After Israelis, Tanzania expects Chinese tourists

An uptick in diplomatic ties between Tanzania and Israel has started to bear socio-economic fruits, the Prime Minister Kassim Majaliwa said.

The premier who saw off 274 tourists on the Israeli Airlines plane at the Kilimanjaro International Airport (KIA) over the weekend, pleaded  with the visitors to serve as Tanzania`s ambassadors back home.

Over 1,000 tourists from Israel were since April 20, this year, in the northern tourism circuit to sample various attractions in Serengeti National Park and Ngorongoro Conservation Area.

The first group of the tourists left on Friday night, the second, which was seen off by the Premier, flew on Saturday afternoon, the third on Saturday evening and the last on Saturday night.

Majaliwa invited members of the business community from Israel to invest in the tourism sector in the natural-resource rich Tanzania. He further asked the Israelis to consider coming back to visit Rubondo, Katavi and Ruaha National Parks and Selous Game Reserve in the Southern Circuit as well as Zanzibar.

`We are flattered,` Majaliwa told Carmel  Shlomo, the Director of Another World, as he extended his gratitude to local and Israel tour operators for promoting Tanzania as number one tourist attraction in Africa.

Ten tour operating firms were involved in arranging the Israelis` safari to Serengeti and Ngorongoro Crater, namely Excellent Guides, Mauly Tours and Safaris, Matembezi, Leopard Tours and Safaris, African Queen Adventures and TAWISA from Tanzania and Another World, My Trip, Camel and Safari Company from Israel.

The Tanzania Tourist Board Director, Devotha Mdachi, said a similar group of tourists from Israel were scheduled to arrive in Tanzania by June 2019. `Also expected in May this year are over 300 tourists from China,` she said in an interview, adding that the board was arranging a trip of Israel journalists and tour operators to Tanzania later this year.

One of the Israeli tourists marveled at how the country is very good and its people excellent upon his arrival a week ago, but however observed that roads heading for Serengeti needed to be improved.

Dr. Hamis Kigwangalla, the Natural Resources and Tourism Minister said the government was reforming the tourism sector for it to offer quality services. Last year, the ministry unveiled its ambitious plan to invest over Tshs.300 billion ($130 million) in the untapped Southern circuit for the country to register 2.2 million tourist arrivals a year from the current 1.3 million.

Dr. Kigwangalla said the money would be spent on improving infrastructure, increasing tourist services and promoting the virgin destinations and its rich culture, cuisine and the people of Tanzania cemented renewal of its friendship with Israel when it opened its embassy in Ramat Gan in May 2018, over 20 years after ties between the two countries were re-established.

Tanzania had initially established diplomatic ties with Israel in 1963, but they were torn asunder in 1973, thanks to the intense Arab pressure.

Earnings from tourism, Tanzania`s main source of hard currency, jumped 7.13 per cent in 2018, as a result of increased arrivals of foreign visitors. Tourism revenues fetched Tshs5.5 trillion ($2.43 billion) during the period 2018, up from Tshs.5 trillion ($2.19 billion) in 2017. Tourist arrivals totaled 1.49 million in 2018, as opposed to 1.33 million in 2017.

Also read:Tanzania-China Direct Flights set to Boost Tourism

Kenya’s steel makers lobby for zero rated fees to boost sector

Over 50 stakeholders in the steel sector have called upon the government to zero rate fees in a bid to boost the industry.

The stakeholders who converged for the first ever International Steel Forum in Kenya said that local steel industry is heavily dependent on imported raw materials.

The forum saw the stakeholders sourced from all over the world meet and focus on providing partnership opportunities to boost the sector’s competitiveness and developing frameworks of collaboration to better shape the future of the industry.

Speaking at the event, the Kenya Association of Manufacturers (KAM) Chair Mr Sachen Gudka noted that the local Steel sector has grown over the years, adding that the establishment of stronger partnerships with global investors, would be vital to attain the desired growth in the sector and the economy.

“The future of the sector looks at the development of Smart Infrastructure. Through data and employment of sustainable strategies the sector will spur the productivity of the country and the continent for the next generation.

We are at the juncture where our trade deficit continues to widen as a country, and the numbers in Steel are a clear demonstration of that. If we can forge stronger partnerships, with our global stakeholders finding opportunities to continually invest in Kenya, surely we can turn this around in a short amount of time,” said Mr Gudka.

He further stated that the realization of the targets set out under the Manufacturing and Affordable Housing pillars of the government’s Big 4 Agenda will require a significant input from the iron and steel sector, as it presents opportunities for growth.

According to data from the Ministry of Industrialisation, direct and indirect consumption of steel in Kenya is projected to increase as the country embarks on the development activities as envisioned in the Vision 2030.The major Vision 2030 projects include Lamu port development, railway and roads projects, housing, Industrial parks and the development of the special economic zones all of which utilize steel products. The Iron and Steel industry in Kenya forms about 13 percent of the manufacturing sector, which in turn contributes significantly to the GDP.

The local steel industry is heavily dependent on imported raw materials, as no local sources have been developed to date. The local deposits of iron ore and coal, which are the raw materials for the production of iron, that have been identified in several Locations in the country have not attracted commercial interest.

KAM Steel Sector Chair Mr Bobby Johnson highlighted that though the sector continues to grow, its full potential still remains unexploited, due to a variety of challenges including, high energy cost, Import Development Fees (IDF) and  Railway development levy (RDL) and illicit trade.

Zero Rating to improve sector competitiveness

“We have continued to lobby the government for Zero rating of IDF and RDL for all industry inputs to improve the sector’s competitiveness. In addition,  we are also keen on advocating for the development of clear procedures for smooth implementation of Buy Kenya, Build Kenya and local content – especially for large scale infrastructure projects with a high demand of steel.

If the Big 4 Agenda target to grow Manufacturing’s GDP contribution to 15% is to be met, we must address these challenges.  We remain resilient in engaging the government, with proposals to solve these issues, and anticipate that  favourable  changes shall be effected soon,” concluded Mr Johnson.

It is estimated that the country spends about 60 billion shillings (approximately 750 million US dollars per annum on importation of steel. This import bill can be reduced if high quality steel is produced locally. The development of the iron and steel sector has a spillover effect to other sectors of the economy and has the potential to create employment opportunities to Kenyans. A single steel plant of a capacity to produce 350,000 metric tons of steel per year can generate about 10,000 jobs not to mention the jobs created through other steel related activities.

Other production activities depend on imported hot rolled coils, used for re-rolling into cold rolled coils, which in
turn are processed into galvanized sheets, color coated sheets, bars, rods etc. In 2017, imports of iron and steel were 1.3 million tonnes valued at Sh83,580 million ($826.347 million). Iron and steel exports during the same year are estimated to have been 108,717 tonnes valued at Sh11,717 million ($115.754 million). The local deposits of iron ore and coal, which are the raw materials for the production of iron, have been identified in Kwale, Kitui and Tharaka Nithi but are yet to attract
commercial interest.

KAM is a Business Member Organization representing value-add companies and associate services in Kenya.  Its members’ significant contribution to the economy is estimated at a quarter of the country’s Gross Domestic Product. The Association provides an essential link for co-operation, dialogue and understanding with the Government and other key stakeholders by representing its members’ views and concerns through fact-based policy advocacy.

KAM promotes trade and investment, upholds standards, encourages the formulation, enactment and administration of sound policies that facilitate a competitive business environment and reduce the cost of doing business.

The Association houses the UN Global Compact Network Kenya chapter and its CEO – Ms. Phyllis Wakiaga is the network representative for the country.

Read Also: Kenyan manufacturers back government on recycling

Israeli tourists hail Tanzania`s landscape

The serene rural Tanzanian landscape has wowed more than 1000 tourists from Israel who have just concluded their week-long tour of the country, leaving them planning for more future visits to explore the beauty of the country further.

The visitors from the Middle East have also expressed their admiration of the friendly attitude shown by the Tanzanians who they said were easy to make acquaintance with, noting that Israel stands a good chance of investing in cultural tourism.

The tour guide and leader of the group, Hagit Geffen stated they were surprised by the Tanzanians way of life as most of them seem to live in rural areas far away from towns and cities, and still the government manages to reach out to all these places, providing electricity, water and other essential services.

One of the tourists in the group observed that while back home in Israel people live in cities, towns or Kibbutz (a collective community in Israel that was traditionally based on agriculture) they are not as scattered as here. He also was surprised to see how people managed to get essential needs and basic services far away from cities and towns, yet he thought people must always live in big clusters in order to get services. He further stated that even the language in simple to master noting that in just a few days most of the tourists were able to learn Swahili words and could easily sing the song `Jambo Bwana, Habari Gani? ` citing that they were singing the song along their trips to Serengeti, Ngorongoro, Tarangire and Lake Manyara.

The tourists expressed their desire to return to Tanzania, but this time to really meet and understand the people of Tanzania whom they described to be warm, friendly, happy and peaceful.

A communications official for the Tanzania National Parks (TANAPA) described the arrival of more than 1000 tourists from the Middle East as a `typhoon` which has occurred during the off-season period in the northern circuit. The number of Israeli tourists visiting Tanzania rose to 36,640  in 2017, from 4,635 in 2012, according to data from the tourism board.

The Tourism Minister Dr. Hamis Kigwangalla said the marketing drive is paying dividends since the world is now turning to Tanzania as destination of choice when studying their global travel plans. In February this year, Tanzanian tourism experts attended the International Mediterranean Travel Market (IMTM) in Tel Aviv, Israel to promote the tourist attractions in the country.

The Zion tourists were seen off by the Prime Minister Kassim Majaliwa at the Kilimanjaro International Airport (KIA) over the weekend. The premier said their visit was among ongoing strategies to cultivate mutual cooperation between Jerusalem and Dar es Salaam.

The influx of Israel tourists to Tanzania comes after Israel opened its first visa processing centre in Dar es Salaam putting an end to necessitate people from Tanzania and Israel from traveling to Nairobi for visa related issues. The Tanzanian government also established an embassy in Israel in 2018 which was aimed at strengthening the ties that had been severed by the Arab pressure during the Yom Kippur war of 1973.

Also read: Germany, United Kingdom tourists dominate Tanzania tourism market

What Africa stand to gain from ACFTA

The African Continental Free Trade Area isn’t simply a ‘Free Trade Agreement’ it’s about establishing a unified continental market with 1.2 billion potential customers and where the private sector is a major engine to make it happen.

This, according to the East African Business Council (EABC) was the tone from the discussions of the meeting held on Thursday in Arusha about how the East African Private sector including Small and Medium Enterprises (SMEs) could benefit from the AfCFTA.

The one-day meeting, organized jointly between the EABC and the UN Economic Commission for Africa (ECA), convened close to 40 key players from the region’s private sector.

The office for Eastern Africa of ECA estimates large potential gains from the AfCFTA, including an increase in intra-African exports of Eastern Africa by nearly US$ 1 billion and job creation of 0.5 to 1.9 million.

“Together African economies have a collective GDP of 2.5 trillion USD, making it the 8th largest economy in the world. That makes the continent much more attractive to investment, both from within and from outside the continent”, said Andrew Mold, Acting Director of ECA in Eastern Africa. “This should encourage business people to take advantage of AfCFTA and make the investments necessary to sustain economic growth and create employment”.

Single continental market

According to data from the African Union, the objectives of the CFTA is to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.

The agreement is also expected to expand intra African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general as well as resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

It is also expected to enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.

The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area (CFTA) by an indicative date of 2017.

The Seven Clusters 

The Summit also endorsed the Action Plan on Boosting Intra-Africa Trade (BIAT) which identifies seven clusters: trade policy, trade facilitation, productive capacity, trade related infrastructure, trade finance, trade information, and factor market integration.

The CFTA will bring together fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product of more than US $3.4 trillion.

According to Nick Nesbitt, EABC’s Chairman it is important that the continent having a clear vision to put an end to the fragmentation of the internal market.

“I really applaud everybody who has involved in creating the AfCFTA because their vision is the one of pan-Africanism. It is something our founding founders aspired to. Our thanks to ECA for being at forefront of this conversation and pushing the agenda forward so that the continent becomes a single economic trading bloc”, he said.

Kenneth Bagamuhunda, Director General of Customs and Trade at the East African Community Secretariat, cited the experience of Regional Economic Communities as the building blocks for the AfCFTA. “The AfCFTA should build on what has already been achieved in regional negotiations like the Tripartite Free Trade Area, as well as within our respective regional blocks” he said.

Bagamuhunda highlighted governments need to set a conducive environment for the successful implementation of AfCFTA.

The AfCFTA was signed in March 2018, at a historic meeting of the African Union in Kigali. 52 of 55 African Union member states have so far signed the AfCFTA, 22 countries that have ratified the agreement, which was the minimum number required for it to enter into force.

According to a study by united nations conference on trade and development (UNCTAD), the CFTA must be ambitious in dismantling barriers and reducing costs to intra-African trade and in improving productivity and competitiveness.  Intraregional trade liberalization needs to be contextualized in a broader developmental framework that will provide benefits in terms of realizing Agenda 2063 of the African Union and the 2030 Agenda for Sustainable Development of the United Nations.

“Development-oriented regionalism can contribute to spearheading Africa’s achievement of development goals, the building of resilience to external financial and economic crises and the fostering of inclusive growth. It can have spillover benefits in terms of helping foster peace, security and political stability on the continent. UNCTAD, working in partnership with the African Union Commission, African States and other development partners, is committed to supporting the attainment of these objectives, embodied under the CFTA.” The study reads in part.

UNCTAD also notes that the CFTA may also mitigate costs associated with inaction in building an integrated market. The international trading environment within which Africa participates is changing rapidly with the proliferation of regional trade agreements and, in particular, mega-regional trade agreements, such as the recently concluded Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Regional Comprehensive Economic Partnership. These arrangements may create spheres of trade centred on partner economies, and African countries face the risk that preferences and trade shares in these markets may erode.

According to an EABC brief on AfCFTA, one of the key steps beyond the ratification of the AfCFTA is to prepare and submit tariff offers, under modalities on goods that will determine tariff liberalization on goods to be undertaken between the AU Member States. Under AfCFTA, African Union Member States have agreed to remove at least 90 percent of tariff on goods imported from other State parties. This implies that under AfCFTA the coverage of products with zero-rated is not intended to be 100 per cent but rather 90 per cent with the remaining 10 per cent tariff classified as sensitive and exemption goods.

Currently is not very clear that 90 percent of tariffs refers to 90 percent of total tariff lines only or a combination of a minimum of 90 percent of total tariff lines and not less than 90 percent of the total value of imports.

In addition, there are uncertainties over the remaining 10 percent tariffs and how these are to be approached in relation to exempted and sensitive products, and how those tariffs are to be liberalized, whether partially or in full, and over what timeframes. Some quarters are proposing that of the remaining 10 percent: 7 percent are classified as sensitive goods with a lengthy phasing-in period, and 3 percent of goods to be exempted altogether. However, it is not known which products will be classified as sensitive and exempt. The most negotiating challenge is to determine which tariff lines will be classified as exempt and sensitive

Also Read: EABC means business when it comes to regional trade

 

Tanzania to establish an e-border management system

The Tanzanian government is finalizing plans for the establishment of e-border management control system aimed at improving security at border points and increase revenues.

In the ongoing parliament meetings, the Minister for Home Affairs, Kangi Lugola told the lawmakers that the new system will be operational from July 2019. He also noted that the government will in the 2019/2020 start using e-passport permit and e-visa in all Tanzanian embassies outside the country.

Tabling the 2019/2020 ministerial budget estimates, the minister said the electronic immigration services has shown great success both locally and internationally, citing recent recognition of Tanzanian passport by the International Civil Aviation Organization (ICAO)

The minister said asked the Parliament to approve Tshs.921.2 billion ($400.2 million) for the 2019/2020 financial year whereby Tshs.889.3 million ($386,652) is for recurrent expenditure and Tshs.372.2 billion ($161.8 million) for other expenses and Tshs.517 billion ($224 million) is for salaries.

He said Tshs.31.9 billion ($13.8 million) for development expenditure, whereby Tshs.21.5 billion ($9.3 million) from internal sources while Tshs.10.4 billion ($4.5 million) from external sources.

On the number of visitors to the country, Lugola said about 957,977 people entering the country between July 2018 and March, 2019 compared to 1,021,071 who visited the country in 2017/18.

About 950,507 foreigners left the country compared to 954,926 who left the country in 2017/18. He also stated that during the same period 293 foreigners were denied entry into the country for failure to meet immigration department requirements.

On the same note, some 1,015 Tanzanians who went to foreign countries without following the rightful immigration procedures were returned into the country whereas a total of 5,604 illegal immigrants were repatriated to their countries of origin.

The minister also said following regular operations in the country, a total of 9,610 illegal immigrants were arrested in the country and handed over to various law enforcing organs.

He noted that big criminals cases reported at police stations in the country reached 45,574 between July, 2018 and March,2019 compared to 47,236 reports during the same period in 2017/2018.

He said the deadline in criminal cases is mainly due o early identification by intelligence forces, cooperation with members of the public and the police, increased surveillance and special operations in both urban and rural areas.

The minister further stated that out of the cases mentioned, 17613 of them with 37,267 culprits were filed in courts. About 27,943 are at different stages of investigations and those involved will soon appear in courts.

Speaking on the rate of road accidents in the country, Lugola said deaths caused by accidents were 1,216 compared to 1,985 deaths in 2017/2018, meaning decrease of 769 deaths, equivalent to 38.7 per cent.

The number of those injured in accidents during the same period also decreased from 4,447 in 2017/2018 to 2,639 in 2018/2019, being 40.7 per cent.

The minister told the House that the ministry will in 2019/2020 employ 3,725 police officers to increase the number of the law enforcers.

Also read: East African passports ranked most powerful in the continent

 

How diplomats’ mass exits from Kenya have affected real estate

In filling Nairobi’s many top-end residential estates, the flight of international residents is now being felt in the real estate, a report has revealed.

According to the report released by Hass Consult, economic growth and consumer demand have also affected tax revenue growth and donor funding during the decade-long ‘great recession’ that has followed.

“This steady attrition in numbers was accelerated last year in the new government drive curbing work permits. This triggered a new uptick in international departures, which by the first quarter of 2019 had resulted in significant falls in the sales prices and rents of top-end detached houses, which fell by 4.4 per cent and 4 per cent respectively in the first 12 weeks of the year,” said Sakina Hassanali, Hass Consult’s Head of Development, Consulting and Research.

According to Ms Sakina, the firm foresees some continued downwards pressure in this segment until the international economy improves or Kenya initiates policies to attract renewed growth in international residency.

However, while the top end of the market has been affected by global trends and domestic policies, the other strong mover has come in apartment rentals.

But the other principal strand of this market has been internationals, with Nairobi positioned as one of the four ‘poles’ of Africa, as a centre of diplomatic and commercial activity. This has brought incoming, foreign top management to the African and East African headquarters of European, Asian and American multinationals. It has also brought an abundance of diplomatic staff, and donor-funded staffing, as well as pools of social entrepreneurs and business adventurers.

There has however been a steady downgrading of diplomatic and donor-funded postings since the world financial crisis of 2008, with many western governments running austerity programmes to cover the debt funding for their support of the financial system at that time.

Starting with the top end, it is a fact, and often commented on, that the primary focus for developers over the last two decades, and particularly in the 1990s, and the decade from the year 2000, was at the very top end of the residential market. Thus, today entire suburbs, such as Muthaiga and Karen, Nyari, Runda and Spring Valley, are filled with large detached houses, and lived in by the wealthy.

The report however noted that in filling thousands of large stand-alone houses and villas one has to reflect on the nature and make-up of the market – both for owners and for residents for such homes.

These certainly include the expanding Kenyan elite: CEOs, top politicians, from governors to cabinet secretaries, private secretaries and company directors.

In Kenya’s ever more sophisticated land and property market, the future of all prices is no longer powerful growth. But, as ever, pricing remains a remarkable pointer to unmet demand and shortages and still the clearest guide available to the most strategic development going forwards.

Hass Consult also reported a continuing shift to growth in the Kenyan property sector’s mid-market, as the top-end market adjusts to international pressures and tightening budgets.

Unveiling its property sales and rental price indices for the first quarter of 2019, Hass Consult reported that the strongest price growth in the first 12 weeks of the year was in apartment rents, which rose by 4.9 per cent in just three months, taking the year-on-year growth to 19.6 per cent.

“However, returning to building after the decade of slowdown in apartment pricing would require close attention to location and gaps in the market. “The Kenyan property market has matured, and the only apartments that will now sell and fill quickly are those where developers have properly researched the market and constructed accommodation that fills a proven and unmet need,” said Sakina.

In this, Kenya may also now start to see a new trend in the more widespread conversion of large detached houses into multiple residences. Developer construction over the last 30 years has been dominated by the building of large homes on individual plots, in estates such as Spring Valley, Runda, and Nyari, and areas such as Muthaiga and Karen. However, a substantial proportion of these homes were occupied by international residents. As governments globally have continued to curb foreign spending following the extra debt loading they took on during the financial crisis of 2008, many international and aid-funded operations have been retrenched.

At the same time, changes to Kenya’s work permit regime marked a sharp exodus of internationals in 2018, leading to the vacating of many larger properties. As a result, the prices of detached houses for sale fell by 4.4 per cent in the first quarter of 2019, while rents fell by 1 per cent, as owners and sellers cut prices in an effort to sell or refill. Only in the mid-market of town houses has growth remained solid and inexorable, with sales and rentals having slowed marginally, but remaining robust. In the first quarter of 2019, rental prices on town houses rose by 1.7 per cent, taking year-on-year growth to 11.1 per cent, while sales prices rose by 1.3 per cent, taking year-on-year growth to 7.9 per cent.

“Each quarter we see ever more marked evidence of the relative strength and demand for properties in the middle and lower market, versus the clear slowdown at the top end of the market,” said Sakina.

Also Read: How mergers are shaping up Kenya’s banking industry

Tanzania, China in cement bilateral ties

The Tanzanian government has pledged continued support to Chinese investments at the 2019 Tanzania-China High-level Investment and Business Environment Dialogue in the commercial capital Dar es Salaam on April 17, 2019.

The Minister of State in the Prime Minister’s Office responsible for Investment, Angellah Kairuki, said Chinese investment has had and will continue to play an important role in helping us reach our goal of attaining a middle-income country status by 2025.

She said as the two countries marked 55 years of diplomatic relations this year, Tanzania was committed to continuing working closely with China, particularly through mechanisms within the Forum on China-Africa Cooperation that promotes government and private investments. However, it is unavoidable that some misunderstandings may occur in the rapidly growing and wide-ranging economic relations and trade, she told the event.

“Even so, it is my sincere belief that cooperation and common development will continue to represent the main trend.” “I wish to use this opportunity to urge all of us here present that when problems occur, we should not hesitate to seek appropriate solutions as equal partners through consultations and dialogues with the view to further expanding mutually beneficial cooperation,” said Kairuki.

The minister said Tanzania will strive to ensure ease of doing business by addressing delays in the issuance of work permits and residence permits. Wang Ke, the Chinese ambassador to Tanzania, said the dialogue was a good beginning for the two countries to strengthen communication on investment and business policies.

“If such dialogues can be institutionalized, the Tanzanian government would know better the wishes and appeals of Chinese enterprises in Tanzania, and the Chinese enterprises would better adjust themselves to the new policies of Tanzania,” she said. She said recent years have witnessed steady development of bilateral relations between China and Tanzania, especially the fruitful cooperation in economic and trade fields.

The bilateral trade volume in 2018 reached about Tshs.8.9 trillion ($3.9 billion, registering a year-on-year growth of 15 percent, said the Chinese envoy, who added that China has been the largest trading partner of Tanzania for three consecutive years. Up to now, she said, China’s total investment in Tanzania has exceeded Tshs.16.1 trillion ($7 billion), which made China the largest foreign investor in Tanzania.

Wang said at present, over 200 Chinese companies were making investments and operating in Tanzania, adding that China was also the largest project contractor in Tanzania with investments ranging from infrastructure, mining, agriculture to manufacturing, hotels, real estate and banks. Noting that this year marks the 55th anniversary of the establishment of China-Tanzania diplomatic relations, Wang said the Chinese embassy in Tanzania will continue fulfilling its obligations by building connections and facilitating participation in China-Tanzania cooperation.

The China-Tanzania high-level dialogue on investment and business environment was aimed at providing a platform for the Tanzanian government to publicize, introduce and promote its investment policies and business environment and to facilitate investment, project contracting and trade business operations of Chinese companies in Tanzania.

Also read: Tanzania to open consulate in Guangzhou trade hub

 

Newly introduced e-tax stamps save Tanzania $1.7 million

The Tanzanian government has been losing about Tshs.4 billion ($1.7 million) per month in uncollected taxes on locally produced cigarettes and alcoholic beverages before Electronic Tax Stamps (ETS) started being used in January 2019.

The Tanzania Revenue Authority (TRA) Commissioner General,  Charles  Kichere told  reporters on April 16th that in March 2019, TRA collected Tshs.42.8 billion ($18.6 million) on the on cigarettes and alcoholic beverages which is an addition of Tshs.3.5 billion ($1.5 million) compared to Tshs.39.3 billion ($17 million) collected the same month last year.

The Commissioner General said the lost revenue is estimated to be higher than that because some producers are yet to enter ETS due to some reasons and the real amount of money that was being lost will be known once all manufacturers use the new tax system.

He said all local manufacturers as well as importers of cigarettes and alcoholic drinks have until the end of this month to install and start using ETS. After that period products bearing paper stamps will not be allowed into the market, he stated.

He further stated that all four cigarette companies, seven beer brewers as well as 12 wine and spirit makers already use ETS technology while seven producers stick the stamps manually under supervision of the TRA since they still use old technology that cannot support the system.

He also said that 14 importers of cigarettes and alcoholic beverages have already joined the new system, with the second phase of implementation of ETS starting on May 1, 2019 targeting soft or carbonated drinks, water, juices and CDs/DVDs.

Installation of ETS in factories and dealership points for the second phase has already began with 45 tax stamp applicators having been put up in 18 industrial establishments.

Kichere expressed hope that all local manufacturers and importers of cigarette and alcohol beverages as well as carbonated drinks, water, juice and CDs/DVDs go electronic, this will boost revenue collection significantly as the old paper stamp system shortchanged the public in uncollected revenues. He gave an example of a liquor producer who paid between Tshs.140 million ($60,800) and Tshs.160 million ($69,500) per month in excise duty before ETS but now is paying Tshs.274 million ($119,130).

President Magufuli recently said outlawed paper tax stamps entrenched systemic corruption whereby the government officials entrusted with revenue collection colluded with the private sector to evade taxes.

After the introduction of the ETS in 2018, manufacturers of beer, soda and cigarettes said at a joint meeting with the government that they were not opposed to the stamps but bearing the cost of running the system would add to the cost of doing business. The manufacturers said that the tender was not awarded competitively and that the terms inappropriately required them to pay for the installation of the stamp machines. The Commissioner General defended the government by stating that the ETS was meant to safeguard government revenue by providing accurate production of data on real time, and would enable the government determine in advance, the amount of duty to be paid and provided by TRA. It will also enable the government to track goods right from the factories, border entry points, warehouses to the final destination.

The ETS is administered by the Electronic Tax Stamps Regulations, 2018 and violation of the ETS is punishable by imprisonment for a term not exceeding three years, or a fine not less than Tsh.5 million ($2,173) and not exceeding Tshs.50 million ($21,739) or both.

Also read: Tanzania losing out big time from informal sector revenues

Tanzania cautioned over signing EPA with EU

A visiting renowned German scholar has cautioned Tanzania not to  sign an Economic Partnership Agreement (EPA) trade pact with the European Union (EU), saying the deal is rhymed against the country`s aspiration of becoming an industrial economy.

Addressing reporters in the capital, Dar es Salaam on 15th April, 2019, Helmut Asche who is Professor of Economics, Politics and African studies at the University of Leipzig said as a country set to build industries and export produce, Tanzania should not sign deals that flood its market with imports.

The EPA is an anticipated trade deal between the East African Community (EAC) and the EU which gives EAC products total access to the EU market, with 82.6 per cent of imports from the EU allowed on the EAC market.

Professor Asche warned African countries against signing EPA because the arrangement does not favour their economies. He further said that Tanzania in particular has no need to rush into signing the deal at a time when other African countries were reviewing such trade arrangements with rich nations.

But if other countries chose to ink the deal, they can go ahead but Tanzania should not be swayed by such decisions as it seeks to protect her own interests and choices of other countries won`t affect her, argued Asche.

Professor Asche also advised the government that the focus for Tanzania – and indeed other African countries should be to build strong economies through industries that use local raw materials and not otherwise.

Kenya and Rwanda have already signed EPA, leaving out Tanzania, Uganda, Burundi and South Sudan still contemplating their next course of action. Negotiations for the EPA were concluded on October 16, 2014 and all EU member-states and the EU itself signed it.

Tanzania has been unhappy about the trade pact, arguing that the agreement will have serious consequences on its revenues and the growth of its industries.

At the EA Summit in Arusha on February 1, Kenya, with the biggest stake in the EPA, lobbied the partner states to start applying the trade pact on an individual basis rather than as a bloc to allow those that have not signed to sort out their issues.

Uganda argued that signing the pact as individual countries would compromise the unity of the region, hence its decision to wait it out.

Burundi, which was sanctioned by the EU after political unrest when President Pierre Nkurunziza ran for a controversial third term in 2015, also maintained that it would not agree to sign the trade deal, given its deteriorating relations with Europe.

But economic experts warn that signing the agreement as individual countries would weaken the region`s rules of origin and give rise to partner states operating on different trading regimes, a situation that is likely to compromise efforts towards regional integration.

The deadline for the signing by EAC countries had originally been set for October 1, 2016 but was extended since then.

Trade and development agreements have been negotiated between the EU and African, Caribbean and Pacific partners to cover goods, fisheries and development cooperation.

Economic Partnership Agreements (EPAs) are trade and development agreements negotiated between the EU and African, Caribbean and Pacific partners engaged in regional economic integration processes.

The EU-EAC EPA covers trade in goods and fisheries as well as development cooperation that aims to reinforce cooperation on the sustainable use of resources. Further negotiations are ongoing to include services and trade-related rules in the future.

The deal is balanced and fully in line with the EAC Common External Tariff. It bans unjustified or discriminatory restrictions on imports and exports, which contributes to the EAC’s efforts to eradicate non-tariff barriers in intra-EAC trade. It supports the EAC’s regional integration agenda and has what it takes to foster development.

Also read: Uganda now willing to sign EU’s EPA agreement

Africa becomes world’s largest free trade zone

AfCFTA, when fully ratified, will cover more than 1.2 billion people with a combined GDP of USD2.5 trillion.

Gambia has become the 22nd nation to approve the Africa Continental Free Trade Agreement (AfCFTA) giving the African Union (AU) the minimum threshold for the agreement to come into force.

On Tuesday, April 9th, Gambia’s parliament approved the AfCFTA which was enacted last year to create the largest trade zone in the world.

AfCFTA is expected to increase intra-African trade by 52 per cent by the year 2022 and remove tariffs on 90 per cent of goods.

AU’s Commissioner for Trade and Industry, Albert Muchanga led celebrations of the historic achievement saying that ‘the AfCFTA market is ready for the launch of its operational phase in July this year’.

Ethiopia deposits free trade pact ratification to AU

And as if on cue, Ethiopia on Thursday deposited the instrument of the AfCFTA ratification to the AU Commission.

Ratified by 22 African countries, the AfCFTA has so far seen 19 AU member countries depositing the instruments of ratification to the 55-member pan African bloc.

Sierra Leone and Zimbabwe are expected to make their ratification, according to an AU statement on Thursday.

AU Commission Chairperson Moussa Faki Mahamat receives Ethiopia’s ratification deposit from the representatives of the Federal Republic of Ethiopia on Wednesday in Addis Ababa. www.exchange.co.tz
AU Commission Chairperson Moussa Faki Mahamat receives Ethiopia’s ratification deposit from the representatives of the Federal Republic of Ethiopia on Wednesday in Addis Ababa. [Photo/AU]
AfCFTA coming into effect

After the receipt of the 22nd instrument of ratification, the AfCFTA will enter into effect in a month.

Following Ethiopia’s move to deposit its ratification, the Senior Advisor and Chief Trade Negotiator in the Prime Minister’s Office, Mamo Mihretu, said Ethiopia’s ratification was “a historic occasion, marking the first ever free trade agreement Ethiopia has ever signed.”

Mahamat added that Ethiopia, which is the host country of the AU “has taken concrete steps such as the issuance of visas on arrival for citizens from AU member states, as a demonstration of the country’s commitment towards the Free Movement of People Protocol as an integral component of the AfCFTA.”

AU Commission Chairperson Moussa Faki Mahamat said in a statement that this “was indicative of the commitment of the Ethiopian government and the leadership of Prime Minister Abiy Ahmed in advancing the African integration agenda.”

What is AfCFTA?

The UN Economic Commission for Africa (ECA) says the AfCFTA will be the world’s largest free trade zone by the number of countries if ratified by all the 55 African countries.

Once operational, the AfCFTA will expand intra-African trade by up to USD35 billion per year and usher in freedom of movement for goods, services and people across the continent’s internal borders. www.exchange.co.tz
Once operational, the AfCFTA will expand intra-African trade by up to USD35 billion per year and usher in freedom of movement for goods, services and people across the continent’s internal borders. [Photo/WEF]
AfCFTA, when fully ratified, will cover more than 1.2 billion people with a combined GDP of USD2.5 trillion.

Launched in Rwanda’s capital Kigali, in March 2018, this continental free trade pact was signed by 44 African countries then. It aspires to create a tariff-free continent to grow local businesses, boost intra-African trade, spur industrialization and create more jobs.

ECA says that once operational, AfCFTA will boost the level of intra-Africa trade in excess of 52 per cent by the year 2020.

The AU says that by the time it convenes its mid-year coordination meeting in July this year in Niamey, Niger, more of its member countries will deposit instruments of ratification.

In a continental meeting held in Addis Ababa in March, African Trade Policy Center Coordinator at the ECA, David Luke, described the AfCFTA as one of the milestone trade policy developments in Africa.

“Africa is set for massive transformation as more countries are expected to sign up and ratify the African Continental Free Trade Agreement (AfCFTA) in 2019. It is expected to change the way Africa does trade and catalyze transformation in a way trade policy has not done before,” he added.

Countries missing from the AfCFTA

Nigeria, Africa’s largest economy is among countries which have abstained from the AfCFTA. The others are Benin and Eritrea whose economies are estimated at less than USD30 billion each.

Interestingly, Nigeria’s economic nominal value is estimated at USD400 billion.

Nigeria’s lack of commitment may be due to the fierce opposition from labour unions and the fact that the country hosts the largest concentration of people living in extreme poverty in the world.

The World Economic Forum acknowledges that “a united African continent working towards common goals would be a major force on the global economic stage.”

WEF adds that there are challenges to effecting the AfCFTA since currently, Africa is a patchwork of regulations and tariffs.

Due to this, trade between countries has suffered as a result.

“For example, only 10 per cent of Nigeria’s annual trade activity is with other African countries. This is a surprise given the country’s dominant economic standing and location firmly in the centre of the continent.”

WEF says that as a whole, Africa’s intra-continental trade level hovers at just around 20 per cent, while nations in Europe and Asia are at 69 per cent and 59 per cent, respectively.

While there is a lot of room for growth, UNCTAD has acknowledged that opening borders between countries could help spur growth on the continent.

Growth and development in Africa are pegged on boosting internal migration within the continent, a United Nations Conference on Trade and Development (UNCTAD) report says.

UNCTAD Secretary-General Mukhisa Kituyi said that for a long time the narrative on African migrants has been driven by fear.

“Contrary to media projections, the largest movement of African migrants is within Africa. Migrants also make a very clear contribution to the economy of the country they move into,” Dr Kituyi said.

You can also read how safe, controlled migration benefits African countries where the AfDB’s Senior Vice-President Charles Boamah says migration challenges require bold responses.

He adds, “In this regard, the Bank has developed the CRFA- an excellent tool to build resilience in our regional member countries.”

AfDB says that the AfCFTA is a major force for continental integration.

“It will expand intra-African trade by up to USD35 billion per year and usher in freedom of movement for goods, services and people across the continent’s internal borders, with a regime of reduced tariffs and non-tariff barriers to cut the cost of doing business on the continent. It will also boost agriculture and industrial exports by up to USD66 billion per year.”

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