Industry leaders pour out their hearts over bad laws

Thursday April 29 2021

Investment minister Geoffrey Mwambe (right) and his Industry and Trade counterpart Kitila Mkumbo stand to show respect to President Samia Suluhu Hassan when their names were called out during the swearing-in of permanent secretaries at State House in Dar es Salaam. PHOTO | SAID KHAMIS

By Alex Nelson Malanga

Dar es Salaam. Manufacturers and politicians have warned that “misuse” of the Economic Sabotage and Anti-Money Laundering laws is impeding investments as they erode investor confidence in the country.

Some investors are among people who have been charged with economic sabotage and/or money laundering, which are non-bailable offences under the laws.

Pundits are calling on the government to revisit the laws which, they say, their interpretation makes nearly anything is considered economic sabotage or money laundering.

Speaking at a recent breakfast meeting that involved members of the Confederation of Tanzania Industries (CTI) and the minister for Investment, the Sumaria Group managing director, Jayesh Shah, said interpretation of the two laws can be very wide, and is left to the discretion of law enforcers.

Offences under both laws are non-bailable - and, according to Mr Shah, this could lead to grand corruption.

“It seems this was widely being used against businesses,” he stressed.


“This would lead to fewer companies considering investing in Tanzania - unless the laws are amended,” he noted.

For unscrupulous investors, he was of the view that, like in any other country, they have to be taken to court.

However, he recommended that the judicial system needs to be efficient so that such cases can be fast-tracked and not take years to conclude.

“It’s important for the government to be very clear that they will not tolerate unscrupulous businesses,” said Mr Shah.

CTI councilor Evarist Nakwambella suggested the establishment of a special court for investors as well as special jails.

This is because investors would now be afraid of coming in the country because they are not sure about their tomorrow.

“If there are offenses committed by investors, they have to be dealt with by a special court instead of subjecting them to other jails with other criminals,” recommended Mr Nakwambella.

Sharing his contribution on the Public Service and Good Governance Budget for the 2021/22 financial year Kawe MP Josephat Gwajima (CCM) expressed the need to revise the two laws if Tanzania were to prove wrong those who argued there was no good governance here.

He said when Parliament was endorsing the Anti-Money Laundering Cap 423 of 2006, which was amended in 2019 and Economic Organisation Crime Act (Cap 200) of 1983, which was amended in 2019, the intention was good.

The government came up with the laws after it had long been aware of losses to Tanzania’s beleaguered economy caused by illegal activities of hoarders, black market dealers and foreign exchange manipulators.

However, Mr Gwajima said the way enforcers were implementing them was against the concept of good governance.

He said some unscrupulous officials were putting investors in trouble of money laundering and economic sabotage charges for failing to make some “unrealistic tax estimates.”

“I have a friend who once came to me and said; bishop, some people want me to give them Sh100 million or be charged with money laundering, what should I do?” he said.

“I advised him to give them money otherwise he would rot in jail.”

“In any smart country, this cannot be let slide.”

He estimated, so far, some 1,701 people were in cell because of either money laundering or economic sabotage.

Speaking during the swearing in of permanent secretaries, their deputies and heads of some government institutions at Dar es Salaam State House early this month, President Samia Suluhu Hassan seemed to have been against the way investors were being treated in the hands of the two aforementioned laws.

Citing the example of an investor (without mentioning the name) who had been in Tanzania for a long time, President Hassan said he (the investor) had at one point found himself at the loggerheads with the taxman.

The investor, she said, tried to reason with them (tax collectors) but to no avail. “The issue reached my office when I was Vice President,” she said.

“I called someone from the Finance Department and informed them to sit with him and sort out the problem so the job could proceed.

“However, what followed was contrary to my expectation. I suspect he (the investor) was threatened with economic sabotage cases so he flew out of the country without paying anything and the problem remained unresolved.”

As it happens, the Head of State expressed the need for mending the way government authorities were operating given that Tanzania needed investors just as the latter also needed the country.

“We must work towards regaining the confidence of investors so that they can come to Tanzania,” she said.

MAC Group chairman Yogesh Manek said if the government was to restore investor confidence, it needed to improve the business environment.

“Investors will come on their own, if we create an enabling business environment,” Mr Manek exuded his optimism.

Meanwhile, if the government is to create a conducive climate for investment, CTI executive director Leodegar Tenga urged it to hasten the refund of value added tax (VAT) and 15 percent additional import duty on industrial sugar.

“Delays are eating into cash flow and tying up working capital of manufacturers,” said Mr Tenga.

Confederation’s chairman Paul Makanza pushed for a speedy implementation of a blueprint, whose operationalisation kicked off on July 1, 2019.

He called for a predictable and friendly taxation system, and removal of red tape if the government was to make Tanzania the best destination for investment.

Investment minister Geoffrey Mwambe said on May 4, 2021 he would meet with the minister for Finance and Planning, Dr Mwigulu Nchemba, and that of Industry and Trade, Prof Kitila Mkumbo, to see how they can jointly address the challenges that the private sector was grappling with.

He said his first assignment as the minister for Investment was to regain trust between the government and the private sector given that the latter is an engine of economic growth.

“We need to be facilitative so that we can reap the benefits of the strong private sector,” he said.

However, he urged that everyone engaging in manufacturing activities should be a CTI member for the government to be able to address manufacturers’ challenges in their togetherness, rather than individually.

Out of the owners of 60,000 manufacturing industries, only 4,000 were CTI members.

On the other hand, the minister for Justice and Constitutional Affairsk, Prof Palamagamba Kabudi, hinted yesterday that the government was evaluating some laws including the Economic Sabotage law for review, in attempt to reduce crowding in prisons.

He said that when tabling his budget for the 2021/22 financial year.