September Newsletter

Letter from the Chairman:

AmCham is proud to support the many talented and influential women who are leaders in their businesses and organizations.  This month, AmCham announces the launch of a new initiative: Women’s Leadership Organization (WLO). WLO will be led and organized by women and aimed at providing female leaders in business, government, and civil society with a forum for discussion and collaboration on vital issues.  If you’d like to get involved in this initiative—and we encourage you to do so—please let us know at info@amcham-tz.com.

AmCham is also a strong supporter of policy that promotes a more even playing field, enables business growth, and contributes to long-term competitiveness for Tanzania and all its people.  This requires close coordination and collaboration between the government and the private sector.  But despite strong leadership from capable women and men, many businesses in Tanzania are currently facing challenging times.  Some of these challenges make the headlines—but many do not.  This month, the Chamber has launched a series of industry-specific roundtable discussions, starting with agriculture.  These engagements provide an opportunity for members to offer feedback on policy and business environment changes specific to their sectors.  Individual feedback is always kept confidential.  But the Chamber will be meeting in the coming months with a number of ministers and permanent secretaries, and the trends identified in these roundtables will be highlighted in our meetings.  If you would like to attend or contribute to AmCham’s high-level dialogues, please inquire about gold and platinum membership at info@amcham-tz.com.

Please let me know if there are other ways we can assist you and your company.  I always appreciate your feedback.

Regards,

Dan Holodnik, Chairman

DOWNLOAD THE FULL VERSION OF THE NEWSLETTER HERE: AMCHAM SEP NEWSLETTER

Overview of the Used Clothing Market in East Africa: Analysis of Determinants and Implications

EXECUTIVE SUMMARY

In March 2016, the East African Community (EAC) Heads of State issued a Joint Communiqué from the 17th Ordinary Summit, expressing their intent to progressively phase out importation of used clothing as a means to support the region’s textile and apparel industry.* A U.S. trade association reacted to these measures by requesting an out-of-cycle review (OCR) of the eligibility of the EAC Partner States for the African Growth and Opportunity Act (AGOA) privileges, citing both loss of American jobs as well as introduction of new trade barriers in contravention of AGOA provisions.

While Kenya took active steps to be exempted from the OCR, the remaining AGOA eligible countries – Rwanda, Tanzania and Uganda – were left standing for review. The Of ce of the U.S. Trade Representative (USTR) granted the OCR request and held a public hearing in Washington, DC on July 13, 2017. Under the OCR process, Rwanda, Uganda and Tanzania stand to lose some or all of their duty-free trading privileges under AGOA.

Given an apparent lack of data on the economic signi cance of the used clothing market in the EAC, or its relative impact on the EAC’s domestic textile and apparel industry, USAID’s East Africa Trade and Investment Hub conducted this rapid assessment.

The following is a top level examination of some of the determinants and implications of the used clothing market in East Africa, including an analysis of used clothing import trends in the EAC; an assessment of the economic signi cance of used clothing to both the U.S. and EAC; a review of EAC import substitution assumptions; and some modeling of long-term outcomes if EAC Partner States maintain their current used clothing import policies. The results provided are intended to aid data-driven policy decisions and negotiations going forward.

The analysis focused on three main questions:

  1. What is the economic signi cance of the used clothing trade in the EAC countries?
  2. What is the relative impact of used clothing imports on EAC Partner States’ domestic industry?
  3. What are some likely outcomes if EAC Partner States phase out used clothing imports, and as a result, lose their AGOA privileges?

Download the full report here: EATIH Used Clothing in East Africa-27.07.17-Final-2

/ In News / By Zuweina Farah / Comments Off on Overview of the Used Clothing Market in East Africa: Analysis of Determinants and Implications

Excise Duty Alert: Introduction of Excise Duty Act 2017 in Zanzibar

In brief

The Government of Zanzibar has introduced the Excise Duty Act 2017 that will administer excise duty on various goods and services in Zanzibar. The new legislation will replace the application of the Excise (Management and Tariff) Act (which has been until recently applicable to both Tanzania Mainland and Zanzibar) on supplies made in Zanzibar.

Download the full copy here: tax-alert-zanzibar-excise-duty-act-2017

Tanzania requires NGOs to verify their registration status

Executive summary

Tanzania’s Registrar of Non-Governmental Organizations (NGOs) has issued a public notice requesting all NGOs operating in Tanzania to verify their registration during the period of 21 August 2017 and 4 September 2017. Non-compliant NGOs will be removed and de-registered from the registry.

Download the full PDF here: 2017G_04713-171Gbl_Tanzania requires NGOs to verify their registration status

Tanzania shows the appeal and the pitfalls of frontier markets

Source: Financial Times

For the past decade or so, investors have used the term “frontier markets” (FMs) to describe a group of up-and-coming equity and bond markets that are smaller and less liquid than the emerging markets (EMs), but with the potential to grow rapidly.

Proponents of FM investing argue that such markets should outperform EMs as they play catch-up with the rest of the world. Indeed, the world’s 10 fastest-growing economies in 2016 disproportionately hailed from the frontier, including Iraq, Côte d’Ivoire, Laos, Tanzania, Cambodia, Bangladesh and Senegal.

However, there is a problem: the universe of investible frontier markets and stocks is shrinking, at least as defined by index providers such as MSCI. Such providers, who classify markets as frontier, emerging and developed, have been moving countries out of FM into EM.

Three years ago, MSCI elevated UAE and Qatar; Pakistan was next to depart for EM, in May this year. Although, in its annual review that followed, MSCI decided not to promote Argentina to EM, it is probably a matter of time before it does so.

This would not be such a problem for FM if there were a “bench” of up-and-coming new markets ready to replenish the depleted ranks. Alas, such fresh blood is in short supply. As a result, MSCI FM’s market capitalisation has declined from 5 per cent of EM a decade ago to 2.3 per cent, and from 50 basis points of the AC World index to 24 bps, with the removal of Pakistan.

This also makes the index less liquid; combined average daily value traded for the index members is down by half over the decade, to just $200m, ex-Pakistan.

All is not lost for frontier markets as an asset class, however. In places, there is evidence that equity market development is still under way.

One such place is Tanzania, where South Africa’s Vodacom Group is in the process of a $220m initial public offering, expected to close in mid-August.

This is the outcome of a longstanding government mandate for all Tanzanian telecoms operators to list a 25 per cent stake on the local stock exchange. Although this requirement has been on the books for some time, it was only after the election of President John Magifuli in 2015 that pressure to comply increased.

Now other telecoms operators are expected to follow Vodacom’s lead, while Tanzania’s mining companies are subject to a similar requirement. In theory, this could see companies such as Acacia Mining, the London-listed gold miner with three mines in the country, pursue a similar path. However, the prospects for this now look highly uncertain following the government’s issuance of a multibillion tax bill to Acacia, alongside new legislation that raises the spectre of renegotiation of mining contracts.

Until now, Tanzania has been too small to qualify for the MSCI FM index: both market capitalisation ($4.6bn before the Vodacom listing) and trading volume (less than $1m a day) are very low, with trading mostly limited to a couple of banks and a brewery. MSCI has never maintained an index for Tanzania, not even one of the “stand alone” indices that it has set up for small or illiquid markets.

In addition to the small size of its market, there are other hurdles that international investors face in Tanzania, including a lack of custodians and limited research.

However, the Vodacom IPO, possibly followed by other telecoms operators and some of the mining companies, could see the Tanzanian equity market grow to more than twice its previous size, with a commensurate increase in trading volumes and foreign interest.

That would position it well as a candidate for the MSCI FM index. And while Tanzania’s entry alone would not offset the loss of Pakistan to EM, similar progress in other markets, from Ghana to Iraq to Ukraine, could set the frontier asset class growing again.

As far as Tanzania is concerned, investors face a mix of positive and negative trends. Encouraging factors include solid growth dynamics, reasonable macroeconomic fundamentals and a strong pipeline of infrastructure spending. Against this must be set Mr Magifuli’s interventionist approach to economic development, with a particularly aggressive stance towards foreign-owned mining companies.

And while Mr Magifuli’s support for domestic equity offerings is encouraging, it is not guaranteed to succeed. The list of companies being asked to float their shares is ambitious — over 80 firms in the telecoms sector alone — and it is not clear where the funds will come from to finance the sales, given a limited pool of domestic investible savings.

The Vodacom IPO, initially expected to close in April, has been delayed significantly, for the very reason that the offering’s size was so large relative to the domestic investor base. This problem could be even more acute for subsequent offerings. While foreign participation in the Vodacom IPO was not initially allowed, this position was reversed last month. But the belated way in which this was done — and the lack of an international roadshow for the offering — suggests a reluctance to allow foreign investment to play a major role in Tanzania’s new equity offerings.

For now, we’ll await news of the completion of the Vodacom IPO and the share’s subsequent performance on the exchange. The ultimate success of this offering and subsequent ones in Tanzania — and elsewhere in frontier markets — could be a useful signal for the future course of equity development on the frontier.

Andrew Howell is the frontier markets equity strategist for Citi Research

Bridges Africa -The Development Potential of Cross-Border Infrastructure in Africa: A Job Creation Perspective

SOURCE: East Africa Trade & Investment Hub

Bridges Africa- The Development Potential of Cross-Border Infrastructure in Africa: A Job Creation Perspective

is a publication by the International Center for Trade and Sustainable Development. It provides insight on the various development strategies being applied all around Africa. The publication contains a segment on how Africa can leverage the potential of cross-border infrastructure to address critical economic bottlenecks, boost regional integration and intra-African trade and create employment for the continent’s growing population.

It points out that cross-border infrastructure is an effective solution to address some of the most critical bottlenecks to regional integration and economic transformation in Africa.

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Newsletter – AUGUST 2017

We’re delighted to welcome Zuweina Farah as AmCham’s new executive director. Zuweina brings an entrepreneurial background in IT consulting and business management to the ED position, and she has already hit the ground running in the first few weeks on the job. Some of you had the chance to meet her at last month’s networking event, and I hope many more of you will meet her soon.

Feel free to reach out to her with questions about membership, upcoming events, or ways that AmCham can be helpful to your business. She can be reached at zuweina@amcham-tz.com.

AmCham recognizes that this is currently a challenging business environment for many companies in Tanzania. As a result, we are working on new initiatives and approaches to help businesses respond to rapid changes. Stay tuned for more information about those initiatives in the coming months. In the meantime, please let me know how we can be helpful to you and your company. I always appreciate your feedback.

Regards,

Dan Holodnik

Managing Partner, AMETAN Contractor

 

Download your PDF copy here: AMCHAM AUG NEWSLETTER.FNL.

Tanzania Energy Briefing by Clyde & Co.

Highlighted in this briefing are the three new bill supplements related to natural wealth and resources. 

These bills were passed under a certificate of urgency allowing for a shorter time frame in which to be debated and concluded. They were passed on the 3rd and 4th of July, 2017.

This briefing provides a summary of the changes and analysis of their practical impact.

Clyde & Co. further provides an analysis of the legislation in context of the existing Bilateral Investment Treaties to which Tanzania is a signatory.

Download the full copy here: Tanzania Energy Briefing

Famous Sundowner @ Karmbezi Café

Join us for AmCham Famous Sundowner at Karambezi Café on Thursday 23rd February.

Meet AmCham newly elected Board, connect with new partners and enjoy drinks by the wonderful deck area of Karambezi Café.
When: Thursday, 23rd February
Time: 17h30-19h30
Where: Karambezi Café, deck area (1st floor)
Members: Free
Non-Members: 40.000 TZS

Reserve your ticket today!

AmCham-TZ

Karibu 2016!

Karibu AMCHAM 2016!

On behalf of the Board of Directors and ACHAM team, Happy New Year and warm wishes for 2016! Under President Magafuli’s leadership, the business and investment climate is expected to be phenomenal. We are excited to serve as a resource as embark on a productive and engaging year.

AMCHAM closed out 2015 by welcoming dynamic new members to our Board, Mr. Amit Patel of Formula 10 Group and Mr. Dan Holodnik of Ametan Contractors. Thank you to Ms.  Clementine James and Ms. Lucy Minde for their two years of service on the Board. We also bid good bye to Mr. Richard Miles and thank him for his strong leadership as Executive Director. Moving forward, AMCHAM’s executive functions will be carried out by Bernadette Mende as the General Manager. I look forward to introducing the new members and Bernadette at our first event of the year. Highlights of the last year included meeting President Magafuli during his private sector forum, hosting U.S Treasury Secretary Jacob Lew and holding a breakfast briefing with the Minister for Economic Empowerment and the Executive Secretary of the Planning Commission in the President’s office to discuss Tanzania five year plan.

As a key partner of the Tanzania Private Sector Foundation, AMCHAM was also invited to comment on the second draft of the National Private Sector Development Policy. Lastly, we held events on Mobile Finance and training for job seekers and donated nearly $50,000 to wildlife conservation through our annual Thanksgiving celebration. At year end, we had doubled our membership and closed on solid financial footing.

During round table discussions at the Annual General Meeting in December, we heard your feedback on membership services and engagement, policy advocacy, events and development. This shaped our goals and objectives for 2016 firmed up during  the Board Strategy meeting in January and we will always welcome your input as the year progresses.

Looking forward to a great 2016 with your continued interest and support.

Hope to see you soon.

Laura Kelley President

AMCHAM Tanzania