India plans to offer duty free market access to export products from Uganda, the Prime Minister Dr Manmohan Singh recently announced.
Seven poor countries, including Cambodia, Tanzania and Ethiopia, are already benefiting from the tariff preference scheme announced in April this year.
Letters of intent (LoIs) for availing duty free market access have been received from 10 least developed countries (LDCs). Customs notification for implementation of the scheme has been issued for seven of them, an official statement said.
The letters of intent received from three other LDCs – Madagascar, Rwanda and Uganda – are under process, it said.
Under the Duty Free Tariff Preference (DFTP) Scheme, India offers duty free access to LDCs with regard to 94 per cent of its tariff lines to be implemented in five years. It is open to all 49 LDC members, including 33 in Africa. Products of interest to Africa include cotton, cocoa, aluminum ores, copper ores, cashew nuts, sugarcane, ready-made garments, fish fillets and non-industrial diamonds.
The IMF wants Uganda to harmonize incentives it offers investors with those of other East African Community member-states. The position is contained in the Fund’s country report for Uganda, Kenya and Tanzania. It recommends that a partner state should consult others before giving investors any incentive. This is not yet the official position of the IMF, but will be debated and may be considered by the Executive Board, the decision making of the Fund.
If adopted, Uganda with the poorest infrastructure in the region, will find itself offering the same incentives as Kenya and Tanzania. This, analysts say, may effectively erode Uganda’s only competitive edge.
Despite its generosity towards investors, Uganda still lags behind in attracting FDI compared to Kenya and Tanzania. Presently, Uganda offers more tax and non-tax incentives to investors than its regional counterparts as a way to attract investors. According to the World Investment Report 2008, Uganda attracted the least amount of Foreign Direct Investments last year. In a year that the country held the Commonwealth Heads of Government Meeting, which was expected to spur investments in construction, the amount of FDI to Uganda declined to $360 million in 2007 down from $400 million the previous year.
Kenya outperformed its competitors when it realized a huge increase of FDI inflows. Investment inflows to East Africa’s biggest economy shot up to $728 million in 2007 up from $51 million the year before. Kenya received more FDI due to large privatization sales in its telecommunications industry and investments in railways, according to the report. Tanzania received $600 million in FDI in 2007, higher than the $522 million received in 2006. The report points out that much of the FDI in Tanzania was directed towards the country’s several natural resource exploitation projects. Such a stark difference in FDI inflows could have prompted the IMF team to suggest a harmonized incentive structure for the region.
“This paper argues that a coordinated approach to providing investment incentives should become a priority in the EAC. To facilitate closer regional economic integration and to avoid the damaging uncoordinated contest to attract foreign investors, the EAC members should seek a closer coordination of investment and tax policies and the creation of an EAC-wide legal framework for foreign investment,” noted the IMF report, which based its recommendation on research carried out in late 2006.
Considering differences in infrastructure development among the three countries, Uganda may find it hard to compete on a level field with the other two—both with a coastline, better transport and utility services.
At the moment, the fight for foreign investors is being fought along the lines of who offers longer tax breaks and cheaper assets such as land. For example, while no East African country beats Uganda when it comes to dishing out free land to foreign investors, Kenya has a good tax structure that favours investors dealing in housing estates. Also, Kenya is considering endorsing a financial bailout package, worth more than $200 million, to write off debts for six sugar companies, and improve their competitiveness in the region.
The IMF paper points out that the EAC countries should “discuss and coordinate their investment incentives policy, and that rules guiding the provision of incentives would be agreed upon. If a country feels that its incentives are insufficient, instead of acting unilaterally, it would be better to raise the issue with its EAC partners.”
The IMF report appears to be uneasy about import and export trade-related incentives that Uganda and Tanzania have handed investors, saying the countries were foregoing revenue that would otherwise be used to fund poverty eradication programs.
The release of the IMF report follows a July 2008 letter by Dr. Ezra Suruma, the Minister of Finance, to the Fund in which he said that Parliament had approved tax incentives to qualified investors. In the same letter, Suruma said he had set aside Shs60 billion for this purpose. Suruma said that only companies that exported more than 80% of their production would benefit from this incentive.
The call to harmonize tax incentives also comes on the back of growing pressure by Uganda’s private sector on government to create Export Processing Zones (EPZs). Kenya and Tanzania have EPZs, areas where exporters enjoy tax breaks and other incentives.
John Ssempebwa, the Head of Trade at the Private Sector Foundation, said that “the IMF recommendation is welcome. But Uganda should first speed up the opening of the Export Processing Zones to compete favorably with the other states.”
Harmonizing incentive structure in the region, could throw the country’s budding private sector at the deep end of the competition with Kenya’s bigger economy. That is a situation Uganda has avoided for years.
Maggie Kigozi, the Executive Director Uganda Investment Authority, had reservations about taking further steps in harmonizing the incentives in the EAC bloc. “At the moment, tax policies in the region are almost the same,” she said. The corporate tax is one of the taxes that have been harmonized across the region. Although, there are stark differences on the taxes charged on petroleum and beverages, with Uganda said to have higher rates than its counterparts. But Kigozi argued that what Uganda needs is to “work on the road from Mombasa to Kampala.”
Uganda, unlike Kenya and Tanzania is landlocked. The country also has a poor transport network and low levels of energy. These barriers continue to undermine Uganda’s prospects of attracting businesses unless government gives the investors a good reason to set up shop here.
But the IMF warns that “Increased competition over FDI (Foreign Direct Investment) and growing pressure to provide tax holidays and other investment incentives to attract investors could result in a “race-to-bottom” that would eventually hurt all three EAC members. Left unchecked, the contest could result in revenue loss, especially in Tanzania and Uganda, threaten the objective of improving revenue collection.”
In his letter of intent – a report card outlining the country’s progress of adhering to policies set out by the IMF – Suruma said that revenue losses from the Shs60 billion incentive to exporters are expected to be very modest (not exceeding 0.1 percent of Gross Domestic Product.
Many Kenyan football players are beoming marketable and are leaving the country in search of better pay packages in Tanzania. George Owino, Bernard Mwalala and Boniface Ambani are some of the players who have made a mark and are playing in the Tanzanian league for a while. It appears more Kenyan players will follow them next season as many of these Tanzanian Clubs have approached more players. Some of the Clubs targeting Kenyan players include Simba, Yanga and Azam FC.
Reliable sources have found out that Tusker FC will be one of the hardest hit Clubs as their dependable players, Kenyan International Osborne Monday( pictured above), Chrispine Odula and Ibrahim Shikanda have already been approached and given an offer. The players are being targeted by Azam FC which plays in the top Tanzanian League. They are currently lying in the 8th position. It is said that Azam FC is offering irresistable packages to any player they approach.
When contacted for more information, Tusker FC’s new Head Coach James Nandwa confirmed the reports but said Tusker is yet to receive a formal offer from Azam. Tusker will then have to study the offer before giving its position.
Titus Mulama, whose contract recently ended in Sweden is also a target of Simba FC. The question is, will the Kenyan Clubs rise and offer better pay packages to their players or will they watch as the cream of the Kenyan league cross the borders and make the Tanzanian league more attractive and competitive?
CAIRO, EGYPT – Egyptian human rights groups and professional unions are pressing for the release of two Egyptian doctors convicted by Saudi authorities of causing a Saudi patient to become addicted to morphine.
Last month a Saudi Islamic court sentenced Egyptian doctors Rauof Al Arabi and Shawki Abd Rabuh to 15 years in prison and 1,500 lashes each for causing the wife of a Saudi prince to get addicted to the painkiller morphine during medical treatment.
The sentencing has drawn angry reaction from Egypt’s human rights advocates and media, who accused the Saudi authorities of unfairly treating Egyptians working there.
‘Too weak’
“I call at the top of my voice on President Hosni Mubarak to intervene personally to secure the release of my husband for the sake of my children,” Tahia, the wife of Dr Al Arabi, said tearfully during a protest in Cairo.
“I am ready to kiss the feet of the Saudi King in order to pardon my husband,” she added. Tahia said that her spouse’s health is too frail to withstand flogging and jailing.
“My brother was coerced into making false confessions,” Sahar, the sister of the second convicted doctor Abd Rabuh, said. She claimed that the Saudi authorities have threatened her brother saying they would imprison his wife who is also working in the kingdom.
The families of the two doctors and the Egyptian Medical Association have sent petitions to Saudi King Abdullah Bin Abdul Aziz to pardon them.
Egyptian newspapers on Tuesday quoted Egypt’s Consul-General Mohammad Al Aashiri in the Saudi city of Jeddah as saying he has lodged a plea with the Saudi authorities to suspend the enforcement of the punishment against the two doctors until a request for their retrial is judged.
“It is important to give efforts underway the chance to succeed either in commuting the sentences against the two doctors or pardoning them,” added the Egyptian official.
More than one million Egyptians are believed to be working in Saudi Arabia. Both countries have good political and economic ties. But the penalty has drawn criticism in the Egyptian media.
The Nigerian Communications Satellite (NigComSat), which was launched into orbit over 18 months ago, is said to be missing.
THISDAY gathered last night that with the satellite missing from orbit, the huge amount spent by the Nigerian government, about N40 billion may have gone down the drain.
The satellite was found to have run into a technical hitch for some weeks now, according to a source, when it was discovered that it was using a technological standard that was not meant for Africa but Asia.
The materials used in the building of the satellite by the Chinese that built it were said to have also been in question.
The solar panel was said to be faulty and not working. All this was being battled with while, the Managing Director of NigComSat, Ahmed Rufai, was said to be angling for the launch of the second satellite.
The contract for the NigComSat project which was signed on December 15, 2004 in Abuja between China Great Wall Industry Corporation and the National Space Research and Development Agency was said to have cost the Federal Government over N40 billion. China was awarded the deal after it outbid 21 international.
The cost of the satellite include items such as construction, insurance, value added tax as well as the price for building one ground control station in Abuja and a backup control station in Kashi, China.
The satellite has four gateways said to be located in South Africa, China, Italy and Northern Nigeria.
The satellite, which has a lifespan of 15 years, is being monitored and tracked by a ground station built in Abuja while the Chinese firm, Great Wall Industry Corporation, has a ground station in Kashgar, in northwest China – Xinjiang Uygur Autonomous Region.
It will be recalled that NigComSat which is 100 per cent owned by the Federal Government, was recently given a 15 per cent stake from the Federal Government’s 49 per cent stake in NITEL.
Nigeria in May 2007 launched NigComSat into orbit with expectations of tremendous gains to the nation’s telecoms sector.
The NigComSat is a super hybrid geo-stationary satellite designed to operate in Africa, parts of the Middle East and southern Europe and was expected to digitalise the Nigerian economy and promote technological advancement in Nigeria and Africa.
The expectation from many quarters was that NigComSat’s carrier rocket, Long March 3-B, which blasted off from Xichang Satellite Launch Center in southwest China’s Sichuan Province and entered the orbit accurately on May 14, would set the stage for Nigeria to consolidate on its growing profile as the technological hub of Africa and an emerging player in the global terrain.
The satellite project was supposed to enable Internet access to even the remotest rural villages, a major quest of stakeholders in recent times. It was also expected to enhance government’s economic reforms, particularly in the areas of e-learning, e-commerce, tele-medicine, tele-education, and rural telephony.
The project, according to experts, was expected to help African users save more than $900 million spent for telephony trunking and data transport services, $660 million in phone call charges and broadband access which is more than $95 million spent each year, as well as create more than 150, 000 jobs for Nigerians.
Rufai had before the launch disclosed that Nigeria would earn about $1.05billion which is N128billion yearly from NigComSat. A major part of the earnings was expected to come in from the sale and leasing of transponders from NigComSat.
Rufai had stated that each transponder, forty in all will be sold for between $60-70 million. NigComSat currently has forty transponders, with 28 active and 12 inactive.
However despite the huge expectations of Nigerians, NigComSat has not performed to expectations. Rufai at a recent media interaction agreed that NigComSat had not been able to capture the market principally because of the challenges it faced from the regulatory authority.
Government sources confirmed to THISDAY the failure of the satellite in orbit. While admitting that the level the failure has gone is mindboggling, the source disclosed that the Federal Executive Council will meet today on the matter and issue a statement on how the failure will be addressed.
RANDOLPH TOWNSHIP, NEW JERSEY – Paul Michael Designs, 477 Route 10 East, will hold a holiday open house fundraiser to benefit Ethiopian orphans from 5 – 9 p.m. Thursday, Nov. 13, 2008.
The event will feature jewelry made by the children of the Orphans and Vulnerable Children Program of the Medhan Social Center in Addis Ababa.
Sale proceeds will be donated to the program through the township-based Medhen Orphan Relieef Effort (MORE).
Founded eight years ago, the non-profit organization has raised over $100,000 for the program. For more information, call (973) 989-3993.
