LOCAL INDUSTRY
Although Africa has seen several years of solid economic growth, this year both the continent and the Tanzanian beer market have been under pressure. Compared to 2016, the beer market is down about 8%, with spirits even more. The fact that a beer market is in decline is typically a reflection of how an economy is faring more generally. The business community in Tanzania is concerned, as we are not seeing the levels of growth one would expect in an emerging market. However, in the mid to long term, we see positive macro economic and socio demographic parameters and are optimistic with regards to the economic development of Tanzania in general and the beverage market in particular. Beer is a rather inelastic product, and the development of the beer market is directly related to the availability of disposable income at the consumer level. With 70% of our raw materials coming from farms in Tanzania, a growing beer market will also allow us to expand our agricultural program and further support the development of local communities.
In 2015, we established a plan to transition Luika from a completely surface operation into a blended underground-surface mine with a view to becoming predominantly underground in the future. There is a significant amount of investment needed in infrastructure to achieve such ambitious projects. In 2016, we undertook a financial restructuring that ensured we had all the funding needed in order to deliver. In the same year, we generated USD50 million of EBITDA from USD107 million of revenue—a high margin operation. For a small company such as ours, we invested substantially at New Luika with USD55 million in capital in 2016, 10% more than our EBITDA. We encountered some problems, however, following the government's decision to delay the outstanding VAT repayments. Without those funds, we had to stop investment in exploration and the development of the Singida Project. To save the company, Shanta had to raise equity at a deep discount to the market, which reflects the significant sovereign risk that Tanzania now represents.
We sell cloves as a raw product in small quantity and in bulk to various markets. Our top consumers are India and Singapore. Aside from this, we also process clove stems to make clove stem oil. We have a distillery in Pemba where we make various types of essential oils—eucalyptus, lemongrass, and clove leave oil—that can be used in massage therapy. For this, our biggest market is the UK, though China is on the rise. Moreover, we have launched a product of branded spices called “Zanzibar Exotic.” This is a selection of four spices—pepper, cinnamon, chili, and cloves—in our own packaging that we sell to local hotels, shops, and airports. For now, we are not entering the European market, though this is our eventual aim. Our products are all naturally organic, which lends itself well to the European market. We are undergoing contract negotiations with an GANEFRYD company from Denmark for organic products.
LOCAL INDUSTRY
TABLE OF CONTENTS
Guest Speaker
Hon. Patricia Scotland, Secretary General, Commonwealth of Nations
TBY talks to Hon. Patricia Scotland, Secretary General of the Commonwealth of Nations, on the advantages of being a member of the Commonwealth, the need to celebrate diversity, and Tanzania's war against corruption.
read articleGuest Speaker
Libérat Mfumukeko, Secretary-General, East African Community (EAC)
TBY talks to Libérat Mfumukeko, Secretary-General of the East African Community (EAC), on Tanzania's importance to the EAC, the major achievements of regional integration, and obstacles ahead of a monetary union.
read articleInterview
Raymond P. Mbilinyi, Executive Secretary , Tanzania National Business Council (TNBC)
TBY talks to Raymond P. Mbilinyi, Executive Secretary of Tanzania National Business Council (TNBC), on its work to support the private sector in the country, tackling challenges in the economy, and clamping down on corruption.
read articleReview: Banking
The Quest for Depth
If Tanzania is to meet its 2025 vision of attaining middle-income status, it will need to corral its bank-centric financial and capital markets for greater depth by extending participation and rendering credit more accessible to SMEs, women, and the young to spur economic growth.
read articleInterview
Dr. Baghayo A. Saqware, Commissioner , Insurance, Tanzania Insurance Regulatory Authority (TIRA)
TBY talks to Dr. Baghayo A. Saqware, Commissioner of Insurance, Tanzania Insurance Regulatory Authority (TIRA), on achieving universal healthcare coverage, the brilliance of microinsurance, and how to partner with public and private entities to increase the industry's penetration.
read articleReview
Legal Thunder
With the stepping down of Minister of Energy and Minerals Sospeter Muhongo in May 2017 over transparency issues and the introduction of three new laws that give the government the right to renegotiate or revoke existing mining and oil and gas rights, private players in the country are unsure of what future lies ahead. On the other hand, project-specific developments bode well for a sector in need of a breakthrough.
read articleInterview
Kapuulya Musomba, Managing Director, Tanzania Petroleum Development Company (TPDC)
TBY talks to Kapuulya Musomba, Acting Managing Director of Tanzania Petroleum Development Company (TPDC), on the planned expansion of the Mtwara-Dar es Salaam natural gas pipeline, entering northern industrial hubs, and empowering nascent industries.
read articleInterview
Marc Den Hartog, Managing Director, Shell/BG Tanzania
TBY talks to Marc Den Hartog, Managing Director of Shell/BG Tanzania, on the critical need for economies of scale, the importance of developing LNG for export, and why renewables must be taken into account in any long-term plan.
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Hon. Charles Mwijage, Minister, Industry, Trade and Investment
TBY talks to Hon. Charles Mwijage, Minister of Industry, Trade and Investment, on how to reach middle-income status, employing the private sector toward this end, and what sets the country apart from the rest of East Africa.
read articleFocus: Helium
Discoveries of Magna-tude
Despite being the second most common element in the universe, helium is in short supply on earth. With global reserves of the gas steadily dwindling, and demand steadily increasing, the discovery of a whopping 1.53 billion cbm of helium in underground chambers in Tanzania could not have come at a better moment.
read articleInterview
Gilliard W. Ngewe, Director General, Surface and Marine Transport Regulatory Agency (SUMATRA)
TBY talks to Gilliard W. Ngewe, Director General of Surface and Marine Transport Regulatory Agency (SUMATRA), on transportation budget allocation and cross-sector dialog and partnerships.
read articleInterview
Jared H. Zerbe, CEO, Tanzania International Container Terminal Services Limited (TICTS)
TBY talks to Jared H. Zerbe, CEO of Tanzania International Container Terminal Services Limited (TICTS), on regional trade flows and Tanzania's potential to take a leading role in orchestrating cargo movement.
read articleFocus: Tanzania Strategic Cities Project (TSCP)
East Africa’s “Geneva”
If Rome wasn't built in a day, it is not surprising that Tanzania's project to revamp eight of its largest cities is entering its eighth year of implementation. A release of further funds from the World Bank has given the project a new lease of life.
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Lost in the Maize
Agriculture accounts for 30% of Tanzania's GDP, and the sector has experienced above-average output in recent years compared to the rest of the African continent. However, the sector's development is held back by poor rural farming practices and general infrastructure bottlenecks.
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Fred Kafeero, Tanzania Representative, Food and Agriculture Organization (FAO)
TBY talks to Fred Kafeero, Tanzania Representative of the Food and Agriculture Organization (FAO), on the organization's long-term support for Tanzania's development, recent initiatives in agriculture, and financing.
read articleFocus: 2020 Irrigation Target
Reap What You Sow
In 2006, the Tanzanian Ministry of Water and Irrigation set a target for Tanzania's agriculture sector: to irrigate 1 million ha of land by 2020. More than 10 years on and moving ever closer to the deadline, this target has not yet been met, though the first seeds are being sown.
read articleFocus: Southern Circuit Tourism
Hidden Gems
Tourism is frequently described as the jewel in Tanzania's economic crown. In 2016 alone, the industry contributed over USD2 billion in revenues. However, for at least three years, the government has expressed concern that tourism is not well distributed across the country.
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