Home Business EAC increases rice import duty to 35% to protect local farmers

EAC increases rice import duty to 35% to protect local farmers

The East African Community (EAC) comprising Tanzania, Burundi, Rwanda, Uganda and Kenya has increased import duty on rice in a move to discourage cheap imports of the product from Asia and protect local farmers.
Tanzania Finance Minister Saada Mkuya Salum said the import duty on rice was increased from 25 to 35 percent.
“We did this after realising that is a sensitive product (rice) which can be produced locally. The whole process was consultative and involved stakeholders from all walks of life, different ministries and other government departments,” said Salum.
There has been an outcry from rice farmers and millers in Tanzania over the influx of the cheap rice into the country from Asia, with calls for complete ban of importation of the staple food increasing in a bid to protect the local industry.
There has been similar call from rice millers in fellow East African country, Uganda, with their representative, Ambassador Phillip Idro advising East African heads of state to “revise the rice policy and ensure there is increased local production before allowing in some import”.
All Finance Ministers of the EAC were said to have signed the new proposal, except the Ugandan Minister, as Oryza quoted local sources as saying the East African country was proposing a 75 percent increase to its import duty and increase local production of rice.
The economy of Tanzania, whose Finance Minister defended the move, depends heavily on agriculture, which accounts for more than 25 percent of Gross Domestic Product (GDP), provides 85 percent of exports, and employs 80 percent of the work force. Topography and climatic conditions, however, limit cultivated crops to only 4 percent of the land area.
Cash crops including coffee, tea, cotton, sisal and pyrethrum account for the vast majority of export earnings.
The volume of all major crops—both cash and goods, which have been marketed through official channels—have increased over the past few years, but large amounts of produce never reach the market.
Poor pricing and unreliable cash flow to farmers continue to frustrate the Tanzanian agricultural sector. (VENTURES AFRICA)
Africa’s internet usage continues rapid growth
Social media boom, abundance of content-rich apps, rich video content and access to cheaper Smartphones has fuelled internet usage in Africa, doubling the use of data from an average of 37,500TB (terabyte) a month in the year 2013 to 76,000TB of data a month this year.
According to the June 2014 Sub-Saharan Africa Mobility Report by Ericsson, the ongoing digital revolution will continue in the coming year (2015) as data usage will increase to as much as 147 000TB per month because consumers, networks and media networks are now embracing the use of 3G and 4G technology.
“We have seen the trend emerging over a few years, but in the past 12 months the digital traffic has increased over 100 percent forcing us to revise our existing predictions,” Fredrik Jejdling, regional head of Ericsson Sub-Saharan Africa said.
According to the new predictions, data revolution is expected to grow at 65 percent to 2019 and beyond to 764 000TB by the end of 2019.
Ericsson says mobile data in Sub-Sahara Africa will grow twenty times the anticipated global expansion in the next five years (2013 and 2019).
The report also states that 75 percent of mobile subscriptions will be Internet inclusive (3G or 4G) while voice call traffic is expected to grow in the next five years in the region.
Consumers in Kenya, Nigeria and South Africa – Africa’s three major growing economies – are already using video TV and media services from their Smartphones more, the Communication and IT service provider noted in the report.
Jejdling added that as cheaper smartphones continue to flood the African market, Africans from all social strata will be able to access the internet through their mobile phones.
This will also help small businesses, health and agriculture as the report noted that “M-commerce can offer endless opportunities for entrepreneurs…and farmers are fans of mobile wallets.”
Financial transaction is also expected to increase online as a result of the increasing use of mobile data.
The report further predicts that mobile subscription will stand at 930 million in sub-Saharan Africa by the end of 2019 while Smartphone and broadband subscriptions will be about 55 million and 710 million respectively.
“Mobile users in the region have shown a preference for using their device for a variety of activities that are normally performed on laptops or desktops,” the report said, backing up its predictions of increase in mobile subscriptions.
The report stressed the need for the need for “Affordable access to mobile broadband is not a luxury, but a necessity in regions such as sub-Saharan Africa.” (VENTURES AFRICA)
Sasol fined $50m for fleecing South African customers
South Africa’s competition matters adjudicator, the Competition Tribunal, on Thursday said it had inflicted a R534 million ($50 million) fine on Sasol Chemical Industries (SCI), a unit of the Johannesburg and New York listed petrochemicals giant, Sasol.
The penalty came after SCI was found guilty of overcharging its South African clients after collecting exorbitant amounts for purified propylene and polypropylene.
SCI was fined R205.2 million ($19.1 million) in the case of purified propylene and R328.8 million ($30.6 million) in the case of polypropylene, the Tribunal said.
The Tribunal also imposed the method the company would use for pricing of the two products in future. This will lead to a drop in the price that local competitors would have to pay for the two products.
The Tribunal said SCI’s transgressions happened during a period of four years, stretching from January 2004 to December 2007.
The Tribunal found that the prices SCI charged during the period had a negative impact on South Africa’s other plastic converters and SCI’s competitors.
Additionally, this hurt the firm’s competitors during the period covered by the Tribunal’s investigation.
The Tribunal’s finding follows a protracted inquiry into claims of excessive pricing by the SCI.
The inquiry lasted over several months from 13 May 2013 with the final submissions being made on May 9 this year. (VENTURES AFRICA)
Central Rand Gold financial director resigns
Central Rand Gold, a gold exploration and production firm listed on the Johannesburg bourse, on Friday said its finance director, Patrick Malaza, had stepped down after five years with the firm in order to pursue other business interests.
The company, which is also listed on the London Stock Exchange (LSE) said the resignation of Malaza will be effective end-July this year, allowing for the company to re-allocate responsibilities within the finance squad in the firm.
“This will provide an opportunity for emerging talent within the finance team to assume more responsibility and also contribute to the future success of the company,” Johan du Toit, the CEO of Central Rand Gold, said.
Du Toit added that the firm’s existing workers had the capacity to take up new and additional roles and duties.
Meanwhile, the firm said the company had embarked on an efficiency review of its operations to improve efficiency. The firm said it is critical to continue reviewing its performance in order for it to operate more efficiently.
At 10:18 GMT Central Rand Gold’s share price was 9.75 pence on the LSE and 280 rands on the Johannesburg Stock Exchange. (VENTURES AFRICA)
IMF tasks Malawi on policies supportive of economic recovery
The International Monetary Fund (IMF) has urged the new Malawi government to implement policies that support economic recovery and also lower inflation.
Opposition leader, Peter Mutharika, of the Democratic Progressive Party (DPP) and brother of Malawi’s former leader won the country’s presidential election in May; with the defeated incumbent president Joyce Banda claiming the election was marred with “serious irregularities”.
IMF Resident Representative in Malawi, Geoffrey Oestreicher while commenting on the election noted that administration change notwithstanding, the global lender’s policy advice remains.
“The IMF engages with the governments of its member countries, not with individuals,” he said, adding, “In the political process administrations may change, but when they do, IMF policy advice should remain based on objective evaluation of the economic situation.”
According to Oestreicher, the exchange rate policy and fuel pricing regimes put in place by Banda’s administration in May 2012 should be maintained, noting that “they have served Malawi well and their retention would help ensure that resources— including foreign exchange— are freely available in the market and allocated efficiently to maximize Malawi’s growth potential”.
The economy of Malawi is predominantly agricultural, with about 90% of the population living in rural areas and agriculture contributing 37 percent to GDP. The sector is also responsible for 85 percent of export revenues.
The landlocked country in south central Africa ranks among the world’s least developed countries. (VENTURES AFRICA)
RCF withdraws proposed $1bn fertilizer plant in Ghana
Mumbai, India-based Rashtriya Chemicals & Fertilisers (RCF) has dropped plans to construct a $1 billion fertilizer facility in Shama district of Ghana after the West African country denied assured gas supply.
Ghana and India had in 2010 entered into a deal to establish a urea plant fitted with capacity to produce 1.2 million tonnes per year, with the two countries asked to identify a company from each side to execute the project. India nominated state-owned RCF, who agreed to finance the deal with the hope of cheap gas supply.
“The Ghana Government has denied assured supply of gas for the plant, giving the reason power generation is priority for them as compared with fertiliser production…So, we are shelving this project,” Press Trust of India quoted a source as saying.
RCF might benefit a lot from this investment as fertilizer manufacturers in India are in search of countries that can offer cheaper gas to meet domestic urea demand.
India produces 22 million tonnes (MT) of urea, but the country’s current demand is about 30 million tonnes, with the country relying on imports for the rest. The country and fertiliser companies have in recent times sought offshore ventures in places like Ghana where they can get gas at a cheaper rate in order to meet domestic urea demand.
Opinions differ on Ghana’s stance on the deal as some believe a $1 billion plant would have come as a boost to the country’s economy in several ways, while others say dedicating its gas reserves to power generation over urea production was a wise decision by the West African nation. (VENTURES AFRICA)
Sanlam earmarks $279.8m for African growth prospects
Sanlam, South Africa’s second biggest life insurer, on Wednesday said it had set aside R3 billion ($279.8 million) for growth prospects in Africa and South East Asia for this year and beyond.
Sanlam said at the end of the last financial year, it had more than R4 billion ($373 million) on hand meant for redeployment in these opportunities.
Since then a total of R1.6 billion ($149.2 million) had already been used, including R1.3 billion ($121.2 million) for the acquisition of a 51 percent stake in Malaysia’s MCIS Insurance.
The other R300 million ($27.9 million) was used to buy a further 2.4 percent shareholding in its Botswana operations and to fund increased capital necessities of specific non-life group units.
Sanlam made this disclosure on Wednesday as it released its operational update for the first four months of the year.
During the period under review, Sanlam saw new business volume surge 21 percent to R59 billion ($5.5 billion).
This was a robust performance given the tough operating conditions during the period under review. The performance was boosted by higher “average investment market levels” and marked improvement in Santam’s underwriting margin.
South African insurance firms have large amounts of money invested in the equity markets. If the markets do well, the company’s top line earnings growth also becomes evident.
Santam is South Africa’s biggest short term insurer and it is a subsidiary of Sanlam. (VENTURES AFRICA)
Cabin crew strike threatens Namibian Aviation Industry
Namibia Cabin Crew Union (NCCU)’s President Reginald Kock has said the union which represents the Southern African country’s flight attendants would commence an industrial action on Wednesday over low salaries.
“Air Namibia did not compare our cabin crew salaries with those of similar positions in the industry. Instead, they compared them with the salaries of clerks,” said Kock.
According to Kock, salaries of flight attendants in the country were far below those of their colleagues in other countries the in Southern Africa Development Community (SADC), making the more than 140 members of the NCCU down tools in protest.
The labour leader emphasized that the cabin crew have a tremendous “safety aspect” to their jobs and hence the airline should treat them with respect.
“We have communicated reasonable salary figures to management but feel we were ignored,” added Kock.
He said cabin crew members out on international flights will join the strike once they return.
Following the expression of grievances by the union, the airline said it had engaged the services of independent HR consultants for a review of the grading exercise, which brought about the strike. The consultants are expected to complete the review by June 20, 2014.
In view of this, the Ministry of Labour was reported to have requested that the union delay its planned strike until the result of the review was released but Sitali said the union remained adamant.
The International Air Transport Association (IATA)-certified airline is a major player in Namibia’s tourism sector, which is the country’s third-largest contributor to GDP, contributing 14.5 percent and creating 18.2 percent of all Namibian employments.
A protracted strike will no doubt be unpleasant for the country’s only major airline, with route network comprising 16 destinations in different countries in Africa and Europe.
Sitali said the airline would continue operating a number of flights and would do everything in its power to avert the strike. (VENTURES AFRICA)
B2Gold to acquire Papillon Resources in $570m deal
Canada’s B2Gold has agreed to buy emerging West African gold developer, Papillon Resources for $570 million or about $1.72 per share, making it one of the biggest gold stock buyout in West Africa.
The deal will see Papillon shareholders get 0.661 B2Gold common shares per one Papillon share.
Altogether, Papillon shareholders will get a 26 per cent stake in the new entity while B2Gold will hold the remaining percentage and also leverage on the potential provided by Papillon Resources-owned Fekola project in Mali.
The Fekola project has the prospect of producing 54.97-million tonnes of mineral resources and an average of 306,000 ounces of gold annually.
Mark Connelly, Papillon Managing Director stated that “B2Gold’s track record of successful mine development and operation, coupled with its balance sheet, cashflows and funding capacity will de-risk the development of Fekola and should maximise the value of the project for both Papillon and B2Gold shareholders.”
B2Gold president and CEO Clive Johnson said “…the merger with Papillon will add the high-grade Fekola project to our rapid growth as a profitable gold producer.”
The deal is also expected to increase B2Gold’s mineral resources by 25 percent.
The miner predicts at least 395,000 ounces of gold production this year from three mines and more than 900,000 ounces of gold in the next three years from five operating mines.
B2Gold’s other African businesses includes the 5 million ounce Kiaka project in Burkina Faso and the low-cost Otjikoto mine in Namibia which is scheduled to produce its first gold by December 2014.
The deal, which is still subject to the approval of the shareholders of the two companies is expected to be completed by September, according to an indicative timetable released by the company. (VENTURES AFRICA)
South African Airways to invest in Asky
In line with its long-term growth strategy, South African Airways (SAA) is hoping to re-vitalise its West African business through an investment it intends to make in Asky, a Togo-based airline.
SAA Chief Executive, Monwabisi Kalawe said the airline is considering partnership with Ghanaian investors to acquire a stake in Lomé-based Asky, and then relocate it to Ghana’s capital, Accra.
The loss-making airline is also considering Ghana as its West Africa hub after its subsidiary, Airports Company SA (Acsa) signed a deal to upgrade the country’s airports this year.
Kalawe said West Africa was under-served by airlines and if the deal goes as planned, the region will account for 10 percent of SAA’s operations compared to the current 2 percent.
Industry analysts however believe that arch-rival Ethiopian Airlines could pose a threat to SAA in acquiring a stake in the airline since the former is a strategic shareholder. Both airlines are members of the Star Alliance member but are in stiff competition on ruling the Africa skies.
A team from the SAA is expected to be in Ghana next week to discuss with potential investors and partners on the issue. (VENTURES AFRICA)
Lafarge Group plans Nigeria, South Africa merger
As the cement market continues to get more competitive, Lafarge Group has decided to merge its South African business with its publicly traded Nigerian unit, Lafarge Wapco to create Lafarge Africa Plc on the Nigerian Stock Exchange (NSE).
This announcement comes on the heels of an agreed $50 billion merger between Lafarge group, the world’s second-largest cement producer with operations in 64 nations and Zurich-based Holcim Ltd. to become the world’s biggest cement producer. The merger is expected to be completed in 2015.
The business consolidation will see Lafarge Africa Plc become the sixth highest capitalised company on the Nigerian bourse.
“The consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa across the region,” Wapco’s CEO Guillaume Roux said at a Press conference.
Chairman of the Nigerian unit, Olusegun Osunkeye also added that the merger would provide growth access in two of Africa’s largest economies.
“It will mean that our shareholders are invested in a larger and more geographically diverse business,” said Osunkeye.
The cement industries in Nigeria and South Africa are expected to grow by 14 percent and 4 percent respectively over the next five years.
Roux said the deal which is worth $1.35 billion will see Lafarge group get $200 million cash payment and 1.4 billion new shares in Lafarge Wapco. The group will also hold 73 percent shares of the new company.
Nigerian-based investment bank Chapel Hill Denham served as the financial adviser on the merger while Standard Chartered Bank was the independent valuation adviser on the deal.
The deal is however expected to close finally before the end of this year as it is still subject to approval by shareholders and regulators. (VENTURES AFRICA)
Mouka partners South African firm on new luxury product
Nigerian foam company, Mouka Limited has formed a strategic partnership with Bravo Pty South Africa to establish Belimi Limited that will provide luxurious quality sleep enhancing products for the Nigerian populace.
Managing Director, Peju Adebajo, who spoke at the official launch of the new company expressed Mouka’s commitment to adding comfort to life, “which is why our joint venture Company; Belimi Limited (partnership between Mouka and Bravo Pty South Africa) is making available the world renowned Sealy Posturepedic mattresses to the public”.
Two flagship Sleep Galleries had already been unveiled, with a range of Sealy Posturepedic mattresses to cater for the needs of its Lagos customers with good taste, siting the galleries at the heart of the country’s commercial hub; The Garnet Plaza, Lekki and 288B Ajose Adeogun Street, Victoria Island.
Adebajo stressed the need for quality rather than quantity, even in the choice of mattresses, which she said has a greater impact on quality of life and daytime functioning.
To ensure money does not hinder discerning customers from getting what they want, the MD said bank financing was available for Nigerian consumers.
Chief executive Officer, Bravo South Africa, Greg Boulle also expressed excitement at the partnership.
“We are excited to partner with Mouka Limited to bring the luxury of Sealy Mattresses in the comfort of homes of Nigerians,” he said.
According to him, through Belimi Limited, the South African company would be delivering on its promise to transform the bedroom into a dream destination.
With the partnership, Bravo has been afforded the opportunity to access the Nigerian market and the birth of Belimi is providing us with a terrific opportunity to access the Nigerian market, arguably Africa’s largest.
Boulle said the growth of the new company in Nigeria will help build a formidable economy that is sustainable over long generation, especially in terms of creation of jobs and contribution to GDP. (VENTURES AFRICA)
Mondi acquires US firm for $105m
Paper and pulp group, Mondi, is set to acquire bags and kraft paper unit of the US-based Graphic Packaging International for $105 million in debt and cash, it said on Tuesday.
David Hathorn, the CEO of London and Johannesburg Stock Exchange (JSE)-listed Mondi Group said the merger of the two businesses will create a critical bags player in North America and extend Mondi’s international footmark in this market.
Hathorn said Mondi, in view of this merger, is set to proffer creative solutions for the firm’s increasing client base.
“Synergies expected from the acquisition…will ensure that the combined business delivers strongly,” Hawthorn said.
Graphic Packaging is one of the biggest players in the in the production and distribution of kraft paper and bags in the US, the world’s biggest economy.
It has a kraft paper mill positioned in Pine Bluff Arkansas, which has the capacity to produce 135 thousand tonnes a year. It also has nine bags factories throughout the US.
In the year to end-March, the firm posted unaudited pro forma sales of about $437 million.
Mondi, a global packaging and paper operator, employs around 24,000 people in production facilities across 31 countries. It has important operations in central Europe, Russia, the Americas and South Africa. (VENTURES AFRICA)
Sasol reviews tribunal’s $50m fine
Johannesburg and New York listed petrochemicals firm, Sasol, late on Thursday said it is reviewing the decision by South Africa’s competition adjudicator, the Competition Tribunal, to impose a $50 million fine on its unit, Sasol Chemicals Industries (SCI) for charging high prices for polypropylene and propylene products.
Sasol said it is also making an allowance to explore other options available to it, including involving other pertinent participants on what other steps should be taken going forward.
Yesterday, the Tribunal disclosed that it had imposed a penalty of R205.2 million ($19.1 million) in the case of purified propylene and R328.8 million ($30.6 million) in the case of polypropylene.
The Tribunal also said it had recommended solutions to the SCI that are aimed at helping SCI on its pricing strategies for the two products.
It said this will go a long way in bringing down the price local competitors would have to pay for the two products.
The Tribunal said SCI’s transgressions happened during a period of four years, stretching from January 2004 to December 2007.
The Tribunal found that the prices SCI charged during the period had a negative impact on South Africa’s other plastic converters and SCI’s competitors. (VENTURES AFRICA)
WFS now runs Kenya’s Transglobal Cargo
France-based Worldwide Flight Services (WFS) has entered into an agreement with Kenya’s Transglobal Cargo Centre to take over the full management, operation and business development of the ultra-modern and fresh produce and cargo terminal at Nairobi’s Jomo Kenyatta International Airport.
The specialised cargo and logistics company now operates under WFS’ African division, Africa Flight Services (AFS) effective June 1, 2014, adding to AFS’ Cape Town, Johannesburg and Dar es Salaam operations.
“We are delighted to be working with a professional partner in Transglobal, which is in line with our commitment to provide our airline clients with a worldwide network of expertise in handling services,” said Barry Nassberg, WFS’ Group Chief Operating Officer.
He added that the Kenyan company would enjoy the benefit that comes with being part of the WFS network, including global customer agreements and access to the French company’s operating and quality standards, and training.
Commercial Director of Transglobal, Tony Bunn, whose company prides itself as one of the most professional and fastest growing cargo handlers in East Africa said the Kenyan company’s partnership with WFS will take its quality and professionalism to the next level to support its customers.
“There is already considerable interest in AFS because it will offer a full ramp, passenger and cargo service and work to the highest international service standards. This is a new and exciting phase in our development,” Bunn added.
With Transglobal’s outstanding facility, with the capacity to handle over 200,000 tonnes of cargo annually, great potential for growth is in the offering for Kenya, coming at a time when the country’s economy is showing healthy growth, forecasting an annual GDP increase of 5.7 percent in 2014 following 2013’s 4.7 percent growth.
AFS will launch ramp and passenger handling in Nairobi by the end of 2014 in addition to providing best-in-class cargo handling at the airport, with a $7 million investment in new equipment to handle narrow and wide-body passenger aircraft and wide-body freighters.
Among other things, AFS will create more than 150 new jobs at the airport this year to support its full service offering for airlines in Nairobi, doubling the size of Transglobal’s workforce at the airport. (VENTURES AFRICA)
Afrox enters $2.3m equipment supply deal with Matus
Johannesburg Stock Exchange (JSE) – listed gas and welding firm, African Oxygen (Afrox), on Wednesday said it had won a R25 million-a-year ($2.3 million) contract to supply equipment to wholesaler, Matus, which is a unit of Brandcorp, a Johannesburg-based industrial tools distributor.
Brett Kimber, the MD of Afrox, said dealing with a wholesaler as big as Matus will help the company in its efforts to cut costs.
“(It also) builds a brand on the newly- launched Transarc 6013 electrode. In this way, Afrox also reaches a far broader customer base than individual sales teams would be able to achieve,” Kimber said.
This is the second contract that Afrox has won in as many weeks, which means the firm’s track record continues to stand it in good stead this year.
The firm last week said it had signed a five-year R55 million ($5.2 million) contract to supply liquefied petroleum gas (LPG) to Sun International, a well-known South African domiciled hotel chain.
Afrox makes its gases and other products on 41 different sites across southern Africa. Its Bulk Scheduling Centre deals with more than 20,000 “customer drops” a month, while its transport fleet covers around 24 million kilometres a year.
The gas and welding firm employs more than 3000 people and has a national network of distributors and branded Gas & Gear centres. (VENTURES AFRICA)