Editorial
Analysis
Collective schemes empower communities
The Unit Trust of Tanzania
(UTT), a recently established government institution
at last unveiled its long term strategies to work with various social groups in
the
country in establishing specific schemes.
Initially, UTT will sponsor its collective investment scheme to be called
‘Umoja’
Fund and according to UTT this will be operational next May. This Fund is
thought
to teach many Tanzanians who could not access stock exchange market to invest
and enhance saving culture.
It indeed looks prudent as majority of Tanzanians will have the opportunity to
buy
units, which thereafter will be pooled in aggregate small savings.
We are told one person will be able to pay just Tsh. 3500 for 50 units
instead of
the market price of Tsh.5,000. This actually will pave the way for public
ownership of privatised parastatals.
We are also pleased that the government is deeply committed to redeeming many
Tanzanians by laying ground for them to acquire shares of companies listed on
the Dar es Salaam Stock Exchange (DSE).
With the establishment of such investment schemes, it is evident the scope of
share holding will increase and clear the hurdles that resulted in slow movement
of
the process.
With its concept of “ bringing the market closer to the people” we are
confident
that UTT would create a conducive infrastructure so that most people in rural
areas can actively participate in market activities as they will be able to
transact
business within their own localities.
We are sure the commercial banks and financial institutions that UTT intends
to
enter into agreements with to reach a wide network, will cooperate in this
crucial
exercise which might bear fruits to the nation.
Investment schemes and empowerment role have sparked a lot of debate among
sections of the public, but still it is true the link between the two be made
clear.
As UTT itself believes, empowerment is linked to effective participation of
local
communities in their economies for sustainability and national economic
development.
Duty on all printing material should be waived
Early this November, the
Parliament was told by the Minister for Finance that the
three East African countries under the East African Community (EAC) would not
charge import duty on newsprint and exercise books.
However, other printing material was not spared, causing an alarm in the
printing
industry as local paper mills can not meet the demands of the industry.
It is clear that all other material will attract an import duty of 25 per cent
as a
move to protect local paper mills, mentioned as the Mufindi Paper Mill (MPM)
formerly SPM and the Kenya based Pan-African Paper Mills.
All these measures were taken following the information that the MPM has
resumed production and it will meet some of the local paper demand.
In reality, MPM will commence trial production this month and if the situation
allows, it may start commercial production towards the end of this year which,
however, has not been ascertained hundred per cent.
We are concerned that with the imposition of 25 per cent import duty, local
printing industry will be greatly destabilised. Most printers will have to
depend on
imported printing material for a number of reasons.
One, MPM plans to produce newsprint paper, if circumstances allow, in 2008,
which is too far. Secondly, MPM can not produce newsprint soon as its local
market consumption is below 60 per cent and thirdly higher power tariffs still
haunt the mill.
Therefore, it would have been more advisable had the government or EAC to take
into consideration these points before imposing the 25 import duty on printing
material. After all, the criteria for fair competition are several, including
prices and
quality: let these two decide.
Analysis
Improved air transport crucial to economic growth
By Angela Mazula
Air transport has a great role to play in the national economic
development as it
renders support to the tourism industry and export of horticultural produce.
Tanzanian policies need to re-affirm the availability and flexibility of air
transport
to support national economic growth.
It is important to harmonise and integrate air transport policies with those of
tourism, horticulture export and general trade in order to achieve the benefits.
Tourism is one of the largest industries in the world and studies predict its
increasing growth as the business sector in the world economy.
According to the Director General of Tanzania Civil Aviation Authority (TCAA)
Margaret Munyagi, the economic growth of the country depends on tourism which
in turn depends on air transport through Dar es Salaam, Zanzibar and
Kilimanjaro.
Munyagi said this year’s figures show the annual foreign exchange income
generated from tourism is Tsh. 750,000,000 trillion and the number of tourists
who
enter the country stands at 650,000 - from Europe, South Africa, Australia,
Japan
and other countries.
Tanzania is the home of best African game reserves, namely Selous, and national
parks such as the Serengeti. . Other national parks and reserves that attract
tourism are Ngorongoro Conservation Area, Mount Kilimanjaro, that is the highest
in Africa, Mikumi National Park, Arusha National Park and Tarangire National
Park.
Records show about 34,165 tourists visited Zanzibar between January and June
this year compared to the figure of 19,963 recorded between January and
November this year.
About 115,000 tourists are expected this year, with a large number coming from
Italy. Sources at the Ministry of Natural Resources and Tourism revealed the
number of tourists who land at Jomo Kenyatta International Airport, Nairobi, and
then come to Tanzania by charter planes and roads is three times higher than the
number of tourists who land at the Dar es Salaam International Airport (DIA),
Zanzibar and Kilimanjaro International Airport.
The reason for the above is not just aggressive publicity by Kenyans, but lack
of
air transport infrastructure in Tanzania.
Charles Chacha of TCAA said tourism is a labour intensive industry, which
generates employment opportunities for semi-skilled, technical and managerial
workers and it is a decentralised industry capable of diversifying regional
economies.
He added while the industry comprises small businesses, there is increasing
involvement of multinationals and big local companies.
It has been argued that tourism has a larger multiplier effect than any other
sector since every unit of tourist expenditure goes through several rounds of
income creation and expenditure before its effect is exhausted.
While tourism industry in Kenya attracts 1,200,000 tourists annually and employs
300,000 Kenyans, Tanzania draws 650,000 tourists per year. However, with
improvement in air transport followed by joint efforts in international
publicity and
relaxation in some of the taxes imposed on airlines operating into and out of
Tanzania, we can compete well and even surpass our neighbours, Kenya and
Uganda.
Tourism remain the important sector in the country as it contributes more than
16
per cent to growth development programmes in Tanzania and provides direct and
indirect employment to as many as 157,200 people in the
country.
Director of Transport and Communication Batholomeo Rufunjo said in Dar es
Salaam the ability to travel quickly, safely and comfortably across vast
distances
has truly turned the world into a global village of opportunity and massive
human
interaction.
He said the government will have to continue with its efforts of reviewing
existing
legislations, regulations and laws, where such work can be simplified and done
in a
harmonious way. If the private sector and the consumers are to be involved, it
must discuss extensively on issues such as competition, tariffs, double
taxation,
financing, affordability, accessibility, environmental issues and to look at
consumer service as the ultimate target.
UTT: For the people, by the people
By Kizito Makoye
From the early eighties, the government embarked on a privatisation
policy, in
which public parastatals and utilities were divested. Certainly, the
government’s
decision was prudent if our country was to cope with realities of modern
economies as the whole idea of divestiture entails increased performance of
crucial institutions.
It is good to learn that some of the divested parastatals have already become
profitable and a section of Tanzanians have had the opportunity to own shares of
divested companies listed on the Dar es Salaam Stock Exchange (DSE).
This is indeed a milestone for most Tanzanians, who for one reason or the other
could not secure shares of various companies. Companies listed on DSE
include TOL, Tanzania Breweries Limited, Tanzania Cigarette Company, Tanga
cement and DAHACO.
Noticeably, divestiture could not go parallel with the capacity of the market to
absorb the changes. Consequently, warehousing approach was developed to deal
with the problem. The shares being warehoused are awaiting an appropriate time
for divestiture.
The warehousing exercise is being facilitated by the Unit Trust of Tanzania
(UTT), which succeeds the defunct Privatisation Trust (PT). UTT is holding in
trust 23,594,277 shares of TBL, 3000,000 shares of TCC, which are being
applied as seed capital for several investment programmes to be established in
future.
Recently, UTT revealed its plans to establish a collective investment scheme to
be called ‘Umoja Fund’. This fund will in the long run empower most Tanzanians
to
acquire shares of companies on the DSE.
People from across the country will, irrespective of their status, be able to
buy
units that will be pooled together to aggregate small savings into large funds.
A person will be able to pay Tsh. 3,500 for 50 units instead of the market price
of
Tsh. 5,000 and the dividends will be paid every six months. In essence, this
will
encourage most people to cultivate culture of savings provided the units are
sold
at a reasonable price.
UTT made it clear there should not be any scepticism among the general public on
the fate of invested money, as there will be a fund manager, who is an
investment analyst.
Most Tanzanians are yet to understand the merits of investing in
shares despite the public education by DSE. It is however clear now ‘Umoja fund’
which kick starts and precedes other investment schemes, will undoubtedly
increase overall participation of Tanzanians.
With Umoja Fund, the market will be brought closer to people. In essence, they
will be able to do business in their own localities. UTT intends to liase with
banks
and financial institutions with wider networks so as to facilitate business
transactions.
We are also told that UTT will ensure shares held in trust are distributed among
Tanzanians in a manner that will encourage and facilitate savings and wider
participation by citizens in the ownership of privatised enterprises.
The promotion and establishment of collective investment schemes by the UTT
will undoubtedly bring more advantages to Tanzanians. Currently, there is no
such
scheme in Tanzania.
Instead of every individual keeping Tsh.10,000 at home knowing that it is too
small amount to invest, ten thousand individuals may invest the same amount
and pool together a sizeable fund, amounting to Tsh.100,000,000 and
subsequent benefits thereof can be distributed to the investors in proportion
to
what they have invested.
Collective investment schemes are helpful for low-income earners who can save
and invest the few resources that they have. The UTT believes that this
aspect not only provides hope but also leads to visible economic benefits
in
the long term.
Other African countries have also seen the merit of such schemes. A most typical
empowerment case for collective investment schemes is that of Ghana. At one
time, the Housing Finance of Ghana learnt it was difficult for Ghanaians to
access
mortgage finance due to a failure to meet a 10 percent own contribution
requirement. It later established a Unit Trust scheme to facilitate savings.
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