Arusha — East African businesses will tomorrow engage key agencies to facilitate trade in Tanzania.

“The meeting aims at providing solutions to enhance business environment in Tanzania, hence increase intra-EAC trade,” said the East African Business Council (EABC) chief executive officer, Ms Lilian Awinja, said.

EABC, the East African Community Secretariat, Trademark East Africa and the Tanzania Private Sector Foundation will host a public-private dialogue (PPD) with key trade facilitation agencies.
The forum will bring together stakeholders from public and the private sectors to discuss major developments as well as address key challenges facing entrepreneurs across the EAC in conducting trade in Tanzania.
Businesses will seeking an understanding of new developments with regard to the work of trade facilitation agencies and clarifications on issues affecting their businesses.

Specifically, the key objectives of the forum is to provide an opportunity to TBS officials to interact with the EAC business community on various requirements regarding compliance with standards in Tanzania. It will also offer an opportunity for TRA officials to discuss with business executives on various tax requirements and compliance, particularly those that are applied to goods from EAC.

The talks will also be a good platform for TPA to interact with the businesses on new developments at the Dar es Salaam Port and the progress towards making it a more efficient port in service to East Africans. TFDA officials are expected to clarify matters regarding the compliance with technical regulations for entry of food, drugs, cosmetics and other products into Tanzania.
Tanzania has been rated lowly in reports on ease of doing business.

The World Bank Ease of Doing Business Report for 2015 placed the country at No. 131 out of 189 countries. It revealed that Tanzania sank by one position compared with how it fared a year before.

The score areas and positions that put Tanzania at rank 131 out of 189 countries in 2015 included starting a business (124), dealing with construction permits (169), getting electricity (87), registering property (123), getting credit (151), protecting minority investors (141), paying taxes (148), trading across borders (137), enforcing contracts (45) and resolving insolvency (105).

According to the report, it takes about 26 days to start and run a business in Tanzania, which is a slight improvement compared with the average of 27.9 days in the sub-Saharan Africa.

Rwanda’s doing business 2015 rank was 46, up from position 48 in 2014. It took 6.5 days to start and run a business. Kenya’s doing business 2015 rank was 136 up from 137 in 2014.

Morogoro — Customers will not be charged extra money

Banks will have to deduct 18pc from fees

Weeks of confusion over 18 per cent Value Added Tax (VAT) on bank transactions yesterday came to an end after Finance and Planning Minister Dr Philip Mpango clarified that the amount will be levied from the transaction fee that banks impose on customers.

Therefore, according to the minister, customers will not be charged extra money and instead banks will have to deduct 18 per cent from the fee to cover VAT. Dr Mpango was speaking after opening a capacity building workshop for internal auditors organised by the Japan International Cooperation Agency (JICA) as part of the corporation’s funded Capacity Development Project.
The clarification came at the time when the public was in a thick forest — not knowing who actually was supposed to bear the cost. While the minister has capitalised on his previous stance, various banks had already started circulating messages to their customers, directing that there will be new charges in relevance to government’s move to introduce the tax.

The ‘mystery’ deepened more when two government institutions –Tanzania Revenue Authority (TRA) and Bank of Tanzania (BoT) gave different interpretations relating to the new charges.

While TRA argued that the tax should be borne by the banks and financial institutions, the central bank maintained that customers should carry the burden.
The interpretation mismatch from the two institutions falling under the same ministry had even thrown the public into a tight spot, with others questioning why the minister was not immediately coming out of shell to shed the light.

Giving clarification to journalists in Morogoro yesterday, Dr Mpango insisted that customers were already being charged by banks and would, therefore, not be charged again.

In its place, he maintained his previous stance that the government will impose the tax on transaction fees charged by financial institutions. Principally, the burden of the tax falls to the final consumer while banks are only required to administer it.

However, economists put it clear that there was no need to charge customers the 18 per cent VAT because final consumers were already being subjected to transaction fees.

For instance, he said, a bank charges its customer 1,000/- transaction fee, the government will impose the 18 per cent VAT from the charge, noting that the transactions fees charged by banks were not something new.
Last week, TRA Principal Research Officer, Mr Beldom Chaula, said in Dar es Salaam that there has been confusion among the public on the said 18 per cent VAT.

He said some people have been misleading the public by saying that 18 per cent VAT on financial transactions will be charged from the amount that is withdrawn or deposited by customers. Instead, the TRA official said, VAT is charged from the set transaction fee.

“TRA does not charge tax from bank’s transactions or interests, the 18 per cent VAT is imposed on the transaction fee and not the whole deposited or withdrawn amount,” he explained.

Presenting the 2016/17 national budget in Dodoma last month, Dr Mpango proposed Value VAT on fee based financial services; a move he said will widen the tax base and increase government revenue. The proposal was later endorsed by MPs.

Enormous deposits of helium–estimated at 54 billion cubic feet–have been discovered in Tanzania’s Rift Valley and could relieve dwindling supplies of the rare gas, which is used in hospitals in MRI scanners as well as in spacecraft, telescopes and radiation monitors. “This is seven times the current global consumption,” said Professor Chris Ballentine of Oxford University, one of the researchers working on the project. “This is enough to fill over 1.2 million medical MRI scanners.”
The discovery, described as game-changer, is set to end concerns over a shortage of gas used in medical diagnosis equipment, mainly MRI and in rocket science. Some independent analysts say the recently discovered helium gas in Lake Rukwa could be worth $3.5 billion.
As scientists in the UK and Norway on Monday revealed the discovery of a large helium gas field in Tanzania, the government said it was not aware of the precious gas.the Permanent Secretary in the Ministry of Energy and Minerals, Mr Justin Ntalikwa, told the ‘Daily News’ in an interview that the government was yet to be informed on the new discovery.
“We don’t have any information regarding the discovery of that gas; those who have announced the discovery know it all,” said the PS. Up until now, helium has been mostly found accidentally during oil and gas exploration.
Helium is formed by the slow and steady radioactive decay of terrestrial rock. However, global supplies are running low, with warnings that supplies cannot be guaranteed in the long term.
Prof Jon Gluyas, of the Department of Earth Sciences at Durham University, who collaborated on the project, said the price of helium had gone up by 500 per cent in the last 15 years.
“Helium is the second most abundant element in the Universe but it’s exceedingly rare on Earth,” Prof Gluyas was quoted by the BBC News as saying. Tanzania Petroleum Development Corporation (TPDC) Managing Director Dr James Mataragio said his organisation had no mandate to deal with helium gas.

What must Chevron’s CEO John Watson be thinking as he sits in his office in San Ramon, California and ponders the future of his Angolan subsidiary, the Cabinda Gulf Oil Company Ltd (Cabgoc)?

How much longer does he estimate that he needs to keep on the good side of José Eduardo dos Santos’s corrupt and kleptocratic MPLA government to ensure Cabgoc can continue to operate? Is he hedging his bets? Or is he staking Chevron’s African corporate future on the faint chance that the Dos Santos family and their acolytes will not be brought to justice for their crimes?

While oil industry analysts around the globe were divided about the merit of the President’s nepotistic appointment of his daughter Isabel to head the restructured Angolan state oil company, Sonangol, Watson’s man in Angola, the Cabgoc director John Baltz, was telling a US-Angola Chamber of Commerce conference that he was “optimistic” about the move.

“The government has acted. It is clear the direction they want to go. I am always optimistic. I certainly support the direction Sonangol is taking,” John Baltz said.

That’s an interesting position given Chevron’s position as one of the doyens of international oil companies in Angola.

The Chevron website proudly boasts of nearly six decades of operations in Angola. Last year alone, its subsidiary Cabgoc produced 110,000 barrels of liquids and 55 million cubic feet of natural gas from its Angolan wells. Over those years it claims to have invested $215 million US dollars in programmes to support the health, education, environmental and social needs of millions of Angolans.

As anyone who has visited the Cabgoc ‘enclave-within-an-enclave’ in Cabinda knows, it has certainly invested millions in creating a slice of California, separated by barbed wire from the remainder of Cabinda which shows little evidence of material benefits in health, education, environmental or social needs from such oil company benevolence.

How did Chevron channel these funds to the millions of Angolans it claims to have benefited? To whom were those checks made out? Given the well-documented reality of doing business in Angola, is it possible the funds had to be routed through the governing MPLA party and its notoriously corrupt leadership?

It must be quite the predicament for the Chevron Johns. On the one hand it would be foolhardy to jeopardize their current cozy corporate status in Angola by publicly acknowledging that the head of state has flouted the laws of the land by abusing his status to appoint a direct family member to run Sonangol.

On the other hand, if and when the Dos Santos family’s grip on Angola comes to an end, if the presidential family is called to account for their actions, then the actions of many rich and powerful corporations who have done business with them over decades will surely also come under close scrutiny.

There have been previous allegations that Chevron was able to influence the Justice system in Angola because it benefits from its clout with the ruling MPLA. Would such influence survive beyond the Dos Santos regime?

And what about the US Justice system? And in particular, that 1977 US federal law known as the Foreign Corrupt Practices Act?

If Isabel dos Santos’s appointment to head Sonangol survives the coming legal challenges, the Chevron Johns may want to take note that Isabel’s “track record of getting deals done” may have been based on the improper use of state funds and remember the old adage that ‘he who sups with the devil, should have a long spoon’.

Angola’s state oil giant, Sonangol, is running out of time to prove it has a credible plan to repay US $13 billion in loans it obtained from a syndicate of European banks.

The loans’ agreements came with a contractual obligation to produce annual balance sheets showing a healthy ratio of debt to capital and it appears Sonangol has been unable to honour this.

Last month the London-based Standard Chartered Bank set a 45 day deadline for Sonangol to explain its failure to comply with the debt ratio obligation stipulated as part of the loan agreement, and to provide documentary evidence that is has the capacity to honour the terms of the loan.

Sources close to the Board of Directors of Sonangol have indicated to Maka Angola that the company may not be in a position to make the repayments on time.

It is alleged that Sonangol’s long-term auditor EY raised objections to some creative accounting which the Angolan company hoped would diminish the scale of its financial problems, improve the debt ratio and satisfy its syndicate of creditor banks.

One aspect of the plan was to transfer US $5 billion of Sonangol’s debt off the books overnight, on the grounds that this was a sum disbursed towards the National Housing Project and is therefore a debt “owned” by the state. This expediency would reduce by almost half the amount of debt being carried by Sonangol.

In addition, the new Sonangol board wants to change the way it reports its revenue.

Corporate income statements listing revenues and expenses for the accounting period typically show more than one measure of pre-tax profits, e.g. EBIT (Earnings before interest and taxes) and EBT (Earnings before taxes). The primary difference between the two is that EBT factors interest into its calculation, while EBIT does not, and as a result this provides a slightly different perspective on the financial health of the company, depending on how much interest is owed on any loans taken out by the company.

Since 2013, Sonangol’s annual balance sheet has only shown a credit because of successive re-valuations of its assets rather than cash flow, valuations which the auditors were unable to justify.

Thus, after 11 years, EY has been replaced by another of the ‘Big Four’ auditors, KPMG. The man in charge of KPMG Angola is none other than Sikander Sattar, who has been in charge of KPMG Portugal, where he came under fire for the part he played (or failed to play) in the contentious collapses of the Banco Espírito Santo (BES) in Portugal and its Angolan subsidiary (BESA).

KPMG was the official auditor of both BES and BESA. It was blamed for failing to avert BES’s over-exposure to risk when BESA offered unsecured loans worth more than three billion euros. Some analysts suggest that as a result, international financial markets have lost confidence in KPMG.

Added to this there are scant reasons for optimism about the short-term financial health of Sonangol. Last year, the former chairman of the board of Sonangol, Francisco Lemos, went public with a claim that the national oil company was effectively bankrupt.

Despite subsequent official denials, time has shown that Francisco Lemos wasn’t far wrong. Given the iconic status of Sonangol as Angola’s primary source of foreign revenue, it took courage to turn whistleblower and alert the public to Sonangol’s impending implosion.

Evidence of this came in the stunning announcement made recently by President José Eduardo dos Santos that Sonangol had been unable to make any contribution to the State Budget since last January.

His response to the impending disaster has proved a source of further anxiety to the international financiers who have lent so much to Sonangol. Contrary to law and common sense, he appointed his daughter, Isabel, to take over as chair of the Board. Isabel lost no time in assigning to herself direct responsibility for the key portfolio of financing (Sonangol Finance).

That places Isabel dos Santos squarely in charge of the Money. Additionally, there is a clear conflict of interest given Isabel dos Santos is both a shareholder and debtor of thanks to her business interests in UNITEL and GALP, in a joint-ventura with Sonangol.

President José Eduardo dos Santos admits Angola is running out of money but he has yet to outline any sort of rescue plan. Is Angola teetering on the precipice of economic disaster? Or is it already in the abyss?

In spite of international entreaties to diversify the economy and reduce its dependence on imports, the MPLA government has so far failed to make meaningful changes to ensure self-sufficiency. So if the national bank has run out of money to pay for imported goods, what is the alternative?

How can the government guarantee a continued supply of food to the Angolan people? Are they to starve? Can the President tell us where he expects to find the resources to avert calamity?

With Angola already having to service billion dollar loans, the President may have run out of collateral. Clearly his generation of governing officials won’t have to bear the burden of having to repay these loans, that will be the sorry legacy they leave to their children and grandchildren. But if Angola’s borrowing options are limited, where can the President turn to find the money?

How fortunate then that the Angolan leadership, with significant public backing, established the Sovereign Wealth Fund as a buffer against economic crises. This was such a good idea that other governments followed suit: investing the budget surplus from the good years for capital growth to protect the national economy against any hard times in future. Who would have predicted that a crisis of such magnitude would be upon us so soon?

Has the government overlooked this potential solution to the cash shortfall brought about by plummeting oil prices? Unless the President has a better plan up his sleeve, what is to prevent him from drawing down funds from the Sovereign Wealth Fund?

Some may argue that this is not the best time to sell Angola’s holdings in the fund and that a delay of a year or more could secure a better return. Are these the same ‘experts’ who prepared budgets last year based on the assumption that oil prices would remain steady at more than US $100 a barrel? Can Angola afford to hold on? Surely not if the price would be mass starvation.

Unless Angola secures an immediate alternative source of revenue to fund its import dependency, or conjures up at short notice sufficient diversification to ensure the country can feed itself, then the future could be very bleak indeed. But if the Sovereign Wealth Fund has been well managed by the President’s son, José Filomeno dos Santos “Zenú”, and if the government is prepared to draw down funds to import food rather than weapons, the solution may be at hand. And then what?