Editorial
Analysis
Bravo
Tanzania Pyrethrum Board
Tanzania is a country that produces a number of cash crops including pyrethrum
but the problem has always been with marketing the crops.
In the recent years, pyrethrum farmers decided to stop cultivating the crop
because buyers owed them millions of shillings.
However, the government stepped in the matter and provided the Tanzania
Pyrethrum Processing and Marketing Company Limited (TPPMCL) some Tsh.1.48
billion through the Export Credit Guarantee Scheme which rescued the farmers.
Following the move, farmers resumed cultivation of pyrethrum after getting
assurance of their crops’ market.
Recently, there was some good news. The Tanzania Pyrethrum Board (TPB)
recently announced that plans are underway to build a pyrethrum refinery in
the country. This thought deserved to be hailed and TPB should be given full
support.
This is because; the construction of a refinery will kill two birds using one
stone: it will provide a more reliable market for pyrethrum farmers and at the
same time will enable the government to get foreign exchange.
The government, according to TPB Director General, Ephraim Mhekwa used to lose
a great deal of foreign exchange due to exporting semi-processed pyrethrum to
the United States.
TPB has shown the way, it is now the responsibility of all stakeholders in the
industry to devote their full support towards making the putting into place of
this refinery a success. We wish all the best to TPB.
Fewer guns, please
ZAKHE ZONDO, a community leader in Alexandria, a Johannesburg township, tried to
stop a row between two drinkers in a shebeen last month. For his pains, one shot
him dead, then killed the other drinker and fled. It was typical of the
20,000-odd violent killings in South Africa every year. A few days later three
more young men were shot dead during a petty tussle on a beach near Cape Town.
At weekends and holidays, stray bullets whiz as often as fireworks. On average,
two South African children die everyday from gunshot wounds.
Though South Africa’s homicide rate is dropping slowly, it may still be the
world’s highest (except, perhaps, for those involved in civil wars). Easily
available guns, used in roughly half of all murders, are increasingly popular.
Some 200 policemen are killed every year, mostly with pistols (often their own).
As Mr Zondo found, pub brawls quickly become fatal.
Too rarely do the police catch the crooks: it was typical that no witnesses in
the busy shebeen would talk about Mr Zondo’s death. So the government has
launched a campaign to rid the country of “surplus” weapons. Under a three-month
amnesty, which ends in late March, police stations will receive unregistered
guns, with no questions asked, and destroy them. The police are also setting up
road blocks to check cars and buses for illicit firearms. The crackdown has its
own risks: one search led recently to a fatal shoot-out near The Economist’s
Johannesburg office.
A new firearms law also makes it harder to own a weapon legally. Gun-lovers
grumble that “draconian” controls will leave innocent people unarmed and
vulnerable. But tighter rules would help. Some 4.5m guns are registered in
private hands; stored carelessly, many are easy pickings for robbers. Between
1994 and 2001, owners reported 184,000 guns lost or stolen; barely half were
recovered, many only after being used in a crime. And accidents often happen.
Last year a local rugby hero shot dead his teenage daughter, mistaking her for a
car thief whom he thought it fine to kill.
The tighter rules might, at first, push more people to buy illegal guns. Owners
must now prove they can store and use guns responsibly, and explain to the
police why they need a weapon for self-defence. Very few new licences are being
issued; legitimate sales are slumping. But even if demand for black-market guns
rises, lobby groups like Gun-Free South Africa say the supply will eventually
decline, so pushing up prices. Then fewer people may take them to the pub.
Analysis
Tanzania
spoils its fortune in cashew business
Lack of processing facilities,
slowly decreasing production and apathy to improve quality force in the country,
once a world leader in cashew business, recline, while Brazil and India make big
gains at the expense of Tanzania. The continent loses over US$500 millions of
profit. Timothy Kitundu analyses what
went wrong and what can be a possible way forward…
Once a leader is now tottering to retain its position. They have already been
outwitted and dethroned. And the loss is in tune of millions of US dollars. It
is time for a wake up call.
It is cashew nut that the country is fast losing out on. The industry is
suffering from lack of new ideas, motivation and facilities than can still make
the country one of the major global players in the sector. The problems are
manifold, but indicate largely to one common problem area, lack of business
acumen and foresight. And it will not take a Herculean effort to make things on
the right track.
The major problem, as it seems, is the lack of processing facilities. Only 10
per cent of country’s produce are processed here, which is a ridiculously small
amount if we talk about exporting cashew nut in global markets. The problem
precisely starts from here with the continent exporting 95 per cent of raw
cashew nuts in the world.
By way of exporting the raw nuts, the country not only goes on losing its wealth
in terms of profits but also ignores the potential of generating huge number, of
employment opportunities who could have worked in the industry.
Now, a continental cashew association has been planned to promote a campaign to
add value to its nuts and to encourage higher production, better quality and
marketing Africa as a source of quality cashews. Currently the African cashew
industry employs three million households, but is dogged by depressed prices and
dwindling production.
Mozambique and Tanzania who were the main global producers, have been edged out
of the top positions by India, Vietnam, and Brazil, whose respective processing
capacities are 750,000, 300,000 and 300,000 tones. While world cashew production
has increased, Africa’s share has decreased steadily with current output of
300,000 tones which is less than half its potential of 700,000 tones.
According to an agency that is helping to revamp cashew industry in Africa known
as TechnoServe, cashew processing can generate annual revenues for Africa as
high as US$500 million by 2015 of which 40 per cent would go to wages for manual
labour.
TechnoServe claims that not only African processors need to be competitive in
four specific areas which include broken nut yields, reduction of production
costs, working capital rates, maintaining quality and reputation. Processors
must also have access to quality nuts to assure long term industry viability.
One of the major challenges is the deterioration of the quality of cashews.
According to Donald Mitchell, a Lead Economist with DECPG, the quality of
Tanzania’s raw cashew nut exports has deteriorated since the marketing
liberalization of 1994/95.
This is apparent from the events of this past year, when early shipments were
rejected by Indian importers and also from comparison of export unit values
calculated from Food and Agriculture Organisation (FAO) data before and after
liberalization.
The average export unit values for Tanzanian cashew nuts declined 14.8 per cent
from the pre-to post-liberalisation period compared with the other Sub-Saharan
African countries.
Before liberalisation, extension agents in the villages used to supervise the
sorting of cashews into three grades: standard, under and rejects. Now cashew
nuts are purchased and exported without grading and often include nuts that
would have been rejected before 1994/95.
The other challenges include the inability of farmers to finance production
namely the cash costs of inputs and labour, high overall taxes and rapidly
increasing local taxes, lack of the initiatives to aggressively replant with
faster maturing varieties and lack of domestic processing.
Statistics from every one of Africa’s big producers paint a bleak picture in
processing. Guinea Bissau, the second biggest producer in Africa and the fifth
in the world produces 90,000 tones and almost all the production is exported for
processing in India and that 80 per cent of the population is connected to the
industry.
Tanzania, whose 2004/05 production is expected to be 84,000 tones, processes
only about 10 per cent of its production, while the rest is exported to India
for processing. A small amount of processed kernel is exported to the US, SA and
Europe. The sector employs 280,000 smallholder farmers.
Raw cashew nut production in Tanzania has fallen from 128,000 tones in 2001 to
84,000 tones currently. Analysts say a viable processing industry in the country
could create 30,000 direct jobs and generate $40 million in incremental
processing revenues annually.
According to TechnoServe Tanzania, a single factory that processes 1,000 tones
of cashew nut per annum would create 300 jobs double export earnings from the
cashew crop and support 10,000 growers.
Experts also argue that replanting with improved varieties would reduce costs
and make Africa a more competitive exporter. Also, developing a more competitive
private sector processing industry would create jobs and reduce dependence on
India as a market for raw nuts.
The issue of taxes is to be addressed as well. Exporters of raw nuts in most
African countries are favoured than those exporting processed nuts. For example,
in Tanzania, there is only a 3.5 per cent export tax on raw nuts and there is a
1 per cent tax on the export of processed kernel which means that there is no
incentive to process kernel rather export raw nuts. As a result, the value added
industry of cashew processing is absent in Tanzania, as in other African
countries.
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