January 29, 2000



ZANZIBAR will this year export more than 5,000 tonnes of seaweed, following a remarkable development in seaweed farming in the Isles.

The Zanzibar Government is expected to earn USD 1.7 million (Tsh. 1.4 billion) from the exports: one tonne of seaweed is sold at USD 350 on the world market.

The associate director of the Institute of Marine Science (University of Dar es Salaam) Dr Matern Mtolera, told Business Times that export of seaweed has been expanding due to improved seaweed farming methods.

Dr. Mtolera, however, basted developed countries for exploiting poor countries by ‘fixing’ seaweed prices. "The prices fluctuate; still, we’re exploited because their marginal profit is very high."

"We’ve been giving the Government, and farmers, technical advice on better seaweed farming. The crop contributes about 20 per cent of Zanzibar’s total export earnings," he commented.

Established in 1979, the Institute of Marine Sciences has research and training in seaweed farming as one of its several activities.

Seaweed forms part of a large group of organisms referred to as algae, which are plants that grow in sea water. Several thousand species are known to occur on marine waters world-wide.

Seaweed contains ploysacharides, substanes that are extracted to obtain agar-agar, algin and carrageenan used in food, pharmaceutical, cosmetic and agriculture industries.

The extracts are used in the food industry to make ‘milk shakes, beer, custards, dessert gel, fish gel, cake toppings and fillings, ice cream, chocolates, yogurt, canned foods and salad dressing.

Narriman Jiddawi, head of the department of marine living resources and ecology at the Institute, told Business Times that seaweed farming has been expanding fast since 1989 when commercial seaweed farming started.

According to Narriman, seaweed contributed 14.7 per cent of all export earnings for Zanzibar in 1993. In 1994, this rose to 27.3 per cent of total earnings – USD 794,000 (Tshs 492 million). Said she: "Seaweed farming is really expanding; villages engaged in the farming have increased from 2 to 53, and the companies involved increased from 2 to 4. Total tonnage exported has risen from 2000 to 5,000 tonnes."

She added that the crop has also boosted household incomes. It is estimated that a seaweed farmer gets Tsh. 10,000 per month on average. The price of a kilo of seaweed at the local market ranges from Tsh. 120 to Tsh. 200.

The seaweed business is carried out by private companies which enter into contracts with the Government and seaweed farmers. Contracts between the companies and the government are based on the need for the company to develop the area (village) allocated to it for seaweed farming within six years of the contract.

The contract between the companies and the farmers states that the companies will provide inputs to the farmers on the understanding that the product would be sold to the company concerned.

"We’re still researching on whether seaweed farming can be further improved; and whether the crop can, in the near future, take the position of cloves in our economy," noted Jiddawi.

Zanzibar competes with Indonesia, the Philippines and Namibia at the world’s seaweed markets. In addition to the Zanzibar islands, Tanga, Mtwara and Lindi also produce seaweed.





THE price of an acre of land in Tanzania has reached Tsh 2 billion, a land market survey by the University College of Lands and Architectural Studies in 1998 has shown.

The survey – conducted in Kilimanjaro, Arusha, Dar es Salaam, Mbeya and Mwanza regions – has shown that prices of an acre in Dar es Salaam city centre range from Tsh500 million to 2 billion.

In the Pugu road and Mikocheni industrial areas of Dar es Salaam, prices range between Tsh 120 million and 150 million an acre. At Tabata on the outskirts of the city, one has to pay between Tsh 50 million and 75 million for an industrial plot. At Mbezi beach industrial area and Oyster Bay low density plots sell for between TShs 30 million and 50 million each.

In Arusha, the land price in the central area is Tsh 20 million an acre; and in Njiro/Themi Hill, the price is Tshs 3 million.

Land in the central and shanty town areas in Kilimanjaro sell at Tsh 10 million and Tsh 3 million an acre respectively.

In the central area, and residential plots in prime areas of Mwanza are available at Shs 30 million and Tsh 3 million respectively.

Land prices for the high density area in Mbeya is Tsh 700,000 an acre; central area, between Tsh 2.5 million and 4 million; and Tsh 10 million for land in the industrial area.

(US$ 1 = Tsh 800)


January 22, 2000




Difficult to implement in this financial year

WHILE the public has been anxiously waiting for the Government of Tanzania to Implement its decision to lower electricity tariffs during this financial year, it has been learnt that this will now "not be an easy task".


While presenting the budget estimates for the ministry of energy and minerals to the National Assembly in Dodoma last July, Tanzania’s energy minister, Dr Abdallah Kigoda, announced the Government’s intention to reduce tariffs by between 30 and 50 percent in order to relieve economic hardships among consumers.


But, since then the Government’s silence on the matter has been creating doubts, anxiety and even confusion among existing consumers of electricity as well as prospective investors.


Investigations by Business Times have established that Tanzanians will continue to dig deeper into their pockets to pay inordinately high power tariffs. This is largely due to persisting budgetary constraints being faced by the Government-thus rendering it unable to afford to lower the rates this fiscal year.


"Currently, there is no budget which can support such a reduction- which would require the Government to heavily ‘ compensate’ Tanzania Electric Supply Company (TANESCO) if the exercise is implemented," said one senior official who is close to high governmental circles.


The permanent secretary in ministry of energy and minerals, Partrick Rutabanzibwa, has confirmed to Business Times that the proposed reduction exercise has been weakened by the absence of budgeted funds to support electricity tariff reduction. Such a reduction would mean that the Government has to subsidize TANESCO by the difference resulting from such a reduction.


Said he: "The simplest and immediate means of reducing power tariffs is for the Government to compensate TANESCO so that it does not affect targeted revenues. The general (understanding) on this issue is that the Government should write off TANESCO debts so that it is not to be affected in terms of efficiency and revenue collections."


According to Rutabanzibwa, the Government is currently unable to carry such a burden. Power reduction will remain a difficult subject until, he said, "the budget is rectified."


Confirming that the ministry has already completed its preliminary task on power tariff reductions, the permanent secretary said: "What is being awaited is the Treasury’s decision: Whether it has money to subsidize or not."


But neither Raphael Mollel, the Treasury permanent secretary, nor his deputy, Gray Mgonja , were available for comment as they were said to be out of the city.


Daniel Yona, the finance minister, was not reachable too; his private secretary (Kweka) told Business Times that the minister would be available after the Parliamentary sitting in Dodoma beginning next Tuesday.


Said Kweka: "What I know is that the Cabinet had already ‘sat;’ but I can’t establish what the decision was in so far as electricity tariff reduction is concerned."


Daniel Mshana, the TANESCO public relations manager, told Business Times late last year that his firm had already completed all the necessary prerequisites for implementation of the exercise. Said he "The programme has reached an advance stage; but, for more in formation, contact the permanent secretary in the ministry of energy and minerals."


Another reliable source closer to the Office of the President told Business Times that the exercise to lower electricity tariffs is likely to remain unsolved for a very long time. This is because the Government has to procure billions of shillings for the general elections due in October this year.


Tanzania has the highest power tariffs in East, Central and Southern Africa thereby keeping at bay prospective investors in the manufacturing sector.


The tariff in Tanzania at USD 0.12 per unit - is double the rate payable in Kenya. It is only USD 0.05 per unit in Uganda. Most of the countries in Central and Southern Africa have electricity tariff rate ranging below USD 0.05 per unit.


This concern was sounded by Dr. Kigoda himself in his budget speech: "... in all SADC (Southern Africa Development Community) countries, and the East African regions, Tanzania’s electricity tariffs are he highest, (thus) affecting production in our industries, the agricultural sector and water....", he confessed.





Fate of TTCL cellular ‘phone licence still enigmatic


THE DECISION whether the Tanzania Telecommunication Company Limited (TTCL) should retain its cellular telephone services licence or not is still enigmatic as the Tanzania telecommunication Commission (TCC) was, until last week, yet to discuss the company’s application for extension. Six months ago, the Commission granted TTCL licence to operate cellular phone services in the country. But the later violated one of TCC’s conditions which requires a licensee to at least start installing equipment within six months.


Mkumbwa Ali, the TCC public relations officer, told Business Times in an interview that the issue was briefly raised at a board meeting last week; but it could not be discussed.


Said Ali: The Commission has required its Secretariat to bring along in-depth information before the Board meets again in two weeks time."


He added it would be during this second meeting that a decision will be reached whether TTCL should retain its license or not; but, he stressed, "that’ll depend on how it will convince TCC through (Tangible) evidence like construction on the ground".


TTCL has applied for a six months extension of its licence following the expiration of the first six months last December. In the application TTCL has mentioned ‘technical hitches’ as the cause of its failure to take off.


"At least", he added, "TTCL has to show some developments in the new cellular phone services


Some of the requirements which TTCL needs to comply with before starting operations include the forming and registering of a new company to operate the cellular phone service, with an account of its own. It is understood that such company has already been formed.


Asked to comment on claims that there was some pressure not to grant TTCL a cellular phone service licence due to the fact the company has an extensive telephone network in Tanzania and, if granted a licence, it would kill off other cellular phone operators, Ali said: "The argument does not hold later – because the present network can’t directly be used by TTCL cellular phone services". He said TTCL will go into the service in three phases if it retains its licence – with the first phase likely to be in Dar es Salaam and Arusha.


TTCL was granted its cellular phone services license last June after withdrawing its about 29 percent shares from Mic-Tanzania Limited (Mobitel) as a prerequisite for the granting of a licence.

January 15, 2000


New lakeside hotel to cost TShs 8bn



ABOUT USD 10 million (Tsh 8 billion) will be spent on the construction of a new posh along the shower of Lake Victoria in Mwanza municipality.


The managing director of the project, Joseph majige, said in an exclusive interview with Business Times last week that construction work started three year ago, is expected to be completed at the end of this year.

He said that: following completion of the first phase early last month, the establishment known as the Rock Beach Hotel was on Christmas Eva tentatively opened to customers who wanted to enjoy the afternoon breeze coming in from across the world’s second largest fresh water lake. Visitor

Were also able to obtain drinks. And sample tropical dished at the hotel’s Green Garden restaurant along the beachfront.

The hotel is designed with 60 en-suite bedrooms, a selection of conference facilities for up to 150 delegates, two restaurant and three bars. There will also be a gym, and access to swimming and water sports facilities all within an area of about 10 acres.

Situated within the municipality just few metres from the famous Bismarck Rock Hotel at the foot of capri Point Hill to the north of the municipality- the hotel has as a background living rock and the natural, unspoiled beach.

Construction of the Rock Beach in Mwanza a town which grew from a small fishing village during the German era to a major lakeside economic powerhouse in that part of the country, opens a new chapter in Tanzania’s tourism development.

As the principal and administrative centre of Mwanza Region, Mwanza is Tanzania’s second city (after Dar es salaam ) in terms of population and commercial enterprises. It is the hub of the country’s northwest tourism circuit, which is endowed with a breathtaking natural scenery.

Hitherto, Mwanza has been lagging behind despite its tremendous tourism potential due to a lack of aggressive promotion and the creation of a conducive environment for the industry’s growth. As a result of Tanzania’s present policy of trade liberalisation, and encouragement given to private sector, investors- most of whom are indigenous Tanzania – have responded to the call to invest in the hotel business as an essential component for the growth of the tourism industry.

About eight decent hotels-new or refurbished-have come up in Mara and Mwanza regions. Over the past ten years now. They include Tilapia, Kirejesh Tented Camp, New Musoma and Peninsula Hotel

In the meantime, refurbishing of the New Mwanza Hotel is still in progress, according to Mwita Gachuma, the hotel’s director.

He told a press conference last week that about Tsh 400 million has so far been spent in renovating 60 rooms and the installation of new TV sets and other communication facilities.

Under the project, Gachuma said, swimming, shopping and parking facilities for up to 20 cars have been added.

The hotel, which was established by the tourism ministry over 30 years ago, was privatised three years ago.

January 8, 2000



TRA collections below target


A REVENUE crisis in Tanzania is currently hitting the economy hard. Reliable sources have told Business Times that collection of Government revenue in the first part of the 1999/2000 financial year has been 15 per cent below the target.


In terms of the Govt. budget estimates presented to Parliament last June by the minister for finance, Daniel Yona, the Govt. had projected to collect total of Tshs 810 billion during the current fiscal year.


But, according to BoT monthly reviews for the period July to October last year, the Govt. had collected Tshs 232.2 bn only-which, on average, mean collections of Tsh. 58.07m per month. On this basis -and, barring miracles- the Govt. can expect to collect only Tsh. 700 bn by the end of the financial year.


The ongoing shortfalls are putting severe pressure on Government budget, resulting in delays in essential expenditure.


In an exclusive interview with Business Times recently, the 2nd vice chairman of the Confederation of Tanzania Industries (CTI), Ravi Chande, said the shortfall has made the Government unable to pay salaries of civil servants on time during the past three months.


"The shortfall is one of the reasons for the deterioration or relationships between the Govt. and the International Monetary Fund. It is also one of the reasons for the recent issuance of warrants of distress" to some traders, he said.


A few weeks ago, the Revenue Authority and its agents issued dozens of warrants of distress against some traders who are allegedly in arrears over disputed taxes.


Chande cited illicit international trade-especially via the infamous Zanzibar and Lake Victoria routes as the major method of tax evasion in Tanzania. The under collection of taxes on international trade is exacerbated by under invoicing, false tariff classifications and tax evasion by transit and lake routes.


"Although customs is a Union matter, Zanzibar charges a lower rate of taxes on imported consumer goods. It is these goods which find their way into the Mainland market without the collection of the differential taxes on them,’ he said.


CTI estimates that the total value of taxes that are evaded on the international trade is over Tsh. 100 billion per year.


He noted that liberalization of the petroleum industry has fueled tax evasion in the country. "It is estimated that the resultant loss of revenue for the last year stood at Tshs 50 billion."


Chande blasted the value add tax (VAT) department for being unable to effectively deal with falsified returns by VAT regulations.


"Instead of aggressively pursuing these tax evaders, we’ve witnessed a tendency on the part of TRA officials to harass those responsible'’ tax payers in the industrial sector-and leaving the evaders to go scot-free,'’ Chande pointed out.


According to CTI’s provisional estimates, the total amount of out standing VAT refund claims by its members exceeds Tshs 10 bn.


When contacted for comment, the TRA deputy manager for tax payer education and public relations, Augustine Mukandara, was unsure of the given data. "Are these data researched and determined? Because tax evasion must be researched and determined," commented Mukandara.


But, according to Chande, the CTI data were obtained through research, BoT, personal contacts and other information gathering systems between CTI and other stakeholders in the economy.







The Government of Germany, through its Agency for Technical Cooperation (GTZ), has contributed a total of DM 16 million (Tsh 6.4 bn) towards the water sector in the northern regions of Tanzania.


The regions to benefit are Arusha, Tanga and Kilimanjaro.


The Contribution is in the form of financial. Co-operation through KfW, and is scheduled to end in September this year, according to a recent Tanzanianian-German Development Co-operation report.


Germany is supporting implementation of a new Government policy to install" independent and autonomous user-owned water supply schemes."


In the rural water sector, different models have been implemented and tested. Some schemes have been installed by regional water engineers who remain principally responsible for the project.


Others follow the urban example, which is aimed at establishing independent water-user associations, user trusts or shareholding companies.


The ministry of water (MoW) favours models that are based on the principles of: user ownership; being demand driven; applying affordable technology; using private sector expertise for capacitation; construction and management with the users bearing the cost of operation and maintenance, and the districts assuming the role of facilitation and control only.


Hydrographically, Tanzania is a water rich country, with an estimated sweet water availability of 15 cubic metres of water per head per day. However, it is estimated that only 70 per cent of the urban population (and 48 percent of the rural population) have access to water.


Under former governments, the provision of water in Tanzania was considered a service provided free of charge by the State.


With the deterioration of the economy and the liquidity of the government, however, it could not fulfill the enormous task of building and maintaining sufficient water installations.


As a result, many water schemes fell into a state of dilapidation and were no longer serviceable or, often, beyond repair.


Consequently, the Government abandoned the policy of free water and the provision of other social services, and adopted a policy of cost-sharing and cost-recovery-at least for operations and maintenance.


GTZ is presently involved in the support of the rural water sector through the following projects:


East Kilimanjaro Water Supply Project (EKWSP); support to the rural water sector in Tanga; and Uchira Water Supply. The Agency is also an advisor to MoW.


KfW also supports the water sector in Arusha town.


The funding had been arranged in two phases which still elapse in September this year.


Phase One lasted from January 1993 to May 1997, during which the public was mobilised, user committees formed and the formation, by EKWSP, of the Kiliwater Company Limited in September 1995.


The company has the objective of managing and maintaining sustainable distribution of water to its stakeholders on a cost-recovery basis.


More than 12,000 individual house holders out of an estimated 45,000 have taken up a share in the company; and the pipe network has been expanded to more than 700 kilometres.


Phase Two covers June 1997 to September 2000. This focuses on the further enhancement of ownership and acceptability by the target group; completion of the technical rehabilitation through such measures as the construction of supplementary water supply lines.


Also included in Phase II is the development of alternative water sources- such as ground water- and building the commercial and administrative capacity of Kiliwater Company Ltd. Through the installation of metering, billing and a commercial information system.


A strong effort on enhancing revenue collection upon which the future of the company rests will be made during this phase.


In Tanga region, the Support to the Rural Water sector (SRWS) project has been able to support at least 50 water committees at any given time since 1995.


The water committees are assisted in identifying water sources, discussing alternative technologies, and selecting solutions. More than 30 per cent of Village Action Plans developed are implemented by villagers with support from SRWS facilitators.


By December 1997, SRWS had supported 11 water committees, out of which 41 implemented their action plans successfully; while 33 were still being supported.


Private artisans have been supported to develop entrepreneurial skills through training and the provision of equipment and tools. At the moment, artisans have registered their businesses, and are getting jobs both in rural and urban areas independent of SRWS support. Others are working as freelance artisans.