BUSINESS NEWS

Exchange rates (Early April 1998)
£1 = TShs 1,104
$1 = TShs 679

The Business Times reports that the ‘World Economic Forum Report’ in February ranked Tanzania as one of the best economic reformers in sub- Saharan Africa and said that Tanzania topped the ‘IMPROVEMENT INDEX’. IMF Senior Resident Representative in Tanzania, Festus Osunsade, commended the report as correctly ranking Tanzania. He said “Look at everyday life patterns; people are enjoying a greater choice of goods and services which means more freedom of choice, a good indicator of achieved reforms”. Another report, this time on COMPETITIVENESS, placed Tanzania 17th out of 23 African countries. First came Mauritius and Tunisia. Bottom were Nigeria and Angola.

World Bank Vice-President for Africa Jean Louis Sarbid has said at a week- long meeting of the SPECTAL PROGRAMME FOR AFRICAN AGRICULTURAL RESEARCH (SPAAR) attended by representatives from 32 African countries in Arusha in late February that he is impressed by Tanzania’s economic reforms and the positive growth in her economy. There should be an air of optimism in future he said -Daily News.

Two new privately-owned English language NEWSPAPERS were launched on February 9. They are ‘The African’ of the Habari Corporation and the ‘Daily Mail’ of the Guardian Ltd -Business Times.

TANZANIA’S STOCK EXCHANGE has been opened by President Mkapa and was scheduled to start full operations on April 15. As a test case, one listed company, Tanzania Oxygen Ltd., has sold 7.5 million shares to some 10,000 new shareholders. Investors were able to become shareholders for as little as Shs 5,000/-. President Mkapa bought 100 shares -Business Times

The government and TANESCO have got themselves into what the Business Times calls a potential disaster for the Tanzanian economy over ELECTRICITY SUPPLIES. World Bank Resident Representative Ron Brigish has expressed concern over delays in reaching agreement between the Government and foreign investors on the important Songo Songo Gas-to- Electricity project (to produce 37 megawatts of electricity) which has been holding up release of $200 million of World Bank money for the $325 million project. The Canadian investors are hesitating because of the forthcoming start of a $150 million project negotiated in 1994 between ‘Independent Power Tanzania Ltd’ (IPTL) and a Malaysian Chinese consortium (Merchmar) under which 100 megawatts of electricity would be produced (starting in mid-1998) at a cost to TANESCO of some $5 million per month, twice the current cost of electricity. Other new supplies are such that it seems unlikely that the additional power will be needed before 2004. TANESCO might have to pay for power which it would not be using and the cost could escalate over time. The Songo Songo scheme is front loaded by comparison.

As this issue of TA goes to press the Business Times has proposed three possible scenarios to deal with what it describes as ‘the mess’:

1) cancel or try to renegotiate the project as recommended by the Bank; the Malaysian bank financing the project however has recently had to be bailed out by the Malaysian government and does not want to hear any bad news from Africa; on March 17 IPTL issued a statement saying that the government should not try to renegotiate. It could cost Tanzania up to $300 million to do so, but the Business Times believes that IPTL could already be in breach of contract and that renegotiation would be possible;

2) do nothing and go ahead with the contract; TANESCO might soon find itself unable to pay and, if the government then bailed it out using IMF funds, relations with the Bank and IMF could deteriorate seriously;

3) sell the individual 10 megawatt generators to the mining industry which has an enormous demand for power; the industry could buy them outright or let IPTL use them to provide electricity on a commercial basis.

The MUFINDI TEA COMPANY, formerly owned by Lonrho and now owned by the Harare-based African Plantation Corporation LDC, has decided to grow coffee as well as tea and has been allocated 1,200 acres in addition to its existing 828 hectares. 80,000 coffee seedlings are ready for planting next season -Daily News.

The CONTROLLER AND AUDITOR GENERAL has reported that 64 out of 103 local authorities mismanaged about Shs 3.5 billion between 1993 and 1996. The mismanagement was done through unauthorised expenditure, questionable payments improperly vouched and unvouched expenditures -Daily News.

ALLIANCE AIR’S newly appointed Executive Director John Murray quoted in Business in Africa (November-December) has said that, in spite of some operational hiccups, load factors on the Heathrow route from Tanzania and Uganda were up to 55 tons a week and passenger bookings and passenger bookings were averaging 70%. The setting up of a new airline ‘Alliance Express Rwanda’ has been agreed and other deals are being discussed with Zambia and the Congo. Alliance is using Kilimanjaro as well as Dar es Salaam airport.

Two Tanzanian hotels have been accepted into the prestigious UK ‘SWL HOTELS OF THE WORLD’ an exclusive international marketing and reservations company -the Zanzibar Serena Inn and the Kirawira Tented Camp in the Serengeti National Park -Daily News.

Dar es salaam’s 34-year old KILIMANJARO HOTEL, which has been running at only 15% bed occupancy during the last two years, was plunged into crisis in February when the staff went on strike and locked out the management demanding payment of their salaries and an end to alleged embezzlement of funds. On March 6 the Board of Directors, with government support, suspended all 400 workers -Daily News..

The TANZANIA SISAL AUTHORITY is being sold for $6.5 million to Katani Ltd which is owned by Messrs Grecian Investments and Wigglesworth and Company both of the UK. The assets involved include eight sisal estates, Tanzania Cordage and Kilosa Carpet Company. The company has promised to rehabilitate the estates and to invest some $28 million in six months time. The divestiture of TSA began in 1993 and 10 estates have already been sold to Tanzanian investors for a cost of Shs 1.2 billion. There has been a revival in the sisal industry as new uses have been found for the fibres (for the making of alcohol, medicines, animal feeds and the generation of electricity) and as environmentalists have turned away from using synthetic materials like nylon and polyesters -Daily News.

Tanzanians are enjoying a new stronger BEER -when they can get it! It is called ‘Kick’ and is the latest production from Associated Breweries Ltd. Demand is said to be far greater than supply. Brew Master Bakari Machumu said that ‘Kick’ is left to mature for 28 days compared with 14 days for most other brews. -Business Times.

The TAZARA Railway Authority generated Shs 12.68 billion during the 1997198 fiscal year compared with Shs 9.9 billion the previous year. The rehabilitation programme has increased the number of freight wagons from 1,122 to 2,280 and passenger wagons from 70 to 79 -Daily News.

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