Communications Limited. Chatbots are set to outperform mobile apps in the next five years. PHOTO | BUSINESSWEEK PHOTOGRAPHER 

By The Citizen Reporter &Agencies @TheCitizenTZ

Dar es Salaam. The global chatbot market grew from $113 million in 2015 to $703 million in 2016 and is projected to grow in value to $1.23 billion by 2025, according to Grand View Research.

Analysis of consumer perceptions and usage of chatbots has revealed that by 2019, 25 per cent of the world’s population (or 1.75 billion people) would be using mobile messaging apps. chatbot (also known as a talkbot, chatterbot, Bot, IM bot, interactive agent, or Artificial Conversational Entity) is a computer program or an artificial intelligence which conducts a conversation via auditory or textual methods.

“In the next 10-20 years, 58 per cent of financial advisors will be replaced by robots and AI” – Frey and Osborne, Oxford University.

To give an idea of this swift adoption, 96 per cent of businesses believe that chatbots are here to stay, and 67 per cent believe that chatbots will outperform mobile apps within five years.

This has led to 80 per cent of businesses stating that they either already have chatbots in operation or they plan to have them by 2020.

To allay concerns that the market will share this shift in doing business, 47 per cent of customers said they’d buy items from a chatbot. In fact, the 26-36-year old market segment said they’d spend up to $675 via a chatbot interaction.

Despite companies offering a wide range of interaction options within a multi-channel contact centre environment, according to this research, consumers are favouring chatbots: 48 per cent would rather connect via live chat than via any other form of contact. Your marketplace is both getting used to this form of interaction and expecting it to be available.

The benefits in brief

The primary sectors making use of chatbots currently are online retail, healthcare, telecommunications, banking and financial services, with consumers saying that they treat chatbots like health care coaches, travel agents, tutors and advisors, with these roles being frequently performed by human agents in contact centres until recently.

An example of the cost savings that are achievable by implementing a chatbot would be in the case of the Autodesk Virtual Agent enabled by Watson Communication: the chatbot reduced the per-query cost from $15 – $200 to an average of $1. Since chatbots can function 24/7, this is of great benefit to the company.

A further consideration relating to time spent on interactions also translates to productivity and profitability: according to research, time saved per chatbot interaction compared with a traditional contact centre interaction is four minutes.

Translated into cost savings, in the banking and healthcare sectors alone, this is projected to save $8 billion by 2022.

What about the humans?

The contact centre sector is a major employer in South Africa, so the challenge posed is whether or not the implementation of chatbots will effectively see job losses, but the general response from the industry is that this won’t necessarily be the case. Sixty-one per cent of customers say that chatbots won’t replace humans completely, although 31 per cent said that they will. What is important to consider is that there will always be complex processes within a business that require human involvement – interactions that require human qualities such as insights, reasoning or empathy.

Although a chatbot is capable of performing and automating some tasks and processes, the technology will also free up humans to perform other more complex tasks that depend on human strengths and qualities to achieve success.

Information at your fingertips

Beyond servicing basic customer queries, chatbots can also be integrated with business systems to not only answer generic knowledgebase questions (relating to products or services, for instance) but also provide customers with specific personal information and feedback.

For example, a customer may engage with a chatbot from a financial institution to find out if they can extend their credit limit by a specific amount. After asking some identity verification questions (such as ID number), a chatbot that is integrated with other business systems can provide this information to the customer immediately – no phone call or branch visit required.

In the contact centre environment, chatbots can also be used to assist employees resolve queries more efficiently. Agents can dynamically engage with a chatbot during a customer call to get answers, effectively shortening resolution time, and reducing the workload on supervisors.

The reality is that this technology is gaining a foothold across the board, with businesses constantly identifying new ways to leverage its benefits.

There will always be customers who prefer to interact with a human, but that is not to say that chatbots can’t work effectively alongside human agents to deliver service excellence in contact centres.


Thursday, May 31, 2018

Heavy investment in tech, staff skills buoy Swissport


By Alex Malanga @ChiefMalanga

Dar es Salaam. Investment in technology, human resource development, ground support equipment and good cooperation with airlines make Swissport Tanzania strong.

Over decades until two years ago, when Nas-Dar Airco Company entered the market, the 33-year-old company took advantage of its monopoly to create a distinguishable environment.

According to its chief executive officer MrishoYassin, such strengths have helped the company greatly as it built a strong foundation since its inception in 1985 when it was called Dar es Salaam Airport Handling Company (Dahaco).

The company employs 1,000 people and handles about 17,000 flights annually.

It handles 1,183,000 embarking passengers and 20,000 tonnes of cargo annually.

Swissport is certified on International Air Transport Association’s Safety Audit for Ground Operations and Environmental Management (ISO 14001:2015).

In May 2000 was privatised. Swissport International, one of the leading airports ground handling companies in the world, acquired 51 per cent of shares.

The remaining stake remained at the hands of Air Tanzania Company Limited on behalf of the government.

In 2003 the government relinquished to the general public its 49 per cent of its stake in the Company through the Dar es Salaam Stock Exchange.

On October 1, 2005, Dahaco launched a new corporate name -- Swissport Tanzania Ltd -- with a spirit of crafting a winning competitive positioning in a globalised aviation market.

“The idea of changing its name, the company which is currently operating at Julius Nyerere International Airport and Kilimanjaro International Airport, was meant to establish a local with international touch through Swissport International brand,” noted Mr Yassin

With the strength that the company, which accounts for more than 90 per cent of the market share, has now a reason to handle huge aircraft, and 2018 got off to a strong start.

From February to April, Swissport whose capacity is to handle 80,000 tonnes of cargo annually handled three big aircraft.

They include Emirates A380, QFA6031 and the aircraft similar to the later carrying Sultan of Oman.

Just before noon on April 24, Swissport ground handling manager Stella Kitali received a call from Emirates station manager Juma Abubakar that flight No EK8701, destined to Mauritius from Dubai was diverting to JNIA.

A380 with 475 passengers and 26 crew members on board was forced to land at JNIA on emergency due to bad weather in the island.

The flight landed and was on blocks at exactly 1300 hrs.

“It was the first time for the giant aircraft to land at Dar hence as a ground handling agent for Emirates there was an urgent need to mobilise resources and coordinate with other stakeholders for the successful operation” Ms Kitali said.

The first consideration was on the parking position at the apron due to its wide wings span for safety reasons and to allow clearance for other flights to operate.

Other ground support equipment like Air Stater Unit, Ground Power Unit, High loaders, conveyor belts, apron buses, ambulift, among others, were checked and kept on standby.

As the preparations to handle the flight were in progress, hotel bookings were also being done to accommodate the passengers who were to spend the night in Dar es Salaam.

They were hosted at Hyatt Regency, New Africa, Serena, Southern Sun and Golden Tulip.

But prior to that, the challenge was how to transfer 475 passengers to the terminal which has limited capacity.

At this time various other flights such as Ethiopian Airlines, Kenya Airways, and Qatar Airways were also operating. The passenger transfer to the terminal was carefully planned to mitigate congestion at arrival hall.

Aircraft cabin dressing and toilet servicing were undertaken after passengers had disembarked the aircraft.


According to Swissport’s passenger services head, Mr James Prosper, the departure flight preparation had started the night before.

All passenger were pre-checked therefore as they arrived at the check-in hall just boarding cards were printed and issued to them.

The plane had a defective Aircraft Power Unit therefore Swissport provided ground support equipment such as Ground Power Unit to provide electricity, Air-conditioning Unit to cool the aircraft interior and Air Start Unit for engine start.

When all the passengers were on board it was time to push back the giant A380.

The sophisticated push back operation was efficiently done by Simon John, one of the Swissport’s most experienced tug master operator.

The flight was airborne at 0818 hrs. Mr John has placed another mark in his professional life as he is the one who had also pushed back Antonov 225, the world’s biggest cargo aircraft that landed at JNIA in the past.

Four days later, the company handled another giant aircraft at Kia: FLT no.QFA6031, Qantas Boeing 747-400ER plane, which landed at Kia. With 30 crew members, the aircraft departed two days later to Morocco.

The aircraft branded the ‘Spirit of Australia,’ had 266 passengers touring various parts of the world.

Soon upon arrival the passengers, most of them rich, old people were boarded into 20 charter aircraft that flew directly to Seronera to visit the ‘endless plains’ of Serengeti.

Before coming to Tanzania they had been to India where they visited Taj Mahal.

Swissport’s station manager at Kia, Mr Shamba Mlanga, said in February a similar type of aircraft landed at the airport, it was a VIP flight carrying Sultan of Oman.

“Such kind of big aircraft gives us the opportunity to show that Tanzania airports with handlers like Swissport can make things happen,” added Mr Mlanga.


Thursday, May 31, 2018

Causes of NPLs in banking industry

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

Last week, I have argued that NPLs are one of the major causes of the economic stagnation so it is not surprising that our economy is currently struggling as the banks struggle to make profits due to high NPLs on their balance sheets. Controlling NPLs is very important for both, the bank and the whole economy of the country.

To improve our economic status, we need to lower the levels of NPLs and ensure the stability of our banking industry and we cannot lower the NPLs level without knowing the causes.

Last week, I have shared one of the main causes of NPLs in banking industry which is the lack of supervision and monitoring of loans which is called post disbursement monitoring. This week I will share three more possible causes of NPLs in our banking industry:

• Lack of effective credit risk management – Lack of effective credit risk management practice is another cause of NPLs in our banking industry. Although credit risk management practices differ from bank to bank based on the type and complexity of the credit activities taken by the banks, but the fundamentals of credit risk practices are the same but still majority of the banks have less effective credit risk practices due to lack of proper skills among the credit risk personnel, and poor credit appraisal.

One of the most important aspects of lending is determining the customer’s capability and desire to repay the loan and the banks can’t do that effectively if the credit risk staff are not competent and do not abide with policy and procedures. Banks need to have an efficient risk management system and procedures, and train their credit staff comprehensively on collecting reliable and adequate information about the customers to minimise the exposure.

• Unhealthy competition – Unhealthy competition among the banks is another cause of NPLs in our banking industry. Currently we have more than forty (40) commercial banks but only 16% of the population is banked which results into unhealthy competition among the banks. Due to unhealthy competition, pressure to deliver the services faster than competitors, and to deliver positive returns, banks are forced to increase the number of facilities to marginal borrowers and lower their lending standards.

Although this strategy delivers short term success, it’s deteriorating the assets quality of banks hence increases the number of NPLs. Thus, to lower the number of loan losses in our banks, we need to lower the number of banks; few weeks ago, I have argued through my article “The Mergers of Banks is Good for Our Economy” that banks ‘mergers is good for our economy.

By having fewer but strong banks; it will improve the financial health of banking industry, improves the customer experience, and increase efficiency & diversify the risks.

• Government indebtedness – Government indebtedness to sensitive sectors to our economy is one of the reason we have high number of NPLs in the banking industry.

Government failure to repay the contractors, suppliers, and vendors has left them with no working capital to run their business hence affects their ability to pay their loans. Therefore, the government must take a large chunk of the blame in this NPLs issue because majority of the borrowers are those who have done work for the government but have not being paid which makes them unable to repay their loans.

As a major stakeholder, it’s in Government best interest to pay its local debtors on time to ensure no disruption of their economic activities.

To conclude, the NPLs are the one of the major causes of the economic stagnation so it is not surprising that currently our economy is struggling as the banks struggle to make profits due to high NPLs on their balance sheets.

To improve our economic status, we need to lower our NPLs level in our banking industry. In the last two weeks, I have stated four possible causes of high NPLs in our banks; non-supervision and monitoring of the loans, lack of effective Credit Risk Management, unhealthy competition, and Government Indebtedness to local debtors.


Thursday, May 31, 2018

Tanzania's road to electricity self-sufficiency

Energy minister Medard Kalemani (in specs)

Energy minister Medard Kalemani (in specs) tours Baobab Energy Systems Tanzania in Dar es Salaam. PHOTO|FILE 

By Citizen Reporters @TheCitizenTZ

Dar es Salaam. It is estimated that about 30 per cent of Tanzanians have access to electricity from national grid and self-installed energy sources.

That is the case despite the country having abundant energy sources. Access to electricity has remained one of the major challenges in Tanzania.

According to the World Bank development indicators, 32.8 per cent of Tanzanians accessed electricity in 2016.

The National Accounts 2007-2016 published in November last year by the National Bureau of Statistics showed the share of electricity to the GDP at 0.9 per cent in 2016, lower than 1.1 per cent in 2014.

The World Bank report 2016 showed rates of access to electricity in other East African countries as 56 per cent in Kenya, 29.4 per cent in Rwanda, 26.7 per cent in Uganda and 7.6 per cent in Burundi.

The Tanzania national accounts show that electricity accounted for Sh914.94 billion to the GDP (at the current market price) in 2016 from Sh232.6 billion in 2007.

When calculated at the 2007 prices, electricity contributed Sh416.9 billion in 2016 compared with Sh297 billion in 2010. Its share has remained at 0.8-0.9 per cent between 2007 and 2016.

Hydropower is the main source of electricity in Tanzania but over the years, reliability has been declining due to vagaries of weather.

The major sources of hydro generation power plants are in Iringa, Morogoro, Dodoma, Tanga and Kilimanjaro.

Under the small power producers’ framework, some mini-hydro power projects have been developed or are in the process of being developed in various parts of the country.

In 2010, the discoveries of gas added up another option for Tanzania’s electricity generation. Until now, gas accounts for 50 per cent of electricity generation in Tanzania.

The government is also planning to exploit more sources of electricity such as natural gas, hydropower, geothermal, wind and solar to ensure energy efficiency.

The Power System Master Plan 2007–2031 envisages the construction of 120 MW of PV capacities by 2018. Several private companies expressed an interest in developing 1–10MW grid-connected solar plants.

From next financial year, the government has vowed to implement the Stiegler’s Gorge hydropower project.

The project will cover 1,350 sq km of Selous Game Reserve’s 45,000 sq km.

Currently, the country has a total installed capacity in the grid of around 1,516MW, and the Stiegler’s Gorge will produce 2,100MW.

Tanzania has only one power utility, which is a vertically integrated company that monopolises power distribution and supply. Tanesco also engages in production.

Tanesco own generation system consists mainly of hydro and thermal based generation. Whereby hydro contributes the largest share of Tanesco’s grid power generation. Hydro power plants comprise 50.6 per cent of total installed capacity while thermal plants contribute 49.4 per cent.

The hydro-plants are all interconnected with the national grid system and their installed capacity for each station is as follows: Kidatu 204 MW; Kihansi 180 MW; Mtera 80 MW; Pangani 68 MW; Hale 21 MW; Uwemba 0.843 and Nyumba ya Mungu 8 MW totaling to 561.84 MW.


Thursday, May 31, 2018

DIGITAL MARKETING: Why entertaining content is key for branding

Innocent Swai

Innocent Swai 

By Innocent Swai

In the 21st century, brands are presenting themselves to consumers differently. Everything is changing. Most legacy brands are facing challenges adapting to what their customers want.

When I get time to talk to young brands often, I am learning that creativity in finding different ways to serve their consumers’ timetables and schedules.

It’s like they are omnipresent both online and wherever their consumers are. This is flexibility at it best because, the entire brand must work like a customer service department. No department categorizations.

In the digital world, earned media is becoming robust and most sought after not only for its originality and authenticity but also its engaging nature with consumers.

In this world, where consumers prefer visual narratives, the art of short films or short video is now becoming dominant.

Consumers are not just devoted to loyal brands driven by originality but also, they are thirsting for storytelling narratives. Why is it like this?

The new young brands that have pulled it off, managed to create really cool entertaining and educative content. Ultimately, pulling advertising that naturally attract established loyal supporters.

Most brands are failing to differentiate the line between entertainment and advertising. Few are even becoming the ‘new broadcasters’.

Good short video has great narratives behind them. Failure to come up with good story work virtually guarantees a branding disaster.

Actually, it’s surprisingly rare, in fact, to find a beautifully crafted narrative with a bad dialogue. More often than not, the better the storytelling, the more terrific characters, with engaging vivid plots and sharp dialogues.

This storytelling narrative is more than entertainment for your brand; as it makes your mission to come alive. That kind of sharing becomes powerful, hence enabling your brand to stand out from the competition.

The biggest pitfall a brand can make is lack of progression in storytelling craft, false motivation, redundant characters, and other such narrative issues which the root causes of unadventurous stories without are forgetting to show your consumers how they fit in your brand.

Your brand should never be afraid of trying new techniques. Remember, the quote? Amateurs built the Ark while Professionals built the Titanic.

It should act as a cue that we should never sell our brands short in the competitive world. We should not assume that we are not capable of achieving brand prominence.

Until your brand learns what is the secret behind winning consumers’ attention, the fresh entertaining content from your competitors will be glorified like the always one-sided story of the illiterate lion and it’s respected hunter.

How can your brand deliver engaging entertaining content which is soothing and relevant every day? Go figure this out.

The columnist is the content director for MobiAd Africa Tanzania Ltd which offers Mobile and Digital Solutions


Thursday, May 31, 2018

Data-guided electrification helps shed light on Africa

A technician rectifies a power fault.

A technician rectifies a power fault. PHOTO|FILE 

By Dustin Homer

The “Africa Rising” narrative has become commonplace among those who recognise the continent’s rapid urbanisation and industrialisation as rich opportunities. Yet, the fact remains that basic services remain out of reach for millions.

Even access to a reliable electricity grid is far from assured for huge segments of the population – in fact, according to data provided by the World Bank’s Sustainable Energy for All Global Tracking Framework, several African states actually moved backward in this regard between 1990 and 2014.

The slow progress of utility-supplied electricity has undoubtedly affected socio-economic progress in these countries.

Urbanised populations are growing at an astounding rate in Africa, and infrastructure upgrades are far outpaced by demand.

This said, the opportunity for a more widely electrified future is on the horizon—and a greener one as well, with the potential to leapfrog dependence on fossil fuels. Power shortages have spurred on incredible innovations and forward-thinking SMEs to provide household-level energy products, allowing consumers to bypass infrastructure that leaves millions in the dark.

Some products offer a simple light; others power TVs and entire households or businesses.

However, while it’s tempting to think that an innovative product that affordably solves a pressing need is all it takes to build a thriving business, these organisations face enormous barriers to successful entry and growth.

Understanding demand, finding new customers and moving sustainably across borders into new markets will be key to enabling expansion – and until then, smart, affordable, eco-friendly answers to the electrification puzzle can only ever be a drop in the ocean when it comes to full electrification on the continent.

Fraym is active in this sphere, working with both public and private enterprises to help them ascertain the location of their markets, how much these markets can afford to pay, and where both private services and grid expansion projects can deliver the greatest benefit to the greatest number of people.

This is achieved by making use of a wide variety of data to build a profile of a client’s ideal consumer.

These profiles are, in turn, used in combination with alternate data points (such as satellite imagery of night-time illumination in target areas, household surveys and individual spending statistics) to identify the total demand for off-grid electricity solutions, and pinpoint priority areas for grid expansion projects.

These insights are invaluable in prioritizing locations, informing strategic business decisions, and helping suppliers to mobilize their sales and distribution teams—driving both profit for businesses and easy, affordable access for citizens.

What is the spending power of households? How much of their income goes into less-than-ideal forms of fuel used for lighting and cooking, such as charcoal and paraffin? Is the potential target market credit-worthy, and how stable is their income (in a region where so many millions are dependent on the highly variable and usually seasonal agricultural sector)?

These questions and many others can be answered through a well-strategized combination of available data points, fed into cutting-edge machine learning algorithms.

With this approach, it is possible to glean patterns and insights that may not be immediately apparent at the surface level.

The process is worth it. In the quest to bring reliable and affordable electricity to Africa, what’s good for business and what’s good for the population are perfectly aligned. Full electrification of the continent certainly won’t happen overnight, but slowing down is not an option.

The author the director of venture geospatial data Analytics Company focusing exclusively on the African continent is based in Johannesburg.


Thursday, May 31, 2018

Why 7.5m farmers are yet to plant new seeds


By Annie Njanja @theCitizenTZ

Nairobi. Liza Thima, a 65 -year- old retiree, began farming her 15-acre land in Kirinyaga County 10 years ago after her teaching job ended. To date, she cultivates seeds that are selectively chosen from previous harvests or sourced from neighbours, an ancient practice picked from her mother.

As a result, Liza, like many farmers in the locality, has stuck to the same crops — maize and beans — year in, year out.

She has not explored new seed varieties due to a lack of knowledge about their existence and benefits, as well sheer disinterest.

“I have heard about new seeds that promise more harvests on radio but I do not know how to get them. But even if they were available I am hesitant because there are health concerns and debates about GMO (Genetically Modified Organism) technologies,” she said.

Ms Thima is one of the estimated 7.5 million smallholder farmers in Kenya who are yet to embrace improved hybrid seeds owing to lack of knowledge, poor access, outright fear of change and disinterest.

The small-scale sub sector comprises 75 per cent of the total agricultural output in Kenya.

Yet the average maize farmer in Kenya is a net buyer of the commodity. Most grow enough to sustain themselves for about nine months in a year before turning to sellers to plug the deficit. Maize is Kenya’s staple food. The country has potential to produce seven million tonnes of the cereal per year but harvests about 2.8 million tonnes.

In addition to incorrect farming practices, a major factor contributing to the deficit is farmers’ tendency to disregard the importance of new, improved seeds.

Recent advances in molecular and cellular biology have led to the development of seeds that produce higher yields and are resistant to the vagaries of pest attacks, diseases and climate change.

For example, Karembo, one of the high-yielding green gram varieties introduced by Kenya Agriculture and Livestock Research Organisation (Kalro) last year, yields an average of two tons per hectare compared to 1.5 tonnes for the same size of land using traditional varieties.

Kalro also has four new bean varieties — Angaza, Metameta, Faida and Nyota — that are fast maturing and richer in nutrients.

Yet, as noted by James Wafula, a farmer who also runs an agrovet shop in Uasin Gishu County, farmers are yet to appreciate the advancements due to resilient commitment to products they are familiar with.

“We have observed a trend where farmers insist on planting varieties of seeds that they are more accustomed to, and it is quite a challenge trying to introduce them to new options even with the promise of better yields,” Mr Wafula said.

Muthoni Njagi, a farmer in Tharaka Nithi County, confirmed Mr Wafula’s assertion noting that it makes sense to use “tried and tested” seeds instead of trying to experiment with inputs she is unfamiliar with.

“For me, agriculture is a livelihood and I do not want to invest in a seed variety I have not encountered before. I would rather focus on what I know because after planting a certain type of seed for several years I know what to expect in terms of quantity and quality of harvest,” said Ms Njagi, who quit maize farming for capsicum and tomatoes.

What Ms Njagi does not know is that some new seeds have the potentially to radically improve her harvest. Kenya Seed Company’s H614D, for example, has the potential to produce 40 bags per acre, according to a maize researcher based at Egerton University.

“In comparison, it is a struggle to raise 10 bags from one acre using local seed varieties such as Nyamula,” said the researcher. Ms Njagi is one of 60 per cent of Kenya’s smallholder farmers who were receptive of hybrid seeds when they were first introduced in the country almost half a century ago, but have refused to adopt further improvements on later varieties.

“For the last five years the market has received a larger share of improved seeds especially maize than years before. The greatest challenge has been uptake. For instance, farmers are still using the H614 maize variety developed by Kalro (then known as Kari) in 1969, yet we have different varieties that are improved against challenges like pests and drought,” Kalro Principal Scientist Murenga Mwimali said.

“These improved seeds are tailored for specific areas but farmers lack the knowledge about the latest farming technologies,” he added.

In addition, Dr Mwimali said, county governments need to play an active role in ensuring that farmers are well educated on the use of modern farming methods and inputs.

“Agriculture, despite being a devolved function, is yet to be given the attention it deserves by county governments, the administrators can be blamed for the lack of information in communities regarding the new technologies and improved seeds in the market. We also need to acknowledge that the number of agriculture personnel needed to guide farmers is not adequate,” he said.

Infiltration of the market by uncertified products, sometimes supplied by unscrupulous dealers within government ranks, is another deterring factor in improved seed adoption.

“The approach by county governments to supply seeds for free has led to an emergence of ‘tenderprenuers’ who deliver products whose certification is in question,” said Nyeri County Drought Co-ordinator Kiragu Kariuki.


Thursday, May 31, 2018

How Tanzania can realise industrialisation goal


By Moremi Marwa

Last three articles covered ideas around the democratization of finance for ownership of factors of production and economic interest, where I argued that ownership is fundamental for creating an “good society”, for economic empowerment and for an inclusive economic growth/development. Today, I will go back to industrialisation.

To write on this topic, I am being partly educated these books: “Capital in the 21st Century” by a French Economist Thomas Piketty; “How Rich Countries Got Rich and Why Poor Countries Stay Poor” by Erik Reinert; and “Globalization and its Discontents” by the Nobel Laureate, Joseph Stiglitz; “From Third World to First” by Lee Kuan Yew; and a book I recently co-authored, Tanzania Industrialization Journey, 2016-2056. They are all good reads.

Let us briefly consider the whole question of industrialisation.

Why does industrial development continue to be sluggish for us? Despite a long tradition of trading and entrepreneurship, a risk-taking enterprising culture by some tribes, a wide network of global and regional commercial links and relationships, an increased level of democracy and political stability, a relatively-developed commercial banking system and about 27 stock markets in the continent.

Following independence, most African countries have had several extensive plans and elaborate policies that formed the critical framework for the nations’ industrial development which came into play from 1970’s to 1990’s.

Then on, came globalization, economic liberalisation and the need for privatisation with the intent of creating a private sector to serve as an engine for economic growth, jobs creation and embracing technology.

Countries with similar levels of development as ours at the time of independence, in Asia and Latin America have marched far ahead in industrial development. We need to question ourselves, what can we do to restore that long gone industrial development glory? – and in which form, what types, under whose ownership, why? Most development economists have indicated to us that it is difficult to achieve significant and sustainable levels of economic growth and development without a developed industrial sector.

Can we make it?

The problem for Africa is not in the lack of progress in the industrial development, No -- the key concern is more about the pace and depth of the industrial sector and its development. A recent report of the Unido puts it clearly: “Global manufacturing has been shifting from developed to developing economies even faster, with economies such as China, India and Taiwan Province of China building strong manufacturing sectors”. Africa is not that much reflected in the global industrial and manufacturing space.

Africa also seem to have almost failed to benefit from ‘Trade in Tasks’ paradigm, one of the outcome of the globalisation is that of disaggregating production of individual components and spreading various tasks of the global manufacturing process to different countries in accordance with climate, logistics, costs and competitiveness. Asian and Latin American countries have managed to leverage on ‘Trade in Tasks’. India, for example has registered remarkable gains in sectors such as information technology, telecom and pharmaceuticals; so is China, Taiwan, South Korea, Malaysia, Turkey, Mexico, Brazil, etc.

For us, statistics in this context are not on our favour -- manufacturing value-added in Africa is still one of the lowest in the globe i.e. averaging less than 2 per cent per annum in the past two decades, compared to India for manufacturing value-addition rose from 7 per cent p.a. during 1992-2002 to 8 per cent during 2002-2012 and probably more now.

Per capita Manufacturing Value Added in India also rose from $116 in 2006 to $158 in 2011 and per capita manufactured exports from $90 to $202. In Africa there has been either decimal growth, or regression for some countries.

FDIs, part of the Solution, at least for now

We, probably, rightly have been focusing on attracting foreign direct investments (FDIs) as a key tenet to our industrial development. Obviously, this has some fundamental causes, i.e. where is the domestic capital sand financing sources for industrialization and its embedded infrastructure? However, I also understand that with better coordination and good policies the situation may change. Furthermore, in my view, a programme of industrial development is not just about attracting FDIs, however also, it may not be right to assume that by merely opening up the domestic economy will attract significant FDIs interested in local economies industrial development.

True, FDI leads to importation of capital, transfer of technology and skills, higher exports as well as job creation and enhancing expertise and efficiency.

However, evidence shows that the real benefits from FDIs could more effectively be harnessed when local enterprises and entrepreneurs working hand in hand with foreigners within the framework of policy pragmatism, prevalence of productive firms, effective forward and backward linkages, fair competition and tax laws, investor protection, and an infrastructure and legal framework that will work at the required speed. Factors such as: (a) top-down decision-making regarding industrial policy; (b) unwillingness to relax direct control of strategic industries; (c) interference in investment decisions; (d) neglect of entrepreneurship and competition; and (e) lack of proper coordination between different development agencies as affecting the pace of growth notwithstanding the FDI flows.

Africa needs to watch these factors and/or amend appropriately.

UNIDO’s latest report, sums up the key features that make an industrial policy successful. “Industrial policy — the main objective of which is to anticipate structural change, facilitating it by removing obstacles and correcting for market failures” should seek to promote such change at each stage of development, in four main ways: (a) as a regulator establishing tariffs, fiscal incentives or subsidies; (b) as a financier influencing the credit market and allocating public and private financial resources to industrial projects; (c) as a producer participating directly in economic activity through, for example, state enterprises; and (d) as a consumer guaranteeing a market for strategic industries through public procurement programmes.

Africa has one way or the other of architecture in the form of a existence in democratic systems, wide range of policymaking institutions, regulatory authorities, financial markets, risk assuming and risk transfer instruments, and some enterprising people -- these makes it much easier to stir and stimulate growth with sound policy interventions. The question remains: where are those policies?


Thursday, May 31, 2018

YOUR BUSINESS IS OUR BUSINESS: Bank mergers – or nationalisation?


By Karl Lyimo

The lead story in this august publication on May 17, 2018 was titled ‘Government opens door to bank mergers’ and – according to the central Bank of Tanzania (c-BoT) – “the government’s position is to remain with fewer, but more efficient and profitable state-owned banks…!”

‘State-owned’ banks, did they say??? Weeeeeell…

The Bank’s deputy governor responsible for ‘Financial Stability,’ Dr Bernard Kibesse, was quoted as saying that “the government’s position was to remain with a few banks – or even one government-owned bank which would work efficiently, and at reduced costs.”

Dr Kibesse said this on May 16, when announcing approval of the state-orchestrated merger of the TPB Bank Plc and Twiga Bancorp in Dar es Salaam. Both banks were state-owned, and the merger was upon the request of the Dr Magufuli government (Nov. 5, 2015—).

The merger notwithstanding, however, the ‘New Babe on the Banking Block’ would keep the name ‘TPB Bank Plc.’ Shareholding is by the Treasury Registrar (86.03 per cent); Tanzania Posts Corporation (8.09 per cent); the Zanzibar Revolutionary Govt. (3.05per cent), and TPC Savings & Credit Society (2.83 per cent)

If the idea as articulated by the deputy governor is really “to have a smaller number of banks which would have a major impact on the economy” – positive impact, I should stress – then well-thought-out and diligently-implemented mergers would be the thing for Tanzania to do.

There’s no reason to doubt the deputy governor, who is described as having “more than 26 years’ experience in central banking and ‘International Monetary Financial Analysis;’ possesses extensive operational knowledge of a variety of banking industries...”

Dr Kibesse is also acknowledged as “a strategic problem-solver with demonstrated abilities to conduct thorough and accurate research using advanced econometrics skills with large data set to support business and organizations initiatives…” [See />].


As of June 2016, there were at least 41 commercial banks in Tanzania, 12 community banks, four microfinance banks, three financial institutions, two private credit reference bureaux and three financial leasing companies: an unhealthy total of 63 finance-related institutions.

That’s to say nothing of the two credit bureaux and any number of village cooperative banks (Vicobas), savings and credit cooperative societies (Saccos) – and untold ‘pyramid schemes’ the likes of the troubled DECI (‘Development Entrepreneurship for Community Initiative’) that went under with an estimated Sh92 billion ‘milked’ from some 400,000 befuddled ‘clients…’

Before this proliferation of financial institutions, Tanzania was home to nine commercial banks, eight of them foreign-owned. The ninth was home/state-owned: the ‘National Cooperative & Development Bank of Tanzania.’

They were all nationalised on the back of the February 5, 1967 ‘Arusha Declaration on Socialism & Self-reliance,’ and ‘morphosed’ into the National Bank of Commerce.

NBC was then privatised in 1997 on the back of a privatisation/economic liberalisation programme which also opened the floodgates to the proliferation that is now causing the heebie-jeebies to the current Administration!

So, what’s the best option that would result in “a few, efficient banks;” how best to get to ‘the fewer, the merrier’ modality, pray: re-nationalisation or mergers – with President Magufuli opening the door to mergers?

Is the Magufuli government showing the way by merging its banks – assuming this will continue with other state banks?

Stay tuned – and Cheers!


Thursday, May 31, 2018

MANAGING TAX RISKS: The buck stops with the board!


An organisation with poor corporate governance practices is more likely to have tax problems.

Most organisations are managed by a board of directors (board”), appointed or elected by the shareholders or owners to run the organisation on their behalf.

This article focuses on tax governance as a subset of corporate governance and navigates through some of the key roles the Board can play in effectively managing tax obligations and risks.

Corporate governance is the system of rules, practices, and processes by which an organisation is directed and controlled. It essentially involves balancing the interests of an organisation’s many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community. A good corporate governance is important in managing the ongoing performance and success of organizations.

Broadly, the roles of the board are two-fold. First, the Board oversees an internal control framework that provides guidance on how all risks, including tax risks, are identified and managed within the organisation. And second is to provide an oversight to ensure that management has adequate tax risk management policies in place and adhered to, as well as overseeing management’s systematic assessment of internal controls and procedures on a periodic basis. On this basis, about four Board – level tax controls can be established.

1. Formalised tax control framework: The Board should endorse a formalised tax control framework prepared by management that is understood across the organisation.

This can be in a form of a tax strategy or a tax policy that provides details of how the organisation identifies and manages tax risk across all taxes. The document may outline the organisation’s tax risk appetite, details an acceptable level of tax risk for day-to-day operations and what requires escalation.

2. Roles and responsibilities are clearly understood: The board should formalize roles and responsibilities for tax risk management. It should ensure there are a documented role and responsibility descriptions for directors including allocating tax risk to an appropriate and independent sub-committee (e.g. an audit committee). The Board’s expectations for managing tax risks should clearly be communicated to management.

3. The board is appropriately informed: The board should ensure that it is briefed by management on tax risks and the effectiveness of their tax control framework. For example, the Board should endorse contentious tax positions taken by management. The Board should also receive regular progress updates by management on how tax issues and risks are trending.

4. Periodic internal control testing: The board should ensure that periodic internal control testing is conducted to assure them that the internal control framework is robust enough to effectively manage all the tax risks.

Independent assurance providers (internal or external) can also be used to test the effectiveness of the tax control framework, whether conducted primarily for tax controls or other interdependent controls.

But is the board capable of performing these and other roles to the required expectations? Last week, I travelled to Arusha to attend a three-day seminar on ‘Financial Markets, Financial Management, and Reporting’.

The seminar was jointly organised by the NBAA and BoT. One of my takeaways from the seminar is that absence of good governance as one of the major problems facing both public and private organisations in Tanzania. And the problem starts with the board. Either due to its composition (quality of the directors) or in some cases absence of the board.

The seminar participants, hence, called for a joint effort to come up with guidelines in respect of various characteristics of the boards such as the size, the skills, experience, leadership, independence, and diversity. Already there are some sort of guidelines for financial institutions and listed entities. So, it could a matter of improving and expanding what already exists.

Mr Maurus is a partner with Auditax International


Thursday, May 31, 2018

FRANCHISE: Queries you’ve to answer on readiness to franchise

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

In determining your brand’s readiness to franchise, you run some questions through your current operations. The answers will reveal what you need to do before attempting to franchise. We continue exploring your current business situation.

Does the business have a well-established, well-managed and respected trademark? Your brand needs to have a plan-from design to legal protection to brand positioning and long-term development.

Even where a brand evolves with little attention by its owners and it generates a big client-base in the market, it is important to consider putting in place a brand plan before franchising. This is because markets are dynamic and your franchisees will want as much certainty as possible.

Are sufficient resources available to support a franchise roll out? Other than the professional fees you pay to franchise, finances will be required to develop a sufficient franchise package and build a strong franchise support team at head office, even if you choose the lowest capital expenditure option of having franchisees select, lease, build and stock outlets. A franchisee financing scheme may also be needed as your most probable franchisees will be young, ready to hassle but poor.

To achieve this, you may need to arrange external franchisee funding commercially using the franchisor’s balance sheet. A more attractive option is an arrangement for private equity infusion into your business like we have put in place in East Africa. Today if you wish to franchise in East Africa we have arrangements with local and international equity funds who would invest 50 per cent of what you require to roll out your franchise network, exiting after five years. More details are available on request.

Is it easy to find sites if location is a key success driver? Sites for most retail, food, petrol and similar products targeting the working class are normally best on the left of a road leading out of the city center. This is because most people shop on their way home, if not over weekends.

Does the business have clear potential for national growth? Having the correct infrastructure to support a national roll out will convince franchisees of your ability to support them wherever they may be.

Have standards been set and documented? What about operations procedures-have they been perfected and documented? What of your internal control systems? All these basically form the core secrets of the business-they must not only be in writing but also legally protected though copyrighting.

The forth area to explore is the existing corporate culture. Franchising necessitates a shift in the way things are done because franchisees are not employees who can be bossed around! They are investors who present a different set of management challenges.

Do you have a strong management team? Even with a strong management team, you need to infuse some franchise culture by hiring managers with franchising experience or attending franchising training yourself.

Hiring a qualified franchise field consultant links you to the franchised units. Also, an experienced franchise professional would be required to handle franchise marketing, leads, franchise sales, advertising fund, training, and multi-unit operations among others.

Given that franchise professionals are rare in East Africa, we are developing a database of industry-specific qualified franchise professionals from the world over who we would place at an agreed fee into businesses that sign up to franchise with us.

The writer is a franchise consultant helping indigenous East African brands to franchise, multinational brands to settle in the region and governments to create a franchise-friendly business environment.

E-mail: or


Thursday, May 24, 2018

What is your brand doing?

Innocent Swai

Innocent Swai 

By Innocent Swai

In almost for all startup companies, everyone is part of the marketing department due to limited resources.

In such companies the everyday is a constant battle to gain some level of awareness from their customers, bankers, suppliers to mention but a few.

However, this is an old problem as for more than a few centuries ago, several brands weathered this problem by interrupting the ongoing routines of captive audiences with advertising.

Genius advertising teams

Some creative brands penetrate the markets with the help of their genius advertising teams, hence reaching the saturation point of public awareness easily. When Apple brings out a new ad, news media intervenes and make it front-page content while and die-hard consumers become more than zombies lining up in their stores, of which most of them have yet to see the ad.

As such, these kinds of happenstance are rare. Not all consumers spend their time waiting to hear about a new product from every other brand. Typical consumers, will only debate about brands at the point in time just before a purchase is made.

Have a purpose told story

Creative brands have a purpose-told story which incites a call to action. I am curiously examining how majority of marketing departments once established, they fail to come up with branding stories. How does this happen? Is it something to do with limited budgets? May be.

However, all brands are able to lay a foundation for designing their own calls to action by cementing their brand in the consumer’s ways of life and their minds too.

Why are some brands able to forge emotional bonds while others are not? Apart from Apple, which is best at it, other brands like Samsung, IBM, General Electric are doing the same thing. These companies are able to surround their brands with storytelling with positive emotion associations which sticks to their audiences’ hearts and minds.

Find your unique yet universal narrative

Let us revisit what a brand looks like in the twenty-first century. In a recent interview, Patrick Davis, CEO of Davis Brand Capital (DBC) laid out a bold vision of the modern brand.

He made it clear that, a brand is a single organizing idea which is a higher-order construct that everything else comes from and aligns with it.

It’s even more interesting when he liken it to water that which makes life and everything else possible, whether it’s agriculture by growing our crops for food or healthcare by cleaning our clothes or taking shower. As you can see water like branding is that ingredient that goes across everything else. It matters.

Finding fresh sources of water that are not yet depleted and can be used in different and diverse ways is a challenge.

The same analogy applies to branding as it is intangible and abstract. It’s true that water as well as branding is all of those things all at once.

The job of branding is so important to be left to the marketing department alone.

It takes more than one department, actually the whole company to make its brand tangible and real.

The truth is more to do with searching for a story to tell which is compelling whether it happens in one image or three lines or a long-form piece. In other words, what I am saying is that, brands can be the link between consumers and the positive associations created by the stories they tell and beyond.

Mr Swai is content director for MobiAd Africa Tanzania Ltd.


Thursday, May 24, 2018

Democratisation of finance for economic empowerment


By Moremi Marwa

This is the last piece in a series of articles whose intent was to engage us in understanding and appreciating the role of finance in economic growth (or the lack of), in development and for an economically empowered society – also called an “ownership-society” which may mean a good society.

Other than ownership of land and housing, the other type of asset ownership with an attached meaning in the role of finance to economic empowerment is the ownership of investment portfolio in the form of shares/stocks, bonds, or collective investment units.

As I had elaborated and argued, in the last two weeks’ articles, this kind of ownership gives people a real sense of participation in society and the economy which may be promoted more broadly by policies that encourage more business-oriented ownership, notably ownership of broad portfolios representing the real productive assets of the economy.

Reading from Lee Kuan Yew’s book: From Third World to First, it seems to me that, Singapore, under Lee Kuan Lew leadership, he led the way to an ownership society with its idea of Central Provident Fund, which is a mandatory saving plan for its citizens, where both the employer and employees contributes. Under such scheme, it allowed Singaporeans to purchase both local and international investments in the form of stocks/shares, bonds, units as well as housing for citizens in Singapore.

Resulting from this approach, the Central Provident Fund made Singapore a different society, given the fact that people who have substantial savings and assets have a different attitude to life – attitude of confidence and entrepreneurship and pro-activeness and consciously proactive into increasing of wealth, etc. They are also more conscious of their strength and take responsibility for themselves and their families.

What we are learning from the Singaporean story is that whether direct portfolio investment by retail/individual investors or institutional investors such as defined (or otherwise) contribution pensions plans, they encouraged people to become owners of investment portfolio, which ostensibly enables individuals or via pension funds to provide incomes for individuals within the economy, which is an important especially during retirement.

So, apart of using pension funds as vehicles for citizens ownership of investment portfolio, there are several opportunities than can be created to enable citizens to participate in the ownership of investment portfolio.

Tools such as privatisation policies via IPOs and listing of state owned companies in the stock market are among those, the other tool is for the state to create a business and investment environment that promotes enterprising and enterprises to access public funds via IPOs and subsequently list in the stock market – that way entrepreneurs and business owners dilute part of their holding in the company for the exchange of efficient sources of capital which also provide an opportunity for a wider investors base and a broad-based economic ownership and empowerment.

Other tools may be in the form of policies and/or legislative approaches such as our Electronic and Postal Communications Act (Epoca) and Mining Acts which requires companies in these selected sectors to sale part of their shares to the wider public and list such companies in the stock market.

Our privatization policy resulted into the listing of seven companies with a combined investor base of about 100,000 (that excludes the multiplier effect of such increased ownership of investment portfolio or investment by institutions such as pensions funds and the unit trust), and so one imagines if we had say 20 companies that were privatized via listing in the stock exchange, among hundreds of other privatized companies via private sales – what would have been the impact in the number of investors and in the creation of an ownership society. The single listing, by Vodacom as a compliance to Epoca brought in about 40,000 investors, many of whom are first time investors in the investment portfolio category. All these, knowingly or not, helps in the democratisation and humanisation of finance -- making finance serve the people and encouraging the people to consider themselves as active participants in a society built on the principles ownership, self-finance, and in economic empowerment.

Lastly, and I admit, not so common in our country, among these tools are policies that promotes employees ownership of business, commonly known as Employees Shares Ownership Schemes (or ESOP).

This is the idea aimed at promoting the ideals and the legacy of better employees’ morale and high effectiveness ins work place, while in the process, creating the ownership society. This financial inclusion motive or an economic empowerment idea is based on the argument that to achieve morale and high effectiveness in the work place, it is helpful if the worker feels loyalty to the employer while at the same time help the company to manage [sometimes] contentious issues of labour-management conflicts/situations which then affects the productivity of the company.

In ESOP, companies encourage their employees to participate in the ownership of the firm by obtaining stock in the company, such a plan motivates employees to work more efficiently and effectively while at the same times helps to create an ownership culture, an ownership society and in the development of an anti-shirking culture.

A society anchored in ownership culture – whether it is the ownership of land, or home ownership, or ownership of investment portfolio (i.e. shares, bonds, units, etc) or corporates that encourages ownership of shares by their employees – is a better society.


Thursday, May 24, 2018

This is how Tanzania can use drones to kill mosquitoes


By Ludger Kasumuni @TheCitizenTZ

Dar es Salaam. The government has been urged to use drones to save money on distributing biolarvicides and spraying mosquito larvae.

Biolarvicides made by Kibaha Biotech Products Ltd for are now produced on mass scale to kill mosquito larvae, but the challenge is how to market and distribute them at low costs.

However, experts say drones are convenient to distribute the chemical and spray mosquitoes.

Combined with mapping, they can be used to target specific areas of insects or diseases, reducing the impact and increasing efficiency, experts of the UK’s DroneAG were recently quoted as saying.

Speaking at the sidelines of a recent forum to discuss drones, the technologists said spraying could be undertaken at a low cost without spoiling the environment.

Tanzania Flying Labs managing director Leka Tingitana says: “Drones are useful for easy, effective and timely gathering of scattered data.

They can also be used to collect accurate data at a lower cost than other means of data collection because of they use unman flights.”

Uhuru Labs director Fredrick Mbuya spoke of the need to be careful on the use of a combination of means to distribute biolarvicides. “Drones are useful for cost-saving, but they have to be adopted in combination with other techniques to avoid complications.”

The idea of using drones has come after President John Magufuli directed that Tanzania Biotech Products Limited, which produces biolarvicides, be rescued.

According to the 2017 Controller and Auditor General report, although the National Development Corporation, through Tanzania Biotech Products, distributed 236,420 litres of biolarvicides worth Sh3.12 billion to all 26 regions in Mainland Tanzania between August and November 2017, where each council was allocated the specific number of litres of biolarvicides, more than 70 per cent of all councils did not spray the chemicals on mosquito larvae.


Thursday, May 24, 2018

How port investments catalyse economic growth


By Samwel Ndandala (

African geography is amazing for tourists, but horrible for commerce. Its coastline has really beautiful beaches, but terrible natural harbors. Its rivers are a wonder to behold, but rubbish for transporting anything commercially significant.

Take the mighty Zambezi for example, 1,600 miles, fourth longest African river.

It flows through 6 countries, dropping 4,900 feet to sea level by the time it reaches the Indian Ocean in eastern Mozambique. While it gives us the stunning Victoria Falls, you would not transport cargo through Zambezi. It is constantly interrupted by rapids, and the few parts that are navigable by shallow boats do not actually interconnect.

Compare that to the Rhine (12 million tonnes of cargo every year) and you have a huge geographical dividend Europe has that Africa is just not blessed with.

Ports are therefore undoubtedly the gateway for African exports, and imports. Because of the nature of the commodity driven African economies, these ports are key to unlocking Africa’s economic potential.

Countries in other continents may afford to have underperforming ports, Africa cannot. This is especially true for the 16 landlocked countries that depend on their neighbours for access to the sea.

Last month, PwC released a study entitled ‘Strengthening Africa’s gateways to trade’. The report analysed port developments in Sub-Saharan Africa.

In addition to highlighting some key statistical insights, the report makes some interesting, forward looking observations. Before considering these, it is worth putting regional port performance in context so that we know where it stands and what we learn from the data.

The report indicates that in West and South Africa, the ports have the most spare capacity; that is their design capacity is more than the current volume throughput.

Durban for example has a design capacity of almost 3.5 million TEUs per annum but its volume throughput is less than 3 million TEU per annum.

On the other hand, the Dar es Salaam port has a design capacity of under 500,000 TEUs per year with a throughput volume of over 600,000 TEUs per year. This trend is similar in Mombasa, indicating the underinvestment that has occurred over time in both countries. (TEU stands for Twenty-Foot Equivalent Unit and can be used to measure a ship’s cargo carrying capacity.

The dimensions of one TEU are equal to that of a standard 20-foot shipping container.)

We also learn that there is so much room for improving efficiencies in the ports. This includes not only the port infrastructure, but also the landside transport connections and operational performance. For example, Durban handles 30 containers per hour less that Rotterdam, but still is Africa’s best performing port.

No East African port makes the list of the best performing ports that handles more than 30 TEUs per hour. The point of efficiency is to cheapen the cost that a transporter would have incur for the movement of goods.

The customer process is also key. The time for landside connections and charges that freight forwarders impose on customers increase if the customs process is inefficient.

There also needs to be great road and rail infrastructure between the ports and the hinterlands, particularly the landlocked countries.

To this end, new rail and road projects (for example between Isaka and Kigali (Rwanda-Tanzania), Masaka and Kumunasi (Uganda-Tanzania) and Djibouti - Addis Ababa (Djibouti - Ethiopia) are welcome given the fact that 67 per cent of terminal operators interviewed in the survey expressed concerns over the road networks around the port.

We also learn that given the volumes in these regions, it is likely that a few dominant ports will eventually emerge as major hubs.

Durban is a clear hub for the Southern African region, Abidjan looks like it will be the hub in West Africa, and at the moment, Mombasa seems to take the lead in the East African region despite its capacity lagging behind its throughput volumes.

But here a few forward looking insights for the region and Tanzania specifically.

We learn that port investment cannot continue to lag behind demand. Ports expansion, both physical infrastructure and technology takes long periods of time and considerable financial investment to complete.

Many African countries remain dependent on port infrastructure built before the 1960s. Accordingly, investments in port expansion should always precede volume growth so as to avoid capacity challenges when volumes grow. In other words, this is a long term venture in which port capacity should always be ahead of demand.

More importantly, government needs to see ports as economic facilitators, not just revenue generators. Traditionally, ports were viewed as revenue collection posts. This one sided view of the role of ports may have caused them to not focus on the wider catalytic impact of these ports in their countries and region’s economy.

In that vein, competition between ports have been viewed as competition between countries rather than between commercial entities. In so doing, the potential for collaboration and between countries may have been sidelined. It may be time to acknowledge the role of specialised ports, whether container hubs, feeder hub or bulk terminal.

Lastly, it is important to integrate ports into logistics supply chains to improve port performance. Ports are only one part of the value chain. To this end, rail and road infrastructure has to meet the demand that comes with ports.

There is, therefore room for greater private sector involvement in raising capital, owning and operating other ports and related infrastructure while at the same time giving governments the ability to protect strategic resources to further developmental goals.

Interestingly, the PwC report highlights that a key reason why West African ports have spare capacity (in contrast to East African ports which do not) is the greater involvement of private sector investment in their ports.

The writer is a Tax Manager – International Tax Services, PwC Tanzania. Samwel spent two years working on secondment with PwC Switzerland. The views expressed do not necessarily represent those of PwC.


Thursday, May 24, 2018

BANKING TIPS: The cause of NPLs in banking industry

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa, MBA

The upward trend in non-performing loans (NPLs) in Tanzania is a cause for concern. According to the International Monetary Fund (IMF), a loan is non-performing if it is at least 90 days (3 months) overdue.

By the end of 2017, the NPL ratio was above 10 percent while the Bank of Tanzania (BOT) regulatory requirement for NPL ratio is five percent.

The level of NPLs always raised concerns among policymakers and the BOT took various measures to reduce the NPLS and ensure the stability of the banks.

In my article two weeks ago, I argued that stability of the banking sector is important to our economic welfare since it is an important sector for the stabilization of the entire financial systems and also plays a critical role in the whole economy of our country.

Hence the performance of the financial sector depends on the performance of the banks.

It is well known that the NPLs shrink the profitability of banks since the banks do not earn interest income from those loans which can cause low-capital base problem to the banks. In addition, the NPLs decrease the ability of the banks to extend additional loans to private sector hence affecting the growth of our economy because NPLs affect the ability of the banks to play their role in the development of the economy.

It has been argued that NPLs are the one of the major causes of the economic stagnation so it is not surprising that currently our economy is struggling as the banks struggle to make profits due to high NPLs on their balance sheets.

To improve our economic status, we need to lower our NPLs levels in our banking industry and to do that we need to understand the causes.

So what are the reasons for high ratio of NPLs in our banking industry? In this article, I will share what I think are the various possible causes of NPLs in our banking industry.

• Non-supervision and monitoring of the loans – One of the main causes of NPLs in the banking industry is the lack of supervision and monitoring of loans which is called post disbursement monitoring.

Banks should have a dedicated department that will monitor their loans portfolio instead of leaving the task to relationship managers who are occupied with chasing sales most of their times, making it more challenging for them to follow and supervise the credits provided.

The main objective of supervising a loan is to verify whether the basis on which the lending decision was taken continues to hold, and to ascertain that the loan funds are being properly used for the purpose they have been sanctioned for.

Also, the other objectives of supervising the loan are: to evaluate the performance of the borrower to see if he/she is in line with the original plan, and detecting early signs of distress from the borrower in order to take corrective actions to avoid the loan to turn into a NPL.

Banks often are not losing money solely because the initial decision to lend was wrong rather they are losing money because they do not pay attention to their borrowers and monitor their activities, hence failing to recognize warning signs early enough to put measures in place to prevent the loan loss.

A majority of the banks in the industry do not monitor their loans performance effectively hence missing the opportunity to prevent the loans from turning into NPLs. The behavior of majority of the borrowers in our market has been well documented; many borrowers tend to have more than one loan from different banks which make it hard for them to make loan repayment timely, and many borrowers after securing loans, use the funds for other social activities that are not part of their loan agreements.

Hence, it is imperative for the banks to change their operational model and create a dedicated unit within the credit department to monitor the borrower and performance of the loan.

Next week, I will share other possible causes of NPLs in our banking industry.

Kelvin Mkwawa, MBA is a seasoned banker.


Thursday, May 24, 2018

Prices of chicks rise by 66pc as scarcity bites


By Halili Letea @hletea

Dar es Salaam. Prices of chicks have soared due to a severe shortage.

BusinessWeek has established that the wholesale price increased to the average of Sh2,000 since May 3, 2018 from Sh1,200 in January. Farmers and wholesalers attribute the trend to cold weather which is unfavorable for chick growth as well as the government ban on poultry imports.

In June last year, then-Livestock and Fisheries Development deputy minister William ole Nasha imposed an importation ban to protect local breeding companies and facilitate an assessment of the country’s actual demand and supply by local producers. Tanzania Poultry Breeders Association secretary Manase Mrindwa attributes the trend to the rising costs of chicken feeds and treating chickens.

Interchick Company chick dispatcher Juma Mtambo says prices range from Sh1,500 for broilers and Sh2,200 for layers.

“Layers are for laying eggs and their management is costlier than that of broilers which are used for meat,” he said.

According to him, a layer takes up to 18 weeks to start producing eggs while broiler takes fewer days to mature. BusinessWeek has also established that prices of chicken feeds have decreased slightly since last year.

A 50-kilo bag of finisher and starter ranges from Sh48,000 and Sh60,000 depending on the quality of the feeds and its producer.

Jenga Quality Animal Feeds manager Timothy Nkurlu says the prices of chicken feeds decreased from Sh50,000 in August last year to Sh48,000 in February as demand has fallen. Prices of veterinary drugs have remained constant since January this year.

Prices of eggs have decreased.

They survey has established that since May 7 wholesale prices of chickens have decreased to Sh5,500 from Sh7, 000 in April.

Retail prices have decreased from Sh8,000 to Sh6,000. Wholesalers attributed the increase in supply to the huge production of chickens by big companies that target consumers during Ramadhan.

Kisutu Market wholesaler and retailer Abdallah Mohammed expects prices to further drop until the end of Ramadhan.

Chicken seller Timothy Daniel says prices dropped slightly in the last two weeks. The permanent secretary in the Ministry of Industry, Trade and Investment, Prof Elisante ole Gabriel, told BusinessWeek: “We encourage the private sector to supply and produce more chicks to balance the pricing equation.”


Thursday, May 24, 2018

This is what Tanzania is doing about plastic bags

When livestock come across plastic bags which

When livestock come across plastic bags which have been turned into waste and thrown in the environment they eat them and get choked. PHOTO | FILE 

By Rosemary Mirondo @mwaikama

Dar es Salaam. One of the biggest challenges facing Tanzania is the use of plastic bags.

With six tonnes of plastic bags produced locally and 170 other tonnes imported, the environmental disaster is indeed huge.

The government is still in the process of coming up with a decision to ban the products as it dialogues with stakeholders are going to find a solution.

The government has so far not put a total ban on the manufacture, supply and importation of the products as it analyses the magnitude of the action in terms of jobs and economic benefits to the country.

This is despite the government having announced in 2015 that itplanned to ban the use of plastic bags as it adopts new environmentalregulations that aimed at combatting pollution and environmentaldegradation.

Rwanda and Kenya have eliminated the use of plastic bags.

An assistant director in the Environment Pollution Control Unit in the Vice President’s Office (Union Affairs and Environment), Ms Magdalena Mtenga, told The Citizen that they were still discussing with other ministries to find the solution on how to implement the ban without affecting adversely any party.

“The government has not put a total ban on the plastic bags even as itintroduces woven material bags into the market as a strategy to enduse of the latter in the country,” she said.

She said they were surveying mining sites, water resources, the ocean, lakes and other areas to see how best the situation could be implemented.

“To safeguard the environment, people need to be well educated and given appropriate information in the process.”

She stressed that since the government introduced to the market new woven material bags it was imperative that the public avoided use of banned plastic bags.

According to her, plastic bags are among the causes of environmental toxic waste.

She urged people to stop using plastic bags and find alternativepaper bags as part of protecting the environment against unwarranted pollution.

She stressed that the government was encouraging alternative materials for bags and in view of the same had stopped issuing licences to new industries as it sought solutions and only the existing ones continued to produce the same.

According to her, neighbouring countries like Kenya and Uganda had succeeded in banning plastic bags and made sure the public was aware of the dangers of such product whichmade the introduction of woven material bags into the market easier.

“The public needs to be aware of the hazards of plastic bags to the environment and most especially to domestic animals as well as fish in the sea.”

The deputy minister in the Vice President’s Office (Union and Environment), Mr Kangi Lugola, told The Citizen that the government had put in place a policy aimed at protecting the environment.

He said the major factor that was contributing to the destruction of the environment was solid waste which also included plastic bags.

He said that when livestock come across plastic bags which have been turned into waste and thrown in the environment they eat them as part of the grass while in the seas fish also consume them, choking them.

He noted that in view of such challenges, the government was nowlooking at having manufacturers produce bags with at least 50 macrons and above. Adding that, they were still in dialogue with the Ministry of Industry, Trade and investment as well as the Prime Minister’s Office to take note of the level of the problem.