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Industrialization agenda, starts on wrong footing

By   /  May 9, 2016  /  No Comments

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  • Which approach – Dr Kigoda’s or Dr Magufuli’s

 

mwijagee By Shermarx Ngahemera

There is reigning confusion at the Ministry of Industry and Trade on the guiding principles of Industrialization following lack of focus and direction and increased politicization of the process.

The experts have not been given chance to deliberate on the issue and the matter is only being said by politicians and thus officials are failing to give adequate information regarding the same since it is not adequately there.

Investigations by the African have revealed that there are two schools of thought on the industrial question and of varied approach on the same.

The approaches are discordant and diverse and have been defined as Dr Magufuli’s and that of the former Minister of Trade , the late Dr  Abdala Kigoda’s.

The late Minister  Dr Kigoda centred his approach and philosophy on the effective implementation of the twin Mchuchuma  and Liganga coal and iron  in Njombe Region, Ludewa district  as basic industries  to centre his vision ; whereby he released to the Parliament last year  saying, “The construction of the Sh5-trillion twin Mchuchuma coal and Liganga iron-ore mining projects will officially kick off before the end of  the year to trigger  the government’s goal to turn Tanzania into a semi-industrialized nation  with a number of high-profile projects on the cards.”

“Our goal is to ensure that President Jakaya Kikwete officially launches the implementation of the project before his leave of office this year,” said Dr Kigoda the (Handeni-CCM) as he requested the August House to endorse some Sh116.5 billion for his ministry’s budget for the 2015/16 financial year.

Dr Kigoda said as a blue print that the project will be developed with funds from China’s Sichuan Hongda Corporation  in partnership with the National Development Corporation (NDC), the two have established a company that is known as Tanzania China International Mineral Resources Limited (TCIM-RL).

He said everything had been completed. “We are only waiting for the arrival of construction equipment and machineries… this will be the first largest industrial investment project to be registered in Tanzania since independence in 1961,” he said.

Mchuchuma is estimated to bear 540 million tonnes of coal deposits, which is enough to produce 600MW for a period of over 100 years. Out of the megawatts, said Dr Kigoda, 250MW will be at Liganga iron-ore mining project while the remaining 350MW will be injected into the national grid.

Some 32,000 people will be employed at the two projects while some Sh3.13 trillion will be earned each year, he said.

Dr Kigoda’s approach names the second mega project  for industrialization  included the construction of Bagamoyo Port and the resultant Industrial City with more than 1000 Exports Processing Industries  in which two investors  Oman State Fund and China Merchants Holding  were working together to establish  them and some acreage was to be developed by the Export Processing Zone  Authority  (EPZA).

The Tanzanian government, Oman’s General State Reserve Fund (GSRF), and the China Merchants Holding International (CMHI) – a state port and free zone operator – will jointly develop the $11 billion (over Sh22 trillion) Bagamoyo Port and a Special Economic Zone in the country.

In Dar es Salaam, construction of a Tanzania and China logistic centre at Kurasini area was also scheduled to start last year with Dr Kigoda’s ministry setting aside some Sh3.75 billion as the last portion of the compensations to residents who were affected by the project.

“The envisaged Sh660 billion/- business hub is expected to serve both East and Central African countries, and was expected to generate about 30,000 direct and indirect jobs. It seeks to turn Dar es Salaam into a ‘Guangzhou’ of all neighbouring landlocked countries. A number of projected, recognized as having a special importance in meeting Tanzanian’s strategic goals, will also be developed, or at least start being developed, during the 2015/16 financial year,” said Dr Kigoda.

Dr Kigoda said the plan also includes the $136 million (over Sh270 billion) wind power project in Singida, which seeks to add an initial 50MW to the national grid. China’s Exim Bank has agreed to fund the project and the ministry of Finance will soon sign a loan agreement with the Chinese Bank, according to Dr Kigoda.

He revealed that the government was also purchasing 26 per cent of shares that were being held by Germany’s Continental AG in the defunct Arusha-based General Tyre Limited to have a 100 per cent ownership of the tyre manufacturing factory and start production.

The government is also reviving Kilimanjaro Machine Tools Limited while plans to build a Soda Ash industry at Engaruka in Arusha are in full gear, with a total of 400 square kilometres already set aside for the project.

“In the same vein, construction of an insecticide/pesticide factory in Kibaha has been completed and it will be officially handed over to President Kikwete on June 25, 2015,” he said, adding that some 670 people will be employed by the firm. Media reports now reveal the factory was dysfunctional at the outset.

Dr Kigoda also produced a string of agro-processing factories and those in the Export Processing factories and those in the Export Processing Zones category that are slated for completion, or launch during the next few months. Nothing has been achieved.

“But that is history now since Dr Kigoda is no more and the government has shelved the Bagamoyo Projects indefinitely using very flimsy excuses of developing Berth 13 and 14  and Mtwara port. It defeats imagination it is being done at the cost of dumping 1000 industries at Bagamoyo!” Confided the source at the Ministry. He  put  a quizzical  question : “Are we dumping the factories or the Chinese ?”

Meanwhile,  Dr Magufuli’s  approach is centred on the revitalizing non-performing national assets  in terms of factories and industries that 274 were privatized  but  22 have failed to take off  and most of them have changed uses  and are not functioning properly.

The search  by the Treasury Registrar has revealed that only 44 industries can be taken overboard in the planned industrialization drive  to be revealed by the current budget speech.

However, judging from the media ac the counts of some of the excerpts of the speech on matters like tax exemptions  show differed positions between the technocrats  and the  administration. While the technocrats want exemption to be part of the strategy of the industrialization the administration want more revenues that call for non-exemption of taxes.

The current CAG report shows the exemptions have denied government more than Shs 9 trn/- that have incensed the Executive.

The Tanzania  Investment Centre (TIC) Acting Executive  Director Clifford argues that Exemptions  are a global tradition  that we, as a country cannot shy away from; while the EPZA Director General  Joseph Simbakalia is adamant that: “ We do not forfeit government taxes  just like that….we have done our research  and we have  concrete  numbers.”

The Permanent Secretary in the Ministry of Trade, Industry and  Dr Adelhelm Meru  argues on the question by saying “We are in a very competitive  world where every country is striving to attract more investors.”

The one-million-dollar question is in a divided and confused  house like this how can we expect success? Is it a wrong footing?

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