Maize farmers’ hope grows on accessibility of inputs

Thursday April 25 2019


By The Citizen Reporter @TheCitizenTZ

Dar es Salaam. Fear is waning for farmers who used to crack their heads on how to afford inputs, subsistence and other needs at the same time whenever the farming season arrived.

Amos Sinkala, 27, is one of the farmers who faced such challenges. The resident of Chiwanda Village in Momba, Songwe, needs six bags of fertilisers worth Sh340,000 for his two acres of a maize farm.

Formerly, he would pay money and sometimes forfeit other basic needs. Or he would take a loan for agricultural inputs with interest.

However, under the maize value chain interventions, Amos can access inputs from his Mkulima Amcos after paying a 50 per cent advance and settle the remaining amount after harvest.

The Maize Value Chain initiative is implemented by development partners and the sector stakeholders under the Agriculture Markets Development Trust (AMDT).

“Paying advance of 50 per cent is convenient because I can use the remaining 50 per cent to cover various family needs like school fees for my child. I like this model because it gives us financial freedom to pursue other activities. I’m happy this season we received fertilisers on time and an extension agent trained us about good agricultural practices like spacing,” says Mr Sinkala. The planned interventions in the maize value chain are aimed at stimulating systemic changes in a number of areas in Tanzania.

The strategy is implemented from 2016 to 2021 and seeks to reach hundreds of thousands of smallholder farmers.

The targeted areas for pilot interventions include Mbeya, Iringa, Songwe, Rukwa, Ruvuma, Njombe, Dodoma, Kigoma, Kagera, Mwanza, Manyara, Morogoro, Arusha and Kilimanjaro. The project, which targets about 150,000 direct beneficiaries, kicked off in those regions except for Kilimanjaro and Katavi, according to the AMDT market system manager for maize, Mr David Mabula.

“We expect to improve maize productivity and ultimately increase farmers’ income. It may appear a few people are targeted but these are direct beneficiaries. We basically aim at making systemic changes which bring about the positive impact to all smallholder farmers in Tanzania,” he says.

The initiative aims at changing four main areas by improving collaboration and contractual arrangements among value chain actors; enhancing the information system and extension services; enhancing availability and adoption of improved post-harvest technologies and good post-harvest practices; and improving strategic coordination and the business environment for agricultural micro, small and medium enterprises in the value chain.

Optimistic about outcomes

Implementing partners of the initiative are optimistic about the outcomes as others claim to widen their businesses through contractual arrangements. The maize project has also seen increasing extension services to farmers who are now attended in groups. “We have seen great changes and profit because of big consignment sold, presence of stable markets and presence of good business environment between us and farmers. We trained farmers about gaps and way to combat fall armyworms. We are doing this so that farmers can have productivity and benefits from the loan. Secondly, if we are closer to farmers and making sure they don’t lose their produce/maize in any stage, it guarantees us the loan will be paid safely and timely,” says Mr Deo Mtewele of Mtewele General Traders in Njombe.

“For sustainability, we will work with other service providers. For example, we have reached an agreement with Mkombozi Agribusiness and it will do soil testing areas and recommend farmers about types of inputs to use.”

Agrovet Iringa used to work with farmers individually and without any formal models.

It believes the maize project, through which education is provided and inputs sold, farmers will increase production from between 5 and 10 bags to between 20 to 30 bags for a farmer who observes all what they were taught.

Ms Maria Mwaisobwa from Phiretajo Vicoba in Mbeya says her firm supervises 2,400 groups and its main work is to initiate development groups and train members about collective saving as well as supervising the groups and connecting with various opportunities like banks, health insurance and other services.

“Formerly, we were working in four regions of Songwe, Mbeya, Rukwa and Njombe, but now through the maize project we have added Ruvuma and Iringa. We are training farmers to inculcate the culture of savings so that when the farming season approaches they will have enough income to cover farm activities,” she says.

“Our target is to reach 300 groups.”

Musoma Food is the implementing partner responsible for training farmers about proper use of inputs.


Understanding digital demographic cohort in business

Thursday April 25 2019

Benson Mambosho

Benson Mambosho 

By Benson Mambosho

Demographic segmentation is among the strongest marketing strategies existing online. It offers endless opportunity to reach a specific audience with tailored information for your business.

Development of high internet connectivity has cut physical geographical barriers and distances. Marketers and businesses don’t have to worry about when or where they can advertise to their niche as the world is now one.

Understanding your market audience will help you narrow down specific people who can interact with your business willingly. Consider this to be your first initiative when planning for your next marketing strategy.

In social media, for instance, you might need a different content strategy since there are distinct groups with various taste and preferences.

However, there are simple collective words/names to comprehend different audiences in the online world.

You might have heard of baby boomers, millennials & generation Z, before, the fact is they are everywhere in the online society. Why is it important to learn from them? It’s because understanding each group’s needs and habits is paramount to creating a successful digital strategy.

To begin with, baby boomers in the developed world are demographic cohorts to exist between the years 1946-1960’s. In Africa, of course, we can assume this group to be born during the rise of new economic transformations in the 1960s-1970s.

This population gives the highest regards to traditional values thus most of them are conservatives. Baby boomers, although consider themselves special and strong, think they can guide future generations to sustainability.

It’s interesting to see how miraculously baby boomers have transformed into adopting the latest technology trends.

Some of them even have social media profiles. Unarguably, the internet has also become part of their lives regardless of what values they hold so dear.

Baby boomers are also; team-oriented, independent, strong work ethic, disciplined and mentally focused.

Millennials, or sometimes referred to as Generation Y. Their period is traced back from the 1990s. These are dominant in the world today cause of their growth in the social media world and are tech savvy.

These are the ones your digital marketing strategy should focus on whether you want to build brand awareness, growth, engagement or customer acquisition.

They are not entitled to anyone but themselves, therefore, you should be extra careful on your content marketing strategy.

Millennials live in a community where word of mouth is powerful, a place where they put their interests and aspirations first before anyone else’s or business. I would recommend you build or advertise your product and service around them.

Millennials are tech-savvy, just keep in mind they will be researching and monitoring for the relevance of all your business ads.

This means you have to be honest with them at every stage, most importantly celebrate or create a lifestyle advertisement for them.

They have high expectations so the exciting the ad, the better chances you have to win them over.

Convenience and authenticity is a top priority if you want to dominate the digital space with them.

Furthermore, to capture qualified leads you have to ensure each commitment you make online is met and guaranteed.

For instance, the seamless user experience of your website or app, fast delivery, quick customer service, simple checkout, and other subtle mechanics.

Your marketing strategy must establish specific goals for each target audience. Should you choose millennials or baby boomers then you must understand how to approach each separately.

Regardless of what approach you choose, your tone and content strategy will surely matter to guarantee the success of your campaign.

Before you start planning, do a short interview by selecting a sample from the demographic cohort.


Africa’s need for artificial intelligence

Thursday April 25 2019

Innocent Swai

Innocent Swai 

Who said that Africa doesn’t need strongmen, but rather it needs strong institutions? It was the former US President Barack Obama.

He once condemned African tyrants for enriching themselves and their families and urged Africans to demand better strategies to fight diseases, poverty and ignorance. He cited the “genocide” in Darfur and terrorism in Africa.

What is happening today, for the African leaders who have jaundiced views for people’s power out there. The African politics is the only form of the known artificial intelligence (AI) taking place with a “U” turn in last few years.

We have seen many changes in African politics. The likes of Jacob Zuma of South Africa, Robert Mugabe of Zimbabwe, Abdelaziz Bouteflika of Algeria and Omar al-Bashir of Sudan.

The first modern Africa AI laboratory has been opened in Accra, Ghana. When Africans hear about AI, they are comparing it with the science fiction stuff.

However, in reality it’s time to understand that AI applies to everyday life from virtual digital assistants, language translation and to many other possibilities which are research based and to be adopted.

AI in Africa is to be applied in many different sectors such as education, agriculture, health, etc.

It has been made clear that Google’s AI efforts in Africa is to build home-grown solutions that can solve African problems effectively rather than just importing solutions.

Back to African traditional ways of doing things; whatever is happening to African strongmen who are not ready to collaborate with realities of change, emerging technologies, social media and transparency is fixing them. It’s time they take note.

Better late than never. Artificial intelligence (AI) comes with a wide range of capabilities that can be adapted in every sector. Due to incredible emerging technologies in this sector, AI has facilitated the growth of digital economy.

Different countries have realized its immense potential and are promoting it for good.

It’s time for Africans came up with their unique AI strategies.

Nations’ selective focus on various aspects such as big data, building digital infrastructure, education, scientific research, public and private sector partnership (PPP) adoption, talent development and other different options as it seems fit is a must. How much longer will Africans keep lagging behind when it comes to leapfrogging?

The strongmen are leaving weak institutions behind them.

It’s time for selective listening for all the African strongmen or else the killer serependiously event will bypass them without knowing.

The writing for such events is all over Africa. AI is waiting to happen. As the saying goes; there is no hurry in Africa.

In early 2019, President Donald Trump took a courageous step by signing an executive order on “Maintaining American Leadership in Artificial Intelligence.” That order was an initiative to “drive technological breakthroughs in AI across the Federal Government, private sector, and academia in order to promote economic competitiveness, scientific discovery and national security.”

Furthermore, his signed executive order encourages institutions to “facilitate access to big data and fully traceable Federal data, models, and computing resources, hence availing the investments needed in AI research & development.” On the other hand, Canada was the first nation in the world to announce its national AI strategy in March 2017.

It’s government’s federal budget had a five-year Canadian Artificial Intelligence strategy.

The Canada’s AI strategy is selectively focused on research and talent. It lacks policies found in other strategies such as investments in skills development, big data and privacy. It’s shared vision is to ensure Canada is a leader in AI training, research & development.


Solve bus tickets, s/h underwear paradoxes

Thursday April 25 2019


Ideally, governments must be purposeful and functional, NOT be public nuisances, or do things of no more than a nuisance value.

‘Purposeful institutions’ are invariably practical, useful, with functional resolve/determination rather than merely being attractive to the eye or ear. Otherwise, they become of a nuisance value.

Take, for instance, a local government which penalises commuters for subconsciously throwing away bus tickets on disembarking from a bus.

But, that very same authority fails in garbage disposal, collecting only about 67 per cent of the waste in its jurisdictional area! [See ‘Kumkamata anayetupa tiketi wakati kuna takataka zinazozagaa mitaani sio haki;’ page 11 of ‘MWANANCHI,’ April 13, 2019].

Government institutions cold-heartedly ‘sit’ on mounds upon mounds of rotting rubbish on street pavements, and in front-yards of residences and workplaces: stinking mounds that are breeding grounds for flies and other living organisms of nuisance value – all dangerous to human health and the environment.

That’s to say nothing of failure by the authorities to provide functional sanitation and sewerage services.

Why would a truly-functional government raise hell over a dropped bus ticket amid mounds of stinking garbage all over the place? Why, indeed...?

‘Spent’ commuter bus tickets aside, some government institutions have also been playing merry hell with imported secondhand underwear.

The Tanzania Bureau of Standards (TBS) has been harassing, harrowing and hounding small-scale retailers (‘Machingas/Marching Guys’) of secondhand underwear, towels and neckties on claims they spread infections to buyers-cum-users. [Neckties...? MY GOD! Google for ].

I’ve penned several articles on this in the past, which are in the public domain. [See “The mitumba imports merry-go-round...” The Citizen: January 17, 2019; “Secondhand underwear imports: curse or saviour?” The Citizen: November 15, 2018; and “East African bloc puts the cart before the horse;” The Citizen: March 17, 2016].

Very briefly, the central thread through the articles is that secondhand clothing imports are fumigated at the exit point in the exporting country. Again, they are fumigated at the entry point in the importing country – at the discretion of Port Health authorities.

Fumigation is “the action of disinfecting or purifying (in this case exports and imports) using steralising chemicals. The process involves “use of special gas to eradicate harmful insects, bacteria, diseases, etc. from somewhere or something.” Hospital wards, residences, workplaces and shipments are fumigated to decontaminate them, thus removing dangerous substances, including bacteria and other harmful organisms. This eliminates the possibilities of infection(s).

This being the case on the ground: why does TBS harass small/struggling traders of secondhand underwear (and towels; and neckties...) on the unfounded excuse that the Bureau is saving Tanzanians from infections? Can TBS effectively counter with incontrovertible evidence the clearly positive fumigation factor vis-à-vis the Bureau’s claims of infections from such imports? Where’s the beef, pray?

In any case: why doesn’t TBS – if it must eliminate secondhand clothing from Tanzanians’ already troubled lives – ‘catch’ the imports at entry points/ports into Tanzania where and when they’re still under government (TRA/Customs) control, instead of harassing retailers?

Remember, Tanzanians perforce go for secondhand clothing imports because they’re cheaper, more durable and readily available than the costlier, flimsier and scarcer local products!


Why Songas is keen on expansion

Thursday April 25 2019


By Mnaku Mbani

PROFILE. Songas has been a key provider of electricity to the Tanzanian grid since July 2004. The company plans to ensure that it generates 25 per cent of electricity in Tanzania by 2020, up from 21 per cent currently. BusinessWeek’s Mnaku Mbani interviewed Songas managing director Nigel Whittaker on the firm’s plans.

QUESTION: How did Songas find Tanzania good for business?

ANSWER. As you are aware, in late 1990s, a very few Tanzanians have had access to electricity. So, a competitive tender was floated, seeking independent producers to supply power to the Tanzania Electric Supply Company [Tanesco], of which the company won the tender. The intention of the project was to use the existing Tanesco units. I would say it was a second-hand unit and was not very efficient or effective and Tanesco thought that they were not of good value. So there were plans to convert the unit to run by gas, so that is where Songas started.

So, after winning the tender, a gas processing plant was set up in Songosongo Island, then the underwater pipeline from the island to the mainland at Somanga; and another pipeline from Somanga all the way to Dar es Salaam was constructed. There were three units: the gas-processing plant, under-water pipeline and the mainland pipeline to Dar es Salaam. So, Songas reached a financial clause in 2001.

Financial clause means the contract was signed, construction was executed and instituted and the plant started commercial operations following completion in 2004. We had a 20-year PPA [power purchase agreement] with Tanesco. All the electricity we produce, we sell it to Tanesco and Tanesco takes all the power and sells it to consumers and the contract will expire in 2024. Songas started by producing 178 megawatt of electricity to Tanesco. The total cost of the project was $320 million. So, Songas is not a gas company.

In fact, it is an electricity company using gas from the Songosongo Island gasfield, off the coast of southern Tanzania. The investment in the operation of the Songosongo Island upstream and midstream gas infrastructure to enable gas shippers [PanAfrican Energy and TPDC -- Tanzania Petroleum Development Corporation] to sell gas to their customers in Dar es Salaam and supply gas to the Ubungo Power Plant.

Who are Songas shareholders?

Songas is a Tanzanian company established in Tanzania and it has Tanzanian shareholders. The first shareholder is Globelec, which owns the majority 54.1 per cent. Globelec is the development fund which is owned by Commonwealth Fund for Development Corporation of the British government with 70 per cent and the Norwegian government development institution (Norfund) with 30 per cent share. The mission of Globelec is to develop power projects in Africa.

The second shareholder is Tanesco, which owns 9.56 per cent of the stake, TPDC owns 28.69 per cent and Tanzania Finance Development Limited [TDFL] which owns 7.69 per cent. Thirty-two per cent of TFDL shares are owned by the government and the remaining 68 per cent by BancABC.

So, in each $100 we get from business, 60 per cent is taken by the Tanzania government.

How has Songas been operating?

Songas is a reliable supplier of electricity. Our guarantee is to meet target of 91.3 per cent, but last year we managed to reach 96 per cent.

We also produce very cheap electricity and the cost of our electricity we sell to Tanesco is being $6 cents per unit because our earlier intention was to sell electricity at a very low cost as possible. This includes $2 cents for electricity and $4 cents for capacity charges.

This is against other independent power producers which were charging between $40 cents and $60 cents per unit. Tanesco sells it to customers at $12 cents. This is the cheapest power tariff in East African Community. These tariffs depend on the costs and costs of gas we purchase from TPDC and PanAfrican Energy Limited.

We produce 21 per cent of all electricity generated in Tanzania and we have been using only 13 per cent of installed capacity.

We are heading towards the middle-income economic status, what will be the role of Songas towards this journey?

Songas endeavours to make long-lasting contribution to the socioeconomic development of Tanzania.

We would like to support the drive towards industrialisation. We recognise that we have an obligation of providing reliable electricity at a low cost.

We are already a local reliable and we are willing to expand our operations.

The next benefits we are creating now, and it is probably contributing towards middle income is to create jobs. We have 72 full-time employees whom are locals and experts are just three.

We have also an internship programme, where we receive students from various universities, ranging from different disciplines including finance, business, engineering of which we started six years ago and nearly 100 interns have benefited from field attachment placement.

We are also implementing the corporate social responsibility [CSR] programmes, targeting health, education and environment.

Through the CSR, the company vision on socioeconomic development is to make an impactful contribution to develop sustainable communities in the area of our operations.

One education, we are working with various partners to improve education deliveries through training teachers, sponsoring young scientists, offering scholarships for students along the gas pipeline.

The company considers education fundamental for the sustainable development and growth of the community.

To ensure the maximisation of the impact to communities, the company implements projects, which are aimed at improving access to quality education for children between three and 18 years of age.

The company also supports health services aimed at improving access to quality basic health services. It works with the government and reputable and non-governmental organisations in training and empowerment projects in rural areas along the way leave.

Each year we provide $360,000 for CSR programmes.

In each $100 we generate, 60 per cent of it goes to the government in terms of taxes and dividends.

The government is changing its energy policy including venturing into cheaper hydroelectric power as well as getting out of independent power producers. Does Songas feel threatened?

As you are aware Songas is one of the best models of public-private partnerships. So I do not think that the changing of energy policy is a threat to us.

We know the government is implementing the largest MW2,100 hydropower project, but experience shows that larger power projects tend to take longer and when they are completed the demand has also risen.

Remember the Akosombo Dam in Ghana, when it was being constructed in the 1960s its capacity of 600MW was four times the country demand but after the time it was completed, the demand for electricity had risen.

As the country embarks on industrialisation, more power will be needed.

Other mega projects like the standard-gauge railway will increase consumption. So more sources must be identified and developed to cater for the anticipated increasing demand.

The sustainability of hydropower is also something you need to plan well by considering whether changes. At any time when drought will persist, alternative sources will be required to supplement power generation.

Songas is interested in developing other energy projects in Tanzania. Under Globelec it has solar and wind projects in other countries it will be glad to have the same in the country too to complement the availability of energy, which will also be affordable.

You are planning to increase capacity and extension of the project. What are you looking to achieve?

Songas, through the proposed expansion and extension, is ready to support the government drive to industrialisation. Songas is a world-class example of public-private partnership and is immensely beneficial to Tanzania.

As we go forward, Songas will replace the smaller, old units 1 and 2, with larger units, concluding an expansion of capacity from the previous committed 178.114 MW to approximately 245 MW, depending on the selected turbine manufacturer technology.

If the Songas expansion/extension project negotiations are concluded by June, this year, the project construction will be completed by September 2020.

The existing contracts could be amended to accommodate the upgraded deal structure. Subject to the costs of gas, Songas proposes that the tariff per kWh remains the same.

The PPA with Tanesco and other key agreements, as necessary, will be extended from 2024 to 2034.

The PPA will be converted to build-operate-own to a build-own-operate and transfer model. Tanzania will immediately own 100 per cent of the plant by 2034 following normal transfer fees of $1.


Documentation guidelines for franchise system rollout

Thursday April 25 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

Past many articles have explored your journey towards building a solid franchise system, from conceptualization, franchise system design and protecting your IP, prototyping to prove your concept, market research, franchise strategic planning to franchise systems development.

We exited with the seven systems needed to build and run your franchise business successfully.

The single-most important outcome from the system development process is documentation, which kept recurring in every system discussed “documenting what you know how to do so that you can train someone else”. This removes guesswork from running the business as it transfers the operating system from your head to a document that can easily be read and understood.

This document is the Franchise Operations Procedures and Training Manual which becomes the blueprint that all your franchisees use to run their franchised outlets.

Once you start engaging potential franchisees, you will use it to train them in every aspect of running their business. You will then loan it to them for the period of the franchise and update it regularly as you update your systems.

Needless to say, before attempting to franchise or applying the systems you develop-and updates-to your entire company-owned outlet network, they have to be run and perfected at the prototype outlet to ensure they are taking your business to where you desire.

We now turn to the documentation needed to protect the franchise system that you have spent a good part of your time building.

These documents are needed before you even start engaging potential franchisees as they will guide your engagement. The discussion will debunk the belief (from a position of not knowing, ignorance or simply being crooked) by some first-time franchisors that once they have an outlet running successfully, all they need is a lawyer to prepare a franchise agreement and they are set to franchise.

It is important to note very early that some franchisors do not prepare all the documents as presented in coming articles for a variety of reasons.

Some legal jurisdictions do not require preparation and sharing of some of these documents with potential franchisees.

Other franchisors collapse as many of these documents into one, the Franchise Agreement, while still others are outrightly dishonest and want to make quick bucks from potential franchisees by hiding some material facts otherwise disclosed in some of these documents. Some brands have approached me with requests to help them franchise as a way to off-load loss-making outlets to franchisees, with a negative response when I asked if they were ready to disclose that the outlets weren’t profitable.

Others have insisted on franchising even before proving their concepts and building some history of financial success.

We will discuss all documents because the right thing to do is to follow international best practices when preparing your franchise offering. We will then leave individual potential franchisors to decide what they wish to do with the information.

Whether or not you are a member of a franchise association in your country (franchise associations subscribe to the World Franchise Council’s Code of Ethics which, among others, includes the documents that franchisors must prepare and share with potential franchisees), following these guidelines will protect your franchise system from external threats and ensure its long-term sustainability.

Some of the documents discussed in coming articles can easily be prepared in-house by potential franchisors wishing to partly own the franchising process.

Others require inputs from franchise development experts and legal minds.

The bottom line is to have expertly-prepared documents that meet the threshold of international best practice.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project.

We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise.

We turn around struggling indigenous franchise brands to franchise cross-border. We settle international franchise brands into Africa to build a well-balanced franchise sector. We create a franchise-friendly business environment with African governments for quicker African integration.,


Expanding tax base should be taken seriously

Thursday April 18 2019


By Moremi Marwa

This is a continuation from last week. There are personal opinions to what many have undertaken already to draw up informed accounts of what could be considered necessary for the expansion of our tax and taxpayers base.

The broadening of the tax base and greater compliance could boost tax collections, even while the overall tax rate could fall – for resource mobilization and economic growth. Therefore, further to the general observation in the last article, these are high level summarized specific recommendations:

On increasing the number of taxpayers

There is a gap in the number of corporate tax payers registered with the TRA vis-à-vis the number of working companies registered with the Registrar of Companies, even though most of them are legally required to file returns mandatorily. The revenue authority should pursue this lead to identify corporates that are registered but are not filling returns.

As we noted last week, 2.75 million have a TIN among us and out of these about 300,000 file income tax returns, i.e. about 89 per cent of registered taxpayers are not filing returns. In here, a mechanism needs to be put in place to ensure the filing of returns by all registered taxpayers. The revenue authority could investigate and carry out a robust analysis on why the percentage of returns filed is so low compared to the number of registrations.

Furthermore, we know that the tax base is not commensurate with the growth in both corporate and individual incomes especially in recent past. An effective mechanism for collecting information from varied sources should be put in place to identify potential taxpayers and bring them into the tax net and broadening the tax base. The compliance system could be made simple and more user friendly to encourage voluntary compliance, thereby broadening the tax base.

On withholding Tax

The beauty about withholding tax (WHT) is that it leaves an audit trail that acts as a deterrent to tax evasion and in early collection of tax as soon as a transaction takes place; it is also a non-intrusive method of expanding the base. Therefore, regular monitoring of tax deduction transactions therefore could be made and compared with the tax return data to identify whether deductees do file tax returns.

It would be ideal if WHT deductors would file the WHT returns on time, each quarter and must include the details of name of the deductees, their TIN and amount of transaction.

WHT coverage could be expanded to capture more and more transactions, especially those that involve large amounts of cash but remain outside the tax net.

It is however important to note that the taxpayer base may not necessarily increase merely by introduction of WHT unless deductees and deductors file correct returns. To ensure that correct returns are filed, WHT needs to be supplemented by enhanced enforcement methods.

On the cash economy

In my opinion, the cash economy is a major problem in our economic system as large-scale transactions reportedly take place in cash, especially in land dealings, the construction sector, etc. In this aspect, a non-intrusive verification system could be designed so that more cases of capital gains liability are detected and taxed.

Certain measures could also be put in place to discourage cash transactions. For example, local authorities and the revenue authority could be encouraged to bridge the gap between the tax computation rates that is used for property valuation for tax imposition, and the market value of properties (even allowing for a lower property tax rate) and increase the digital footprint of transactions.

Coupled with this, there is also a need to develop better assessment of the “underground economy” both in terms of its size and the economic behavioral factors that motivate the players in that economy. There is no recent study that I have come across on the issue, and if this is generally the case, there is an urgent need to promote research which is Knowledge, Analysis and Intelligence-oriented in this area. That would provide much needed insight into the functioning of the “black economy” and how to harness it with appropriate revenue yielding administrative measures.

Meanwhile, there is no robust instrument at present that captures details of bank accounts/transactions, as they relate to tax payments. The availability of such information could help the revenue authority in widen its information base on the use of black money.

On presumptive taxation

This is the particular area that in recent years has played a major role in enhancing the widening of tax and taxpayers base. However, there is still a large number of individuals in businesses, trade, services and professions, (especially in the informal sector and sectors where large scale transactions take place in cash) who are outside the tax net. Therefore, the presumptive income estimation scheme should further be reviewed based on appropriate analysis and its scope be enlarged with the view of attracting more into the tax net.

Many small businesses are still in the informal economy and remain untaxed. For these groups, in addition to the ongoing efforts following the President’s directive, the tax administration could design, promote, and establish simple, optional presumptive tax schemes, including those based on a compounding (turnover) basis, for example in the service tax that are below a threshold.

Since there is still some scope for presumptive taxation in the Finance Act, currently applicable to only some business sectors with a turnover below a threshold limit, data mining remains crucial for analysis-based strategies to examine if its scope should be expanded.

However, the presumptive taxation scheme should always be backed by taxpayer education programs to bring taxpayers up to the point at which they can enter the regular tax system. The revenue authority has in recent years increased the visibility of tax education and awareness programmes; this should continuously be an important goal of the presumptive scheme. To be continued next week.


Why it’s important to embrace startups, bring funding closer

Thursday April 18 2019


By Salum Awadh

Tanzania has been experiencing incredible GDP growth rate averaging at 6 per cent over the past 10 years, this has led to the transformation of many sectors including telecommunication, banking, road infrastructure, real estate, and many more.

But this growth has remained at macro and corporate level, with many start-ups still struggling to make it in the mainstream.

Starting and growing a start-up is a tough journey across many African countries, if not all. With some exceptions in South Africa, Nigeria, and Kenya, which have done a wonderful job in growing the start-up ecosystem, especially in the tech space, and attracting more than 60% of all funding coming to the continent.

Tanzania, the second largest economy in East Africa, is still in its early stage of growing a robust start-up ecosystem that will create formidable start-ups, sustainable innovation spaces, and readily available venture capital and angel investors funding.

Where are these start-ups?

We have seen great efforts in starting innovation hubs in the country, some not existing anymore, and some showing great hope and maturity in terms of building the future “Africa-made unicorns”.

But what happens when these hubs and accelerators do their job right? Is their funding ready to take these start-ups to the next level? We know we can’t talk of banks, neither can we speak of VCs, as this is too early for them.

What is the landscape of early stage start-ups?

Fintrek report by EAVCA and partners published early this year indicates that between 2010 and 2017, Tanzania raised $0.8 million only, while Kenyan-based Fintech, for example, raised $204 million for the same period. This requires aggressive interventions to bring this money home.

How can we bring these investors closer?

Tanzania Venture Capital Network is one of the initiatives expected to improve the situation by mobilizing local and foreign capital for both early and late stage investing.

For early stage, local investors, the network seeks to mobilize financial resources from local successful entrepreneurs and executives, Tanzanians living in diaspora, formal and informal savings schemes, and international angel investors interested in the market.

Among the other things, the network helps investors with the following;

• Deal sourcing

• Deal preparations

• Due diligence

• Preparing all investment and legal documents

• Monitoring the investments have been committed

• Supporting the investors with exit

Conducting these activities will help the country embrace the start-ups that are ready for investment, and bring these investors closer in investing in these start-ups.

Salum Awadh is a CEO of SSC Capital, a corporate and investment advisory firm based in Tanzania and Rwanda , offering capital raising services, M&A, Corporate advisory, research and feasibility studies, business development, funds management, and development advisory


Taskforce proposes policy on charcoal

Thursday April 18 2019


By Gadiosa Lamtey @gadiosa2

Dar es Salaam. A government taskforce has proposed that a charcoal policy be drawn up to formalise the business.

The chairman of the taskforce, Prof John Kessy, told BusinessWeek that it was important for charcoal trade to be recognised for businesspeople to do it freely and contribute to the national coffers.

Prof Kessy was speaking on the sidelines of a meeting on transforming Tanzania’s charcoal trade.

It was held under the aegis of the Tanzania Forest Conservation Group (TFCG), which started in 2015 and will end November 2019.

Another recommendation from the task force was that charcoal producers should find more than one source rather than relying on forest alone.

In February. this year, during the Mwananchi Thought Leadership Forum, the minister of State in the Vice President’s Office (Union Affairs and Environment), Mr January Makamba, said at least 22,000 people die annually due to respiratory diseases caused by charcoal use.

A TFCG report indicates that Tanzania loses 412,000 hectares of forest annually.

“We have been tasked by the ministry of Natural Resources and Tourism,” said Prof Kessy.

He explained that the technology should be improved as charcoal producers still use old technology, resulting in poor production.

He also suggested the Tanzania Forest Authority be established to coordinate forest issues instead of the current multi-coordination.

“We have brought these suggestions to this meeting so that stakeholders can discuss because TFCG is set to implement phase three of the project. So, they wanted to know what we proposed so as they can make adjustment in some areas.”

TFCG executive director Charles Meshack said since the project started more than 200,000 villagers in Kilosa, Morogoro Rural and Mvomero districts in Morogoro Region had benefited from phase two of the project.

“We are coming to an end of our project so we have to discuss how this structure can be spread in other districts during the phase three. We are collecting views from stakeholders.”

He said the project had brought a huge impact as more than 400,000 hectares of village forestland were reserved and the revenue collected from sustainable harvest of charcoal was spent on constructing classrooms, dispensary and water boreholes.

He added that the villagers were taught how best to use land including forest planting and preparing strategy on sustainable charcoal.

Charcoal producers were taught on the kind of trees that could be cut.


Consumption of cooking gas rises by 13pc: Ewura report shows

Thursday April 18 2019


By Alex Malanga @ChiefMalanga

Dar es Salaam. More Tanzanians used cooking gas in the 2017/18 than the previous year.

A 2018 report by the Energy and Water Utilities Regulatory Authority showed that the importation of liquefied petroleum gas (LPG) rose by 13 per cent, up from that of the previous year.

During the period, marketing companies imported 120, 961 tonnes of LPG, up from 107, 083 tonnes in 2016/17.

Muleba North MP (CCM) Charles Mwijage says awareness about the importance of clean energy has been growing.

Business expert and economist Donath Olomi attributes the increase in the consumption of cooking gas to a change in people’s mindset.

“Previously, people were afraid of using cooking gas, saying it could explode easily,” says Dr Olomi.

However, such increase in importation of LPG has been outmatched by economic hardships and increased competition, according to cooking gas sellers.

Ms Upendo Mroto, a gas seller at Tabata Visiwani in Dar es Salaam, says despite a promotion in price of cooking gas, business is tough.

The Citizen survey established that LPG is currently retailing at a promotion price of between Sh50,000 and Sh55,000 for a six-kilo Mihan cylinder filled with gas and Sh60 000 for Oryx.

For six-kilo Mihan and Orxy cylinders, one must respectively pay Sh19,000 and Sh19, 500 for refilling. “The business is not on our side despite increased importation of LPG. This is due to unaffordability of the product,” Ms Mroto tells The Citizen.

Ms Rebecca Cheyo, a resident of Salasala in Kinondoni District, says she was only using gas for cooking light food.

“Gas is more effective in terms of time but due to financial constraints, it is not an easy task for me to get Sh19,500 at once for refilling my six-kilos of a gas cylinder each month,” she says. She spends an average of Sh19,500 for gas and Sh16,500 for charcoal every month.

Stakeholders are unhappy that the situation could force people opt for other sources of energy like firewood and charcoal which are disastrous to the environment.

Dr Olomi calls on government to improve gas infrastructure to ease distribution.

He sees a need to subsidise LPG cooking gas to lower prices.

Despite increase in importation of LPG, The Citizen understands that many potential customers are yet to be reached due to financial constraints.

Tanzania Private Sector Foundation executive director Godfrey Simbeye call on LPG distributors to be innovative to provide energy services on a pay-as-you-go basis.

He says affordability is not the only hurdle as some people believe food cooked in traditional ways is more delicious.

“Many households do not have access to alternative fuels like electricity or LPG. Even when they do, they may not use them, or they may continue to use biomass alongside the alternative,” he says.


BANKING TIPS: Why banks need artificial intelligence

Thursday April 18 2019

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

Last week I shared that Artificial Intelligence (AI), which has an immense potential for the banking sector.

Banks seek to gain a competitive edge over their peers by implementing advanced technology to achieve improvement in speed, accuracy, cost efficiency and meets customer needs.

Much of the expectation surrounds the ability of machines to replicate, and often exceed, what human beings are able to do in banking.

Even though the purpose of these intelligent machines is to replace human intelligence to a certain extent, employees of banks have nothing to worry about as the industry still needs human interaction to serve the customer exceptionally.

AI is being used to address a wide range of challenges by making interactions between machines and systems simpler and smarter across all industries, but the adoption of AI systems in the banking industry is limited to date because of the important element of human interaction needed in providing services in the banking industry.

Additionally, I shared that with money laundering, continuing to be a persistent problem for banks, AI can assist banks in combating this threat through advanced data analytics systems to save the banks from being fined more frequently due to inadequacies in their anti-money laundering infrastructures. This week is a continuation of last week’s article. In this article, I will share a few more examples of how AI can impact the banking industry.

Enhances customer service experience

Customer experience is one of the areas that can be enhanced through AI as quick support can be easily provided to the customer along with tailored banking products according to his/her needs.

Based on past dealings and data (detailed customer’s demographics and records of online and offline transactions), AI can develop a better understanding of customers and their behaviour. This enables banks to customize financial products and services by adding personalized features and intuitive interactions to deliver meaningful customer engagement and build strong relationships with their customers. One form of AI that helps banks tremendously is Chatbots. Chatbots are automated service assistants that provide customers with the convenience of resolving their queries via an online messaging system instead of having to visit a branch. Chatbots offer efficient, systematic and accurate conversations which lead to a great customer service experience.

In addition, as technology evolves, AI has been able to offer voice bots as well to solve customer’s issues without human intervention.

Enhances mobile banking apps

To meet today’s customer expectations, most of the banks are shifting more into offering digital services and products which have resulted in millions and millions of transactions being done online irrespective of time and place worldwide.

AI can be integrated into the bank’s mobile apps to improve customer service. How? After gathering the customer’s data from the mobile device, the AI system incorporated in mobile apps processes the data to understand the customer’s behaviour to provide the relevant information – services and offers in line with the customer’s needs.

Also, the mobile app with AI will assist the customers when it comes to personalized planning. For example, if a customer wants to buy a new house, the mobile app can guide the customer with budget and other related details to help the customer achieve that goal. In conclusion, AI has many benefits to offer for the banking industry. I shared that AI is being used to address a wide range of challenges across all industries, but the adoption of AI systems in the banking industry is limited to date mainly due the important element of human interaction in providing banking services.

The past two weeks I shared how AI can impact banks: AI brings the power of advanced data analytics systems to combat fraudulent transactions.

and improve compliance; AI combines the personal data provided by a prospective borrower with market trends, his/her most recent financial activities and transactions to identify the potential risks in giving out the loan to the prospective borrower; AI can develop a better understanding of customers based on their past dealings and their behavior to enhance customer experience; and AI can be incorporated into banks mobile apps to improve customer experience on mobile/internet banking platforms.

Mr Mkwawa is a seasoned banker


Business-to-business digital marketing approaches

Thursday April 18 2019

Benson Mambosho

Benson Mambosho 

We are living in the ever-transforming digital world. An era where business opportunities are endless. While customer needs are expanding, businesses have to adjust to new trends embraced in the digital age.

Business to business (commonly known as B2B) demand business ideas that are well thought and strategic.

B2B customers are people who have unique requirements, their purchasing solutions are for their businesses not for private use. So where do you begin as a marketer or business in B2B?

The first thing is, know your buyer. It’s not easy to market to everyone. You must research intensively and extensively on your target industry.

Go ahead and understand their behaviour, buying habits, price preference, interests, dislikes and pain points to mention a few. Thanks to modern trends, google analytics can offer you an in-depth view of your buyers across the globe.

Understanding your customers will help you to make sound and logical business decisions. Besides data-driven solutions create favorable grounds for business to flourish and invite potential investors.

Your clients or customers need room to engage and know your business. A website will build your credibility and expose your service/product to the public. Moreover, your website must be friendly, interactive and informative.

Each click made by a customer must create the necessary conversion or value. Let’s not forget, the majority of people nowadays are on the ‘go’, therefore it would be convenient for your website to be mobile friendly.

Make every visit from your customer personal. Create automated lead follow up process or emails that feed your niche with valuable info about your business.

Emails connect you and your audience, it promotes your business by sharing new updates, sharing testimonials, offer promotions and eventually increase sales.

To get higher returns on investment (ROI) you can build and maintain list made up of people who visit your business online or subscribed to your newsletter.

Always remember, customers don’t appear from thin air in the digital space. There are people looking for your business out there. You need to create a simple path for them to get to you.

Focus part of your energy investing in search of marketing. The point here is that you need to build your keywords relevant to phases audience use to search for your business.

Content must be tailored to capture online audience attention each time a keyword is activated or a search is made for that particular product or service.

Strengthen your search campaign by deploying an outreach program such as public relations in the online world. Create news articles and journals to amplify your message across the digital space. Give your customers/clients lifetime value while interacting with your business online. Take them through personalized and exciting customer journey.

Customers need personalized guidance in choosing products or services that offer more convenience to their lives. In a fast-moving society driven by enormous data, empowering your buyers with high-quality content and marketing automation will attract more leads and nurture their expectations.

Create multi-channel that sell and communicate with your potential clients. Why don’t you start with social media? One of the quickest ways to engage with everyone and get direct feedback about your business.

Through social media, you can listen and respond to customers feedback, hear their discontents, joy, and view competitor’s actions and most importantly make your marketing strategy evaluation worth a while.

If you serve your customers right on social media, then it is very likely to create a chain of brand loyalists who will recommend your business elsewhere. Your audience can also be the source of creating great educational and inspirational content.


Sanitation business gets financing boost under PPP

Thursday April 18 2019

By Rosemary Mirondo @Mwaikama

Dar es Salaam. Sanitation financing has received a boost in Tanzania as a humanitarian society started an initiative that will address challenges in the rural areas.

The Catholic Relief Services (CRS), has started an innovation initiative to address challenges of sanitation financing following a high demand for the service especially in rural areas.

The CRS project manager for Youth Engagement in Sanitation, Business (YESB), Mr Ephraim Tonya, told Business Week that through funding from Human Development Innovation Fund (HDIF), they have come up with YESB that is implemented through Public-Private Partnership Project for Small Scale, Youth-Led Sanitation Business Development in Rural areas.

He said that the Ministry of Health has authorised approach to conduct sanitation improvement in rural areas through Community Lead Total Sanitation (COTS) guidelines.

However, he noted that the guidelines only focused on demand application and had left out the finance part which lead CRS to come in with a business plan that will take on board both demand and finance.

Explaining, he said that through the Ministry of State in the Prime Minister’s Office (Regional Administration and Local Government) guidelines every municipal council must allocate 10 percent of its own source fund to finance community based projects.

“Through the funding 4 per cent goes to women, 4 per cent to the youth and 2 per cent for the disabled. He noted that they used the loophole to build capacity for the youth to seek funding for sanitation business: enhancing financing mechanism at youths,” he said.

“We decided to build capacity of the youth to implement the project after it came to our attention that a majority of the people in the rural areas lack proper toilets that meet the standards of the Ministry of Health.

To qualify for the funding, the youths were required according to municipal council guidelines to be between 18 and 35 years, in registered groups recognized at the municipal council level, and to have a sound proposal for financing.

“Youth Selected Groups (YSGs) formed and trained on masonry and certified, registered and trained on entrepreneurship and submitted business plans to LGAs for loans equivalent to Sh60 million in the three districts and at least 30 per cent of those applied were girls,’ he said.

Explaining ,he said their baseline research showed the actual need for sanitation was 60- 80 per cent in all districts of Mbeya region including Mbarali, Chunya and Mbeya.

“We discovered that a majority had either traditional pit latrines or improved pit latrines including those that were practicing open designation which is a huge challenge and proved that they did not qualify as having proper toilets,” he said.

According to standards, at least one was expected to have ventilated improved pit latrines, flast toilets (pour) or the modern toilet known as ecological sanitation latrine (Ecosan).

He said in order for one to meet the requirements of a standard toilet it was mandatory that the toilets had four walls, permanent roof, washable floor, permanent door as well as a washing facility.

He said that recipients for the funding of the project because other than other qualifications the program for sanitation business was also looking at youths at risk.

He noted that the project is currently being implemented by six youth groups with 121 youths including Chunya 26 boys and 13 girls, Mbarali 30 boys and 12 girls, Mbeya 29 boys and 11 girls.

Mr McGinty said that HDIF has learned a lot from running the largest innovation programme in the country, supported by almost £40 million British Pounds in financing from UKAid to innovative ideas to pilot and scale in Education, Health and Water, Sanitation and Hygiene (WASH).


Business-to-business digital marketing approaches

Thursday April 18 2019

Benson Mambosho

Benson Mambosho 

We are living in the ever-transforming digital world. An era where business opportunities are endless. While customer needs are expanding, businesses have to adjust to new trends embraced in the digital age.

Business to business (commonly known as B2B) demand business ideas that are well thought and strategic.

B2B customers are people who have unique requirements, their purchasing solutions are for their businesses not for private use. So where do you begin as a marketer or business in B2B?

The first thing is, know your buyer. It’s not easy to market to everyone. You must research intensively and extensively on your target industry.

Go ahead and understand their behaviour, buying habits, price preference, interests, dislikes and pain points to mention a few. Thanks to modern trends, google analytics can offer you an in-depth view of your buyers across the globe.

Understanding your customers will help you to make sound and logical business decisions. Besides data-driven solutions create favorable grounds for business to flourish and invite potential investors.

Your clients or customers need room to engage and know your business. A website will build your credibility and expose your service/product to the public. Moreover, your website must be friendly, interactive and informative.

Each click made by a customer must create the necessary conversion or value. Let’s not forget, the majority of people nowadays are on the ‘go’, therefore it would be convenient for your website to be mobile friendly.

Make every visit from your customer personal. Create automated lead follow up process or emails that feed your niche with valuable info about your business.

Emails connect you and your audience, it promotes your business by sharing new updates, sharing testimonials, offer promotions and eventually increase sales.

To get higher returns on investment (ROI) you can build and maintain list made up of people who visit your business online or subscribed to your newsletter.

Always remember, customers don’t appear from thin air in the digital space. There are people looking for your business out there. You need to create a simple path for them to get to you.

Focus part of your energy investing in search of marketing. The point here is that you need to build your keywords relevant to phases audience use to search for your business.

Content must be tailored to capture online audience attention each time a keyword is activated or a search is made for that particular product or service.

Strengthen your search campaign by deploying an outreach program such as public relations in the online world. Create news articles and journals to amplify your message across the digital space. Give your customers/clients lifetime value while interacting with your business online. Take them through personalized and exciting customer journey.

Customers need personalized guidance in choosing products or services that offer more convenience to their lives. In a fast-moving society driven by enormous data, empowering your buyers with high-quality content and marketing automation will attract more leads and nurture their expectations.

Create multi-channel that sell and communicate with your potential clients. Why don’t you start with social media? One of the quickest ways to engage with everyone and get direct feedback about your business.

Through social media, you can listen and respond to customers feedback, hear their discontents, joy, and view competitor’s actions and most importantly make your marketing strategy evaluation worth a while.

If you serve your customers right on social media, then it is very likely to create a chain of brand loyalists who will recommend your business elsewhere. Your audience can also be the source of creating great educational and inspirational content.


Why you should handle tax enquiries carefully

Thursday April 18 2019

Shabu Maurus ,

Shabu Maurus ,  

Tax-related enquiries from the Tanzania Revenue Authority (TRA) can come in many forms.

An enquiry can be a question or request for information through a phone call, a text message, an email, a letter or even a one-to-one conversation. But some tax enquiries can be more serious than just the simple questions or requests.

For example, audit, investigation, verification exercise, inspection, or even search of premises or your home. But, unlike enquiries from your other stakeholders, say your customers or suppliers, enquiries from a tax authority need to be handled with extra care.

Your obligations

You have various legal obligations under the tax laws. The obligation to keep documents and information pertaining to your business for at least five years. The obligation to provide accurate and complete information.

The obligation to grant free access, facilities and assistance to TRA. Providing false or misleading information to TRA is an offence. Failure to provide information, access, facilities or assistance may be charged as an offence for impeding tax administration.

TRA powers

You may decide not to, voluntarily, cooperate with TRA. But that may not be as helpful. Apart from your legal obligations and the possible sanctions thereof, tax laws give TRA massive powers to gather information from taxpayers or third parties. And TRA can exercise most of their powers without court orders. TRA have powers to access any of your assets, information or premises any time.

The only exception is dwelling houses where a court order is required for access between 6 pm and 9 am. TRA can also use experts or officers from other government institutions such as police. TRA can also seize, retain and restrain assets or documents. TRA can also restrain persons.


Simple tax enquires may also extend to more serious tax enquiries like a tax audit or even a tax investigation if a tax crime is suspected. Tax enquiries may not necessarily end in a tax liability. But most of the enquiries will do.

Especially if they are not handled carefully. Either a new tax liability or an amended one. Even in cases where TRA is unable to gather information from you, TRA can use third-party information or use their best judgment to estimate tax liability. Again, TRA has massive powers to collect taxes.

They have various tools at their disposal to collect the tax directly from you, the taxpayer. In this respect, TRA can create a charge over your assets, sell your charged assets, restrain your assets or even restrain you if you are likely to flee.

TRA is also empowered to collect from third parties. If you are an entity, TRA can collect the outstanding tax from managers or directors of the entity. TRA can also collect from your debtors, guarantors, receivers or liquidators and agents.

Your rights

Despite the massive powers given to TRA, as a taxpayer you also have some rights. TRA, with limited exceptions, is obliged to treat information collected from you as “secret and confidential”. In the course of a tax enquiry, you may decide to be represented or assisted by your tax consultant.

You may decide not to cooperate with TRA officials if they fail to properly identify themselves.

You also have a right to reasonable compensation for lost or damaged documents, assets or sample retained by TRA.

There is also a statute of limitation where TRA is barred from amending your tax return after five years


Ricardian Economics and all that...!

Thursday April 18 2019


Today’s piece was prompted by the historical fact that a “brilliant Economist” of yore rarely mentioned/heard, David Abraham Ricardo, was born on a date like today’s 247 years ago.

Born in London, England, on April 18, 1772 – only to ‘die a slow, painful death from severe (unnamed) illness’ at 51 years of age on September 11, 1823 – David Ricardo was the third of 17 (!) children of a Sephardic Jewish family who had just then relocated to Britain from the Dutch Republic, modern-day The Netherlands!

David Ricardo had a rather adventurous early life. His father Abraham employed him in his business as stockbroker of the London Stock Exchange when he was only ‘14 years young.’ From that time, young Ricardo acquired exceptional acumen in business and economic matters – eventually amassing a fortune of some £1 million dealing in government securities as a “stockbroker and loanbroker.”

This ‘allowed’ him to retire at the relatively young age of 42 years to become a member of the British Parliament.

During his brief life this side of Heaven, Ricardo’s contributions to Economics became known as ‘Ricardian Economics,’ embodying theories he propounded after reading, at age-27, ‘An Inquiry into the Nature and Causes of Wealth of Nations’ by Adam Smith (popular as ‘The Wealth of Nations’ for short).

In due course of time and musing, Ricardo came up with economic theorizations that were published in 1817 under the title ‘On the Principles of Political Economy and Taxation.’ The theories included ‘Ricardian Socialism,’ ‘Ricardian Equivalence,’ ‘Comparative Advantage,’ the Labour Theory of Value,’ ‘Law of Diminishing Returns,’ ‘Economic Rent,’ the ‘Iron Law of Wages’...

Merriam-Webster defines the Iron (or Brazen) Law of Wages as “a statement in economics (that) wages tend to fall to the minimum level necessary for subsistence” – and all attempts to improve the real income of workers were futile! The theory of ‘Comparative Advantage’ in effect stated that manufacturers should specialize in the production of goods in which they not only have an ‘Absolute Advantage,’ but also a ‘Relative Advantage’ over other manufacturers in order to promote their benefits from trade. “For example, a mutual trade benefit would be realized between China and the UK by China specializing in porcelain and tea production, while the UK concentrated on producing machine parts...” Sheesh!

‘Absolute Advantage’ is, of course, the ability of an individual, a company, country or a zone to produce/provide goods and/or services at a lower cost per unit than another entity that produces the same goods or services. In other words: it’s the ability of an individual or a group to carry out a particular economic activity more efficiently than another individual or group.

The concept of ‘Diminishing Returns’ postulates that if one factor of production (number of workers, for example) is increased while other factors (machines and workspace, etc.) remain constant, the output per unit of the variable factor will eventually diminish.

‘Ricardian equivalence’ is an economic theory suggesting that when a government tries to stimulate its economy by increasing debt-financed government spending, demand remains unchanged.

But, are the Ricardian pontifications two-and-a-half centuries ago relevant today? Are they...? I ask you... yes; YOU! Anyway; happy 247th birthday, David Ricardo – wherever you are!


Successful brands are effective in wandering around

Thursday April 18 2019

Innocent Swai

Innocent Swai 

As we know him, Henry Ford was the 19th century world’s great innovator of the assembly line.

He was quoted as saying, “If I had asked people what they wanted, a faster horse would be the answer.” Let’s look at what another entrepreneur of the 21st century said at Air Force Association event hosted by the Air Force in 2018 in Maryland, US. He said there was no customer who asked for Echo as it came up as a definite ‘wandering’ initiative.” He further shocked people when he said, “market research doesn’t help much.”

It’s known that for any brand to survive, efficiency is a must. Customers prefer what’s ordered, to arrive on their doorstep immediately.

For the most successful brands efficiency is their DNA. At any retail brand, the goal is execute their mission to keep customers happy by having low prices, fast delivery. However, other brands like Amazon and Google, their employees are given something extra.

For employees at Amazon, they actually have a time to be inefficient. Likewise, at Google employees are given 20% of their time to have their side projects. Such devotions have made these brands thrive in the world.

What Amazon and Google are doing has given their employees a beginners mind all the time in a very simple manner. At Amazon, it has another name according to Jeff; it’s called “wandering.”

At Amazon, wandering is guided. Likewise at Google, the side projects are guided too. In the process these brands manage to help their employees cultivate very special skills like hunches, guts, intuitions and inquisitiveness which are essential counter-balance to efficiency. For effectiveness to happen efficiency is key.

On the other hand for outsized discoveries to happen, the ‘non-linear’ tasks happen while people are exploring different options, one of them being wandering.

Building such a culture is not an easy thing. No wonder the most successful brands design a culture of builders.

They help their employees to become learners, curious, explorers, inventors, etc. It doesn’t matter they are qualified as experts or not. What matters the most is for them to have a ‘fresh’ with a beginner’s mind.

In addition, for employees to have time for wandering or side projects, their failures are embraced, something which has always been taken into account in the aviation industry which has growth mindset as opposed to healthcare, education or religious endovours. In the aviation industry failures once exposed by the help of the Nlackbox; automatically they will be rectified while in most other industries, the failures which happened many decades ago are still happening due to lack of transparency.

In South Korean, their culture has two features namely “respect for seniority and age,” which is quite an authoritarian destructive style of doing things.

This problem is still hidden in other fields like healthcare, education and religion. Without proper changes, employees and other people in different fields will remain rooted in character traits that end up in preserving hierarchy and asking few questions. It’s time for culture change so that authorities must be challenged creatively for better future. King Herod in the Bible is known to have ordered slaughtering of baby boys below two years old to preserve his authority in those days.


Differentiating your business

Thursday April 18 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

In the past several articles, we have been on a journey through the seven systems needed to build and run your franchise business successfully. We exit through a trip around branding.

In the normal study of business, branding is part of the promotional strategy within the marketing mix.

In franchising, however, we differentiate branding from promotional and marketing activities because franchising revolves around building brands through branding.

Remember franchising is about replicating a success formula of a business. Branding, therefore, is how your target market perceives your business, thereby determining its replicability or otherwise.

To create this perception, businesses create distinctive images for themselves- from designing your logos, registering your trademarks, developing, distributing and using your distinctively-designed marketing materials to how you do your marketing campaigns, lay out your outlets and engage with your most probable customer-all in an effort to distinguish yourself from competitors and clarify what it is you offer that makes you the better choice.

Your brand is built to be a true representation of who you are as a business, and how you wish to be perceived.

In exchange, your customers make a verdict of who you really are and vote for or against you with their feet and wallets. This is why prior to attempting to franchise, your brand needs to command some record of successful operation.

This includes successful operation of a prototype unit at arms-length over a reasonable period and a profitability record of at least two years prior to franchising.

This explains why it is not advisable to attempt to franchise a brand that is struggling for survival because customers already voted against it.

Your branding system should therefore, as a minimum, address the following areas. First, it should enable you to conduct regular customer satisfaction surveys.

This survey covers all aspects of how you not only offer services to the customer but how your competitors serve their customers. Using various methods from hard-copy questionnaires to mystery shopper to digitized responses and short Happy or Unhappy responses, this is important in that it regularly gives you the customer’s perception about your brand, thereby allowing you to correct any identified mistakes in time to enhance the customer’s perception.

Secondly, as emphasized in other articles, franchising is about scaling up businesses through replication of success which is impossible if the “how to do” remains in the head of the business owner. Your branding system should therefore also enable you to document and continuously update what you know how to do in branding so that you can train others to do the same.

Thirdly, your branding system should also enable you to generate and regularly update branding standards. As in all other systems discussed, standards are important to ensure uniformity in delivering the customer’s experience. Standards across all systems are a prerequisite to successful franchising.

Forth, the branding system should enable you to track and evaluate how different outlets apply your brand standards. This ensures that your Franchise Field Consultant constantly checks and reports adherence to brand standards or lack of it, with clear action plans to address non-compliance.

Finally, the branding system should address structure, content, look, feel and display of your brand.

Your logo color codes, size, when and where to use different logos and how to display the different logos on different marketing materials should be addressed as should type and color of furniture, staff uniforms etc.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project.

We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise. We turn around struggling indigenous franchise brands to franchise cross-border.

We settle international franchise brands into Africa to build a well-balanced franchise sector. We create a franchise-friendly business environment with African governments for quicker African integration.,


Poultry production cost cut as insects are used as feed

Thursday April 11 2019

By Josephine Christopher @TheCitizenTZ.

Dar es Salaam. Soy and fishmeal are main protein sources for chickens and fish by farmers.

But they are costly. Although the government exempted value added tax on the locally produced poultry feeds, still prices are extremely high.

Globally the use of insects as a viable animal feed has been increasing due to their high energy and protein content, but they are also costly and unsustainable.

BioBuu Limited, an insect company based in Tanzania, has been using larvae of black soldier flies (BSF) for recycling nutrients in food waste to get proteins for feeding chickens and fish.

BSF are native to Tanzania.

The firm stated that since poultry and fish farmers incur a high cost on feeds, the use of BSF larvae makes production cheaper by 25 per cent.

That will increase the production chickens and eggs.

The firm’s chief executive officer, Mr Kigen Compton, said the insects produce larvae which consume organic waste.

“After the insects produce the eggs, they hatch larvae that naturally feed on decaying organic matter, which we collect from market places,” Mr Compton told The Citizen at Vikindu, Coast Region.

Organic waste is usually broken down by other organisms over time and may also be referred to as wet waste. This is what the larvae do; they consume the waste and absorb the nutrients.

Mr Compton said: “The newly hatched small larvae are then fed with the organic waste until they consume enough nutrients and became grown, then they are harvested, dried and became ready for the use as poultry feeds.”

But the larvae don’t consume all of the organic waste, the facility use the leftovers as organic compost which is also offered as another individual product by BioBuu.

“As the insects eat the waste, they turn it into very good compost. Biobuu has been trying this out with farmers all across Tanzania,” noted the firm’s commercial director, Mr Matthew Haden.

“We breeding more than 3 million of these insects every day just outside Dar es Salaam, in terms of individual animals, I would bet that would make us the biggest farm in Tanzania. Of course, our animal is a small insect,” he said.

Biobuu began to research the potential of using insects to eat waste and product animal feed in 2013. After three years of research on the breeding and feeding behaviours of the black soldier fly, the firm was registered in Tanzania and raised money for scaling into a factory. The goal was to recycle the nutrients in organic waste into a high protein feed supplement for poultry and aquaculture.

Customers are small- and medium-size farmers.

Currently, Biobuu sells primarily to small- and medium-scale chicken farmers. They can use this to replace soy and fishmeal at more affordable costs. In Tanzania, the availability of soy and the high cost of fishmeal are prohibitive to poultry and fish farmers. Mr Haden said farmers could mix dried insects with other components such as ground grains and soy to form a mixture of a desired composition that is then pressed into pallets for better and more convenient feeding to animals.

“We have a consistent price that is very competitive. We are working with poultry farmers that mix their own feed and are looking for more affordable and innovate solutions,” he noted.

The company is also in the process of doing trials with the Tanzania Fisheries Research Institute for fish feeds as well.

When asked if the small holder farmers can practice this process of breeding the insects at their households Mr Haden said the firm is on its final stages in making a bin for home and farm use so Tanzanians can grow their own insects from their waste.

“Many Tanzania’s have chickens at home. We have designed a bin where you can dispose of your food waste, the insect naturally comes, lays eggs and eats your food waste. The bin will then allow the insect to crawl out and so a farmer can capture them to feed the chickens. And chickens love them,” said Mr Haden.

According to him, Biobuu has tried out the bin in different household across Tanzania, and will start selling the bins this month. “About the home bin is that our flies do not spread disease like houseflies and they actually reduce the number of houseflies in the area by up to 80 per cent.”

Benefits to environment

The recycling of the organic waste reduces pollution because when organic waste such as food rots it releases methane, which is harmful greenhouse gas that is 25 times more potent than carbon dioxide.

“So this whole process is good for the environment, because it helps in combating the environmental pollution,” Mr Haden told The Citizen.

Also the organic compost that is being produced from the recycling process can be used by gardeners, farmers, and landscapers to grow things. Organic compost provides an alternative to chemical fertilizers, thus, in the view of many, providing a benefit to the environment.

With the growing popularity of organically-grown food, turning organic waste into compost would seem to be a win-win for everyone concerned.


BioBuu say poultry farmers have been well aware of using insect as feeds. There is more demand than supply which creates potential for the firm to expand its breeding plants across East Africa.

“We will set up a new factory in Mombasa by June this year, which will be bigger than this one in Dar es Salaam,” said Mr Haden.


DIGITAL TRENDS : Is your brand having technical debt?

Thursday April 11 2019

Innocent Swai

Innocent Swai 

By Innocent Swai

Why should African goverments take a responsibility of funding literature, building educational institutions and libraries?

History repeats itself except in the education field. Why? The other day President Kagame of Rwanda reiterated that “nothing has the power to turn Rwandans against each other, ever again”. Furthermore he insisted that such “history will not repeat itself”.

With that firm commitment from an army-general-turned-politician, you admire the courage in his chosen words. More on that later. Where should people in Africa travel to and fro around the world to study something about business leadership and legacy?

Why do most African brands die with their owners? One good reason is the way we train the young generation. How does that happen?

A rich corrupt businessmanwill ensure his kid will attend the best schools anywhere. Among the best subjects which the kids will study are not mathematics or science. It’s ethics and integrity. We know much better, such kids end up being transformed.

They can’t help in changing their parents mindset, hence running away. This is the problem. If the head of a school can fire irresponsible teachers just because they are not doing what is right; imagine what will happen if they are given a country like Zimbabwe to run? That is how the likes of Robert Mugabe were born.

In Swahili we say “samaki mkunje angali mbichi” implying that when parents or guardians should take an obligation of raising kids; what they do in the very early stages (at very young age); they must train them in the way they should go and when they become mature, they will not turn away from such insights. It has really worked well in some religious perspectives. To get what you want like say, you want to change someone’s mind is not an easy job. However, it’s easy when technology is utilised properly. In this digital world, education, intelligence and hard work alone won’t deliver much. No wonder Americans have lost the last two years fighting each other about Russiagate collusion despite their best technologies that could not handle the situation! Come back to Africa.

We are doing better without such technologies. The only problem is good abilities to persuade, the biggest differentiator. However, where is such persuasion focused? It’s not directed in the right places. That is the biggest African challenge today. In everything we are doing, we need “due diligence” which is an assumption that every dealable deal has to utilise the power of technology. Why are we not embracing the digital failures that carry the DNA of leapfrogging Africa? It’s hard for brands to optimise technology from an operational perspective. Why? There could be 1001 reasons. Let’s pinpoint just one specifically for brands which aren’t tech companies at their core.

They don’t have proper management teams hence they are not aware of the upsides and downsides of not having digital strategies to empower their people.

When it comes to measuring the degree of success in implementing such technological trends everything becomes harder. Most of us are facing technical debts. That is the cost of taking shortcuts. According to Sunny Bindra, the best CEO are like the best heads of schools whose role is to train their teams patiently.


MANAGING TAX RISKS : Why you should demand receipt

Thursday April 11 2019


By Shabu Maurus

The move by tax authority and the government to press business operators in Tanzania to use EFDs appears to have been very successful, at least in the major towns in Tanzania.

But there are still some snags. Last week media reports indicated that the anti-graft body in Tanzania (PCCB) has been monitoring the implementation and use of Electronic Fiscal Devices (EFDs) by businesses in Kariakoo area of Dar es Salaam.

PCCB observed a presence of tax evasion by various business operators. Last year, PCCB and TRA issued a joint notice back in 2016 with similar sentiments.

Fraud is still a problem. But there is another problem on the part of customers. It appears that not many customers bother to pick up the EFD receipts after purchasing their goods and services.

For example, if you have been driving in Tanzania for the past three years, you may have noticed that the introduction of EFDs to the fuel stations also came with one additional container - a dustbin! The pump attendants dump the uncollected receipts into the dustbins. In most of the fuel stations that I frequently refill, it is normal to find the dustbins full of receipts or strings of uncollected receipts hanging from the EFD machines. But as a customer, why should you demand a receipt?

Legal obligation

The law (The Tax Administration Act, Cap 438) require customers to demand receipts whenever they purchase goods and services. So, as a customer you have a legal obligation to demand a receipt.

This means that you may be penalized if you recklessly fail to comply. Whether you are an individual or an organisation. Now that PCCB appears to get more and more interest in the implementation of EFD. This makes your decision not to demand receipt on your purchases even riskier.


To persons in business, apart from demanding receipts being a legal obligation, they also have a business interest. The receipts are necessary for them to be able to support their claim for expenses. The receipts may be helpful in reducing both your income tax and VAT liability. Imagine being audited by TRA four years from now and you need to support certain expenses else pay more tax.

Prevent abuse

Individuals not in business may perceive the receipts just be like any other worthless piece of paper to be dumped or burnt.

This may, partly, make sense because once the EFD receipt has been issued, the details of that transaction are already sent to the tax authority via the EFD management system. And so, whether an individual pick up the receipt or not, it doesn’t matter as far as possible tax evasion is concerned.

But this argument is not be entirely true especially if one considers this in the context of the weaknesses of the EFDs implementation in Tanzania.

One of the weaknesses in the implementation of EFD, is the lack of customer details on receipts issued by most businesses.

Lack of customer details on a receipt presents a big risk for tax leakage through fraudulent use of the receipts. The risk is higher when genuine customers do not demand and picks their receipts.

How do the fuel retailers or their attendants dispose of the receipts from those dustbins? The same question can be asked for other businesses.

They probably burn them. But burning may not happen if they have someone who can buy the receipts!

As customers, we can help mitigate the fraud risks by building a culture of demanding receipt after purchasing goods or services.


YOUR BUSINESS IS OUR BUSINESS : Can plastic roads save the world?

Thursday April 11 2019


By Karl Lyimo

Let’s start with some of the latest news on the subject-matter of vehicular travel and transport roads... Or, more specifically: ‘plastic roads!’

“Recycling: Road makers turn to recycled plastic for tougher (road) surfaces,” cooed the headline to the print edition of Science and Technology of September 13, 2018...

“30 tonnes of seized plastics to end up as roads,” roared another headline to a news report by Komal Gautham published in the Chennai-based The Times of India on January 6, 2019...

...And, the latest in the series: “South Africa to build the first plastic road in Africa,” crowed the headline to a report by Judy Bokao updated in the Construction Review Online on March 14, 2019.

Oh... there is more on that in the public domain in recent years which can readily be accessed via the ubiquitous Internet.

Generally speaking, plastic roads are made entirely of plastic, or of composites of plastic with other materials. In this regard, they are different from standard roads in that the latter are made from asphalt concrete, which consists of mineral aggregates and asphalt. [/>].

Apparently, the general idea behind the growing shift from using asphalt concrete to using plastics on constructing roads in founded in environmental protection every which way.

Briefly put, ‘environmental protection’ is the practice of protecting the natural environment by individuals, organizations and governments, with the overriding objective of conserving Mother Nature, natural resources and the natural environment.

The term generally refers to any activity that’s indulged in with a view to maintaining or restoring the quality of the environment. This is usually accomplished through preventing the emission of pollutants, or reducing the presence of polluting substances in our environment.

This can also be achieved by changing human consumption patterns, production techniques and characteristics of goods and services; as well as disposing or ‘treating’ residuals in separate environmental protection facilities; preventing degradation of the landscape and ecosystems, and recycling...

This last one – recycling – is being used in this day and age of plastic roads.

‘Recycling’ is, of course, the action or process of converting waste into ‘new,’ reusable materials or objects. Recycling is a key component of modern waste reduction that is aimed at environmental sustainability by substituting raw material inputs into, and redirecting waste outputs out of, the economic system.

Hence road construction using recycled plastics. These are synthetic materials made from a wide range of organic polymers such as polyethylene, PVC (polymerizing vinyl chloride), nylon, etc., that can be moulded into shape while soft, and then set into a rigid or slightly elastic form.

So, to protect the Environment, the Tamil Nadu government banned the use of some plastic products, starting from January 1, 2019. [See ‘Tamil Nadu bans use of plastics;’ January 10, 2019: />].

In that regard, seized plastics are recycled in road construction projects using “a technique conceptualised by the Madurai-based Professor Rajagopalan Vasudevan...” [/>].

Oh, I don’t know... But, Africa is also scrambling aboard the Plastic Roads Bandwagon – what with the Kouga Municipality in the Eastern Cape of South Africa preparing to “construct the first plastic road in Africa, with the aim of solving waste plastic epidemic andpoor quality roads...” [articles/341560/uk-company-piloting-plastic-waste-to-build-roads-in-sa>]. Cheers,


How telecoms firms are key in financial inclusion

Thursday April 11 2019

Tigo’s chief officer for financial services,

Tigo’s chief officer for financial services, Hussein Sayed. PHOTO|FILE 

Tanzania is increasingly becoming a cashless society. Gone are the days when people would queue to pay for their water, electricity and pay Tv bills. Tigo’s chief officer for financial services, Hussein Sayed, explains more in this interview. Read on:

Q. Analysis of statistics for telecommunication firms shows that operators are increasingly shifting their competition towards data and mobile money. Can you briefly tell us how the year 2018 was like for Tigo Pesa?

A. Our key focus has always been advancing financial inclusion. In 2018, we crossed the 7 million mark in number of subscribers. We have added around 800,000 in a record period.

This is also the year in which we launched a number of landmark partnerships with Global Players and World-Class brands such Uber and MasterCard. We launched a state-of-the-art payment solution with MasterCard using QR code where customers can scan a QR at our merchant and pay for products or services.

We also launched our Self Service solution called Self-Care through which Tigo Pesa customers are able to initiate reversals of wrongly done peer-to-peer transfers by themselves, hence protecting their money.

In your view, what is the future of a cashless Tanzania?

First, we highly support the Government agenda in increasing Financial Inclusion in Tanzania. Promoting Digital Payments comes on top of our priorities and we are taking all necessarily needed actions to support delivery of this objective.

Digital Financial transactions present an unlimited opportunity for everyone.

Tanzanians will be capable of accessing a long list of financial solutions that will help them to send money to the future (save), receive money from the future (credit), mitigating risk (insurance) and pay (remittance, bill pay, collections and international money transfer) through their mobile device.

The efforts taken to increase Financial Inclusion in Tanzania will lead to secure a prosperous future to the entire society, and we are proud to be one of the players contributing to achieving this objective.

You said one of the products initiated last year was the Tigo Pesa App. How has it been received in the market?

With the changing needs of our customers, our app is designed according to the World-Class measures of international applications.

We have seen a record increase in the number of transactions and the customers using the application.

Using the application allows customers to do all of their financial transactions in a faster and more convenient manner.

What role should mobile operators play in empowering businesses in Tanzania?

Supporting businesses is one of our key strategic pillars, and we glad to see a long list of major business players using our solutions in collections and disbursements. Businesses can use our solutions to collect payments from their suppliers and customers.

Also, they can disburse to anyone in Tanzania, directly to their wallets and regardless to the operator; a feature that’s only provided by Tigo Pesa.


FRANCHISE : Marketing and branding systems

Thursday April 11 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

By Wambugu Wa Gichohi

Business schools teach marketing as a business process through which businesses evolve goods and services, from concept to the consumer. It involves juggling the “four Ps” of the marketing mix-product, price, promotion and place.

Developed by E. Jerome McCarthy in the 1960s the concept has provided the blueprint for marketing since then, but modern marketers have added a “fifth P”-personalization-to recognize the need to deliver a tailored and personalized experience to customers.

Branding, on the other hand and in its basic form, is the practice of creating a name, symbol or design that is easily identifiable as belonging to the business. It’s part of the promotional strategy of the marketing mix which helps to identify a product and distinguish it from other products and services. Branding is important because not only is it what makes a memorable impression on consumers but it allows your customers and clients to know what to expect from your business. It’s a way of distinguishing yourself from the competitors and clarifying what it is you offer that makes you the better choice.

That is as far as the theory of business is concerned. Franchising is a game of reality and concepts should be understood at street level-where they are applied. My humble opinion, therefore, is that marketing is what your business tells the world it is-how it presents itself through all the “five Ps”- while branding is what the business really is, in the eyes of its most important resource-its customers. In other words, you can make all the noise and claims you wish through the “five Ps” but what you really are is the ultimate decision of your customers, and your understanding of the customer’s verdict is crucial in ensuring your business sustainability. They vote for or against you through their wallets.

In setting up your marketing and branding systems, a thorough understanding of the above is required. You will need systems that enable you to conduct regular market research in order to maintain a competitive edge. As emphasized in other articles, franchising is about scaling up businesses through replication of success which is impossible if the “how to do” remains in the head of the business owner. Your system should therefore also enable you to document and continuously update what you know how to do in the area of marketing so that you can train others to do the same.

Your marketing system should also enable you to track and evaluate the results of your advertising. In the past many businesses argued that advertising cost is a “sunken” cost-once spent, you couldn’t clearly match your sales to a certain advertising campaign/message. Modern digital marketing has unique solutions that attempt to do this, such as use of promotional codes which are assigned to a customer who has seen an advertisement, to apply when purchasing. Your marketing system should also address understanding your most probable customer, directing your messaging and advertising to them, ensuring your marketing channels are effectively reaching your most probable customer and how to use the internet and social media to attract this most probable customer. This is where the “fifth P” comes in. With the advent of smart phones, modern trends indicate that advertising spend is moving from the traditional media such as radio, TV and hard-copy newspapers to internet and social media. Platforms such as Google, Facebook, Instagram, WeChat etc have huge following, making it easier to reach certain market segments more impactfully than through traditional media. Personalized messages therefore come in handy as they reach the target segments seamlessly.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project. We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise.

We turn around struggling indigenous franchise brands to franchise cross-border.

We settle international franchise brands into Africa to build a well-balanced franchise sector.

We create a franchise-friendly business environment with African governments for quicker African integration.,


Focusing on bringing in new taxpayers to lower burden

Thursday April 11 2019


By Moremi Marwa

Many have undertaken to draw up their account of the aspects considered necessary for the expansion of our tax and taxpayers base. Since myself have carefully followed up such debates, it seems good that I comment on these things. And so, few weeks ago I wrote a piece “The case for Tanzanians to Embrace Paying taxes”. This is the second article.

Among other words of wisdom said by Justice Wendell Homes (former Associate Justice of the Supreme Court of the United States) was: “I like paying taxes. With them, I buy civilisation’’ – implying, taxes are the cost paid for living in a society and for being part of civilisation.

Taxes are utilised to meet basic functions of the state like defence, law, justice, public services and good governance. Unfortunately, people take taxes only as a burden on their income and treat the filing of returns as a mere formality.

In one way or the other, we all pay indirect taxes, charged on goods and services that we all consume. I would therefore focus on the direct taxes. According to publicly available data, in the last three years, direct tax collection has increased by about 7 per cent, while the number of taxpayers has grown by 20 and 3 per cent for individuals/sole proprietorships and corporate types of direct taxes respectively. Direct taxes (PAYE, Corporate Tax, etc) contributes about 40 per cent of our total tax revenue. The total number of taxpayers in the lowest income bracket (i.e. below Sh100 million) comprises almost 99 per cent of total taxpayers, from whom 20 per cent of the tax revenues collected.

The highest bracket of the above Sh100 million comprises a 1 percent of total taxpayers, contributing 80 per cent of tax revenues. In FY2017/18 the numbers of corporate taxpayers in the Sh100 million bracket was about 67,000 and those above Sh100 million bracket numbered just 20,000 taxpayers. This suggests that the income tax base in revenue terms is very narrow and adversely affects tax buoyancy.

Tanzania has a low taxpayer base even as a percentage of the total population. With a population of over 55 million, only 2.75 million have a TIN and of these, 21,000 have filled for VAT and about 300,000 file income tax returns.

Only 5 per cent of the population pays direct tax, which is very low compared to 30 per cent in Botswana, 25 per cent in Namibia, 20 per cent in Mozambique, etc. One could argue, of course, this reflects Tanzania’s low-income levels, which, for a large part of the population, falls below the basic income tax threshold; yes, but yet significant potential remains to expand the taxpayer base.

However, due to various structural reasons that I will explain, the base could perhaps be doubled at most to say 10 per cent (i.e. 4.5 million taxpayers). A huge gap has also been noticed between the number of entities to which tax deduction and taxpayer identity number (TIN) has been allotted vis-à-vis the number of those filing income tax returns.

A significant cause for the difference is that not all those allotted TIN file returns. Even though widening the tax base has been one of the key action plan areas for the past recent years, achievement has fallen short of targets. There is, therefore, an urgent need to pursue efforts for enlarging the tax base as well as taxpayer base (which is currently not commensurate with the growth in income and wealth) through both policy as well as enforcement action.

Why the 4.5 million potential? Let’s do the maths, assuming an average family size of 7, there are then over 7 million families on the 55 million population.

Assuming, further, that 30 per cent of the households earn only subsistence wages and therefore below the income tax threshold, there will then be 5 million potential taxpaying families. If 70 per cent of this is assumed to derive income from agriculture, we remain with 1.5 million potential taxpayers’ families.

If three individuals in such families could potentially pay income taxes, these are 4.5 million individuals, compared to the current 2.7 million. Even from this simple analysis (with many faults), there is, thus, a significant scope to increase the tax payer base and a lot of this increase will need to come from both increasing the tax base and ensuring true income disclosures. Widening the tax base raises equity, because if all persons liable to pay tax are brought on tax records, the burden on existing taxpayers can be brought down.

The overall level of compliance improves when a large number of people who are legally required to file returns, do so. It also encourages others to comply with their legal obligation to pay their taxes dutifully.

As the President directs, the focus has to be on bringing in new taxpayers, rather than putting a heavier burden on payers who are already in the tax net by targeting sectors that are currently untaxed, especially the informal sectors. There also has to be a comprehensive review of exemptions, incentives, etc., with a view to rationalising them, which may require legislative changes.

Attention has also to be given to minimisation of tax avoidance/evasion by developing a better understanding of the “underground economy”, both in terms of its size and the economic behavioural factors that motivate players in the economy, identifying vulnerable areas of tax evasion, and co-ordination and collaboration with other government agencies for exchange of information on a real time basis and its effective utilisation.

Without impinging upon good taxpayers, tax avoidance needs to be examined very carefully in those identified areas. The tax administration also may consider to be oriented more towards customers; an idea adopted by many modernising tax administrations for improving voluntary compliance. This could go a long way in expanding the taxpayer base. To continue next week.


Throwing light on how private equity investors exit

Thursday April 11 2019


By Salum Awadh

Are you worried of selling your shares and invite a stranger in your company? Don’t worry, they are only here for a while, you can always buy back your shares if you can afford.

It is a traditional practice of venture capital investors that they will invest in a company for a specified time period, and exit the investment for capital gain, actually that’s how they make their big money.

Any investment proposal that has no clear sign of exit will not attract a traditional VC investor, unless the investor has the option of lifetime holding.

According to AVCA and EY, the average holding period in Africa now is 6.5 years, thereafter we expect to see an exit activity.

Majority of VCs will want to invest and exit as quickly as possible, given the timeframe they have to return the money to their limited partners

Africa still offers limited exit options, with PE/financial buy-out accounting for the largest share of all exits on the continent.

As a company seeking VC money, it is important to understand how your partners will exit when the big day comes.

Buy-back option

With this option, company will buy back its shares from the VC. Principally, VCs get their money back directly from the company instead of getting from new investors.

Trade sale

This is a business-to-business sale, instead of selling the shares to the public. This can be done by selling the shares to a company in the same industry or to a company interested in the underlying intellectual rights that your company owns.


This is the decision of the VC selling the shares to the public through a stock exchange.

Despite having low uptake, taking the company public will help to build more stronger governance structures in the portfolio company. In Tanzania, VC can exit either through the main DSE market or via EGM. In 2018, exit through IPO accounted for only 2 per cent of total 46 exits in the continent

Mergers & Acquisitions

These are rare exit options in Africa. With this option, your company is 100 per cent acquired or merged with another bigger company, practically in similar business or industry

Mr Awadh is a CEO of SSC Capital, a corporate and investment advisory firm based in Tanzania and Rwanda , offering capital raising services, M&A, Corporate advisory, research and feasibility studies, business development, funds management, and development advisory


BANKING TIPS : Artificial intelligence impact in banking

Thursday April 11 2019

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwawa

Artificial intelligence (AI) is creating the single biggest technology revolution the world has ever seen. AI is a field of computer science that consists of the construction of intelligent machines.

The purpose of these intelligent machines is to replace human intelligence to a certain extent. Across all industries, AI is being used to address a wide range of challenges by making interactions between the machines and systems simpler and smarter.

There are huge amounts of data being generated in the banking industry which need to be analyzed and AI can easily examine that data and provide outcomes which can be used to create more opportunities for the banks and its customers as well. However, the penetration of AI in the banking industry is somewhat limited to date because of distinct databases and the risk of confidential data. In addition, it takes time for the banking industry to adopt AI technology compared to other industries because of the dependency on human involvement.

Nonetheless, as advanced technology becomes more available in our daily lives, more tech-savvy customers, exposed to advanced technologies in their day-to-day lives, expect banks to deliver seamless experiences which enable them to access most of the banking services at their fingertips, anytime, anywhere. To meet these expectations, the majority of banks now are shifting more into offering digital services which have resulted in an increase in online transactions.

And this is where AI can play a significant role in ensuring the digitization of the products and services in the banking industry. AI has an immense potential for the banking sector and can have an influence on many different aspects. It brings automation and simplifies processes, speeding up the response time, keeping humans apprised of latest regulatory changes, and saving time by preparing reports faster. In this article, I will share how AI can impact the banking industry:

• Fraud detection and anti-money-laundering – Avoiding fraud and money laundering activities is a challenge for many banks. AI has the potential to help the banks become more efficient in the process of detecting fraud and money laundering activities. Currently, banks are struggling to keep up with sophisticated methods fraudsters use as their systems are not equipped with capabilities to read and interpret data fast enough to detect suspicious/dubious activities.

To be able to quickly identify potential fraud and money laundering activities, AI brings the power of advanced data analytics systems to combat fraudulent transactions and improve compliance. In addition, AI has tools and systems that automatically compress data, and interpret the data within a few seconds, which otherwise takes a lot of hours and days to understand. By collecting and utilizing data faster to identify a whole host of patterns, AI systems can predict suspicious activities and anomalous transactions. This capability will ultimately make banks more efficient, safer from frauds and compliant with anti-money laundering regulations.

• Effective credit risk management – Credit risk refers to the probability of loss due to a borrower’s failure to make repayments of any type of credit, and credit risk management is the practice of mitigating the probability of loan loss due to a borrower’s failure to make loan payments at any given time. Therefore, the credit risk management process is a critical process in the banking industry. It requires both accuracy and confidentiality. AI can help banks to have an effective credit risk management process by simplifying the analyzation of data of the prospective borrower. AI can combine the personal data of a prospective borrower with market trends, his/her most recent financial activities and transactions to identify the potential risks in giving out the loan to the prospective borrower. Also, AI will help banks to get an idea of the prospect’s behaviour through AI’s behaviour algorithms hence lowering the probability of lending to a riskier individual.

Next week, I will share more how AI can impact the banks.

Written by Kelvin Mkwawa, MBA

Seasoned Banker

Email address:


DIGITAL TRANSFORMING : Emotional selling through content marketing

Thursday April 11 2019

Benson Mambosho

Benson Mambosho 

By Benson Mambosho

There are issues are hard to ignore in the online world today where news travels fast than the speed of light. Haven’t you ever wondered why there are some images, videos, articles, and graphics are most liked and shared? The answer to this is quite simple, they contain emotions that connect with people. Remember, humans are not only rational creatures but also emotional.

As businesses continue to grow customers are becoming very demanding. They are no longer after business as usual, they demand personalized service that connects them directly with brands. You need to give them more reasons to buy from you regardless of how cheap or expensive your product or service might be.

Therefore, it is crucial each piece of content shared establishes a positive and sustainable connection with them.

The most important thing to consider is to research on your customer. Get to understand their delights, discontents, where they hang out, what they talk about, and who do they associate with. Fortunately, both traditional and digital channels can help you get the right data. Deep knowledge of customers will harness the power of emotional selling in your content strategy.

Understanding the role of emotions will largely contribute to developing sound and valuable content that pierces through your audience. Emotions will also help you by increasing brand loyalty and awareness. These emotions include feelings such as; love, hate, fear, awe, joy, love, laughter, empathy, surprise and so many others.

Why don’t you begin sharing your content by telling a story to your audience? Narrating your brand’s history into smaller details leaves a tale through which the audience can always refer to. Show to them the hero of the story that will take them through challenges and opportunities of starting the business. Create curiosity in your story that will make them search for more of your business.

Your service or product is doomed if your customers will be left out. This means you need to create a sense of belonging. Allow them to feel special that the product or service they buy is very valuable, unique and limited.

To get here, you have to build around your image (lifestyle) and not what you sell. Don’t stop here, continue engaging with them even after making a sale. Let them know you always care.

There are cases your response to customers should be humorous. Avoid being serious all the time, remember your customers are humans, therefore, they deserve humor like laughter or even jokes sometimes. Use emoji which so far are commonly used to make emphasis when words run out. Label your responses or engagement with a distinct tone of voice versus your competitors as it will help your audience remember you every single minute.

Using the element of surprise might spark conversation and excitement to your customers. You don’t have to wait for a holiday or festival to do a promotion, you can award loyal customers anytime and anywhere they might be. Customers will be likely to share the good news with friends and acquaintances through which your business will be heard even further. At times of customer desperation and panic, this might just be the best remedy.

Your content strategy will be more effective and successful if you build on the right emotions across all stages of the customer’s buying journey. Listen and analyze carefully how they react to your content, which ones are having many shares? What are they saying about it? And most importantly do they attract clicks? Go further by examining if your competitors are also doing something similar, if yes then you might just have inspired them to do so.


New hybrid rice variety raises farmers’ income

Thursday April 4 2019

Welezo villager Monica Jilabi works at her farm

Welezo villager Monica Jilabi works at her farm in Shinyanga Region. TXD 3016, Saro 5 hybrid rice variety has hugely improved productivity. PHOTO | courtesy 

By Gadiosa Lamtey @gadiosa2

Shinyanga. Farmers benefit from a modern paddy seed variety as productivity has risen.

Researched by Dakawa Research Institute, TXD 3016, Saro 5 is seen as a solution to many farmers. It is one of Tanzania’s hybrid rice seeds which are getting widely acknowledged for their enhanced productivity. The Walezo area in Shinyanga Rural can be an example of as farmers can produce 28-40 bags per acre if they follow modern farm practices.Major limitations are generally due to the hybrid rice seed technology being laborious and intensive, besides the high cost of the seeds.

However, in Shinyanga, Oxfam and Rural Urban Development Initiatives (Rudi) are making it possible for farmers to get the seeds.

The hybrid rice seeds market growth in developing countries is varying from moderate to stagnant, owing to the lack of trained human resources, lack of sufficient water, and unfavourable climatic conditions.

Rice producing Asian countries, apart from China, which include India, Indonesia, Bangladesh, the Philippines, Vietnam, Myanmar, and Pakistan, together have 4.5 million hectares under hybrid rice seed cultivation.

In African countries such as Liberia, Mozambique, Nigeria, Uganda, Madagascar and Tanzania, cultivation with hybrid rice seeds started in the early 2000s. Walezo Village has a modern warehouse and a rice miller that has added the rice value and made farmers benefit from agriculture.

Middle men no longer exploit farmers. According to researcher Hezron Tusekelege, the seeds were first planted on a sizeable scale in 2002 after a long-term study, and have now spread across the country and neighbouring countries such as Burundi, Rwanda and Kenya.

At the same time the centre also conducts further research to improve the seeds, after discovering birds are eating them.

Farmer Winfrida Mlale said before starting using the modern seed variety, harvests were poor.

But after receiving training from Oxfam and Rudi on modern agriculture and the new seed variety in 2014, farmers began getting high yields.

“I have been getting two or three bags per acre,” she said.

However, after 2014, in her three acres, she built a house and paid school fees for her children.

Seven farmers have established the Shyrice Group to build a warehouse and a modern miller.

Shyrice Group secretary Monica Jilabi said: “We started the project in 2012 by raising money from Vicoba but it didn’t work out until 2014 when Oxfam/Rudi reached our village and trained us on modern agriculture.”

The machine is capable of dehusking between 90 and 120 bags per day.

Farmers pay Sh50 for one kilo of rice to be dehusked.

“Rice value has been increased and more profit earned. Farmers can sell their rice according to grades,” she said. In 2016 the machine dehusked 1,024 kilos of rice. The amount increased in 2017 to 52,010 kilos.

Rudi project manager Stephano Mpangala said rice husks were used to make bricks and farmers would be taught how to make charcoal from them.

According to him, rice leaves are left in field to fertilise the soil as they have no technology to process so that can be used as livestock feeds.

Rice is cultivation in Tanzania is still characterized by low yield and productivity as affected by factors such as lack of irrigation infrastructure, low-yield seeds and outdated farming practices.

Rice farming is also faced by other challenges like poor roads to the market, lack of quality storage facilities and post-harvest losses.

But efforts are mounting to improve production in the agriculture sector which employs over 60 per cent of the working population and generate over 60 per cent of the country’s raw materials.


Gas firm targets low-income earners

Thursday April 4 2019


By Rosemary Mirondo @mwaikama

Dar es Salaam. KopaGas Company has received Sh6 billion from investors to enable low-income earners to access cooking gas at a cheaper price than that of charcoal.

KopaGas director Andron Mendes told Business Week that so far the firm had reached at least 2,000 families. The aim is to serve at least 600,000 families in the next five years.

However, he noted that talks were going on to get Sh25 billion to meet the target.

“The funding that we have so far received was from impact investors who target solutions for low-income communities,” he said.

He named the investors as Acumen (USA), HRSV (The Netherlands), KFW Bank (Germany), GSMA and Japan.

He noted that the programme started early 2019 after the funds were received.

Explaining, he said that the previous programme entailed one family having a complete set but was later seen as impractical as the majority of families lived in one rented rooms and therefore not safe to be cooking in the same room. According to him, the initiative targets low-income families that are forced to live in one room apartments that have no kitchens.

“We target such homes that share a common kitchen and give them a complete kit which consists of a gas cooker, gas cylinder plus a meter and gas card that loads credit which essentially is for pay as you cook.”

While they share a common stove in one common kitchen, each family has its own credit card.

According to him, the card has credit that can be loaded at whatever amount the owner requires starting at Sh500, depending on the amount they require. Explaining he said the gas card is the key for accessing gas, and when they require cooking the meter identifies the user and gives them access. The meter also reads the amount that the owner has in the card and deducts that was used to cook.

However, Mr Mendes said for customers to access the facility they have to pay an initial deposit or membership fee of Sh15,000. Each family spends at least Sh1,200 on cooking daily.

“The ‘pay-as-you-cook gas’ is cheaper than charcoal which is not quick, clean and also expensive where families have to use at least Sh3,000 for cooking daily and may still not be adequate,” he said.

Tanzania Forestry Services (TFS) CEO Dos Santos Silayo said Tanzania was looking for alternatives sources of energy apart from charcoal to save forests.

Prof Silayo said TFS was providing awareness programmes to the public on the importance of using alternative sources of energy to save the environment.

“Currently KopaGas is working closely with the community to provide gas to low-income earners through ‘pay-as-you-cook plan’ because they cannot afford to buy the whole gas cylinder.”

He noted that plans were underway to come up with a community gas network, where a large gas cylinder is placed at the centre with pipes distribution to the surrounding people.


Digital marketing strategy uncovered

Thursday April 4 2019

Benson Mambosho

Benson Mambosho 

By Benson Mambosho

Digitization has blurred the line of traditional marketing by offering new competition in new corners of doing business.

It has completely ushered a new era of thinking, organization restructuring, career development, innovation, and enhanced creativity.

One of the prime concerns facing this modern development is the ability of brands and organizations to organize their work by incorporating new modern techniques of doing business, especially in key areas such as marketing and advertising.

It is obvious that technology has been available for so many years, but we can’t ignore the tremendous change of customer purchase behavior today.

Digital has curbed geographical impediments to the customer, today services and products are more profound online.

It is for a fact that a well-framed digital strategy shouldn’t overlook customer migration in the online world. It is not an option but a necessary factor.

Complementing your marketing efforts seamlessly across digital solutions are considered to be gateways that ensure customers stay happy all the time.

If you are planning to excite your customers, then be aware that they will demand multiple channels that are cross-functional and seamless in terms of use.

This should be simple as ‘plug and play’. There is nothing less to this but more of what your digital strategy needs to address to guarantee to retain existing customers and acquiring new ones.

Keeping up with modern trends and covering extensive digital space of your campaign can sometimes be painful.

Hustle less by increasing your scale of investment in your marketing efforts by expanding your thoughts in collaborating with other playmakers who could add more value to your marketing campaign. Your strategy can include collaboration areas with other brands or companies that can provide you with more data, traffic, awareness, engagement or reinforce your campaign on their channels.

What is the value in your product or service? Sell the lifetime value of your business behind your marketing campaign, features and price might be of less importance. In fact, a storytelling campaign creates more room for customers to connect with your brand even after you are done with your campaign.

They need something to remember you with, a story they can share with others through word of mouth. Customers will always buy from you over and over again as long as you keep on providing value to them.

Your strategy has to be built from your top competitors. It might sound weird but it’s the truth.

Learning from the best can give you an edge to your campaign by adding and omitting kinds of stuff that might hurt you in the long run. Getting to know what your competitor tactics can also help you to overcome obstacles that might arise along the way. It keeps you at bay by differentiating your business to theirs.

Every step you take needs to be well calculated and weighed. This means you need to have a funnel that measures the impact of each approach you make or take.

Go back to your main goal(s) of your strategy and create key performance indicators that they can evaluate your whole marketing strategy. Measured approaches help to limit initiatives that don’t work and avoid further waste of resources that could be directed elsewhere.

To succeed, your strategy should focus on the integration of functions such as the ‘what’ you want to achieve (objective), how you would want to achieve it (strategy itself) and tools that you will use to get there (tactics).

All these three factors are indispensable to make your marketing strategy effective and thorough. It’s also important to understand your position in the market that can help you create a credible marketing strategy.


Setting up your operations system

Thursday April 4 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

Franchising is about scaling up businesses through replication of their success formula. This is not possible without setting up an organized way in which to run the business.

An operations system ensures daily work is focused on the organization’s strategic objectives and is done in the most efficient way.

It deals with the questions “why” (purpose of the work), “what” (specific objectives of the work) and “how” (the processes used to do the work). It ensures smooth communication between your leadership team, your management team and all your employees.

Businesses that run on a dependable operations system seem to run themselves, those that don’t feel like they’re out of control – no one is on the same page, employees are all rowing in different directions, the same problems keep popping back up and there’s inefficiency and chaos everywhere – and accountability nowhere.

Regardless of what copycats think, no business is similar to the other, hence picking an operations system of one business to run the other simply doesn’t work. Neither does reinventing the wheel.

What works better is customizing an operations system that you might get off-the-shelves to fit your business’ unique situation.

In setting up an operations system be sure to address the following areas, as a basic minimum.

First you will have a component for quantifying how long it takes to complete a job/serve your customers and for picking out and implementing innovation needed to better serve your customers on an ongoing basis.

Second, you will have one for delivering exceptional customer service consistently regardless of who is helping your customer. Third, your system should ensure successful resolution of customer complaints.

Fourth is tracking customer retention and identifying any loss due to unmet service/product expectations. This ensures that you can adequately address the shortfalls in customer service in a timely manner.

Fifth, your operations system should be able to analyze and evaluate your current operations to determine if business expansion is feasible or even desirable.

This will ensure that growth decisions are supported by facts and not hunches and emotions. Sixth, a component to control current costs and to accurately forecast future costs will also be needed.

Seventh is a component for documenting how to do your operations work so that it is easily trainable to others.

This is the most important key to replication of your success formula, often missed by many indigenous businesses whose operating system remains in the head of the owners, to their graves. Eighth is a system for scheduling work or jobs to assure timely completion.

This ensures that you organize and maintain a productive workplace. Ninth is a component for assessing current and future operating needs to determine whether new or additional equipment/materials/ space is necessary.

Tenth, to avoid looking for information and documents for prolonged periods, your system should address organizing, processing and storing your files/paperwork in an efficient and easily accessible manner.

Eleventh, the system should address the need for controlling all order processing activities to assure prompt service to your customers.

Twelfth, there should be a component in your system for designing your product/service packaging or bundled offers to both meet customer expectations and your gross profit margin goals.

Finally, a component for monitoring your suppliers and/or subcontractors will allow you to identify potential delays or problems so that you can schedule your work accordingly.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project. We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise.

We turn around struggling indigenous franchise brands to franchise cross-border.

We settle international franchise brands into Africa to build a well-balanced franchise sector.

We create a franchise-friendly business environment with African governments for quicker African integration.,


How society can benefit from stock market

Thursday April 4 2019


How the society finances its enterprises and government activities, as far financial markets are concern, is driven by historical and cultural perspectives.

In Europe, for example, historically businesses have been more reliant on bank financing (as opposed to market financing), than their counterparts in the U.S. Much as tides sometimes moves in each other’s direction but this remains fundamentally the case.

However, efforts are continuously made all through to elevate market financing, for good reasons, and this has been the case for us as well. And so, the role of stock markets.

Stock market are places where governments and businesses can raise long term capital and investors can buy and sale various types of financial instruments that are quoted into the stock market. Such instruments ranges from cash-based instruments i.e. equities/shares, bonds — government bonds, corporate bonds, municipal bonds; to derivative instruments such as options, warrants, and futures.

Stock markets growth is derived from their capability to respond to the demand for finance projects, investment and ventures that need capital to finance their production, commerce and trade. For ages, capital markets have been pre-eminent, as platforms for raising funds for investment in domestic markets as well as in overseas markets.

Much early industrialization was financed by individuals’ and partnerships, but as capital requirements became large, it was clear that joint-ownership in enterprises was a matter of necessity — under this model, numerous investors were brought together into a joint ownership in a commercial enterprise with the promise of a share of profits as well as investment growth.

From the start of the nineteenth century, stock markets have prospered and expanded largely. And, for the last 30 years, especially in responding to globalization, economic liberalization, and the accelerating wave of privatization new stock markets have appeared in developing countries where they have become the forefront of most developing countries’ tools of financing economic progress.

Even countries that still spouses communism such as China and Vietnam, now have thriving and increasingly influential stock exchanges designed to facilitate the mobilization of capital and savings for its employment to productive endeavors — with return going back to capital providers, while the society benefits with increased output, employment, revenue to the government and the overall economic well-being.

Today, the important contribution of capital markets to economic well-being is recognized across many African capitals. Stock exchanges in the continent have increased from three 20-years ago to 29 exchanges in 26 countries.

Some stock markets, particularly those prior to 1990s, came into existence following demands from the business community and investors in companies who wanted a platform that will enable them to buy and sale shares in a more efficient manner.

Some markets, and this true for most of African stock exchanges, came into being in response to the World Bank and IMF’s Structural Adjustment Programs during the 1990s as part of the qualifying conditions for such programs, i.e. the need to liberalize economies, its markets and trade.

Because of this, among other few possible reasons, African stock markets, with just a few exceptions, have not been treated, by governments, private sector or the donor community as primary engines for financing economic developments, especially in mobilizing long term sources of financing to finance productive investments.

As an example, the wave of privatization, as part of Structural Adjustment Programmes, was mostly driven outside capital markets, the consequence of which has been economically weak exchanges, without adequate supply of securities in the markets place.

As it turned out, this was a big lost opportunity for creating vibrant stock markets in Africa, lost opportunity for financial inclusion, literacy and the much talked (but highly needed), broad-based economic empowerment.

In turn business enterprises from the private sector have also been relatively slow in embracing the stock markets model as a facilitator for long term sources of capital.

Either way, what is the relevance does stock markets?

Apart from facilitating the funding of enterprises growth or project development due their efficiency pricing of capital, stock markets have many other benefits:

One of the economic challenges for a nation is in finding a mechanism for deciding the mixture of goods and services to produce to satisfy various needs and wants of its people.

One extreme situation is where the government determines the types, quantity and prices of goods and services the country should produce and consume.

The alternative is where the nation decides to let the market determine what should be produced, with which entities and at what price.

Under the second scenario, stock markets can assist in the choice process through allowing the flow of capital to areas where they can be efficiently allocated.

If the stock market is efficiently run— it can lead to capital being allocated into sectors which are appropriate for the objective of maximizing economic well-being of the society. Stock exchanges help the nation and businesses to be more transparent in their conduct — this then facilitates the improvement in its corporate behavior.

This is achieved through a number of pressure points i.e. stock exchange’s listed companies are required to disclose a far greater range and depth of information than that is normally required by the accounting standards or the Companies Act. This information is then disseminated to the wider audience which becomes the focus of scrutiny as well as much press and public comments — therefore the board of directors and management of listed companies have fiduciary duties to ensure they produce as much information they possibly can, indicating not only good operational and financial performance but also report on matters of sustainability, good corporate citizenry, and social responsibility.


What happens after taking venture capital money?

Thursday April 4 2019


By Salum Awadh

I understand that there is more talk and emphasis on what needs to be done to be Venture Capital (VC) attractive. Many articles and awareness is continually done on how to be investor ready, how to prepare an investor pitch, etc. But less is still know on what happens at post-investment stage.

It is important to know that even though VCs are more hands-off than with the case of angel investors, there is a still a degree of participation, oversight, and engagement until they exit and liquidate their investment.

But how and how much do VCs engage themselves with you once you receive their money?


VC investor will ensure that the company is well run; controls are not just established but also adhered to.

They will have a seat in the board and one of their representatives will be appointed. This individual will participate in all the required board meetings, and no major decision will be done without the board approval. Business owners need to understand that business will not be as usual.

Board meetings are normally held quarterly, and some of the issues discussed in the board meeting include but not limited to:

• Performance review especially around revenues, human resources, new developments, agreed targets, etc.

• New plans and proposals

• Discussing the issues that need board decision

Technical support

The beauty of venture capital investors is that they won’t just give you money. They will also make sure that the company is properly managed. In achieving this, they will provide advisory to the management in the overall strategy formulation and execution.

Management mandate

The VCs, in most cases, will ask for management mandate before giving you the money. This will give them the comfort that they have right people in the management team, and if not, they will have the mandate to replace and recruit some key positions in the company, such as the CFO or the head of sales, etc. This is all for the good reason that they want to see the company is well managed, and value is maximized.

Non-formal check-ins

Apart from board meetings, which are official and structured, the VC may also engage with the management less formally, on occasional basis. This could be by the way of drop-ins in the office, emails, or phone calls. These sessions are normally used to discuss such operational issues that do not need to go to the board. These could include such issues as getting a feedback, follow-up on a recruitment process, follow-up on an agreed campaign, etc.

Follow-on funding

Follow-on funding is a process of an existing investor provides additional funding at a later stage. There are cases where the company needs to go for a second round of fundraising. Your VC may decide to participate in this stage, and this will involve the usual processes of raising money and the usual engagements.

Exit preparations

After a few years of investment, the VC will start preparations for the exit, actually, some VC investors say that they start exit preparations soon after cutting you’re a cheque. Exit needs to be prepared, especially if it’s a proactive exit, in this case, the investor might start conducting a few activities, and some might involve you as well.

Mr Awadh is a CEO of SSC Capital, a corporate and investment advisory firm based in Tanzania and Rwanda, offering capital raising services, M&A, Corporate advisory, research and feasibility studies, business development, funds management, and development advisory


‘Harambee’ model revives hope in cashew farming

Thursday March 28 2019

A model ‘Harambee’ factory. The Harambee

A model ‘Harambee’ factory. The Harambee industry is a standard unit that can be multiplied all over Tanzania. Being a standard means processing cost is known and as Out-Growers guarantee the off-take the Harambee is a safe investment or lending object for banks to support. PHOTO | COURTESY 

By Tom Mosoba @TomMosoba1

Tanga. A new initiative is out to change the narrative of cashew nut growing and trading in Tanzania, beginning with Mkinga District in Tanga Region.

Out-Growers Tanzania Limited has had farmers in Mkinga District talking since 2016 when it first set foot in the area. The company aims at empowering farmers through enriching the crop’s production and thrusting them in the cashew nuts trading value chain.

Farmers who have remained impoverished for many years are excited at the model that Out-Growers is deploying to improve their lot.

The farmers’ hope is that the quest to make cashew nuts a dependable cash crop in Tanga Region will succeed and erase the bad memories of many failed trials in the past.

Out-Growers Tanzania is a private business initiative with contribution from African Enterprise Challenge Fund (AECF) in which farmers will be invited to co-own the processing and marketing of their produce in a four-stage arrangement that will significantly boost their income through better farming techniques and local value addition capacity.

Inclusion and transparency

Out-Growers will introduce farmers to a different way of looking at their investment as it seeks a win-win relation that it hopes will put Tanzanian farmers on the global cashew map.

Out-Growers director Karsten Solaas says their model will help Mkinga farmers to control of their destiny as they become business partners with Out-Growers. A big win for the farmers is the access to finance for farm improvements.“At the moment farmers are removed from the value chain.

Out- Growers will see them directly co-own the business and earn profit up to the point of retailers where the final product is sold,” said Mr Karsten.

Out-Growers introduce a shared value chain with complete transparency for all. The supermarket price on finished cashews is shared between processing and farming and everybody knows who gets what, when.

By sharing from the street price, the possibility of corruption and price fixing which has been a big issue in the cashew sector is eliminated.

According to Mr Karsten, the Mkinga story when successful, will offer a business model that can be rolled out to other cashew nuts growing areas to empower more Tanzanian farmers and enable the country earn its rightful value from processed nuts as opposed to exporting raw cashew nuts as is the case today.

“We envisage a situation where Tanzania cashews are easily recognised in the consumer market around the world and its premium value rewarded for originality,” said Mr Karsten.

The Out-Grower model has four steps namely Farmer Clubs; The Harambee; The Hub ; and Waste conversion to Biodiesel

Farmer Clubs

Out-Growers is helping establish farmer clubs as the starting point for the venture. Nearly 2,000 farmers have so far joined the clubs of 12 to 20 people each in five villagers of Mkinga district that are targeted in this phase of the initiative. The villages are Nkanyevi, Mahandakini, Mayomboni, Mazola-Kilifi and Kibewani.

The farm club stage aims at improving farmland yield and production of a larger kernel for the target market through provision of input, seedling and hardware as well as training of the farmers on optimal farming practices, good governance and financial literacy. Management services would also be made easier through the farmer clubs.

With this, Out-Growers expects the farmers to realize at least some of the potentials set by Naliendele Research Institute – Tanzania’s world recognised cashew: planting of up to 70 trees per acre from the current 18 trees per acre and harvest 35 kilos of cashew nuts per tree from 5 kilos per tree. All of this has the potential of the local farmer raising his or her income from $1 (Sh2,300) to $10 (Sh23,000) per day.

The Harambee for local processing

The ‘Harambee’ will be the most significant injection in the value chain. This is an invention of a self-contained village processing factory. It will be a critical input in that it is here that the current value chain begins to be broken.

The Harambee will be co-owned by Out-Growers and farmer groups who feed it with the raw product for first-level processing using standardized equipment positioned not far from the member farmer clubs, reducing the current long distances to ferry the produce to collection centres.

The factory is built on a standard construction that can be multiplied throughout Tanzania. (The vision takes inspiration from successful international franchise models such as MacDonald’s.) It is easy to service and has a potential to employ some 23 people.

Farmers’ ownership is through an arrangement that uses part of their produce as investment capital. The Harambee will be a legal entity with farmers as shareholders to create a long lasting bonding with supply.

Danish Technological University experts have researched on how to enable transparency using a mobile phone-based system through which farmers will keep record, capture and monitor the real value of their harvests and earnings throughout the value chain.

The Hub to secure critical mass quality

In Tanga City, operations have started at Out-Growers’ main base called the ‘Hub’. Here, the semi-processed cashew nuts from the ‘Harambees’ are received for final processing and packaging of the cashews kernels for export.

The Hub secures the critical mass so that the supplier can meet the market requirement for their recipients for credibility.

Another key role of the Hub will be to secure the highest possible quality assurance rating for cashews from Tanzania.

The Hub doubles up as a resource center for the organisation, offers logistical support, management, training and maintenance.

The centre will be responsible for investor relations as it eyes expansion south and will seek partnerships for this venture.

Waste conversion to biofuel

The lack of value addition is one of the disadvantages of cashew nut processing. But for Mkinga farmers, it will be twice lucky as Out-Growers looks to not only have them process their produce within their vicinity, but will for the first time bring the technology to use waste from cashews to add to the income of the cashew growers.

Supported by Unido’s Waste to Energy programme and Danish Technological University professors, Out-Growers has already started producing Biofuel at the Hub by using the cashew nut shells. This is a major step as shells have mostly gone to waste.

The company has installed machinery from India that use new and affordable technology to produce environment-friendly biofuel energy.

Some industries have shown keen interest on the use of this bio-fuel, which will help them become climate friendly through carbon dioxide neutral fuelling.

Out-Growers will even see Mkinga farmers add up income by making use of the cashews apple that is at the moment left to rot without meaningful use.

As a first, researchers from the Technological University will show how the farmers can process the fruit (cashew apple) to generate green bio-ethanol. But Out-Growers has more ambition for this product, and the university’s Food Science Department is now involved in developing higher value products from the today wasted apple, including developing foods such as jams.


Need for operation systems

Thursday March 28 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

Past articles have explored leadership, management, sales and finance systems needed to run your franchise business. We now turn to operations.

Your operation systems will set you apart from competition. These are the systems that define how you interact with your target market and customers, from the minute they hear about your product, set foot into your outlet to the after-sales support they receive. Within this spectrum are many aspects that need your attention, all dependent on your line of business.

A fast food restaurant, for example, has to think through how and where they set up their service counters in relation to the general architecture of the outlet. “Fast” dictates a set up where customers walk in, pick up food, pay, eat and check out in the shortest time. You therefore have to think whether the cashier sits at the start or end of the service line.

The food service line is supported by a food production line. You will need to set up the production line in a way that it enhances your “fast” concept. Food required, volumes of which you would know over time, must be available at the service line throughout.

That means appropriate cookery equipment, adequate quantities of raw materials in the store, cooking must match the demand of the service line while waiters, where needed, must clear the tables promptly to create room for the next customer. Your furniture and fittings must also support your “fast” concept. How you design them, how you lay out the tables, colors, in-store equipment such as TV screens, WiFi, telephone charging ports etc will all determine how fast you can turn customers over.

Regardless of your line of business, your vendors, sub-contractors and suppliers are key to your operations.

If unreliable, they will cause regular hitches on your production line, to the chagrin of your customers. The quality of operations will bear on overall costs of the business, hence the pricing policy.

Operation costs that are too high resulting from complex delivery systems will eventually run you out. Simplified sophistication is key to managing delivery costs and keeping prices within reach of your target market.

Continuous innovations in operation systems are prerequisite to business sustainability. While market conditions yesterday may have supported your current delivery systems, changes in future market trends will require a total overhaul of your operations.

A clear example here is the banking industry. In the past, banks competed on the number and size of branches mainly because, to reach the target market of the past, a bank needed physical presence in many localities. Today, millennials compose the larger target market for forward-looking banks.

Millennials hate banking halls. Using technology to reach them will separate winners from the rest-delivering a death warning to numerous fancy banking halls and private banking lounges currently used by most banks.

Use of technology to roll out mobile banking, e-banking and agency banking is rapidly increasing financial penetration across Africa, with some banks like Equity Bank going as far as acquiring a telco licence in Kenya (Equitel) through which they roll out their financial products.

Franchising is about scaling up through replication. Needless to say, as a business owner-manager, there is no way you will scale up if you are the cook, cashier and waiter all at the same time.

You will need to set up operation systems that deliver the same superior results in these roles, regardless of who is in control.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project. We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise. We turn around struggling indigenous franchise brands to franchise cross-border.

We settle international franchise brands into Africa to build a well-balanced franchise sector. We create a franchise-friendly business environment with African governments for quicker African integration.,


Improving car financing

Thursday March 28 2019

Kelvin Mkwawa

Kelvin Mkwawa 

By Kelvin Mkwaw

Not many people can afford to buy a car with cash. Hence we need to explore other avenues so that we can live our dream of owning our own car. One of these avenues is going to a bank and applying for a special loan called “car loan/car finance”.

Even though it is not a complicated process, it can be confusing to know if this is the right avenue for you to buy your car. It is important to note that before you head to the bank, you need to know how much you can afford and which car you would like to buy.

As I stated in one of my previous articles, it is crucial to think long and hard before you take a loan from a bank. In that article, I shared that you need to ask yourself the following questions: Will it help me to achieve my financial goal? Can I afford it? Is it convenient? If your answers to those questions are “yes” then you can proceed to explore your options.

In this article, I will share the steps you should take when you decide to finance your next car, and also what banks need to do to improve auto financing in Tanzania.

There are three steps that you should take when you are trying to finance the purchase of your next car. The first step is to look at your financial status. 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.

Through this exercise, you will be able to gauge how much money is left for you (how much you can afford) for your next car. After knowing how much you can afford for your next car, the second step is to find the car that you would like to buy.

When you know exactly what kind of car you want, it makes you focus on what you need and not what you want.

You should take your time on this step to find a car that suits your needs both personally and financially. Usually, there are a lot of sales and deals that are being offered by car dealers hence it is important to visit as many car dealerships as you can to explore the opportunities.

Once you have found the car that meets your need, the next (and third) step is to look for the bank that can offer you the terms and conditions that fit your budget. This step can be done earlier simultaneously with the previous step of looking for your specific car. The reason is that many banks have certain requirements on types and features of the cars that they can finance.

of those requirements are a date of manufacture, how many miles/kilometres the car has and size of the engine. In addition, the reason it is advised to do these steps simultaneous is to get the pre-approved amount from a bank to give you an idea of a specific finance amount that you will qualify for.

This will limit your options of the cars as you will have to work within the specific approval amount approved by the bank.

Once it is approved and agreed, the bank will communicate and prepare the finance agreement which will detail the terms of the loan including how much you will pay every month, for how long, and the interest rate you will be charged.

An interest rate determines how much interest and monthly instalments you’ll pay on your car loan. You can usually choose between fixed rates and variable rates but almost all banks in Tanzania offer an interest rate based on market conditions (so a variable rate).

Next week, I will share steps the banks need to take to improve auto financing in Tanzania.


Building a culture of savings, investment is crucial

Thursday March 28 2019


For the past six-years the Dar es Salaam Stock Exchange have been running an edutainment challenge dubbed DSE Scholar Investment Challenge whose objective is financial literacy i.e. educating and sensitizing the youth, especially those in universities, colleges and secondary school, about the necessity of savings for investment, in this case investing in listed securities and bonds.

This is in trying to avoid situations where the next generation will have to live in the situation of not having enough assets (i.e. share, bonds, property, cash, etc) to meet obligations which then create significant stress, leading to host of problems, such as depression and heart diseases.

As it is said in the book of Proverbs 21:20 - [There is] treasure to be desired and oil in the dwelling of the wise; but a foolish man spendeth it up. Also Proverbs 13:11 - Wealth [gotten] by vanity shall be diminished: but he that gathereth by labour shall increase.

Thus, educating oneself and pursuing the discipline of savings and investing for the future is where wisdom towards financial freedom begins. This applies to individuals, but a nation also needs to create the saving culture and the saving-investment identity.

This is necessary for the national income, because the amount saved in an economy will be the amount that can be directly invested or intermediated for investment in new physical machinery, new infrastructure, new inventories and the like.

It is true than in an open economy private saving plus governmental saving plus foreign investment domestically equates into physical investment. In other words, the flow of investment must be financed by some combination of private domestic saving, government saving (surplus), and foreign saving – it is good to enhance domestic private and government savings.

Going back to personal finance – from overspending and financial setbacks to incurring massive debt and simply just not making enough money, there are several huddles that one has to overcome.

Therefore, cultivating the habit of savings is very important and can be helpful in many aspects of life. A good saver can set aside funds for business, is debt free and has already made a right as well as bold step towards financial freedom. A good saver can also reach certain goals that cannot be attained on the limited income that one gets.

In many cases, people and companies tend to save and invest if they trust the institutions that manage their money and the economy at large.

Countries with a high savings rate withstand financial shocks and channel more funds towards critical sectors of their economies.

However, building this resilience is steeped in a culture of saving and investment. We are told that less 20 per cent of Tanzanians have a bank account, and as it stands only about 1 per cent have an investment account at the stock exchange.

As I argue for an idea and a culture of saving for investment I also underscore the fact that ours is a developing nation pursuing a vision of becoming a middle income country within this next decade, that as it stands those among us with formal employment are few and with poorly paying jobs to meet the cost of living –individuals have minimal disposable income and less to save and invest.

I understand all of that, but within such circumstances there is opportunity to save for investment, you see this is also largely of a cultural issue.

We all know some of us whose circumstances are better and could save and invest than they already do, however without discipline and a propensity to spend than to save – it becomes difficult. This is a question of choice.

As I said in previous articles, one need to assess his/her financial health to help in the understanding the direction is headed towards achieving financial freedom.

In doing this one need to have a clear picture of income and expenses, then plan and be focused on setting aside a portion of your income for investing, don’t spend unwisely.

As for our collective greater good – what is being currently pursued by the government in strengthening property rights by way of land titling will go a long way in promoting greater saving and investment in the area of real estate, and beyond.

Along with this, ongoing efforts by the government to improve the business environment and addressing infrastructure challenges especially in the areas of energy, transport and communication is another key aspect of what the state can do to incentive people within the society to save and invest in new projects.

Embedded into the above is also the commendable act by the government to shift public expenditure and spend more on infrastructure projects than on wages, goods and services.

I know this can sometimes seem complicated and may require a good way of striking the balance, especially based on what I said earlier -- better wages and well-paying jobs enable individuals’ savings for investment – but for our collective greater good, sometimes the principles of social contract enshrined onto Leviathan (or commonwealth) as argued by Thomas Hobbes (the philosopher) may have to come into play. After all, if the state can save and invest on our collective behalf, benefits could apply the same, as long as mechanisms and tools for distribution of the wealth created is equitable and efficient.

But it all starts with the knowledge, commitment and focus.


Are you planning to raise money for your business?

Thursday March 28 2019


As indicated in the previous article, raising money is not a walk in the park; it needs preparations, commitment, and the knowledge of what it takes to raise money.

Venture capital receives hundreds of requests and pitches from companies that are seeking to raise money, whether is a start-up or a growth company, you need to strike them off with the first glance.

As they say, you don’t get the second chance to make the first impression. Your pitch document has a key role in deciding whether the investor will go the next stage with you or not.

Here are the common issues that must be covered in your pitch;

Company background

You need to briefly say about who you are, why did you start your business; what is really your story. In narrating this, the investor would easily pick some key attributes from you, as whether you are an entrepreneur they want to be associated with or not. This narration also shows how you developed your business idea. It needs to be fascinating, and TRUE.

Purpose of the company

You also need to briefly highlight the purpose of your business; this is different from the above. This describes your future, your business guiding principles, and what do you want the investors to see with you in the next foreseeable future.


This is a no-brainer; no investor will invest in a business that does not seek to solve any problem. You must demonstrate the problem you are solving, why do you think is a problem, and the extent of it.


After explaining the problem you are solving, you need to demonstrate the solution you are bringing up. How did you come up with the solution, how is the solution offered? Are you changing the user experience? Are you reducing cost? Are you increasing profitability? Are you addressing one of the 17 SDGs?


Many investors are now seeking investment opportunities that bring an impact on the community. In connection to the above point, you can look at the 17 SDGs and see which one (s) is/are linked to your solution, is it an agro solution that seeks to address food security? Or a healthcare solution that seeks to improve vaccine delivery?


Here you need to demonstrate your product or service, how does it work? How is it accessed? How is it distributed? If it is a live pitch, you can bring with you a few samples of your products.


You need to show how much you know about your competition, what are their offering, what gives them advantage. You can’t develop your unique selling proposition if you don’t know about your competition

Why you and why now?

Here you need to clearly articulate your competitive edge, this part is easier if you studied well the competition and developed a product or service that is demand-driven, and you should be able to do this easily. You must also say why this is the right time for your solution.

Market size

You need to demonstrate the potential of your market, how big is your market size, what are the key drivers of your market growth, what are their consumption pattern, and your total addressable market


This is one of the most important parts of your business, and therefore your pitch document. Who are your key players in the team, and what are their credentials.

Revenue model and traction

You need to define your revenue model, how do you make money, many start-up owners start businesses, and when you ask them about how they make money, they say they will figure it out as the business grows. This needs to be addressed from the beginning, and you also need to show some traction in your revenue game.


This is another key part of your business, you need to prepare the primary numbers of your business, and this includes revenue forecast, expense forecast, income statement, and your cash flow. This might include your initial valuation, your investment asks, and how much you are willing to give.

Salum Awadh is a CEO of SSC Capital, a corporate and investment advisory firm based in Tanzania and Rwanda , offering capital raising services, M&A, Corporate advisory, research and feasibility studies, business development, funds management, and development advisory


Ride-sharing companies upset car rental industry

Thursday March 21 2019

Reports show that Uber Tanzania rates are set

Reports show that Uber Tanzania rates are set at Sh466 per km while rental cars used to charge in dollars per drop or specific time of renting. PHOTO | FILE 

By Hellen Nachilongo @musanachi60

Dar es Salaam. The car rental industry faces stiff competition from ride-sharing services.

The coming of Uber, Taxify and the likes expanded the choice of expatriates and company executives who needed to outsource transport services, putting more pressure on car rental firms.

Car rentals involve hiring of automobiles by individuals or corporate firms for short periods of time for a fee.

Car rental agencies primarily serve people who have a car that is temporarily out of reach or out of service, for example travellers who are out of town or owners of damaged or destroyed vehicles who are awaiting repair or insurance compensation.

The companies rent a variety of vehicles including vans, cars and even buses.

Although some car renting companies claim to remain unshaken, others confirm to have experienced revenue declines in recent times.

“Within a week, three cars could generate at least Sh2.1 million when hired but currently the same number of cars can hardly make between Sh600,000 and Sh900,000 per week,” says JB Car Rental executive director Jastas Jasson.

According to him, nowadays it is rare and difficult to have reliable customers because most of them opt for taxi-hailing operators, which offer lower prices.

Reports show that Uber Tanzania rates are set at Sh466 per km while rental cars used to charge in dollars per drop or specific time of renting.

MK Kings Car Rental treasurer Yusuph Omary says his company offers pick-and-drop services, but these have so far experienced a slight drop as some of their clients had switched to Uber and Taxify services.

According to him, even if they try to reduce or set fees that were similar to those of Uber and Taxify, customers don’t choose them.

“Even people visiting the country also opt for the taxi-hailing services. This has slightly shaken our business though, not very much because we have other services we offer.”

Mr Omary says his company also leases cars for weddings and transportation of equipment for construction of development projects.

However, PD Tours International director Derick Godian told The Citizen that taxi-hailing services had not brought any harm to their business.

He said though most car renting business complain about poor business, their business was going on well.

“We have not lost any of our customers. We have not encountered or noticed any pinch because most of services that we provide are on agreements. Most of our clients are corporate,” he says.

He stresses on several occasions they sign contracts of three to six months with companies and this makes them easier to run their business.

Uber, Ping and Taxify are currently competing in Tanzania and Kenya’s Little planning to launch its services soon.

Global situation

According to a new report from digital marketing firm Epsilon-Conversant, car rental companies are quickly losing customers to rideshare services.

In an analysis of $140 billion of travel transactions over the past two years, 63 per cent of previous car rental customers reduced their spending on car rentals—almost a $3.2 billion loss. Moreover, 56 per cent stopped using car rental services altogether, with most of these customers moving to rideshare services.

These services include Lyft and Uber which are frequently used.

Car rentals, meanwhile, are retaining a loyal demographic of older individuals, says Epsilon-Conversant‘s report, leaving room for these companies to capture market share presented by younger travelers.

Uber is a decade old now, and top car rental companies have started to make changes to remain competitive: Avis is moving to implement technology into the rental process, easing the exhausting lines outside airports. Hertz offers car rentals to Uber and Lyft drivers directly, hoping to lure drivers with savings on car maintenance, additional insurance, and mileage. Enterprise, meanwhile, offers a vanpooling service to lessen the carbon footprint of commuters.

While 9.8 million consumers use car rentals but don’t use rideshare services, the report says, there’s still 9.4 million more who use rideshare services but spend nothing on car rentals, meaning there’s still a long way for these companies to go.


LNG project on the right track: director

Thursday March 21 2019

Shell Tanzania managing director Marc den

Shell Tanzania managing director Marc den Hartog at a past event PHOTO | FILE 

INTERVIEW. As the government prepares to have individual discussions with international oil companies, The Citizen Reporter Rosemary Mirondo interviewed Shell managing director Marc den Hartog to know what is going on

QUESTION: As one of the majority share companies, what are your views about what is going on in the LNG project?

ANSWER: With some $2 billion already “sunk” during the exploration phase that started in 2010, we are naturally very keen to bring the Tanzania LNG project to fruition as soon as possible. This is an important project for Shell and our partners. To do that, we need to agree commercial, legal and regulatory terms with the government first. Progress to date has been slow, and we are very encouraged by recent advice that government would now like to accelerate the negotiation process.

Reports show that the government has allowed international oil companies, or IOCs, operating in Tanzania to have individual discussions with the government on the host government agreement (HGA). What is your stand on this?

Development of deep-water gas resources is one of the most capital-intensive businesses in the world (even more capital-intensive than developing oil resources). This means that to achieve a competitive project with maximum benefits for the country and investors, we need to build a facility that has “economies of scale”. The gas resources discovered in the Tanzanian deep water are sufficient for one world-scale project, and therefore it is our strong view that we should develop a single LNG project. Other solutions would be suboptimal. Perhaps a good analogy is to look at the EACOP [East African Crude Oil Pipeline] project which will be constructing a large heated pipeline running from Uganda to Tanga. It would be possible to replace that pipeline by two pipelines of half the size, but that would be much more costly. That cost has to be recovered, meaning less net income and therefore much less revenue for the two host governments.

Do you think we are on the right track, especially as the discussions on the HGA have been taking too long, taking into consideration that Mozambique LNG plans are moving forward?

We are on the right track, but we would always like to go a little faster, in partnership with government. There are still many steps to go through before the gas that was discovered almost ten years ago can start flowing. If this year we can lay a strong foundation with enabling Host Government Agreement Key Terms, we’re well set up to make this project happen for Tanzania.

Reports show that Mozambique was moving towards its final investment decision. What does this mean for Tanzania?

The market for LNG is a truly global market. All LNG projects have to compete in that global market, rather than compete with a particular neighbour. In that respect, a project in Mozambique has the same effect on Tanzania as a project in, say, Senegal or Indonesia. Fortunately, the LNG global market is growing well, and we therefore see good opportunity for Tanzania to compete successfully.

What lessons can Tanzania learn from Mozambique to enable the LNG project move forward and at the same time benefit Tanzania?

The situation in Mozambique is not directly comparable with that of Tanzania. For example, Mozambique has discovered a lot more gas than we have found here. Still, it is true that the LNG projects over there are moving faster than in Tanzania. One key factor is that Mozambique was quick to pass an enabling so-called sector law, already in 2014, which laid the foundations for unlocking LNG investment.

If we continue to delay, how would our LNG project suffer in the global market, if Mozambique continues to go further than us?

We have nothing to fear from Mozambique in principle, our gas is just as good, and we have five first-rate IOC investors. The only proviso is that we need to design and build a large, world-scale project in Tanzania that achieves the full economies of scale – just as the government and investors are doing in Mozambique.

Going by this, after the agreement to have sole discussions with the government, what is happening to ensure the discussions start soon?

This is something we are discussing with the government.

When exactly are the discussions expected to commence and for how long will the last

This is something we are discussing with government. A target has been set to complete the first phase of the negotiations by September. Our team is fully geared to work towards meeting that deadline.

What lessons were learnt during the IOCs group discussions with the government, and what has been planned to ensure they don’t repeat gain?

Considering that the LNG project will be the largest investment by far that Tanzania has ever witnessed, naturally this is a complex negotiation.

We’re working with the government team to have clarity on the LNG value proposition before the restart of the negotiations and look forward to have constructive engagements with the appropriate government representatives to make these complex decisions.

Shell has been in the country for sometimes now, what has the company done so far to benefit surrounding communities.

To start with, Shell is proud of the Tanzanian staff that has the majority of management in Shell Tanzania. We’ve continued to hire high calibre Tanzanian staff and continue to give them the exposure to become strong leaders of this company.

Shell is also keen to make substantial contribution through its social investment programs in Tanzania. Our priority areas of interest include support for higher education programmes in geosciences (Master’s and PhD degrees), institutional capacity building in both vocational and higher learning institutions, community and skills development programs, entrepreneurship programs and Science, Technology, Engineering and Mathematics (STEM) programs.

In addition, Shell supports ‘access to clean energy’ projects including support for the charcoal program that was initiated by the Environment Ministry in the Vice President Office that aimed at seeking alternatives for charcoal.


Villagers benefit from sisal farming

Thursday March 21 2019

Farmers work at a sisal farm in Kishapu

Farmers work at a sisal farm in Kishapu District, Shinyanga Region. PHOTO | gadiosa lamtey 

By Gadiosa Lamtey @gadiosa2

Kishapu. Farmers in Kishapu District, Shinyanga Region, are benefiting from sisal farming.

Sisal is one of Tanzania’s traditional strategic crops and the residents have started to grow it as cotton and many other cash crops have failed.

The farmers discovered that sisal can well grow, thanks to Oxfam Tanzania and Relief to Development Society (Redeso) which provided knowledge on the crop potential and value addition.

The Tanzania Sisal Board shows that 37,255.30 tonnes of sisal were produced last year.

Of the amount, 7,750.84 tonnes were produced in the Lake Zone in which Kishapu is located.

Farmers in Kishapu and Meatu where Oxfam implements the project of sisal value chain have cut poverty.

A Mwaisengela Village farmer in Meatu District said he started growing sisal in 2014 after receiving training from Oxfam.

“Before, I used to cultivate maize and cotton and keep livestock,” he said. “In fact every year I didn’t get enough food. So life was difficult. However, since I started growing sisal I have built two houses.”

He has his own processing machine and provides temporary jobs.

Unlike maize and cotton, sisal is drought-resistant.

It does not require fertilisers or pesticides like coffee, cashew nuts and cotton.

Since Kishapu is semi-arid, the residents sometimes face food shortages. Sisal matures in four or five years and a farmer can harvest it for almost ten years.

Kishapu has 345,000 people, according to acting district executive director George Jessi. Ninety per cent of householders depend on agriculture.

The Oxfam project has encouraged farmers to grow and process sisal.

Sisal cultivation has spread to Meatu in Simiyu Region.

Currently more than 1,570 residents in Kishapu grow it. Others cultivate and process it.

Redeso field officer Erica Karutha said the project started in 2000. For almost 12 years, farmers were trained on how to plant, harvest and process it.

She said also Oxfam gave processing machines on credit.

Farmers also got improved seeds from Tanga. “One of the project targets was to empower women who most of the time take care of families,” she said.

Oxfam Tanzania communications manager Kisuma Mapunda said the organisation was empowering farmers in Geita, Shinyanga and Simiyu.

Ms Karutha said 150 groups had been formed. Out of them 100 are women groups while remaining have both men and women.

Some women groups make sisal fibre products for sale.

Through sisal business, residents launched a Sacoss in 2014 with Sh50 million in shares.

Some farmers have established a group to clean sisal fibres.

Redeso has submitted a sample to the Sokoine University of Agriculture for testing if the sisal waste can be used as a feed for livestock.


Pricing strategies suitable for your goals

Thursday March 21 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

Our ongoing exploration of finance systems needed to run your business turns to pricing and stock control.

Pricing is a critical element of your finance system-you might be selling but not at the right price. There are about six pricing strategies available depending on what you want to achieve. Price skimming is appropriate when your products enjoy little or no competition. You set prices high to “enjoy it when it lasts” then reduce when competition comes in.

In premium pricing you build value perception in customers’ eyes by proving your product is unique and much valuable than competition-from store layout and decor, packaging all through to marketing campaigns.

It is most appropriate for unique, rather than mass-market products. Eg, in Dar es Salaam, you pay Sh15,000.00 (premium) for a haircut in Oysterbay while the same costs Sh2,500.00 in Sinza.

Penetration pricing is used to attract customers, with low prices, where there is competition.

You will initially not cover all your costs but over time, when customers are convinced by your offering, they come in droves and drive your volumes and profits, thereby covering past losses.

It cannot be sustained for too long as we have seen with telcos, where a new entrant sets prices below the dominant player-if the price is too low to cover operational costs over the long run alternatives have to be sought-some have had to sell out or merge to remain relevant.

Telcos put together airtime to call their network, other networks, SMS and data all in one bundle selling at less than what you can get for each separately. This is bundle pricing.

What they don’t tell us is that they include SMS because it doesn’t sell by itself after the advent of data-based chatting apps.

Eventually, our perception about the bundles grows because they give us freebies, never mind that you may never use them. This pricing strategy can also move big volumes for small businesses.

We often see price tags reading Shs. 99,999.00 rather than Shs. 100,000.00.

This is psychological pricing targeting your emotions rather than your logic-and it works! You buy because, like many other consumers, research shows that you attach more importance to the first number on a price tag, not the last.

Economy pricing is used to attract the price-conscious customer-in return you must keep costs low to be able to offer economy prices.

In essence it dictates low margins. It is more appropriate for bigger players who drive large volumes that can generate profits even at low margins. For large-scale retail businesses such as supermarkets, fuel etc this might be appropriate, not for small low-volume businesses.

Combinations of these strategies can be used depending on target markets and prevailing market conditions.

Using ERPs ensures pricing details are adjusted throughout the financial system once initiated. Fair competition laws restrict franchisors from dictating franchisee pricing, they can only recommend.

Stock control is the other key element of the finance system. You need a system that manages how you buy stocks, manages shipping, receiving, tracking particular stock items and storage.

You also need to know stock turnover and re-order levels for each item you sell. It is important so that you avoid carrying dead stock and you know whenever pilferage occurs.

It is rumored that one of the main reasons for closure of a large South African supermarket chain in Dar es Salaam and eventual pullout from Tanzania was unabated stock pilferage where staff sold items at “Sale” prices even after they had long been pulled off the “Sale” list.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project that helps indigenous African brands to franchise, turns around struggling indigenous franchise brands to franchise cross-border, settles international franchise brands into Africa to build a well-balanced franchise sector and creates a franchise-friendly business environment with African governments for quicker African integration.,


It is time to invest in listed stocks

Thursday March 21 2019


An analysis of the underlying activities driving our equities and the fixed-income markets over the last couple of months presents reassuring outlooks for prospective investors at the Dar es Salaam Stock Exchange’s listed securities.

It is a fact that the recent past has been depressing to some investors, but not the value-investors.

For a start, the DSE is currently trading at attractive multiples on the back of significant sell in 2018 which saw, DSE indices and market capitalization for domestic listed companies decline by 6 per cent. The cause for the decline may be many – depends on the perspective, in summary key ones are: (i) sell-off by foreign investors in preference of US dollar-based assets (equity, bonds, currency)– note that foreign investors contributes up to 80 percent of liquidity creation at the Exchange; (ii) the declining appetite and change of priority/preference from listed equity by domestic institutional investors – particularly pension funds; and (iii) the selloff pressure by retail investors due to increased social economic demands requiring liquidation of their investments and/or also preferences for other alternative asset classes. However, putting these factors aside –because the intent of this article is not to explain the decline in prices -- now let us proceed to the issue.

The upside to this [experienced decline in prices and depressed values of listed equities], is that valuations are now ever so attractive, presenting excellent entry point for most stocks which were previously traded at a premium relative to their true intrinsic value. What I am almost arguing is for investors to do away with speculative motives and sentimental driven investment approach and consider the “value-investment” approach and strategy. For more on this read the writings by Warren Buffet and his mentor Benjamin Graham, or Buffet’s long-term investment partner Charlie Munger.

Why the proposal to invest now may be attractive? Because, macro-economic forecasts support the idea of value investment.

According to forecasts by the Government, the Gross Domestic Growth in 2019 will be about 7 percent, the same growth rate as has been in the past two decades. This growth rate is one of the highest not only in Africa, but across the global. Furthermore, data on the forecast by various agencies indicates that this growth will be sustained/maintained in the medium term, with some potential for the upside.

This positivism in sentiments and the underlying fundamentals of economic activities should somehow be reflective in corporate entities forecasts and performances. Data indicates that lending to private sector and productive sectors of the economy is increasing, in the stock market there has been less profit warnings, but rather reported stronger earnings growth, on the back of more attractive macro data and background.

These indicators once digested are supposed to reflect and drive activity on the bourse.

Data also indicates that industrialisation drive is gaining traction, as it is for the infrastructure and public investment activities. Based on these and other factors, there seem to be investment opportunity presented in the banking, manufacturing, agribusinesses, and infrastructure and FMCG sectors.

I therefore would imagine that there will be opportunities for relatively good returns for investors in these sectors counters of listed securities, i.e. for those investors with medium to long-term view in their investment approach.

Without going into specifics but looking into the price earnings and price book value valuation matrices to determine which listed counters presents the most viable investment option, there are several counters which presents attractive prospects for value-investors, while others are also good buys for dividend seekers. For instance, while the banking sector has an immense potential, on the fact that some banks are trading at the trailing Price Earnings Ratio of five times and Price Book Value of less 0.5 times.

Overall value weighted average PE ratio for banks listed in the Nairobi bourse, trades at 7.32 times and a value weighted Book Value is 1.32 times compared to our value weighted average NBV of 1.17 times. The same can be said of other sectors.

Let me conclude by summarising this case: in India and almost elsewhere, there was a push for socio-economic growth via economic liberalization and market-based approaches and the more use of capital markets in the early 1990s – but, despite this, few expected much from a small software company that struggled to list its shares in Mumbai Stock Exchange in February 1993. Despite its size and potential, during then India was an economic “small fish” and the technology sector was tiny and untested.

Those who were brave and bought shares of Infosys Technologies did well if they held on to the shares to date.

The company reported an operating profit for the year to March 31, 2018 of over $2.6 billion – on a turnover of more than $10 billion. Shares were worth 4,000 times more than they had been 25 years earlier.

Our TBL and TCC shares are now worth 20 times more than they have been 20 years ago when they listed in the local exchange, but those who benefit from these (and other such stories I previously shared in my articles) are those who don’t get pulled or pushed by momentary sentiments of the stock market.


Why is it hard for startups to raise money?

Thursday March 21 2019


By Salum Awadh

There is a general understanding that access to finance is more challenging to start-ups than to late stage companies, despite African start-ups continue to attract more venture capital money.

According to Partech report, in 2017, the total USD 560m was invested into African start-ups, a 53% increase compared to 2016 performance, despite this impressive trend, still hundreds and thousands of start-ups are struggling to raise money from investors, either as seed capital or series A round.

There are many reasons that explain such a gap, from both the supply and demand side. Below are some of the reasons within the start-ups themselves that keep them offshore to the money;

Good idea syndrome

Many start-up owners lack the understanding that raising money from commercial investors require a business and not an idea. It is common to hear every start-up owner claims to have the best idea, but only a few of them can present a solid business that any investor would hardly ignore.

Not preparing

Raising money could be as hard as growing a business; it needs the preparations and the understanding of the process. It is not a walk in the park, it is involving, time consuming, back and forth requests, and at times frustrating that make others abort the process.

Not understanding their own business

Being a business owner doesn’t automatically make you an expert of your business. You need to understand your business beyond the narration of how you started or how its going to solve the problem in the market, you need to know about your industry, your competition, your numbers, and the metrics of your future strategic growth.

Not understanding the legal framework

No business operates in a legal vacuum; your business needs to comply with the country’s legal and regulatory framework. Take an example of an entrepreneur who is in agro processing, very few would know the process and costs of complying with TFDA, or starting a microfinance without understanding if there is a new microfinance law and what it requires.

Raising too early

Business has a cycle, and each cycle has its own characteristics the same applies to fundraising through ladder finance (see the figure below). A start-up owner needs to understand when to bootstrap, when to raise from family and friends, when to seek an angel investor, and at what stage to go for a venture capital investor.

Mr Awadh is a CEO of SSC Capital, a corporate and investment advisory firm based in Tanzania and Rwanda, offering capital raising services, M&A, Corporate advisory, research and feasibility studies, business development, funds management, and development advisory


Dar is second EAC city in highest FDI inflows: study

Thursday March 14 2019

Dar es Salaam, whose foreign direct investment

Dar es Salaam, whose foreign direct investment amounted to $3.4 billion, was ranked 224th among 1,325th cities in the world. PHOTO | FILE 

By The Citizen Reporter @TheCitizenTZ

Dar es Salaam. Dar es Salaam has been ranked second in East Africa and 14th among 42 cities in Africa to receive huge foreign direct investment (FDI) inflows.

This was reported in the recent study titled The States of African Cities 2003-2018 jointly published by the UN-Habitat, African Development Bank, Wits School of Economic and Business sciences and UK Aid.

The report, which covers the period of 15 years has also revealed that Dar es Salaam was ranked 224th among 1,325th cities in the world, to record huge investments.

During the reviewed period, Dar es Salaam city received FDIs amounting $3.4 billion, a decrease of 4.75 per cent recorded during the previous ranking held in 2008.

Manufacturing and services sectors attracted more investments to African cities, not only Dar es Salaam, but also other cities featured, the report has said.

The resources sector is the second-largest recipient of FDI, accounting for 34 per cent of total FDI. “The resources sector in Africa is extractive in nature and mainly associated with the export of raw material rather than local value addition,” says the 322-pages report.

Other leading sectors to receive FDI were construction, geological exploration and development, Import and export trade as well as wholesale and retail trade.

The report has said that domestic market size, well-developed norms of trustworthiness, low level of corruption, rule of law have strong positive impacts on attracting FDI into Africa.

“FDI will locate in countries with large and expanding markets with greater purchasing power and where firms are likely to obtain a higher return on capital and investment profit,” says a report.

Further, the report shows that availability of domestic credit, financial market development and Presidential systems of government were highly significant and positive to attracting FDI.

For East Africa ranking, Nairobi was leading after being ranked eighth in Africa by recording FDI valued $5.9 billion, a growth of 25.1 per cent compared with the previous report of 2008.

The third city was Kampala, which ranked 26th in Africa and 335th in the world with FDI amounted $2.3 billion, a growth of eight per cent when compared with the previous report followed by Kigali, which is ranked 27th in Africa and 349th in the world after receiving FDIs amounting $2.3 billion.

The report has ranked Mombasa as the fifth city to attract more FDIs in East Africa with a portfolio of $1.3 billion, a growth of 4.9 per cent. It was also ranked 34th in Africa and 435 out of 1,325 cities in the world.

The main FDI sources according to the report were Paris, Tokyo, London, New York, Singapore, Seoul, Hong Kong, Chicago and Dubai.

Generally, the report has shown that Cairo holds the first place in Africa in terms of volume of FDI attracted, followed in 2nd place by Johannesburg, then Tangiers (3rd), Lagos (4th), Casablanca (5th), Algiers (6th), Cape Town (7th), Nairobi (8th), Abidjan (9th) and Dakar (10th). The case study of Cairo reveals that, apart from the proximity to Europe and Arab States, Cairo is a vibrant city with well-developed infrastructure and road networks, an availability of skilled workers, a conducive foreign investment environment and ease of doing business which makes it a desirable location for investment.

“It is noteworthy that 40 per cent of the top 10 are in Northern Africa, but also that many of these are currently experiencing negative FDI growth, arguably reflecting political and social tensions in the wake of the ‘Arab Spring’,” reads the report.

“It is further noteworthy that many newly emerging urban economies like Abidjan,

Accra and Kigali have high positive growth rate.”

UN-Habitat Executive Director Ms Maimunah Mohd Sharif commented in the report that with a population of over 1.2 billion and a combined GDP of $3.4 trillion, Africa is an attractive destination for foreign direct investment (FDI), which amounted to $56.5 billion in 2016.

The report shows that although Africa receives a modest share of global FDI, it has the second highest investment growth rate, when compared to other world regions.

Moreover, she said Africa’s rapidly growing population is increasingly living in cities with the continent’s urban population expected to reach 50 per cent by 2030, up from 36 per cent in 2016. “Benefiting from economies of scale and agglomeration, African cities are becoming the drivers of economic growth and productivity,” she said. “The report also shows that African governments need to connect FDI attraction to sustainable urbanisation by underpinning it with robust national urban policies, urban planning, and financial and legal systems.”

The report critically considers the benefits of FDI into job-rich and higher productivity sectors (e.g. IT and manufacturing) compared to capital intensive sectors with limited value addition (e.g. resources).

It was argued that African countries should find the best trajectories for their development, taking into account their country and city-specific locational advantages in attracting public and private investment.

The study noted that FDI into Africa has neither lifted African populations out of poverty nor has it addressed the growing gap between the more innovative and technologically lagging countries.

The city with the highest amount of FDI inflows is Johannesburg with $944 million, followed by Lagos, Cape Town and Nairobi, which attracted FDI inflows of $658 million, $460 million and $427 million respectively.

Pierre Guislain, the Vice-President, Private Sector, Infrastructure & Industrialisation, African Development Bank commented that “an interesting finding is that in contrast to conventional FDI theory, Chinese investment in Africa tends to focus on countries with lower political stability”.

so as to explore underinvested states, as well as to avoid competition with investors from advanced economies.

The research shows that Chinese firms have made contributions to African development, particularly in the energy and infrastructure sectors, with the incentive of creating more attractive investment environments and to stake a claim in the economic development of the continent.

However, he said Chinese involvement in Africa mainly focuses on agriculture and the extractive industries, with Chinese multinational firms being particularly export-driven.


Finance systems for your business

Thursday March 14 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

By Wambugu Wa Gichohi

We continue exploring the seven systems your business needs for sustainability.

Fourth is finance. Sales drive finances, hence the finance system that you develop must clearly address cash management.

It must also address other areas such as credit and receivables management, debt retirement, pricing, inventory control, fixed and variable cost management and financial reports

How will you collect upon sale? Throughout the history of money, cash money has a tendency to stick to its handler even when the handler is not the owner. If you run your business by the book, by now you know that the business and yourself are separate entities; you run it and it pays you an agreed amount regularly.

You open separate business accounts from your own. You and your staff only handle cash in trust for your business which rightly owns it. You therefore must set up a system that as much as possible removes handling of cash by humans running the business, including you.

Payment systems abound which can do this, for example opening a collection account in a telco, signing up for collection through payment cards, using pre-paid cards where you load cash into a card then the card is swiped through a card reader to collect payment, paying through scanning QR codes etc.

Even where cash must be handled, reducing the incidences will deliver better results. A system has to be in place on how much “float” your cashier should always have, getting “loose change” into the till before opening and during the entire business day, transferring cash to the bank as collected (and not using it for same day purchases) etc.

Financial control systems such as when and how to pay suppliers, bank withdrawal procedures, reserves etc all have to be thought through, documented and preferably automated.

Being a franchisor requires a bit more financial control than when running company outlets. Remember you earn monthly royalties based on franchisee turnover.

You will need a finance system that reports everything the franchisee sells, otherwise you run the risk of not earning your equitable royalties from dishonest franchisees. With modern developments, such a system is easy through the use of Enterprise Resource Programs (ERPs) and cloud computing.

Credit and receivables management will determine how healthy your cash position is at any point.

As awkward as this might sound, the ideal position is where your business offers no credit to customers while you take maximum credit from your suppliers.

The reasoning behind this is that by selling on cash basis, your business is able to accumulate cash reserves way above what is needed to pay off debtors when payments fall due.

This requires maximum financial discipline to ensure that you pay your creditors on time (and not diverting the funds to unplanned investments) in order to continue enjoying the credit lines.

To instill this discipline, you prepare and follow a budget showing where funds will come from, when and how they will be used.

On the expenditure side you divide the budget into capital budget-what you need to invest in equipment and when, re-capitalization and other items needed to successfully run the business and the operational budget-what you need to pay off fixed and variable costs, including your creditors.

A cash-flow statement, though not entirely sufficient, is a good starting point to track your finances.

Also forecasting income and future financial positions through preparation of projected cash flows, profit and loss account and the balance sheet will help you keep tabs with your business.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project. We work with country apex private sector bodies to increase the uptake of franchising by helping indigenous African brands to franchise.

We turn around struggling indigenous franchise brands to franchise cross-border.

We settle international franchise brands into Africa to build a well-balanced franchise sector.

We create a franchise-friendly business environment with African governments for quicker African integration.,


Creating African markets for global climate action

Thursday March 14 2019

The concentration of people, industries, and

The concentration of people, industries, and infrastructure leaves African cities especially vulnerable to climate change, and at the same time uniquely placed to combat it. PHOTO|FILE 

By Alzbeta Klein

Africa is one of the most vulnerable regions to the impacts of climate change. While the continent is responsible for only 4 per cent of global greenhouse-gas emissions, far reaching repercussions of climate-related shocks directly impact 65 per cent of its population.

Urban households have particularly endured the devastating punchbowl of climate impact, and efforts to build resilience and mitigate this impact hinge on cities.

Africa’s urban population is estimated to swell up to 1.2 billion by 2050, and its global share of urban residents will rise to over 20 per cent in the same period. The concentration of people, industries, and infrastructure leaves African cities especially vulnerable to climate change, and at the same time uniquely placed to combat it.

Amid ever-increasing clouds of climate-related challenges, Africa embodies a silver-lining – a unique opportunity to implement innovative solutions for investment in green, resilient infrastructure and services. It’s not a secret that the magnitude of investment required to fulfill growing commitment of cities to climate action far exceeds public budgets.

African cities must create an enabling environment that will crowd in the required private sector innovation, management know-how and financing to invest in climate-smart infrastructure and services. This approach will not only fill the existing financing gap, but also turn climate-related challenges in to opportunities.

Turning challenges into opportunities

Africa has an important role to play, as a global partner, in efforts to meet the commitment of the 2015 Paris Agreement to limit global warming. In addition, the continent can leapfrog historical approaches to urbanisation by investing scarce resources in climate resilient, sustainable development projects to meet the United Nations (UN) Sustainable Development Goal (SDG) 11 on sustainable cities and communities.

However, cities in Sub-Saharan Africa, like many others in emerging markets, struggle with accessing financing for low-carbon, resilient infrastructure and services. Globally, more than 70 per cent of low-emission and climate-resilient infrastructure will be built in urban areas, at a cost of $4.5 – $5.4 trillion per year.

However, only 3 per cent of this amount is available through official development assistance. To address this challenge, cities in Sub-Saharan Africa must be ready to embrace innovative ways to scale up financing to build climate-smart cities.

One way of doing this is by embracing the Maximizing Finance for Development approach – a World Bank Group initiative aimed at helping emerging markets to leverage private financing and sustainable private sector solutions for growth and sustainable development.

Successful pilots of innovative debt financing instruments like green bonds and climate insurance have yielded results that show great potential to expand capital markets for climate-smart investment. The financial sector has shown interest by providing investment funds targeting smart cities.

Sub-Saharan African cities can strategically position themselves to benefit from efforts to increase investment in sustainable urban infrastructure from commercial financing sources, as this will free up the scarce public funds to be deployed where they are needed the most.

In 2018, Kenya diversified its capital markets when the Nairobi Securities Exchange launched a legal framework to pave the way for issuing of green bonds to implement energy efficient, pollution-free and sustainable infrastructure plans in priority sectors.

Climate investment opportunities in cities in sub-Saharan Africa

Bridging the existing gap in financing climate efforts is an essential component towards building urban resilience and achieving mitigation targets.

A recent analysis by IFC, a member of the World Bank Group, estimates that cities in emerging markets around the globe have the potential to attract more than $29.4 trillion in cumulative climate-related investments in six key sectors by 2030. Sub-Saharan Africa region accounts for $1.5 trillion of this investment opportunity.

The highest share in the region is in green buildings ($768 billion) covering new constructions and retrofits as cities race to accommodate their growing populations.

The other five sectors include electric vehicles ($344 billion), public transportation ($159 billion), climate smart water ($101 billion), renewable energy ($89 billion) and waste ($13 billion).

For these markets to be realized, it is essential for cities in Sub-Saharan Africa to create the necessary space to leverage existing private sector interest to innovate and invest in sustainable climate-smart cities, while driving growth and fighting poverty.

The successes or failures of these global efforts to address the burden of climate change hinge on cities. Most cities in sub-Saharan Africa have responded by setting urban planning goals that emphasize climate-related targets.

Kenya has set up the Nairobi Integrated Urban Development Master Plan that juxtaposes urban planning and environmental impact to guide adaptation and mitigation efforts in key sectors (i.e. transport, water, power, solid waste and telecommunications). Implementation of this plan will help Nairobi to avoid the “domino-effect” of climate change by breaking silos.

Prioritising coalitions for climate action

The good news is that cities don’t have to work on climate change issues in silos, the strength lies in coalitions. The One Planet Summit, taking place for the first time on African soil in Nairobi, Kenya on March 14, is one such coalition. It will bring together global climate leaders, including Heads of State, CEOs, youth, civil society and other key actors to showcase achievements and innovative approaches that contribute to turning climate-related challenges in to opportunities.

The objective of the summit is to help accelerate and focus attention on climate investments in line with the Paris Agreement.

Other global support networks exist, such as the 100 Resilient Cities – a platform to assess shared vulnerability, develop mutually beneficial strategies and share technical knowledge on how cities can achieve their climate-related aspirations and find financing.

Nine Sub-Saharan Africa cities are members of this network; Nairobi, Accra, Addis Ababa, Cape Town, Durban, Dakar, Kigali, Lagos and Paynesville.

Today’s city-level decision-making and infrastructure investments will have long-term impacts that shape the direction of urban growth and development for decades.


Early financial planning, execution for better retirement

Thursday March 14 2019


Our priorities, goals and needs change constantly as we journey through life. Lifestyle choices like cars and holidays occupy and dominate our thinking early on as we start our career, then as years go by imperatives such as renting, buying or building a house come along.

After that we have education for our children, health care for us and our families and all the things that goes with growing families and expanding responsibilities. All the while, we have to keep an eye of the possibility of a comfortable retirement with some form of “financial freedom”.

Juggling these competing financial needs, on a limited and finite income stretches most of us to the core. However, the part of the secret to succeed in these challenges lies in start early, making plans and sticking, as much possible, to those plans. Have you ever heard words such as “financial freedom”, “the freedom fund”, or “the Rule of Seven”? – where you are encouraged to make regular and sustainable savings in pursuing to create a fund which is made up of investments in income producing investments (i.e. dividend paying shares, income-earning cash (i.e. fixed deposits and treasury bills), bonds, real estate’s rental income, royalties, etc) whose ultimate objective is to enable you live a relatively similar life as the one you had when you were earning regular income from your day job during the active career years.

What I am saying is that, you should get into the good habit of saving, early in life. The earlier you start the better, because the small amounts you save – with a compounding effect – turns into large sums over time.

When you are trying to accumulate wealth for future, the longer you have your money invested the more it will grow in value.

The other advantage in starting early is the mindset it helps create. You begin to see savings not as some sort of luxury but as an essential part of your overall financial plan and execution.

Basically, savings should be an integral piece of your planning and seen as important as your rent, or loan repayments or, school fees.

The best way to approach this is to have personal plans and create the budget to support implementation of those plans. If there won’t be conscious and deliberate efforts to ensure all these are put down on paper – then the follow through would also face challenges.

Unfortunately, most of us, approach matters of income and spending via focusing on the short-term, the here and now, where we act as if what is here now is far important to what lies ahead of us not so long down the line.

Because of lack of plans or the habit of putting matters on hold until the last minutes, or according priority to matters that are not, we end up spending money on things that we do not even need or know about.

In this context, getting the basics i.e. personal planning, budgeting and budgetary control is essential.

Earlier [above] I introduced the concept of compounding, in accounting and finance this is a key term, and this is how it works -- let us assume that your savings are kept in the form of bank deposits with a fixed term and your return is interest earnings.

In this case, there will be the effect of compounding interest - meaning that the interest you earn each period is added to your principal and re-invested, so that the balance doesn’t merely grow, it grows at an increasing rate.

It is the basis of everything from a personal savings plan to the long term growth of the stock market. It also accounts for the effects of inflation, and the importance of paying down your debt. What it also means is that the earlier you start savings the better.

Let us assume that you are now in your early 30s and started saving, your chances of getting enough funds, not only for retirement, but also for buying/building a house, taking children to good schools, etc are much higher relative to if you started savings in your 40s where the struggle to achieve financial freedom will be far much higher.

Now, personal and financial planning is key – setting out your goals, setting out the plan to achieve the said goals and prioritizing objectives for executions. But before you proceed with any savings plans, you have to map out your action plan for getting there.

In any case, even if you are in your 40s or 50s, you still have 20 or 10 years before retirement, and there is still quite a lot that can be done. It is never too late to start, what is important is that you have to have a sensible savings and investment strategy, act on it and seek help from financial advisers, when needed.

Best regards...


Potential is high in Tanzania fish market: farmer

Thursday March 7 2019

Mr Lucas Malembo

Mr Lucas Malembo 

By Elias Msuya

INTERVIEW. Tanzania is rich in fisheries resources from marine, freshwater, rivers and wetland species.

However, the sector faces a shortage of fish supply. According to the Ministry of Livestock and Fisheries Tanzania’s fisheries production has been in the range of 325,000 to 380,000 tonnes per annum while the demand is over 700,000.

About 85 per cent is from inland fisheries, 14 per cent from marine fisheries and just one per cent from aquaculture.

Lucas Malembo, who is an agricultural entrepreneur, is embarking on aquaculture.

After venturing in other kinds of farming in various parts of Tanzania, Mr Malembo is now establishing fish farming in Mwanza to tap the potentials of the sector. In this interview with BusinessWeek’s Elias Msuya, he explains how aquaculture may help in taming illegal fishing and boost productivity

QUESTION: What motivated you to invest in this type of fish farming?

ANSWER: Aquaculture has proven to be the profitable method compared to the traditional ways used by majority fishermen or dam fishing. In this method you keep some fish in a confined area feeding them for a specific period before fishing. When you compare this method with others, it is very profitable because you plan your fish to be sold in a specified period.

For example, a six-metre square cage takes 9,000 to 12,000 tilapias while in a dam you put a few fish in a large area.

In this method fish get enough oxygen compared to the dam method, in which you should change water periodically or put inlet and outlet water system. Also it is easier to feed fish as you put pellets in which 90 per cent will be eaten.

The increasing demand for fish has motivated me to invest in aquaculture. In Tanzania there is a demand of more than 300,000 tonnes of fish while we are producing more than 700,000 tonnes per annum. My intention is take that opportunity to capture that market.

What type of fish do you expect to keep?

I expect to keep tilapias which are common in the Lake Zone but I will also think of keeping Nile perch which are also common country wide.

Why do you just think of Nile perch? By the way, it’s not common to find people keeping that specie,s what’s wrong with it?

I personally did a simple research on Nile perch keeping and found out that, it is problematic during laying eggs because they tend to go deep down. So it is difficult to get those eggs. Experts say in order to keep this species, its younger ones should be taken in adolescence stage and also should be taken during the night because when you take it during the day they could go blind after contact direct sun.

I think the government institutions and stakeholders should invest Nile perch keeping to protect the species which is endangered by illegal fishing. It is highly demanded in the country and in the European markets. Marine and fisheries should come up with ideal research.

Are there some challenges that you are facing so far?

Of course, I got some challenges including capital. This project needs grand capital including licences and permits from different institution like Tanzania Fisheries Research Institute (Tafiri), National Environment Management Council and village charges. All these permits would take about Sh10 million which does not include cage construction, fish to be kept and their food. The total cost could reach over Sh50 million.

So how could you recover the cost from the business?

I expect to keep about 45,000 tilapias in five cages (9,000 fish in each) and they will be sold at between Sh8,000 and Sh10,000 each after six months. That can generate profit after removing the feeding cost.

How could this project transform fishing industry in general?

I know that I am not the first one to introduce this method of fishing, but it would be a pilot project to other fishers to adopt this type of fishing. The government has been fighting illegal fishing so this could be the solution because fishers would use small areas for profitable fishing.


UK insurance firm announces entry into Tanzanian

Thursday March 7 2019


By The Citizen Reporter @TheCitizenTZ

Dar es Salaam. A UK-based insurance firm, Howden, officially announced its entry into the Tanzanian market on Tuesday, putting the European nation closer to its goal of becoming the G7’s number one investor in Africa by 2022.

Howden, which is part of Hyperion Insurance Group, has partnered with a local insurance broker, B.R. Puri & Company Limited, to form a new entity that is known as Howden Puri Insurance Brokers Limited.

The British High Commissioner to Tanzania, Sarah Cooke, said in Dar es Salaam on Tuesday that the coming of Howden toTanzania was in line with British Prime Minister Theresa May’s goal of seeing British companies taking the lead and investing in African economies.

“Last August, Theresa May, the British Prime Minister, visited South Africa, Nigeria and Kenya. During that visit in Cape Town, she announced that she wanted to see the UK to be the G7’s number investor in Africa by 2022….Tonight is a great example of that investment in Tanzania,” she said during an event that was held at her residence in Dar es Salaam

She said in Tanzania, British companies have created about 300,000 jobs in the past 15 years. “We are number one in Tanzania in terms of investments…About five per cent of total taxes are paid British companies,” she said during a press briefing that was also attended by Hyperion and Howden chief executive officer David Howden, the Howden Puri regional chairman for Africa region, Mr Praveen Vashishta, and the firm’s chief executive officer, Mr Umesh Puri.

According to Mr Howden, Tanzania becomes the firm’s first entry point for Africa, courtesy of its (the country’s) growth opportunities.

“We trade in a number of African countries. This business has been built around people…In Tanzania, we have a lot of connections but also, we see growth in Tanzania,” he said.

Mr Umesh Puri said: “As a forward-looking broking firm in Tanzania, our goal is to actively explore new insurance products and pave the way for innovation in our market. Tanzania was selected as the first direct investment destination for Howden in Africa because we believe that recent initiatives undertaken by the regulator are encouraging and the overall outlook for the country is positive.”


Government prepares new terms for talks on LNG project

Thursday March 7 2019

A liquefied natural gas plant. Tanzania plans

A liquefied natural gas plant. Tanzania plans to undertake a similar project at $30 billion in Lindi Region. Negotiations on the enterprise started in 2017. PHOTO | FILE 

By Rosemary Mirondo @mwaikama

Dar es Salaam. The government of Tanzania is now preparing new terms after changing modality of negotiations for the planned liquefied natural gas (LNG) plant in Lindi.

Host Government Agreement – the pact between the government of Tanzania and international oil companies (IOCs) - governs the rights and obligations of both parties with respect to the development, construction, and operation of the $30 billion natural gas project.

These discussions in which the IOCs negotiated as one team started in 2017 and were hoped to conclude in 2018.

However, up to August 2017, they were yet to be finalised and Tanzania Petroleum Development Corporation (TPDC) reported that the delays were partly due to differences on the two sides which could not agree on modalities on who to do what.

Following the delays, Equinor – one of the IOCs - requested to go separately and President John Magufuli accepted the appeal asking his government to proceed with negotiations to set out the commercial and fiscal framework for the LNG project in Tanzania.

Equinor will now proceed with the negotiations with their partner ExxonMobil.

The commissioner for Petroleum, Mr Innocent Luoga, told BusinessWeek that the government and IOCs were now preparing for individual negotiations.

“We are preparing a negotiation term sheet because it cannot work with this arrangement,’ he said.

When the individual negotiations kick off, implementation will also be done individually but the gas will collectively be put in one government facility.

Mr Luoga said that the IOCs had requested the government for separate negotiations after the discussions were taking too long to reach consensus.“The government took on board the propsal and worked on it before allowing the companies to negotiate on the Host Government Agreement (HGA) for the planned Tanzanian LNG plant separately,” he said. He stressed that the government will conduct individual negotiations with Equinor and its partners as well as Shell with its partners.

He noted that the implementation of the LNG will also be done individually before all the companies come together collectively to put the gas in one LNG government facility.

Tanzania has a natural gas resource estimated at 57 trillion cubic feet (tcf) onshore and deep sea.

Equinor spokesperson Erik Haaland said in an email interview that Equinor, on behalf of the partners in block 2, has agreed with the government to start the negotiations.

“We are currently in the preparatory phase working jointly with the government to plan the negotiations process.” The company also said in an advert last week that it was looking for interested law firms which will act as project legal counsel in connection with the Host Government Negotiations (HGA) for block 2 offshore Tanzania in developing the gas and LNG project in Tanzania.

To supplement that, Mr Haaland said that the invitation to express interest as advertised on 13 February 2019 is the start of a process for Equinor to engage a Tanzanian law firm that can provide legal advice and guidance during the negotiations.

On its side, Shell Tanzania representative who asked for anonymity, said that Shell being one of the “most experienced global LNG player” believes that a joint development will provide far more benefits to all parties involved, including a significantly larger government revenue stream from the project.

He said economies of scale would yield more value for all parties in the LNG project.

“We are committed to continue to work with the government to jointly develop the best possible project for all partners,” he said.

Reports show that IOCs involved in the LNG project include Equinor, Shell, Ophir, Pavilion and Exxon Mobil. LNG is natural gas (predominantly methane, with some mixture of ethane) that has been cooled down to liquid form for ease and safety of non-pressurised storage or transport.


Why Tanzanian meat processors fail to beat foreign competitors

Thursday March 7 2019

A trader prepares meat for sale at Msalato open

A trader prepares meat for sale at Msalato open air market in Dodoma. PHOTO|FILE 

By George Sembony @TheCitizenTZ

Arusha. Lack of a grading system has been termed as one of the hitches that make Tanzanian meat processors miss a competitive edge against their foreign counterparts in the meat business.

A local entrepreneur, Justin Shirima who is the founder and managing partner of Arusha-based small-scale meat business known as Winning Creative said the local meat processors failed to grade their meet hence limiting their markets.

Mr Shirima who is also the managing director of the Tanzania Farmers’ Association (TFA) cited other challenges as high taxes on equipment and machines such as saws and chopping boards, meat grinding machines, packaging and labeling materials.

Other challenges are availability of expertise in meat processing, lack of cold chain facilities and a disjointed meat value chain from the industry to airports and ports.

“For instance it is very hard to get trained butchery professionals because of absence of such curriculum and this is an important factor for the growth of the industry. The industry also needs the establishment of quality slaughterhouses,” he said.

“The government has done well to ban meat import but it should go further by easing conditions for improving the industry’s performance in Tanzania,” he said.

A study named ‘Characterising the Tanzanian quality beef supply chain’, which contains a case of Arusha and Dar esSalaam, states that a significant portion of quality beef (23 per cent) traded through supermarkets and modern butchers; and tourist hotels and restaurants were imported mainly from Kenya.

“Despite having the largest cattle population in Africa after Sudan and Ethiopia with the expansion of quality beef market share, Tanzania has remained a net importer of quality beef (QB) products for the past three decades” the study states citing statistics from the United Nations Food and Agricultural Organization (FAO).

More than 700 tonnes (80 per cent) of QB consumed in the country are imported annually and the importation contributes to depletion of the nation’s meager foreign exchange, the report states.

The importation of substantial portion of quality beef in the country calls for the attention of beef industry stakeholders in Tanzania, the study said.

According to the study, niche markets that require livestock quality products and pay premium prices are increasingly dominating the market share of East African countries. In Tanzania, the tourist industry that forms the main part (88 per cent) of quality beef consumers has increased plausibly.

It also states that importation of beef is accompanied with underutilization of beef processing factories that is operating at 50 per cent capacity; with only two per cent of beef produced being processed country wide while the remaining beef is sold warm and undifferentiated.

“Sustainable supply of quality beef in the niche markets requires a well-coordinated and integrated chain that ensures understanding of competitive challenges, relationship among chain actors and notices of efficient product flows among chain actors to access the markets,” the study states.


Develop a bespoke sales system

Thursday March 7 2019

Wambugu Wa Gichohi

Wambugu Wa Gichohi 

Previous articles explored leadership and management which are among seven areas you need to think through and develop systems around in order to save your business from following you to your grave.

The third system is sales. Sales drive finances. They are the lifeblood of the business, without which business withers.

To sustain your business in the long run, you will need to develop a bespoke sales system that will ensure the business generates consistently high and growing sales volumes all the time. To do this, you will need to think through how you will convert your target market to spending customers.

You will need a thorough understanding of how buying decisions are made in order for you to develop a sales process around it.

The starting point is a system that enables you to conduct regular market research and collect marketing intelligence on a regular basis in order to maintain relevance and build/retain a competitive advantage.

This will help you to create a strategy to attract more qualified customers.

You then develop your sales strategies to fill-in the gaps. Will you sit and wait for walk-in customers? Will you take the product/service to the target market? You therefore develop a route-to-market plan, with clearly defined sales goals for each route.

The reason why franchising is a more attractive growth and distribution model compared to others is that once you develop a clear route-to-market plan for your products, you deploy an army of dedicated franchisees in designated franchise territories to push the sales and deliver your brand promise.

They expect to achieve their personal and financial goals “fighting” for you. They invest their own time and money, from which they demand a return. This is unlike most other distribution models where the distributor or agent, once appointed, either sits and waits for walk-in customers-who can also buy a competing brand- or relies on your own sales representatives to push sales. Franchisees develop the local market on your behalf.

Knowledge of local environment and culture is one key attribute in the franchisee selection criteria. Being local and having invested money to acquire your franchise, your franchisee is better placed to push sales and deliver your brand promise than your own sales representative, oftentimes transferred to the area and before they solidly entrench themselves into the local environment, it is time to move on to another sales territory.

Franchising is about replicating and scaling success. What cannot be easily replicated cannot be scaled, hence cannot be franchised. In order to replicate your success, you need to document what you know how to do so you can train others to do the same. You also need to schedule your time to work on the strategic work of the business as your franchisees work on the operational bit of it.

You will therefore need a system that establishes sales goals for each franchise territory, tracks sales as well as the effectiveness of the sales process. The system should capture and develop responses to your customer’s most often-asked questions.

Your system should also cover recruiting and hiring effective sales people and training them to use your sales process. Rather than applying an arbitrary compensation system, the system you develop should have a compensation program based on the results your employees produce.

In the innovation world, there is a common saying that what works is already obsolete. Given the dynamics of the market you play in you will need a system to identify, evaluate and correct problems in your sales process in order to stay ahead of the game.

The writer is the Lead Franchise Consultant at Africa Franchising Accelerator Project that helps indigenous African brands to franchise, turns around struggling indigenous franchise brands to franchise cross-border, settles international franchise brands into Africa to build a well-balanced franchise sector and creates a franchise-friendly business environment with African governments for quicker African integration.,


Towards sustainable business model for community radios in Tanzania

Thursday February 21 2019

Daniel Mrawa

Daniel Mrawa 

I am about to end my assignment with the Business Environment Strengthening for Tanzania (BEST-Dialogue) on capacity building for community radios within the Lake Zone.

This assignment which is aimed at designing a tailored business mode that can enable community radios to have collaborative marketing approach has indeed inspired me and perhaps changed my perception on the right marketing approach for community radios in Tanzania.

The recent reclassification of the radios by the Tanzania Communication regulatory Authority (TCRA) implies that all radios in Tanzania will be limited to the following categorization; community radio, commercial radio and public radio.

With these new categorizations surely community radio need to find sustainable ways of working together in order to improve their marketability and ultimately boost their revenue through collaborative approaches.

During my assignment, I had an opportunity to hear experience on how community radio operates in other countries. Mr Ssemakula from Uganda – whom we co facilitated the training had briefed me on how the common business model had proved successful for community radios in Uganda and West Africa.

Listening to his testimonies I came to learn that in Tanzania community radio have all it takes for sustainability only they are yet to find a common platform for exploring opportunity for sustainable market; perhaps due to their selfishness and their reluctant to learn from the effects of Dambisa Moyo’s “the winner takes it all”.

The proposed business model is simple and clear. It just need the consensus of community radio in establishing the common platform, and defined way of sharing revenues while considering individuals efforts in their collaborative marketing approaches.

Pragmatically the business model challenges community radios to use the common wider coverage and high number of audience to attract adverts from commercial companies and NGO’s.

While traditional marketing approaches are focused on individual community radio soliciting adverts from commercial companies as their main sources of revenues; the proposed business model offers alternative approach that is embedded in the collaborative marketing approaches that considers the extent of potential and efforts used in sharing revenues.

The shift to non traditional sources of revenues such as adverts from NGO’s and humanitarian organizations is one of key ingredients provided by the proposed model.

While radios (both community and others) are facing the challenge of revenues decrease – a situation which threatens their sustainability; community radio managers and owners should not neglect this opportunity of using the proposed business model.

Well, it might need some tailoring to meet the local need of communities in Tanzania; the implementation strategy worth a try if stakeholders’ commitment is guaranteed.

With recent community radios’ platform offered by the Tanzania Development Information Organization (TADIO) and the Community Radios Network (CRN) – a network funded by BEST-D, and aimed at providing common platform for community radios in Tanzania; community radios should remain focused in collaborative approaches offered by the proposed business model.

It is time for community radios to sacrifice their individual interest and embark on the quest for the sustainability of all community radios in Tanzania.

It may take us some time but once operational the results will worth enjoying.

Mr Mrawa is an assistant lecturer at Saint Augustine University of Tanzania (SAUT), consultant & business development services provider