Monday, 22 January 2018

Did Tanzania falsify its GDP data?

President Magufuli of Tanzania(R).
Heavy-handedness paying off?
TANZANIA's economic growth, which slowed down in the first half of last year compared to previously, could be revised down after weaknesses in the compilation of national accounts data are addressed, the International Monetary Fund (IMF) has revealed.
Economic growth was subdued in the first half of last year compared to previously, raising concern among some opposition politicians about the direction of the national economy.
 But the IMF now reckons that an ongoing review of the government's method of computing the gross domestic product (GDP) figure, will likely reveal that the economy actually grew at a slower speed than the already reported 6.8 percent in H1 2017.
 The IMF said in a new report that its East Africa Regional Technical Assistance Centre (East AFRITAC) is currently working with the state-run National Bureau of Statistics (NBS) to help review the GDP growth figures.
 "The East AFRITAC is assisting the authorities in addressing weaknesses in national accounts’ compilation, which is likely to lead to downward revisions to the published growth number for the first half of 2017," IMF said in its latest 55-page country report for Tanzania released this week.
 The officially published GDP growth figure for the first half of 2017 is 6.8 per cent, down from 7.7 percent in H1 2016.
 However, the IMF warned that a review of data compilation for the national economy will probably reveal that the economy grew at a slower speed than the reported 6.8 per cent in the first half of last year.
"A decline in private sector credit, a sharp increase in non-performing loan (NPL) ratios, and weaknesses in tax revenue collections would suggest a deceleration in economic growth," it said.
 The IMF said Tanzania's economy, which has been growing at around 7 per cent annually over the past decade, will now probably miss its GDP growth targets.
 "Based on recent developments of the leading indicators of economic activities in the first half of 2017, the (government’s) targeted growth rate has been revised downwards to 7.0 per cent against the initial estimate of 7.1 percent," it said.
 The World Bank said in November last year that Tanzania’s full-year GDP growth would likely decline to 6.6 percent in 2017 versus the government’s revised growth target of 7.0 percent.
 The IMF said in its report that while Tanzania's economy grew at around 7.0 percent in fiscal year 2015/16, GDP growth will likely slow down to 6.0 percent in 2016/17.
According to IMF projections, Tanzania’s GDP growth will likely grow by 6.2 percent in 2017/18, followed by 6.5 percent (2018/19), 6.8 percent (2019/20) and 6.7 percent (2020/21).
  "The deteriorated perceptions regarding the business climate may become a drag on economic activity by failing to unlock new investment opportunities and deterring private sector participation in the major infrastructure projects," the IMF warned.
A decline in investor confidence in Tanzania over the past two years due to the uncertainty of government policies was hurting the economy, said the fund.
"Some recent events have increased private sector concerns about heavy-handed and arbitrary enforcement of rules, increasing uncertainty and negatively affecting private investment," the IMF noted.
 "These include, for example, an export ban on mineral concentrates, heavy-handed changes to the mining laws and the delayed repayment of value-added tax (VAT) refunds."
 According to the IMF, only 58 billion/- in VAT refunds were paid in 2016/17, compared with a staggering 570 billion/- paid in 2015/16 due to "broad and protracted audits of related claims."
"A continued low rate of execution of public infrastructure spending would have a negative impact on economic activity in the near term and reduce the growth potential going forward," it said.
 "Additionally, a prolonged slowdown in private sector credit growth could affect economic activity."
The IMF said the fundamentals of Tanzania's economy remain robust, but the government needs to urgently address warning signs from key economic indicators.
"Although GDP data point to continued strong growth, other high-frequency data suggest a weakening economic activity. Tax revenue collections are lower than expected and credit growth has stagnated reflecting in part banks’ rising NPLs. Inflation remains moderate, and international reserves have increased substantially," it said.
"Strong growth and job creation are needed to address high poverty and a large underemployed youth population. Infrastructure gaps and the business climate have also become increasingly challenging and require a response. Sustained reforms will be needed to achieve the strong private sector-led growth envisioned by the government’s development plan."
Additional domestic revenue needs to be mobilised through tax policy and administration reforms while improving the functioning of the VAT refunds system, said the IMF.
Despite forecasts from both the IMF and the World Bank of slowing GDP growth in Tanzania, the government remains bullish that it will meet its revised 7.0 percent economic growth target for 2017.

The Minister for Finance and Planning, Dr Philip Mpango, said last month that Tanzania remained one of the fastest-growing economies in Africa, driven by construction, transport, communication and financial services sectors.
From the Sunday Guardian

Wednesday, 10 January 2018

KQ to fly to direct New York from October

Kenya Airways will begin daily flights between Nairobi and New York in October. The flight will cut 7 hours of travel between the two cities.
Those keen top travel in October on the maiden flight can now start buying tickets whose sale begins on Thursday. Kenya Airways has already secured a landing slot at JFK.
The trans-Atlantic flights, scheduled to depart Jomo Kenyatta International Airport (JKIA) at 10:30pm every day, will last 15 hours arriving at JFK Airport at 6.30 am EAT. The return flight will depart JFK at 1: 30 PM landing in Nairobi at 10.30 am the next day.
Passengers traveling to JFK will arrive at 6:30am, in time for morning meetings, while the return flight from JFK will depart at 1:30pm and arrive in Nairobi at 10:30am the next day.
Each flight has a capacity of 234 passengers – 204 in Economy and the rest in Business Class of the national carrier’s Dreamliner aircraft.
Kenya Airways, known in short as KQ, has shelved plans to operate the flights through a code-share partnership with US carrier Delta Airlines, its SkyTeam partner.
Delta and three other airlines - Virgin Atlantic and KLM Air France- are currently involved in lengthy merger forcing Kenya Airways to go it alone for now.
 KQ could add another flight to the US through West Africa, once the merger between her code-share partners is over.
 For the Kenya government which has worked hard for the direct flights, it’s a sigh of relief. Phew it’s over! The government expects the direct flights to boost exports to the US and help jumpstart the tourism sector. An estimated100,000 Americans visit Kenya each year.

Also read

Monday, 27 October 2014

Construction of Bagamoyo Port begins in 2015

Construction of a Chinese-funded port and special economic zone in Tanzania worth at least $10 billion will start in July 2015, the president's office said in a statement on Monday, for the first time setting a start date for the delayed initiative.

 The construction of Bagamoyo Port begins in July 2015. The proposed port is locatedat Bagamoyo, 75 km (47 miles) north of commercial capital Dar es Salaam.
A construction agreement for the port and associated zone was signed on Sunday and follows a framework deal signed last year. An official said a start date for building work had taken time to set because of other negotiations about infrastructure to link the port to national transport networks.
The planned Bagamoyo port, new investment in Dar es Salaam and other spending on roads and railways are part of Tanzania's efforts to become a transport hub that could challenge the dominance of Mombasa in neighbouring Kenya.
"The Tanzanian government signed a memorandum of understanding with two major international institutions ... to develop the Bagamoyo economic zone," Tanzania's presidency said in a statement, adding construction would start on July 1 next year.
Tanzania said it signed the infrastructure development agreement with port developer China Merchant Holding International (CMHI) and Oman's biggest sovereign wealth fund, the State General Reserve Fund (SGRF).
Tanzanian President Jakaya Kikwete witnessed the signing of the agreement in Shenzhen, southern China.
A framework agreement between Tanzania and the Chinese port operator was signed when Chinese President Xi Jinping's visited the African nation in March 2013.
Li Jianhong, executive chairman of China Merchants Holdings, asked Tanzania's government at the signing of the construction contract to remove obstacles that have delayed implementation.
"We will do everything possible to ensure that this project takes off because it will bring enormous economic benefits to the entire country," President Kikwete said in the statement.
Separately, Tanzania and China on Oct. 24 signed deals with Chinese firms worth more than $1.7 billion, including one to build a satellite city to ease congestion in Dar es Salaam, deepening Beijing's ties with east Africa.
China, which built a railway linking Tanzania and Zambia in the 1960s and 1970s, is financing a $1.2 billion, 532 km (330 mile) natural gas pipeline. China's Sichuan Hongda Co Ltd in 2011 signed a $3 billion deal with Tanzania to mine coal and iron ore

Wednesday, 22 October 2014

East Africa neighbours close to picking consultant for oil export pipeline

KENYA, UGANDA and Rwanda are in the final stages of deciding on a consultant to oversee building a pipeline to pump the region's new oil bonanza to the coast for export, a senior Kenyan energy ministry officials said on Thursday.

In June, the three countries invited bids for a consultant to oversee a feasibility study and initial design for the construction of a 1,300-km (808-mile) oil pipeline to transport crude to the Kenyan coast.

"We are in the final stage of negotiating with the consultant who will do a feasibility study and the front end engineering design for a crude oil pipeline which should run from Hoima to coastal region of this country," Joseph Njoroge, principal secretary at the Ministry Energy and Petroleum told an east African oil and gas conference.

"Very soon, early next month," Martin Heya, commissioner of petroleum at the same ministry said of the award timing.

Njoroge said the consultant would be required finish the study within five months of the award.
In addition to the pipeline, the consultant would be required to supervise the construction of a fibre optic cable from Hoima in Uganda through the Lokichar basin in northwest Kenya to Lamu, and tank terminals in Hoima, Lokichar and Lamu.

The project will also involve the construction of a 9-km pipeline from the Lamu tank terminal to an offshore mooring buoys.

Kenya's energy ministry said earlier this year the aim of having a single consultant for the whole project was to ensure consistency in the quality of the whole pipeline.

East Africa has become potentially lucrative for international oil firms after Kenya and Uganda's commercial oil finds and discoveries of gas off the coast of Tanzania and Mozambique.

Tullow Oil and Africa Oil, which control blocks in Kenya, have estimated discoveries in the South Lokichar basin at 600 million barrels, a level experts say is enough to make a pipeline viable even without Uganda.

In neighbouring Uganda, the government estimates its crude reserves at 6.5 billion barrels.

Njoroge put the estimated crude oil recoverable reserves at about 1 billion barrels from the tertiary Rift Valley Basin, and about 1 trillion cubic standard feet of natural gas in the Anza Basin, and about 750 billion cubic feet of gas in the Lamu Basin, all in Kenya.

 By Reuters

Thursday, 25 September 2014

The corrupt fuel violence in Kenya

CORRUPT businessmen and politicians have been fanning insecurity in Kenya. They use violence as a red herring to divert attention from corruption to insecurity in a bid to cover their trucks or to blackmail the government into stopping criminal investigations. A case in point is the violence in Lamu County in June and July this year.

 Corrupt characters had grabbed huge tracts of land- to be precise- some 500,000 acres of public land.  The land covers much of the area set aside for the proposed   US$23 billion Lamu Port-South Sudan - Ethiopia transport corridor, LAPSSET.  The land is public land occupied by squatters. The grabbers therefore hired goons- who pretended to be Al-shabaab militants- to violently evict them.

This opened a Pandora’s Box.  Investigations into the cause of the violence unearthed the scandal.  The land grab was executed by 22 entities that grabbed 500,000 acres in 2011/2012. It is note worth that that was the period immediately preceding the general election in Kenya in 2013. Kenya’s President Uhuru Kenyatta pulled fast and bold one on the avaricious:  He shocked the nation by announcing that just a group of 22 entities, had grabbed some 500, 000 acres of public land in Lamu County. The president ordered the repossession of the land and also investigation with a view to prosecuting the culprits.

The presidential announcement solved a paradox: Lamu is a sparsely populated County, where population density is just sixteen per square Kilometre: Why does the region suffer landlessness and violence related to land ownership?  Now 500,000acres of land measures some 2000 square kilometres. This is enough land to accommodate some 32,000 people.  This means that the 22 well-healed land grabbers displaced some 32,000 people.

The land is a prime piece of real estate considering that it borders the site of the proposed US$25 billion Lamu Port south Sudan Ethiopia transport (LAPSSET) corridor. This corridor’s developments include the Lamu Mega Port on 9000 hectares of land, a 2000km high speed Railway line, a Crude Oil pipeline, a120, 000bpd Crude oil refinery, a highway  a resort city and an economic zone.
 The Port will also be at the head of the equatorial bridge, a Railway line connecting Lamu Port on the Indian Ocean to Douala port in Cameroun on the Atlantic Coast. This makes the land a real gold hence a prime target for grabbing.  LAPSSET will turn the backwater Lamu County into a bustling energy and logistics hub in east Africa thus increasing demand for land and consequently pushing up its price.

Construction of the first three berths begins in the 32-berth port was proposed to begin this month hence the urgency to evict the squatters.  At least 100 people were slaughtered in an orgy of violence lasting about three weekends.

 The predators according to intelligence reports were business men and politicians from both the coast and up country.  A majority appears to be members or supporters of the opposition party, ODM, which is an affiliate of the CORD coalition, the official opposition party in Kenya. One of the kingpins of the opposition, Siaya senator James Orengo was the Minister in charge of Lands in 2011/2012 when the land was dished out.  Orengo is a Member of the Opposition CORD coalition led by Raila Odinga who was the Prime Minster in the last coalition government.  He and Orengo are also at the fore front of change the Constitution Movement. Ironically, among the issues they want voted for is Corruption and insecurity. He has already recorded a statement with the Police over the land grab.
 The corrupt are adept creating smokescreens and red herring s to cover up its shenanigans. For instance, when the violence broke out in Mpeketoni in Mid- June, the government blamed local political networks.  The opposition led by Raila Odinga, stopped short of calling the President an idiot insisting that the violence is perpetuated by the Somali militant group-Al- Shabaab. Interestingly, the Somalia based Al-shabaab militants “claimed responsibility for the carnage.”  However, a person suspected to be an ODM supporter, was later arrested for using a fake Al-shabaab twitter account to issue the said admission.

 The admission by Al-shabaab was puzzling; the Militants are under siege, nay on the run, in Somalia.  Few thought they have the stomach to attack targets across the borders.   The land scandal has blown the cover on the avaricious in Kenya.

A part from displacing people from their land and therefore their daily economic activities, the violence has devastated the tourism sector.

The coastal economy is largely depended on tourism.  The sector, which was just emerging from bad business caused by uncertainties associated with last year’s elections, is now back in the doldrums. Travel advisories by western source markets have emptied the white sandy beaches of tourists.
The industry employs some 500,000 people directly and millions others indirectly.  These jobs are at stake.  Hotels have already declared a significant proportion of these employees redundant.  The national economic growth rate which is forecast at 5.5 to per cent this year is also threatened. The crisis in the tourism sector could shave off up to one per cent off the forecast growth. Last year, the decline in tourist numbers shaved off 0.7 per cent of economic growth.

It is perhaps this realisation that informed the bold move by the government to cancel the title deeds and repossess the land. In addition, to stop the bloodletting and hemorrhage of the economy, the government sent the military to hunt down the criminals with a devastating effect.

Intelligence reports indicate that a large number of the criminals were killed in security forces’ raids on their hideout in the expansive Boni forest. If government sustains its aggressive stance on crime, insecurity will decline. In fact, in august, insecurity was down significantly.

Tuesday, 16 September 2014

East Africa’s EOI for Pipeline extension

Kenya, Uganda and Rwanda have invited EOI (Expression Of Interest) to build a 784-kilometre pipeline to transport while petroleum products. The project, to be built in in two phases will transport refined petroleum products from Kenya to both Uganda and Rwanda.
The project, part of east African regional integration plans, involves extending an existing pipeline that runs from the Kenyan port of Mombasa and the western town of Eldoret.

The extension will link that pipeline to Kampala and Kigali and also serve markets in Tanzania, Burundi, South Sudan and the Democratic Republic of Congo. Products now have to be trucked by road.

Uganda and Kenya have discovered commercial quantities of oil and plan to start production in about three years. Those finds are among a series of discoveries along Africa's eastern coast and Rift Valley which runs through Kenya and other states.

As well as exporting crude, Uganda plans to refine some oil, making products that could flow through the pipeline extension. Plans include modifying the existing pipeline, which pumps products from the coast inland, so products can flow both ways.
 Interested parties should submit the bids by Sept. 30.

 The advertisement does not have a price tag. However, previously the tag was estimated at $300 million.

The existing products pipeline is owned and operated by the state-run Kenya Pipeline Company (KPC).

The extension would be built in two phases, comprising a 350-km stretch between Eldoret and Kampala and a 434-km pipeline between the Ugandan capital to Kigali.  It also includes construction of storage terminal at Kampala, Mbarara and Kigali.

Separate to the products pipeline, Kenya, Uganda and Rwanda invited bids in June for a consultant to oversee a feasibility study and initial design for a 1,300-kilometre oil export pipeline to the Kenyan coast. 

Tuesday, 9 September 2014

EOI call for Kenya's oil jetty

Kenya's National Oil Corp has floated an EOI for a project adviser  for a new oil jetty in the port city of Mombasa.

 The tendedr, published on Monday, NOCK invites firms to submit expressions of interest by Sept. 29 to act as adviser for the Public Private Partnership (PPP) project.

"The successful candidate will  review the original feasibility study to cater for the oil discoveries which have made Kenya a potential oil exporter.

 The initial plans unveiled in 2012 for the oil jetty, or single buoy mooring, and storage facilities were pushed back to change the scope and design after oil was found in Kenya. The initial plan was to cost some US$500 million.

"We originally envisaged to work with a specific jetty design as a net importer of oil but that changed because of the discovery of oil deposits in Kenya in 2012," NOCK spokesman Temesi Mukani  told Reuters.

The tender document said the project aimed to ensure the port was more efficient, cut delays and made Kenya's coast a competitive choice for oil tankers. Another objective is to "provide the infrastructure that will support east African states to export their discoveries to global markets".

The main export route discussed up until now for Kenyan and Ugandan oil, both still a few years from major production, would be via a planned pipeline in north Kenya to a new port at Lamu.
Kenya is under pressure to boost storage facilities and develop a strategic reserve to stabilise petroleum supplies. The country has no strategic reserves and relies on oil marketers' 21-day reserves required under industry regulations.

Crude has also been found in next door Uganda, part of a string of hydrocarbons finds along Africa's east coast and the Rift Valley that passes through Kenya and neighbouring states.

Fuel prices have a big impact on inflation in the east African nation, which relies heavily on diesel for transport, power generation and agriculture, while kerosene is used in many households for cooking and lighting.