Friday, August 10, 2018

BANKING TIPS: What are secured and unsecured loans?

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

Borrowing from a bank is not a bad idea but it has to be done wisely as borrowing can help reach your financial goals or destroy your life if being done reckless and excessively. It is crucial to think long and hard before making the decision to take a bank loan.

There are different loan options offered by banks and if you are considering taking out a personal loan, it’s important to understand the different types of loans that are available to you.

This week I will talk about the difference between two common types of personal loans; unsecured personal loans and secured personal loans.

Anytime you borrow from a bank, a bank may allow you to borrow the money with only your promise to pay it back or the bank may require you to use an asset as a security for the loan. Any loan that is backed with security is called a secured loan while an unsecured loan is not tied to any kind of asset.

Let me start off with secured loans. Common types of secured loans are mortgages, car loans, and equity release loans in which items financed become the collateral for the financing. The bank maintains an equity (financial interest) in that collateral until the loan is paid in full.

This means that you agree that the bank can take the collateral if you don’t repay the loan as agreed.

Therefore, if the borrower defaults on the payments, the bank can seize the collateral and sell it to recoup the funds it had loaned out to the borrower. If the collateral doesn’t sell for enough money to completely cover the loan, you will be responsible for paying the remaining amount of the loan.

With the risk of having your collateral seized if the loan is not paid, you might wonder why anyone would choose a secured loan.

The reasons why people are choosing secured loans include: their credit history does not allow them to get approved for an unsecured loan, secured loans allow a borrower to get approved for higher loan limits (amount) based on your affordability, longer repayment period, and they have lower interest rates. From a bank’s view, the risk of default on secured loan tends to be relatively low since the borrower has so much to lose (i.e. the collateral) by neglecting his/her financial obligation.

Meanwhile, an unsecured loan is not tied to any of asset so the bank has no collateral to fall back on incase a borrower defaults. Common types of unsecured personal loans are salary loans, personal lines of credit, and student loans.

You typically need to have a good credit history and solid and constant income (salary) to be approved for an unsecured personal loan.

The main reason people choose unsecured loan is because they involve lesser paper work and its approval process is shorter.

Banks take a bigger risk by giving out loans with no collateral to recover in case of a default, which is why the interest rates for unsecured loans are considerably higher.

In addition, loan amounts may be smaller since the bank doesn’t have any collateral to seize if you default on payments. Since there is no security required, the bank will decide to give an unsecured personal loan using the five C’s of credit to assess a borrower’s creditworthiness; character, capacity, capital, collateral, and conditions.

Furthermore, credit-to income ratio is a very important deciding factor used by banks for unsecured personal loans to ensure the risk of default is as minimal as possible.

To summarize, there are two main types of personal loans; secured and unsecured personal loans. Any loan that is backed with security is called a secured loan while an unsecured loan is not tied to any asset. Secured loans usually have higher amounts, longer repayment period, and lower interest rate. While unsecured personal loans have shorter repayment period, lower loan limit, and higher interest rate.

Mr Mkwawa is a seasoned banker


Friday, August 10, 2018

FRANCHISE: Managing a franchise system efficiently

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

By Wambugu Wa Gichohi

Although it has barely taken root in East Africa, franchising, as a business model, is a world phenomenon. In some countries, such as America and Australia where a new franchise opens every eight minutes, franchising is so big that it is possible to be born and educated and to work and die in a franchise. We continue discussing how franchisors and franchisees manage and contribute to the management of a franchise system.

Sixth, a comprehensive franchisee training programme. Besides the initial training that must be comprehensive there must also be ongoing training when necessary. Initial fees charged on granting the franchise should include fees for the initial training programme. Any additional training required is chargeable to the franchisee.

Seventh, site selection is key for most businesses. A set of carefully developed site selection criteria and architectural standards are needed to assist franchisees in achieving success.

Eighth, a genuine understanding of the competition. This includes both direct and indirect competitors that the franchisor and franchisees will face in marketing the brand. While the franchisor should focus on understanding competition at the national level and the franchisee at the local-territory level, a point of intersection is needed for them to work as a team to ward off competition.

Ninth, external relationships. Good relationships are needed with suppliers, financial institutions, real estate developers, shopping centre management and key resources that will benefit the franchisee and the system that must be maintained.

Tenth, a franchisee profile and screening system. Just like in hiring own staff where getting the correct staff is a gamble, the recruitment of the right franchisee is vital for the system. A franchisee profile and screening system is needed in order to identify the minimum financial qualifications, attitude, business acumen and understanding of the industry that will be required to be a successful franchisee. A carefully crafted and well-thought out franchisee recruitment plan is a prerequisite to successful franchising.

Eleventh, an effective reporting and record-keeping system. Management needs to be aware of the performance of the franchisee and ensure royalties (management services fees) and sales are reported accurately and paid promptly. A robust Information Management system is a prerequisite for success.

To understand how the franchise system is performing, the franchisor will need timely and detailed reports from each franchisee on the key performance indicators. By analyzing these reports, market information can be deduced for possible improvements and/or changes to the system. The reporting system is a vital administrative procedure for the franchisor for reasons already explained. In addition, reporting also serves to determine whether franchisees are in compliance with their agreement, to control under-reporting of turnover (on which royalties are based), to review the purchase and use of unauthorized products and to gain insight into a franchisee’s marketing communications activity.

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


Thursday, August 2, 2018

FRANCHISE: Managing a franchise system effectively

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

By Wambugu Wa Gichohi

Although it has barely taken root in East Africa, franchising, as a business model, is a world phenomenon. We continue discussing how franchisors and franchisees manage and contribute to the management of a franchise system.

Second, a strong management team. Both staff and directors must understand the particular industry in which the franchise operates. It also includes the legal and business aspects of franchising as a method of branding and expansion.

The franchisor is the senior more-experienced partner here. Franchisor’s management team must therefore understand franchising and be ready to change their corporate culture from an owner-managed system to embrace a franchising culture. The management team must have interpersonal skills and ability to work with other people (franchisees). They must be competent in what their responsibilities are, trustworthy and committed to providing support when needed.

The task of the management team is also to monitor the environment within which the franchise operates and to provide leadership. They also control the franchise system through for instance, reporting and reviews. Management must also ensure franchisees have the skills to manage their franchise outlet.

Third, sufficient capitalization to launch and sustain the franchising programme is needed.

It is important that the franchisor ensures that capital is available to provide both initial and ongoing support and assistance to franchisees.

For the first year of franchising, it is advisable not to include in your capital expenditure projections income you receive from franchisees when you grant them franchises. That means you need alternative means to finance the entire franchise roll out in year one which will ensure that you have enough capital to finance the roll out in subsequent years.

It is for this reason that at the East African Business Council Franchising Project, we have put in place a pool of equity funds where local brands seeking to franchise can access equity investments from over twenty large equity funds in Europe and North America. The funds are also availed to franchisees to acquire your franchises.

The investors exit after five years-typically through the stock exchange-leaving your business to grow further using cheap capital from the public. More details are available on request.

Fourth, a distinctive and protected trade identity. This includes amongst others a registered trademark and/or business identity/name, uniform signage, slogan, trade dress and overall image. For restaurants, overall image extends to include menus, infrastructure designs and table layouts.

Fifth, proven methods of operation and management. This is usually reduced to writing in a comprehensive Franchise Operations Procedures and Training Manual which will maintain their value to the franchisee over an extended period of time, and which can be enforced through clearly drafted and objective quality control standards. Since the market is dynamic, your business operating systems and the manual need constant upgrades.


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


Monday, August 13, 2018

BANKING TIPS: Divorce and avoidance of financial nightmare

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

Sadly, many people in our society nowadays find themselves the victims of divorce, faced with the harsh realities of a broken marriage.

The rising number of divorces in our country in recent years is alarming; The National Panel Survey of 2014/15 carried out on Tanzania’s households by the National Bureau of Statistics (NBS) shows that the rate of divorce has doubled within the last six years.

This means that currently, for every 100 people who have reached the age of marriage, two have been divorced.

The survey further reveals that four couples out of 100 have separated, meaning that their chances of divorcing are high.

Going through a divorce is never fun. Not for you, and definitely not for your soon to be ex-wife/husband and definitely not for your kids (if you have them).

Divorce is an unfortunate time for all those involved and it affects not only a person’s emotional well-being but their finances as well.

The divorce proceedings can be a big challenge on many different levels and the biggest mistake you can make while going through a divorce is making decisions based on emotions.

When you are emotional, you don’t think logically and usually make irrational decisions so the best thing you can do throughout the divorce process is to manage your emotions and keep your focus towards achieving your personal and financial goals.

This week, I will share a few tips on how to avoid a financial nightmare during divorce which will help you rebuild your life again:

Create a new budget

A divorce is a major lifestyle change as for a while you lived on two incomes but now you are down to one.

Therefore, if you had a budget, it is time to create a new one and if you didn’t have a budget, it is important to have one as it is the only way to survive the transition and to thrive in your new life.

You need to re-evaluate your expenses as your past expenditures cannot fit into your new life of a single income. As a starting point, downsize your expenditures temporarily, stash away any extra money you can and live on a minimum budget to ensure you are setting a strong budget base for your new life.

Separate your finances

This part can be irritating if you have been married for a long time since you will need to reorganize your finances. Your finances include everything from all investments, debts, and liabilities; if you were not involved in your family finances, now is the time to immerse yourself in the details.

The first and important step is to cancel and remove yourself from all joint properties, bank accounts, insurance policies, and loans; anything that has both your names on it needs to be addressed.

This will help you to have a clear picture of your financial situation and help you strategize towards your new financial goals.

Get financial advice

During a divorce, your partner can engage in dubious activities that will hurt you financially such as moving the funds or selling off assets without your consent.

Furthermore, in most marriages, it is a common practice that one spouse tends to manage the majority of finances and this can lead to all sorts of problems during the divorce if you were not the party that managed the shared finances.

If that is the case, you will need to step up and educate yourself about managing the finances, which may very likely require you to seek financial advice.

You can hire a financial advisor or have someone who can help you understand your investments, assets and how to manage your liabilities to ensure a smooth transition to your new life.

To summarise, divorce is one of the most stressful life events a person can through. So surround yourself with people you trust that can help you get through personally and financially. Through this article, I have shared three tips that will help you regain control of your financials during a divorce: create a new budget, separate your finances and get financial advice.

Mr Mkwawa is seasoned banker



Thursday, August 2, 2018

Made in Fukushima: Japanese farmers struggle to win trust

Onahama Port employees preparing seafood for

Onahama Port employees preparing seafood for radiation tests in Iwaki on July 27, 2018. PHOTO | COURTESY 

Koriyama, Japan. The pumpkin is diced, the chicken carved and the eggs beaten into an omelette, but the people preparing the food are not chefs -- they are scientists testing produce from Japan’s Fukushima region.

Seven years after the March 2011 nuclear disaster caused by a devastating tsunami, rigorous testing shows no radioactive threat from Fukushima’s produce, officials and experts say.

But local producers say they still face crippling suspicion from consumers.

More than 205,000 food items have been tested at the Fukushima Agricultural Technology Centre since March 2011, with Japan setting a standard of no more than 100 becquerels of radioactivity per kilogramme (Bq/kg).

The European Union, by comparison, sets that level at 1,250 Bq/kg and the US at 1,200.

In the last year, the centre says no cultivated produce or farm-reared livestock has exceeded the government’s limit.

In all just nine samples out of tens of thousands were over the limit: eight from fish bred in inland ponds, and one a sample of wild mushrooms.

Each day, more than 150 samples are prepared, coded, weighed, and then passed through a “germanium semiconductor detector”. Rice undergoes screening elsewhere.

While radiation affected several regions which have their own testing processes, Fukushima’s programme is the most systematic, testament to the particularly severe reputational damage it suffered.

In the wake of the nuclear disaster, a wide-scale decontamination programme has been carried out in Fukushima.

It can’t be done in forests, where thick tree growth makes it impractical. But elsewhere topsoil has been removed, trees washed down and potassium sprinkled to reduce caesium uptake.

But the testing process is the cornerstone of efforts to win consumer trust.

‘Our products are safe’

“Some people are still worried, in Japan and abroad, so we want to continue to explain to people in other prefectures and in foreign countries that our products are safe,” said Kenji Kusano, an official at the testing centre.

And occasionally radioactivity is detected, for example in wild plants and mushrooms, which are destroyed if they exceed the government standard.

Kusano said testing will remain important as residents gradually return.

“When residents come back to areas that are off-limits at the moment and start producing their own fruit and vegetables, they must be tested,” he said.

The Fukushima disaster devastated a previously flourishing local agricultural sector.

“Profits have not yet reached pre-2011 levels and prices remain below the national average,” said Fukushima representative Nobuhide Takahashi.

The situation is even worse for fisherman, many of whom have survived only on compensation paid by Fukushima operator TEPCO. The tsunami destroyed ports across the region and demand is low despite an even stricter testing standard of 50Bq/kg for Fukushima’s seafood.

“When we catch fish and send it to market in Tokyo, some people don’t want to buy it,” said Kazunori Yoshida, director of Iwaki’s fishing cooperative.

As a result, fishermen brought in just 3,200 tonnes of seafood in the area last year, down from 24,700 in 2010. (AFP)


Thursday, August 2, 2018

MANAGING TAX RISKS: Beware of slippery paths in tax amnesty

Shabu Maurus

Shabu Maurus 

By Shabu Maurus

This article is a continuation of my earlier few articles on tax amnesty. Following amendments of the tax administration law (through the Finance Act, 2018), the Minister of Finance and Planning issued the Tax Administration (Remission of Interest and Penalty) Order, 2018 (“Tax Amnesty Order”). The Tax Amnesty Order is effective from 1st July 2018 and expires on 31st December 2018.” TRA also issued a public notice explaining the scope of the tax amnesty, eligibility criteria and how one can apply for the tax amnesty.

Enrolling in the tax amnesty has several potential advantages to the taxpayer. My article last week discoursed some of the advantages. The biggest is the waiver of interest and penalties but there are several others which are equally important to the taxpayer. The tax amnesty sounds so good. But what are the risks of enrolling in the tax amnesty, if any? What can go wrong?

Before you proceed here are my few caveats:

I personally believe that the tax amnesty is a good thing in Tanzania for now. I also believe that taxpayers ought to pay to the government the right amount of tax as per the prevailing tax laws. Not more, not less. This is regardless of the existence or applicability of the tax amnesty. What I consider below as risks are my personal views and should not, in any way, derail you as a taxpayer from your decision to enroll in the tax amnesty.

My intention, in this article, is to point out some few things that taxpayers should consider when deciding to enroll in the tax amnesty.

1. Spillover effect

The tax amnesty does not apply to each kind of tax in Tanzania. For example, the amnesty does not apply to the gaming tax, service levy, customs taxes, skills and development levy (SDL), social security contributions and the VAT in Zanzibar. There is a possibility that seeking a tax amnesty on eligible taxes may also reveal non-compliance with other non-eligible taxes. For example, non-compliance with PAYE (eligible tax) may also be an indicator of non-compliance with SDL (non-eligible tax).

2. The remission can be reversed

The Tax Amnesty Order empowers TRA to reverse the remission granted on interest and penalties if the taxpayer fails to implement the terms of a settlement agreement. One such term is for a taxpayer to commit to paying the principal tax amount on specified dates. If TRA rescinds the settlement agreement, the principal tax, interest, and penalty become payable as if there was no remission. The settlement is also voidable if the taxpayer gives false or fraudulently misrepresents facts.

3. TRA discretional powers

Enrolling to the tax amnesty is purely voluntary. Enrolment involves a declaration of tax liability by the taxpayer. But TRA still has powers to assess the amount of tax that is deemed reasonable given the available information. The Tax Amnesty Order requires TRA to decide on an application for tax amnesty within 30 days. There is no compulsion for TRA to accept your application.

4. No more dispute?

The tax amnesty extends to tax objections pending with TRA and tax appeals pending at the tax courts. But only if the applicant agreed to “finally conclude his tax liability without further grievance or dispute”. This is fine provided the settlement agreement is reached and fully implemented by both parties. But what if the settlement agreement is, for some reasons, not fully implemented? Assume the taxpayer is unhappy with the TRA decision to rescind the agreement.

Mr Maurus is a Partner with Auditax International


Thursday, August 2, 2018

YOUR BUSINESS IS OUR BUSINESS: Experts, politicians differ on tanzanite woes

Karl Lyimo

Karl Lyimo 

By Karl Lyimo

Exactly what’s going on in Tanzania’s tanzanite sub-sector, pray? There’s so much doublespeak, confusion, discrepancies, inaccuracies, recriminations and disarray involving miners, regulators and quasi-stakeholders.

This mishmash cannot be a good thing. Is it true, for example, that the Merelani tanzanite miners collectively paid Sh714.6 million in royalty (‘mrahaba’) for the three months of January, February and March this year?

Put in perspective, the miners paid measly sums in royalty for the past three years: Sh166.8 million in 2015; Sh71.8 million in 2016, and Sh147.1 million in 2017 – totaling Sh385.7 million in three ‘long’ years …

That sum is Sh328.9 million LESS than the Sh714.6 million collected over three ‘short’ months this year…

Then, they rather too suddenly pay an astounding Sh714.6 million in three months… Holy Moses!

That’s where and when the doublespeak begun in earnest…

We’re told this steep rise in royalties is the direct result of the 3-metre-high, 24km-long, single-gate fence wall constructed around the tanzanite mines as directed by President John Magufuli in late September 2017.

While the wall was constructed in record time by the military, it’s yet to be fitted with appropriate security appliances such as CCTV cameras and other sensors as directed.

Construction of the wall begun in November 2017. It was completed two months ahead of schedule – in February 2018 – and was officially inaugurated by President Magufuli on April 6th, 2018. [See ‘Ukuta wa Merelani wamg’oa kigogo;’ MTANZANIA: July 22, 2018].

So: did the ‘Great Wall of Merelani’ really play a tangible role in boosting the royalty collections skywards? Did it…?

If yes, then why have the royalties (and other public revenues) been melodramatically dwindling since then – despite the wall firmly remaining in place?

For instance, we’re told monthly government revenue collections plummeted from Sh444 million at the beginning of 2018 to a measly 40 million in April – the security wall notwithstanding!

But, even before this had sunk in, the Manyara Regional Commissioner (RC), Mr Alexander Mnyeti, dived headlong into the fray, attributing the drop in public revenues to falling tanzanite production beginning in April – not due to smuggling, cheating or any other malfeasance…

Agreeing with the RC, the Manyara Regional Miners Association (Marema) chairman, Sadiki Mneney, plunged deeper, attributing the production drop to hard economic times: reduced money circulation, etc., etc. [See ‘MWANANCHI: July 23, 2018].

Well, this never happened in years past. Besides, the RC and Marema directly contradict findings of the Presidential Tanzania Mining Commission (TMC) whose chairman, Prof Idris Kikula, squarely attributes the drop in public revenues to rampant smuggling, rife false production declarations and suchlike malfeasance.

Who’s right here: TMC or the politicians?

To help you answer that: a woman was intercepted carrying 7.53kg of tanzanite in a bucketful of maize flour out of the fenced mining area and through the single in/out gate on July 22 this year! [See MTANANIA, July 24, 2018].

Now, if that’s not smuggling, I don’t know what is!

This is to say nothing of… Sorry, I’ve run out of editorial space here… Cheers!


Thursday, July 26, 2018

Managing franchise system effectively

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

By Wambugu Wa Gichohi

Although it has barely taken root in East Africa, franchising, as a business model, is a world phenomenon. In some countries, such as America and Australia where a new franchise opens every eight minutes, franchising is so big that it is possible to be born and educated and to work and die in a franchise. In Africa, South Africa already qualifies in all these counts with the exception that they don’t have a maternity home franchise. Egypt is soon catching up after serious investment in franchise development over the last ten years.

But franchising is encouraged by a changing market place as a new customer and consumer society is continuously being developed. In East Africa, a new and rapidly-growing middle class (although still nascent and not yet large enough to support rapid development) can be expected to impact on our economies in the near future. It is therefore not surprising that major changes in consumer actions and attitudes are also taking place in these economies.

Any business hoping to grow on the franchise model needs to appeal to this market to influence and retain their business support. But this has become more difficult than ever before. The franchisor as the “leader”, with his/her team will therefore need to invest time and energy to manage the franchise network. Some of the changes that are having a major influence on the market place include the following.

First, there is no longer a mass market. It was long-replaced by the market segment, the niche market and the one-to-one market. For example, Coca-Cola has at least nine different versions of their beverage; Holiday Inn has five different versions of their hotel, meant to appeal to different market niches.

Second, companies have realized that profit is not only derived from the transaction but also from the relationship. Today, books are being written on “Customer Relationship Marketing” (CRM). Relationship entails more than encouraging repeat business. It means investing in a customer and keeping in touch with the customer’s needs. For example, in addition to always having the Big Mac Burger on their menu, McDonald’s always localizes menus wherever they go to appeal to and keep their local customers.

Third, the marketing trend of major consideration is entrepreneurial marketing. Marketers are learning that they must lead customers. It is said that if Thomas Edison had relied on conventional market research, he would have invented a better light bulb.

Fourth, technology continues to impact on all spheres of business and to contribute to the global village effectiveness already created by franchising. Current trends in artificial intelligence will impact on franchise businesses in future.

It is within this context that this new culture of business, the SME market and franchising, is developing. The question then is how do franchisors and franchisees manage and contribute to the management of the franchise system? The key components in the operation of an effective management system are here-below discussed.

First, a proven concept/pilot store to serve as the basis for the franchising programme. As discussed in previous articles, you cannot franchise an idea.


Thursday, July 26, 2018

Farmers now assured of crop markets


By Halili Letea @hletea

Dar es Salaam. Farmers of some crops have a reason to concentrate on production and value addition as the commodity exchange seeks to solve the challenge of markets.

The platform, which will start trading of strategic crops such as cashew nuts, sesame, tea, coffee, cotton and maize, is supervised by the Warehouse Receipts Regulatory Body (WRRB) in association with the Tanzania Mercantile Exchange (TMX).

It is expected to bring markets closer to farmers, increase transparency, reduce transportation costs and time, according to TMX chief executive officer Godfrey Malekano who spoke last week during a seminar on the new system for agriculture stakeholders.

“We are starting with spot exchange for now and because this system will depend much on information and communication technology system, it will reach buyers within and outside the country. We are working on it and we will soon implement it,” he said, adding that they will be working with Tanzanian embassies of Tanzania in finding markets by using ICT.

The ICT system will connect farmers, buyers and regulators. They will be able to access and see market situation from where they are.

According to WRRB managing director Augustino Mbulumi, the big role will now be to collect crops, grade them and ensure their quality so that they will be used by TMX for exchange.

“After storing and grading and adding value to them we will tell TMX through ICT so they can have this in their system” he said.

To ensure value maintenance, WRRB uses quality packages known as hermetic bags so that no insects penetrate. The crops will be stored in silos.

Farmers must store their crops in the Warehouse Receipt System (WRS) and receive receipts.

The process involves undergoing commodity verification and grading before the receipt is issued.

To reduce storage costs to farmers, WRRB is working with the Tanzania Cooperative Development Commission (TCDC) to collect produce for storage in bulk as it is easy to find markets for them.

Farmers will wait for their crops to be sold. TMX agents will look for markets using their local agencies which will be dealing with local markets and information from foreign countries will be provided by respective embassies.

To avoid risk of money loss or counterfeits by conmen after transaction, the produce owners will receive their payments directly into their bank accounts, one day after trading.

The TCDC registrar of cooperatives, Mr Tito Haule, hopes the system will ensure farmers and buyers get what they deserve in such a way that farmers will have full follow up of their produce until they are sold and they will get paid once the transaction is completed while buyers will get produce of the quality they want.

He said that the role of TCDC is to collect farm produce from farmers and educate them on the importance of WRS and how they will access market through the new established commodity exchange.

Depending on the time commodities stay in the warehouse, farmers will pay only the same price for storage and the owner of the produce will have access to loan by up to 60 per cent of their produce value only by showing the receipt.

Mr Mbulumi said the system will also minimise risk and transaction costs, quality assurance and encourage the farmers to produce more.

Mr Malekano said farmers will now, have no need to search for markets for their produce as TMX will be dealing with that and buyers will have easy access to large quantity and quality crops as they will have reliable data and information about the market.

“Farmers should now concentrate on production and it will enable crop boards to focus on supporting farmers to increase production while buyers will use ICT system to access the commodities they want,” he said.

Mr Malekano said the commodity exchange would help farmers to make decision on the price of the crops they sell and they can now deal with commercial farming.

The permanent secretary in the Prime Minister’s Office, (Policy and Coordination), Prof Faustine Kamuzora, said the commodity exchange would increase opportunities.

He said the value chain system from farmer to seller set to remove all leakages, so that ever participant would get what he/she deserves.

“To make farmers confident financial institutions must connect them to their mobile money so that they can have easy access to their bank accounts,” he said.


Thursday, July 26, 2018

Commodity exchange is expected to improve farmers’ well-being


By Hellen Nachilongo @musanachi60

Dar es Salaam. The commodity exchange is expected to increase the bargaining power of farmers and maintain price stability of produce.

The market, which will involve electronic operations in passing information, is also expected to help farmers access markets countrywide and abroad. Chato District agriculture, irrigation and cooperative officer Mwiza Waryuba is optimistic that price stability of most crops will be standardised because the warehouse receipt system will add value to crops.

“Even if supply of crops is huge, farmers will still benefit from them as prices will be stable,” he said.

“In previous years, we had a business market where you could find us lined up with our crops selling them and when buyers come, each farmer will sell his/her crops at his own price….it was really a challenge to sell grains at the similar price. Now the bargaining power will increase because every crop would have its own value,” said Mr Waryuba, who is also a farmer.

He cited cashew nuts whose prices ranged from Sh100 to Sh300 a kilo before the warehouse receipt system was introduced. After introducing the system, the price rose to Sh3,000 a kilo. Cotton is being sold at Sh700-800 a kilo, but Mr Waryuba hopes the price will increase.

Shinyanga assistant crop registrar Shose Monyo is optimistic that farmers’ earnings will improve.

She said 180 associations had been revived for collecting crops from farmers.

According to her, farmers are convinced that once the system starts they will be “price-setters” unlike in the past when they used to be “price-takers”.

Warehouse Receipts Regulatory Body managing director Augustino Mbulumi said farmers should not be worried when harvests were bumper as crops would be sold in the next season.

“There is no need of reducing prices when harvests are bumper as farmers would have collateral with financial institutions to access loans using crops in warehouses and continue selling other crops,” he said.


Thursday, July 26, 2018

What Tanzania is doing to make air transport safer


By Alex Malanga @ChiefMalanga

Dar es Salaam. There about 100,000 flights globally every day, according to the International Air Transport Association (Iata).

Aircraft take to the skies and land safely, thanks to stakeholders’ push in improving aviation safety.

Swissport Tanzania saw fatalities, permanent disability or time lost from work falling to eight last year compared to 13 a year before, according to quality and compliance manager Daniel Simkanga.

The company handled 14,792 aircraft last year. It also saw a significant decrease in the number of aircraft damage.

Since January, no aircraft was damaged, said the company’s chief executive officer, Mr Mrisho Yassin.

According to a recent Tanzania Civil Aviation Authority (TCAA) report, the number of air traffic grew by 2.1 per cent to 4.95 million in 2016 compared with the previous year.

Cargo volume dropped by 20 per cent, to 24,030 tonnes between 2015 and 2016.

The construction of the Sh560 billion terminal three at Julius Nyerere International Airport (JNIA) is at final stages and the passenger capacity will rise by more than twofold to nine million. The airport will eventually be decongested.

Upon its completion, terminal three alone, will 6.5 million passengers annually, more than twice the capacity of terminal two’s 2.5 million passengers. However, challenges facing the air transport are not about congestion and service quality.

This has placed pressure on both local and international stakeholders to put in place a number of safety efficiency initiatives.

Safely handling for aircraft continues to be Swissport Tanzania’s top priority, with the company used Sh58.5 million for safety-related programmes last year, according to Mr Yassin.

To ensure safety is enhanced, campaigns have been carried out.

Safety alerts and posters are issued to sensitise staff.

Also, safety inspections and audits are done and incidents are collected and analysed to assess the effectiveness.

Other initiatives are near-miss reporting and safety, health improvement programme (Ship) and safety campaign.

Near-miss reporting is an unplanned event that has the potential to cause, but does not actually result in human injury, environmental or equipment damage or an interruption to normal operation but has to be reported to prevent future incidents. Ship is run in a form of workshops and is geared towards training employees about safety issues.

“We continue taking steps in raising standards and implementing best practices,” noted Mr Yassin.

The safety officers deployed recently have proved to be efficient function as they keep monitoring safety and security aspects in all areas of the company’s operations.

Swissport was audited by Iata whose mission is to represent, lead and serve the airline industry, and subsequently was approved as Iata Safety Audit for Ground Operations compliant and received accredited certificates for JNIA and Kilimanjaro International Airport (Kia) to June 17, 2017.

Reports from the International Civil Aviation Organisation (Icao) indicate that the average worldwide level of implementation of international safety standards in civil aviation in 2016 were estimated at only 63 per cent.

To improve safety of Tanzania’s airspace, the regulator last year signed an agreement with the France-based Company Thales Air System to install four radars in four airports in 18 months.

With the acquisition of the state-of-the-art surveillance radars worth $28 million (about Sh63 billion at the prevailing exchange rate), now the country will be able to monitor its entire aviation airspace.

Tanzania uses aviation radar installed at the JNIA in 2002, monitoring only 25 per cent of its aviation airspace. TCAA director general Hamza Johari said: “Safety of our skies is of paramount importance. With the four radars we will be able to monitor our entire airspace and beyond.”

Early this year, TCAA installed a high frequency radio station in Tanga to oversee the airspace for the safety to airline operators.

The Tanzania Airports Authority (TAA) ensures passenger screening is done for travellers for safety and security as they leave the airport.

It is conducted at different points starting with the entrance area into the departure terminal and ending with one last screening point before passengers go through the boarding gates. Safety data management and analyses are a part of Iata’s safety strategy and are available via the Global Aviation Data Management programme.

The programme provides Iata members and other eligible industry members with a wealth of information and acts as a gateway to the multiple sources and areas of aircraft operations.

The programme has information from over 470 organisations.

Over 90 per cent of Iata members are contributing to at least one of its databases.

The EU considers safety to be the joint responsibility of the global aviation community to support states that have difficulties or are unable to establish sustainable safety oversight systems in compliance with international standards.

The EU is actively engaged in a number of technical assistance and cooperation initiatives aimed at promoting aviation safety globally and regionally, particularly in areas with high accident rates.

To meet these challenges, government agencies and industry will have to invest in new and upgraded infrastructure and equipment.

Another cornerstone of the approach to enhancing aviation safety is the Iata Operational Safety Audit, an internationally recognised programme that is implemented consistently throughout the industry.

On top of that is Integrated Management Solutions - a tool that provides an efficient and cost-effective solution to manage the collection and processing of your quality and safety data and information as part of your safety data collection and processing system.

Furthermore is supporting consistent implementation of the Safety Management System in ensuring safety performance monitoring, analysis and dissemination of information safety promotion and facilitation.


Thursday, July 26, 2018

On being shareholder of publicly listed company


By Moremi Marwa

In the last two articles we share some of the factors that one needs to consider when investing. We particularly focused on shares investment. I got the feedback from some of our readers who wanted me to elaborate a bit on the concept of shares and how it relates to business ownership and business management. In today’s article, I will do just that.

So, what is a share?

Plain and simple, shares represent ownership of a company – a company which is in the business of profit making. A share represents a claim on the company’s assets and earnings. As you acquire more shares, your ownership stake in the company becomes bigger. Whether you say shares, stocks, equity, they all mean the same thing and they are used interchangeably.

By buying a share, money, which could have been idle or otherwise, held in low interest earning savings in banks or other financial instruments moves to a more productive economic activity. How, because by acquiring shares you provide money (called capital) to the business, the money which is used to buy plants, equipment, furniture, inventory, pay wages for workers, pay rent, etc – these acquired assets are then used to produce goods or services which are sold to users and consumers, in the process the business generates revenues and profits.

Being an owner

Holding a company’s shares means that you are one of the many owners (shareholders) of the company, and, as such, you have a part claim to everything the company owns. Yes, this means that technically you own a relative part of every piece of furniture, every machinery and equipment, every trademark, and every contract of the company. As an owner, you are entitled to your share of the company’s earnings as well as any voting rights attached to the shares.

A share to the company is represented by a share certificate, (or a CDS Receipt for shares listed in the Dar es Salaam Stock Exchange - DSE), which an evidence for a piece of ownership of a company. When you buy a share, you become an investor (or a shareholder) and thereby an owner of a piece of the company’s assets, debts, profits or even losses.

One thing to note -- being a shareholder of a public company (a company listed in the stock market, such as the DSE) does not mean you have a say in the day-to-day running of the business, this is different from a business ownership arrangement where you are a sole proprietorship, or a partner to a partnership or even a shareholder to a private company. Instead, for a publicly listed company, the rule is one vote per share when it comes to matters of decision making, whether to elect the members of board of directors, or to approve appointment of auditors or to approve audited accounts at annual meetings. Basically, your shareholding status determines the extent to which you have a say in the decision making of a company.

For instance, being a DSE PLC shareholder doesn’t mean you can call up the DSE’s Chief Executive Officer and tell him how you think the company should be run. In the same line of thinking, being a shareholder of TBL doesn’t mean you can walk into the factory and grab a free case of beer or grab a packet of cigarettes from the production plant in the case of TCC!

The governance system via the board of directors and management of the company is supposed to enhance the value of the firm for its shareholders. If this doesn’t happen, shareholders can vote to have the Board, and in some cases, management be removed. For a shareholder in the listed company you don’t have to work to make money, management works for you and the board looks after your interest as a principal.

What is important for you to note is that the importance of share ownership is your claim on assets and earnings. Without these two, the shares wouldn’t be worth the paper it’s printed on.

Another extremely important feature of shares is its limited liability, which means that, as an owner of a share to the company, you are not personally liable if the company is not able to pay its debts and other obligations. Other business arrangements such as partnerships or sole proprietorship are set up so that if the partnership goes bankrupt the creditors can come after the partners (shareholders) personally and sell off their personal assets – i.e. houses, cars, furniture, etc. Owning shares means that, no matter what, the maximum value you can lose is the value of your investment. Even if a company of which you are a shareholder goes bankrupt, you can never lose your personal assets.

Owning shares

So, if you love continuing with your day job, or being a business owner without ever having to show up at work, or entertaining the idea of becoming a retiree who has ownership to businesses -- you could just seat back, watch your company grow, and collect dividend cheques as the money rolls by becoming a shareholder! and in case of liquidity challenges and you real need the money, you can just watch the TV or read a newspaper, get the price of your investment, call a broker, place a sale order and there you are – you have the money you needed.


Thursday, July 26, 2018

Sido: Every district should grow one commercial crop

By Hellen Nachilongo @musanachi60

Dar es Salaam. Small Industries Development Organisation (Sido) proposes that every district should grow one cash crop.

‘One District One Crop Product (ODCP)’ is said to be right approach for the country to have bumper harvests for commercial purposes.

The Sido director of technology development and industrialisation, Mr Emanuel Saiguran, told The Citizen recently that such initiative would help farmers grow crops on large scales and promote industrialisation using the Cluster Development Approach (CDA).

“CDA is a way to realise competitive advantage of industries by promoting the strengthening of linkages among various stakeholders across and beyond value chains,” he said.

He explained that in the past years, farmers in most regions used to grow crops without knowing their competitive advantage. Sometimes farmers grew crops that were not even suitable for their respective areas.

“Cashew nuts are potentially grown in Mtwara... you cannot grow rice in Mtwara as a commercial crop. What we are trying to do is to promote crops found in various areas to be improved for commercial use and to feed the nation at large.

“By collaborating with several development partners, the ODOCP initiative is currently being implemented in some regions, “he said.

Explaining on CDA, he said it was a geographically proximate group of interconnected companies and associated institution in particular field, linked by commonalities.

According to him, with support from Sida, Costech and Jica in some regions, cluster projects were being implemented.

“In Dodoma we have a grape cluster that produces juice. In Kilimanjaro there is a leather cluster to produce leather products. In Singida, there is a sunflower oil processing and refinery cluster for sunflower oil that would soon be launched, “he said. Mr Saiguran said that was an industrialisation strategy.

He noted that its success will depend on stakeholders working jointly together in developing the chosen product.

“Key players would include various firms, people along vertical and horizontal value chain. Others would include raw material producers, suppliers, traders and buyers.”

He explained that Tanzania had diverse resources. People’s culture, nature and commodities and therefore, such sources could be of sustainable social and economic development of the country if utilised well to capture opportunities.

As Tanzania is pursuing industrialisation, CDA has come into existence with the objective to realise the competitive advantage of industries by promoting and strengthening linkages and collaboration among various players in and around the selected commodity value chain.

Arusha resident Julius Ngalawa, who is a CDA beneficiary, told The Citizen that most people think working together would make their businesses collapse and lose customers.

“The cluster approach is very beneficial. It unites us,” he said.


Thursday, July 26, 2018

Why insurers find rain-fed agriculture risky to cover


Dar es Salaam. Insurers believe agriculture is too risky to cover.

They say that is because the sector is dominated by smallholder farmers who are often surrounded by many challenges such as vagaries of weather, insecure land ownership, difficulties in accessing to capital and farm inputs, unfavorable trade policies and price fluctuations.

Many of those constraints are beyond the farmers’ control.

“Agriculture insurance is tricky because the sector is still unstable,” said Zanzibar Insurance Corporation’s planning investment officer, Mr Rahim Hamza.

The corporation has no plans of starting such a product. It will wait until irrigation systems are improved.

According to Annual Agriculture Sample Survey published by National Bureau of Statistics, 8,763,267 operators were engaged in agriculture in 2017 but only 437,112 farmers were using irrigation.

“How can I insure a person who cultivates only two hectares and has no guarantee of securing enough water and fertilisers?” said Mr Hamza.

Every insurance company needs to make profits, so when the sector guarantees profit to operators, the product will be started, according to him.

He insisted that neither insurance companies nor farmers seem to be interested in the concept, implying that it will take time for such insurance product to be a reality.

Metropolitan Tanzania Insurance Ltd assistant marketing officer Bruno Moyo is not even aware with the agriculture insurance concept.

He has been just hearing about it but he cannot even tell how it can be operating.

“I am still out of the blue, and I am certain that there are so many others in the field who know nothing about it. I think even farmers still know nothing about it,” he said.

“We always come up with insurance products after either finding out that the product is currently necessary to people’s lives or from strong demand from our customers. But for agriculture insurance none of the two is coming to us.”

Training programmes for insurance operators and public awareness to farmers are highly needed, according to him.

However, Strategis Insurance Ltd and MGen Tanzania Insurance Company operate agriculture insurance product.

They too acknowledge that that running the product is risky.

Strategis has started operating agriculture insurance product in 2018, targeting medium-sized and large-scale farmers, according to Mr Emmanuel Jimmy, planning and marketing officer.

The product covers disasters such as insects’ detriment, drought, floods, fire and theft before harvesting as well as when particular agricultural product lacks a market, according to him.

Before deciding a price for the insurance product the company measures operational costs the farmer incurs and the profits expected after harvest. The value of the farm determines the price of the insurance product which a farmer should pay to the company.

“We have a limited number of customers because the insurance product is not popular to farmers,” he noted.

He also admitted that it was still difficult to run the business since the farmers were not aware. But some liked the idea.

“Some say we are stealing and some claim that we exploit them.”

MGen Tanzania Insurance Company is somehow different. It has been practicing agriculture insurance since 2013, serving the farmers in groups.

The company’s marketing supervisor, Mr Derrick Sebastian, says visits had been made to unite medium and large-scale farmers in a single group, educating them on agriculture and insurance services before they join the product.

So far, the company is capable of reaching 1,000 groups annually, according to him.

“After the evaluation, we charge at least Sh25,000 per hectare. We offer the service to the group with at least Tanzania Insurance Regulatory Authority public relations officer Mr Oyuke Phostine once told The Citizen that the plan was to make sure that until the end of 2028, every Tanzanian adult uses at least one or two insurance products.

Insurance contributes about 0.7 per cent of the GDP.

The agriculture insurance remains their hope as the sector covers the large population, according to him.


Thursday, July 26, 2018

Key questions before getting personal loan

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

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 to our needs. Once you decide to borrow money, it is crucial to think long and hard before you take that route. There are so many places where you can borrow money from: friends, families, micro and macro lenders, and banks. One of the options for borrowing money is through a personal loan from the bank. There are two types of personal loans – secured personal loans and unsecured personal loans. The most common type of personal loan is an unsecured loan which is borrowed in a lump sum without collateral.

It is important that you consider whether a personal loan is the best option for your financial needs so don’t hesitate to seek professional advice if you’re unsure about whether a personal loan is right for the goal you’re trying to achieve. Used wisely, a personal loan can help individuals achieve a number of financial goals.

People decide to get loans for many reasons so it’s very important to know which questions to ask yourself before seeking personal loans. Today I will share the key questions that you should ask yourself before getting a personal loan from a bank;

Will it help me achieve my financial goal(s)?

This is the most important question you need to ask yourself before you borrow a single cent from a bank.

To be able to ask yourself that question, take a look at your financial picture and develop your financial goals. For example, your goal can be buying a house, funding an education, looking for capital to invest in your business, or financing an emergency family situation.

Regardless of the goals, it is important to know whether the personal loan will help you achieve those goals and equally important to be clear on the purpose of the personal loan you want to get.

This is a very key step towards making meaningful decisions such as how much you need and for how long.

Can I afford it?

The first rule of smart borrowing is this: do not borrow money that you cannot repay back. One of the easiest traps to fall into is taking out a larger loan amount than you need.

Before getting a loan, you must review your monthly budget and cash flow to figure out if you usually have money left to cover extra obligations after your necessity needs.

In case there is no money left for additional obligations, look for areas where you can cut your costs to have more room in your monthly budget before thinking about taking a personal loan. Furthermore, always make sure you read and understand the bank’s loan fees and charges before you sing up to take the loan.

To read the fine print of conditions and terms that go with your bank’s loan is crucial: this will enable you to find the bank that charges you less than the rest. Your primary concern should be keeping the cost of obtaining a loan as low as possible, hence shop for banks that offer competitive interest rates and fees to ensure your monthly repayment cost is affordable.

Is it convenient?

When shopping for your personal loan, it is important that you assess your needs as a customer to make sure the bank that you will take the loan from offers you other services that are convenient for you.

You should always look for a bank partner that really sees the world from your point of view and understands your journey.

Therefore, it is very important to ask yourself which bank understand your needs, has convenient products, and a customer-centric culture before you decide to take a personal loan.

Let me wind up by stating that at the end of the day, think twice before you borrow. Do your homework and ask yourself these key questions that will help you steer you into making a right financial decision. After that, move forward with confidence, get a sensible loan, and commit to paying it off.

Mr Mkwawa is a seasoned banker


Thursday, July 19, 2018

Review investment pacts for your benefit, EAC states told


By Alex Malanga @ChiefMalanga

Dar es Salaam. Many investment agreements are not in favour of Tanzania, stakeholders say.

That is why foreign direct investment (FDI) inflows into Tanzania have dropped for the third year running, they stress.

They were speaking in separate interviews on the sidelines of a workshop for development stakeholders in the East African Community (EAC) here.

They called on Tanzania to review investment treaties to have a win-win situation.

Laws and policies should bear in mind what Tanzania wants to achieve.

FDI inflows dipped by 24.4 per cent last year to $1.18 billion (about Sh2.6 trillion), down from the 2015 level, according to United Nations Conference on Trade and Development.

The Southern and Eastern African Trade Information and Negotiations Institute (Seatini) country director, Ms Jane Nalunga, said foreign investors enjoyed numerous legal rights without needing to worry about corresponding responsibilities.

Way back in 1959, Germany and Pakistan signed the first bilateral investment treaty (BIT) in the world without knowing they marked a new era as many countries have followed the example since then. Currently, the international legal system that governs international investment flows is shaped by a network of about 3,000 BITs and other international investment agreements (IIAs), according to the Netherlands-based organisation Both Ends that focuses on international trade and investment issues.

“This system no longer serves its purpose and needs to be changed profoundly,” opined Ms Nalunga.

“Not only is it questionable whether IIAs at all encourage international investment flows in support of sustainable development, but its current generation has also failed to address the uneven balance of rights and responsibilities between foreign investors and the host countries.”

In recent years, a large number of countries have faced costly international investment treaty claims on matters of economic policy, financial stability, and environmental and health regulations, according to Both Ends senior policy officer Burghard Ilge.

This reality, and especially the fact that 60 per cent of all investor-to-state-dispute settlement claims are brought against developing countries, has serious repercussions for poverty reduction, inclusive growth and sustainable development. This has in turn, he said, sparked many governments to rethink and revisit their current BITs regime.

Serious questions, according to him, are being raised by citizens and their representatives about the legitimacy and effectiveness of the BITs regime.

Reforming the multi-layered investment treaty regime calls for collective thinking and constructive engagement by all stakeholders: governments, inter-governmental organisations, the private sector, civil society, think-tanks and academia.

“Rethinking, reforming, and where necessary, terminating bilateral investment treaties is imperative because of superior treaty obligations under the UN charter and human rights convention,” suggested Mr Ilge.

Already the government has started reviewing treaties with some of investors.

In May, Attorney General Adelardus Kilangi told Parliament that his office had started reviewing contracts signed by Tanesco and Songas.

Last year, President John Magufuli assented to bills which require the government to own at least a 16 per cent stake in mining projects.

Dr Magufuli reiterated that no new mining licences would be issued until Tanzania put things in order and that the government would review all mining licences with foreign investors.

However, according to private sector development specialist Solomon Baregu, changing BITs is not enough as a sound legal and regulatory framework is needed.

“When signing agreements, the government should understand that it is entering into a deal. It should be strong in negation by providing investors with conditions on what we need, for national interests,” opined Mr Baregu.

“Let’s increase transparency in our treaties. There should be monitoring mechanisms for the treaties to be fruitful to the public.”

Investors, according to Mr Baregu, should have a deeper economic impact to the country and above all to everyone in terms of employment creation and technology transfer.

The Tax Justice Network -- Africa policy lead in charge of the tax and investments programme, Mr Jared Maranga, was of the view that the government should use its power to ensure that the country benefits from an investment.

“The government has the right to get what it negotiates and not what it deserves. We need to be strong but not ridiculous,” said Mr Maranga. For that to work, Kigali, Rwanda-based international trade negations independent consultant John Kanyangoga called for a friendly tax system.

“Taxes should be well calculated.”

Seatini executive director Nathan Irumba suggested for adoption and implementation of policies and rules that are friendly to multinational companies.

“If we are to record sustainable development, legal system should be friendly. It should be working properly,” explained Mr Irumba.


Thursday, July 26, 2018

Farmers now assured of crop markets


By Halili Letea @hletea

Dar es Salaam. Farmers of some crops have a reason to concentrate on production and value addition as the commodity exchange seeks to solve the challenge of markets.

The platform, which will start trading of strategic crops such as cashew nuts, sesame, tea, coffee, cotton and maize, is supervised by the Warehouse Receipts Regulatory Body (WRRB) in association with the Tanzania Mercantile Exchange (TMX).

It is expected to bring markets closer to farmers, increase transparency, reduce transportation costs and time, according to TMX chief executive officer Godfrey Malekano who spoke last week during a seminar on the new system for agriculture stakeholders.

“We are starting with spot exchange for now and because this system will depend much on information and communication technology system, it will reach buyers within and outside the country. We are working on it and we will soon implement it,” he said, adding that they will be working with Tanzanian embassies of Tanzania in finding markets by using ICT.

The ICT system will connect farmers, buyers and regulators. They will be able to access and see market situation from where they are.

According to WRRB managing director Augustino Mbulumi, the big role will now be to collect crops, grade them and ensure their quality so that they will be used by TMX for exchange.

“After storing and grading and adding value to them we will tell TMX through ICT so they can have this in their system” he said.

To ensure value maintenance, WRRB uses quality packages known as hermetic bags so that no insects penetrate. The crops will be stored in silos.

Farmers must store their crops in the Warehouse Receipt System (WRS) and receive receipts.

The process involves undergoing commodity verification and grading before the receipt is issued.

To reduce storage costs to farmers, WRRB is working with the Tanzania Cooperative Development Commission (TCDC) to collect produce for storage in bulk as it is easy to find markets for them.

Farmers will wait for their crops to be sold. TMX agents will look for markets using their local agencies which will be dealing with local markets and information from foreign countries will be provided by respective embassies.

To avoid risk of money loss or counterfeits by conmen after transaction, the produce owners will receive their payments directly into their bank accounts, one day after trading.

The TCDC registrar of cooperatives, Mr Tito Haule, hopes the system will ensure farmers and buyers get what they deserve in such a way that farmers will have full follow up of their produce until they are sold and they will get paid once the transaction is completed while buyers will get produce of the quality they want.

He said that the role of TCDC is to collect farm produce from farmers and educate them on the importance of WRS and how they will access market through the new established commodity exchange.

Depending on the time commodities stay in the warehouse, farmers will pay only the same price for storage and the owner of the produce will have access to loan by up to 60 per cent of their produce value only by showing the receipt.

Mr Mbulumi said the system will also minimise risk and transaction costs, quality assurance and encourage the farmers to produce more.

Mr Malekano said farmers will now, have no need to search for markets for their produce as TMX will be dealing with that and buyers will have easy access to large quantity and quality crops as they will have reliable data and information about the market.

“Farmers should now concentrate on production and it will enable crop boards to focus on supporting farmers to increase production while buyers will use ICT system to access the commodities they want,” he said.

Mr Malekano said the commodity exchange would help farmers to make decision on the price of the crops they sell and they can now deal with commercial farming.

The permanent secretary in the Prime Minister’s Office, (Policy and Coordination), Prof Faustine Kamuzora, said the commodity exchange would increase opportunities.

He said the value chain system from farmer to seller set to remove all leakages, so that ever participant would get what he/she deserves.

“To make farmers confident financial institutions must connect them to their mobile money so that they can have easy access to their bank accounts,” he said.


Thursday, July 19, 2018

BANKING TIPS: Customer-centric services needed

Kelvin Mkwawa

Kelvin Mkwawa 

It has been argued that when customers encounter a poor customer service, the majority of them will not complain but rather will simply take their business somewhere else. Customer service is very critical for the survival of the organization and one that cannot be ignored.

That is why I have written several times about the subject. A few weeks ago, I shared the importance of offering excellent customer service; it builds awareness and trust, improves customer retention, improves employee turnover, and improves brand image.

And last week, I shared three impacts of poor customer service; it damages the brand’s reputation, it kills potential sales deals, and it causes your top performers to leave your organization.

It is for the best interest of your organization to offer customer-centric services otherwise you can’t compete effectively. So, how can your organization ensure it offers customer-centric service? This week I will share some of the steps your bank can take to ensure it offers customer-centric services:

Educate and train your employees

Customer service is a very important tool to recruit and retain your customers. Make sure your employees are trained to ensure they have the knowledge, skills, and ability to make each interaction with the customer memorable by providing a convenient and positive experience which is above the customer’s expectations. In addition, you need to educate your employees on what impact customer service has on your bottom line (profits/loss line) and the role they need to play to ensure the positive impact.

Advocate simplicity

Customers want to deal with banks that value their business by fulfilling their demands faster and efficiently. Internal policies and procedures are designed to protect the bank’s interests but they can make it difficult for the customers to do business with you. Therefore, evaluate your process flows, systems, policies, and procedures from the customer’s point of view and make the necessary changes if needed to ensure customers’ requests are processed simpler, faster and accurately.

Promote customer service all around

Customer service should not be seen as a sole responsibility of customer-contact staff (i.e. tellers, salespersons, and relationship managers). Create a culture that everyone in your organization has a role to contribute to the success of each customer experience because it has been proved that the main reason for most customer service failure is due to a breakdown in an effective partnership between different teams in an organization. Hence train and educate your staff to understand how their work impacts the customer service experience and how they can contribute to the positive outcome of every customer interaction.

Encourage feedback from your customers

As I stated earlier, most customers will not complain when they encounter a poor customer service but will do so only if they feel like their feedback will be acted upon. This can only happen if you make listening to the voice of your customers as part of your staff’s daily responsibility. This can be done by training the staff in how to encourage feedback from the customers and use the information to make necessary changes which will have a positive impact on customer experience.

Customer- focused leaders

Most service initiatives fail because the leaders of the organization are not customer-focused. Traditional and usual ways of management need to be replaced with new styles that promote customer-focused service to ensure all leaders in your organization receive the required training in customer-focused leadership to implement the same in all levels of the organization.

In summary, for achieving excellence in customer service, banks need to clearly understand the needs of their customers and expectations.

Mr Kelvin Mkwawa is a seasoned banker


Thursday, July 19, 2018

What to consider when investing in shares


By Moremi Marwa

The capital market is a crucial component of the economy, putting savings and investments in the hands of those in need of capital.

The capital which is then used to generate economic output ultimately supports development and creating wealth.

A humming capital market can elevate a country’s socioeconomic conditions, as it has done in many economies where financial infrastructure and its supporting institutions are fundamental to economic development agenda.

When correctly harnessed and channeled, capital markets can prove to be transformative: not just for the economy, but for society too -- by unlocking opportunity and giving citizens a greater stake in their nation’s success (in the democratization of finance and wealth), capital markets can strengthen both individual prospects and the bonds of community, when many people are engaged in financing their economic development and are economically empowered.

For this to happen, there must be financing tools and products that may be used to mobilize savings for productive investments.

The economy needs a sizable investor base, made of by both individual households and institutions, not only by the quantity of their participation but also by the quality of their investment strategy and decisions based on the understanding and appreciation the fundamental workings of the capital markets.

In the last week’s article I shared some of the factors, approaches and activities for one to undertake during the process of saving and investing in financial instruments that are issued by participants in the capital markets.

I said, anyone who is keen on investing in the capital markets should have a clearly informed personal investment plan, followed by an evaluation of his or her risk tolerance level for various asset class (or securities within the asset class).

While on this, it is important for one to understand and appreciate a principle of investment that says: the higher the risk, the higher the return. I discourage the speculative mentality and “quick money” motives – it is not good for an investor, especially on value-based investments.

The element I emphasize on is for one to determine where he/she want to end up financially. In the thinking process towards achieving the outcome to such a determination, questions such as at what age one wants to retire, how much money s/he need in order to retire comfortably, how much time one have between retiring, how much money he/she need to work with and how much risks are comfortable and willing to take on – needs to be responded into in a careful manner.

Once you know the answers to these questions you will have a good idea of how much you need to invest to reach your goal.

Remember the wise saying which says: “if you do not care where you end up, any road will get you there”.

So, do not choose to take any road – because any road will not help you to get where you want, you need to be specific, for example, if you are 45 years old and you intend to retire at age 60 and your net income (after deducting your expenses and liability obligations, and without consideration for inflation and time value of value) is Tsh. 1 million a month.

This means that for you to achieve the Financial Freedom during your retirement, your Financial Freedom Fund Target should be to generate about Sh180 million by the year 2033. With careful planning, financial literacy, good investment selection and financial discipline – this can be achieved.

If you do not have necessary competences and skills for financial planning, or you are not as savvy and disciplined, how can you go about this? You need to start by a bit of researching on the idea, which should be followed by opening an investment account at the stock exchange via a stock brokerage firm.

As it with the bank accounts, which you use for your savings and investment purposes relating to financial products and services provided by banks, for investing in shares and bonds which are listed on the stock market, requires you to open an investment account. In our local environment, there are two primary routes you can take when it comes to investing in the stock market, you may have to use the services of the stock broker who will make investment recommendations based on your needs, desires and risk appetite; or the other option is for use to invest via a unit trust/mutual funds, i.e. the Unit Trust of Tanzania, which provides both diversification and professional management, coupled with researches and analysis.

Once you have opened an investment account, either with the stock broker or a mutual fund, develop the discipline to invest a certain amount, like the Sh1 million as above, on a constant/regular basis – this approach will give you the benefit of averaging, the average cost per unit share will be lower relatively. Along the lines of discipline on investing, you may need to note that stock have a tendency to go up and down, for you to create wealth in the stock market, do not be emotionally attached to a certain stock. Develop the discipline to always setting a stop-loss price – this being the amount you are willing to lose, but not beyond, and once reached get rid of the stock.

We talked about the need for diversification in order to manage your investment risk, I would like to end up by re-emphasizing on it, remember that the bedrock of all the investment advice in large part of human history has been: “don’t put all your eggs in one basket”. There is not better long-term risk management strategy than the diversification of investments.


Thursday, July 19, 2018

Techie helps firms know how clients perceive services

Akshay Shah. Photo File

Akshay Shah. Photo File 

By James Kariuki @TheCitizenTZ

Nairobi. Akshay Shah’s unique experience both in Kenya and abroad led to the development of the Ratemyservice technology.

Mr Shah studied at Warwick University in the UK and briefly worked in the country before moving to South Africa as a corporate management and board advisor.

After a decade, he returned to Kenya to work at a corporate management consultancy which enabled him to travel across East Africa, interacting with board members of corporate firms and major shareholders.

“I realised that most directors, company owners and top management teams hardly understood what their customers needed and I looked forward to improving their experience within the firms,” Mr Shah recalls.

The 37-year-old spent some time shopping for a favourable online bank but details available lacked essential input from bank customers. This ignited the Ratemyservice web application idea which he developed and tested at two local firms. He quit employment to concentrate on his IT startup.

“Today’s customer is highly fluid, seeks bargains, special treatment and is always shopping for innovative services that define how they transact their business on-the-go using mobile gadgets,” he says.

Mr Shah says he refined his mobile app enabling customers to give feedback on what they felt about bank services. They were also given an opportunity to suggest changes to enhance their experience.

He invested about Sh1 million to enhance his platform’s interactiveness. The new portal also gives companies access to a private interface where they view comments about their business as well as engage ardent customers keen on seeking responses on certain product issues.

“One of my clients sells electronics and has created a nationwide contacts database for all those using its products which it uses as an after-sales platform. It has helped to build loyal customers who have become oral ambassadors,” he said.

While he has earned Sh1.3 million from his venture, Mr Shah says he has kept his operational costs low by outsourcing services but plans to establish an internal product development team as his clients grows.

The technology provides a customer with an online “suggestion” platform to rate a company’s quality of service, staff, communication, and value for money. Customers have an opportunity to give a score for their satisfaction or dissatisfaction with any department including accolades for select officers.

Mr Shah says that some firms needed their IT systems customised where customer feedback is noted and unsavoury comments acted upon thereby helping restore the dissatisfied client’s trust.

He said that is registered and mans customer feedback services for 10 firms dealing in takeaway meals, auto-services, electronic after-sales and a retirement benefits management firm.

“A restaurant client of mine planned to stop making coconut rice with curry since they were unsure of the recipe and the cooking process. But clients protested and it was retained. This earned them new clients and higher sales,” he said. The service also gives firms a chance to engage customers on online platforms where feedback on products and services dispensed is monitored.

The site was this year’s overall winner in the e-commerce and business services category during the Nairobi Innovation Week, an event organised by the University of Nairobi for business startups. (NMG)


Thursday, July 19, 2018

MANAGING TAX RISKS: Does the tax amnesty apply to you?


In his 2018/19 Budget Speech, by the Minister of Finance and Planning announced a tax amnesty. The tax amnesty will involve remission of up to 100 percent of interest and penalties.

Last week, TRA issued a public notice explaining the scope of the tax amnesty, eligibility criteria and how one can apply for the tax amnesty. Knowing whether the tax amnesty applies to you or not is an important first step in the whole process of tax amnesty.

And if it does apply, to what extent? In this article, I highlight some circumstances the tax amnesty may not apply to you.

1. Are you compliant?

If you owed TRA tax but have already paid it in full, obviously, this amnesty does not apply to you. The intention of the tax amnesty “is to give relief to taxpayers with debts by waiving 100 percent of interest and penalties to motivate them to pay principle tax liabilities voluntarily and in installments, within the financial year 2018/2019” reads part of the TRA public notice.

2. Which tax?

The tax amnesty only applies for eligible types of taxes. Main those administered by TRA on behalf of the central government such as VAT, Income tax, Excise Duty, Stamp Duty, PAYE and Withholding tax. The tax amnesty will not apply to you if the non-compliance is in respect of tax not administered by TRA.

A service levy, for example, is administered by local government authorities. Non-union taxes applicable only in Zanzibar (such as VAT in Zanzibar) are administered by the Zanzibar Revenue Board (ZRB).

The tax amnesty will also not apply to you if the non-compliance is in respect of customs duties administered by TRA under the East African Community Customs Management Act, 2004. Also, the amnesty will not apply if the non-compliance is in respect of non-tax laws administered by TRA. This includes taxes such as gaming tax, skills and development levy, property tax, advertising fees.

3. Can you settle the tax debt in a year?

One of the conditions for the remission of interest and penalties is for you to commit (“confirm”) in writing to pay the principal tax amount within the financial year 2018/19 (latest 30th June 2019) excluding penalties and interest. If you think you are not able to make and fulfill this commitment, then the tax amnesty is not meant for you.

4. Are you ready to drop your tax objection or appeal?

The tax amnesty extends to tax objections pending with TRA and tax appeals pending at the tax courts. But, obviously, this will involve the aggrieved taxpayer who wants to enroll for tax amnesty to withdraw/drop his objection or the appeal and commit not to proceed with the same.

5. Are you under audit or investigation?

If you are under an audit or investigation by TRA, then the amnesty will not apply to you for the period and taxes being audited or investigated. If, for example, TRA is auditing your VAT affairs for the year of income 2016, then you will not be eligible for tax amnesty for VAT related to 2016.

But you will be eligible for tax amnesty for VAT matters related to years of income other than 2016 and all other eligible taxes.

6. Is the unpaid tax related to crimes?

The tax amnesty will not apply to you if the unpaid taxes related to tax crimes, human trafficking, money laundering and other crimes. You have determined that the tax amnesty may apply to you. Your next question is whether you should enroll for the tax amnesty or not. My next few articles I will continue focusing on the tax amnesty.

Mr Maurus is a partner with Auditax International


Thursday, July 19, 2018

DIGITAL TRENDS: Secret to understanding artificial intelligence

Innocent Swai

Innocent Swai 

Have you ever heard about the current hype on AI? Has your attention been grabbed by the screen (smartphone, Computers, etc.). Sometimes it seems like every other digital gadget or app is citing AI as it’s secret ingredient recipe for success.

AI is contributing to humanity a better future of leisure and creativity as machines are taking care of most dull routines. Conversely, it’s claimed that AI leads to rising unemployment rates, causing more civil unrest.

AI is creativity in the form of algorithms. Consider these the numbers 1 and 0 as arranged to create different perceptions like poverty, wealth, laughter, etc. When rearranged as ones, tens, hundreds, etc. they can go all the way to trillions in countless ways depending on where the zero (0) is positioned.

It could be termed as rearranging unknown patterns in order to have different alternatives. The rearrangement of these two digital numbers (1,0) is usually what offers countless possibilities for digital brands.

Every storey building has an elevator ride with two states; namely go (1) and stop (0). When the elevator is operating, it goes and stops at any floor several times even when there’s nobody. This could be time wasting, hence the necessity for AI automation to simplify Elevator routines.

A team of Engineers at one Company came up with a better arrangement. When people are approaching the lobby waiting for elevators; they have to press a button number on the centralized control panel; within a second, the panel responds by showing which elevator is at your service.

Such arrangements are replacing the human mechanical skills with algorithms. That’s Artificial Intelligence at its best. AI designed elevators have become an overnight success.

In other words elevators take people to their desired floors and then returns to the lobby to service others swiftly; hence the need for few elevators in storey buildings. Money is saved, wait time is minimised and a precious space for gardening rather than elevator infrastructure.

The race of technological advancement is increasing daily, but we don’t know how to get to the endpoint, or how far we have to go.

However, AI is creating easier ways to live and lengthening life. In this digital era, it’s not about transferring of labor from rural to urban areas as it used to be in the industrial age.

AI is augmenting our mental functions particularly our ability to make predictions and decisions. In the developed world, AI is already creating jobs as people are learning how to collaborate with robots.

The big task at hand is making our leaders (political& religious) to become like cats rather than dogs.

Why am I bringing these pets when we are talking about serious issues?

For an observant person, you might have noted that Cats are much more preferred than dogs to make meme and cute viral internet sensation videos.

While people domesticated dogs; cats smartly domesticated themselves to people’s homes. Other major differences; while dogs are bred to be obedient, trainable, dependable and predictable; cats are weird, surprising and magical.

However, there are more popular dog training videos; most captured cat videos have unpredictable behaviors when they are in their 9th life.


Thursday, July 19, 2018

YOUR BUSINESS IS OUR BUSINESS: Mengi and Roosevelt could, did – and WON


The tittle-tattle here today is about two very successful persons who were nonetheless born and lived/still live in different countries and times.

These are the 26th US President (1901-09) Teddy Roosevelt Jr. (1858-1919); and Reginald ‘Tough Reggie’ Abraham Mengi (born in 1949? />)…

Starting with the latter – call it favouritism or whatever; but I must confess the two of us were briefly classmates at Old Moshi Secondary School where he was popularly known as ‘Tough Reggie’ – Mr Mengi started off his career in Tanzania as a Managing Partner and, later, Chairman of Coopers & Lybrand-Tanzania.

Today, he owns IPP Ltd (Industrial Products Promotion), and is its executive chairman. IPP is a holding company with a bazillion subsidiaries engaged in manufacturing (bottled soft beverages, etc.) mass media ‘products/services’ (TV, radio and newspapers), mining, etc.The holder of an honorary Doctorate - and a Chartered Accountant (UK) and Certified Accountant (Tanzania) by training - Mr Mengi is listed on the as chairman of the Handeni Gold, Inc., IPP Gold Ltd.; the Confederation of Tanzania Industries (CTI); the Media Owners Association of Tanzania (Moat), the Economic Empowerment Committee at the Tanzania National Business Council (TNBC); a Member of the Institutional Investors Roundtable...

Furthermore, Mengi is also on the Board of the Commonwealth Business Council; chairman of the People with Disabilities Trust Fund-Tanzania; a member of the International Investors Round Table-Tanzania; and chairman, East African Business Council (EABC). Before all that stifling complexity, in the past Mr Mengi also held top positions at the National Board of Accountants and Auditors-Tanzania (NBAA); the National Environment Management Council-Tanzania (Nemc); the Leadership for Environment and Development International Board (Lead), and the Tanzania HIV/Aids Commission, Tacaids…

The other fellow – Teddy Roosevelt Jr. – was never really a businessman along the ‘Tough Reggie’ lines. He mainly dabbled (or specialized) in the military, politics, outdoorsmanship, pacifying warring nations (hence becoming the first American to win the Nobel Peace Prize in 1906) – and the US Presidency (26th US President, in office September 14, 1901-March 4, 1909). Oh, I shouldn’t forget that Roosevelt was also a good writer of books: 38 books in his lifetime, starting with ‘The Naval War of 1812,’ written at age-23. Others were Oliver Cromwell’s biography; a History of New York City; an autobiography and ‘writings on his hunting and frontier exploits.’

So, it can safely be said that the only possible link between these two historical heavyweights is in book-writing. But, even that link is gossamer, tenuous. Remember that Mr Mengi launched his autobiography on July 2 this year, titled ‘I can, I must, I will’ – while Roosevelt authored 38 books – and hundreds of magazine and newspaper articles.

But then, while Mengi ‘Can, Must and Will’ today, Roosevelt had already told his countrymen (and countrywomen): ‘Believe you CAN – and you are half-the-way there!’ “Our aim is to promote prosperity – and then to see that prosperity is passed around; that there’s a proper division of prosperity….” President Roosevelt stated.

“We won’t submit to prosperity that’s obtained by lowering the wages of the working class, and charging excessive prices to consumers; nor prosperity that’s obtained by swindling investors or getting unfair advantages over business rivals...”

Oh, there’s more of that juicy stuff, which our leaders should access and implement; just google ‘The Farmer and the Business Man;’ Roosevelt; August 1912… Cheers!


Thursday, July 19, 2018

Meeting discusses investments in EAC

The East African Community headquarters in

The East African Community headquarters in Arusha. Regional investment policies should be people-centred. PHOTO|FILE 

By Halili Letea @hletea

Dar es Salaam. Regional investment policies should be people-centered, representatives of civil society organisations (CSOs) have urged.

They should protect human rights and promote the environment of attaining sustainable development to have a win-win investment setting in the East African Community (EAC), they stressed.

They were speaking during their meeting here recently.

The meeting was run under the theme ‘Understanding the Changing Global Investment Policy Landscape and its Implications on the EAC’.

It also discussed the importance of conducting productive research and assessing financing from global systems before embarking on projects. Mr Burghard Ilge, a senior policy officer from a Dutch environmental organisation, Both Ends, argue that “the current generation of IISs [international investment agreements] has also failed to address the uneven balance of rights and responsibilities between foreign investors and host governments”.

He clarified that foreign investors enjoyed numerous legal rights without needing to worry about corresponding responsibilities.

“This fact is explained by the reality that 60 per cent of all investors to State Dispute Settlement claims are brought against developing countries and the situation has serious repercussions for poverty reduction, inclusive growth and sustainable development” he said Mr Ilge.

The executive director of the Southern and East Africa Trade Information and Negotiations Institute, Mr Nathan Irumba, spoke about unequal treaties which only consider rights and no obligations for investors and ignoring national legal system.

“Most treaties are unfair as they do not take into consideration local residents’ rights,” he argued.

Mr Arnold Kwesi from Uganda Consortium on Cooperate Accountability said most of bilateral investment treaties (BITs) and IIAs did not consider human rights in such a way that there were no social impact assessment, human rights impact assessment and environmental impact assessment and the fact that people’s welfare was not a centre for them.“How do you negotiate with the community that you don’t have information about it or when the information is only on one side, especially investors? Will the treaty be sustainable if you will spend much money when you haven’t involved communities?”

The executive director of Haki Madini Tanzania, Mr Amani Mhinda, said communities should be educated on how to benefit from projects.

Mr John Bosco Kanyangoga, a consultant from Rwanda, said Africans need foreign direct investment inflows, but that should be achieved in a healthy and sustainable way.

“Issues like technology transfer and tax mechanisms must be implemented in win-win situations for both parties,” he said.

Mr Jared Maranga, of Tax Justice Network Africa in Burundi, stressed that community consultations were a must.

“Respective governments must come up with strategies which will be beneficial to both sides -- investors and locals. Government agencies must connect people with investors. Policies and legislation should be amended to protect investors and people where projects are undertaken. Issues of land are extremely critical in many areas. Land is not just a commodity that an investor can buy as it has a different meaning in African societies like cultural and social heritage.”

Mr Ilge said the first obvious option was to simply let parties determine for themselves during treaty negotiations, which of the many fundamental human rights, labour rights, environmental rights and anti-corruption obligations they want to include in the BIT.

“Every single obligation to be imposed upon corporations would have to be the object of negotiation between the parties. This is not the most well suited approach as such negotiations would likely take a considerable amount of time and raise numerous controversial issues” he said.

Also, negotiation inevitably involves compromises, which may not result in an effective reinforcement of human rights obligations. For all these reasons, countries will likely be reluctant to embark on such an uncertain journey.

The treaty’s section on investor state dispute resolution must also contain a provision indicating specifically how human rights obligations imposed upon corporations can actually be enforced before an arbitral tribunal.

The provision must make it clear that an arbitral tribunal has jurisdiction over allegations of human rights violations committed by corporations.

Setting up a regime of direct obligations under a BIT without any enforcement mechanism will not only render these rights totally ineffective, it would in fact, as one author puts it, “not enhance human rights, but trivialise international law”.

An option on a case of human rights violations, respondent state should be allowed to raise any such allegations during the arbitral proceedings. This is the offsetting of damages or mitigation option. A tribunal would thus take into account such allegations when making its determination on the merits of the dispute.

Under ‘counterclaim’ option, a claimant investor would be permitted to file a claim, even in the face of human rights violations, but the host country would be allowed to raise human rights allegations in a counterclaim.

Mr Irumba stressed on a need of international debate on how to reshape the international policy framework and rules for investment in order to ensure that these indeed support the globally agreed ambition of inclusive and sustainable development for all by 2030.


Thursday, July 19, 2018

Will low rate of corporate income tax encourage investment?

Stivin Bonde

Stivin Bonde 

By Stivin Bonde

To achieve Tanzania’s vision of transformation into a semi-industrialized middle-income country by 2025, as articulated in the 2016/17 to 2020/21 National Five Year Development Plan, it is necessary to have a conducive environment for investors in the industrial sector.

Certainly, the government has started to take initiatives to support the industrial sector. For example, last year the Finance Act 2017 reduced the corporate income tax rate from 30 per cent to 20 per cent to industries which are dealing with assembling of vehicles, tractors and fishing boats for the first five years of operation.

Again, this year the Finance Act 2018 has reduced the corporate income tax rate from 30 per cent to 20 per cent for five consecutive years for a newly established entity dealing in manufacture of pharmaceutical and leather industries.

These measures aim to promote investment in manufacturing of pharmaceutical and leather products, create employment opportunities, increase government revenue and save foreign exchange.

But how much will an investor benefit from this reduced corporate income tax rate? I pose this question as for large manufacturing investments tax losses are usually generated in the early years of operations as a consequence of initial operating losses as well significant tax depreciation on initial capital expenditure.

Therefore, there is a risk that the benefit from such an incentive may not be so significant.

As an alternative, I would propose the reduced rate should apply to the first five years in which the company has made the taxable profit or alternatively should apply for a longer term period.

Currently I am working in Lusaka, where I am on secondment with PwC Zambia, and it is interesting to compare the journey taken by Zambia with regard to tax incentives for the industrial sector.

By way of background, Zambia also had a five year tax holiday which was introduced in 2007 for the investors who invested at least $500,000 in a priority sector (e.g. manufacturing sector) declared under the Zambia Development Agency (ZDA).

At that time the tax incentive was a corporate income tax at 0 per cent for a period of five years starting from the first year profits are returned; then, for years 6 to 8, the tax rate was applied to only 50 per cent of the profits; then 75 per cent of the profits in years 9 to 10; and thereafter 100 per cent of profits.

However, from 2012 the commencement basis was changed to refer to the commencement of operation – so a similar basis for Tanzania, and ultimately in 2017 the tax holiday incentive was repealed.

Nevertheless, Zambia still continues to provide certain targeted income tax incentives to the manufacturing sector – for example, a long term reduced corporate income tax rate of 15% on income received from the production of organic fertilizer and the chemical manufacture of fertilizer.

Taxation is a major factor that is considered by a potential investor in the decision-making process in relation to the optimal structure and investment return.

The investors are looking at tax-related risks as well as the opportunities before any potential investment in the particular country. Zambia’s experiment with corporate income tax holidays appears to have been short lived.

Such incentives may nevertheless have a place even if only for a short time so as to catalyse initial investment. My own experience however that what is more important are the tax costs that directly impact profitability by way of labour taxes or indirect taxes borne by the investor, rather than tax on the profits themselves.

Stivin Bonde is a Senior Associate at PwC – Tax Services, currently on secondment in Zambia. The views expressed do not necessarily represent those of PwC.


Thursday, July 19, 2018

Subsidise improved seeds, sunflower farmers plead

A butterfly and bees sit on a sunflower. PHOTO

A butterfly and bees sit on a sunflower. PHOTO | FILE 

By Gadiosa Lamtey @gadiosa2

Dar es Salaam. Sunflower farmers complain about high prices of improved seeds.

To tackle the situation and improve productivity, they call for government subsidy.

The farmers also want agriculture research institutes to produce large quantities of high-yielding seeds.

Currently, a kilo of improved sunflower seeds is sold at Sh35,000 and mostly are imported from India.

Sunflower is grown in more than 10 regions, but farmers still use old ways that do not improve productivity.

As a result, the ratio between production and processing varies. Open-pollinated varieties are estimated to have an oil content of 15-20 per cent while the modern seeds have between 35-42 per cent oil content.

Tanzania imports 60 per cent of cooking oils despite having huge potential of sunflower seeds, according to a Bank of Tanzania report in 2017. The country spends annually $120 million on importing cooking oils.

Agriculture Development Trust has established a facility to tackle such hurdles.

According to National Sunflower Farmers Association chairman Samba Pununta, large-scale farmers have begun using modern seeds.

“The largest share of sunflower farmers is made up of small-scale farmers who cannot afford the current prices. If these seeds are produced locally they can be sold at Sh10,000 a kilo. The government should use local institutions to produce high-yielding seeds.”

He was speaking during Sunflower Day held alongside the 42nd Dar es Salaam International Trade Fair.

The event brought together farmers, processors and other stakeholders.

“We are very grateful for the government for increasing tax on imported crude palm oil, but agriculture will not be improved if modern seeds are not distributed to all small-scale farmers who are the majority of growers…. They can’t afford modern seeds as prices are high.”

A study by the Agriculture Council of Tanzania (ACT) has revealed that poor quality of seeds was a major challenge in sunflower production. The ACT director for policy and planning, Mr Timothy Mmbaga, said the research established that farmers needed 3,000 tonnes of quality sunflower seeds annually.

To ensure that the majority of farmers get the seeds, the government should give a subsidy of Sh23 billion annually.

“After the government imposed tax on crude palm oil imports there must be an impact. So we must prepare strategies that will enhance the sector and the outcome should be seen,” he said.

“We must have our local source of modern seeds whereby it will be available all the time.”

According to Tanzania Trade Development Authority director general Edwin Rutageruka, the sunflower cooking oil has large market in Southern and Eastern Africa as well as Europe and Asia.

The chairman of the Tanzania Sunflower Oil Processors Association, Mr Ringo Iringo, pointed out that technology hindered processing.

That was why in 2016, Tanzania produced more than one million tonnes of sunflower seeds, but only 180,000 tonnes were processed.

That was in sharp contrast with South Africa where 970,000 tonnes of sunflower seeds were produced in the same year and 600,000 tonnes were processed.

“Ours is a big challenge,” he said.


Thursday, July 19, 2018

FRANCHISE: Brand equity depends on its customers

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

Accountants base business evaluations on historic performance and activities. They record income and expenses during the accounting period, work out profit and how shareholders equity changes from period to period. Unfortunately, by the time the accounts are published, the information is old.

New accounting standards address this shortcoming through “fair value” which differs from historic costs, because it values assets according to what they would fetch on the open market. Historic cost is what the asset cost originally less accumulated depreciation.

This approach caused problems for brand owners and one of the new accounting standards currently in use is a standard dealing with brands.

A guide on how a “fair value” for a brand should be measured is still being finalized. However, these accounting standards relate to companies with product brands such as Coca-Cola, Pepsi Co etc with no real relevance to franchising.

In franchising a brand is much more than the logo. Most successful franchisors recognize that brands are dynamic and need to adapt to local market dynamics without sacrificing their integrity.

It is important for the franchisor to know what the core of the brand is, which includes attributes, benefits, values and personality. However, even with franchisees as “partners” and most competitive positioning, there are no guarantees.

The franchisor only has influence and not complete control over the customer experience which involves franchisees and their staff.

A franchise brand can be explained in more than one way. First, it is the position you hold in the consumers’ minds telling them who you are, what you do and why you are better/different from competition.

Second, it is the franchise system’s tangible expression of vision, values and personality.

Third, it is the intangible equity that increases the value of the system. Fourth, it is the promise made to the consumer. Fifth, it is how you “look, speak and act” at every point of contact. Finally, it is what the franchisees pay for.

Managing a franchise brand is everyone’s responsibility including franchisees and their staff. Good internal systems, standards, quality controls, communication and well-trained personnel are important aspects of protecting the brand.

In franchising brand equity is dependent on its customers. It is a perception in the consumers mind, created or implemented by experience and brand positioning.

It is not what is promised but what the consumer experiences, it not just an arbitrary marketing thing. Focus is on the brand with a business model to drive and sustain its values. Consumers are attracted to different brands on the basis of matching the brand benefits with what they seek. Therefore, brands need constant nurturing.

Brands vary in power and the value they have in the market. A strong brand has high brand equity meaning it has a high brand loyalty, name awareness, perceived quality, strong brand associations and other assets such as trademark, logo etc.

Brand equity has emerged over the past years as a key strategic asset for franchise systems. Franchisors and franchisees regard the brand as a source of control and a way to build a stronger relationship with customers.

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


Thursday, July 12, 2018

Tanzania concerned as FDI inflows dwindle for three years


By Alex Malanga @ChiefMalanga

Dar es Salaam. Foreign direct investment (FDI) inflows into Tanzania have dwindled for the third year running, with analysts citing an unsound business environment as the reason for the decline.

They cite policy unpredictability, inadequate incentives to investors, delays by the government in making decision on some major projects and the multiplicity of regulatory bodies.

FDI inflows, according to United Nations Conference on Trade and Development, dipped by 24.4 per cent last year to $1.18 billion (about Sh2.6 trillion) compared with the 2015 level.

Last year it, FDI inflows dropped by 13.8 per cent compared with the previous year’s.

That shows something is wrong with Tanzania’s competitiveness, experts opine.

To reverse the trend, the Ministry of Industry, Trade and Investment on May 18, 2018 come up with a blueprint to address the challenges.

Speaking during the 59th Association of Tanzania Employers (Ate) meeting, the permanent secretary in the Ministry of Industry, Trade and Investment, Prof Elisante ole Gabriel, said the government was aware of some unresolved issues like conflicting laws and legal framework, impede businesses.

“We were ranked the 137th position globally in the Doing Business Report in 2018 compared to the 132nd position in 2017. But with the new blueprint in place, the challenges will be tackled,” noted Prof Ole Gabriel.

Tanzania Private Sector Foundation (TPSF) executive director Godfrey Simbeye advises the government to speed up the implementation of the blueprint to create a friendly environment to investors.

He underscored the importance of policy predictability to attract investors. According to him, the private sector likes changes.

He also attributed the dwindling of FDI inflows to unimpressive performance of the oil and gas sub-sector.

He called on the government to decide whether or not to a liquefied natural gas facility should be constructed.

To restore the investors’ confidence, the business environment should be improved.

“The expected relative risk/reward ratio is the driving force of investment decisions. As it happens, investors tend to invest in countries and projects where they expect the highest return and the lowest risk relative to alternative investment opportunities,” Mr Simbeye told BusinessWeek.

Return on investment, according to the report, is in decline across all regions, with the sharpest drops in Africa, Latin America and the Caribbean. Pointing out that global average return on foreign investment is now at 6.7 per cent, down from 8.1 per cent in 2012.

The lower returns on foreign assets also affect longer-term FDI prospects. As a result of the investment downturn, the rate of expansion of international production is slowing down.The modalities of international production and of cross-border exchanges of factors of production are shifting from tangible to intangible forms.

Going by the report, FDI inflows to Africa are forecast to increase by about 20 per cent in 2018, to $50 billion (about Sh113 trillion).

The projection is underpinned by the expectations of a continued modest recovery in commodity prices and macroeconomic fundamentals.

The report suggests for strategic review of investment policies for industrial development that would in turn attract FDI.

It advises policymakers to keep investment policy instruments up-to-date by re-orienting investment incentives, modernising special economic zones, retooling investment promotion and facilitation, and developing smart mechanisms for screening foreign investment.

Mr Simbeye, who is also, a member of Tanzania Investment Centre board of directors, says Ethiopia, South Africa and China perform well.

He would like the government to establish fully serviced industrial parks to attract investors’ attention and hence attract more FDI.

“The challenge that we are grappling with is lack of the ‘FDI targets’. We should emulate South African government, which has formed a task force comprising four ministers and representatives from the private sector to raise $100 billion (about Sh226 trillion) in three years,” Mr Simbeye said. Confederation of Tanzania Industries (CTI) second vice chairman Shabbir Zavery cites the multiplicity of regulatory agencies, attracting multiple fees, sending high operational costs and scaring away investors.He also linked negative the performance to the government’s spending cuts by banning what was termed as “unnecessary government officials’ foreign trips”, purchase of first-class air ticket and an order that the government meetings be held in government buildings instead of expensive hotels. Ceteris paribus, these have a negative impact on aggregate demand for products and hence discouraging investors.

“We are competing for FDI but the question is on how aggressive we are to win it,” noted Mr Zavery. “We need to bolster confidence to foreign investors that Tanzania continues to have stable policies and a conducive business environment.”

Economics professor Samuel Wangwe, of the University of Dar es Salaam, said some investors, who were in the past taking undue advantage, were feeling the pinch of the opaque regulatory environment and corruption crackdown, which increased significantly since the fifth government came to power in 2015.

“The economy is not in a better shape due to increased regulatory investment policies,” he said. “However, this is just a transition period and already there are signs that the situation is improving.”

According to him, encouraging progress in dealing with unscrupulous businesses has been made.

He said the path ahead was clear and Tanzania would be well positioned to attract FDI sustainably.

FDI is the largest external source of finance for developing economies.

It makes up 39 per cent of total incoming finance in developing economies as a group.

It now accounts for less than a quarter in the least developed countries, with a declining trend since 2012. Prof Wangwe said if Tanzania was to benefit, it should attract FDI which triggers technology spillover, assist human capital formation, help create a more competitive business environment, contribute to international trade integration and enhance development.

He said the government had powers to improve the situation.

“This bodes well for the future of Tanzania’s investment environment should the government continue to try to tackle these issues through its reform agenda.”

Although FDI inflows are declining, Tanzania is in a stronger position compared with other member states of the East African Community, with analysts linking the performance with relative better economic growth, return on investment and lower competition in the country.

Going by the report, last year’s investment inflows to Uganda and Kenya stood at $700 million and $672 million respectively.


Thursday, July 12, 2018

Seaweed contribution to Zanzibar economy increases

Women sort seaweed for sale. PHOTO|FILE

Women sort seaweed for sale. PHOTO|FILE 

By Rosemary Mirondo @mwaikama

Dar es Salaam. Seaweed is common name for countless species of marine plants and algae that grow in the ocean as well as in rivers, lakes and other water bodies.

The produce has become one of the highest commercial products for exports due to its mineral content in iodine, vitamins and calcium.

Zanzibar is the third producer of seaweed after the Philippines and Indonesia.

Zanzibar exports seaweed to Denmark, US, China, France and Belgium. Locally, there is a low demand for it in Dar es Salaam, Bukoba and Arusha.

Zanzibar Seaweed Cluster initiative secretary Rajab Ali Ameir told BusinessWeek during the 42nd Dar es Salaam International Trade Fair that seaweed was introduced in the Isles in 1986 from the Philippines.

“Two types of seaweed are grown. They are cottonji which has a high content of jelly and therefore expensive. The second type is spinosium whose jelly content is low and therefore less expensive,’ he said.

According to him, Zanzibar produces 15,000 tonnes of seaweed annually from about 24,000 farmers. A kilo of it is sold at Sh500-1,000.

Farmers established clusters that were later helped by the Commission for Science and Technology (Costech) to add value. He noted that through Costech guidance, the clusters came up with different types of products including soap, jam, lotion, massage oil and even snacks.Unido gave equipment worth $80,000 for establishing small-scale industries to add value to seaweed.

The Zanzibar government is also in a process of establishing a semi-refined carrageenan plant that will be used to extract the product to produce gelatin that has been added value instead of being exported as raw material.

However, he noted, challenges were there. They include difficulties in packaging materials to attract buyers internationally.

The other challenge is the lack of seaweed innovation parks.

Meanwhile, Costech acting director general Amos Nungu said the commission had been striving to help the public solve socioeconomic challenges.


Thursday, July 12, 2018

Tanzania horticultural body awaits government move on tax cut plea

Taha executive director Jacquiline Mkindi

Taha executive director Jacquiline Mkindi during her visit to Mt Meru Flowers at Tengeru in Arumeru District. PHOTO | ZEPHANIA UBWANI 

By Zephania Ubwani @ubwanizg3

Arusha. Horticultural industry players are awaiting the government’s action to their proposals to reduce taxes.

These include VAT on various agricultural inputs such as the cold storage facilities, plant protection substances and packaging materials, among others.

The proposals were sent to the Taskforce on Tax Reform under the ministry of Finance and Planning in March this year by the Tanzania Horticultural Association (Taha), a lobby group based here.

“We have challenges on the taxation. They have implications on the horticulture industry,” said Taha Policy and Advocacy manager Kelvin Remen.

He told BusinessWeek that the horticultural stakeholders through Taha wanted reforms on some taxation laws and regulations that he said hindered the growth of the export oriented sub-sector.

Mr Remen hinted the Budget speech delivered in Parliament recently by the Finance minister and the Finance Bill 2018/19 that did not highlight their proposals, but are optimistic the government will act on their requests.

“The proposals submitted are solutions to most of the taxation challenges faced by the industry players which hinder the growth of horticulture sub sector due to unfavourable business environment,” he said.

Key among the reforms sought are with VAT Act, 2014 which, according to the official, now applied to several agricultural inputs and implements which were initially exempted.

Under it, items like biological control agents, storage, post-harvest and cooling facilities and equipment, packaging materials, refrigerated containers and peat moss agro-nets are taxed.

Taha wants the items on the list as well as spare parts for technologies like the greenhouse, irrigation system equipment such as dam liners and pipes also to be considered for exemption.

“These are important items and equipment in modern farming. Therefore, exempting them will make them affordable to farmers, reduce post-harvest losses and increase productivity in agriculture,” he said.

Also requested for scrapping is the import duty on packaging materials for horticulture produce.

They are currently charged import duty of 25 per cent and 10 per cent for printed and unprinted labels respectively.

Packaging materials are essential elements for preserving the quality of horticultural products such as flowers, vegetables and fruits in particular. Most of the quality packaging materials have to be imported.

Taha also want waiving of excise duty on plastic packaging materials for wrapping horticultural produce for export markets.

Currently they are charged excise duty for importation. “The excise duty on packaging materials makes Tanzanian produce more expensive and less competitive in the international markets,” said the horticulture Sub-Sector Fiscal Reform Proposals for Finance Act 2018/2019 sent to the ministry.

The Tanzania Revenue Authority (TRA) was accused of forcing the importers of horticultural inputs and equipment ‘’very high and unfair” taxes because of questionable tax assessments.

This, according to the report, has made the horticultural companies to incur significant losses during importation “to the extent that they have stopped importing even the very important agricultural inputs to support their farm operations”.

Taha is also up in arms over the fire levy charged on the horticultural farms and want the entities exempted from paying the fees. Presently they are charged Sh500,000 to Sh2 million per annum depending on the size of the farm.

Since fire and rescue services are located in towns and the farms away from the urban centres, horticultural farmers feel paying the levy was wastage of money since they cannot easily access the services during time of need.

Many farms have set their own fire control systems “and therefore charging them fire levy is an added cost of business”, the report added.

Horticultural production has grown steeply in the last five years, thanks to a favourable environment for investors and rising demand in the overseas markets.

According to Taha CEO Jacquiline Mkindi, the exports will hit $ 1.3 billion in three to five years’ time if the current production trend is sustained.


Thursday, July 12, 2018

MANAGING TAX RISKS: Should loss-making firms be taxed?


The question of whether a business making losses should pay income tax or not is especially tricky.

Taxing a genuinely loss-making business does not seem equitable. Making losses in the first few years of operations seems to be a business norm.

The main reason being the capital investment and the low customer base that a new business may experience at the beginning. Also, the income tax law allows a loss made in one year to be carried in the next year of income.

So, a company can be profitable but not pay income tax due to the utilization of losses credits from previous years.

There are also several genuine reasons even a long-established business can make losses. But loss-making can also be artificial.

A tax avoidance plan. So taxing loss-making companies can be justifiable as an anti-avoidance measure.

Generally, a company in Tanzania pays income tax on a taxable profit it makes in a year of income. Taxable profit is determined by deducting all allowable expenses and allowances from the all the sales (or rather revenue) made during the year.

Several rules are applied to determine which expenses are allowable and which ones are not. So, if a company makes a loss in a year of income then, no income tax is payable.

However, this may not true for a company in Tanzania which is in a loss position for three consecutive years of income.

Alternative Minimum Tax (AMT) rules were first introduced into the current income tax law in 2008. Generally, under the AMT rules, if a company has been loss-making for three consecutive years, in the third year, income tax will be charged on its turnover.

Initially, AMT rules would only apply to companies whose losses were caused by tax incentives enjoyed by those companies. But in 2012 the rules were reformed to apply generally to any loss-making company.

This, unfortunately, brought into the income tax net even the genuinely loss-making companies.

So, the question is to what extent should a loss-making company be taxed? Ability to pay is one of the key considerations in tax policymaking.

Ever since the introduction of AMT rules in 2008, the AMT rate has been 0.3 per cent of turnover.

This is despite the several reforms made around the AMT rules. But this year, this has changed. Initially, the bill to the Finance Act, 2018 proposed to increase the rate to 1 per cent.

Whilst the intention is, probably, to prevent tax avoidance, one also needs to ensure that those who genuinely are unable to make a profit will be to pay the tax. Otherwise, the additional tax burden will only serve to kill the business.

So, it appears that the proposed 1 per cent rate did not sail through the parliament. The Finance Act, 2018 increased the rate to only 0.5 per cent.

But like most income tax reforms, there is always a problem with the transition period. The reform takes effect from July 1, 2018. What rate should company whose year of income started before 1 July 2018 apply? For example, a company whose year of income started January 1, 2018 and will end December 31, 2018.

Should it apply the old rate, the new rate or do the splitting? I think it is an area that TRA can guide through practice notes. A better alternative is for the minister to clarify by issuing regulations.

Mr Maurus is a partner with Auditax International


Thursday, July 12, 2018

YOUR BUSINESS IS OUR BUSINESS: Population explosion: blame China, India, US


Yesterday, July 11, was ‘World Population Day’ (WPD), with this year’s theme being ‘Family Planning is a Human Right!’

WPD focuses attention on the urgency and importance of population issues – marked by activities and events that draw attention to the need to work together on population growth and related issues.

July 11, 1987 was designated ‘The Day of Five Billion.’ It was on that day when the world population reached 5 billion, up from 4 only 13 years earlier!

In historical perspective, the world’s ‘living’ population totaled some 7.6bn in May 2018, up from 7.342bn on September 30, 2016 – and from a relatively measly 400 million around 1,000CE!

It took 804 years for the population to reach one billion by 1804CE. Then, it only needed 156 years to add another 2 billion – bringing the population to three billion in 1960…

In the next 40 years, some three billion ‘earthlings’ were born, increasing the ‘living’ to six billion by year-2000.

Add another billion in the next 16 years – and the world population exceeded seven-billion in 2016, reaching 7.6 billion in May 2018… And still counting!

[To ‘help with the counting,’ google world-population/?>].

According to the ‘World Population Clock,’ Planet Earth was home to 7,342,686,578 humans-alive at 17:13hours UTC (Universal Time Coordinated) on September 30, 2016 – and was projected to reach 7,483,223,649 this year.

In fact, the population had reached 7,632,870,400 head by 14.20hours on July 1, 2018 – and still counting…!

China was home to the largest segment of the global population: 1,376,745,728 persons. [population.php?pc=world>].

Second most populated was India (1,296,834,048 souls), followed by the US (331,026,400); Indonesia (262,936,096); Brazil (218,622,302); Pakistan (207,862,512); Nigeria (195,875,237); Bangladesh (177,330,992); Russia (133,795,056); Japan (126,168,160); … Tanzania: 54.2 million, as per NBS).

When the population reached 5-billion on July 11, 1987, it discombobulated stakeholders in the planet’s welfare. Stakeholders the likes of the UN Development Programme, the UN Fund for Population Activities and others were disconcerted.

So, they created ‘World Population Day’ on the back of ‘The Day of Five Billion’ – perhaps little knowing that there’d just as soon be Days of ‘Six Billion, Seven Billion’ – and counting.

It took 800-plus years in early Christendom to procreate 600 million humans, thereby increasing the population from 400 million in year-1,000CE to a billion in 1804CE.

In stark contrast, it took only 214 years to increase the population from a billion in year-1804 to 7.6bn in May 2018!

Clearly, population growth was at a snail’s pace – for lack of a better phraseology – in the early Christian era. Then it gained momentum post-1000CE, partly on account of “unwanted or accidental pregnancies, estimated to contribute about 30 per cent of the population growth” today.


We’re also told that “world population growth is slowing down; but it’ll take about 100 years before it stops!”


What’ll happen next if and when population growth stops – but the Grim Reaper, Death, continues to take its toll right, left and centre?

What will happen then? I ask you… Yes: YOU! Cheers…


Thursday, July 12, 2018

DIGITAL MARKETING: The mother of inventions

Innocent Swai

Innocent Swai 

Do all original business ideas come from visionary geniuses? Actually, most original business ideas come from ordinary people. We must learn how to “borrow liberally, combine uniquely and create their own bespoke blueprint,” said Tim Ferris.

Recently, there was a competition for Entrepreneurs aged below 35 years young organised by a famous businessman. He only wanted to pick the best two winners in a “DREAM TO GREATNESS“ original business ideas writing competition.

And the winners have been announced. One of them is a Tanzanian lady, Miss Wakonta Kapunda.

There is a proverb which says that necessity is the mother of invention. For Ms Kapunda, it all started as an accident which left her paralysed everywhere except a functioning head. She only uses her tongue to receive and make calls.

Moreover, her tongue scrolls through her smartphone and sending texts.

Till when she was offered a programme known as Nuance Dragon Naturally Speaking, she used to type using her tongue as well.

Her life story after an accident in high school is inspiring. It was a search for a business original idea. She had to figure out her own formula for success through self-education. She taught herself how to write Film Scripts.

Three things gave her a breakthrough. She got all the resources she wanted from the Internet. She wants to do everything when it comes to being a scriptwriter and sees no reason why anything should get in the way of achieving if her mission despite of her challenges.

Her tongue, a smartphone, a computer program and the internet has provided everything in her life. Her curiosity made the whole difference. With her own initiatives, there is no limit to what she can create in art form. For her it’s totally a free digital world of exploration, a constant discovery, and who knows the sky is the limit. All the information she has ever needed to learn is found online.

In other words all her success can be boiled down to two things; passion and dictating on her Nuance Dragon Naturally Speaking Program.

Simple software + Speaking + Passion = more time to write. Thus all for her.

In the “DREAM TO GREATNESS“ original business ideas completion, there were no rules. Just a tweet. I wonder why? In 1997, Steve Jobs said, “here’s to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes.

Those who see things differently, they’re not fond of rules.” The fact there were no rules, says a lot about collaboration as the new game in searching for new ways to revolutionise current industries.

Just by looking back, business original ideas were taking much longer time to be realised.

It could be we no longer need rigid perfectionists who comes up with (un)original ideas; we need thinkers who can see problems from different points of view and appreciate; there could be several alternatives for reaching better conclusions.

Today, the problems facing our businesses are significantly more complex than in earlier generations. The Internet is making things happen much faster as we have seen knowledge is being much more democratized.

For her to win, thanks to technology which provided more access to all the information she needed on script writing than a highly trained script specialist a generation ago. The Internet has become an enabler for useful collaborations hence a competitive advantage if it’s leveraged.

Today, there are diverse major efforts in which certain techniques are being applied (un)consciously to solve tough business problems. However, working smart is the formula for solving most world’s difficult problems. Go Figure!


Thursday, July 12, 2018

What to consider when you are investing


When thinking about personal finance – what matters are three things: spending, saving and investing; striking the right balance to these is key, whether you are defined as rich or poor. Getting the right mix between spending, savings and investing is one of the major challenge to many of us – except for those who are “lucky”.

Even for these few, figuring out what to do with whatever the amount of money earned and could be spend, saved or invested is not easy.

Among the three (spending, saving and investing), investing is the hardest —whether investing for your life goals, investing for children’s education, investing in preparation for bad times, investing for retirement and financial freedom, etc.

In this article, I will focus on investing, particularly investing in listed shares. Before I get into that — there are many forms of investment and many asset classes that an investor could choose from. One may decide to invest in bonds, term deposits, REITs and CIS units, bonds, etc.

In the process of investing, directly or indirectly, there are risks to be managed, that’s why there are other financial products traded in stock markets that assist investors in managing investment risks — products such financial derivatives, exchanges traded funds, indices, etc.

Narrowing whatever I have just allured into above, let’s focus into some of the factors one would consider when investing:

The point to start with is to determine where you are financially and what is your personal investment goals — as a matter of fact, before embarking on any investment decision, it is recommended that you consult yourself honestly as you can, taking into consideration your financial situation, i.e. you need to figure out your net worth – and how is this achieved? First, it is by adding up all your assets and subtracting all your debt obligations; second, develop a budget by listing all your monthly income and all your monthly expenses. These two steps will tell you how much money you have available for investing.

It is important that you determine how you relate to money and how much risk you feel comfortable taking.

This means, one of the things to consider is figuring out your investment goals versus your level of risk tolerance — sometimes it isn’t easy for one to self-consult, in such cases it is advisable that you consider accessing the advice of professionals. Always remember, there is no guarantee whatsoever that you will surely make profits in your investment process.

What is true though is, if you get rights your facts about investing and with an intelligent investment plan, you can surely gain some financial security and can enjoy the benefits of managing your money in a smarter way.

Once you have a clearly informed personal investment plan, follow on it by evaluating your risk tolerance level: it is important to know that all investments involve some degree of risk.

The degree of risk varies from one asset class (or securities within the asset class) to another. For example, shares are traditionally investments that have high degree of risk compared to bonds or bank deposits. But, it is important to also note a principle of investment that says: the higher the risk, the higher the return.

So, the key is for one to be able to establish the maximum level of investment that s/he is willing to lose in case the investment outcome goes against expectations. In this process, it is good to also determine at which point in time you will need cash for spending, not for investment.

The point of cash need requires careful consideration because under normal circumstances investment in listed shares should be looked into a medium to long-term horizon. Speculative motives and “quick money” mentality should be discouraged. The quick-money strategy is as good a strategy until it is not good for you.

If you are pursuing a goal that have a medium to long term horizon, you are likely to make more money by carefully investing in asset categories with greater risk, such as shares rather than restricting your investments to assets with less risk, like cash equivalents e.g. opening a savings account or a bank deposit.

The other element is for one to determine where you want to end up financially -- this can be achieved by asking yourself specific questions, with related answers.

Questions such as at what age you want to retire, how much money you need in order to retire comfortably, how much time you have between now and then, how much money you need to work with and how much risks are you comfortable and willing to take.

Once you know the answers to these questions you will have a good idea of how much you need to invest to reach your goal. Do not choose to take any road, be specific, i.e. if you are 45 years old and you intend to retire at age 55 and your earning is Sh1 million a month.

This means that for you to achieve the financial freedom during your retirement period, assuming you have not started investing already, you will need to apply this financial model: Take your Sh1 million multiply by 12 months then multiply by the different of years between now and the time you retire i.e. 10 years.

This way your Financial Freedom Target should be to accumulate about Sh120 million by year 2028. This is a simple modelling exercise that excluded other factors i.e. inflation, time value of money, etc. We will continue next week.


Thursday, July 12, 2018

BANKING TIPS: The impact of poor customer service

Kelvin Mkwawa

Kelvin Mkwawa 

Great customer service should be the heart of banking service delivery. As competition is fiercer than ever, customer service is becoming an increasingly important factor in the banking industry and offering excellent customer service is emerging as the valuable way for banks to differentiate themselves from their competitors.

A few months ago, I shared why excellent customer service is important than anything else in the banking industry; It builds awareness and trust, it increases customer retention, it improves employee turnover, and it improves your brand image.

More importantly, customers who receive excellent customer service will improve your profits by returning to you with repeat business.

So, would you think every bank would strive to provide excellent customer service to their customers but that is not the case?

In today’s highly competitive world, a bank can gain cutting –edge not through distinguished processes, systems or technology, which can easily be duplicated, but through excellent customer service.

More than anything, a customer would like to get an excellent customer service but unfortunately, in our banking industry, customer service experience is awful.

Personally, I have experienced and witnessed poor customer services countless times in more than one bank.

Therefore, it is a challenge that needs to be addressed urgently. According to the American Express Global Customer Service Barometer survey, 96 per cent of the customers who received poor customer service will not make a complaint and approximately 88 per cent of them will take their business elsewhere.

Hence this week, I will argue the importance of the banks to offer an excellent customer experience by sharing the side effects of bad customer service.

It will damaged your reputation

If it is not bad enough to lose your customers, extending bad customer service to your clients will damage your band.

Your organization’s reputation is extremely valuable and is not something you want to lose.

However, when you extended a bad customer service to your clients, your reputation will be the first to take a hit; customers will talk about you negatively and tarnish your brand to the masses.

In the Digital World, we are living in today; customers are quick to write negative reviews for their entire social media World to see when they have experienced a bad customer service.

Several studies have shown over 90 per cent of the customers who received bad customer experience usually tell at least one other person while about 54 per cent tell at least five (5) other people.

This means your brand will lose mouth marketing which is arguably the most valuable marketing outlet a brand can have.

It kills potential sales

Bad customer service experience not only kills sales but even the prospective sales deals. Extending customer service should not be limited to your current customers only but to all interactions with anyone who is interested in doing business hence they should be treated as your customers.

Imagine after you meeting a prospective client, she/he raised a concern but you never respond back; she/he would think if they treat me this way when they try to bank me, how are they going to treat me once I am their customer? First they will not refer you to their friends, families or associates and secondly, it is worth to note that no sales leads can be converted into sales with bad customer service.

Not only you will lose customers but you run the risk of losing your best employees as well. When your organization has a customer service issue, you will have a lot of complaints and unhappy customers which leads to burnout and dissatisfaction of your best employees.

In addition, if your organization has a bad reputation, there is a high chance your top performers will leave you and no talented and skilled person in the market would want to join your organization.

Today’s customers are highly educated and knowledgeable so without customer-centric culture in your organization, it will be difficult to differentiate from your competitors.


Thursday, July 12, 2018

Company rolls out door-to-door services for food

Nikuze Food Products managing director James

Nikuze Food Products managing director James Kunyangana at his food store. Photo Paul Owere. 

By Paul Owere @p_owere

Dar es Salaam. Dar es Salaam is the commercial capital of Tanzania, with an estimated population of about six million.

This population has to be fed to remain productive.

However, buying groceries in a city like Dar es Salaam can sometimes become a nightmare given the type of hassle that you one has to go through..

In most cases one has to dedicate a whole day to do his or her shopping because not everything is available at a one stop centre to save time.

It gets worse during the rainy season as in some of the markets infrastructure is poor and the threat of communicable diseases is high.

Nikuze Food Products is set to launch a new service in Dar es Salaam this month to make grocery shopping as easy as possible. Nikuze Food Products managing director James Kuyangana told BusinessWeek that the company was set to make a door-to-door delivery of vegetables, fruits and other food items within Dar es Salaam.

“Our services are tailored to each customer’s requirements and we only count our services as satisfactory after the customer is satisfied,” he says.

The pilot scheme has proved successful with the company having been serving three five-star hotels in Dar es Salaam for the past four years.

“The experience that we have attained at that level tells us that we are ready to roll out this project to the rest of the city to save especially the working population of the hassle of running around the city,” he says.

“We guarantee to supply the same type and quality of groceries at competitive prices to save them the hassle of price fluctuations that is the norm at many outlets in the city.”

The question is how to guarantee the availability of produce throughout the year given the fact that some of the crops are seasonal.

According to Mr Kuyangana, the company has signed supply agreements with several farmers across the country who will supply the produce throughout the year even during the low season when items such green vegetables tend to become scarce.

“Tanzania is such a diverse country gifted with different types of climatic conditions in different areas therefore there is no way that the whole country can lack the products that are listed on our catalogue,” says Kuyangana.

Armed with a modern food shop and storage facilities in Kinondoni, the company also has its own gardens.

“With our well-trained personnel who work round the clock, we are now ready to give Dar es Salaam its first reliable grocery shopping with a turnaround period that is unbeatable,” he says.

According to him, from the time a customer completes the order form which is available online, at, it should take between 30 minutes and one hour for the delivery to be made at the customer’s door step.

In an increasingly environmentally conscious population the company takes into consideration the type of packaging materials as well.

“We have made it a policy that we are going to use the packaging materials that will not ruin our environment; instead we shall opt for environmental-friendly bags to deliver our products.”


Thursday, July 12, 2018

FRANCHISE: Structural options of franchising

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

In the early planning stage to franchise a business it is advisable to consider various structural operational systems in order to ensure effective corporate governance needed to assure franchisees of the safety of their investments, manage the risk, provide the most effective and efficient means to penetrate the market and ensure that as a franchisor resources are available to service the franchisee’s needs.

Prospective franchisees will invest time, money and sometimes a lifetime to deliver your brand’s promise. As such they need assurance that your franchise system will survive to eternity. A solid corporate governance structure is key to this.

Sometimes a separate corporate entity is incorporated to own the franchise network with the existing entity choosing to continue opening company-owned outlets where this does not infringe on franchisee territories.

The old entity licenses its intellectual property rights to the new entity to give the latter a legal base to own the franchise network. Both would need strong independent boards of directors to assure franchisees as earlier stated.

There are generally three basic methods used to structure a franchise system, namely individual franchise, area franchise and master/regional franchise.

In an individual franchise, the target market is divided into franchise territories with a single franchisee acquiring the right to operate and manage the franchisor’s business from a location in each territory.

This system normally generates the highest revenue for the franchisor because discounts, rebates and deductions do not apply on the set franchise fees as in other systems. However, this structure also requires a higher service level as a larger number of franchisees will need to be supported.

In an area franchise, the franchise rights for a particular geographic area-normally within a country or region-are granted to an area developer.

The area franchisee may then either develop individual franchise units for its own account or find independent franchisees to develop franchise units.

In the latter instance the area developer can have an equity interest in its “area franchisees”. The system reduces the resources needed by the franchisor.

The area developer has the responsibility to service franchisees in his/her area using the franchisor’s guidelines and standards and in doing so reduces the resources needed by the franchisor.

The area franchisee takes a fee for this service performed on behalf of the franchisor thereby, reducing the franchisor’s income.

In a master/regional franchise arrangement, the franchisor grants the development rights in a particular market, usually a country or region, to a master franchisee who then takes on the responsibilities of the franchisor in the particular country or region.

The master franchisee then develops the franchise system within the country or region. The development is in full accordance with the franchisor’s standards and quality control.

Normally the parties agree beforehand on the target outlet numbers to be opened per period.

Most foreign franchises you see in East Africa follow this structure. The master franchisee structure is similar to that of an area franchisee.

It is in particular used when the franchise operation is some distance from the franchisor base e. g. in a different country.

Each of the above structural methods has advantages and disadvantages which will depend on the circumstances under which the different structures operate.

A franchisor may therefore decide to use a combination of these options in different markets and for different reasons.

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


Thursday, July 5, 2018

Reasons behind decline in gas exploration revealed

A rig at an exploration site in deep sea.

A rig at an exploration site in deep sea. Natural gas exploration in Tanzania has slowed in recent years. PHOTO | FILE 

By Elias Msuya @TheCitizenTZ

Dar es Salaam. Tanzania’s natural gas exploration activities are dropping amid reports that some investors are contemplating to sell their stakes and focus on other countries.

The government has confirmed that the number of gas exploration licences for eight companies has dropped from 26 to 11 within a decade.

Recently, Parliament’s Budget Committee asked the government to conduct a thorough analysis on the reasons behind the fall.

US Exxon Mobil is seeking to sell its stake in gas field off Tanzania to develop a bigger project in Mozambique.

Exxon Mobil holds a 35 per cent stake in Tanzania’s deepwater Block 2 field that was discovered early this decade. It holds an estimated 23 trillion cubic feet of gas, according to the website of Norway’s Equinor, which operates the block and holds a 65 per cent stake.

According to the Reuters, the prospect had faced repeated delays in recent years due mainly to a lack of infrastructure and regulation for the country’s nascent oil and gas sector, complicating any sale. The value of the asset was unclear due to early stage of development and uncertain future, the news agency reported. The acting director general of the Petroleum Upstream Regulatory Authority (Pura), Mr Charles Sangweni, told BusinessWeek: “We are very smart with contracts to make sure that we do not repeat the previous mistakes. So companies are annoyed with this and that’s why some of them pull out. As you know this is business and they want to maximise profits.”

He stated that no company had pulled out just for an unfavourable environment. “It just depends on exploration contracts.”

He clarified that the Petroleum Act gives companies 11 years of exploration of which is divided into three consecutive periods of 4:4:3.

“For the first four years, the company will explore the area. If it finds gas, it confines itself to a particular block and then moves to another. If it loses it also loses a half of the bloc and it continues to another for the second four years period.

“If it loses at the second block, it gets another three years. If it loses again it also loses the whole block. But if it gets at the first block and misses at the second block it can apply for the development license. That’s why most companies leave. Even if we would register 100 companies we don’t expect them all to win,” he said.

He also mentions the falling of world market prices, saying the trend discourages some companies to continue with the business fearing to risk their capital.

Natural Resource Governance Institute director Silas Olang concurs with Mr Sangweni on the drop of oil prices globally as an international factor.

“In 2015 when investors came, gas prices in the world market were $12-14 per unit. The prices have dropped to $8 per unit. So if you combine the processing costs it doesn’t pay,” he said. However he explained that the oil price had started recovering in recent months and investors could be convinced to remain in Tanzania.

Speaking on internal factors, Mr Olang said the amendment of the Mining Act done in 2017 sent shock waves through the mining community.

“Costs have increased in some areas of investment. There is also the issue of banking in which they are required to bank their fund locally. How safe is our banking system? How capable is it?

“Also there’s the issue of arbitration of which they are now required to log their cases to the local courts in case of misunderstandings. How impartial are the local courts? They seem to be confident with international courts.”

However, Statoil Tanzania which operates in Block 2 with partners ExxonMobil and TPDC as the license holder told BusinessWeek that they were proceeding with the operations as usual.

The Statoil spokesperson for International Upstream, Erik Haaland, said they had completed a successful drilling campaign in Block 2 early in 2015 and finalised a commitment well in January 2018. “The drilling campaign resulted in 15 wells and nine discoveries. Over $2 billion has been invested to date in Tanzania,” he stated in an emailed communication. He said the current phase of activities requires an establishment of the commercial and fiscal framework (Host Government Agreement) that will enable the development of the resources discovered in Block 2.

“We believe through collaboration, cooperation and support from the government this endeavour will become possible for the benefit of all parties involved,” he said.

Apart from Exxon, other companies in planned LNG exploration are Tanzania Petroleum Development Corporation, BG/ Shell, Statoil, Pavilion and Ophir.

Tanzania has discovered more than 57 trillion cubic feet of natural gas and currently the government is ongoing with discussions for the construction of the planned liquefied natural gas plant in Lindi.

The construction of the $30 billion project is expected in 2022, Energy minister Medard Kalemani told the National Assembly recently.


Thursday, July 5, 2018

How debt servicing eats into Budget


By Halili Letea @hletea

Dar es Salaam. Thinking of the national budget priorities, one’s mind would quickly turn to industrialisation, infrastructure, energy and other projects.

However, debt servicing might be the leading priority as the state is spending a chunk of its estimates to finance the public debt.

For instance, the government will spend more than 30 per cent of the total budget on servicing the debt this financial year.

Finance and Planning minister Philip Mpango told the National Assembly recently that Sh10 trillion of the 2018/19 Budget (Sh32.5 trillion) would go to servicing the debt.

According to Dr Mpango, up to April, 2018 the public debt stock was Sh49.65 trillion, up from Sh43.79 trillion in April 2017.

Out of the stock, domestic debt was Sh14.05 trillion and external debt was Sh35.60 trillion.

The increase was mainly due to the disbursement of outstanding loans from either concessional or non-concessional as well as accumulation of interest arrears of external debt.

The public debt stock of Sh49.65 trillion is over 40 per cent of Tanzania’s gross domestic product (GDP).

Stakeholders are in view that the decline in grants and concessional loans are the reason for increased debt.

“Grants and concessional loans which were coming with lower interest rates and long-term yields have declined, forcing the government to rely on external or internal non-concessional loans with high interest rates and short-term yields” said Economics Society of Tanzania chief executive officer Blandina Kilama.

“If you are in need and you no longer obtain concessional loan, you must shift to other type of loans which are more expensive. What we are seeing now is that concessional loans have declined and countries are forced to go for non-concessional loans with short terms.”

She said having loans was not a problem but the problem was the rate of growth of loans and where the borrowed was used.

“The focus must be on proportionate behaviour between the maturity of loans and maturity of the projects,” Dr Kilama said.

She explained that short-term projects must be financed by short-term loans.

College of Business Education economics and finance lecturer Dickson Pastory says the amount of loans a country repays is proportional to what it borrows.

“The government should increase its capacity of collecting taxes and reduce overreliance on expensive foreign loans,” Dr Pastory said.

Dr Mpango has in the past defended the growing debt, saying it was within an acceptable limit.


Thursday, July 5, 2018

MANAGING TAX RISKS: How to clean up for tax amnesty


It is a unique new year! Sunday, July 1, 2018 marked the beginning of a new fiscal year 2018/19.

Last week, Parliament approved both, the Sh32.4 trillion Budget for 2018/19 as well as the bill to the Finance Act, 2018. Several tax reforms were proposed and approved. Implementations will now start.

As usual, opportunities and challenges will soon start to unfold. But what makes 2018/19 fiscal year unique?

In my opinion, the proposed tax amnesty programme makes this year unique to taxpayers in Tanzania.

You, probably, already know that the tax amnesty as proposed by the Minister of Finance is basically a 100 per cent waiver of interest and penalties on the outstanding principal tax that was not paid. The regulations are yet to come.

But, ideally a taxpayer needs to voluntarily determine the unpaid principal tax and makes declaration to TRA for the amnesty to apply.

This amnesty presents a very rare opportunity to taxpayers to do tax “clean-up” without fear of penalties. But can all the targeted taxpayers do the clean up effectively?

Whilst a patient may feel the symptoms of a disease, but it takes a medical expert to diagnose and determine the exact cause the symptoms.

It is dangerous for a patient to just take pills not prescribed by a qualified medic. Similarly, determining the unpaid taxes is not always as a straight forward task, especially for non-tax experts.

Some tax laws or provisions are especially complex. So, even if a taxpayer desires to pay the correct amount of tax, the complexity of the tax laws may easily prevent that from happening effectively.

Let’s take an example of income tax for companies. Taxable profit is determined by deducting all allowable expenses from the all the sales for the period (normally a year). Several rules are applied to determine which expenses are allowable and which ones are not.

Ideally, if there is no profit then no income tax is payable. But if a company has been a loss-making for three consecutive years, in the third year, income tax will be charged on its turnover. This is called alternative minimum tax.

The standard income tax rate for companies is 30 per cent of taxable profit but there are exceptions. For a newly listed company with at least 30 per cent of its shares issued to the public, the rate is 25 per cent for first three years.

For a newly established assembler of motor vehicles, tractor, fishing boats or out boats engines, the rate is 10 per cent for the first five years.

Yet again, for a newly established pharmaceutical or lather manufacturer, the rate is 20 per cent for the first five years. Loss-making companies are taxed at the 1 per cent of turnover (before July 2018, the rate was 0.3 per cent).

So, there are risks around accuracy and completeness in tax determination. Without proper expert guidance, tax may still be significantly overpaid or underpaid making the tax amnesty programme ineffective.

Both TRA and the private tax consultants can play a role in making the programme a success. But for the tax experts to be of help, they need to understand the taxpayer and its business.

The people, processes, activities and transactions. For this, the experts will need information or documents pertaining to the business(es) of the taxpayer. There are some questions that need to be answered.

What sort of taxes apply to the business? What is the tax base for each tax? And what are the tax rates? Roughly, in that order. The information will assist them to determine the correct amount of tax payable.

So, even if you strongly believe that you have so far been compliant, there is no harm in reviewing again your tax affairs. Or get a tax expert to do it for you.

The review will give you some comfort that no significant unknown tax liability exists.

Mr Maurus is a partner with Auditax International