Archive for Business & the Economy

AGRICULTURE

by David Brewin

President Magufuli of Tanzania, often known locally as the ‘Bulldozer’, is vigorously continuing his campaign against corruption throughout Tanzania. The President is now turning to other areas of public service, in particular, the industrialisation of the economy.

However, he is well aware of the overwhelming importance of agriculture to the economy. A recent measure he has introduced is the banning of public organisations holding meetings outside their offices so that public events such as the annual agricultural show are no longer an opportunity for ministries to award contracts including bribes for uniforms, catering and entertainment in elaborate pavilions.

Major change in land tenure leases
Dr Magufuli’s reforming zeal is evident in the revelation that a new policy on land tenure is being examined, which is likely to lead to a new national land policy, the draft of which is being subject to public scrutiny by the Ministry of Lands and Settlement Development. The main change is that conditions for foreigners trying to develop land for business would change.

The normal period for a lease of land for development is 99 years, but in the purposed new policy this will be reduced to 33 years for foreigners. In justifying the change, it is said that there have been many instances where foreigner s have applied for land and not used it for the stated purpose. To curb such cases, foreign investors will have to register with the Tanzania Investment Centre (TIC) to acquire land. To purchase a parcel of land from individuals or companies, once the buyer and seller have agreed on the price, the seller is required to surrender the land title to the Commissioner of Lands in order to reissue it in the name of TIC. The intention is that the rights of Tanzanians will be protected and that land needed for development is being used for the purpose originally indicated. The aim of this is also to minimize conflict between foreign investors and communities, and to promote optimal utilisation of the country’s resources. Under the new draft land policy, foreigners will be allowed to directly own land (occupational rights), but not to hold it on behalf of others (derivative rights).

Needless to say, the draft policy is facing criticism from many sides. Although the policy drafting process included consultations – conducted in 8 zones across the country – these have often been rushed and were not ‘conclusive’.

Women
For the first time in Tanzanian history a national land policy will recognise the right to equal access for land for both women and men.

Tractor assembly plant
At present Tanzanian imports about 1,000 agricultural tractors a year. This has encouraged two Indian companies to establish a joint tractor plant in the Morogoro region. It aims to start with the assembly of fully-knocked-down tractors but will move on to the manufacture of complete tractors in the future.

Sugar
With Tanzania still producing much less sugar than is needed by the population, two cabinet ministers are planning to visit Mauritius, a major global supplier of sugar, on a mission to attract investors into Tanzania’s sugar cultivation sector. At the same time the government embarked in October, on a country-wide search for ‘hidden sugar’ often being hidden by suppliers in anticipation of increasing prices.

Local firms are also already setting up new sugar firms mainly in the Morogoro, Kigoma and Songwe regions as well as in the costal district of Rufiji. The National Social Security Fund and a pension fund have also announced joint plans to establish sugar processing factories in Mkunazini, Ngerengere and Morogoro.

Seaweed
Seaweed farmers in Zanzibar are complaining about the falling price of their product. They have appealed to the government to provide more harvesting equipment to help increase selling prices. The Japanese Aid Agency JICA recently convened a workshop to bring the seaweed farmers together. The JICA representative said that a Japanese expert would continue to support seaweed farmers in improving their methods and in the use of appropriate equipment.

Marketing Boards
The government has indicated that it intends to close down existing marketing boards for sales of agricultural products. The Cashew Nut Marketing board has already been closed down. However, in the case of the Cotton Board, the Director General, who was initially removed on allegations of misappropriation of money, has been reinstated. Other marketing boards are being investigated to determine whether they are still carrying out the functions for which they were originally established.

FAO-Dar link up to double rice production
With funding from the Government of Venezuela, a ‘Partnership for Sustainable Rice Systems Development in Africa’ covering ten countries, including Tanzania, is being set up. It will begin by supporting efforts to improve domestic rice supply and strengthen the rice market.

Permanent Secretary in the Tanzanian Ministry of Agriculture, Livestock and Fisheries, Dr Florens Turuka, said that rice productivity in Tanzania is lower than in most neighbouring countries and is one of the lowest in the world. He mentioned factors such as predominantly rain fed production, limited adoption and availability of improved cultivars, minimal use of fertiliser, traditional planting techniques and the limited areas of irrigation as being behind the low production. The new project will be implemented in five targeted irrigation schemes in Morogoro Region and will establish junior farmer field schools to upscale the adoption of systems of rice intensification, purchase of new processing machinery to reduce post-harvest losses.

Deadly weed causes alarm in Arusha Region
A new variety of alien weed affecting plant and human life is spreading around the Arusha region and causing considerable concern. Scientists from the Tropical Pesticide Research Institute (TPRI), Tanzania, the Wildlife Research Institute (TAWIRI) and Education Concerning Hunger Organisation (ECHO) are already studying the strange weed – “Parthenium” – which is referred to as ‘Gugu Karoti’ in Kiswahili.

According to Ms Hannah Hacker, a researcher from Wheaton College in Illinois, the weed is found around Ngaramtoni, Kwa-Mrombo, parts of Meru and Njiro. She is working with ECHO, one of whose scientists is studying the problem, and has said that the first effect of getting into contact with the weed is developing skin rashes all over the body.

Scientists warn that the weed could also grow in the Southern Highlands, Bukoba and some coastal regions should its seedlings find their way there. Scientists are at the moment conducting training to local residents in Arumeru and Arusha Urban districts on the dangers of the alien grass.

When consumed by livestock, lesions in the mouth and excessive salivation occur. According to scientists, consumption also causes tainted meat and milk which can lower the value of livestock. A diet consisting of between 10% and 50% of Parthenium can cause death in cattle. Most livestock avoid Parthenium but will consume it if forced by circumstances to do so.

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BUSINESS & THE ECONOMY

by Ben Taylor

Hot debate on Tanzania’s economic situation
Questions were raised in parliament about an apparent slowdown in Tanzania’s economic growth, particularly in some key sectors. Data from the National Bureau of Statistics showed a considerable decline in the rate of growth of the construction sector in particular, with growth having slowed to 4.3% in the first quarter of 2016 compared to 23.2% in the same period of 2015. Transport and manufacturing saw smaller declines in the same figures, from 14.5% to 7.9% and 9.9% to 7.4% respectively.

“Some transport companies have reportedly cut their operations by up to 40%, while others have relocated to neighbouring countries because of uncertainty in the business environment in Tanzania. Is the government aware of this? What steps is it taking to address the situation?” asked Freeman Mbowe, Chadema party chair.

Prime Minister Majaliwa replied there was no concrete evidence the economy has not been performing well. He told Parliament that for the government to come up with a definitive answer it would first conduct an in-depth study. He added that the government was already taking a number of measures to improve the situation at Dar es Salaam port, including seeking the advice of a number of countries that were operating successful ports. He further noted further that the decline in cargo was partly a global phenomenon linked to lower oil and gas prices in the world market.

Bank of Tanzania governor, Prof Benno Ndulu, said there was no slowdown, but rather a re-distribution of money away from the pockets of corrupt people. “Nationally, there is enough money in circulation to serve and implement various public projects for the interests of all the people,” he stated, explaining that the government had plugged loopholes in illicit or cheap means of getting money, which was why those who had previously been taking advantage were now crying out for money.

On executing the government expenditures for the first six months, the governor said there have been difficulties in obtaining foreign aid due to the world economic crunch, adding, however, that the cost cutting and tax collection measures helped to fund various projects.

Meanwhile, the IMF issued a coded note of caution to the Tanzanian government to prevent national debt from growing out of control. “Careful prioritisation and implementation of expenditures will be required to ensure that spending does not exceed available resources and to avoid domestic arrears accumulation,” said IMF deputy managing director Min Zhu after the conclusion of the latest country review for Tanzania.

“Creating fiscal space for higher infrastructure investment through sustained efforts to raise domestic revenue and increasing spending efficiency, particularly in public investment, is imperative,” Zhu added.

The government plans to raise spending by 31% to TSh 29.53 trillion in its 2016/17 fiscal year budget, focusing on infrastructure and industrial projects.

Prof Ndulu said that as of June, this year, national debt had reached US$ 21bn, but that it is projected to drop. He noted that Tanzania currently uses TSh 20 in every TSh 100 of its revenue collected on debt payments, a level which he said was relatively low. “It is contrary to some reports that the national debt has reached dangerous levels,” he insisted. (The Citizen, The Guardian, Daily News)

Suspension of operations at Dangote cement: a symptom of Magufuli’s economic dilemmas?
The recent temporary suspension of production at the Dangote cement works in Mtwara, less than six months after the plant was opened, has been described as a sign of difficult times ahead for Tanzania’s economy. According to media coverage, promises made under the presidency of Jakaya Kikwete relating to tax exemptions and the supply of natural gas to power the plant have either been withdrawn or failed to materialise.

“Before Kikwete left, the gas issue hadn’t been resolved but there were promises made that Dangote would get gas at a cheaper price,” a source familiar with the company’s business in Tanzania told Quartz, an online magazine.

Dangote plugged the gap in their power supplies by importing coal from South Africa, until the Tanzanian government banned coal imports in response, arguing that domestic coal production should be supported.

“We don’t want to hear that the price of imported coal from South Africa is cheaper than the price of coal from Mchuchuma to Mtwara,” said Medard Kalemani, Deputy Minister for Energy and Minerals.

This forced Dangote to rely on generators which sent operational costs soaring. Operations at the plant were suspended in November.

President Magufuli then became personally involved and reached a last-minute deal with Dangote in mid-December to keep the factory in the country and save thousands of jobs that were at risk if it closed.

The president has taken a more hard-line approach to tax incentives than his predecessor, leading to concerns among some analysts and investors that Tanzania could lose out on future investment decisions as a result.

The previous administration has been accused of giving Dangote Cement generous incentives through the Tanzania Investment Centre, including land for the factory and tax exemptions on importation of diesel and machinery. According to the East African, other potential investors in the cement industry are demanding similar incentives, which the government is finding hard to square with their commitment to reducing tax exemptions.

“If you’re told one day, out of the blue, that you’re no longer exempt from VAT, not only does it throw a spanner in your current business, it also affects your confidence about your future investment decisions,” said Anna Rabin, an investment analyst. “Investors feel that the want for upfront revenue collection is to the detriment of the potential to secure future investments,” she added. (Quartz, The East African, The Guardian)

EU Economic Partnership Agreement (EPA) still contested
The debate prompted by the Tanzanian government’s decision earlier in 2016 to withdraw from a proposed Economic Partnership Agreement (EPA) between the East African Community (EAC) and the European Union (EU) continues to rage.

In September, the EU parliament extended Kenya’s current preferential access terms for an additional four months, to give Kenya time to persuade their Tanzanian counterparts of the benefits of the proposed agreement. Without the EPA, as a middle-income country, Kenya is set to lose their valuable trade terms with the EU – Kenya’s largest export market – worth an estimated $100m each month, and linked to around 4 million jobs.

As a shared customs territory, all the six EAC members must sign the EPA for it to be implemented in the region. Tanzania has refused to sign, saying the agreement would have serious consequences for its revenues and the growth of its industries. Burundi has also declined to sign.

Former Tanzanian President Benjamin Mkapa has previously personified the country’s resistance to the trade deal. In November, the Tanzanian parliament added their support for his arguments with a near unanimous vote to block the country from signing the EPA.

Opposition MP, Zitto Kabwe, referred to figures from Eurostat and the International Trade Centre (ITC) to make the case that Tanzania would lose out heavily under the proposed deal. “Losses will mainly be caused by contractual demands requiring Tanzania to scrap tax barriers by 90 per cent on non-agricultural products from the EU and by 10 per cent on agricultural products. This means that Tanzania will remain a supplier of raw material and a market for value added products from the EU.” Kabwe added that Tanzania would lose anticipated revenue following removal of value added tax (VAT) payable as import duty to products from the EU. “We should build internal capacity first. World Trade Organisation conditions allow us access the EU market without taxation,” he concluded.

Kenyan Vice President, William Ruto, said the agreement had given the EAC a lot of credibility and had assisted the region to attract investments He said backtracking on the agreement would erode the credibility the region has built over the last 20 years. “This will negatively affect prospective trade arrangements with other countries,” he said.
(The Citizen, The East African)

Race for mobile phone networks to list on Dar stock exchange
Tanzania’s leading mobile phone networks were scrambling to meet a December 31st deadline for mandatory listing on the Dar es Salaam stock exchange (DSE). Vodacom, now under the name Vodacom Tanzania PLC, became in November the first network to submit its application for an Initial Public Offering (IPO). Tigo and Airtel, the second and third largest networks in the country are following close behind, though Tigo admit they are unlikely to meet the deadline.

Under the Electronic and Postal Communication Act of 2010 (EPOCA) and the Finance Act of 2016, all telecoms companies in the country were required to list at least 25 per cent of their shares on the DSE before the end of 2016. It is expected that most such firms will complete the listing requirements in the first quarter of 2017.

Financial experts described the listing of the foreign-backed mobile phone giants on the local stock exchange as a ‘game changer’ in the country’s capital market.

“When a telecom company lists on a stock exchange, its impact is significant. Our nearest example is Safaricom in Kenya, where its listing on the Nairobi Stock Exchange changed the dynamics of NSE to date,” said Moremi Marwa, chief executive officer of the DSE to The Guardian.

“The impact on the DSE will result in almost the doubling of its market capitalisation, which is good and it will of course offer more choices to investors,” said George Fumbuka, chief executive officer of CORE Securities Limited.

“The parent companies of these telecommunications companies are abroad, so when they make profits all the profit goes out of the country,” said a spokesman of the Capital Markets and Securities Authority.
“Through these IPOs, Tanzanians can now own shares in the companies. This means that some of the profits made by the firms will in the near future remain in Tanzania.” (The Guardian)

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TOURISM & ENVIRONMENTAL CONSERVATION

by Mark Gillies

Value Added?
This June a familiar shadow fell across Tanzania’s tourism industry. For the past few years, in the run up to the annual budget, the Tanzania Government has threatened to remove the VAT exemption that previously applied to many aspects of the tourism industry’s goods and services. And every year, following a good argument and representations from tourism players to the highest levels of government, the threat has fallen away.

Until this year. As reported by Hugh Morris in The Daily Telegraph on 7th July, on 23rd June, Tanzanian tourism operators were notified by the Ministry for Natural Resources and Tourism that the exemption would be removed from 1 July.

The reaction from tourism operators was immediate as representatives of the industry pushed behind the scenes and in public for the government to reassess its position, citing the potential harm the changes will cause to the Tanzanian tourism industry and the potential result of making the country and uncompetitive and unattractive destination for long haul tourists.

The East African on 18th June contained a statement from the 330-member Tanzania Association of Tour Operators (TATO) that said the country was already charging 7% more than other regional states due to multiple taxes and that imposing the proposed VAT would cripple the $2 billion worth industry. Going onto explain how tour operators in Tanzania are currently subjected to 32 different taxes, 12 being business registration and regulatory licence fees, 11 annual duties for tourist vehicles and nine other miscellaneous fees.

Despite on-going protests and negative international publicity, by mid-July, no government climb down was announced and Tanzanian tour operators engaged in a confusing intercourse with their international agents with neither sure who was charging what and whether to pass on additional costs to final client. Cancellations began to be reported and Prof. Maghembe, the embattled Minister for Natural Resources and Tourism moved to allay fears about a fall in visitor numbers by saying to reporters (The Citizen on 15th July), “Go and see for yourself the long lines of vehicles bringing tourists into Ngorongoro and Serengeti. It does not in any way point to a decline.”

As the story developed and opposition seemed to grow, sources began
to indicate that the government would consider a compromise and reports began to circulate of leading industry figures considering approaching President Magufuli to plead their case.

If these stories suggested a conclusion to the story (for another year), they were wrong. On 19th July, the Citizen reported how President Magufuli used an address to newly promoted police officers to scotch any rumours of compromise and reiterated that all charges due must be paid saying that it was better to have 500,000 tourists who paid the correct charges, rather than 1,000,000 who do not.

President Magufuli has made probity and clarity of procedure the mark of his nascent presidency and his comments are understandable in that context. However, it is also not difficult to understand the frustration of all Tanzanians working in the highly competitive African tourism industry. They know that the Okavango Delta or the Maasai Mara, to name but two, have as much draw as the Serengeti or the Ngorongoro Crater to many tourists who still regard Africa as a single country. The costs of going on safari are rising across the continent and so the end price of a package is assuming ever-increasing importance. The fear is that Kenya, which recently restored the VAT exemption on various tourism goods and services, will take a painfully large slice of tourist pie that had, until this year, been feeding so many Tanzanians.

A declining Tanzanian tourism industry will have three potentially serious consequences. The first consequence will be a significant drop in foreign currency earnings that will directly impact the national finances. The second will be loss of jobs as drivers’ services go unrequired and camps close. The third will be a setback for the cause of Tanzanian wildlife conservation – still, itself, reeling from the horrendous poaching epidemic of the last few years. In many parks and reserves it is only the presence of camps and the tourists they attract that protects these vital areas from poaching, habitat loss and unrestrained development. If camps don’t attract tourists then they become financially unviable and close, leaving the land vulnerable.

It is therefore understandable that many in the Tanzanian tourism and conservation sectors are despondent, but they are also frustrated, asking themselves why impose a new tax when so many existing ones go unpaid by so many?

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BUSINESS & THE ECONOMY

by Ben Taylor

Tanzania pull-outs of EU-EAC Economic Partnership Agreement, Brexit cited
Tanzania has decided not to sign the proposed Economic Partnership Agreement (EPA), which would have opened up trade between the European Union (EU) and the East African Community (EAC). Dr Aziz Mlima, permanent secretary in the Ministry of Foreign Affairs, made the announcement in early July.

“Our experts have analysed the pact and established that it will not be to our local industry’s benefit. Signing this pact at the moment would expose young EAC countries to harsh economic conditions in post-Brexit Europe,” explained Dr Mlima.

Minister for Trade, Industries and Investment Charles Mwijage said Britain was Tanzania’s key trade partner in Europe. “Internationally, we trade with Britain, China, India and South Africa. When you don’t have Britain in a deal with Europe, what do you have? We have to think it over and this can take any duration to decide,” he said.

The move appears to fit with President Magufuli’s economic policies, which include a greater focus on raising tax revenues and on protecting local industry. A few weeks before the decision on the EPA was announced, the President gave a speech in which he called for imported good to be subject to higher taxes in order to protect local producers.

“We have every reason to protect our industries,” he said. “They generate direct employment for our people and provide our farmers with reliable markets for their produce. The government collects revenue from them and they play a key role in spurring economic development. That is the direction I want to take, and I know the Minister for Industry, Trade and Investment (Mr Charles Mwijage) is here…this is what I want him to do.”

Former Tanzanian President, Benjamin Mkapa, expanded on the decision in an essay published various Tanzanian and regional newspapers.

“If we sign the EPA, we would still get the same duty-free access, but in return, we would have to open up our markets also for EU exports,” he explained. “Tanzania would reduce to zero tariffs on 90% of all its industrial goods trade with the EU i.e. duty-free access on almost all EU’s non-agricultural products into the country. Such a high level of liberalisation vis-a-vis a very competitive partner is likely to put our existing local industries in jeopardy and discourage the development of new industries.”

“As a Least Developed Country (LDC), Tanzania already enjoys the Everything but Arms (EBA) preference scheme provided by the European Union i.e. we can already export duty-free and quota-free to the EU market without providing the EU with similar market access terms.”
Kenya, Rwanda and Burundi were ready to sign the Economic Partnership Agreement (EPA) with the EU, but Uganda indicated that no agreement should be signed without full agreement of all EAC member states. World Trade Organisation rules do not allow countries aligned to a trade bloc to sign up individually.

In the short term at least, Kenya is seen as the biggest loser from Tanzania’s decision, as the country’s middle-income status means Kenya does not currently have the same tariff-free access to European markets that the other EAC members enjoy. Nevertheless, at current growth rates, Tanzania will itself achieve middle-income status within the next couple of years.

Austerity budget
Dr Philip Mpango, the aptly-named Minister of Finance and Planning presented an austerity budget to parliament in June. The budget scrapped a wide range of tax exemptions while increasing taxes on sugar, cement imports and beverages, and doubled down on President John Magufuli’s cost-cutting measures with tight restrictions on ministries’ and departments’ operating costs.

Tabling the TSh 29.54tn (US$14bn) budget for the 2016/17 financial year in Parliament, Dr Mpango introduced income tax on the gratuity that MPs earn after every five years and offered relief to small-scale farmers and other low-income earners by scrapping various “nuisance taxes”.
The budget also aims to support the president’s industrialisation strategy, by increasing import taxes on various manufactured goods, including cement, sugar, corrugated iron sheets, and second-hand clothes and shoes.

Dr Mpango, a former World Bank economist, told the house that in the 2016/17 Budget, TSh 17.8tn (60% of the total) would come from domestic sources, TSh 5.37tn (18% of the total) from domestic loans and the sale of Treasury papers, TSh 3.6tn (12%) from foreign aid and development grants, and TSh 665bn (2%) from local government authorities’ sources. Finally, the government plans to borrow TSh 2.1tn (7%) from foreign commercial sources for infrastructure projects.

Some business leaders and economists reacted to the budget with a note of caution, recognising the value of the budget as a bold attempt speed up industrialisation, but arguing that “too much focus” on the private sector in revenue collection could hit investment.

The decision to target key and fast growing sectors of the economy, particularly telecommunications, banking and tourism, will adversely affect the economy, they argued. Further, they also warned that strong enforcement of cost-cutting measures in the budget could hurt businesses and narrow the tax base.

“The newly introduced taxes will hit the banking and tourism sectors hard. These are key sectors of the economy that have yet to reach their full potential. Imposing 18% VAT on tourism services will only succeed in benefiting our closest competitor, Kenya,” said Ernst & Young Executive Director for Tax, Laurian Justinian [see also Tourism & Conservation section].

Elsewhere in the budget, Dr Mpango said that Tanzania’s economy will grow by 7.2% in 2016, and the inflation rate, at 5.1% in April this year, will remain between 5% and 8%. Domestic revenue will reach 16.9% of GDP in the 2016/2017 financial year, up from 14.8% in 2015/2016.

However, President Magufuli took issue with official inflation figures, arguing that they appear to be at odds with the economic reality on the ground as many Tanzanians complain about the rising cost of living. “[We’re told] Tanzania’s inflation rate has fallen from around 30% in the 1990s to 5%. But is this really reflected in the lives of Tanzanians?” he queried. “We can just celebrate these statistical data, but in reality people might feel that the inflation rate has actually increased to 70%,” the president added.

Volumes down at Dar port, but revenues rise
The Commissioner General of the Tanzania Revenue Authority (TRA), Alphayo Kidata, said revenue from the Port of Dar es Salaam has increased in the last two months despite the burdens of a reduction in trade volumes. He said this after the Tanzania Ports Authority (TPA) reported a decline by more than 50% in the freight transported to neighbouring DR Congo and Zambia.

Kidata cited global economic problems, in particular in China, as the main reason for the reduction in volume, adding that a similar effect could also be seen in Mombasa, Beira and Durban.

However, he stressed that despite the decrease in cargo, revenue at the port has increased because they have closed loopholes for importers, ensuring that all appropriate duties are now paid.

The Commissioner said TRA were previously collecting TSh 200-300bn per month from the port but after controlling loopholes, TRA collected TSh 458bn in April of this year, and TSh 517bn (US$250m) in June.
Dr Philip Mpango, the aptly-named Minister of Finance and Planning, told parliament in April that from October 2015 to March of this year cargo had declined at the port, with the number containers from Congo dropping from 5,529 to 4,092. He added that freight to Malawi fell from 337 to 265 containers, while the number heading to Zambia declined from 6,859 to 4,448.

Later, analysts noted that the Dar es Salaam port risks handling the lowest number of vessels in its history this year. Several logistics firms opted to bypass the city after Value Added Tax (VAT) was imposed on transit goods.

Cargo firms took issue with the imposition of VAT, which came even after the Prime Minister, Kassim Majaliwa, agreed that it was standard practice worldwide not to charge VAT on transit goods. A meeting between TRA and the Tanzania Freight Forwarders Association (TAFFA) was postponed when TAFFA representatives were not satisfied with TRA sending a junior representative to the meeting.

Tanzania Economic Update (TEU) published
The World Bank published the latest in their bi-annual series of economic updates, with a mix of praise and criticism for Tanzania’s economy.

The report commended the new government’s measures to strengthen fiscal management and curb corruption, saying they have started to yield results with tax revenue collection exceeding targets.

Nevertheless, the report called for a greater focus on strengthening the private sector, calling for adoption of Public-Private Partnerships as a new source of finance for development projects. “Tanzania needs to improve overall business environment, including through improved access to finance and electricity, for private sector development,” said Emmanuel Mungunasi, WB Senior Economist and co-author of the report. “Further development of the private sector will be key to accessing the needed resources including financing and creating more employment opportunities which are critical for poverty reduction.”

The Bank’s Country Representative, Bella Bird, also noted that Tanzania had been very generous in recent years with tax exemptions, and praised President Magufuli’s commitment to limiting such exemptions.

Critics took issue with some aspects of the report, notably a warning that over-dependence on China as an economic partner could leave Tanzania vulnerable to faltering growth in the East Asian giant.

“The saviour of industrial policy is China and other developed nations of the East. We stand to gain from China’s relocation plans. It is the right time to grab the opportunities,” said Prof Humphrey Moshi of the University of Dar es Salaam.

Standard Bank compensation payment
The outgoing British High Commissioner to Tanzania, Ms Diana Melrose, announced on Twitter that the UK has transferred US$ 7m to the Tanzanian government, paid by Standard Bank as a compensation payment as a result of its failure to prevent bribery in Tanzania. In November 2015, a UK court ordered the bank to pay a fine of US$ 25m, plus this compensation payment to the Tanzanian government. [See TA114 for details of the case].

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BUSINESS & THE ECONOMY

by Ben Taylor

Standard Bank case
Late in 2015, a landmark judgement in the UK courts saw Standard Bank fined US$25m and ordered to pay the Tanzanian government US$7m in compensation. The “deferred prosecution agreement” (DPA) suspended a case against Standard Bank for its alleged failure to prevent bribery. It relates to a $6m payment made in 2013 by Stanbic Bank Tanzania, then a sister company of Standard Bank, to a local agent, Enterprise Growth Market Advisors (EGMA), associated with Tanzania’s US$600m private bond placement.

The judge in the case, Lord Justice Leveson, concluded that Standard Bank “did not have adequate measures in place” to guard against corruption, and did not conduct sufficient due diligence in relation to EGMA.

EGMA was paid $6m for assistance in arranging the bond issue, though there was no evidence that the firm actually provided any services. One of EGMA’s directors was Harry Kitilya, then Commissioner General of the Tanzania Revenue Authority, a potential conflict of interest. The payment to EGMA was financed by raising the cost of the service provided by Standard Bank to the Tanzanian Government from 1.4% to 2.4% ($8.4m to $14.4m) of the total bond issue.

This is the first use of a DPA in UK courts. It allows for criminal proceedings against a company to be suspended provided that the company meets certain conditions. A prosecution may follow if the conditions are not met within three years, otherwise the Serious Fraud Office (SFO) will discontinue proceedings.

The case was initiated by Standard Bank itself reporting concerns to the UK authorities, when close to $6m in cash was withdrawn from EGMA’s account over nine days in March 2013. Observers are speculating whether the firm really decided of its own accord to self-report in this way, or whether they did so under pressure. Tanzanian opposition MP, Zitto Kabwe, argued that Standard Bank could have falsified information given to the SFO in order to reduce the fine.

The case raises difficult questions for the Magufuli administration, which has in other cases acted swiftly and decisively against corruption. The DPA does not prevent Tanzanian authorities from investigating further or from bringing a case against Standard Bank, Stanbic, EGMA or government officials involved in the bond issue.

In January, Valentino Mlowola, Director General of the Prevention and Combatting of Corruption Bureau (PCCB), said investigations into the Standard Bank case were at “final stages,” and promised that “soon you will see grand corruption suspects taken to court.” This has not yet happened.

Meanwhile, Tanzania has a debt of $600m, which may not have been negotiated on favourable terms. Standard Bank and Stanbic Bank were appointed to manage the bond placement following a closed bidding process, and the placement attracted a 6% interest rate – substantially higher than the 4% achieved by Zambia and Ghana. Corruption Watch UK estimate that the potential cost to Tanzania could be as much as $80m over the life of the bond.

Tax cut
On Workers Day, May 1, just as Tanzanian Affairs was going to press, President Magufuli announced a reduction in the basic rate of income tax. The rate for monthly salaries between TSh 170,000 and 360,000 has been cut from 11% to 9%. The higher rates for incomes above TSh 360,000 are unchanged. As a result, a worker on a monthly salary of TSh 360,000 or above will be better off by TSh 3,800 each month, or TSh 45,600 over the course of a year.

Announcing the change, President Magufuli stated that the move aims at alleviating the burden of tax on workers. “I promised during my campaign to reduce pay as you earn tax to single digits. Now I declare to reduce it from 11% to 9%. I know this percentage will create a gap in our revenue, but we shall see how to fill it,” said President Magufuli.

Professor Haji Semboja of the University of Dar es Salaam said that the amount returned to workers as tax reduction and its impact on economy was minimal. “The government has increased workers’ purchasing power by 2% … it’s something … but not that much.” Professor Honest Ngowi of Mzumbe University, said the 2% tax-cut on s alaries at the end of day was likely to be chopped off by inflation, exchange rate and consumable tax increase in the 2016/17 budget.

The Daily News newspaper, however, in an editorial, stated that they “warmly welcome the PAYE relief not necessarily because of the impact they will bring on the workers’ earnings, but as a concrete message that the future of the workers in the country is bright.”

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AGRICULTURE

by David Brewin

Drones and Crop Data
Scientists from various research institutions, including the University of Nairobi, the International Potato Centre (CIP) in partnership with the University of Missouri and regional civil aviation authorities in Tanzania are working on a pilot project where a drone was able to pinpoint 14 different varieties of sweet potatoes at the Ukiriguru Agricultural research Institute near Mwanza.

This drone-based remote sensing technology is being described as a ‘game changer’ in the gathering of agricultural statistical data. It is relatively cheaper than other methods, boasts high quality sensors, and allows collection of accurate data on a large scale with minimal effects from clouds or rain, which, in some areas, blur images taken by satellites. The drone is able to map everything on the ground, after which the data is processed by specialised software to enable scientists to zero in on their area of interest.

The drones can gather data on all food crops in a particular area and point out diseases and water-stressed areas thus making them an important tool in irrigation scheduling. The drones have been known to detect diseases in a field two weeks before the symptoms become obvious to the human eye. Sweet potatoes are being used as the pilot crop.

Drone technology can also help identify the right pesticides to use on plants. The images captured by the drone can also map areas on a farm where there are diseases or a lack of soil nutrients. The locally assembled drones, known as ‘Octocopters’, have eight multi-rotors and a maximum range of 200 metres from the ground. They can carry up to 2.5kg including the weight of the drone and a 1kg regular camera equipped with specialised sensors. The equipment is powered by rechargeable batteries that can each last 10 minutes per session.

Repossessing Idle Land
According to a report in the East African on 20 February 2016, Tanzania is planning to identify underdeveloped parcels of land with the aim of repossessing them. Minster for Lands William Lukuvi has announced that ownership of idle land would be revoked and the land re-allocated as part of wider efforts to end long-standing land disputes in many parts of the country and to ensure equitable distribution of land. A special audit would be part of a $15 million land tenure support programme. “Our intention is to identify those holding large areas and farms without developing them. We will revoke their title deeds and give the land to those in need. Any investor who needs land should come to my office with a business plan and I will give them land in any region even Dar es Salaam” said the Minister.

‘We want our land back’
Villagers in Hanang district, Manyara Region, whose land has been taken over in recent years under various schemes of the defunct National Agricultural and Food Corporation (NAFCO) have been complaining for years at the loss of their land.

This first happened in 1969 for a large capital-intensive Canadian-supported wheat project. In the 1980s some 100,000 acres were under wheat cultivation and the wheat produced met at least one third of the nation’s total demand. However, the scheme collapsed in 2003 after Canada had invested $44 million. (see TA 51 and TA 29 for some background).

The government then invited private investors to develop the land but this has not pleased the local people who are now pleading with President Magufuli to help them to get back their land.

Insect threat to tomatoes in Zanzibar
The tomato leaf miner, scientifically known as tuta absoluta, which has been prevalent in the Arusha region of Tanzania since 2014, before spreading to other parts of the Tanzanian mainland, has now arrived in Zanzibar. One mainland farm manager was quoted as saying that they had lost nearly a thousand tonnes of tomatoes worth 350,000 dollars.

Zanzibar has called in experts from mainland Tanzania to help it to bring the insect under control.

Five forestry officials suspended
After inspecting parts of the Kalamazoo Forest in Rukwa Region during a surprise visit, Minister of Natural Resources and Tourism, Prof. Jumanne Maghembe, suspended five senior forestry officials for mismanagement. He stated that this action was preliminary to the launching of an investigation into allegedly gross mismanagement which had allowed illegal harvesting of logs worth TSh 500 billion. The Minister issued a 10-day ultimatum to the Tanzanian Forest Service to move logs to a nearby police station where they would be auctioned with the revenue being deposited in government coffers.

The local District Commissioner also revealed that unscrupulous log traders were colluding with some dishonest leaders and forestry officials to harvest the prohibited ‘mkurungu’ tree logs at night and export them to Zambia.

Evolution in ‘Darwin’s Puddle’.
In a volcanic crater lake in Tanzania, two species have emerged from one fish according to an article in the London Financial Times (Thank you Jill Bowden for sending this – Editor).

The writer of the article Clive Cookson said that evolutionary theory suggested that there must be some geographical or physical barrier. Otherwise, constant genetic mixing would keep the population as one species. Observation of small fish called cichlids, evolving rapidly in East African lakes, show that barrier-free divergence, known technically as ‘sympatric speciation’, does sometimes take place. Lake Malawi, for example, contains more than 500 different cichlid species that must have evolved from just a few originators – an evolutionary burst that has led biologist to call the lake ‘Darwin’s Pond’.

The diversity and complexity make it hard for scientists to disentangle the genetic processes involved. UK researchers from the Wellcome Trust Sanger Institute and Bristol, Bangor and Cambridge Universities, are investigating the much smaller Lake Massoko, a volcanic crater lake in Tanzania, where two species are emerging from a single cichlid. The evidence from Lake Massoko, which they dub ‘Darwin’s Puddle’, appears in the journal Science.

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BUSINESS & THE ECONOMY

by Ben Taylor

Stabilised shilling, but at a price
The decline in value of the Tanzanian shilling against the US dollar has been halted, with the shilling now stable at around TSh 2,150 to the dollar since the end of September. Previously, the shilling had hit a record low of just over TSh 2,300 to the dollar in late July, having declined by around 30% in the preceding six months.

The stabilisation has been at some cost, with a little over US $500m of Tanzanian foreign currency reserves spent on reversing the decline by the end of September. However, by mid-November, the Governor of the Bank of Tanzania, Benno Ndulo, was able to state that the central bank was no longer intervening in forex markets.

A strong dollar contributed to the trend, which was seen across many African countries’ currencies.

“Depreciation of the shilling against the US dollar is driven by external and internal factors,” noted the Bank of Tanzania in their Economic Bulletin. “In the second half of 2014, the US dollar strengthened against currencies across the world following improved economic performance in the US, which led to increased demand for US dollar as investors preferred investing in the US economy. From April 2015 onwards though, the depreciation of the shilling against the US dollar accelerated as it was compounded by domestic factors that included continued decline in receipts from some exports, particularly gold and cotton,”

IMF chief of Debt Policy, Hervé Joly, said other factors affecting the shilling were the high liquidity in the banking system, seasonally low export earnings, and high repatriation of corporate dividends. The situation was further compounded by delays by donors to disburse pledged funding of the budget during 2014/15, which fuelled a foreign exchange shortage psychology.

“The shilling, which was assessed to be somewhat overvalued in 2014, is now closer to equilibrium,” said the IMF in a statement following their regular assessment of the economy.

Dangote cement plant
Alhaj Aliko Dangote, a Nigerian billionaire described by Forbes magazine as “Africa’s richest man by far” with an estimated net worth of over US $16bn, has commissioned a cement plant 20km outside Mtwara town.
The plant, with a capacity of 3 million metric tonnes per annum, is the largest cement works in East Africa, and will represent half the total cement production in Tanzania. It reportedly cost around US $600m to construct.

Dangote explained the choice of Tanzania for investment, stating that the existing supply gap had been inadequate in meeting local demands, noting the need to boost export supply in the eastern Africa regional bloc.
“The construction sector is a major emergent component of the Tanzanian economy that has been receiving the attention of investors. This makes it an ideal market for cement production. The existing cement manufacturers have historically been unable to satisfy local demand, which has been filled by imports. As essential economy-driven infrastructure continues to be built to improve electricity supply and the transport network, additional demand for cement can be expected,” he said.

“Our strategy is to invest in countries that offer investors attractive returns on investment as well as provide them with an enabling environment to operate. It is our sincere belief that our $600million investment in Tanzania will further speed up infrastructural development and complement the government’s efforts in stimulating economic growth and creating jobs for the people. When in full production, this plant will make Tanzania self-sufficient in cement, with a lot of cement for export to neighbouring countries,” Dangote added.

President Kikwete, who was also present at the launch noted that the timing of the citing of the cement plant was very auspicious, coming at a time when the demand for cement is on the upsurge and increasing both locally and regionally.

Uchumi Supermarket woes
Kenya-based Uchumi Supermarkets Limited has closed its operations in both Tanzania and Uganda, after they had failed to turn a profit in five years of operations.

CEO of the company, Dr Julius Kipng’etich said the outlets in Uganda and Tanzania make up only 4.75% of the firm’s operations but over 25% per cent of operating costs. “The two subsidiaries have not made any profits over the last 5 years which means they have been draining the parent operations,” said Dr. Kipng’etich.

Earlier in the week of the announcement, around 50 staff of Uchumi Supermarkets at the Quality Centre in Dar es Salaam confined themselves behind doors for 20 hours to press their employer for clarifying on their fate of employment, following unofficial reports that business operations would be closed due to poor performance.

Uchumi Supermarket which had operated in the country for two years had six outlets. The firm had recently hired a firm of management consultants to investigate theft by staff in Uganda and Tanzania and identify the retailer’s prospects of surviving in both markets. The closures will result in around 900 job losses across the two countries.
The move makes Uchumi the second major supermarket firm to shut up shop in Tanzania in two years, after the departure of the South African chain, Shoprite, in 2014.

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ENERGY & MINERALS

by Roger Nellist

President Magufuli has reappointed Professor Sospeter Muhongo as Minister of Energy and Minerals. Muhongo had resigned from the position last January (see TA111).

Mining troubles
The big gold mining company Acacia Mining plc reported in October that it had suffered a US$13 million net loss in the third quarter and announced urgent cost-saving measures to avert further financial difficulties. Acacia – which is listed on the London and Tanzanian stock exchanges – operates the Bulyanhulu, Buzwagi and North Mara mines and employs a total workforce of more than 6,000 people in Tanzania.

Acacia’s CEO, Brad Gordon, told company staff that “these are challenging times, with gold prices dropping from US$1,800 per ounce three years ago to less than US$1,100 during the September quarter”. High operating costs and lower output also contributed to the loss. Its gold production in 2015 was likely to be only 720,000 ounces compared with the previous forecast of 750,000 – 800,000 ounces. The company warned of job losses, pay freezes/cuts and other efficiency measures by the end of 2015.

Meanwhile, in Manyara region in September the long-standing conflict between artisanal tanzanite miners and a large mining company, TanzaniteOne, led 500 artisanal miners to protest on the streets after the Government suspended tanzanite mining in some areas. The company is alleged to have encroached on the artisans’ mining areas and the regional miners’ association has called for the Government to hand over its 50% stake in TanzaniteOne to the artisans. The regional authorities warned the miners not to take the law into their own hands but await the outcome of an investigation into the issue.

Mining operations can be difficult and dangerous. On 5 October six small-scale miners were trapped and feared lost, and others killed, when a mine pit in which they were working collapsed and buried them at the Nyagalata gold mine in Kahama District. Incredibly, more than 40 days later, five of the six were discovered alive though in very bad condition under the pit, whilst the sixth had died. They had survived by eating tree roots and drinking water that that they collected in their helmets as it trickled through openings in the rocks. The Ministry of Energy and Minerals reiterated the need for small-scale miners to use modern mining equipment to prevent such disasters in the future.

In August the Geita gold mine became the first in Africa to enter into a Fair Trade gold sales agreement with the UK that, among other things, requires producers to abide by modern health and safety standards. The more than 200 miners at the mine are expecting this new deal to improve their working conditions and lives which, for many thousands of miners in Tanzania, are harsh.

Better energy news
In September, TANESCO switched on its Ubungo gas power plants to start generating electricity from the natural gas that is being transported to Dar from Madimba in Mtwara Region. The then Minister of Energy and Minerals, George Simbachawene, said that by end October gas would be contributing about 335 MW of electricity to the national grid – a big step forward to producing a permanent all-year-round solution to power shortages in the country. The Minister lauded this “huge achievement” and reminded that the project, which had cost US$1.225 billion, was fully funded by the Government and supervised by the Tanzania Petroleum Development Corporation.

Over the last decade smaller amounts of electricity have been generated using gas piped from Songo Songo island. In coming years, the government will invest in further gas-fired power plants, both to boost electricity supplies for a growing economy and also to reduce expensive oil imports and save foreign exchange.

In October at the University of Dodoma President Kikwete launched Tanzania’s largest solar energy project as well as a College of Renewable Energy and Sustainability. The project, which will be operational in 2016, will be the largest solar farm built on a University campus anywhere in the world and is expected to generate up to 55 MW of electricity to supply Dodoma Region. Both the college and the project are being undertaken through strategic partnerships with Ohio State University and a USA renewable energy company. Together, they should also help pump clean water to rural Tanzanians. The college will establish Tanzania as an African leader on renewable energy – training technicians, scientists and entrepreneurs in sustainable energy supplies.

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ECONOMICS

by Valerie Leach

Economic growth

Annual growth in GDP

Annual growth in GDP

The Tanzanian economy con­tinues to grow, at a rate of 7% in 2014. (Hali ya Uchumi 2014). Construction, transport and financial services were the fastest growing sectors.

Estimated GDP per capita was TSh 1.72 million (USD 1,038), a small real increase over the year. This allowed the Minister of Finance, Saada Mkuyu, to state in parliament that Tanzania is on the verge of achieving middle-income status.

Employment
Over 1 million people were added to the payroll in the private sector in the ten years 2005 to 2014, increasing the number of people formally employed from just over 1 million in 2005 to over 2 million in 2014. The National Bureau of Statistics reported results from the Employment and Earnings Survey of 2014. The biggest growth in formal sector employment was from 2012 onwards and in the private sector. Dar es Salaam, Morogoro and Arusha feature in the NBS’ report as regions with especially strong growth. One-third of all formal sector employees are reported to be in Dar es Salaam.

There was a big jump in the number of newly recruited workers in 2014 and in their average earnings, with changes in new recruitment particu­larly strong for professional and technical employees. The percentage of formal sector employees who are female – 37% – has not changed in this ten-year period.

Unemployment rates have, accordingly, fallen, mostly among urban male adults. Changes were negligible for younger people, among women and people in rural areas.

Prices
Prices increased by 6.1% in June – the same rate as a year earlier, but higher than the 4.5% and 5.3% in the two previous months. As is usual, increases in the prices of foodstuffs were the main cause of the increase in prices overall.

Exchange rates
The fall in the value of the Tanzanian shilling, depreciating by almost 20% in the first five months of the year, was reported with great concern in the newspapers. Much of the change was attributed by the Ministry of Finance to the strength of the dollar.

Recent inflows of external funds resulting from increased export earn­ings from tourism, coffee and cashews as well funding from interna­tional development banks have stemmed the shilling’s decline.

Currencies in Kenya and Uganda have been similarly affected and central banks in all three countries are reported to be taking actions to tighten liquidity and dealing in foreign exchange. At the time of writing, the exchange rate has recovered to around TSh 2,100 to the dollar, an improvement from the TSh 2,300 reached in June.

The Development Plan
The Annual Development Plan is tabled at the time of the budget. This year, the Parliamentary Standing Committee on the Budget identified the following priorities: managing inflation and depreciation of the shil­ling; scaling up efforts to reduce income poverty; construction of a new central railway line of standard gauge; increase electricity supply par­ticularly in rural areas; improve rural water supply services; improve irrigation; improve livestock and fishing sectors; accord priority to education and health services; and improve the business environment for private sector investment.

The Annual Development Plan 2015/16 specified the following main policy targets: maintaining peace, stability, unity and strengthening good governance; poverty reduction; sustaining macroeconomic stabil­ity; value addition; increasing capacity for storage of food grains and strengthening crop market; attracting more tourists and promoting domestic tourism; and improving private sector participation in imple­mentation of development projects.

Key issues of focus in the plan were identified: completion of ongoing development projects particularly projects in the “Big Results Now” initiative; ensuring food security; improving the business environment; developing human resource skills especially in oil and gas, science, technology and innovation; and mitigating effects of climate change.

The Budget
The budget, announced in June, includes plans to increase revenue from domestic sources and reduce the share of the budget coming from exter­nal financing from 14.8% in 2014/15 to 8.4% in 2015/16. Uncertainties about external development funding have led to a reduc­tion in the share of the budget for development expenditure. No new development projects are to be included in the budget, though there is a possibility that the new government after the October elections may choose, through a supplementary budget, to modify priorities and allocations.

Tax revenues currently amount to 12.5% of GDP, not enough to fund much needed investments in infrastructure and social services. The World Bank argues that greater increases in domestic tax revenues are needed through a reformed, more productive and well-managed tax system. Among the measures included in the budget is a new levy on imported goods of 1.5% which is to be earmarked for improve­ments in the rail infrastructure. It is a measure which has been agreed by all the countries of the East African Community. There is also an increase in petroleum levy on petrol, diesel from 50 to 100 shillings per litre and on kerosene from 50 to 150 shillings, the proceeds from which will go towards rural electrification.

The minimum wage has been increased and the low band PAYE rate lowered from 12% to 11%.

At the time of the budget, the World Bank approved a fund of USD 100 million to help increase transparency and accountability in Tanzania’s governance, and to help improve public financial management.

IMF’s review
The IMF’s assessment of the state of the economy in July was largely positive: “The draft 2015/16 budget, which targets an underlying deficit of 3.5 percent of GDP (excluding arrears clearance), is built on more prudent revenue and foreign financing assumptions. The fiscal target also puts Tanzania on a path to a 3-percent deficit over the medium term, which is consistent with maintaining a low risk of debt distress.”

The Fund, however, also expressed concern about the accumulation of arrears in government payments and actions were urged to have them cleared. It commended a policy paper, approved by the cabinet, for a fis­cal framework for managing resources from natural gas which is based on international experience. There will be a Natural Gas Revenue Fund that will be fully integrated into the budget, with no parallel spending authority.

Recent Developments
President Kikwete, at the Dar es Salaam International Trade Fair directed all regional and district commissioners to stop banning the transportation and exportation of produce. He said that such bans do not benefit farmers and business but rather engender corruption.

On a visit to the port of Dar es Salaam, World Bank Vice President for Africa, Dr Makhtar Diop commended its improved infrastructure and efficiency. He pointed out the benefits to the economy of Tanzania and its landlocked neighbours of a well-functioning port.

An aspect of the planned large trading centre at Kurasini has been criti­cised by a representative of small traders now operating in Kariokoo who believe the new trading centre will benefit Chinese rather than local traders.

Further progress has been made in the reduction of non-tariff barriers to trade in the larger region with an agreement between the governments of Tanzania and Zambia. Border management will be improved with a one-stop border post by the Nakonde-Tunduma corridor which will speed up transit times and lower costs of trading.

Structural change in the economy
Manufacturing is a growing albeit still a small part of the Tanzanian economy. A research paper for World Institute for Development Economics Research (WIDER) by Samuel Wangwe, Donald Mmari, Jehovanes Aikaeli, Neema Rutatina, Thadeus Mboghoina and Abel Kinyondo examined the manufacturing sector in Tanzania. It remains largely undiversified, and vulnerable to variations in agricultural pro­duction and commodity prices.

The growth in output and exports, production innovation and product diversity have been most dynamic in the manufacturing of food prod­ucts, plastic and rubber, chemicals, basic metal work, and non-metallic mineral products. However, the extent to which Tanzanian manufactur­ers have added value has been limited by their dependence on imported intermediate goods. This limits inter-industry linkages that are impor­tant for promoting a domestic manufacturing base and employment.

The authors conclude that various technological, financial, policy and administrative constraints remain unresolved and they are limiting faster industrial growth and transformation.

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AGRICULTURE

by David Brewin

Relaxation of restrictions on GM Crops
Assistant Director of Crop Research at the Ministry of Agriculture, Food Security and Cooperatives Husain Mansoor has announced that scien­tists will, in future, be allowed able to carry out confined field trials of Genetically Modified crops without fear.

Under the previous regulations a strict liability clause had meant that scientists, donors or partners funding research could be held accounta­ble in the event of any damage that might occur during or after research on GM crops.

The new rules allow scientists to carry out confined field trials of GM crops to find out their effects on humans and the environment. Plant materials would have to be enclosed within a laboratories or green­houses and field trials would be undertaken only in specific areas, usu­ally small pieces of land set aside for experiments.

For some time Tanzanian scientists have been keen to pursue their trials on drought-resistant and insect-tolerant maize under a new interna­tional project entitled “Water efficient maize for Africa and cassava vari­eties resistant to mosaic and brown streak diseases”. It is anticipated that this project will promote drought-tolerant and insect-protected maize using conventional breeding methods. Its goal is to make these varieties available royalty free to smallholder farmers through seed companies associated with the Nairobi-based ‘African Agricultural Technology Foundation’, the coordinating agency.

Scientists plan to carry out the first confined field trials of GM modified maize tolerant to drought and pests this year and hope to commercialise it when research is completed in coming years.

Revival Plan for Cotton
Cotton has been, for many years, a mainstay of Tanzania’s economy. During the last three years, however, production has declined substan­tially.

In 2011/12 350,000 tonnes were produced, but this dropped to 246,000 tonnes in 2012/13 and just 201,000 tonnes the following year.
The cotton is largely grown by small-scale farmers owing farms of between two and ten hectares. It is 100 percent rain-fed and not irri­gated, as in many other countries,

In these circumstances, Director General of the Tanzania Cotton Board, Gabriel Mwalo, accompanied by many experts and others involved in the industry, held a significant press conference in Dar es Salaam recently.

He expressed concern about the state of production and admitted that the Cotton Board had not played its part well, but pointed out that the industry was handicapped by a lack of a reliable input supply system and that there had been frequent changes in world market prices. He said that these had greatly affected performance in terms of yield per hectare.

The decision to liberalise the cotton industry in the early 1990s had been a success although it was still facing a number of challenges. The number of ginneries had increased from 36 in 1993 to 56 and the number of cotton buyers had also increased to about 35 companies which had largely taken over from a handful of large regional cooperative unions.

Speaking about cotton seed he stated that in the last season almost 17,000 tonnes of fuzzy seeds and 1,200 tonnes of de-linted seeds had been distributed. He said that there was a high demand for clean seeds for oil milling purposes but this demand could jeopardise the availabil­ity of good seeds for planting. There were no cotton seed production farms in the country so that the industry had had to depend entirely on seed cotton produced by the small farmers themselves.

He said that the problem of poor seed germination could best be dealt with through contract farming, where farmers’ business groups would be the centres of cotton sales and custodians of their own products.

He added that in embracing contract farming, the system of using gin­ners would be abolished. Such a model of cotton production would not only assure farmers of better seeds for planting but would also ensure quality yields and high incomes since cheating through weighing scales would no longer be there. The lasting solution was to use certified seeds.

France interested in Tanzania’s Fisheries and Livestock
During the first Franco-Tanzanian Economic Forum held in Paris in March 2015, organised by the French Business Confederation (the most representative organisation of the private sector in France), French investors showed considerable interest in investing in livestock and fisheries in Tanzania, according to Tanzania’s Minister for Fisheries and Livestock Development Dr Titus Kamani, who attended the forum.

Sale of maize surplus
Last year Tanzania harvested a record 2.5 million tonnes of maize. The country then began talks with China so as to find a market for this huge surplus. America previously supplied China with maize but Beijing suspended the deal after the US started using genetically modified tech­nology in maize growing. China’s growing demand for maize is driven by population and economic growth.

During the last three years Tanzania has been harvesting more food crops than it can consume having enjoyed 118 percent food sufficiency in 2013.

Tractor Assembly
The Tanzanian farming system is largely dominated by smallholders cultivating average farm sizes of between 0.9 and 3.0 hectares and mechanisation is limited. The government has now received a loan of €50 million from Poland to help it in assembling Polish tractors locally. It is understood that Tanzania will start assembling the tractors this year.

Grape Juice Processing
The TIB Development Bank is providing TSh 729 million in loans to construct two major ultra-modern grape processing plants in the Dodoma Region. This will enable grape producers to start sell­ing millions of litres of grape juice to Kenyan and South African wine companies. At the initial stage of development of this new industry Chamwino District farmers received financial support from the CRDB Bank to grow more than 300 hectares of grapes. The project is reported to be going well.

“Milk production needs to be increased”
At a recent conference on climate change, a senior lecturer in Animal Science at Sokoine University of Agriculture, Dr Msalya, said that in a study conducted in 2014, although Tanzania had huge potential for milk production its actual production was only some 2.3 billion litres. This was far below UN Food and Agriculture global standards which are based on consumption of 200 litres per person annually. In order to reach this standard Tanzania needed to step up its production to 9 billion litres per year.

Dr Msalya mentioned various problems including the case of a small project under which goats from Norway had been supplied to small­holders to help them produce goat milk. However, the project had had to be abandoned as those involved started to sell the goats rather than market the goat milk.

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