Plans for the construction of a 2,190-kilometre central railway line to standard gauge form are now up for implementation as Chinese Exim Bank has agreed to give a soft loan of 7.6 US dollars (about 16 trillion/-) to finance the project.

According to a statement issued yesterday by the State House, the amount is enough to cover construction of 2,190 kilometres. The project is expected to start this financial year as the government has also set aside about 1tri/- from the current budget for the purpose.

Once completed, it is expected that the project will revolutionise Tanzania’s economy and other countries in Eastern and Central Africa including Burundi, Rwanda and Democratic Republic of Congo (DRC). The first phase will constitute the construction of the railway line from Dar es Salaam to Mwanza via Isaka and Tabora.

Exim Bank gave a nod yesterday over financing the construction after its president, Mr Liu Liang, met President John Magufuli at the State Lodge in Dodoma.

Mr Liu said apart from the funds, the bank would cooperate with Tanzania in exchanging experience and skills on the construction of the railway and its management. He praised Dr Magufuli for what he termed “his true desire to bring development to the country,” including fostering the construction of the central railway line. “On this central railway line project, we have a positive view. We see it as good project.

We will accord the needed cooperation,” Mr Liu pledged.

According to him, the bank is ready to support the railway project and other development projects. President Magufuli assured Mr Liu that Tanzania desires to implement such projects by using funds from its own budget and foreign sources.

The talks between President Magufuli and Mr Liu were held in the presence of Chinese Ambassador to Tanzania, Dr Lu Youqing, the Minister for Works, Transport and Communication, Professor Makame Mbarawa, Finance and Planning Minister, Dr Philip Mpango and Deputy Minister for Foreign Affairs, East African, Regional and International Cooperation, Dr Suzan Kolimba.

Recently, Ambassador Lu assured President Magufuli that the Chinese government, its financial organisations and other companies will give their total support towards the implementation of the project.

GOVERNMENT has issued over 6 000 import certificates, with three quarters of those for South African products, five months after it tightened the flow of imports to curb dumping of substandard products onto the local market.

The southern African country enforced a Consignment-Based Conformity Assessment (CBCA) programme in March this year under Statutory Instrument 132 of 2015 to ensure that the goods imported into Zimbabwe comply with accepted quality.

A French company Bureau Veritas, has been contracted to enforce the import standards.

South Africa is Zimbabwe’s largest trading partner, accounting for about 70 percent of imported goods in the southern African country and over 60 percent of its total trade, official figures show.

“It has been observed that most certificates were issued on imports coming from South Africa constituting 75 percent, followed by China, and the rest of the world,” said the minister of Industry and Commerce Mike Bimha at the launch of Bureau Veritas office in Harare.
A total of 6,004 CBCA certificates have been issued so far, Bimha added.

The import policing programme has seen a general improvement in quality and the number of consignments failing to meet standards has fallen to 44 percent from 67 percent since March when it started.

About 58 percent of the accepted imports are for chemical, machinery and food products as well as electrical equipment.

The majority of failures are mostly electrical equipment and machinery, plastics and chemical products, Bimha added.

Zimbabwe has been battling a tide of cheap and predominantly substandard products from China and neighbouring countries, which has pushed its own manufacturing industry on the brink and widened its trade deficit.

In 2015, it registered a trade deficit of US$3,3 billion, about a fifth of its GDP, after exports for the full year to December amounted to $2,7 billion against imports of $6 billion.

A similar trend is expected this year as the manufacturing sector remains flat amid a worsening cash shortage.

The Finance Act, 2016 has introduced a new income tax regime for the extractive industry. The Income Tax has been amended to incorporate two new divisions for mining and petroleum respectively.

Tax regimes for the extractive industry are different from the regimes of other sectors partly because of the uniqueness of the sector.

Some of the unique features of the sector include long period of exploration, uncertainty regarding production outcomes, high sunk costs, unpredictability of future revenues due to fluctuations of oil/gas and mineral prices, a long production period before reaching break-even point, substantial rehabilitation and decommissioning expenditure and exhaustibility of the resources etc.

The changes introduced include ring fencing of mineral and petroleum operations; granting of depreciation allowances; realization (disposal) of mineral and petroleum rights; treatment of unrelieved tax losses; treatment of joint mineral and petroleum rights; treatment of bonus payments, provisions for rehabilitation and decommissioning expenditure etc. Last week we looked at ring fencing of mineral and petroleum operations and the granting of depreciation allowance. Today we look at treatment of unrelieved losses as well as rehabilitation and decommissioning expenditure.

Loss relief

Previous years unrelieved losses of an operation may reduce income of the same operation in the current year up to only 30 per cent of the current year income. The other losses will be carried forward.Ring fencing on losses for petroleum applies to upstream, midstream and downstream activities while for mining it applies to mineral operations, processing, smelting and refining activities.The perpetual loss corporation rules (alternative minimum tax) are also not applicable. Effectively this provision implies that the Government wants to ensure that entities in the extractive industry with a taxable profit and with no carried forward losses pays income tax of at least 30 per cent. Entities in the extractive industry will be affected by this limitation in terms of project cash flows as the timing of tax payments is fast tracked.

Rehabilitation and decommissioning expenditure

Rehabilitation and decommissioning expenditure are exempt from income tax (for upstream, midstream and downstream activities) only when payments are made to a rehabilitation or decommissioning fund. Rehabilitation expenditure with respect to a mineral operation, processing, smelting or refining minerals covers expenditure incurred on abandonment activities including reclamation, rehabilitation, restoration and closure of an operation as required by law, mineral right or development agreement. Decommissioning expenditure applies to petroleum operations and refers to expenditure incurred on removal or disposal of structures, facilities and installations operations in an area, cleaning of the area, plugging and secure of wells, restoration of land, safety clearance related to abandonment or cessation of petroleum operations. Decommissioning fund is a fund established under the Petroleum Act, 2015 for activities authorized by the decommissioning plan.
The requirement for payments for expenditure to be paid to a fund for a relief to be provided will to some extent limit the ability of companies to claim the relief for tax purposes as some companies may not be ready to tie up a significant amount of fund at initial stages of operations.

Kahama and Dar es Salaam — Economists commended President John Magufuli’s yesterday ban on transporting mineral sands from gold mines for smelting outside the country.

Speaking to The Citizen in separate interviews, they said the ban was long overdue because the government was losing the much deserved revenue due to poor follow-up on the amount and value of minerals recovered from the sands.

President Magufuli said at a public rally yesterday in Kahama that gold miners should invest in smelters right here in Tanzania instead of “exporting” sands to recover minerals in them that include tin, copper and silver.

The President, who is on a tour of the Lake Regions, said among all the countries blessed with minerals, it was only Tanzania that airlifted its valuable sands abroad. He affirmed that his government would not allow that to continue.

“It is very surprising that these investors have been air-lifting mineral sands to other countries. So, I’m saying this: they must now build processing plants right here in Tanzania to purify the mineral sands. This is because when they export the sands, the government loses some revenue,” Dr Magufuli said.

But the economists, in addition to commending President Magufuli’s ban, said care should be taken to ensure maximum benefit from domestic investments in the smelters. Prof Semboja Haji from the Economics Department of the University of Dar es Salaam said even as the government welcomes investors to invest in smelting, it should also work diligently to establish markets for the minerals that are recovered from the sands to ensure investors recover the costs of their undertakings.

“It is crucial that the issue of markets for the minerals, mostly tin, silver and copper, is considered well in advance to ensure the investments become sustainable,” Prof Haji said.

Prof Samuel Wangwe said smelting the sands within Tanzania is possible so long as there is enough political will.

“If we cannot build the smelters immediately, then there must be an agreement with the gold miners on the value of the minerals contained in the sand so as to ensure the government gets its fair share of the tax when the smelting is done outside the country,” Prof Wangwe, a renowned industrial economist noted.

Dr Jehovaness Aikaeli, a senior lecturer in Economics at the University of Dar es Salaam, said smelting the sands in the country would reduce unnecessary costs of transporting them to far off countries.

“I believe those who afford to export the sands have the financial capacity to invest in smelters in Tanzania,” Dr Aikaeli said.

He added that President Magufuli’s move was actually overdue, one that previous administrations ought to have taken a long time ago.

Prof Haji added that in the past, when investors opened the gold mines, smelting technology seemed too expensive and was feared it could have added to operational costs, but now a new technology called mobile minerals processing plant has come into the market.

This one, he said, is relatively cheap and well advanced.

“What is needed is for the government to look for investors who can invest in that area,” he noted.

He cautioned, however, that investing in smelting gold sand in the country needs reliable electricity. Investors would incur untold loss if electricity will be erratic. Marketing channels should also be found to sell the minerals so that investors can be assured of where to sell and get returns for their investors.

He noted that the government has been incurring huge losses because there was no evidence whether the Bank of Tanzania was following up on the amount and value of minerals recovered from smelting gold sands abroad to enable the government to collect taxes.

“Lack of coordination between ministries of Industries, Trade and Investment as well as that of Minerals and Energy could have complicated matters. While mining was under MEM, the export of the sands was under the ministry of MITI,” he said.

Meanwhile, President Magufuli ordered yesterday the National Environment Management Council to remove gold residual in the Geita Gold Mine and give it to wananchi.

He warned leaders in the region from dividing the residuals among themselves. The Head of State also touched on the issue of mineral discoveries by residents, who found themselves being removed, saying from now on procedures would be followed and those residents would stay put in the area where the minerals have been discovered on the basis laws and procedures.

Except there is a last-minute change in his schedule, the embattled Speaker of the House of Representatives, Yakubu Dogara, will on Friday meet President Muhammadu Buhari over the budget padding scandal rocking the lower legislative chamber, PREMIUM TIMES can authoritatively report.

According to President Buhari’s list of engagements for Friday, seen by this newspaper, Mr. Buhari will meet Mr. Dogara at 4.30p.m.

The meeting is at the instance of the Speaker, presidency sources said.

Associates of Mr. Dogara said the speaker sought audience with the President over the allegations levelled against him by a former chairman of the appropriations committee of the House, Abdulmumin Jibrin, that he abused his office and committed budget fraud.

The meeting is holding about 24 hours after the governing All Progressives Congress ordered Mr. Jibrin to stop further public comment on the matter.

Those familiar with the matter said Mr. Dogara sought to see the President “to offer personal explanation” on the allegations against him.

Our sources said the speaker is worried that the President might believe Mr. Jibrin’s claims if he did not make efforts to state his own side of the story to the nation’s number one citizen.

Mr. Dogara will also be requesting the President to help call Mr. Jibrin and his backers to order, our sources said.

The crisis has deeply polarised the House, with the allegations made by Mr. Jibrin now being investigated by the Economic and Financial Crimes Commission, the Independent Corrupt Practices and other related offences Commission, the State Security Service and the Nigeria Police Force.

When contacted, Mr. Dogara’s spokesperson, Turaki Hassan, said he was not aware of the planned meeting between the President and the Speaker.

The 2016 African Economic Outlook (AEO) was launched by the Nigeria Country Office of the African Development Bank at an outreach event held at the Ahmadu Bello University in Zaria. The theme of the 2016 AEO is Sustainable Cities and Structural Transformation. The report looks closely at Africa’s distinctive pathways towards urbanisation, and how this is increasingly shifting economic resources to more productive activities.

The publication covers all 54 African nations, with individual country notes and corresponding statistical annexes. Nigeria’s case formed the basis for exchange of views on the AEO, as well as deliberations on prospects for the Nigerian economy.

The July 29, 2016 event started off with a brief meeting with the university’s senior management, which expressed appreciation of the Bank’s efforts in reaching out to academia and encouraging scholars to engage in public policy space. In his remarks, the Country Director of AfDB’s Nigeria Office, Ousmane Dore, emphasised the importance of the report. “It significantly informs policy dialogue and feeds into the design of Bank’s projects to support government priorities,” Dore said.

AfDB Lead Economist Barbara Barungi outlined the main findings of the report. According to the publication, Africa’s economic performance had been steady and was expected to remain moderate in 2015 and strengthen in 2016 against the backdrop of a fragile global economy. The continent remained the second fastest-growing economic region after East Asia. The report predicts the continent’s average growth at 3.7% in 2016, increasing to 4.5% in 2017, provided the world economy strengthens and commodity prices gradually recover.

Urbanisation, the report states, is a megatrend that is transforming African societies profoundly. However, this is not accompanied by structural transformation, and therefore industrialisation remains rather slow. Two-thirds of the investments in urban infrastructure until 2050 are yet to be made, the report adds.

If harnessed by adequate urban planning policies, urbanisation can help advance economic development through higher agricultural productivity, industrialisation, services and foreign direct investment in urban corridors.

According to the report, Nigeria has had a sluggish economic growth of 2.8% since the end of 2015. At the time of the report launch, Barungi reported that the economy had contracted further by 0.36% in the first quarter of 2016, while inflation continued to rise, standing at 16.5%.

Policy reforms by the new administration are highlighted, and they include strong fiscal policy, improvements in public sector transparency and accountability, as well as adoption of a more flexible exchange rate.

Nigeria has been rapidly urbanising, with fast-growing cities such as Lagos and Kano facing increasing unemployment and income inequality due to poor urban planning and weak links between structural transformation and urbanisation.