Industries Economic Growth: A prerequisite for Industrialising Tanzania

Industries Economic Growth: A prerequisite for Industrialising Tanzania

THE Industries, Trade and Investments Minister Hon. Charles Mwijage has said that for the fifth phase government’s objective to make Tanzania an industrial country to succeed, the industrial sector must lead in economic growth.

Hon. Mwijage, who spoke on behalf of the President of the United Republic of Tanzania and Patron of the Confederation of Tanzania Industries (CTI) made the statement at the President’s Manufacturer of the Year Awards (PMAYA) 2017 giving ceremony held at Serena Hotel recently.

He said that the government’s objective is to ensure Tanzania economy grows at 12 percent per year, attain a minimum Gross Domestic Product (GDP) of 15 percent per year, a performance which could enable the industries to increase their contribution of employment to 40 percent.

Earlier on, the Chairman of CTI Dr. Samuel Nyantahe pointed out that the industrial sector is facing various challenges which affect its growth as well as its contribution to the GDP. The challenges are:

  • Delays of Value Added Tax Claim Refunds for some exports. Until at the end of year 2017, some industries which submitted copies of their VAT refunds claim to CTI amounts to TZS 30 billion. As a result of the delays, the industries have experienced increase in cost of their capital which emanates from accumulated loans’ interests from banks. The industries have also failed to expand as well as increase job opportunities an act which affects production in the industries.
  • The government should consider to refund the VAT claims to rescue the industries by enhancing competition as well as industrial growth.
  • Delay to refund additional 15% Import Duty on Industrial Sugar. By the end of year 2017, the accumulated refunds had reached TZS 35 billion. This system of levying 15% additional import duty on industrial sugar has greatly affected the industries as it ties up capital, increases the cost of supervising taxes and reduces industrial efficiency.

Suggestion: CTI proposes removal of the 15% import duty on Industrial sugar in order to make industries competitive and hasten refunds of all unpaid claims.

  • Existence of multiple regulatory authorities leading to high cost of doing business which some of the authorities doing similar functions with high fees or charges.

The Confederation understands the various efforts being done by the government to improve business environment. CTI also knows that the government has recently approved the recommendations contained in the draft Blueprint for Business Environment Regulatory Licensing Reform which will reduce the list of the needs for regulatory authorities and the costs involved.

Requests: The government should hasten implementation of the recommendations outlined in the Blueprint.

  • Introduction of Electronic Tax Stamp on alcohol and non-alcohol beverages, water, cigarettes, perfumed products and lubricants (Electronic Tax Stamps on excisable goods).

The government plans to introduce the system which will be fixed on the production machines for excisable goods. The system is very expensive which will be borne by industries. According to TRA directives, the costs will be USD 1 for 1000 products. It is being estimated that more than USD 100 million (TZS 220 billion) will be paid to external company called SICPA by Tanzania Industries.

-The system will greatly reduce Tanzania industries’ competitiveness in the market as a result of increased costs of production.

-The confederation has no problem with this new electronic system of collecting revenue, but the industries’ concern is on the huge cost which the producers will be forced to pay to start using the system.

Request and Recommendations: The confederation requests the government to relook into the cost of buying the electronic stamps with a view to reducing producers’ burden. CTI also recommends that, the industries should not bear any cost regarding the payments and introduction of the new system of Electronic Tax Stamp (ETS).

Speaking at the event, the representative of lead sponsor, Executive Director of CRDB PLC, Dr. Charles Kimei expressed his gratitude for CRDB bank to be associated with the President’s Manufacturer of the Year Awards Competition.

He said that his bank has been supporting industries and the fifth phase government’s commitment to build an industrial economy has encouraged the bank to continue supporting the Awards Competition.

The PMAYA 2017 competition has seen last year’s overall winner, the Tanzania Breweries Limited (TBL) re-emerging overall winner. TBL was followed by Zenufa Laboratories Limited as 1st runner – up and Plasco Limited as 2nd runner – up in the list of top three overall winners.

The PMAYA 2017 Awards Giving Ceremony was also sponsored by MM Steel Industries, ALAF Ltd, GIZ, Tanzania Communications Regulatory Authority (TCRA), Business Times, Dar es Salaam Serena Hotel, Ako Vintage Wines, Coca Cola Kwanza, Tanzania Revenue Authority (TRA), Tanzania Standard News Papers (TSN), ITV and Radio One and MONTAGE Ltd.