Tanzania: Public Debt Hits Sh53 Trillion Mark
Dar es Salaam — Tanzania's public debt rose by 15 per cent during the 2016/17 financial year even as the government grapples with own sources of development financing amid growing unpredictability of funds disbursements from development partners.
Latest figures show that the debt had reached Sh53.3 trillion (about $24.514 billion) during the financial year that ended on June 30, 2017.
Among the mega projects which President John Magufuli's administration is currently executing are the standard gauge railway that will connect Tanzania to the landlocked neighbouring countries of the Democratic Republic of Congo, Zambia, Rwanda, Burundi and Uganda.
Construction of the first phase of the railway project - a 205-kilometre stretch from Dar es Salaam on the Indian Ocean coast to Morogoro - is already ongoing, whereby part of the funding was sourced as a loan from the Turkish state-owned Export Credit Bank of Turkey (Exim Bank).
One that readily comes to mind is the much-anticipated Ubungo Interchange which is being constructed using funds from local and foreign sources. Then again, the government has been purchasing airplanes for the national flag carrier Air Tanzania Company Limited (ATCL).
That aside, the debt growth rate for 2016/17 was the lowest to have been registered in recent years. During the 2015/16 financial year, the debt jumped by 20 per cent, reaching Sh46 trillion in June 2016 - up from Sh38.2 trillion as of June 2015.
In June this year, the central government borrowed a total of $505.0 million from Switzerland's Credit Suisse.
The central government debt accounted for the largest share, reaching $14.948 billion as of June 2017.
Tanzania's struggling banks
Tanzania’s President John Magufuli has ordered the country’s central bank not to bail out any struggling banks as East Africa’s third-largest economy tries to control rising bad debts in the sector.
A spike in non-performing loans over the past two years has hit local bank profits and choked off new lending to the private sector, undermining economic growth in the country.
"it’s better to have a few viable banks than dozens of failing banks,” he said late on Friday at the inauguration of a new bank branch in northwestern Tanzania.
Tanzania has about 40 licensed banks, but the country’s financial services sector is dominated by only a handful of big lenders.
Bad debts as a proportion of the total bank loans rose to 11.7 percent in December 2017, more than twice the ma
ximum target of 5 percent, up from 10.6 percent in June 2017, the latest central bank data showed.
The International Monetary Fund (IMF) said in January the growth of credit to the private sector had stagnated, partly due to the deteriorating quality of the loans.
Dozens of Broke Banks cause Tanzanians don't know how to repay debt makes me wonder if they will pay back on of the "projects" they are building.
Tanzania's T-Bills Sell Out As Interest Rises
Tanzania has seen higher appetite for government securities, with the Treasury bills auction held last week recording oversubscription.
The Bank of Tanzania had offered Tsh170 billion ($75.173 million) in T-bills, comprising Tsh169 billion ($74.731 million) on the competitive window and Tsh1 billion ($440,000) as non-competitive.
The 35-day paper received bids worth Tsh1 billion ($440,000); the 91-day paper received bids worth Tsh10.35 billion ($4.58 million) while the 182-day paper attracted Tsh98.75 billion ($43.67 million).
The Treasury only accepted Tsh3 billion ($1.32 million) from the 91-day bids, and Tsh65 billion ($28.743 million) from the 182-day offer.
According to the Bank of Tanzania, bids worth of Tsh265.28 billion ($117.31 million) were received on the competitive window, representing an oversubscription of Tsh96.28 billion ($42.58 million).
BoT accepted bids worth Tsh169 billion ($74.731 million) in face value, and Tsh1,612.37 billion ($713 million) on the competitive window.
The auction was dominated by commercial banks, which accounted for 92.71 per cent of the total bids, followed by insurance companies with 4.68 per cent, pension funds with 1.12 per cent and other investors with 1.49 per cent.
The overall weighted average yield declined by 35 bps, reaching 4.84 per cent. The average price for the issue was 0.4859 per cent, with the lowest accepted price being 0.4149 per cent.
Market analysts at the central bank said that they expect demand to remain high for the shorter-term paper.
Even more short term debt resulting from broke banks.
Tanzania's Moody's negative rating outlook
DAR ES SALAAM, March 5 (Reuters) - Tanzania criticised Moody’s decision to impose a negative outlook on the country’s first international credit rating, saying the agency’s concerns about the business climate were misleading.
Moody’s on Friday assigned Tanzania a“B1” credit rating with a negative outlook, the first time the country has been given a rating by any of the big international agencies.
Moody’s said the negative outlook was justified by unpredictable policymaking, which could affect economic growth and the ability to attract foreign investment.
The government in the East African nation has tussled with mining and energy firms, as it sought to renegotiate their contracts, alarming foreign investors.
“Tanzania rejects the negative outlook on the credit rating. The government expected Moody’s to sit down with the government to discuss any queries they may have after their review,” Ben Mwaipaja, a Ministry of Finance and Planning spokesperson, said on Monday.
He said the government had taken several steps to improve the business environment, without offering details.
Tanzania has prioritised infrastructure investment as part of a five-year national development plan with a goal of achieving middle income status by 2025.
Moody’s said Tanzania’s debt could rise to 43 percent of GDP in 2020 from 40.2 percent last year.
In 2016, Tanzania said it wanted to issue a debut Eurobond to finance infrastructure projects, but it has delayed the process due to a lack of a credit rating.
Forced Moody's for a rating just to get a EuroBond and go bleeting and crying when its downgraded same day its rated.
Acacia posts $700m loss on hit from Tanzania export ban
Acacia Mining plunged to a loss of more $700m in 2017 after the gold producer was forced to write down the value of assets in Tanzania, where it has been embroiled in a bitter row with the government. In addition to the $850m impairment charge, Acacia said it had also increased its uncertain tax provision by $172m to $300m because of the dispute with President John Magufuli of Tanzania. The London-listed company has been unable to export gold from Tanzania since March because of a battle over unpaid taxes. That has hit profits and its share price hard. “The challenges in our operating environment led to our production guidance being revised during 2017, whilst the ongoing ban on the export of gold/copper concentrate meant that we were unable to export and sell 185,800 ounces of produced gold which led to a substantial cash outflow ” said Peter Geleta, Acacia’s interim chief executive in a statement. In the year to December, Acacia reported a loss of $710m against a pre-tax profit of $242m a year earlier, while the company’s cash position fell to $80.5m from $318m. The company scrapped its dividend.
Another Loss making Gold Mining Company when Gold is at its highest ever price.
Tanzania: Mindsets lead to Grinding Poverty
Dar es Salaam — Sheikh Mungia Zuberi, resident of Muheza in Tanga Region, has been involved in Islamic preaching for many years.
As a leader of the mosque at his community, Sheikh Zuberi, who is in his 50s had previously no economic activity, and depended on believers well-wishes for survival.
The situation made him to continue being dependent to the mosque financial resources as his main sources of livelihood.
He said, "I have always been asking myself on when I am going to get out of this dependence?"
But since he joined the World Vision Tanzania's mindset transformation programme, things have totally changed to his life.
"The World Vision programme taught us on how to change our own lives using own resources instead of waiting for someone to do it for us," he said.
Sheikh Zuberi is like Dickson Jacob, resident of Simiyu region who since he finished his education, he decided to stay at home jobless.
"I had no any economic activity for years. I used to work up early in the morning, walk around the streets the whole day before returning home during night," he said. He said he was always thinking that one day the government would provide jobs for youths.
After years of joblessness, the village was visited by officials from World Vision Tanzania who came with good news of training villagers on how to think positively.
Tanzania Lazy mindset reason for their backward economy.
Tanzania: TRA Accused of Being Slack
Dar es Salaam — The seizure yesterday by Kenyan authorities of undeclared gold from Tanzania whose value was estimated at Sh2 billion has raised concerns over the continued laxity in mineral export processes in Tanzania, thus exposing Customs.
The Kenya Revenue Authority (KRA) said on Wednesday that it had intercepted 32,255.50 grammes of gold bars worth KSh100 million (Sh2 billion) at the Jomo Kenyatta International Airport in Nairobi.
The consignment was being transported to Dubai, and a Tanzanian national, whose identity was not revealed immediately, was arrested over the matter. "The suspect was intercepted following an intelligence alert. He arrived at JKIA at 1505hrs on Friday, February 16, on-board PrecisionAir from Mwanza via Kilimanjaro International Airport (KIA), heading for Dubai aboard a Kenya Airways flight," a statement issued yesterday by the KRA said.
How the suspect passed through Tanzanian customs checkpoints undetected remains unclear. The relevant Tanzanian authorities confirmed to The Citizen yesterday that their data base does not indicate any mineral export licences being issued for such amount in recent times.
The Tanzania commissioner for minerals, Mr Shukurani Manya, said he had no details on the matter, but was following it up. He added that, although the government has a centralized system for issuing mineral export permits, it was still up to customs officials at exit points to check whether minerals being exported do have the requisite documentation - and are declared to the officials as a matter of course.
TRA are lazy clowns at work
Protests and hunger in Tanzania's refugee camps
Too hungry to study
Around 500 kilometers (310 miles) south of Kiziba, in neighboring Tanzania, lies the Nyarugusu refugee camp. About 200,000 people from Burundi and DRC live here. They too are feeling the shortage in food aid.
"The refugees go to our fields and steal our cassava and potatoes," says Amandusi Ndondeye, a representative from the local government.
Young women from the camps have turned to prostitution to make ends meet. "We have very little money," says Marco Lujulika, a resident from the camp. "We need to be able to provide for ourselves and we at least need enough food to eat. The children are crying all the time and the ones who go to school can't concentrate on an empty stomach," he says.
Faustin Lumona is the camp's education coordinator. "The children often come to school late, or they skip school altogether. Some fall asleep in class and all this because of the hunger," he told DW. "They also don't manage to study at home. Instead they go to the fields to try and find some food."
Without any additional sources of income, the hardships in the camps are barely manageable. In order to actually leave the camp and earn money, the refugees need a special permit. "The people try to earn a bit of money on the farms in the area," explains Angelique Abiola, a spokesperson for the refugees in the camp. "But if you are caught without a permit, then you're in trouble,” she says.
Over the years, Tanzania has often hosted refugees from the neighboring countries. The plight of the refugees at the Burundian border has, however, pushed Tanzania to its limits. The Tanzanian government is said to have encouraged the ‘voluntary' return of the refugees and some have indeed gone home despite the dangers.
Hunger and dark hearts plague tanzania
Tanzania pushed Moody's for a Credit Rating to enable application of Eurobond
Tanzania’s debut credit rating on March 2 could see it issue a Eurobond later this year, even as it protests the “premature” release of the rating by Moody’s, who gave it a negative outlook.
Moody’s assigned first-time local-and foreign-currency issuer ratings of B1 to Tanzania.
The rating agency justified the negative outlook, saying that the country’s “unpredictable” policymaking under President John Magufuli could affect economic growth and the ability to attract foreign investment.
But analysts say that the rating would still allow the country to enter the sovereign debt market as it seeks to fund its infrastructure projects.
“Given Tanzania’s low GDP per capita, a “B1” rating — even with a negative outlook — was decent, given the worsening debt profiles across the continent.So, as a debut issuer, it’s a decent rating,” said Charles Robertson, Renaissance Capital chief economist.
According to documents from the Bank of Tanzania, Dar had indicated that it would use the proceeds from its Eurobond to finance maturing debt and Infrastructure.
“We submitted all documents to our lead consultant Citi Group. We will borrow up to $900 million, depending on the timing of the Eurobond for the infrastructure projects,” Permanent Secretary in the Ministry of Finance and Planning, James Doto, told The EastAfrican at the time.
DAR ES SALAAM (Reuters) - Tanzania aims to issue its first Eurobond in fiscal 2017/18 to fund new infrastructure, the Finance and Planning Ministry said on Thursday, after repeated delays in the launch as it sought a credit rating.
It did not say how much the bond would be worth, but said the government wanted to raise $900 million in the financial year starting July 1 to fund infrastructure projects.
President John Magufuli, a former public works minister, has promised to renew creaking infrastructure with transport links and other projects, and has also led an anti-corruption drive since his election a year ago.
“The funds will be raised through issuance of a Eurobond and other modalities including tapping the syndicated loan and export credit agencies,” the ministry said in a budget document.
The Finance Ministry had said last year it had concluded talks with Fitch Ratings for a sovereign credit rating and also hoped to finalise similar discussions with Moody’s Investors Service, paving the way for a possible debut Eurobond issue.
The ministry’s budget document also said:“The government will continue to maintain good relationship with traditional and new emerging creditors to sustain concessional borrowing as the most preferable source of external funding.”
Eurobond to pay for the SGR
Tanzania Power Issues Casts Shadow on $12 Billion Debt Plan.
For investors considering financing Tanzania’s proposed 27.6 trillion-shilling ($12.3 billion) borrowing program, the government’s handling of its power utility’s debt problems may give pause for thought.
Independent power projects (IPPs) can contribute to economic growth and livelihood improvement – when they are competitively and transparently negotiated within effective energy planning and regulatory systems. By contrast, unsolicited and non-competitive projects can end up costing percentage points of gross domestic product (GDP). Tanzania’s experience with IPPs since the mid-1990s falls into the latter category.
Framed as an “emergency” supplier to address an energy crisis in 1994-95, Independent Power Tanzania Ltd (IPTL) did not serve the national grid until 2002. It then became a permanent feature of the energy sector for the next 15 years. In the process, the facility burdened the Tanzania Electric Supply Company (TANESCO) with overpriced, diesel-fuelled power that was not part of the country’s “least cost” strategy, while seriously undermining the development of gas-fuelled power that was. To make matters worse, a second “emergency” project known as Richmond – later Dowans and finally Symbion – failed to address another energy crisis in 2006, and remained idle for two years after its eventual completion, while still collecting capacity charges of US$4m a month. Finally, an escrow account, set up in the central bank to hold monies owed by TANESCO to IPTL while a dispute between the two parties underwent arbitration, was paid to the new “owner” of the facility in suspicious circumstances. This led to further litigation and, in July 2017, the arrest of the principals involved on charges of fraud and criminal conspiracy.
This Briefing Note chronicles how politics and rent-seeking have subverted the development of Tanzania’s power sector during the past quarter of a century and offers tentative estimates regarding the extent of the irreparable damage caused.
Looks like the electric SGR doesn't and will not have adequate power.
UPDATE 1-Tanzania suffers national power outage after technical fault-supply company.
DAR ES SALAAM, Nov 30 (Reuters) - Tanzania was hit by a country-wide blackout early on Thursday due to a technical glitch in its national power grid, the country’s state-run electricity monopoly said.
“A technical fault ... caused all regions connected to the national power grid to lose electricity supply,” the Tanzania Electric Supply Company (TANESCO) said in a statement.
The outage occurred at around 04:00 GMT on Thursday, and it was still trying to fix the fault, the company said.
Partial blackouts occur regularly in Tanzania, which relies on hydro, natural gas and heavy fuel oil to generate electricity. Many businesses use power generators as backups, pushing up their operating costs.
Tanzania invited bids in August to build a 2,100-megawatt (MW) hydroelectric plant in a World Heritage site renowned for its animal population, despite opposition from conservationists to the long-delayed project.
Tanzanian president John Magufuli is personally backing the project at Stiegler’s Gorge in the UNESCO-designated Selous Game Reserve and sees it as vital to diversify Tanzania’s energy mix and end chronic electricity shortages. Thecountry’s current power generation capacity of around 1,500MW. The government did not say how much the project would cost and how it would raise financing, but wants it completed within three years.
Tanzania’s energy infrastructure has suffered from decades of underinvestment, neglect and corruption allegations, and investors have long complained that the lack of reliable power hurts business in East Africa’s third biggest economy. (reporting by Fumbuka Ng’wanakilala; editing by Katharine Houreld and William Maclean).
"Electric" SGR looks like it will run on generators.
US firm demands Sh53bn from Tanzania power supplier Tanesco for breach of contract.
US-based Symbion Power has taken Tanzania Electric Supply Company (Tanesco) to the International Court of Arbitration in Paris seeking $561 million settlement (KSh53.7 billion) for breach of contract.
According to Symbion spokeswoman Julie Foster, the firm filed an application for arbitration at the court on Monday after efforts to resolve the dispute about the validity of the 15-year Power Purchase Agreement (PPA) in a friendly manner for more than a whole year failed. “We ran out of options.”
“One month ago, we wrote to Tanesco to give them a notice that we had no choice other than to terminate the contract. The notice period expired on March 3, but Tanesco has not replied. They just continued to ignore Symbion.
"We waited for another week and still heard nothing before we eventually and reluctantly resorted to the international court on March 13. The Power Purchase Agreement is now terminated and the amount claimed is $561 million,” said Ms Foster in a statement made available to The Citizen.
The disputed PPA was signed in December 2015, handing the US firm a long-term contract to supply Tanesco with 112 MW through firm’s Ubungo gas-powered generators until December 2030.
Ordered to pay
As Symbion opted to the international tribunal, last September, the International Centre for Settlement of Investment Disputes (ICSID) ordered Tanesco to pay $148.8 million to Standard Chartered Bank-Hong Kong over the tussle on ownership of controversial Independent Tanzania Power Limited (IPTL).
Tanesco’s problems began after the government, in September 2013, controversially paid over Sh440 billion ($200 million) to Pan African Power Solutions Tanzania Limited (PAP) owned by Harbinder Sethi after he claimed he had acquired IPTL.
The funds were withdrawn from the Tegeta escrow account that was opened at the Bank of Tanzania after Tanesco opened a suit at ICSID claiming it was being overcharged by IPTL. Both agreed to have payments directed to the account until the matter was resolved.
However, before any ruling was made, the controversial payments to PAP were made.
Debt repayment seems to be a big issue in Tanzania.