THE ZANZIBAR AGREEMENT

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After some initial delay, implementation of the CCM-CUF Agreement of October 10 2001 (TA Nos. 71 and 72) is proceeding well. An amendment to the Zanzibar constitution passed by the House of Assembly allows President Karume to establish a new Electoral Commission including opposition members and to appoint two new opposition MP’s to the Assembly. Protests by other small parties (none of which has had any success in Zanzibar elections) that they were being excluded from these arrangements by CUF have been rebuffed by the latter on the grounds that it was CUF which signed the agreement and members of CUF who went to jail, were killed or fled into exile last year after protests in the streets against the election results.

Bye-elections in the 16 seats in Pemba from which elected CUF MP’s were expelled (following their boycott of the Assembly) and the one vacant CCM seat arising from the appointment of Dr Shein, a former Zanzibar MP as Vice President of Tanzania, have been scheduled for next March.

BUSINESS AND THE ECONOMY

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Exchange rates: £1 = Shs 1,500 US$1 = Shs 960

TEN GOOD REASONS
Speaking at the inaugural session of Tanzania’s International Investors Round Table, in Dar es Salaam on July 17, an initiative supported by the World Bank and the IMF which seeks to improve the investment climate in Tanzania, World Bank President James Wolfensohn said that the Bank supported President Mkapa’s determination to stay the course, encourage private investment and resolutely address the AIDS crisis in the country. President Mkapa gave Mr Woolfensohn ten reasons why foreigners should invest in Tanzania – political stability, correct economic and fiscal policies, abundant resources, investment incentives, unrestrained transfer of capital and profits, investment guarantees, settlement of disputes, the one-stop Tanzania Investment Centre (TIC), Tanzania’s qualified access to Europe and the USA’s AGOA and its geographical location which enabled it to reach a market of over 250 million people in East, Central and Southern Africa. Mr Wolfensohn then added an 11th attribute – President Mkapa’s able leadership. – The East African.

BUDGET SUMMARY
Finance Minister Basil Mramba presented his budget for 2002/2003 on 13th June. It was addressed primarily to the weaker sectors of the economy such as agriculture (allocation increased by 101%) and poverty reduction programmes. Investors’ interests were covered by reduced taxes on imported raw materials and on capital and interest on dividends. He included measures to raise the civil service minimum wage to Shs 53,130 but tax exemption on civil servants’ vehicles was stopped. He announced the launching of an Export Credit Guarantee Scheme and said that taxes on cement, aviation fuel, matches, casinos, land, tyres and bicycles were to go down while the road toll would go up. The inflation rate was targeted at 4.25 per cent this year. Foreign reserves would pay for importations for six months.

Four foreign firms have submitted bids for leasing and managing Tanzanian Railways: Comazar Consortium (Great Lakes Railways) from South Africa, Geneses and Wyoming Inc (USA), Canac (Canada) and SNCF (France). Later this year the four pre-qualified bidders will be invited to submit their plans for leasing and managing the network. The winner is expected to be announced in September – Mtanzania.

Mwananchi (August 1) reported that two of the three firms bidding for the leasing of the Dar es Salaam Water Corporation (DAWASA) had withdrawn as they were not happy about the conditions of the lease and the state of the Corporation. This left BiWater from UK in partnership with Gauff Ingenieure of Germany as the only bidders.

Bill Gates of Microsoft, the world’s richest man, has agreed to become a special goodwill ambassador for Tanzania and help to persuade fellow chief executives of some of the world’s top companies to invest in the country – Daily News.

AIR TRAFFIC CONTROL

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When Britain’s Development Secretary Clare Short arrived in Tanzania on 3rd July to face President Mkapa on the controversial purchase by Tanzania of an expensive air traffic control system, the man on the street in Dar es Salaam was expecting fireworks in view of the strongly opposed positions the two had taken on the issue. A few days before her arrival people were reporting that they had seen heavy lorries carrying the equipment to a newly created site at an army barracks. Ms Short had fiercely opposed the deal because of its high cost and had suspended British aid to put pressure on the country to change its decision (see TA No. 72). CUF opposition leader Ibrahim Lipumba had called for publication of a report that had been commissioned by the World Bank which was said to be highly critical of the purchase. He was quoted in Mtanzania as saying that while Shs 36 billion had been spent on the radar, in the last budget only Shs 24 billion had been allocated for rural roads, Shs 31 billion for water and Shs 10 billion for medicine. He said that while attempts were being made by donors to write off debts, the country was now entering into this additional “odious debt”.

Mwananchi reported on 17th July that a CCM MP, speaking in a debate on foreign donors had referred to Clare Short as “that troublesome British lady”. Speaker of the House Pius Msekwa asked the MP to withdraw his remarks and to call the Secretary of State by her proper title. The MP complied.

However, two days after Ms Short’s arrival, the Daily News, under the heading “Short: Radar Row Over”, reported that Ms Short had stated that the row was over and had announced a new six-year aid package to Tanzania in which the UK would provide the country with at least £45 million in budget support. She was quoted as saying “It’s true that we held back £10 million in order that we could get to the point that we are at now -not to punish Tanzania by taking away money but because of a contract that could have been done better … but you can’t undo it”. She added that lessons should be learnt from the experience. However, she said, despite the new agreement, she still believed that the radar was a “waste of money”. Finance Minister Basil Mramba and Minister for Communications and Transport Professor Mark Mwandosya were said to have been all smiles at the end of Ms Short’s visit. “The meeting was highly successful” they said.

BUNYANHULU

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On May 30 Home Affairs Minister, Mohammed Seif Khatib said the government has no objection to anyone going to the Bulyanhulu mines to enquire into the alleged death of small miners (TA No 72). He emphasised however that clearance had to be obtained before embarking on such research. The Minister refuted reports that more than 50 artisanal miners were buried alive at the gold mines in 1996. “No government can ever do such a thing,” said Khatib quoted in Majira.

TANESCO TRIBULATIONS

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The new South African management of the Tanzania Electric Supply Company (TANESCO) caused some surprise on June 11 by issuing a 21-day ultimatum to its customers to settle over Shs 100 billion in outstanding bills. Otherwise they would be disconnected. TANESCO Managing Director Rudi Huysen thanked the 70% of TANESCO customers who paid their bills promptly. Only 10% of Tanzanians had electric power. Others would have to wait a long time to be connected if people refused to pay for the supplies they were receiving.

The South African team had finally entered TANESCO head office on 17th May after protracted resistance from employees who wanted to get their terminal benefits before it took over. The new management has a two-year mandate to Improve TANESCO services before divestiture.

On April 29 President Mkapa had railed against the previous management saying it had failed to deliver, and that was why the government had decided to contract a foreign firm to run the company. The President noted that the decision was accelerated by revelations arising from audits carried out by three renowned international firms which had revealed gross mismanagement and misappropriation within the state-owned company. In the six years from 1995 to 2000 the company had recorded an aggregate loss amounting to more than Shs 125 billion. Another audit company, KPMG Consulting, revealed in its report that 36 per cent of revenue from the pre-paid (LUKU) meter system did not feature in any of the company reports since 1995. The KPGM auditors also revealed that since 1995 the TANESCO Board of Directors had approved tenders worth 5.6bn/-, which were beyond its powers to sanction. The KPGM report also accused the TANESCO management of failure to command revenue collection, poor management of company assets, funds misappropriation and power leakages which could have been contained. President Mkapa further quoted the report as saying that TANESCO did not know the actual number of its customers and that those who featured in its computerised system differed from the number of connected electricity users. “This means that a good percentage of electricity users have been using power without paying a single cent, since they were not being billed,” he said. He conceded that, as of November last year, government had also owed TANESCO some Shs 42 billion.

On July 3 power to the Tanzania Peoples Defence Forces (TPDF) and the Dar es Salaam Water Authority (DAWASA) was cut off. They promptly paid part of their outstanding bills. On 15th July TANESCO disconnected power to hundreds of houses in Zanzibar including those owned by government institutions and departments allegedly for not paying outstanding debts amounting to Shillings 31 billion. Following the success of this programme (people were queuing in TANESCO offices to settle their bills) the company was planning to embark on a campaign against people who have connected electricity to their houses illegally.

THE TEXTILE FACTORY

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The Swahili press reported what papers called ‘a big row’ at the Friendship Textile Mill in Dar es Salaam on May 7 when Minister for Trade and Industry, Juma Ngasongwa, entered into a heated argument with workers. The problem was said to have started when the Minister accused the workers of “being lazy” while asking for a pay rise. One angry worker shouted “bull” and the Minister asked the police to arrest him. In the ensuing melee the meeting was called off and the Minister’s car was surrounded. In the end the arrested worker was released and the Minister was allowed to leave. Friendship is a joint enterprise run by Tanzania and China.

THE MALAYSIAN-FINANCED POWER PLANT

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On June 7 Majira alleged that while the Prevention of Corruption Bureau (PCB) had begun investigating the government’s contract with the Malaysian-financed Independent Power Tanzania Ltd (IPTL) (see earlier issues of TA) it had found that four ministers and one MP had been involved in what it called ‘the shady deal’. The paper said that, while the initial negotiations had been going on, one minister had been offered $200,000 which he had turned down. According to the paper the PCB’s investigation had found a ‘hot potato’ when it seemed that some senior ministers might have been implicated. The PCB was said to have left the matter with President Mkapa to deal with. The Parliamentary Sectoral Committee on Trade had earlier urged the government to take legal and disciplinary action against officials who might have been involved.

The government is now paying Shillings 3 billion per month for electricity from IPTL. A CCM MP said that, as TANESCO was not involved in the IPTL, all blame should be borne by the government. He suggested that the IPTL plant should be bought by the government so as to stop the payment of huge amounts of money every month. The leader of the opposition in the National Assembly Dr Kabourou announced that he was also investigating the matter and might be able to name the ministers involved later.

Meanwhile, Minister for Energy and Minerals Daniel Yona said that 127 villages were supplied with electricity last year.

AGRICULTURE

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Although the cotton buying season in Mwanza region began on June 24 and the crop promises to yield up to 325,000 bales compared with 280,000 bales during the last season, production per acre remains very low -between 250 and 300 kilos per acre. This compares with Zimbabwe which produced 850 to 1,200 kilos on similar land and Australia which was producing an average of 4,000 kilos per acre. Daily News writer Emmanuel Mwero writing on July 4 listed the many problems facing Tanzanian cotton farmers. They found it difficult to get high quality seeds and to obtain insecticides early in order to combat pests. The main problem, however, was the price. Last year it was between Shs 130 and Shs 200 per kilo but this year the highest price was Shs 140. Farmers were said to be demoralised and to be looking to grow alternative crops. The world price has gone down to 32 US cents per pound this year compared with 42 cents last year. In addition, among costs to be borne by farmers are the buying process (Shs 40 per kilo), bank charges (Shs 3), the cotton levy (Shs 10) the district levy (3% of the buying price), and the education levy (5%). Farmers had pointed out that this contrasted with the subsidies given to cotton farmers in other parts ofthe world.

Following a serious outbreak of Fusarium Wilt (Tracheomycosis) in coffee in the Kagera Region, Minister for Agriculture and Food Security Charles Keenja issued an order prohibiting all movement of coffee except where permission had been obtained from an agricultural officer or inspector. Coffee seedlings not resistant were also prohibited.

TANZANITE

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Thirty nine small-scale Tanzanite miners at Mererani, near Arusha, suffocated after an air compressor which was providing oxygen to one of the mines broke down. When the Government stopped mining operations at Mererani in July (a few days later) and gave small-scale miners 30 days to fulfil new conditions to improve safety, some 4,000 miners went on a rampage looting goods worth millions of dollars. They asked why one mine accident should lead to the closure of 300 other mines. Police arrested 15 miners before order was restored. Meanwhile, Tiffany’s in New York and other American jewellers have now resumed purchase of Tanzanite after earlier allegations that the trade was helping to launder money being used by terrorists.

THE KIULA CORRUPTION CASE

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The long running Shs 3.4 billion case against former Works Minister Nalaila Kiula and four of his colleagues continues at its sedentary pace in the Kisitu Resident Magistrates Court in Dar es Salaam with no end seeming to be in sight. As more and more witnesses were brought into the case the Guardian published details. Extracts:

Kiula said he saw nothing wrong in getting a free ticket for his wife to travel with him to Japan paid for by Mitsubishi which supplied vehicles to his ministry. Kiula was going to Japan for a conference.

Former Ministry Permanent Secretary Dr George Mlingwa, the second accused, told the court that he was twice as wealthy as had been alleged by the prosecution. He said that while he was accused of having corruptly obtained Shs 95 million (according to the Prevention of Corruption Bureau) the truth was that his wealth, all of which he had legally acquired, amounted to Shs 187 million which he had earned in various currencies and which would have been more than enough to build the various houses which he was alleged to own.

He explained how his wife had started a business in 1994. He was not able to explain how she had managed to earn more than Shs 300,000 from selling potato chips and cassava, ice-cream and pop-corn. She would explain later when she appeared as a witness.

Later, it was also claimed by the defence that when Kiula and Mlingwa were in office from 1991 to 1995 more trunk and rural roads (4,700 Kms) were built than in the following five years (1,468 kms).