International oil companies engaged in the construction of a Sh67-trillion) $30-billion liquefied natural gas (LNG) project are establishing a commercial framework for the scheme, BusinessWeek has learnt. The framework will define and compare alternative commercial and financial arrangements involving government and the private sector in a way that addresses the unique attributes of the project. It basically outlines the rights and obligations of each party (between the government and the investors) in the process of executing major projects such as the LNG one. BG Tanzania external relations manager Patricia Mhondo told BusinessWeek that the companies have done groundwork to establish the LNG commercial framework. “The report has been submitted to the government and we are awaiting response,” she said. The Statoil senior vice president and country manager for Tanzania, Mr Oystein Michelson, shared similar sentiments. He noted that the job of bringing the gas onshore was difficult but noted that the companies were optimistic it could be done. Reports show that the government announced it will conduct an environmental impact assessment (EIA) at Likong’o Village in Lindi Region where LNG Plant is to be built. Tanzania has found at least 55 trillion cubic feet of natural gas reserves. BG Group - which was last year acquired by Royal Dutch Shell - along with Statoil, Exxon Mobil and Ophir Energy plan to build the onshore LNG export terminal in partnership with the Tanzania Petroleum Development Corporation (TPDC). TPDC owns a title deed for the 2,071.705 hectares where the plant will be...

The cost of the August 8 General Election on Kenya’s economy has started to emerge, with firms scaling down production, investors holding on to their cash and neighbouring countries redirecting their cargo to Tanzanian ports, away from Mombasa. Foreign governments, especially in the West, driven by uncertainty, have stepped up travel advisories to their citizens in the country and those intending to visit, warning that “in the past, some political protests, rallies and demonstrations have turned violent.” International organisations whose business is outside the provision of humanitarian services and foreign firms have given their staff permission to leave for neighbouring countries a week before and stay until a week after the elections, citing uncertainty over the poll, whose main contenders are Jubilee’s President Uhuru Kenyatta and National Super Alliance’s Raila Odinga. GRIM PICTURE Sources in the business community who sought anonymity for fear of being seen to be painting a grim picture over the elections said a majority of companies had scaled down production, while investors are holding onto their finances awaiting the outcome of the elections. They were particular that banks, which are normally hard hit with uncertainty, had limited the amount of loans lent to individuals until after the elections, with one of the sources saying they were lending out a maximum of Sh5 million. However, businessman Vimal Shah played down fears within the business community, saying: “So far, so good. I don’t know of any business that has suffered as a result of the election fever. People...

Dar es Salaam/Arusha. Tanzania and Kenya plan to form a joint committee and set up a channel of communication to deal with future trade disputes. The decision was reached during a meeting between the Minister of Foreign Affairs and East African Cooperation, Dr Augustine Mahiga, and his Kenyan counterpart, Ms Amina Mohamed, last Sunday in Nairobi. The two ministers met to discuss a trade dispute triggered by Kenya’s ban on cooking gas imports from Tanzania. Dr Mahiga told reporters on Monday in Dar es Salaam that in addition to the joint trade committee, the two countries would also set up a communication channel to facilitate real time consultations in case of a trade dispute. The proposed committee will supplement the Joint Cooperation Commission (JCC) that was revived last November after President John Magufuli visited Kenya. “The committee will look into all business-related issues on which the two countries diverge,” Dr Mahiga said. “It’s a committee that will be formed to deal specifically with trade disputes. It will work closely with sectorial ministries from both countries.” Kenya and Tanzania have in recent years been engaged in on-and-off trade and investment disputes, some of which have taken a long time to resolve. Kenya recently banned imports of liquefied petroleum gas from Tanzania, citing safety and quality concerns. Tanzania retaliated by banning imports of cigarettes, margarine and tyres from Kenya and blocked vehicles transporting maize from Zambia to Kenya from passing through Tanzania. Kenya hit back by banning wheat imports from Tanzania. A...

 Tanzania’s Bakhresa Group of companies has assured its Kenyan customers that its products will now be available after agreement to lift trade restrictions which affected products and services exchanged between the two countries. Kenya banned wheat flour and gas imports from Tanzania due to what it called safety and quality concerns and Tanzania reciprocated by slapping a ban on Kenyan tyres, margarine and fermented milk. President John Magufuli and his Kenyan counterpart, Mr Uhuru Kenyatta intervened into the saga and agreed to lift restrictions on imports from either country. The decision was announced at the weekend. Bakhresa exports to Kenya almost all its products including water, soft drinks, biscuits and wheat flour. “We thank and congratulate the two presidents for this bold agreement that will remove the trading hurdles,” Bakhresa said in a statement. “Our intention is to continue producing safe and high quality products for both local and international markets. We also urge all other manufacturers to make sure they meet these standards for the Tanzanian products to penetrate in the international markets and ultimately help the government efforts in driving the country into the industrial economy,” it stated. Source: The Citizen

Was the Africa Growth and Opportunity Act a poisoned chalice from the United States of America? It appeared so after the US allowed a petition that could see Tanzania, Uganda and Rwanda lose their unlimited opening to its market. This follows the US Trade Representative assenting last week to an appeal by Secondary Materials and Recycled Textiles Association, a used clothes lobby, for a review of the three countries’ duty-free, quota-free access to the country for their resolve to ban importation of used clothes. The US just happens to be the biggest source of used clothes sold in the world. Some of the clothes are recycled in countries like Canada and Thailand before being shipped to markets mostly in the developing world. In East Africa, up to $125 million is spent on used clothes annually, a fifth of them imported directly from the US and the bulk from trans-shippers including Canada, India, the UAE, Pakistan, Honduras and Mexico. The East Africa imports account for 22 per cent of used clothes sold in Africa. Suspending the three countries from the 2000 trade affirmation would leave them short of $230 million in foreign exchange that they earn from exports to the US. That would worsen the trade balance, which is already $80 million in favour of the US. In trade disputes, numbers do not tell the whole story. Agoa now appears to have been caught up in the nationalism sweeping across the developed world and Trumponomics. US lobbies have been pushing for tough...

Kenya has emerged as the continent’s trailblazer in championing women’s representation in top management of companies, despite failing to attain the constitutional one-third gender requirement. A report by the Kenya Institute of Management (KIM) and the Nairobi Securities Exchange (NSE) shows that listed multinationals fared better than indigenous firms in women representation on boards, at 27 per cent, against 20 per cent. The number of women in boards rose to 21 per cent this year, from 18 per cent in 2015 and 12 per cent five years ago. “The number of women heading boards remains low, with just five of the 52 (out of 62) listed companies that responded in the survey headed by a woman, similar to what it was five years ago. We also note that like in the boardroom, women representation in senior management was a quarter, meaning that there is one woman for every four men in the senior management teams,” said KIM chief executive Muriithi Ndegwa. In terms of the average representation on boards of women, Africa came fourth at 13 per cent behind Europe and Australia at 26 per cent and North America at 20 per cent. The ratio was however higher than South America at eight per cent and Asia at nine per cent. NSE chief executive officer Geoffrey Odundo said that the presence of a diverse and inclusive organisation is one of the greatest business catalysts that exist to broaden the talent pipeline, enhance brand and corporate reputation. “For diversity and inclusion...

Investors and organisers of the YouthConnekt Africa Summit that took place in Kigali from July 19-21, aim to raise $60 million to finance innovative projects by young entrepreneurs as part of efforts to create 10 million jobs before 2020. The event, which was organised in collaboration with United Nations Development Program (UNDP) and United Nations Conference on Trade and Development (UNCTAD), is in its fifth edition. It brought together 2,500 delegates including heads of states, motivational speakers, celebrities, business leaders, investors, young innovators and development partners. Under the theme From Potential to Success the conference marked the launch of the YouthConnekt Africa Hub and Empowerment Fund that will identify and finance business projects for young entrepreneurs. Baraka Ochieng, programme analyst at UNDP regional office for Africa, told Rwanda Today that YouthConnekt has demonstrated the potential to empower young Africans in different sectors. “As Africa, one of the challenges faced by youth is unemployment, lack of entrepreneurship opportunities; lack of space in decision making within government and leadership. “So this platform provides many opportunities for the youth to be empowered. One of the goals is to create 10 million jobs,” Mr Ochieng said. On the creation of the YouthConnekt Africa Hub and Empowerment Fund, participants will have to agree on a model of outsourcing pledged funds and projects. Projects that promote Sustainable Development Goals (SDGs) are likely to secure funds from the UNDP. The Empowerment Fund seeks to raise $60 million before 2020 to finance key agendas like creating jobs for more than 10 million people...

Nairobi. Tanzania and Kenya have held successful talks that will see the lifting of restrictions on imports from either country. The Minister of Foreign Affairs and East African Cooperation, Dr Augustine Mahiga, announced the decision in Nairobi yesterday following discussions between President John Magufuli and his Kenyan counterpart, Mr Uhuru Kenyatta. As a result, Kenya will lift the ban on wheat flour and gas imports from Tanzania, which, in turn, will remove restrictions on milk and cigarettes from Kenya. Additionally, the two countries will form a standing joint technical committee to address various issues. Diplomatic and trade relations between Kenya and Tanzania had been strained for some time, with both imposing tit-for-tat bans on each other’s exports. The ban on Tanzania’s imports was ostensibly attributed to safety and quality concerns, and Tanzania reciprocated by slapping a ban on Kenyan tyres, margarine and fermented milk. Tanzania also banned overland transport of maize from Zambia into Kenya, which is experiencing one of the severest shortages of the staple. The trade tiff is strange, given the huge volumes of goods flowing between the two countries and the potential harm that trade disputes could cause. Industry, Trade and Investment Permanent Secretary Adolf Mkenda had a few weeks ago said no action had been forthcoming from Nairobi since February and June when the two countries agreed that the ban be lifted. Kenya argued that wheat imports from Tanzania were outside the common external tariff benchmarks to allow free entry into the country. But Prof Mkenda...

Kenyan insurance brokers operating in Tanzania will be forced to cede shareholding to locals under a new law which cut by half the ownership quota allowed for foreigners. Fresh amendments to the Insurance Act sets the mandatory stake that must be held by Tanzanian citizens to be at least two-thirds from the initial one third or 33 per cent. It is estimated that a significant chunk of Tanzania’s 124 insurance brokers are foreign-owned, with a substantial number being backed by Kenyan investors. Some of the Nairobi-based firms selling and negotiating insurance products in Dar es Salaam include Aristocrats Insurance Brokers Ltd, Eagle Africa Insurance Brokers Ltd, MIC Global Risks, and Pacific Insurance Brokers. Others are global insurance brokers such as AoN and JW Seagon, which have operations across the region. The shareholding structures of these firms was, however, not available immediately to the Business Daily, and as such it is not clear how they will be affected by the new regulations. “The changes require insurance brokers to be at least two-thirds (66 per cent plus) owned and controlled by Tanzanian citizens. “This is a 100 per cent increase from the previous local participation requirement (of one third (33 per cent),” said Shamiza Ratansi, managing partner at ATZ Law Chambers, in a research note. Peter Nyabuti, a Kenyan businessman behind Astra Insurance Brokers Ltd, said his company will not be affected by the new ownership rules as foreign shareholding complies with the new quota. “Already, Tanzanian nationals own about 70 per cent...

Tanzanian gas exporters have termed Kenya’s ban on imports as protectionism, as its oil marketing firms lose their share of the market. They say the move is against fair competition practice as set by the EAC Common Market rules. However, the exporters may have to wait till the end of the year for a possible resumption of business after Kenya indicated that it will take up to six months to install a gas-testing facility at its border points. The Tanzania LPG Association said that the ban has benefited select companies in Kenya. “We don’t see any plausible reason for the ban on LPG trade between Kenya and Tanzania, save for undue influence by a few oil firms in Kenya keen to monopolise the LPG business in Kenya,” the association said in a statement. “This decision is already having a major impact on Tanzanian LPG companies since these companies trade a large part of their volumes with their Kenyan counterparts. This ban will affect Kenyans as it will allow select firms to operate in a monopolistic set-up.” The traders say they can readily supply the Kenyan market. “The LPG cost in Mombasa is much higher than in Dar es Salaam. Monopoly and protectionism have pushed prices up in Mombasa. The main reason why LPG from Dar es Salaam or Tanga is cheaper is because the offloading and storage infrastructure at these two ports is more efficient. Firms in Kenya have higher storage unit costs due to facilities like floating storage, which...