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.