Category: Economy

Tanzania:Dar committed to transform to semi-industrial nation

{Prime Minister Kassim Majaliwa has said the government is committed to develop industrial sector as a strategy to boost growth and propel Tanzania to join the league of middle income countries.}

The Premier told the Oman Minister for Commerce, Dr Ali Masoud Al Sunaidy in Dar es Salaam yesterday that the government was keen to attract private investments to promote industrialization, export and growth in line with the development agenda of transforming the agriculture economy into semi-industrial economy.

“Manufacturing sector is the area we want to strengthen as it will improve the value of our crops and local products and increase more jobs and trade opportunities to our youth.

So I welcome you to invest in the country,” he told the visiting Oman minister who is leading a strong delegation of business community from the Middle East country who arrived in Tanzania on Tuesday for a three-day visit to explore trade and investments opportunities.

He said the government was also improving the energy, transportation and agriculture sectors which would help the nation realize its vision of reaching the middle income status.

He said the government had worked hard for over two decades to put in place conducive investment environment and it offers well balanced and competitive package for fiscal and non-fiscal incentives for large scale investors.

“We offer a wide range of investment incentives just like several other popular investment destinations in the world. And, in some respect we are even more generous and attractive,” he said.

The Prime Minister told the visiting Oman minister that the government would provide necessary support for investors from Oman to invest in various sectors.

Dr Al Sunaidy said the Oman business delegation that comprise of traders and industrialists were pleased with conducive investment environment in Tanzania and were interested to invest in various areas including processing industries, modern farming, port construction and oil and in gas sectors.

“Oman has Salala port which is one of best ports in the world with capacity to handle 45 containers per hour. We have also Sohar port which is famous for manufacturing products and has the capacity to handle 32 containers per hour,” he said.

Port of Salalah is the largest port in Oman. Situated in the Dhofar Governorate, on the Arabian Sea which is on the northern part of the Indian Ocean.

Sohar Port and Freezone is a deep-sea port and adjacent free zone in the Middle East, located in Sohar, Oman, around 200 kilometres northwest of the capital Muscat.

The Minister for Energy and Minerals, Prof. Sospeter Muhongo, said he understood that Oman has made great strides in liquefied natural gas (LNG) technology and said he believed Tanzania would benefit from the technolgy.

He said Oman business community could also invest in fertilizer industries in Lindi and Mtwara regions and could also invest in Bagamoyo, Tanga, Kilwa, Lindi and Mtwara ports.

The meeting was attended by Saud bin Ali al-Raqishi, Sultanate’s Ambassador to Tanzania, Abdul Salam bin Mohammed al- Murshidi, CEO of the State General Reserve Fund, Said bin Saleh al- Kayoumi, Chairman of Oman Chamber of Commerce and Industry (OCCI) and some members of the Omani delegation accompanying Dr al-Sunaidy.

April 15, 2016
Rwanda’s growth remained robust in 2015

{Rwanda’s economic growth has remained robust amidst the deceleration realized in Sub-Saharan Africa. According to figures published in Africa’s Pulse, a World Bank’s biannual analysis of economic trends and latest data for the region, economic activity in Sub-Saharan Africa slowed in 2015, with GDP growth averaging 3.0 percent, down from 4.5 percent in 2014.}

The 2016 growth forecast remains subdued at 3.3 percent, way below the robust 6.8 percent growth in GDP that the region sustained in the 2003-2008 period. Overall, growth is projected to pick up in 2017-2018 to 4.5 percent.

The plunge in commodity prices – particularly oil, which fell 67 percent from June 2014 to December 2015 – and weak global growth, especially in emerging market economies, are said to be behind the region’s lackluster performance. In several instances, the adverse impact of lower commodity prices was compounded by domestic conditions such as electricity shortages, policy uncertainty, drought, and security threats, which stymied growth.

There are some bright spots where growth continued to be robust such in Côte , which saw a favorable policy environment and rising investment, as well as oil importers such as Kenya, Rwanda, and Tanzania.

Delays in implementing adjustments to the drop in revenues from commodity exports and worsening drought conditions are cited as presenting risks to Africa’s growth prospects.

Makhtar Diop, World Bank Vice President for Africa finds stresses a need to adopt new measures addressing the growth deceleration.

”As countries adjust to a more challenging global environment, stronger efforts to increase domestic resource mobilization will be needed. With the trend of falling commodity prices, particularly oil and gas, it is time to accelerate all reforms that will unleash the growth potential of Africa and provide affordable electricity for the African people,” he said.

According to the report several countries are expected to see moderate growth. Among frontier markets, growth is expected to edge up in Ghana, driven by improving investor sentiment, the launch of new oilfields, and the easing of the electricity crisis. In Kenya, growth is expected to remain robust, supported by private consumption and public infrastructure investment.

The projected pickup in activity in 2017-2018 reflects a gradual improvement in the region’s largest economies – Angola, Nigeria, and South Africa – as commodity prices stabilize and growth-enhancing reforms are implemented.

Housing and transport are particularly costly in urban Africa. Housing prices are about 55 percent higher in urban areas of African countries relative to their income levels. Urban transport, which includes prices of vehicles and transport services, is about 42 percent more expensive in African cities than cities in other countries. Like households and workers, firms also face high urban costs. Cross-country analysis confirms that manufacturing firms in African cities pay higher wages in nominal terms than urban firms in other countries at comparable development levels.

To build cities that work—cities that are livable, connected, and affordable, and therefore economically dense—policy makers will need to direct attention toward the deeper structural problems that misallocate land, fragment development, and limit productivity.

“To ensure growth and social development, cities need to become less costly for firms and more appealing to investors,” says Punam Chuhan-Pole, Acting Chief Economist, World Bank Africa and the report’s author. “They must also become kinder to residents, offering services, amenities. All of this will require reforming urban land markets and urban regulations and coordinating early infrastructure investment,” he added.

April 11, 2016
Magufuli pushes for economic prosperity

{President John Magufuli has assured Tanzania and Rwanda residents on security saying he recently appointed senior army officials to be Regional Commissioners (RC), for Kagera, Kigoma, Geita and Simiyu.
}

He appealed to Tanzania and Rwanda residents to utilise fully the opportunities availed as the Rusumo International Bridge and One Stop Border Post (OSBP), for robust economic transformation, poverty reduction and improved livelihoods.

Dr Magufuli made the remarks on Wednesday when opening the facilities accompanied by President Paul Kagame of the Republic of Rwanda. He noted that security in regions bordering Rwanda and Burundi was beefed up to allow people to do business in a peaceful mood.

“Security is secured. We have military generals in the four regions. I can assure you that incidents of banditry and carjacking are now a matter of the past, “he said.

President Magufuli recently appointed Maj Gen (rtd) Salim Kijuu the new Kagera Regional Commissioner (RC), replacing John Mongela who was transferred to Mwanza. In the past, armed bandits terrorized passengers plying between Muleba-Biharamulo, Biharamulo-Ngara and Karagwe-Ngara hiding in Kimisi and Burigi National Forest Reserves.

President Magufuli also stressed the importance of unity among East African Community (EAC), member countries, saying such unity would make the countries stronger economically and speed up development.

He noted that EAC countries–Tanzania, Rwanda, Kenya, Uganda, Burundi and South Sudan with a combined population of 165 million people had a better chance to hasten development if they remained united.

April 8, 2016
Cows earn me money and dignity

{Perpetue Mukamuhoza, 51, is a resident of Gatare Village in Nyanza Sector, Nyanza District. She has lived with her husband for the last 27 years.Their marriage has been characterized by quarrels and sometimes beatings from the husband.}

Without an income, dependent on his husband for survival, she could hardly think of extricating herself out of that misery.

“There are times when I could decide to leave him and just live with friends. But then I could not live with my children at friends’ or relatives’ homes; that is how I always ended up coming back. I remember the last time I left him, he had sold off some household property so he could pay bride price for another woman. There are even times he could sell an item simply to take local brew,” recollects the mother of seven.

In 2007, Mukamuhoza joined the Dukunde Inzuki Cooperative and, from the Rwf50,000 given by Action Aid Rwanda, started a small business of selling vegetables and fruits.

She got profits and expanded her stock, and as the confidence from her suppliers grew, she could get some on credit and pay later. “I made sure that I involve my children in the business. In 2011, I got a Friesian cow, courtesy of Action Aid Rwanda, which calved in 2012. Now from the cow I get milk, for home consumption and to sell and fertilizers for my gardens where I grow beans, potatoes, maize, beans, cassava and soy beans.

“My yields have now increased because of the organic fertilizers I do apply in the gardens. But because my gardens are seated on a small piece of land, I sell off some fertilizers. During holidays, the children get involved in the sale of the manure from which we get Rwf15,000 a month and Rwf20,000 from the sale of milk,” says Mukamuhoza.

Mukamuhoza gets more than money from the Friesian cow that she got two years ago as she delightedly explains; “Another thing, my husband now respects me. I do buy the household items, so we no longer lack. My children go to school and I clothe them as decently as I can. He cannot touch any of those cows and sell them.

He knows they are a government property. And when he sees you coming from Kigali every now and then, in those big cars, he just knows that even selling household items bought with income from the project can spell him trouble.” She concludes; “Muri Make, (Kinyarwanda speak for ‘in a few words’) from the cow donated to me by Action Aid Rwanda, I do not only earn an income, but respect from my husband and dignity from the community as well.”

April 7, 2016
Angola seeks IMF help in wake of oil price falls

{Oil exporting Angola has asked the International Monetary Fund (IMF) for financial assistance.}

A Finance Ministry statement said the government would work with the IMF to improve economic and financial stability.

The IMF said it is ready to work with Angola to tackle the country’s economic challenges.

Discussions are expected to begin next week during the IMF’s Spring meetings in Washington.

Angola’s economy is heavily dependent on oil. It accounts for more than 95% of export earnings and more than two-thirds of government revenue.

{{Major challenge}}

International crude oil prices are now less than half the level they reached in mid-2014. Inevitably countries such as Angola where the oil industry dominates the economy have been hit hard.

“The sharp decline in oil prices since mid-2014 represents a major challenge for oil exporters, especially for those economies that have yet to become more diversified,” said the IMF’s deputy managing director, Min Zhu.

Angola’s finance ministry suggests there has been significant diversification already. It says the share of oil in total economic activity has declined since the mid-1980s – markedly so according to its figures.

The non-oil sector has gone from 40% of the economy then to just below 70% now. But there is no question oil is still central and it dominates exports and the government finances.

In the short term, efforts to diversify the economy would focus on agriculture, fisheries and mining, the finance ministry said.

{{Fiscal reforms}}

The ministry’s statement emphasised the role of “fiscal reforms” in addressing its problems, which means tax reform and controlling public spending. The government did cut spending last year, a move described by the IMF as “timely”.

Even the biggest oil exporter of all, Saudi Arabia, is facing similar challenges as a result of the collapse in oil prices, though it has not sought financial help from the IMF.

Saudi Arabia is seeking to curb government spending and it wants to diversify the economy, making it less dependent on oil.

April 7, 2016
Iceland’s PM resigns over Panama Papers scandal

{Sigmundur Gunnlaugsson steps down after thousands call for his resignation following Panama Papers investigation.}

Iceland’s prime minister has resigned following massive protests in the wake of the Panama Papers investigation which revealed how the world’s wealthy avoid tax.

Sigmundur Gunnlaugsson stepped down on Tuesday hours after thousands of protesters gathered outside parliament to demand his resignation.

Agriculture Minister Sigurdur Ingi Johannsson – who will replace the prime minister for an interim period – confirmed to Icelandic broadcaster RUV that Gunnlaugsson was stepping down as leader of the country’s coalition government.

Gunnlaugsson is the first major scalp from a leak of more than 11 million documents from Mossack Fonseca, a Panamanian law firm, showing tax-avoidance arrangements of the rich and famous around the world.

Gunnlaugsson was among the names mentioned in the so-called Panama Papers, which were published on Sunday.

The leaked documents allege that Gunnlaugsson and his wife set up a company called Wintris in the British Virgin Islands with the help of the Panamanian law firm.

Gunnlaugsson is accused of a conflict of interest for failing to disclose his involvement in the company, which held interests in failed Icelandic banks that his government was responsible for overseeing.

The leader quit ahead of a planned vote of no-confidence, hours after asking the president to dissolve parliament, a move which would almost certainly have led to a new election.

Despite his resignantion, opposition parties continued their call for a snap election.

Iceland, a volcanic North Atlantic island nation with a population of 330,000, was rocked by a prolonged financial crisis when its main commercial banks collapsed within a week of one another in 2008.

Since then Icelanders have weathered a recession and been subjected to tough capital controls – another reason the prime minister’s offshore holdings rankle many.

“He [Gunnlaugsson] is the first casualty of the Panama Papers,” said Al Jazeera’s Laurence Lee, reporting from Reykjavik. “Iceland is clearly a functioning democracy. People have said they’re not prepared to put up with it. As soon as it [the leak] started to come out on Sunday, people took to the streets.”

Panama Papers

The International Consortium of Investigative Journalism (ICIJ), a non-profit group in the US, said the cache of 11.5 million records detailed the offshore holdings of a dozen current and former world leaders, as well as businessmen, criminals, celebrities and sports stars.

Elsewhere among the sitting world leaders named in the leak are Argentine President Mauricio Macri and Ukraine’s President Petro Poroshenko.

The documents link at least 12 current and former heads of state and 143 other politicians to illicit financial transactions.

Mossack Fonseca, the law firm at the centre of the leak, rejected wrongdoing.

“These reports rely on supposition and stereotypes, and play on the public’s lack of familiarity with the work of firms like ours,” it said late Monday.

In a four-page document, the law firm reiterated that it had “never been accused or charged in connection with criminal wrongdoing”.

The publication of the data reignited the debate over how the world’s wealthy make use of tax avoidance schemes not available to most of the world’s population.

Global fallout

The Panama Papers were the result of a year-long, worldwide investigation.

Among those involved are friends of Russian President Vladimir Putin; the family of Pakistani Prime Minister Nawaz Sharif; the brother-in-law of Chinese leader Xi Jinping; the football star Lionel Messi; the father of British Prime Minister David Cameron; as well as Oscar-winning Spanish film director Pedro Almodovar – who on Tuesday cancelled a press junket because of the controversy.

US President Barack Obama said on Tuesday that the revelations that powerful international politicians and businessmen have hidden money in shell companies shows tax avoidance is a global issue.

He said wealthy individuals and corporations are “gaming the system” by making use of tax code loopholes that average taxpayers do not have access to.

He also labelled “insidious” the growing practice of US companies merging with foreign firms just to cut their tax liabilities.

April 6, 2016
Tax leak exposes Putin aides, world leaders, celebrities

{Probe reveals hidden offshore dealings in the assets of around 140 political figures.}

A massive leak of 11.5 million tax documents on Monday exposed the secret offshore dealings of aides to Russian President Vladimir Putin, other world leaders and celebrities, including Barcelona soccer star Lionel Messi.

An investigation into the documents by more than 100 media groups, described as one of the largest such inquiries in history, revealed the hidden offshore dealings in the assets of around 140 political figures — including 12 current or former heads of state.

The vast stash of records was obtained from an anonymous source by the German daily, Sueddeutsche Zeitung, and shared with media worldwide by the International Consortium of Investigative Journalists (ICIJ).

The documents, from around 214,000 offshore entities, came from Mossack Fonseca, a Panama-based law firm with offices in more than 30 countries.

Though most of the alleged dealings are said by the ICIJ to be legal, they are likely to have a serious political impact on many of those named.

ICIJ Director Gerard Ryle said the documents covered the day-to-day business at Mossack Fonseca over the past 40 years.

“I think the leak will prove to be probably the biggest blow the offshore world has ever taken because of the extent of the documents,” he said.

NO-CONFIDENCE VOTE

Also in the world of football, Francetv Info named UEFA president Michel Platini as the beneficiary of a Panama-based tax company, adding, however, that no illegal activity was alleged.

Platini’s communications service said in a statement sent to AFP that “all of his accounts and assets are known to the tax authorities in Switzerland, where he has been a tax resident since 2007”.

Iceland’s Gunnlaugsson is expected to face a no-confidence vote this week over allegations he used a secret offshore firm called Wintris Inc to hide millions of dollars in the British Virgin Islands.

Visibly irritated, the premier refused to answer reporters’ questions during an interview broadcast on Swedish television on Sunday evening.

“I have never hidden assets,” Mr Gunnlaugsson told a journalist from the Swedish SVT channel before leaving the room. His spokesman insisted he and his wife have scrupulously followed the law.

At least 33 people and companies listed in the documents were blacklisted by the US Government for wrongdoing, including dealings with North Korea and Iran, as well as Lebanon’s Islamist group Hezbollah, the ICIJ said.

The leaked data, covering 1975 to the end of last year, provides what the ICIJ described as a “never-before-seen view inside the offshore world”.

The massive leak of documents recalls Wikileaks’ exploits of 2010 — which included the release of 500,000 secret military files on the wars in Afghanistan and Iraq and 250,000 diplomatic cables, and infuriated the US.

April 5, 2016
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.

March 29, 2016
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.

March 18, 2016
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.

March 17, 2016