TA124 cover – President Magufuli visits the fish market in Dar-es-Salaam following the plastic bag ban – photo State House
Feathers ruffled in CCM
Plastic bag ban earns minister sack?
Parliament passes TSh 33 trillion annual budget
Reviews
A pdf of the issue can be downloaded here
by Ben Taylor
Selection of newspaper covers from July featuring the developing story
Two former Secretary Generals of the ruling party, CCM, Abdulrahman Kinana and Yusuf Makamba, stirred up a very public argument at the highest levels of the party in July. They wrote a letter to the Elders’ Council, an advisory body within the party, warning of the dangers that “unfounded allegations” in a tabloid newspaper pose to the party’s “unity, solidarity and tranquillity.”
This refers to the frequent allegations by publisher, Mr Cyprian Musiba, in his newspapers and on social media, that several senior figures within the party were involved in a plot to undermine the leadership of President John Magufuli. The supposed plotters named by Mr Musiba include Kinana and Makamba, as well as former Foreign Affairs Minister, Bernard Membe, various opposition leaders, government officials and civil society activists.
Mr Musiba has styled himself as a “media activist” seeking to “defend the President against a plot to sabotage him.” His publications have consistently backed President Magufuli and ferociously attacked many within the party and outside, on the basis of little or no evidence.
Mr Makamba and Mr Kinana, who served as CCM’s secretary generals between 2009 to 2011 and 2012-2018 respectively, called on the party’s elders to intervene. They argued that there must be something else behind Mr Musiba’s accusations, which they think is determined to drive the country “into a precipitous drop.” They suggested that for him to be doing this, he must have protection or even direction from a very high level.
They added that they preferred to seek resolution of the matter by raising it within the party rather than taking legal action against Mr Musiba, as others including Mr Membe have done, saying they want to clear their names rather than seek compensation.
The response from the party was sceptical. The secretary to the Elders Council, Pius Msekwa, former speaker of parliament, said there was little the council could do. Mtera MP, Mr Livingstone Lusinde, said the paid had gone astray and wondered how come they are agitated by the acts whose culture they helped create in the first place. Nzega Urban MP (CCM) Hussein Bashe described the letter as a “plot to deny President Magufuli a chance to contest as second term in 2020” and said it went against the party’s constitution.
More significantly, the current CCM Secretary General Dr Bashiru Ally appeared to take issue with Kinana and Makamba. Without mentioning them by name, he warned of a plot to destabilise the party and said that those behind it would “face the music.” According to newspaper reports, the supposed plot also involves Makamba’s son, January Makamba, himself a significant political figure – see next story – as well as former Ministers Nape Nnauye, William Ngeleja and Bernard Membe.
Rather than helping CCM, Bashiru said, the dispute serves the interests of the opposition. “This is a childish game and it’s not surprising that the opposition loves it. They love childish games,” noted Bashiru. He called on party members to defend their leaders when the political atmosphere “gets dirty”.
Previously, in December 2018, Dr Ally had publicly summoned Mr Membe, saying he wanted to speak to him about reports – published in Mr Musiba’s newspapers – that he wanted to challenge President Magufuli in the 2020 General Election.
Mr Membe has largely stepped back from politics after losing the CCM race for the presidential nomination to Dr Magufuli in 2015. He has largely spent his time outside the country on private business. Thus far, he has said nothing to suggest he would challenge President Magufuli for the CCM ticket in 2020.
Outside the party, ACT-Wazalendo party leader Zitto Kabwe commended Mr Kinana’s and Mr Makamba’s letter, saying it transcends party’s interests, touching issues of national interests, especially national security.
Dr Paul Luisulie, a political analyst from the University of Dodoma, said the letter and the reaction to it could be a sign of the failure of CCM’s internal mechanisms to deal with the grievances of those in the party who have concerns with the party’s current leadership. He said the situation could “have very serious consequences” for the unity of the party ahead of elections in 2020. If the letter is ignored, he argued, the authors’ suspicions will be confirmed. “It is very important that CCM give an explanation and work on the grievances that its former leaders have pointed out,” says Dr Luisulie.
A political scientist from the University of Dar es Salaam Dr Richard Mbunda noted that Mr Musiba’s attacks attracted neither protest nor condemnation from either the party or the government. “It is very possible that the person who is steering reforms to the party thinks that getting rid of these bad elements [those with doubts about the party’s leadership] is good for the larger party’s interests. But the consequences will be disastrous if the trend continues unbroken,” he warned.
by Ben Taylor
A country-wide ban on plastic bags has perhaps had unexpected consequences for the Minister who brought the long-standing proposal to fruition. As of June 2019, Tanzania became the 34th African country to ban importation, production, sale and use of plastic bags, according to the United Nations Environmental Programme (UNEP). A few weeks later, the Minister responsible, January Makamba, was fired.
In his role as Minister of State for Union Matters and the Environment, Mr Makamba had worked for several years to win the support of cabinet and put the necessary legal reforms in place. In recent months he had conducted a nationwide campaign to raise awareness of the ban. The country also issued a notice to travellers that they will have to “surrender” plastic bags in their possession at airports and other points of entry.
Traders in Dar es Salaam and elsewhere initially reported concerns that alternatives were more expensive and not as easily available as plastic bags had been. They also complained that they had found themselves with little choice but to burn their remaining stock of plastic bags to avoid problems with the authorities.
Nevertheless, more recent reports suggest that alternative containers had become more readily available. A resident of Dar es Salaam, Ms Rehema Mbiku, said that “the government has done a good thing because the plastic bags were polluting the environment.”
Immediately following the introduction of the ban, President John Magufuli made a surprise visit to a fish market sporting a wicker basket in a move to support the ban. However, his support for Mr Makamba did not last long.
Explaining his decision to fire Mr Makamba, President Magufuli complained that it actually took four years for the ban to be implemented. “The Vice President spoke about it. The Prime Minister spoke about it. There has been a lot of dillydallying until I issued an ultimatum,” he said.
The President also complained of sluggishness in the way tasks were being handled at the Ministry. “Investors are exposed to a lot of delays in accessing Environmental Impact Assessment (EIA) certificates.” Some observers pointed to other factors, however. Mr Makamba is regarded as a potential successor of President Magufuli, and some argued that his widely praised ban on plastic bags was seen at high levels of the party as an attempt to gain political mileage.
Others noted that it is alleged that Makamba had played a role in the letter written by his father, the former CCM Secretary General Yusuf Makamba, complaining of his treatment in the media (see previous story). It is also alleged that January Makamba is a leading figure in the supposed plot to prevent President Magufuli from serving a second term.
At the same time as Mr Makamba was fired, a new Minister of Agriculture was appointed, Hussein Bashe. It may or may not be relevant that Mr Bashe was among the most vocal critics of Kinana and Yusuf Makamba following their letter to party elders (see previous story).
by Ben Taylor
Erick Kabendera, a leading Tanzanian investigative journalist whose articles have been published around the world, was arrested in July, prompting widespread criticism.
Kabendera, who has written for The Guardian, The Independent and Economist Intelligence Unit in the UK, as well as the East African and several Tanzanian newspapers. His work has been notable for his willingness to report facts that embarrass the government, and he has also been a prominent critic of President Magufuli’s government on social media.
The situation with Kabendera’s arrest remained unclear for several days. He was picked up from his home by unknown people in a vehicle with no number plate. His whereabouts was initially unknown, prompting alarm among his friends and family.
Two days later, the government admitted having detained Kabendera, and pointed to immigration concerns – that he might not be a Tanzanian citizen. Similar allegations have been made in the past, though the Immigration Department at the Ministry of Home Affairs issued a statement in 2013 clarifying that Mr Kabendera and his parents were indeed citizens of Tanzania.
Immigration concerns were soon dropped, however, to be replaced by allegations that Kabendera had contravened the Cybercrime Act through his work with the Economist Intelligence Unit. These new claims did not make it onto the eventual charge sheet either, which instead contains charges of money laundering, tax evasion and organised crime. Money laundering is a non-bailable offence in Tanzania, and the journalist is therefore likely to spend several months behind bars even before his case is heard.
Kabendera’s lawyer, Jebra Kambole, said that the questioning since his arrest indicated that the real reason Kabendera had been detained was his work as a journalist.
The case drew strong criticism from pro-democracy campaigners and press freedom advocates. The Committee to Protect Journalists (CPJ) wrote a public letter to President Magufuli, arguing that “the public commitments that Tanzania has made to press freedom will remain empty words without urgent action,” and urging the government to drop the charges against Kabendera.
The UK government also expressed its concern, in a statement issued jointly by the British High Commission and the US Embassy in Tanzania. The statement referred to the “steady erosion of due process in the justice system in Tanzania,” citing frequent resort to lengthy pretrial detentions and shifting charges.
“The irregular handling of the arrest, detention, and indictment of investigative journalist Erick Kabendera, including the fact that he was denied access to a lawyer in the early stages of his detention, (is) contrary to the Criminal Procedures Act,” the statement read. It concludes by urging the Tanzania government “to guarantee due process to each of its citizens, which it has recognized as a basic human right as signatory to multiple UN Human Rights Conventions, among them the International Covenant for Civil and Political Rights.”
Emmanuel Buhohela, spokesman at Tanzania’s foreign affairs ministry, said that the matter regarding Kabendera is before the country’s courts of law. “They [the diplomats] should let justice follow its due course,” he told Reuters news agency.
Tanzanian journalist Maxence Melo
The work of Tanzanian journalist Maxence Melo has been recognised by the Committee to Protect Journalists (CPJ), who presented him with their 2019 International Press Freedom Award.
Melo is the owner and co-founder of Jamii Forums, a popular website and discussion forum that hosts frank debates, mostly in Kiswahili on topics including politics and corruption in Tanzania.
In 2016, Jamii Forums’ office was raided by Tanzanian security forces, and Melo was detained for interrogation. After being held for eight days, he was charged with managing a domain not registered in Tanzania and obstruction for refusing to disclose the identities of Jamii Forums’ users.
In 2017, Melo appeared in court 81 times. He continues to fight in Tanzanian court to clear his name.
by Roger Nellist
A milestone for the Stiegler’s Gorge Hydropower project
In April the huge and environmentally controversial Stiegler’s Gorge Hydropower Project on the Rufiji River in the Selous Game Reserve witnessed a major milestone when the Tanzanian government issued Performance Guarantees and made an advance payment of almost US$310 million to the foreign contractor that will be undertaking the project. The contractor is a joint-venture of two Egyptian companies: Arab Contractors and Elsewedy Electric S.A.E.
The Stiegler’s Gorge contract between the Tanzanian government and the Egyptian consortium was signed in December 2018. Two months later, in February 2019, the government handed over the site.
Upon completion the project is projected to generate up to 2,115 MW of electricity for the national grid, adding very substantially to Tanzania’s current generation of about 1,600 MW from all existing power projects. This will provide more than enough electricity to support the growth of the Tanzanian economy in the foreseeable future as the country targets attainment of Middle-Income status during the next decade. Excess power could be exported to neighbouring countries.
The provision of a reliably adequate supply of electricity to support the country’s expanding industrial base is obviously the most important feature of Stiegler’s Gorge, but the government also expects the project to generate some 6,000 new direct jobs. Construction work is scheduled to take 3 years.
The total cost of the Stiegler’s Gorge project is put at around US$3 billion. At the payment ceremony in April in the Ministry of Finance it was explained that the $310 million was the (70%) foreign exchange component of the agreed total Advance Payment due under the project contract; the remaining 30% local currency portion will be paid once the contractor has finalised certain contractual processes. The Advance Payment constitutes 15% of the total project cost and allows the contractor to mobilise and commence construction work.
It is understood that the project is to be fully funded by the Tanzanian government. In his June 2019 Budget in Dodoma the Finance Minister, Phillip Mpango, allocated 4% (TSh 1.44 trillion; approx. US$600m) of the national budget towards construction of the Stiegler’s Gorge project in the coming year.
Responsibility for the Stiegler’s Gorge power project rests with the Ministry of Energy. At the end of May in his own Parliamentary budget session, the Minister for Energy, Dr Medard Kalemani, also tabled project funding requirements for his Ministry in the coming financial year of TSh 363 billion for the third phase of the Rural Electrification Agency (REA) and TSh 60 billion for the extension of the Kinyerezi 1 gas-to-power project.
Government piles on the pressure on Acacia Mining and Barrick Gold
With apparently little recent news of interest concerning Tanzania’s petroleum exploration and development activities, the country’s extractives news is dominated by the continuing saga over Acacia Mining and the efforts by its Canadian parent company – Barrick Gold – to sort out the complicated situation involving Acacia and the Tanzanian government. It is a long-drawn-out saga, with big reputational and financial implications for the two international corporates as well as the government. Acacia Mining (listed on the London Stock Exchange) is Tanzania’s largest gold producer and Barrick is one of the world’s major gold mining companies.
Acacia has been accused of massively under-reporting gold exports, of smuggling out gold concentrates, of underpaying taxes, of operating and concealing foreign accounts, of not respecting other important provisions in its Mining Development Agreements and generally of poor management at its three operational gold mines in the country (including of adopting a high-handed manner in its community relations and failing to comply with environmental laws). As a consequence, in 2017 and 2018 the government banned further gold concentrate exports by the company and demanded back payment of taxes amounting to a staggering US$190 billion. Last year, a few senior Acacia employees were also arrested and jailed.
In an attempt to resolve matters, Barrick then engaged directly in high-level negotiations with the government, excluding Acacia from all the discussions. A cooperation framework agreement was reached at the end of 2018 in which it was anticipated that the future economic benefits derived from Acacia’s gold mining operations would be shared with the government on a 50/50 basis and that an early payment of $300 million would be made by Acacia to government “to resolve outstanding tax claims”. However, unhappy at being excluded, Acacia then challenged those proposed arrangements, asserting that its own Board must first approve them. Apparently, it has also launched an arbitration case against the government through an international tribunal.
However, in the middle of May 2019, with no payment yet made and final terms not quite settled, the government further ratcheted up the pressure on Acacia and Barrick by announcing in a letter to the company’s three gold mines (at Bulhanyulu, North Mara and Buzwagi) that it would no longer recognise any agreements with their holding company, Acacia. In a news statement the government spokesman, Dr Hassan Abbas, announced that Acacia was “operating as a rogue company that was disdainful of the Tanzanian authorities and the laws of the land”, adding that “Acacia management is loathed” and “The government does not want the presence of Acacia in any form in the country”. Perhaps ominously, Abbas said that Acacia stood in the way of the government reaching an amicable deal with Barrick and challenged Barrick to sort out the problem or risk not concluding a deal. Declaring Acacia “unwanted in Tanzania” the government told Barrick: “Solve Acacia or no deal”. The government made clear it expects a new mining operating company to be established in which it has a share and there is no presence or involvement whatsoever by Acacia.
With media headlines like “Why Tanzania wants Acacia to pack and go”, Barrick – which holds 64% of Acacia’s shares – then moved quickly to affect a full take-over of Acacia, seeking to buy the remaining 36% shareholding. It proposed to do so by offering Barrick shares to Acacia’s minority shareholders in a shares-swap, but at a discount on the current share trading price. The proposal valued Acacia at about $787 million. However, at the end of June Acacia rejected that bid, accusing Barrick of trying to take advantage of its troubles. More optimistically, though, it did signal that acquisition of its minority shares by Barrick at a fair price “would be an attractive solution” to its Tanzanian impasse.
by David Brewin
Climate-Smart Agricultural Solutions
The Netherlands Development Organisation is providing $43.68 million for a fund aimed at increasing food production using Climate-Smart Agricultural Solutions in Tanzania, Kenya, and Uganda.
Project Manager Joseph Muhangwa has explained that the beneficiaries will be smallholder farmers, farm input providers, small and medium business enterprises, agricultural service providers and cooperatives which deal in the value chain of pulses, oilseeds, potatoes, and cereals in the three countries. The money will mostly go directly to various businesses that meet the relevant criteria during the next five years. The support is designed for businesses that are too risky for financial institutions to support, but which meet the project’s expectations. The project manager has been quoted as saying that businesses benefiting from the project must demonstrate involvement of smallholder farmers and be climate-smart or environmentally-sustainable. They should also be all inclusive in terms of women and youth. Most importantly the ideas should be replicable.
The maximum amount available for any given business is $224,000 or 50% of the total business case cost. In Tanzania the beneficiaries will be agricultural entrepreneurs in Mbeya, Katavi, Njombe, Ruvuma, Arusha, Kilimanjaro, Dodoma, Singida, Tabora and Manyara regions.
The programme’s aim is to increase production and income for 300,000 farmers and improve business performance for 50 small and medium entrepreneurs and 30 cooperatives. The program analyses the climate risk of food value chains and business opportunities in the three countries.
Livestock and leather
Tanzania’s huge livestock population provides the economy with not only meat, milk and associated products, but also raw hides and skins which are processed into leather.
In the East African region, Tanzania has the second largest herd of livestock (after Ethiopia) and produces 3.9 million bovine hides, 2.5 million goat skins and 2.3 million sheep skins each year. But thousands of tonnes of skins and hides apparently go to waste.
Two Italian companies have signed an agreement with the prisons department and the Public Service Social Security Fund to establish two leather factories in Moshi in the Kilimanjaro region. The companies will invest $24.5 million to construct the two leather factories, managed jointly with Karanga Leather Industries Company in Karanga prison. The factories, one for shoe-making and another for tanneries, will be constructed on 25 acres of land at the industrial area within Karanga Prison and are set to be completed in 16 months. The Italian companies will provide both finance and technology for production of quality leather products for export to Italy and other European countries. The plant is expected to produce 1.2 million pairs of shoes per year.
President Magufuli has also invited Egyptian investors to invest in livestock-based industries modelled on Egyptian technology.
The cashew nut marketing saga
Details were given in the last issue of Tanzania Affairs concerning the intervention by President Magufuli in the marketing of Tanzania’s valuable cashew nut crop to help growers. The search for processes came at a time when the Tanzania government was still holding a huge stock of cashew nuts, estimated at 200,000 tonnes, which it bought from farmers in November last year after it failed to secure foreign buyers. It seems that the Kenyan company, Indo Power Solutions, which agreed to buy 100,000 tonnes of cashews from Tanzania, took the Tanzania government for a ride in the $180 million deal after it surfaced that the company was not known to have transacted any deals worth more than $10m and was a trader of various commodities but not cashews.
Cashew nut sales on the international market dropped 63% to $196.5 million last year, compared to $529.6 million in the 2017 trading period. Recent figures show that exports fell from 329,000 tonnes in 2017 to 120,000 tonnes in 2018.
Cashew nut production during the 2017/2018 season stood at about 240,000 tonnes; out of which, some 213,000 tonnes were produced by the government. Some 90% of the cashew nuts are exported in their raw form owing to the country’s low processing capacity.
To increase local returns, Tanzania is looking for investors to add value on the nuts and process them into products such as cashew nut cheese or butter, sweets, fruit drinks or distilled liquor lubricants.
The government has set aside 540,000 ha of land for agricultural expansion and industrial development.
Banana research
More than 20 varieties of bananas are grown in Tanzania, although not all are suitable for human consumption. They are popular due to their non-seasonal nature and, apart from playing a key role in ensuring food availability all year round; the crop provides an annual income for households of about $1,500.
Furthermore, the banana plant trunk can be cut up for use as livestock feed, and its fibres can be used for fencing, making paper and crafting various works of art.
Late last year the Tanzania Agricultural Research Institute confirmed 16 new drought and disease resistant banana hybrid varieties in the banana producing regions of Mbeya, Kilimanjaro and Kagera.
Tanzania is also making plans for a new banana research centre. Belgium has pledged $1.29 million for a Centre of Excellence to be based at the Nelson Mandela African Institute of Science and Technology in Arusha.
Boosting rice output
Tanzania’s main food crops are maize, rice, sorghum, millet, legumes, nuts and other tubers, horticultural crops and coconuts, all produced largely by smallholder farmers.
Maize and rice are the most important staple food crops grown in most parts of the country. About two million farmers grow rice.
The Permanent Secretary in the Ministry of Agriculture, Matthew Mtingumwe, has announced a new 12-year plan to raise annual rice production from 2.2 million tonnes to 4.5 million tonnes. The strategy will be implemented between the government and with funding from the World Bank, Japan International Cooperation Agency and the African Development Bank.
Over the years crop production has been dropping partly due to low adoption of recommended agricultural production practices and lack of fertilisers. The 12-year plan to boost rice production can be viewed as a means of forestalling a food crisis in the region, with many African countries south of the Sahara counting below average rains and drought which has caused a sharp rise in cereal prices.
15 Coffee species facing extinction
According to botanist Aaron Davis writing in Nature, 15 species of coffee out of the 75 species grown in the East African coffee sector are threatened with extinction. Tanzania has been facing a dry season in many growing areas.
The Tanzania Coffee Board has estimated that about 450,000 families in Tanzania grow coffee. Arabica coffee accounts for more than half of the country’s production. It exports over 12,000 metric tons annually – mainly to Japan and Germany.
Poor agricultural practices among the mainly smallholder producers are causing the decline of Arabica and Robusta so that attention is very slowly being drawn back to wild coffee because of its tolerance of changes in the weather and resistance to pests and diseases. Robusta is becoming more popular because it resists coffee leaf rust in many locations, has higher productivity and lower market prices. It also has a high caffeine content.
The UN Environment Programme has identified improper land use, like slashing and burning, and the excessive use of chemicals as leading causes of habitat and forest loss. In East Africa, commercial house construction has taken over even arable land that was initially used for farming. It is often straight, hard and termite resistance which makes it a favourite for use in minor construction. These, coupled with diseases, are causing growers to opt for wild coffee as it is a more attractive alternative for the sustainability of coffee.
Game hunting blocks
Tanzania is introducing a new auction system for big game hunting blocks. The government says that this is aimed at emphasising transparency and curbing corruption in parts of the tourism industry. The Tanzania Wildlife Management Authority is auctioning off 26 hunting blocks for the first time. Eligible hunting companies will be allocated a maximum of five hunting blocks, each in different categories. Most of the hunting blocks are allocated within the 50 km² Selous game reserve ecosystem, a UNESCO World Heritage site known for its elephants, lions, zebras, black rhinos, giraffes and other species. Revenues from the tourism sector fetched $2.43 billion last year, up from $2.19 billion in 2017. Tourist arrivals totalled 1.49 million last year compared with 1.33 million a year ago. The government has said that it wants to bring in one million visitors a year by 2020.
by Ben Taylor
Parliament passes TSh 33 trillion annual budget
MPs overwhelmingly endorsed the TSh 33.1 trillion budget for the 2019/2020 Financial Year, a slight increase from 32.4 trillion in 2018/19. All CCM MPs endorsed the budget while the majority of opposition MPs voted against. Government expenditure is expected to reach 22.7% of GDP in 2019/20 estimates, up from 22.3% in 2018/19.
Of this amount, TSh 11.7 trillion is allocated for development projects. The minister said the development plan focuses on attaining 7.1% growth of Gross Domestic Product (GDP) in 2019 compared to 7.0% in 2018. The budget also aims to maintain inflation at between 3% and 4.5% and increase national revenue collection to 13.1% of GDP in the 2019/20 fiscal year from this year’s 12.1%.
According to the Minister, Tanzania cemented its middle-income status last year by raising its per capita Gross Domestic Product (GDP) to $1,090, and noted that a strong year for agriculture had kept inflation down at 3.5%, the lowest level in 40 years.
Dr Mpango said the government seeks to put emphasis on the establishment and development of industries, especially those exploiting domestically produced raw materials. He said the focus will be on development of industrial clusters, Tanzania Automobiles Manufacturing Company Ltd (TAMCO) in Kibaha, Coast region, hide industry in Dodoma and special investment zones in Bunda, Dodoma and Benjamin William Mkapa in Dar es Salaam.
The budget also includes plans to spend TSh 9.7 trillion to service the public debt, which reached over TSh 51 trillion as of April, up from 49.9 trillion a year earlier. The Minister of Finance and Planning, Dr Philip Mpango, assured MPs that the debt remains manageable, according to the recent assessment by the ministry. He added that the present value of external debt against GDP is 22%, well below the allowable maximum of 55%.
The Minister attributed the debt increase to the new loans that the country acquired for execution of various development projects. These projects include construction of Terminal III at Julius Nyerere International Airport (JNIA), upgrading the central railway to standard gauge, implementation of power projects as well as construction of roads and major bridges.
The Minister further announced that the country’s foreign reserve stood at US$ 4.4 billion, equivalent to 4.3 months of imports, as of April 2019. The amount exceeds the government target of four months’ worth of imports, according to Dr Mpango.
The budget also presented an opportunity for the government to refute claims by a section of MPs that business in the country was struggling due to poor business and investment climate. Dr Mpango and his Deputy Dr Ashatu Kijaji said the business environment in the country was superb and that more investors were willing to start businesses in Tanzania.
“Some MPs have been providing unrealistic statistics on business in the country, but the current statistics in the ministry show that businesses which are being shut are 16,252 while new businesses that are established are 147,817,” said Dr Kijaji. According to her, closing business was a normal practice worldwide and that some of the reasons for that were change of business, failure to compete with others, huge debts and accumulated taxes, among others.
As he presented the budget to parliament, Dr Mpango said the government was proposing to review 54 different fees and levies with a view to reduce and abolish some of them. “This is the first phase of implementation of the blueprint for regulatory reforms to improve the business environment,” he said. The minister added that apart from the review of fees and levies, the review will also address the elimination of the existing duplication of responsibilities among the ministries, regulatory authorities and institutions.
Pauline Gekel (Babati, CCM) described it as “a special budget for Tanzanians”, that “has touched every mwananchi, poor, ordinary and big traders.”
Julius Karanga (Monduli, CCM) called it a win-win budget. “We hope people are going to receive it well because it is friendly budget that will help people generate income,” he said.
Opposition MPs were less positive, however. Acting Shadow Minister for Finance and Planning David Silinde said it was sad to see that 40% of the 2019/20 development budget had been directed to three projects namely Stiegler’s Gorge, the standard gauge railway and the revival of the Air Tanzania Company Limited (ATCL), instead of investing more on projects that touched directly on people’s lives.
He told the national assembly yesterday that despite the various changes in economic systems that the country has undergone, it has failed to remove the country and its people from abject poverty. He added that the government has failed to stick to its own five-year development plan, which states “that commercially viable projects should be left to the private sector, unless there is strong justification for doing otherwise”.
He said the opposition would have allocated 20% of the total budget to agriculture, 20% to education, 15% to industrial development and 10% to the water and health sectors respectively.
ACT Wazalendo leader Zitto Kabwe said the new budget is set more “to develop things rather than people” – infrastructure projects rather than public services. He also said that implementation of the budget is challenging because budgeted funds are not released in time or in full.
Beyond parliament, Honest Ngowi, an economist from the University of Mzumbe, cautioned against unrealistic budget that cannot achieve the intended revenue targets. “The government has collected only 87% of its revenue target in the current budget. And yet, it has increased projected collections to TSh 19 trillion in 2019/20,” he said. “The budget for 2019/20 is to a tune of TSh 33.1 trillion, more than what we can raise. It is so unrealistic, it would be good to use what we have.”
Tax authority chief demoted amid business complaints
In June, President John Magufuli unexpectedly sacked TRA commissioner general Charles Kicheere, and appointed Mr Edwin Mhede to head the tax agency. Mr Kicheere was demoted to the position of Regional Administrative Secretary of Njombe Region.
Sacked along him was the Trade and Industry minister, Mr Joseph Kakunda, who was replaced by Mr Innocent Bashungwa.
The move came a day after the president met with business leaders from various parts of the country. The hundreds of traders spent more than 10 hours at State House, complaining vehemently about the difficulties they were facing doing business: an “unfair” taxation regime, “harassment” by security and regulatory agencies, “bureaucracy”, and “corruption” dominated cries from the traders.
The meeting echoed the apparent gloom among the business community that has persisted for some time now, even as the government was trying to restore confidence and push positive reforms.
Mr Kichere, who was at the meeting, found himself in a tight spot as TRA received most of the flak, roundly accused of harassing traders through over-estimation of taxes and threats. “Many of TRA workers who deal with tax do not know what they are doing. They have turned themselves into the law,” complained Francis Noni, a businessman from Kondoa District.
The President appointed Mr Edwin Mhede as the new head of the tax agency. Mr Mhede becomes the fifth Commissioner General to serve since the election of President Magufuli in October 2015.
“If the systems and institutions are functioning properly, then he (the president) wouldn’t have to convene such meetings,” said Prof Haji Semboja, a former lecturer at the University of Dar es Salaam. “The President is supposed to make sure the systems work so that he gets ample time and energy to implement major national programmes like the industrialisation drive,” he added.
Professor of economics, Honest Ngowi, says the causes of the mess that businessmen exposed before the president should be looked at beyond TRA and individual capabilities. “It is the question of the whole institutional and legal framework in creating a favourable business environment and investment climate,” he said. “Issues of ethics, the fear of God, bribes and over-estimations of taxes go beyond TRA. If we don’t touch on the kernel of the matter we may keep on changing individuals a thousand times without results.”
Small fall in national poverty rate
The poverty rate dropped from 28.2% in 2011/12 to 26.4% in 2017/18, according to the latest survey by the National Bureau of Statistics (NBS). This was the headline finding of the government statistics agency’s latest Household Budget Survey. 14 million Tanzanians spend less than TSh 49,000 each a month, putting them below the official basic needs poverty line.
The report also concluded that TSh 161 billion is needed each month to enable the total population to meet life’s basic needs, the National Bureau of Statistics (NBS) says. The amount has increased from the TSh 103 billion estimated in 2011/12, partly due to inflation and partly to the country’s growing population.
Three out of ten (31%) rural dwellers live below the basic need poverty line compared to 16% of those living in urban areas. The rates had dropped from 33% in rural areas and 22% in urban areas in 2011/12.
Poverty remains most prevalent in Rukwa Region, where about 45% of its residents live below the accepted poverty line. Other areas with high poverty rates are Simiyu (39%), Lindi (38%), Geita (38%), Mwanza (35%) Kigoma (35%), Tabora (35%) and Singida (34%).
Aside from basic needs poverty, 8% of the Tanzanian population spends less than TSh 34,000 monthly. This means that they fall below the food poverty line.
The food poverty line increased from TSh 26,000 per month in 2011/12 to TSh 34,000 in 2017/18. The basic needs poverty increased from TSh 36,000 to TSh 49,000 per adult per month, in the same period.
Compared to the 2011/12 survey, there is a change in the distribution of poor people. The proportion of poor population in rural areas decreased from 84% in 2011/12 to 81% in 2017/18, while the proportion of the poor who live in Dar es Salaam doubled from 1.5% to 3.0%, and the proportion in other urban areas rose from 14% to 16%.
Harsh economic realities for female-headed households
An increasing number of families across Tanzania are now being headed by a woman, a recent national survey has revealed. According to the 2017/18 Household Budget Survey (HBS), the proportion of female-headed families increased from 25% in 2011/12 to 28%, having already increased from 18% in 1991/92.
The survey also found that poverty among such households has also jumped from 20% to 27%. Previously, female-headed households had been richer, on average, than male-headed households, but this no longer applies.
The Household Budget Survey was conducted by the National Bureau of Statistics (NBS), in partnership with the World Bank, UN Women, Unicef and Global Affairs Canada (GAC).
Ms Mwajuma Hamza, director of the Tanzania Women Chamber of Commerce, says development interventions should focus on ensuring equal opportunities for women and men in all sectors. “Tanzania needs to wisely carve a future where both women and men can thrive even in the event that one has to assume the responsibility of taking care of the family,” Ms Hamza said.
The Statistician General at NBS, Dr Albina Chuwa, said the rise in female-headed households is not peculiar to Tanzania, but a global trend that is most pronounced in Southern Africa. (The Citizen)
British High Commissioner shares concerns on the business climate
The British High Commissioner to Tanzania, Sarah Cooke, said in May that British investors yearned for policy predictability, less bureaucracy and faster approval of new investments or projects. Speaking at a Tanzania-Britain business dialogue forum in Dar es Salaam, she said there could be a severe lack of business confidence in Tanzania over the next few years if nothing is done to improve business environment predictability.
The event brought together government officials, British investors and UK government representatives to discuss the business environment in the country. The UK is the second biggest investor in Tanzania after China with investments valued at $5.64 billion (TSh12.9 trillion), according to Ms Cooke. “Investors plan for the long term,” she said. “They need to know the rules of the game will not change abruptly without consultation.”
However, the Minister of State in the Prime Minister’s Office (Investment), Ms Angellah Kairuki, said policy reforms were inevitable, and urged investors to be ready to adopt to policy changes so that they could make good decisions on investing in Tanzania.
“Changing policy has its challenges, and everybody should understand that the government’s intention is to strike an appropriate balance between the rights and obligations of investors,” she said. “We need to provide sufficient protection to foreign investors while at the same time ensuring that legal obligations are upheld.”
Over 900 British companies are operating in Tanzania, with the British High Commission stating that nearly 300,000 jobs were created in the past 15 years. British investors have invested in diverse sectors, including energy, infrastructure and construction, manufacturing, tourism, agriculture and agri-business, consumer goods, financial services and telecommunications. (The Citizen)
by Ben Taylor
Dar Airport Terminal III open
President John Pombe Magufuli opened the Terminal III building at the Julius Nyerere International Airport on August 1, 2019. The new terminal has the capacity to handle 24 large planes concurrently, and six million passengers annually.
Together with the other two terminals, the entire airport will now be able to handle more than 8 million passengers each year. This represents a significant increase on the airport’s busiest year to date: 2016, when 2.5 million passengers passed through. It is expected that Terminal III will handle international flights, while Terminal II will in future only operate domestic flights. The old international terminal is now due for refurbishment and technical upgrading.
The construction of the new facility cost the government a reported TSh 705 billion (US$ 282m). Of this amount, the Tanzanian government paid 15% in cash, with the balance provided in the form of loans from a range of lenders including HSBC bank. “Terminal three has been built using taxpayers money. As it stands, they need to feel the benefit of their money,” noted the President. He therefore directed the Works, Transport and Communication Ministry to ensure that all business at the new premises should be Tanzanian-owned.
Construction of the new terminal building, by Dutch contractors BAM Group, began in 2014. It had initially been due to be completed in 2016, but this was delayed, reportedly due to shortage of funds and a dispute over VAT payments. President Magufuli ordered a probe into the airport project in February 2018 after project costs and construction schedules were derailed.
Terminal I was originally constructed in 1956 by the colonial government, with capacity of handling 500,000 passengers a year. Terminal II, with capacity of handling 1.5 million passengers, opened in 1984. (The Citizen, The Guardian)
Hello Mumbai, London to follow soon?
The inauguration of Terminal III at JNIA came two weeks after the relaunch of long-haul flights to Mumbai, India by the national carrier Air Tanzania. A month earlier, the national carrier launched a direct flight from Dar es Salaam to Johannesburg in South Africa. This brings to seven ATCL’s number of international routes.
Passengers on the inaugural flight included the Minister for Works, Transport and Communications, Mr Isaak Kamwelwe, senior government officials, ATCL staff and journalists.
Mr Kamwelwe expressed optimism that the new route would help in cutting the time spent by passengers who had to connect through Nairobi, Dubai and South Africa. He added that the Mumbai route is of great importance in cementing relationships between Tanzania and India, noting that it would spur the growth of tourism and trade between the two countries. “India has high potential as a tourists source market, and we must take advantage of this by ensuring that we maximally utilize the available opportunities,” the minister said.
The Mumbai route – to be operated three times a week – heralds the airline’s foray into the Asian market. Other planned routes are Bangkok, Thailand, and the Chinese city of Guangzhou.
Air Tanzania spokesperson Josephat Kagirwa said they are also planning flights to London, to Lagos in Nigeria and Accra, Ghana. In addition, a route to Nairobi, Kenya is anticipated.
Significant moves towards establishing the London route have also been completed. The airline has secured three landing slots per week for London’s Gatwick Airport. It is expected that flights will connect both Dar es Salaam and Kilimanjaro Airports with Gatwick on Wednesday, Friday and Sunday each week.
Before this route can begin operations, ATCL need to secure European Union safety standards certification. If Britain leaves the EU later this year as planned, this will require two signatory bodies to approve instead of one: a double headache for the airline, which only regularised its membership with the International Air Transport Association (IATA) recently, by paying back owed membership fees. However, ATCL has already completed the IATA Operational Safety Audit (IOSA).
Currently, there is no direct route from London to Tanzania. British Airways stopped operating the route after four decades in 2013, explaining that it was unable to do so at a profit.
Bagamoyo port development stalled
Talks on a proposed $10 billion development of a port at Bagamoyo have stalled. According to Tanzania Ports Authority (TPA) director general Deusdedit Kakoko, this is because investors’ conditions were likely to deny Tanzania maximum benefit from the project. “The conditions include investors’ demand that they be allowed to set charges for cargo passing through the port. They also want tax exemption on various goods in addition to being compensated for any losses incurred during implementation of the project,” he told The Citizen newspaper in early May.
An initial agreement on the project was signed in 2013 during a ceremony witnessed by President Jakaya Kikwete and Chinese President Xi Jinping. The project was to have been executed by China and Oman’s State General Reserve Fund (SGRF).
In November 2017, SGRF announced that the project would entail the construction in phases of a maritime port built to international standards. The first phase was planned to include the construction of four berths, two of which were to have been set aside for containers, one for multiple uses and another for support services. However, these plans now seem to be in doubt.
According to Mr Kakoko, it was odd that the developers sought tax exemptions on the grounds there was insufficient cargo in the country. “If the country has insufficient cargo, why do they seriously consider Tanzania for investment in railways and ports? The condition requiring the government to compensate the companies in case of losses is the worst. Who knows that they will incur losses? This demand can render the country bankrupt,” he said.
According to him, the doors for discussions were still wide open, noting that the interests of Tanzania will have to take priority. “We are waiting for them. We will be ready for equal participation provided they relax their conditions. They should just bring in the money and be ready to share it with the country, but they should forget about getting 100 per cent preferential treatment,” said Mr Kakoko.
A month later, the stakes were raised further when President Magufuli weighed in on a related matter. The President expressed his strong opposition to the proposed Bagamoyo Special Economic Zone, a 3,000-hectare port and industrial city north of Dar es Salaam.
According to the President, allowing the Bagamoyo initiative to progress would halt expansion of other ports including Tanga and Mtwara, and would entail long tax breaks for investors in the special economic zone. The government has also argued that it would also lose some sovereignty in the management of the project.
The President suggested corruption may have been involved in the government’s payment of billions of shillings as compensation for local residents to create room. “This project has very difficult conditions. They are exploitative and awkward. We can’t allow it,’’ said President Magufuli.
China is in the process of establishing transport and trade infrastructure across Africa, Asia and Europe under the ambitious ‘Belt and Road Initiative’. The Bagamoyo investment was an important part of this global strategy to strengthen the country’s trade and other interests, drawing on the ancient Silk Road trading route.
Opposition leader Zitto Kabwe said President Magufuli was opposed to the project from the beginning. “The conditions he is saying is just diversionary,” said Mr Kabwe, adding that the project would put Tanzania in the world maritime map.
The Speaker of Parliament, Job Ndugai who has publicly expressed support for the Bagamoyo project and challenged the government to roll it out, yesterday backtracked. “We didn’t have information about the stringent conditions that were attached to the project, as was explained by the President,” he said.
Horrific petrol tanker explosion in Morogoro
More than 80 people have been confirmed dead and 50 others serious injured after a fuel tanker exploded into flames at Msamvu in Morogoro town on August 10. Many of the dead were reportedly motor cyclists who were at the scene collecting the spilled fuel and food vendors who conduct their business along the Dar-Morogoro Highway.
The accident occurred about 200 metres from the Msamvu Bus Station in Morogoro town. “The lorry overturned and spilled fuel over 100 metres along the road,’’ said Morogoro Regional Commissioner, Dr Steven Kebwe.
President John Magufuli said he received the news with deep shock. “I have been saddened to learn such a big number of Tanzanians who lost their lives due to the accident. I am extending my condolences to the families of those, who lost their beloved ones and I wish a speedy recovery for those, who were injured in the accident,” he said in a statement.
by Paul Harrison
Tourism renewal throughout 2018
Tourism is the main contributor to foreign exchange receipts for Tanzania, making up over 15% of GDP. According to the Bank of Tanzania, tourism brought in $1.22 billion of revenues in 2018, making it the second largest earner for Tanzania in GDP terms. The government is well aware of the significance of the industry and has been taking steps to diversify the product and the demand.
Indeed, Tanzania’s efforts to attract more tourism revenues have yielded fruit over the last eighteen months or so. According to reporting by the Bank of Tanzania, visitor numbers rose to 688,252 in mid-2018, up from 567,761 in mid-2017, a rise of 21%, as reported in the Guardian newspaper.
Minister of Natural Resources and Tourism, Dr. Hamisi Kigwangalla is pushing for two million visitors to Tanzania by 2020 by increasing the number of tourism products but also the number of nationalities visiting. The Minister has, according to press reports, described Russia as a “new frontier”. The Chinese market is also being actively sought. For the time being, the United States and the UK are the two main markets for Tanzania, alongside Kenya if you include volumes of entries across the Namanga border. The Tanzanian Investment Centre is actively engaged in attracting new tourism industry investment from emerging markets like China to provide sufficient products for emerging Asian demand.
According to the Citizen newspaper, the minister disbanded the Tanzania Tourism Board (TTB) in late January 2019 for being slow and ineffective. It was subsequently reinstated under a new management team. The Minister has been pushing for digitising the system, which has been slow in development and the TTB is under pressure to update itself and its offer.
Diversification of the tourism product will require a boost for the south, which though long-talked about, has yet to come about at the pace the country would like to see. ‘Southern Circuit’ destinations being promoted include Ruaha, Katavi, Mahale and Gombe Stream national parks. Efforts to reinvigorate the southern protected area estate need to continue to avoid reliance on the northern circuit and greater efforts at bringing tourism dollars into the lesser known game reserves. Currently only northern circuit national parks like the Serengeti and Kilimanjaro are profitable, the rest being, in effect, subsidised.
The government is aware that the southern circuit needs considerable promotion, and Tanzania and the TTB will likely want to move away from the tagline of “Tanzania: Land of Kilimanjaro, Zanzibar and the Serengeti” to show case the remaining parks and associated landscapes. Many great southern circuit destinations are being missed by this approach of marketing only the north, rather than taking a more holistic approach such as the “Incredible India” marketing campaign.
Tanzania has had to rise above numerous criticisms in the international media and from certain bilateral partners over its handling of the Selous hydropower scheme, to prove that the majority of the Selous as a protected area will be able to continue to be protected. Criticism has been put that the new hydroelectric dam will lead to significant environmental damage in the existing game reserve through logging and disturbance to wildlife populations, and downstream, such as through various impacts on the drainage system of the Rufiji basin and associated riverine ecosystems.
Nonetheless, clearing of the miombo woodland for the new hydropower site in the Selous game reserve has taken place, with preparations underway now for initiating the dam development, the project having been formally inaugurated in July.
President John Magufuli has been keen to emphasise that the majority of the Selous as a protected system, remains and will remain protected. Indeed, the President has gone further through announcing that the most popular part of the Selous, the northern section, will be upgraded, likely to be called “Nyerere National Park”. The south will remain as a game reserve and hunting licences are in the process of being reissued with new bidding rounds for some concessions underway.
The subject of hydropower has not been limited to Selous and Stiegler’s Gorge alone, as Tanzania has been negotiating with Kenya about halting the proposed construction of a set of dams along the Mara river. This has been an ongoing discussion and it is not clear how serious the Kenyan proposals are.
In the Selous area, the proposed Nyerere national park falls in line with a spate of upgrades to the protected area system as part of the tourism drive. The national park system has risen from 16 to 21 parks of late with the addition of new game reserves in the north west, namely Ibanda, Rumanyika, Birigi, Biharamulo and Kimisi. If the tourism products can be developed in the new sites and well marketed, they will offer significant new potential for further growth of the sector, though there is a risk in the short term of the new parks weighing down the system further.
The rise of interest in tourism by the government is also extending to cultural sights, with new government investments in the Olduvai gorge visitor experience. More investments are needed in other sights, however, such as Kolo, Kondoa, and Kilwa Kisiwani, to continue to diversify the cultural tourism portfolio.
Meanwhile, according to the Citizen, a nine-year-old boy, Advait Bhartia, known fondly by locals as simba mtoto, or little lion, has recently climbed Kilimanjaro, summiting on 31st July 2019. He is perhaps surprisingly not the youngest, that prize going to a seven-year-old.
Taking nature conservation more seriously
Perhaps in recognition, at least in part, of the tourism potential of Tanzania’s natural resources, government attention on the security of natural resources has been on the rise. Wildlife enforcement efforts have been on the rise with a joint task force between the Ministry of Natural Resources and Tourism and law enforcement agencies getting results from intelligence operations and some significant arrests.
There is, as a result, positive news in the world of elephant conservation, with numbers rising again in the country after their brutal persecution in recent years, particularly in the Selous. However, with rising elephant numbers, as the animals start to feel more relaxed away from wilderness areas and head to park boundaries and into public lands, the incidence of human elephant conflict is now a significant problem across many parts of the country, from the Selous to the western Serengeti, amongst other places. Tanzania can be expected to seek financial support to engage with local people to effectively tackle this.
The government is aware of the difficultly of community engagement in conservation, with different forms of participation possible through marine, forest and wildlife management. There may be cause for further simplification of the policy structure to make it easier for communities to manage and benefit from the wild flora and fauna around them. The conservancy model is one option that may be considered, which has been utilised in Namibia and Kenya with some success.
Some positive news is arising in the world of forestry too, with Chome nature reserve reporting a growth in canopy cover following donor investments and new community forests set up to take advantage of sustainable trade of selected hard wood species using Forest Stewardship Council certification.