June 26, 1999

Govt. budget hits Tanzania shilling hard


THE Tanzania shilling weakened fast against the United States dollar only three weeks after the minister for finance announced the government budget for 1999 2000.

The shilling declined from Tshs 709 three weeks ago, to Tshs735 against the dollar.

The announcement by the minister for agriculture and cooperatives, William Kusila, that food shortages of 600,000 tones were bedeviling Tanzania further sent shivers down the spine of the economy, causing the shilling to fall further against the US dollar

According to a Business Times survey of 10 bureaux de change and four commercial banks, average exchange rates fell from Tshs 709 per dollar on June 7 this year, to Tshs 735 per dollar on June 28.

The average exchange rate at the bureaux declined from Tsh715 per USD on 7, to Tshs 737 per USD on June 28,1999.

Mojor Shinde of Exim Securities & Investment Limit said the food scarcity the country is facing will make the local currency to keep falling. This is because the country needs the dollar to import food.

At the commercial bank, the average rate decline from Tsh705 per dollar on June 7,1999, to Tsh732 per dollar three weeks later.

With regard to the British pound, the shilling fluctuated at around Tshs 1,135 per pound sterling from June 7, 1999 to Tshs 1,140 per pound on June 28, 1999.

Both in bureau markets and the commercial banks, the shilling declined from Tsh,132 and Tsh,128 per pound respectively on June 7,1999,to Tsh1,139 and Tsh1134 per pound on June 28,1999.

The chief executive officer of the International Bank Malaysia in Dar es salaam, George Koshy, told Business Times that Tanzania has imported more than it has exported. The main imports are food intended to cushion deficits.

He said Tanzania will continue to import more, and this will make the local currency weaker and weaker against all hard currencies

According to data obtained from the bank of Tanzania, Tanzania trades in dollars by about 90 per cent; and the rest of the other hard currencies share the remaining 10 per cent of trading.

All the dollar that are offered at the Interbank Foreign Exchange Market are invariably sold out showing that there is a high demand in the economy, for the dollar.


June 19, 1999

Computer importers happy with tax reduction

IMPORTERS and dealers of information Technology (IT) in Tanzania received the national budget announcement with relief, following the reduction in import duty on IT equipment by 75 per cent.

National budget unveiled last week that effect from July 1 this years the customs duty rate will be 5 per cent instead of the current 20 per cent on computer software and hardware, including accessories, printers, UPS and systems with embedded processors

Some interviewed companies dealing in IT equipment in Dar es Salaam have said that the reduction of the customs duty will give Tanzanians more opportunities buying computers at affordable price.

Raghavan Sudarsan, Business Machines Tanzania Limited (BMTL) sales manager in computer division, said one of the problems that computer dealers are facing was high customs and VAT which has made the computers be sold at the high price.

Raghavan said there will be fair competition and it will reduce smuggling, I expect that the company’s sales will double because most of the businesses even the small ones will by computers.

One senior official with soft Tech said high rate of import duty and value Added Tax (VAT) was a set back of development of IT in Tanzania as many people were unable to buy such equipment.

She said computers are important for the country’s economy as they are used in telecommunications, banks, hospital, airline and other vital sector.

"I believed that Tanzanians could benefit from the government’s customs duty reduction. This will encourage many Tanzanians to use computers in several sectors for the country’s economic growth", she said.

According to the minister for finance, Daniel Yona, reducing import duty is aimed at to encourage Tanzanians to us computers.

Following the reduction of import duty, the computer which is bought at USD 1,000 in the US will be sold at around USD 1,900.

Prior to the duty reduction, he said, Tanzania had the highest rate of import duty on IT accessories in East Africa.

In Uganda import duty on IT equipment was zero-rated while VAT was lower than in Tanzania. Also Kenya has lower rate of import duty in IT equipment which is 5 per cent. Kenya’s VAT rate is 15 per cent, less than Tanzania’s 20 per cent.




Rufiji bridge to help promote tourism in southern Tanzania


SOUTHERN Tanzania’s tourism circuit will get a good boost after the completion of the Rufiji Bridge scheduled in the coming two years. The bridge, which will connect most parts of southern Tanzania, will help promote Selous Game Reserve. With over 55,000 square kilometres, the reserve is the biggest natural word where photographic safaris are carried out. It attracts a number of visitors class. Due to poor communication, tourism is only possible during the dry season. President Benjamin Mkapa recently laid the foundation stone of the bridge which will cost USD25 million upon its completion, and other tourist sites to be connected by the bridge include Tendaguru Island where remains of one of the earliest animals in the world were discovered. Historic sites in Kilwa are the other areas to be connected by the bridge while more investments in the less developed Lindi and Mtwara regions will be promoted. The Minister for Natural Resources and Tourism, Zakia Meghji, said the ministry is devoted to promote the less developed southern tourist circuit comprising the Udzungwa Mountains National Park, Mikumi, Ruaha and Sealous.

June 12, 1999

Dar unveils soft budget to raise production

CIVIL servant’s salaries have been raised to undisclosed to levels for the 1999/2000 fiscal year budget which has also adjusted various taxes that will lower the prices of pharmaceuticals, tractors and computers

However, the budget increases prices of cigarettes, beer, sprits and local wines. Imported soft drinks and wines may, however, be a little cheaper than now.

Although the levels of new salaries are to be announced later by the ministry responsible for Civil Service, the minimum salary may likely go up to Tsh 45,000 ($ 65) which is the highest non-taxable income under the new Pay -As -You-Earn (PAYE) structure contained in the budget. All along in the past, the government minimum wage has not been taxed.

The new structure has only four tax bands with the highest marginal income tax rate reduced from 35 per cent to equate it with corporate income tax rate of 30 per cent. The structure will not result in a reduction of revenue estimates for the years.

value-Added Tax (VAT) on pharmaceutical products approved by the National Pharmacy Boards will be zero- rated so that producers may get refunds of on inputs. Meanwhile, air charters aircraft engines, spare parts for aircraft and aircraft maintenance are to exempted from VAT effective July 1.

Airport tax for domestic travelers goes up by 50 per cent to Tsh 3,000 in the budget which is geared to tighten measures against tax evasion and the collection of more government revenue.

Presenting the budget in Parliament at Dodoma yesterday in a 85-minutes speech, the Minister for Finance, Daniel Yona, also announced various changes that will open up more revenue channels for local authorities.

Tractors will be imported tax free, thus abolishing the five per cent import duty in order to promote of modern technology and farm implements on the agricultural sector.

On the same line customs duty for computers software and hardware including accessories, printers UPS and system with embedded processors has been revised downwards to 5 per cent from 20 per cent to encourage Tanzanians to us computers and tackle the Millennium Bug.

Excise duty for cigarettes has been increase by 10 per cent while the excise duty on local and imported beers has been harmonized at Tsh 200 per litre in stead of Tsh 174 per litre on local beers, beer from ex COMESA members states and Tsh 153 for imported beers from else where.

The excise duty on local and imported wines has been harmonized at Tsh 674/25 per litre instead of instead of Tsh 508/30 per litre for local wine and Tsh 776 per litre for imported wines. For spirits, the rate is being harmonized at Tsh 1,000 per litre for local and imported stuff instead of Tsh 864 per litre for local spirits and Tsh 1,000 per litre for imported spirits.

Yona also announced the streamlining of various other taxes for the benefit of local industries and consumers. He declared that from now onwards, the government will use imported duty as an instrument of protecting domestic industries instead of excise duty.

In order to curb tax evasion he said that the Tanzania Revenue Authorit will be empowered to fix minimum dutiable value (MDV) corporate tax on imported goods with a high incidence of under- declaration of value.

These good include soap and detergents, iron and steel, paints, plastic products, cement, tea, sacks and bags, rice, textiles, shoes, edible oils, metal packing, fishnets, lid & caps, plastic bags, beer, spirits & wine, bulbs match boxes, motor vehicle batteries, radios, bicycle tubes and tyres.

Yona also said that Commissioner General of TRA is being empowered to publish names of notorious tax evader to induce tax-evaders to pay tax.

June 5, 1999



The international travel and tourism exhibition which scheduled to kick off in Dar es salaam from 21st to 23rd May has been postponed due to poor response from the international as well as the local travel and tours companies and associations.

Called Multi Expo 10 the purpose of the event was to contribute towards the promotion of the Tanzania Tourism Sector by facilitating the establishment of global partnership between travel markets in the developed counties.

Mustafa Rajani, managing director for Multi Travel and Tours Limited the organizer for the event said that "after having gathered all resources and prepared for an international Travel and Tourism Exhibition we regret to inform the public that Multi Expo 10 has been postponed.

He said that it is their conservation that with the Arabian Travel market and various New Millennium Events at home and abroad the event is attracting no interest.

Rajani said, over and above this fact it is also evident that the current money market has compelled industry men and women to restructure their organisation to suit the changing travel markets and participate only in selected target areas. Asked of Multi did not envisage there problems he replied that the time was set after consultations with experienced people in the field. "I believe that foreign Tour Companies do not think of Tanzania as a major OUT BOUND travel market", he said.

Another problem that we faced was that, despite encouraging words from many prospective participants they did not came forward with firm registration, he added. This was fearful as we were only pumping money in the preparation and waiting with hopes. Organising such an event is an onerous task indeed, I must and do say it loudly that had it not been due to the support of the Ministry of Natural Resources and Tourism and Tanzania Tourist Board perhaps our morale would have diminished, he said.

Guidance that we got was tremendous and I do not hesitate to make a special mention of the director of tourism and managing director of Tanzania Tourist Board who made contribution to the idea of this world class travel and tourism fair, said Rajani. We are optimistic that a favorable date will be fixed after further survey, we know we can do it.

"I believe that outsides will get attracted in future date as Tanzania is growing but we have to change the programe and its style in general," he said.



Improve services, key players in tourism told

TANZANIA can have more tourists if key players in tourism improve their services.

The director of Skylink Travel & Tour Limited, Moustafa Kwataw, told Business Times, that the government projects that 500,000 foreigners will tour Tanzania next year and all this will depend on the efforts of government and other key players in the industry. He said the industry is important for the country’s economic growth. "Tourism is very complex and needs a lot of investments in implementing the plans to make Tanzania achieve its tourism goals," he said.

Compared to neighboring countries, he said, Tanzania is weak in publicizing its riches for tourists. "We have not invested much in tourism business and thus revenue from the industry is very low," he said.

Kenya has been selling and promoting the country well in tourism, even telling the world that Mount Kilimanjaro is in Kenya while it is in Tanzania.

Much of Kenya’s achievements from tourism do not come from its natural endowment but through a vast private input in tourism development.

Khataw said while the government has the upper hand in improving the tourism, more important is that the policy should protect Tanzanians and give more privileges so that they can perform better.

The government should involve key players and take stock of problems from the operators. While preparing a budget, the agents should be able to contribute fully in giving their views so that whatever is discussed in parliament should actually present the views of the stakeholders.

"I think the country should concentrate more so that the industry can perform better," said Debbie McNight, an American tourist, in an interview on how Tanzania can improve its tourism.

She added that on the other hand, hoteliers, tour operators and travel agents should in position to improve their services.

She said she has visited several countries and found that hotel rates are too high in Tanzania compared to standards and services available.

Meanwhile, according to figures obtained from Tanzania Tourist Board shows that the country’s earnings from tourism account for 14 per cent of the Gross domestic Product, and generate USD 400 million out of 401,000 tourist arrivals.

The figures show that Kenya earns over USD 500 million out of 500,000 tourist arrivals.

Tanzania uses about USD 415,000 on promoting tourism. Kenya’s budget in the sector is more than USD 1.3 million and South Africa spends about USD 13 million on promotion.

He said advertising can be expensive. To put details of Tanzania’s national parks on the Cable News Networks for one minute only would cost about USD 33,000

Tanzania has large attractive networks of parks and reserves covering about 25 per cent of the land, with unique 12 national parks, 17 game reserves, 50 game-controlled areas, a conservation area and a marine park.