BUSINESS NEWS

Exchange rates (Mid-August): £1 = TShs 1,010 to 1,090
$1 = TShs 580 to 638

Tanzania’s Markets and Securities Authority has approved provisional licenses for five brokers/dealers (Tanzania Securities, Exim Securities and Investments, Rasimali, Solomon and Orbit Securities) to trade on the country’s STOCK EXCHANGE which is scheduled to be launched in Dar es Salaam in October. Meanwhile, Tanzania Oxygen, a leading manufacturer of industrial and medical gases became in April the first company to launch its prospectus; it will sell 30 million shares to the public – Business in Africa and East African.

Following the recent $1.7 billion debt relief agreement at the Paris Club in February (TA No 57) Tanzania has now reached AGREEMENT WITH FOUR OF ITS 12 MAJOR CREDITORS (France, Germany, Norway and Austria) and has assured donors that it will service its external debt promptly and ensure that it remains credit worthy. It hopes for further debt relief at the Paris Club next year – East &can.

TWO NEW BANKS opened for business in mid-August – the indigenous Akiba Commercial Bank with 207 indigenous shareholders and Rabobank of the Netherlands as its partner, and Exim Bank (Tanzania) catering primarily for corporate clientele with 80% Tanzania local shareholding – East African.

The government has reduced CORPORATE TAX from 35% to 30% as a ‘compensatory measure to mitigate revenue obligations while giving relief to taxpayers’ – Business Tunes.

The NATIONAL BANK OF COMMERCE has collected some Shs 1.13 billion from 28 debtors under its loan recovery drive during the past few months – Sunday News.

Tanzania has completed the installation of sophisticated new CARGO AND PASSENGER X-RAY SCREENING EQUIPMENT at the Dar es Salaam and Kilimanjaro airports in response to concerns expressed by airlines flying into the country – East African.

Some 2000 peasant families living along the proposed Songo Songo Gas Pipeline will receive Shs 2 billion in COMPENSATION for damage to their land and for resettlement – Daily News

“ENGINEERS, of whom there are now more than 5,000 in Tanzania, are being under-utilised as there are now more than the country can afford” said Dr. Strato Mosha, Director of Inter-Consult Ltd (he is also Vice Chairman of the Tanzanian Chapter of the Britain-Tanzania Society) at a recent seminar. He went on to say that the ratio engineers:technicians:artisans was 1:3:9 which indicated the critical shortage of technicians and artisans. Engineers had to work without technical support and might actually have to do work best left to technicians. However, engineers constituted only about 0.5% of the total waged employees compared to 4-6% in developed countries – Financial Times.

The POPULATION of Dar es Salaam has reached 4.5 million. Regional Commissioner Brig. Gen. Hassan Ngwilizi said that this population growth was a serious threat to the wellbeing of city residents – Daily News.

Speaking at a dinner in honour of visiting Chinese Premier Li Peng on May 13 President Mkapa defined TANZANIA’S ECONOMIC POLICY as the ‘development of a market economy with internal characteristics’. Tanzania wanted to learn from Chinese experience. “Economic and social justice, respect and dignity must never be sacrificed at the altar of unguided capitalism” he said.

The Dar es Salaam firm A C Gomez has bought and started rehabilitating the KUNDUCHI BEACH HOTEL – Daily News.

The Minister of Finance announced on August 14 that the government had suspended issuing LOAN GUARANTEES to public enterprises in a move to control the country’s debt burden. Cabinet approval would be needed by ministries and parastatals before any further debt could be incurred – Daily News.

NEW AID for Tanzania: Shs 30 billion from the EU for rehabilitation of areas affected by refugees and Shs 1.6 billion for education; Shs 17 billion from the Netherlands for rural development and other projects and Shs 7 billion for dredging Dar es Salaam port; Shs 16.7 billion from Japan for three bridges on the Mtawara-Mingoya road and for power supplies; Shs 15 billion from the UN Population Fund; Shs 3.2 billion from Switzerland for two development funds and a further Shs 15 million to fight a cholera epidemic in Dar es Salaam which has claimed scores of lives; $7.8 million immediately for balance of payments support and probably a further $23.4 million later in the year from Sweden; $24 million from Denmark for the development of Tanzania’s private sector; a $1 5.7 million loan from China to revamp the TANZAM railway and for other projects.

Tanzania’s new 3 16-page TELEPHONE DIRECTORY, the first since 1992 was issued (free to those with telephones) at the beginning of May. Some 92,760 telephone lines are now connected in Tanzania – Business Times.

The debt ridden Dar es Salaam University Press and University Bookshop have been merged and are being privatised as BUP (1996) Ltd. – East African.

There has been a sharp down-turn in PASSENGER AND CARGO BUSINESS ON THE DAR ES SALAAM – ZANZIBAR SEA ROUTE following the harmonisation of import tariffs between the mainland and the Isles; this has made it no longer profitable to buy goods in Zanzibar and sell them on the mainland. But one company, Azam Marine, has invested $4 million in two new speed boats which travel at 30 knots and have a capacity of 180 people each. The company is banking its hopes on the novelty and newness of the boats and the growing tourist boom in Zanzibar. Some of the other boats on the route are old and have been known to stall sometimes midway between the two points – East African.

TANZANIA’S 1997/98 BUDGET (June 19) emphasised promotion of the private sector and investment, especially in mining, but there was little of help to the agricultural sector and duty on fertiliser was increased. In the interests of greater simplicity, the present customs duty bands have been reduced from seven to four and sales tax bands from six to four. Minister of Finance Daniel Yona announced targets of 5% growth (4.2% in the present year) and 10% inflation. He said that he would raise revenue of Shs 695,000 million (17.1% of GDP) and spend Shs 666,842 million; indebtedness to local banks would be reduced by Shs 59,695 million. Features of the budget included reduced taxes and duties on some beer (much heavier taxes on European beers) and soft drinks but a new 25% tax on bottled water. The cost of transport has been increased; there is a 30% excise duty on four-wheel drive vehicles. The hotel levy, withholding tax on business insurance claims, excess profits tax on single trade transactions, sales export tax and stamp duty on mineral exports have been abolished. Civil servants will get a modest pay rise.

Zanzibar Finance mister Amina Salum Ali said that implementation of the 1996/97 budget in the Isles had been impaired by a severe shortfall in revenue caused largely by the boycott by many donors following the last elections. But the government had taken effective action to build up and consolidate the economy while at the same time widening the economic base in order to make it more equitable. Revenue from tourism had increased substantially.

PLAUDITS FOR TANZANIA’S ECONOMY

‘One African country that seems unable to put a foot wrong at the moment is Tanzania’ according to the March issue of ‘African Business’. IMF Director for Africa Goodall Gondwe spoke of Tanzania’s improving economy as a ‘tremendous achievement’. ‘Africa Confidential’ headed its most recent article on Tanzania: ‘Baby Tiger – At Last Some Good Economic News to Bolster President Mkapa’s Multi-party Democracy’ as some people even began to say that Tanzania could develop, in the new millennium, into one of the first ‘tiger economies’ in Africa.

ONE BILLION DOLLARS IN DEBT RELIEF

It was announced on January 23 that Tanzania had received a seal of approval from the Paris Club of donors. It had been given the most generous terms of debt reduction currently available for the world’s poorest nations – a debt relief programme of $1 billion (Shs 600 billion). The total debt is $7.8 billion. This relief should bring the government’s debt repayment to the 12 Club members in the financial year 1996/97 to Shs 44 billion instead of the Shs 100 billion anticipated. The remaining Shs 56 billion ($700 million) will be either rescheduled or refinanced over a period of 23 years including a six-year grace period on debt payment. In addition each creditor country can – separately – convert some Tanzanian debt into development projects. The creditor nations said that Tanzania’s very low per capita income and its very severe debt burden justified an exceptional treatment of the debt.

The debt relief followed President Mkapa’s agreement to split the National Bank of Commerce into three parts. World Bank Resident Representative Ron Brigish said the debt relief was a major pat on the back for the government of President Mwinyi and its tough economic policies. “Tanzania is now back in the fold” he said.

VERY ENCOURAGING SIGNS IN THE LATEST ECONOMIC DATA
Tanzania’s GDP growth rate reached 4.5% in the first half of 1996/97 and Tanzania’s foreign reserves have reached a record $450 million, the highest in the country’s history, following strong export growth and new donor support. Inflation has dropped at a record rate from 27% a year ago to 13.8% in February this year, the lowest figure for 11 years. Export earnings are up from $500 million on average for the last five years to $762 million last year. Revenue collection has improved substantially from Shs 29 million per month last year to Shs 45 million this year. The over-manned and underpaid civil service has been cut back from 335,000 to 275,000 since 1992 and those made redundant have received donor- financed compensation packages.

Foreign investors are coming back slowly but many are waiting for the passage of the new ‘Investment Bill’ which came before parliament in April. New investors in mining have recently claimed to have found up to 410 metric tonnes of gold which could eventually put Tanzania in the same league as South Africa and Ghana as an African gold producer. The huge new project in Kilwa, now well under way, will provide Dar es Salaam (and even parts of Kenya) with electricity from natural gas within two years. Tourism is beginning a boom – receipts are up from $250 million in 1995 to $322 million in 1996 and new hotels are springing up all over the country. And between 1992 and 1996, 125 of the country’s 400 mostly dilapidated parastatal industries have been wholly or partially privatised and many are now coming back into production. For the first time in its recent history, as a result of its tight monetary and credit stance, the government is expected to be in a position to meet 60% of its expenses during the next financial year instead of relying on borrowing or from the donor community for the major part of its expenditure.

The Dar es Salaam ‘Business Times’ is full of praise for what it believes to be the recommendations of the ‘Presidential Task Force on Tax Rationalisation’ which was due to present its report as this issue of TA went to press. The proposals could, if implemented, increase revenue collection from this years’ estimated Shs 564 billion to Shs 790 billion next year. ‘This would be a phenomenal improvement over a single year’ the paper wrote.

Meanwhile, the second tranche ($40million) of the IMF’s Enhanced Structural Adjustment Facility (ESAF) has been released; the money is to help increase allocations in the 1996/97 budget for the very hard pressed education, health and water supply sectors of the economy.

Finance Minister Daniel Yona attributed these positive trends in the economy to the radical reforms adopted in the mid-1980’s at the behest of the World Bank and the IMF.

FOREIGN AID RESUMES
Following the agreements with the IMF, the freeze on foreign aid, which was introduced at the time of the tax exemption scandal two years ago, has now ended. Tanzania has been picked as one of the six developing countries in Africa selected for Japanese aid; a representative of the Japanese Ministry of Foreign Affairs said that Japan was impressed by Tanzania’s political and economic changes. The EC’s latest package of grant aid for Tanzania is the second largest to be given amongst all 70 member countries of the ACP. Norway has agreed to provide $50 million in development aid this year, Denmark has promised Shs 150 billion and the African Development Bank is releasing $21.5 million for the first phase of a $281 million project to ease Dar es Salaam’s chronic water shortage.

But, to put matters into perspective, it has also been announced recently that about 60% of rural people and 39% of urban inhabitants have incomes below the poverty line.

AND IN ZANZIBAR
Here too, in spite of the continued reluctance of foreign donors to give further assistance pending a solution to the political deadlock, the economic news has been encouraging. The ‘Business Times’ reports that GDP growth was 3.9% in 1996/97 compared with 3.7% the previous year. Clove production increased to 10,105 tons last season, the best for three years but copra went down by 51%. Inflation has dropped to 12.6% compared with 30.8% the previous year. Revenue collection remained poor. Tourism has become Zanzibar’s second most important foreign exchange earner (after cloves). Tourist numbers increased from less than 30,000 in 1985 to 56,415 in 1995 and the number of hotels and guest houses had increased from 10 to 100.

AND THE NOT SO GOOO NEWS
Tanzania has shown once again how harsh its climate can be. Following the failure of the short rains, severe drought – in some areas the worst for forty years according to the ‘East African’ – has been afflicting almost four million people in nine regions of the country and foreign donors have been asked for assistance. Dar es Salaam’s three million population has been suffering from severe water shortage because of the very low level of the Ruvu river and breakdowns in equipment.

And then, with the beginning of the main rains in late March, the skies opened all over the country and there have very been very severe floods. Some 40 people are believed to have been killed and 2,100 people have been rendered homeless in Kilwa District.

WARIOBA REPORT SHAKES TANZANIA

There has never been anything quite like it in Tanzania or even in many other countries. Few administrations in the world seem to be as willing as the Mkapa government to wash their dirty linen in so public a way. There were screaming headlines and juicy stories in the press. Some tabloid newspapers began serialising it. And some big people were mentioned including a former prime minister, a cabinet minister, six former cabinet ministers, a former chief secretary, a chief engineer and a former mayor of Dar es Salaam.

The 521-page report published by former Prime Minister and Attorney General Joseph Warioba and his nine-person Presidential Commission has revealed corruption everywhere:

• in 20 lodges and hotels in game parks and in hotels in Dar es Salaam and Kigoma;
• in the offices of the Ministry of Home Affairs, the Attorney General, the ministries of education, health and lands;
• in the Treasury and the ‘Investment Promotion Centre’ where tax exemptions had been given to rich businessmen;
• in the use of the VIP lounge at the Dar es Salaam airport;
• in the National Bank of Commerce (uncovered loans);
• in 15 private companies (not repaying loans);
• in the social services (for example, demanding money for hospital beds);
• and especially in the police force where it was said to be deep-rooted throughout the hierarchy; and in the courts (‘judgements are written in the streets without even a hearing’);
• amongst journalists for ‘cheque book’ journalism – accepting bribes to write or not to write revealing stories; and so on.

The Warioba Report said that Tanzania inherited the ‘Colonial Anti-Corruption Law’ of 1958. The report went on: “Because at that time public servants observed ethical standards for civil servants and because corruption was limited to the lower and middle grade officers who had direct connections with the delivery of services to the public, this law was adequate. After independence, the public service expanded very rapidly, public servants started to behave contrary to the civil service code of conduct and began to use their offices for private economic gain …….it has become evident that the greatest source of corruption in the country is (now) not the poor economy and low salaries, although these too have played some part. The greatest source is laxity of leadership in overseeing the implementation of established norms …. most leaders do not understand the seriousness of the problem …. most believe that corruption is more widespread in the lower and middle grades of the public service. In the Police Force 123 policemen had been dismissed for corruption in the last six years but of these 120 had been constables and only one was of the rank of Assistant Superintendent … if we want to rid ourselves of corruption we must begin by cleaning the top leadership ranks:

The report makes a large number of recommendations covering all departments of government. Among recommendations are the following:

• the setting up of a ‘Truth Commission’ to prepare a code of ethics, to administer oaths, to take legal action against those making false declarations ….
• declaration by leaders of all presents received ….
• forfeiture of property for breaches of established rules …
• changes in the Anti-Corruption Bureau … the benefits for its employees should be improved;
• policemen should be transferred more frequently;
• the size of the government should be reduced …… and many more.

President Mkapa has announced that a team of experts is working on the feasibility of taking criminal action against those implicated in the report. If there was enough basis for action the culprits would be prosecuted. If not, disciplinary action like retirement would be instituted.

The Warioba Report had its critics. Munir Daya in the ‘Sunday News’ wrote that the persons mentioned in the report had been tried, convicted and punished by the press without them being given a chance to defend themselves. Ludovic Ngatara in the Dar es Salaam ‘Guardian’ used the simile ‘Unchained dogs after long captivity’ to describe the opportunity which had been offered, when, in the late eighties, the CCM’s unpopular ‘Leadership Code’ had been abandoned and replaced by the ‘Zanzibar Declaration’. ‘The unchained party and government leaders ‘ he wrote, ‘rushed for all sorts of whatever seemed to be of some value for enriching themselves’. The article then listed examples of these things, including funds levied for the construction of the CCM headquarters, foreign exchange obtained for export crops, donor funds, bank borrowings, land reserved for wildlife. . . . .. and went on to say that, since nearly all government and party leaders had been involved in corruption, the Warioba Commission should have named those who were not corrupt. “Everyone has been doing it, Why only us?” (Thank you Simon Hardwick for bringing this latter news to my attention – Editor).

MINISTER RESIGNS
A few days after the report was published, and in which he had been mentioned in connection with allegations about the issue of a hunting licence to the Deputy Minister of Defence in the United Arab Emirates, Dr. Juma Ngasongwa, Minister for Natural Resources and Tourism resigned from the government. This, he said, in his letter of resignation, was ‘to enable state organs to investigate the allegations that featured in the report’. President Mkapa replied by commending the Minister saying that by the action he had taken he had demonstrated his sense of accountability and loyalty to the CCM. At the hearing of a separate election petition in court in March however, which alleged infringement of election rules by Dr. Ngasongwa, the judge found that all the charges against the MP’s conduct of his election campaign had been ‘baseless’.

NEW ANTI-CORRUPTION MEASURES
On February 21 Prime Minister Frederick Sumaye directed the new Tanzania Revenue Authority to sack all its corrupt officials (“who are known to fellow workers” he said) before the end of their one-year probationary period. Instructions were also issued that by June 30, Ministers, Regional Commissioners, District Commissioners, and departmental and parastatal heads had to submit to the Prime Minister reports on the actions they intended to take to stop corruption in their respective jurisdictions in accordance with the Warioba Report.

BUSINESS NEWS

Exchange Rates. (April 1)
US Dollar T Shs 610-615
£ Sterling T Shs 960-1020

The Bank of Tanzania is scrapping a proposed arrangement which would have cut its STATUTARY MINIMUM RESERVE to commercial banks by half from 12% to 6%. Every bank now has to maintain minimum reserves equivalent to 12% of the outstanding balance of its total shilling deposits and borrowings from the general public. This decision was welcomed by the IMF and has indicated the high priority Tanzania gives to its economic reform programme.

The NATIONAL BANK OF COMMERCE which lost Shs 66 billion in 1995/96 and is being privatised is to be divided into three parts – a Trade Bank for large companies, a Regional Bank for medium sized companies and a Microfinance Bank for small projects – Business Times.

Thirteen large companies will deal in shares on the DAR ES SALAAM STOCK EXCHANGE when it starts shortly. The companies include Tanga Cement, General Tyre, BP, AGIP, Tanzania Breweries, Tanzania Cigarette Company, and Tanzania Oxygen. During the debate prior to the passage in parliament on January 29 of the ‘Capital Markets and Securities Act 1997’ which authorises the setting up of the exchange, several MP’s complained that they did not understand the Bill, especially, as one said ‘after three decades of socialist economic policies’. “Are we now going capitalist” asked another MP – Daily News.

On the same day parliament passed the ‘Tea Act 1997’ which paves the way for increased participation by the private sector as part of a process of RESTRUCTURING THE TEA INDUSTRY in Tanzania. A ‘Tanzania Tea Board’ replaces the ‘Tanzania Tea Authority’ and a special fund has been created for research and development.

By joining with the Malaysian Group Petronas the South African Energy group (Engen) has gained the financial muscle to enable it to venture into DOWNSTREAM OPERATIONS IN TANZANIA. Engen has invested 100 million rands in a state-of -the-art terminal in Dar es Salaam as well as several inland depots which will ‘open up the whole hinterland’ – Business in Africa. The proposed 1997 TANZANIA INVESTMENT ACT, expected to be enacted shortly will spell out the incentives to be given to new investors, the qualifications needed, the areas of priority for investment (which will include mining, agriculture, manufacturing, tourism, banking, media and aviation), tax concessions and a new simpler way in which expatriates can obtain work permits for approved projects.

The Zanzibar State Trading Corporation bought 12,000 tons of CLOVES worth Shs 36 billion this season, about 75% of the projected target – Business Times. Tanzania has introduced the SINGLE BILL OF ENTRY SYSTEM for all customs declarations including imports, exports, warehousing and transit goods, thus reducing the length of time for clearing goods at the port from one or two weeks to 24 hours.

Coca Cola is to invest $50 million in a NEW PLANT in Dar es Salaam able to produce 10 million crates per year – the fifth Coca Cola plant in the country. The company’s President said that the investment was in response to the new liberalized economy – African Economic Digest

New 500 Shilling Note

New CURRENCY NOTES of 10,000/-, 5,000/-, 1,000/-, and 500/- which bear the head of a giraffe rather than that of the President were issued on March 10. Existing notes remain legal tender – Daily News.

In spite of strong opposition from the Board of Air Tanzania Corporation it looks as though there might be eventually a MERGER between the national airlines of Tanzania and Uganda (Rwanda wishes to join too) with ‘Alliance Air’ ‘to save’ according to Tanzanian Minister William Kusila ‘both airlines from eventual collapse’ – East African.

VALUE ADDED TAX is scheduled to be introduced on the mainland on January 1 1998. It is expected to replace sales tax on locally produced goods and services, hotel levy and stamp duty on receipts. Shs 3.6 billion from World Bank and EC projects is being spent on preparations for it – Business Times.

The Swiss Societe Generale de Surveillance has built a $500,000 MINERAL TESTING FACILITY in Mwanza to cater for gold prospectors in the Lake Victoria zone – East African.

The Zanzibar Government has approved the setting up of a ‘Global Centre OFFSHORE BANKING FACILITY’ where foreign banking institutions, casino operators and shipping companies will provide financial and leisure services to foreigners – East African

The long awaited harmonisation of CUSTOMS TARIFFS between the mainland and Zanzibar finally took place on January 24 for rice, cooking oil, wheat flour, sugar, khangas and kitenge cloth. It is hoped that this will reduce the losses of revenue through the ‘Zanzibar route’ which have amounted to between Shs 500,00 and one billion per month – Daily News.

TANZANIA AND RUSSIA are in negotiations about the settlement of the $600 million said to be owed by Tanzania. One of the issues being discussed is the unstable exchange rates of the Tanzania shilling and the Russian rouble since the mid-1980’s.

$768 MILLION IN NEW INVESTMENT

Potential investors turned up in great numbers at two investment conferences, in Dar es Salaam (November 5-8) and London (November 6). The first, the Tanzania International Investment and Technology Forum, was sponsored by UNIDO and the second, which was devoted to East African cooperation, by the Financial Times.

The Dar Forum was clearly very successful as it attracted $786 million in new investment from more than 400 foreign investors representing 220 companies. Four joint-venture contracts and 75 letters of intent were signed by local companies and state agencies with foreign partners. The investments were in gold mining, soap manufacture, oilseeds, a dairy plant, a petroleum pipeline from Dar es Salaam to Mwanza, a hydro-electric plant in Morogoro, diamond and gemstone mining, construction of hotels, shoe manufacturing, cutlery, cotton yarn, fruit juice manufacturing and coffee processing.

CRITICISM
But Tanzania came in for heavy criticism especially at the London seminar for the way in which its Investment Promotion Centre (IPC) treated investors compared with the warm welcome they received in Uganda. One British businessman called it the , Investment Prevention Centre’ because of its bureaucratic nature and negative attitude. Even the new IPC head, Mr Samuel Sitta, was quoted in the Express (September 12) as saying that he found the centre too tardy and riddled with red tape. Staff at the IPC seemed to love controlling rather than inviting new investment he said; some investors had to go to seven different offices with the same set of documents. At the London seminar Foreign Minister Jakwaya Kikwete put a lot of the blame on the IMF. It was the IMF that had insisted that tax exemptions could be approved only by the Ministry of Finance and not by a ‘one-stop’ investment centre. He felt that the situation would soon be resolved.

THE ADVANTAGES
But Mr Kikwete also pointed out that Tanzania was the largest country in East Africa in terms of size and population; it was better endowed with resources than the other two countries; it was stable, peaceful and had been cohesive since independence; it had just undergone a peaceful transition from a one-party to a multi-party system of government; there was plenty of land; the industrial sector was more or less virgin territory; there were numerous training facilities available for use by the private sector.

A MUCH BETTER DEAL FOR INVESTORS
President Mkapa, in a highly significant pro-private enterprise opening speech at the Dar es Salaam forum (delivered by Vice-President Dr. Omar Ali Juma) promised a much better deal for foreign investors. He said that the government planned to drop visa requirements for citizens of countries of ‘ strategic investment interest and trade importance to Tanzania’, and provide long-term work permits to foreign investors promptly. He said that he would restructure the IPC, would reduce bureaucracy, would streamline the taxation system, fight corruption and rationalise labour laws. He assured investors of protection, peace and stability, things which Tanzania had enjoyed since independence. British aid minister Baroness Chalker at the London seminar pointed out that corruption depended on two parties; investors should stop offering bribes.

TANZANIA’S BIG SPLASH
Regular visitors to the vast World Travel Market at Earls Court in London (November 11-14) were astonished to see the transformation in the scope and style of Tanzania’s stand. Among the African stands only that of South Africa was larger. Dynamic Natural Resources and Tourism Minister Juma Ngasongwa, having just returned from a similar assignment in South Africa, led a party of some 20 private companies who had arranged displays at the impressively laid out stand. Potential tourists were invited to hire a private yacht on the coast, to travel by private train, to flyover the Serengeti in a balloon, to watch birds or ride horse back and engage in a whole range of other activities. Tanzania’s 12 national parks, seven game reserves, 50 controlled areas, its conservation park, its marine park, beaches, historical sites and other attractions are now finally receiving significant international publicity.

The minister had reacted forcefully immediately after an attack on two tourists in the Serengeti National Park on September 8. He announced that security patrols had been strengthened, the number of rangers at each lodge had been increased and those out on patrol had been instructed to shoot bandits on sight. A new helicopter would soon be helping with security in the park. A US$ 25 million film with a cast of 200 entitled ‘The Maasai’ and intended to further promote Tanzanian tourism is to be made in Arusha starting in May 1997.

ASIANS
Uganda’s formidable President Museveni, on a state visit to Tanzania on September 21, lectured the Dar es Salaam business community on ways in which Tanzania could profit from Uganda’s highly successful experience with investment and revenue collection. “I understand that some people here don’t like Indians” he said. “They argue that they are corrupt and bribe the indigenous people. If the indigenous accept bribes from them they are stupid (applause) …. if you don’t want Indians here I’m ready to take them to Uganda ….. five years ago Uganda collected $40 million in taxes; this year I am expecting US$900 million …. suppose I had 1,000 Indians like Madhvani in Uganda, I would be generating US$36 billion annually in taxes and Uganda would become a donor nation!”.

EAST AFRICAN COOPERATION – MANY POSSIBILITIES

At another meeting in London on November 20, under the auspices of the Royal African Society, the three East African High Commissioners in London talked about East African cooperation. One speaker said that a possible future benefit of such cooperation might be the appointment of only one High Commissioner for the three countries!

Tanzania’s High Commissioner Dr. Abdul-Kader Shareef put some flesh on the bones of the proposed cooperation arrangements now being actively discussed at the headquarters office in Arusha by describing some of the possibilities – an easing of previously restricted social interaction across borders; common strategies on foreign debt; the creation of a critical mass in terms of the market; cooperation on environmental issues – the Serengeti and the Maasai Mara were one continuous ecosystem; the pooling of telecommunications facilities; stemming the loss of professionals; the assembly of the huge capital requirements if energy resources were to be properly developed; and the advantage of a unified approach when dealing with the issue of instability in neighbouring countries.

IMF APPROVES BIG LOAN

As if to reinforce the other favourable developments, Tanzania’s financial crisis was greatly eased by the decision on November 8 of the IMF finally to approve Tanzania’s Enhanced Structural Adjustment Facility (ESAF) totalling US$234 million.

World Bank Resident Representative in Dar es Salaam Ron Brigish was quoted as saying that this could open the floodgates for balance of payments support and donor contributions to Tanzania’s development. Two weeks later the British government announced that it had approved a £24 million grant of programme aid for imports support, civil service reform costs and budgetary support.

The IMF loan is to be released in six equal half-yearly instalments over a three year period. The funds are being used to boost foreign exchange reserves in the Central Bank to enable Tanzania to purchase urgently needed medical and educational supplies.

Tanzania was said to be hoping that a beginning might be made in new international debt relief programmes at the next Paris Club meeting scheduled to be held in January 1997. Although revenue collection had improved and was totalling Shs 44.3 billion each month, some Shs 20.0 billion of this had to be paid in debt servicing. with government personnel needing to be paid, only Shs 4.7 billion was left each month for all other expenditure although the minimum needed was Shs 15 billion per month.

The World Bank announced on November 7 that it had established a ‘Heavily Indebted Poorest countries Trust Fund’ (HIPC) to be managed by the IDA to provide debt relief. Forty one countries being considered for possible assistance have been placed in four categories. Tanzania is in the second group i.e. ‘Possibly stressed’. Countries in the first group containing Burundi, Sudan and Zaire were described as ‘Unsustainable’. ‘Sustainable’ countries included Ghana, Kenya and Yemen.

BUSINESS NEWS

Exchange Rates (December 1):
US Dollar = T Shs 605-615
£ Sterling = T Shs 850-1000

Although there was some opposition and there had been delays in presenting the matter to parliament the Bill ending the 29- year old state MONOPOLY OF INSURANCE was finally passed on November 5. The National Insurance Company (NIC) and the Zanzibar Insurance Company are to remain wholly owned by the two governments but they have been given two years ‘to clean their slates’ – Daily News.

The Tanzania Revenue Authority has begun publishing lists of registered TAX CONSULTANTS, the only persons authorised to offer advice on taxation matters. Persons who have been refused registration have been instructed to stop practising immediately – Business Times.

The LOANS AND ADVANCES REALISATION TRUST of Tanzania which was formed in 1991 to recover the bad debts of 93 firms (with a total debt to banks of $45 million) has brought in $9.0 million from sale of the assets of 59 of the firms – the East African.

The National Agricultural and Food Corporation (NAFCO) which has a new board of directors is now producing 50% of Tanzania’s requirements of WHEAT. with 38,000 tonnes in stock, the Chairman requested the government to stop importation of foreign wheat which was destroying NAFCO’s market Daily News.

The government has repaid £13.6 million to the Commonwealth Development Corporation (CDC) out of a £20.0 million LOAN RESCHEDULED in 1990. CDC disbursed £8.0 million in 1995 for investments in power generation, agro-processing, tourism and financial institutions – Business Times

FUEL PRICES were increased by about 6% on September 1 due to the dwindling value of the shilling and increased prices of crude oil. Regular gasoline went up from Shs 335 to Shs 350 per litre – Daily News.

Five NEW COMMERCIAL BANKS were due to open before the end of 1996 to add to the fifteen already operating. The new banks are the Exim Bank, the Wall Street Banking Corporation, savings and Finance Bank, The Akiba Commercial Bank and the Mercantile Bank of Pakistan – East African.

From January 1, 1997 the MONOPOLY ON THE IMPORTATION OF REFINED PETROLEUM PRODUCTS held by the Tanzania Petroleum Development Corporation (TPDC) is to be removed. Tanzania has long opposed this move which the World Bank had been pressing for (the refinery was considered outdated and inefficient) because it considered the refinery as of strategic economic importance. It was hoped that this change in policy would reinforce international confidence in President Mkapa’s commitment to free market economic policies – Africa Analysis Tanzania is to benefit from THREE NEW CREDITS from the World Bank/International Development Association (IDA): $26.3 mi 11 ion to improve the management of water resources; $ 31.1 million for the second phase of a national agricultural extension project and $35 million for Lake victoria to help conserve its biodiversity and genetic resources; this project includes assistance to buy equipment for 25 to 30 new irrigation networks and moves to streamline the operations of organisations managing the Pangani and Rufiji river basins – World Bank News.

Tanzania Breweries Ltd. (TBL) whose production went up 56% in 1995 following its entry into a JOINT VENTURE AGREEMENT with South Africa/s Indol International, was hoping that by Christmas 1996 its best selling brand ‘Safari Lager’ would be on sale in Kenya. It has also started selling on the local market a new brand with an alcohol content of 4.45% per half litre bottle – ‘Kilimanjaro Premium Lager/. Tanzania consumes some 20 million crates per year of which half comes from TBL, a quarter from Kenya and the rest from smaller producers – the East African.

Zanzibar could become an OFF-SHORE BANKING CENTRE – the first such tax haven in Africa. A locally registered mining company, Tanzalite International, is said to be in discussion with the Zanzibar Investment Promotion Agency on the possibilities – Business Times.

Dar es Salaam held its first MOTOR SHOW from October 13 organised by the 21-member Tanzania Motor Traders Association (TMTA). Chairman Pravin Mevada said that it had been a success and business enquiries had been received. Asked about possible future car assembly in Tanzania Mr Mevada said that with current sales volumes it was unlikely to be economic. The Vice-Chairman of the TMTA has criticised what he described as the ‘dumping’ of second hand cars; Tanzania imported only 4,600 new cars in 1995 compared with 41,400 second hand cars. – Daily News and the Express.

There was a drop in COFFEE PRODUCTION in Tanzania in the 1996/97 season about 42,000 tonnes compared with 53,000 tonnes in the previous season. Regional figures: Mbeya, Mbozi, Mbinga and Songea 12,000 tonnes; Kilimanjaro about 15,500; Bukoba some 13,000 tonnes. Planting of new seedlings was necessary if production was to be revived – the East African (November 11).

THE 1996/97 BUDGET

Tanzania’s Finance Minister, Professor Simon Mbilinyi, said in his budget speech on June 20 that government would spend Shs 758,896 million in 1996/97 compared with estimates of Shs 631,906 million in the previous year – an increase of 20.8%. Government would collect Shs 550,192 million domestic revenue; the balance of Shs 208,704 million would be raised through a series of sources which included foreign loans and grants (Shs 187,537 million – an optimistic figure, non-bank borrowing (Shs 24,256 million), additional revenue from taxes and nontax revenue (Shs 13,563 million). There are no plans for ‘bank borrowing’ which is really equivalent to printing money. He said that he had two main aims in his 1996/97 budget – to broaden the tax base and to protect local industries. Shs 40 out of every Shs 100 of expenditure was to service foreign debt amounting to seven billion dollars. This would mean shedding 200 out of 1,500 development projects.

Earlier, Planning Minister of State Daniel Yona had stated that he was optimistic about restoring macro-economic stability by lowering the rate of inflation from 23.5% to below 10% within two years; exports had gone up from $519 million to $683 million last year but the government had had to borrow Shs 86.4 billion compared with Shs 56.8 billion the previous year to finance the budget deficit.

HIGHLIGHTS OF THE BUDGET

– increase in the minimum wage for the civil service from Shs 17,000 to Shs 30,000 but present allowances are consolidated in the new rates and income tax will be charged;

– higher taxes on imported beer; local beer tax remains at Shs 280; beer from the Common Market for Eastern and Southern Africa (COMESA) countries Shs 345 per litre; from other countries Shs 745; Konyagi up from Shs 300 to Shs 400 per litre; imported spirits from Shs 300 to Shs 500; soft drinks from Shs 32/80 to Shs 34; cigarettes up by 20%;

– to protect the domestic textile industry higher taxes on imported woven fabrics and garments;

– increase of 20% on registration and transfer of motor vehicles;

– to help education substantial reduction in duty on packaging materials; abolition of duty and sales tax on newsprint used for printing newspapers, books and exercise books used for educational purposes – increases in duty on completely built buses, lorries and bicycles; sales tax on local tyres and on computers reduced from 25% and 30% respectively to 10%;

– reintroduction of tax on traditional exports including minerals:

– 15% income tax on landlords charging more than Shs 500,000 per month

– new taxes on security services, car rentals, air charters, quantity surveying, private valuers, driving schools, reworked jewellery;

– tax abolished on goods imported by religious institutions for educational, health and water supply projects;

REACTIONS

The budget was criticised by many in the business community which had itself prepared detailed budget proposals for the Minister’s consideration. They had proposed doing away with a myriad of taxes which cost more to administer than the benefit they brought; to introduce punitive measures for those breaking the law; give an amnesty for earlier defaulters because their cases could clog up the courts for years and cause yet more corruption; and encourage by tax incentive new investment in priority areas. The Business Times expressed the disappointment of the business community – ‘the difference between this budget and past budgets is that the business community was interested in what the Minister of Finance was going to say. This was the first time that there was a government which actually meant it when it said that it wanted to fight corruption, encourage the free market and the private sector. In the past Ministers of Finance had pretended that they were administering a budget and businessmen had pretended to pay their dues. But this budget was too conservative, designed primarily to appease the IMF and World Bank and lacked incentive for investors.

THE DONOR CONFERENCE IN PARIS

At the Consultative Group meeting in Paris in late July donor nations pledged about $1.2 billion in aid ($200 million more than originally planned) of which about $560 million could be made available during 19976/77. Delegates welcomed the progress that had been made during the second half of the 1996 financial year with structural reforms and the start made in restoring fiscal stability. But there was some ambiguity in the statement made at the end of the meeting. Specific conditions were laid down before the aid could start being disbursed. These included sustaining macro-economic and fiscal stability, further progress in reform and measurable improvements in governance (presumably in Zanzibar). A particularly contentious issue was the liberalisation and privatisation of the utility companies.

KILWA – FROM DECAY TO DEVELOPMENT

Kilwa 1996

Kilwa 1996

Above: The German-built boma at Kilwa Kivinje as it is today Below: one of the well heads or ‘Christmas trees’ at Songo Sonqo which are now being brought back into use.

Historic Kilwa Kisiwani, decaying Kilwa Kivinje, small town Kilwa Masoko with its unusual little market and the nearby Songo Songo island may never be the same again in the light of all that is now going on in this long neglected part of Tanzania:

– President Mkapa has made a promise that the main road from Dar es Salaam to Kilwa, which must be one of the worst in the world, will be fixed during his term in office;

– If it is, the present occasional visitor to the ancient ruins on the island could become more like a flood because the excavations of the ruins at Kilwa Kisiwani remain in good condition and full of interest;

– a rehabilitated and expanding fish freezing and packing plant at Kilwa Masoko could, if the local fishermen respond and if the government can gain control of the illegal fishing now taking place, benefit thousands of local fisherman all along the coast;

– a long planned fertiliser manufacturing plant – the Kilwa Ammonia Company (KILAMCO) appears to be back on the drawing board; Minister of Energy and Minerals William F Shija announced in August that discussions were continuing with M W Kellog of the USA and IFFCO of India on possible financing because the biggest development of all – the Songo Songo ‘Gas to Electricity project’ is now fully financed and being developed apace.

– new efforts are being made by an Irish company which has taken over exploration following the numerous efforts over the years of such companies as BP, AGIP, AMOCO Shell, Shell Company to find viable quantities of petroleum through two wells being drilled at Mandawa, 30 kms inland from Kilwa; drilling equipment has been flown in by helicopter.

But visitors to Kilwa Kivinje must be saddened by the sight of a town seemingly forgotten by the world. The main street comprises dirty and derelict buildings on both sides of the road but the saddest sight of all is the old German Boma. Heavy rain earlier this year caused further damage to the building which now looks forlorn indeed. The old mango tree just outside town where the Germans hanged leaders of the Maji Maji rebellion was burnt down last year but the government has replaced it with a small monument.

Following the collapse of a parastatal fishing company and the failure of the enterprise which succeeded it, a third attempt to establish a viable cleaning, processing and freezing plant is now under way at Kilwa Masoko and is showing considerable promise. Seithmar Ocean Products Ltd., the most important local industry, is employing 100 people and is shipping significant quantities of prawns, lobsters, crabs and sea fish to Spain and Portugal. It supplies local fishermen with outboard engines, nets, and ice and then collects the fish they are able to catch. The products then have to travel with difficulty in massive 20-ton refrigerated trucks at -20 degrees C along the appalling road to Dar es Salaam. The operation needs lots more fish; it is also greatly handicapped by the widespread dynamiting of fish stocks by people from outside the area and the government’s inability to stop it.

THE GAS TO ELECTRICITY PROJECT

If all goes well a bright orange smokeless flame at the top of a 100ft. flare stack will pierce the night skies of Songo Songo island later this year and signal the beginning of what must be one of the biggest, if not the biggest, development projects under way in East Africa at the present time. The gas field was discovered in 1974 and later relinquished by AGIP. It was further developed from 1986 to 1985 by the Tanzania Petroleum Development Corporation (TPDC) and 9 wells were dug of which 5 are producers.

The company now formed to develop the field is SONGAS. Its Assistant General Manager Gary Boucher told TA that all the funds needed ($300 million from the World Bank, TransCanada Pipelines, Ocelot Energy Inc., the government and several other donor agencies) were now available, subject to final contracts. Although there had been a six month delay caused by the need to complete a number of supplementary agreements, everything was now ready to start and the whole thing should be completed by the end of 1998.

This complex project will finally bring into use three offshore and two onshore wells. The well heads constructed at the time and known in the trade as ‘Christmas trees’ are likely to have become heavily corroded over the years and the first job, (being undertaken by the Canadian companies Ocelot Tanzania Ltd and TCPL Tanzania Inc. on behalf of TPDC will be to test, repair and increase the tubing size on two wells to increase the gas flow. Then the new company which has been formed to implement the project – SONGAS – will be able to start work on building two 35 million cubic ft. processing units on Songo Songo island; it will construct water and power supplies, roads, an airstrip and wharves on the island; build a 25 km 12″ diameter underwater pipeline to Somanga Funga (bypassing Kilwa to the north – see below); lay a 207 km underground pipeline from there to the Ubungo Power Plant and the Wazo Hill Cement Plant in Dar es Salaam; then will follow the purchase of an additional gas turbine generator to add to the four already owned by TANESCO at Ubungo and thus produce 150 megawatts of electricity to fuel Dar es Salaam’s growing industries. The gas supply is expected to last for at least 50 years.

‘SERIKALI YAONYWA’

‘The Government is Warned’. This was the front-page headline in ‘Taifa Letul on August 11 as indignation about the fact that the gas was to be sent to Dar es Salaam and not used directly for the benefit of the southern Region of Tanzania. Wananchi wa Kusini wasema kunyang’anywa gesi hiyo ni kufyekwa miguu na mikono….Wadai gesi hiyo ni zawadi toka kwa Mungu (Southern people say that to be deprived of this gas is like sweeping away their arms and their legs ….. they claim that this gas is a gift from God) the article went on. TA understands that the reason why the gas has to be piped first to Dar es Salaam and then converted into electricity is the availability in the capital of numerous industries able to use the gas directly – something which does not apply to Kilwa or other parts of the Southern region. But a Rural Village Electrification scheme is envisaged for some time in the future.

David Brewin