IGIHE

Category: Economy

  • Tanzania:TRA set to collect 850bn/- in taxes from VIP

    The Tanzania Revenue Authority (TRA) is set to collect over 850.75 billion/- as tax from VIP Engineering and Marketing Limited (VIP) upon successful prosecution of three high profile cases by the latter that have been pending before local courts.

    According to court sources, VIP has lodged Civil Case No. 229 of 2013, which is still pending, against three Standard Chartered Banks (Hong Kong, Tanzania and United Kingdom) and three others defendants before the High Court, demanding 877.56 million US dollars (about 2.02 trillion/-).

    There is another Miscellaneous Commercial case No. 6 of 2003 involving Citibank Tanzania Limited in winding up of Tri-telecommunication Tanzania Limited (Tritel), the first ever mobile service provider firm in Tanzania.

    In this case, the VIP Company demands 199.01 million US dollars (about 457.72bn/-). Records further show that there is Commercial Case Number 16 of 2000 involving two companies, Societe Generale De Survellance (S.A) and SGS (Tanzania) Limited, over a dispute relating to imported rotten rice.

    VIP Company claims 156.40 million US dollars (about 359.72bn/-). In total, the Tanzanian company would be paid 1,232.97 million US dollars (about 2.84 tri/-), that will attract potential 30 per cent corporate tax payable to TRA amounting at 369.89 million US dollars (about 850.75bn/-) while VIP would remain with outstanding claims of 863.08 US dollars (about 1.99tri/-).

    International Independent Consultant with VIP Company, Mr James Rugemalira, declined comment when contacted to comment on the issue.

    However, the ‘Daily News’ has reliably been informed that the delay by the Commissioner General to refund to VIP undisputable over paid capital gains tax amount of USD 14,481,934.75 out of the total claim of USD 24,074,471.65 was making the company fail to effectively prosecute its long outstanding tort claims in the three separate court cases.

    Such cases amounting to over USD 1.2 billion that has a corporation tax revenue generation potential to TRA of about USD 370million. According to taxation experts, a capital gains tax is a tax on capital gains or profit realised on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realised on the sale of the capital asset.

    The most relevant capital gains arise from the sale of shares, bonds, and property. If, as VIP invested USD 13,500,000 in its 30 percent shares in Independent Power Tanzania Limited (IPTL) and sold them to Pan African Power Solution Limited (PAP) for USD 75,010,000, the capital gain is USD 61,500,000.

    This is the difference between cost of investment and the price realised on sale of shares.

    In its decision dated February 12, 2014, the International Centre for Settlement of Investment Disputes (ICSID) in ICSID Case No. ARB/10/20 noted that VIP paid USD 13,500,000 for its 30 percent shares in IPTL.

    On January 23, 2014, the TRA collected from VIP Capital Gains Tax on sale of its 30% Shares in IPTL to PAP amounting to USD 23,629,434.75. VIP is claiming from TRA refund of USD 24,076,471.65, including cost of maintenance, interest and costs of the Appeal.

    VIP is now only requesting that the undisputable amount of USD 14,481,934.75 be paid now and the balance may be adjudicated upon by the Tax Revenue Appeals Board.

    The amount of USD 14,481,934.75 includes 30 per cent capital gains tax amounting to USD 1,128, 543.75 USD on default interest of 3,761,812.50 USD, which by consent was ordered by the High Court before Judge John Utamwa not to be paid and was consequently not paid by PAP to VIP.

    TRA Commissioner General, Alphayo Kidata.

  • Agricultural performance remains stagnant in 2015

    The National Institute of Statistics of Rwanda (NISR) has revealed that Rwanda’s Gross Domestic Product 2015 (GDP) grew by 6.9% , about Rwf 5,837,000,000. Statistics from NISR indicate that agriculture sector grew by 5% industries by 7% and services by 7%.

    The Director of NISR, Yusuf Murangwa, said that services sector continues to lead other sectors in contributing to GDP, dominating with 47%; agriculture 33% and industries 14%.

    In the previous three years, agriculture, forestry and fisheries all, together grew by 5% in 2010 and 2011; 6% in 2012; 3% in 2013.

    The Minister of Finance and Economic Planning, Amb. Gatete Claver shared said that Rwandan agriculture had stagnated for far too long, but efforts are beginning to bear fruit.

    “As you know, our policies target Vision 2020.We wanted to increase agriculture by 8% from 5%.We currently want to identify problems affecting agriculture. The general challenge is that our agriculture is mostly rain-fed. Agricultural harvests increase when it rains and decline in dry seasons. So, the matter cannot be addressed at once. We are putting efforts in irrigation but the system cannot expand across the country in one financial year,” he said.

    He noted that more efforts are being directed towards the use of fertilizers in addition to others like land consolidation.

    He noted that the government is seeking ways of increasing the value of harvests through establishment of industries.

    Rwanda is currently self sufficient in food.

    The Minister of Finance and Economic Planning, Amb. Gatete Claver

  • S. Sudan feels pinch of economic crisis as prices of goods shoot up

    South Sudan finds itself in a severe economic meltdown, after it devalued its currency last December in an effort to stabilise the prices of food commodities.

    Joice Yiki, who sells beans at Juba’s Konyokonyo main market, has considered closing down her business due to the high dollar exchange rates.

    Raising sufficient hard currency to buy imports from Uganda remains a big challenge for her.

    “If I exhaust my current stock, I will go home and rest because I have no choice, since I purchase the beans from Kampala, Uganda,” she said.

    Most of the goods sold in the South Sudan capital are imported from neighbouring Uganda, Kenya and Sudan.

    A 12kg bag of beans currently costs SSP450, compared with SSP70 before the local currency took a beating.

    A 50kg of flour now goes for SSP800, compared with SSP75 previously.

    The official exchange rate stood at $100 for SSP295, at the Central Bank and $100 for SSP360 at the commercial banks. The black market sold $100 for SSP400, the rate Ms Yiki said was preferred by ordinary citizens like herself.

    “Imagine! What is the rate of the dollar against the pound today?

    “It is very worrying and hurting to exchange $100 for SSP3,200 at the Central Bank and SSP3,600-4,000 per $100 on the black market,” she said.

    ARMS PURCHASE

    According to Catholic Bishop Santo Laku Pio, prices of good started rising steeply when the government decided to use billions of its reserves to buy arms, especially from China.

    Bishop Pio said the government’s move was a “great sin”.

    “The problem is the cost of living caused by this erratic exchange rate. Everything is going up daily.

    “If the dollar goes up today, you are forced to raise your prices and the cost of food goes up,” he explained.

    According to a 2014 UNDP report, the socio-political and economic situation in South Sudan took a severe knock with the eruption of violence in December 2013.

    The report said the turn of events had reversed the significant gains in peace and security achieved since independence in 2011.

    The economy, the UNDP report explained, deteriorated with inflationary pressure, commodity price swings, exchange rate volatility and increasing domestic debt.

    SECURITY SPENDING

    Foreign exchange reserves were reportedly largely depleted and the budget ran large deficits owing, among other things, to heavy spending on the security sector.

    According to the report, the conflict in South Sudan had caused significant declines in domestic and oil revenues, limiting the budget allocation to human development initiatives.

    The government was reportedly facing budgetary constraints, forcing it to resort to printing money after it devalued its currency last year.

    Last week, Community Empowerment for Progress Organisation Executive Director Edmund Yakani said the decision to devalue the South Sudanese pound could be defended but its timing was realistic.

    Mr Yakani explained that the current state of the South Sudan economy offered nothing to the local market that could justify the devaluation.

    “This idea has been tried in other parts of the world, but with limited success. The manner we executed our devaluation cannot give us any success,” he said.

    South Sudanese civilians flee fighting in Malakal on February 18, 2016, where gunmen opened fire on civilians sheltering inside a United Nations base.

  • Nigeria’s NNPC ‘failed to pay’ $16bn in oil revenues

    Nigeria’s state-owned oil company has failed to pay the government $16bn (£11bn) in a suspected fraud, according to an official audit.

    The Nigerian National Petroleum Corporation (NNPC) provided no explanation for the missing funds, the auditor general told MPs.

    Oil revenue accounts for two-thirds of the government’s funding.
    President Muhammadu Buhari has promised to crack down on corruption since coming to office last May.

    This finding by the auditor general, while shocking, is not a surprise.

    Officials from the previous administration allegedly indulged in wholesale corruption where billions of dollars of oil funds simply disappeared.

    When the then central bank governor Lamido Sanusi pointed out that billions of dollars were missing from the treasury, he was sacked from his job.

    Nigeria’s oil reserves should have been blessing for Nigeria to be used to build infrastructure and invest in social services.

    Instead, it has been a curse, a lubricant that has produced massive corruption and dysfunctional governments.

    President Buhari was elected on a platform of cleaning up the country’s notoriously corrupt politics.

    But some officials from the previous administration accuse him of using corruption to pursue a political vendetta.

    The state oil giant has been mired in corruption allegations and losing money for many years.

    Last month, the government announced that the NNPC would be broken up into seven different companies.

    A separate audit ordered under former President Goodluck Jonathan and carried out by global accountancy firm PwC, found that the NNPC had failed to pay the government $1.48bn between January 2012 and July 2013.

    It did not provide a total figure for how much revenue the NNPC should legally have handed over to the treasury.

    However, the company said that it could not vouch for the integrity of the information it was given when it conducted the audit.

    Nigeria is Africa’s biggest oil producer, but the economy has suffered because of the recent decline in the price of oil.

    Nigeria is Africa's largest oil producer

  • European Central Bank reveals strong stimulus plan

    European Central Bank reveals strong stimulus plan

    The ECB cuts main interest rate to zero and unveils new measures aimed at encouraging banks to increase lending.

    The European Central Bank has cut its main interest rate to 0 percent from 0.05 percent, in a surprise move aimed at boosting eurozone economies.

    The bank, known as the ECB, said on Thursday that it will expand its asset-buying programme and will increase its monthly bond purchases from €60bn to €80bn ($67bn-$89bn), pushing more newly printed money into the economy.

    The bolder-than-expected stimulus package also included a reduction in the interest rate on deposits held by banks at the ECB to minus 0.4 percent, from minus 0.3 percent.

    The scheme also includes long-term cheap loans of up to four years to help support banks.

    Mario Draghi, the ECB president, said the measures would “reinforce” the momentum of the eurozone economic recovery and “accelerate” the return of inflation to close to, but below, 2 percent.

    Yet, European stocks markets closed sharply lower as investors appearred unconvinced by the stimulus measures.

    In Germany, DAX ended the day down by 2.3 percent after initially rising on the ECB announcement, while France’s CAC 40 fell by 1.7 percent.

    The euro, which tends to weaken with more stimulus, was 1.6 percent higher at $1.1172, having earlier tanked by 1.2 percent.

    Lending push

    The negative rate on deposits – in essence, a tax on bank’s excess funds – is aimed at pushing banks to lend rather than leave money at the central bank.

    More lending would promote growth and push up inflation from a worryingly low annual rate of minus 0.2 percent.

    The rate cut and the other measures to expand stimulus underline how far the ECB sees itself from achieving its goal of inflation of just under 2 percent.

    Low or negative inflation has raised fears that Europe may become stuck in deflation, in which stagnant prices weigh on wages, investment and economic growth for years.

    Draghi, judged to have disappointed markets in December with stimulus measures below expectations, said more action was needed because the eurozone recovery risked being dampened by the slow-down in emerging markets.

    “With today’s comprehensive package of monetary policy decisions, we are providing substantial monetary stimulus to counteract heightened risks to the ECB’s price-stability objective,” he told a news conference.

    Yet, Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown, said it was hard to see how even lower interest rates and an increase in the bond-buying programme can been seen as a positive development.

    He says that the fact the ECB is “still pursuing such extreme monetary policy paints a depressing picture of the European economy”.

    Khalaf added that the markets “are beginning to question what central banks have left in the locker if the global economy slips back towards recession”.

  • MINAGRI to address Bugarama valley flooding

    The Ministry of Agriculture and Animal Resources (MINAGRI) has revealed a plan to undertake a survey aimed at seeking to sustainably resolve the matter of rivers flooding Bugarama valley.

    Rice farmers in Bugarama valley have been lamenting over rivers flooding and ravage fields of rice .These Rivers devastating their lands are Rubyiro, Katabuvuga among other rivers surrounding Bugarama valley.

    Nkundineza Emmanuel, one farmer who talked to IGIHE said that rivers deposit stones in their fields which destroy their land.

    The permanent secretary in MINAGRI, Innocent Muhayimana revealed a plan of undertaking a study to solve the matter. He said this on March 6, 2016 when he visited Katabavuga River.

    “We are going to extensively undergo a study aiming at solving the matter of water and other mountains debris flowing to rivers and deported to fields. The delegation will help us to find what can be done to counteract such erosion affecting Bugarama valley,” he said.

    He said that the study must be undergone this year to be implemented.

    The vice mayor of Rusizi district in charge of development , Innocent Musabyimana has advised them to seek a machine facilitating to process debris from one of the flooding rivers in this Autumn season.

    Katabavuga river

  • Poor preservation facilities hinder Rusizi fishing progress

    Lack of fish preservation facilities is affecting fish production and profitability among the fishing population on Lake Kivu and fish traders in Budiki market of Gihundwe sector. Fish-mongers say that once they fail to clear off the fish stock on the same day, they are certain of making losses since the fish just rot.

    They have appealed to Ministry of Trade and Industry to provide either cooling facilities, drying technologies or fish-milling facilities so they can add value on the catch. The business is dominated by women.

    “We already knowledge of how we can preserve our fish for sale to distant markets but we have no means of harnessing the technologies. The project would have started if we had a partner,” said Simbarikure, one of the fish mongers.

    The MINICOM officer in charge of cross-border trade Rurezamfizi Apollinaire promised to advocate for the provision of fish preservation facilities to the people of Gihundwe cell.

    A total of 538 men and women come together in three cooperatives in Gihundwe cell selling fish amounting to 4 tons every week, mainly to Democratic Republic of Congo.

    Fish traders in Budiki market of Rusizi district

  • Consume more local products, produce quality—MINICOM

    Consume more local products, produce quality—MINICOM

    Rwanda is putting in more efforts to support the Made in Rwanda program as a way of addressing challenges caused by the balance of trade deficits.

    Statistics from the National Institute of Statistics (NISR) indicate that from January to September 2015 Rwanda imports were valued at USD1, 384,310,000 and USD426,200,000 for exports.

    During the launch of Made in Rwanda expo held at the Gikondo Private Sector Federation (PSF) grounds on Friday, the Minister of Trade and Industry, François Kanimba said that ‘the program is aimed at mobilizing Rwandans and foreigners to use products made in the country to offset bad trading patterns.

    Kanimba said MINICOM’s survey findings last year indicate that Made in Rwanda program will enable the country save up to 18% of money spent on imports.

    “We have realized that we have the ability of reducing expenditures on imports to the tune of almost USD450 million through import substitution by producing locally,” said Kanimba.

    He said that production of cement and other construction materials will play a big role in reducing the gap in trade deficit. He gave an example of Cimerwa which has now turned to mass production since it increased six folds its production to satisfy the Rwanda market.

    Some Rwandans say that made in Rwanda cement is expensive which deters them from buying it. Industry captains argue that products are expensive because of high transport costs and inadequate capacity to manufacture in bulk within a short time.

    The director of Hollanda Fair Food, a company which makes Chips, told IGIHE that some Rwandan products are expensive but have unique characteristics and high quality.

    He said the government of Rwanda shall continue supporting manufacturers and identify why foreign products are preferred so that, if they are policy related, they can be pragmatically addressed.

    Promoting SMEs can have an impact of saving USD 124 million in import substitution.

    The chairperson of Private Sector Federation, Benjamin Gasamagera has requested Rwandans to consume more home products and urged industries in Rwanda to produce in a way that meets international standards.

    Minister Kanimba with the chairperson of Private Sector Federation,Benjamin Gasamagera at the the exhibition of Chips

  • MPs, BNR discuss high interest rates

    The National Bank of Rwanda says that much as they realize that interest rates in Rwanda are high and slow down private local investments, they cannot superimpose a ruling rate as it is determined by market forces.

    In a discussion held between BNR and MPs to discuss monetary management policy, parliamentarians realized that there’s a direct correlation between high lending rates and increasing public auction of mortgaged property, as borrowers fail to service their loans in stipulated time frames.

    Hon Emmanuel Mudidi, an MP, said that high interest rates are in most cases attributed to the risks involved in lending.

    The BNR governor, John Rwangombwa, explained that their involvement in determining lending interest rates can destabilize financial sector performance.

    “The bank only sets interest rate ceiling based on source of finance and required benefits. BNR ensures banks build channels through which people can make deposits. We have few financial institutions in Rwanda which can provide long term loans such as Rwanda Social Security Board and some insurance companies, so it’s not possible to put a ceiling on those that provide short term loans,” he said.

    Rwangombwa highlighted that when the demand for loans is higher than the supply, market forces set a high interest rate.

    The lending interest rate currently stands at between 15% and 16% .

    Rwangombwa revealed that they are working closely with banks to reduce non-performing loans, reduce lending interest rates since persistent high interest rates to destabilize the banking sector.

    BNR governor, John Rwangombwa

  • Rusizi farmers demand maize mill for value addition, eliminating post-harvest losses

    Maize famers in Bugarama agro-zone, Rusizi district, have called on the authorities to avail them with maize milling plants to enable them add value to their produce for sale and own consumption, instead of offering it cheaply to middlemen who return and sell to them expensive processed flour.

    “Establishing a maize processing plant would motivate farmers to increase the yields, enable easy obtainment, value addition, avoiding post-harvest waste and better prices,” said one of the farmers, Mbarubukeye Claver, in an exclusive interview with IGIHE.

    The agronomist of Rusizi district, Marie Alice Bayizere, says the district administration will keep advocating for investors to establish the said maize mill.

    “There is no maize mill in the area; but farmers should not seek for its establishment from the government but from private investors who should be convinced of the quantities and quality of maize produced in the area,” says Bayizere.

    Maize farming in Bugarama valley is practiced by farmers from Nzahaha sector, Bugarama, Muganza, Gikundamvura, Nyakabuye and Gitambi sectors with members working together in different cooperatives.

    Rusizi farmers demand maize mill for value addition