ECONOMIC AND SOCIAL RESEARCH FOUNDATION (ESRF)

SOUTH AFRICAN FDI INTO EAST AFRICA: THE CASE OF TANZANIA

By George Kabelwa

Paper Prepared for the Globalization and East Africa Project ESRF, and delivered as Paper 3 to the Project’s Seminar October 30, 2002

I.

TABLE OF CONTENTS

I. II. III. IV. 1.

TABLE OF CONTENTS...............................................................................................................i LIST OF TABLES ........................................................................................................................ii LIST OF FIGURES ......................................................................................................................ii LIST OF ABBREVIATIONS ......................................................................................................ii BACKGROUND ...........................................................................................................................1

1.1. 1.2. 1.3. 2.

Introduction....................................................................................................1 An Overview of the Main Issues ...................................................................2 Organization of the Study ..............................................................................3

SOUTH AFRICAN COMPANIES IN TANZANIA ..................................................................4

2.1. Chronology of South African FDI into Tanzania, 1993 – 2002 ....................4 2.2. A Tentative Description of the Impact of SA FDI in the Tanzania’s Economy ..................................................................................................................10 2.2.1. Modern Technology.............................................................................11 2.2.2. Competition..........................................................................................12 2.2.3. Employment.........................................................................................12 2.2.4. Investment in Agriculture ....................................................................13 3.

MAIN SA INVESTOR FRIENDLY POLICY TRENDS IN TANZANIA.............................14

3.1. Political Shift Towards a Cooperative Relationship with South Africa ......14 3.2. Policy Shift Towards Promotion of Private Investment ..............................15 3.3. New Regulatory and Incentive Framework for the Mining Sector..............16 3.4. Privatization of State Corporations and Some Controversies......................18 3.4.1. The Program for the Privatization........................................................18 3.4.2. Controversies Surrounding Privatization of Utility Companies ..........19 3.4.2.1. Divestiture of NBC (1997)...........................................................19 3.4.2.2. Divestiture of TANESCO ............................................................21 3.4.2.3. Other Privatisations......................................................................21 3.4.2.4. Reaction by the Government on the Controversies .....................22 4.

TANZANIA’S COMPETITIVE ADVANTAGE IN EAST AFRICA ....................................23

4.1. World Economic Forum’s Indicators...........................................................23 4.1.1. Openness ..............................................................................................24 4.1.2. Infrastructure........................................................................................24 4.1.3. Government Intervention .....................................................................24 4.1.4. Finance.................................................................................................26 4.1.5. Labour ..................................................................................................26 4.1.6. Institutional Framework.......................................................................26 4.2. Other Indicators ...........................................................................................26 4.2.1. Mineral Endowment.............................................................................26 4.2.2. Strategic Geographical Position...........................................................27 4.2.3. Tourism ................................................................................................27 4.2.4. Historical Factors .................................................................................28 4.2.5. Political Stability..................................................................................28 5. REFERENCES............................................................................................................................30 APPENDIX ...........................................................................................................................................31

i

II.

LIST OF TABLES

Table 1: SA FDI in SADC 1996-1998 (US$ m)............................................................2 Table 2: Some Of Investments With South African Interests From 1994 To 2002.6 Table 3: Major Foreign Affiliates in Tanzania, 2001 ..................................................11 Table 4: East African Comparisons: Selected Indicators, 2000 ..................................23 Table 5: South African Trade With East African Countries........................................24 Table 6: East African Comparisons: Competitive Factors (Ranking 24 African Countries)) ...........................................................................................................25 III.

LIST OF FIGURES

Figure 1: South African Companies in Tanzania, 1993-2002 .......................................1 Figure 2: Sectoral Distribution of Employment from South African Businesses, 19932002......................................................................................................................13 Figure 3: Sectoral Distribution of South African Investment, 1993-2002...................13 IV.

LIST OF ABBREVIATIONS

ABSA ANC APTV BRELA EAGM FAT FDI GDP IPC JT NBC NMB PSRC SA SAB SADC STAMICO SUDECO TANESCO TAZARA TBL TIC TPDC UNCTAD

Amalgamated Banks of South Africa Group Limited African Development Congress Africa Pay Television Business Registration and Licensing Agency East African Gold Mines Limited Football Association of Tanzania Foreign Direct Investment Gross Domestic Product Investment Promotion Centre Jovenna Tanzania National Bank of Commerce National Micro Finance Bank Parastatal Sector Reform Commission South Africa South African Breweries Southern African Development Community State Mining Corporation Sugar Development Corporation Tanzania Electricity Supply Corporation Tanzania Railway Corporation Tanzania Breweries Limited Tanzania Investment Centre Tanzania Petroleum Development Corporation United Nations Conference on Trade and Development

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1.

BACKGROUND

1.1. Introduction Until the end of Apartheid, there was almost no presence of South African investment in East Africa. In Tanzania, for example, although there had been an ongoing involvement of de Beers in the Williamson Diamond Mine, there was no other significant investment. During that period, the main South African presence had been members of the South African opposition in exile. Over the past decade, this has changed dramatically. South African companies have become the most noticeable foreign investors in Tanzania. In the second half of 1990s, the pace of South African direct investment flow into Tanzania dramatically increased (See Figure 1). Figure 1: South African Companies in Tanzania, 1993-2002

16

14

Number

12

10

8

6

4

2

0 1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Year Source: Table 1 and Section 2.1. Notes: For 2002, data is from January to September

This inflow has not been equally experienced in all East African countries. There have been differential trends of South African direct investment into these countries with Tanzania receiving a much greater flow than Kenya and Uganda According to the Johannesburg Chamber of Commerce (2000) Tanzania held more promise as a market compared to other East African countries. This is despite the fact that Uganda was ranked as one of the top ten foreign direct investment (FDI) recipients in Africa, and Kenya’s established role as the leading destination of FDI in East Africa. However, although Kenya had enjoyed relatively high FDI for the better part of the last three decades, it is claimed that over the past decade there has been a decline in investor confidence in Kenya as a result of a falling out with the country’s development partners in the early 1990s.

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Tanzania’s remarkable achievement in terms of South African direct investment inflow in the late 1990s was not only in comparison with her East African neighbours but also in comparison with the entire SADC area. According to Table 1, Tanzania became the leading recipient of South African investment capital in 1998, with FDI topping about US$443 million. The country received slightly higher than 10 per cent of the total flow of South African investment capital in the area from 1996 through to 1998. Table 1: SA FDI in SADC 1996-1998 (US$ m) Target country Angola Botswana Lesotho Malawi Mauritius Mozambique Namibia Swaziland Tanzania

1996

1997 0.78 9.99 2.43

8.35 1.62 126.03 5.81

1 380.89 15.39 32.61 26.30 186.24 586.52 2 241.15

0.83 4.50

Zimbabwe Total 147.14 Source: BusinessMap (1999:61)

1998 103.00 57.25 41.30 7.30 393.21 124.45 48.77 443.29 212.39 340.24 1 771.19

Total 103.78 75.59 2.43 42.92 7.30 1 900.13 145.65 81.38 470.42 403.13 926.76 4 159.49

The main purpose of this paper is to address the questions “how” and “why” this happened. It sets out to describe the process whereby the South African stake in the Tanzanian economy has increased so dramatically and explore possible explanations for the phenomenon. It also attempts to explain reasons for the differential trends in the South African investment into East African countries by making use of various economic and social indicators. The analysis of the consequences (effects)1 of this development and implications for future policy are left for a subsequent stage of the study. 1.2. An Overview of the Main Issues The influx of South African investment from the early 1990s was propelled by the confluence of crucial political changes in South Africa with important changes in Tanzanian economic policy. The process that led to the end of the Apartheid regime in South Africa also involved the end of the economic boycott of South Africa, which had been maintained by most African countries. In Tanzania, this had the somewhat paradoxical result of replacing the political activists and refugees, who had received solid support from the Tanzanian government over three decades, by South African business people, who in some cases had presumably been supporters of the discredited regime. On the Tanzanian side there were four policy changes, which set the stage for the expansion in South African investment. These were:

1

Some of the consequences are briefly described in the Section 2.2.

2

•

The political shift from hostility to the South African political regime to positive co-operation with the accession to power of the ANC government;

•

The introduction of a series of measures to encourage private foreign investment – the Tanzanian receptivity to South African investment was part of a more general shift in government policy towards foreign investment;

•

The introduction of a new regulatory and incentive framework for the mining sector, an important sector in the South African economy; and

•

The program for the privatisation of State owned (parastatal) enterprises, which provided some attractive investment opportunities for South African firms.

This paper is mainly written using East African data, but will be supplemented later by an analysis of factors operating on the South African, which encouraged the spurt of investment. 2 Part of the explanation for South African interest was simply the opportunity to penetrate a market, which had previously been inaccessible. However, it would be interesting to explore whether the end of Apartheid not only provided the opportunity but also increased the interest in South African firms diversifying internationally. Also, it would be interesting to understand the role of African investment in the international strategies of South African business (e.g. do South African firms see themselves as having a potential competitive advantage in the region?) 1.3. Organization of the Study This study comprises of five chapters. Chapter one begins with the introduction and proceeds with the overview of the main issues. The trend of South African FDI in Tanzania is surveyed in Chapter two. This trend is discussed both chronologically and later summarized to give a tentative description of the impact of the South African companies in the Tanzania’s economy. This is followed by Chapters three and four which try to answer the main research questions of this paper – how and why South African companies have dramatically increased in the country in the second half of 1990s and why there has been differential trends in these companies into the East African countries. In both cases, the study makes use of secondary data. Chapter three attempts to link the trend in South African companies in Tanzania with shifts in the policy framework as briefly discussed in the previous section, Chapter four uses comparative indicators in order to gauge the relative potentials of East African countries in attracting South African investors. In Chapter four, some controversies surrounding the privatization of the major utility companies are also cited. Finally, in Chapter five, concluding remarks are presented.

2

The ESRF is planning to cooperate with the EDGE Institute in Johannesburg and Indicus Analytics in Delhi on a project on South-South Investment, Globalisation and Development: South Africa, East Africa and India.

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2.

SOUTH AFRICAN COMPANIES IN TANZANIA

2.1. Chronology of South African FDI into Tanzania, 1993 – 2002 The flow of South African investment into Tanzania dates back to 1993. This was a year before the historic event in 1994 that resulted into South Africa becoming a democratic country. Prior to 1994, South Africa operated under the apartheid regime. Sanctions against this regime prevented South African companies from investing their profits abroad. The adoption of a democratic regime in 1994, however, released this previously dormant investment capacity. Since then, South Africa became the major source of foreign direct investment (FDI) in many African countries. The entry of Alliance Airways during 1993 marked the beginning of South African FDI into the country. The Alliance Airways was a joint venture between Air Tanzania, Uganda Airlines and South African Airways under the latter’s majority control. The new company took over some of the assets of Air Tanzania, when the Government re-designated part of Air Tanzania property, including licenses for certain routes, to the joint venture. In November 1993, South African Breweries acquired 46 percent of Tanzania Breweries Ltd. (TBL) for US$ 21 million. As part of its achievements, in September 1998, TBL became the Dar es Salaam Stock Exchange’s second company to acquire a listing and South African Breweries had its share increased to 50.5 percent. Since the joint venture agreement with Government, the company has increased its interest in Tanzania Distilleries Ltd to 100 percent and its interest in Darbrew Ltd – a sorghum beer producer – to 60 percent. In 1994, in the mining sector, Wilcroft Co., a subsidiary of the De Beers Centenary AG, was granted an additional 30 percent of Williamsons Diamonds Ltd. De Beers had been operating a joint venture with the Government (latterly through the State Mining Corp.) since 1940s. As a result of the 30 percent addition, De Beers’s overall share rose to 75 percent (see Table 2). The company paid US$1.2 million plus a US$7.5 million investment pledge to rehabilitate and modernize the Mwadui Mine. In September 1995, Randgold Resources of South Africa formed a joint venture, namely Randgold Resources Tanzania, with the Pangea Goldfields Inc. of Canada. The joint venture company explored the Golden Ridge project, which covers three adjacent areas of about 174 square kilometres in Lake Victoria gold fields, in the northwest part of the country. Randgold planned to invest about US $ 5 million in order to acquire a 65 percent equity interest in the property. However, later in 1998, the Barrick Gold Corp. of Canada acquired all the Randgold’s interest in the Golden Ridge property. Another South African company, which entered in 1995, was the JCI Ltd. The company formed a joint venture with a number of other foreign companies to explore for gold in Tanzania. However, in 1997, the company sold their interests in four Tanzania gold exploration projects to Kimberley Resources N.L. of Australia in return for a 37.8 percent in Kimberley.

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In the construction sector, the Mirambo Street Properties Ltd. (an ANC venture) was established and built an office block situated in Dar es Salaam. Since 1995, the company had invested about 6.5 million dollars and built properties, which provide about 3300 square meters of rentable space. Other investments during 1995 were in tourism and manufacturing sectors. In the tourism sector, the year 1995 experienced the opening of the Klein’s Camp by the South African Conservation Corporation Africa. The Klein’s Camp lies just south of the Masai Mara in a 25,000-acre private game ranch on the northeastern boundary of the Serengeti. The Camp follows the concept of Kenya's private game ranches, the first of its kind in Tanzania. In the manufacturing sector, some South African investors acquired shares of the Kwanza Bottlers Ltd., - a soft drink manufacturing company which was established in Dar es Salaam. During 1996, two South African mining companies entered the country – Anglo American Corp. and Alpha (Pty) Ltd., a subsidiary of Holcim. Early in 1996, Anglo formed a joint venture with the Canadian Pangea Goldfields Inc. to explore for gold in the Kahama/Chocolate Reef property. The company held 70 percent interest in the venture. In July 1996, Alpha acquired 60 percent shares in the Tanga Cement Company. Over the past few years, the company has invested about US$12 million in improving operational efficiency, reducing costs and maintaining high and consistent product quality. It has also invested in a human resource development programme, which aimed at improving the skills level of Tanga Cement's workforce of 325. The year 1996 also saw the establishment of the Theatre Square Ltd. This was a tourism related company and was situated in Dar es Salaam. The company has managed to invest about US $4 on building 48 apartments with about 60 bedrooms. A minor share of about 13 percent of the company belonged to the South African investors. During 1997, Anglo American, which held a 14.9 percent equity interest in Tanganyika Gold, had a two-year commitment to spend US $ 2 million in the exploration of Tanganyika Gold’s Lupa Goldfields. An agreement was made between the South African Iscor Ltd. and the Canadian Ormonde Mining in which Iscor acquired a 50 percent interest in the Ormonde’s Mrangi prospecting license in the Seka area, were also made in 1997. Iscor Ltd. had also joint-venture agreement with the Pangea on the Suguti and Ushirombo properties. In June 1997, Jovenna Tanzania (JT), a petroleum company, started operations. During the two years of its operations, it signed an agreement with Agip Tanzania that enabled the JT to either import refined product or buy it from Tanzania Petroleum Development Corporation (TPDC). The company also purchased an existing station in Singida (Central Tanzania) on the main route between Dar es Salaam and Rwanda. Recently, the company has commenced construction of a second station at Kunduchi just north of Dar es Salaam. The company has also supplied tanks, pumps and equipment to a number of bulk consumers.

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Table 2: Some of Investments With South African Interests From 1994 To 2002 S. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29

Name of Project

Shareholding

De Beers Centenary AG Mirambo Street Properties Ltd. Kwanza Bottlers Ltd. RandGold Theatre Square Ltd. Anglo American Corp. Alpha Bahati Holdings Ltd. Conscorp (T) Ltd. Megapack (T) Ltd. Jovenna (T) Ltd. International Trade Finance and Commodity Co. Ltd Seraceb (T) Ltd. International House Properties Ltd. Inter-Africa Outdoor Advertising Co. Ltd Karibu Food Ltd. Wonder Foods Ltd. Engen Petroleum (T) Ltd. Afri-Bottlers Ltd. Kilombero Sugar Co. Ltd. Kumbuka Safaris Ltd. Trans-Africa Railways Corp. Harwood International Ltd. Karibu Mining Services Limited Consolidated Africa Diamond Ltd. Usa Managed Resources Ltd. Hydromulch East Africa Ltd. Siemens Ltd. NBC (1997)

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75% 100% 100% 65% 13% 60% 60% 100% 100% 100% 100% 15% 70% 13% 100% 100% 100% 100% 56% 55% 90% 100% 33% 70% 0% 90% 49% 80% 70%

Sector Mining Construction Manufacturing Mining Tourism Mining Mining Manufacturing Tourism Manufacturing Petroleum Services Services Tourism Manufacturing Manufacturing Manufacturing Petroleum Manufacturing Manufacturing Tourism Transport Services Services Mining Agriculture Construction Construction Services

Location Shinyanga Dar es Salaam Dar es Salaam Shinyanga Dar es Salaam Shinyanga Tanga Arusha Arusha Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Mbeya Morogoro Morogoro Morogoro Mwanza Mwanza Shinyanga Arusha Dar es Salaam Dar es Salaam Dar es Salaam

Employment (No) Investment (Tsh M) Year of Entry … 31 100 … 33 … 325 20 238 19 110 18 35 56 36 97 120 40 390 3500 49 60 20 16 50 56 162 43 34000

4554* 2370 19162 2791 2700 19303* 7157* 354 5606 325 2041 3653 830 5400 987 853 966 15600 1247 80400 292 3699 536 183 966 282 256 400 17906*

1994 1995 1995 1995 1996 1996 1996 1997 1997 1997 1997 1997 1997 1997 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1999 1999 1999 1999

30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59

Dalnik Metal Ltd. Gray Security Services Ltd. Medical Express (T) Ltd. Sandrive Tamrock (T) Ltd. Coin Securities (T) Ltd. Chole Mjini Conservation Dev. Co. Unitrans Tanzania Ltd. Kubwa 5 Safaris (T) Ltd. AngloGold Krone Capital Corp. Ltd. Triangle Tourist Resort Ltd. TV Burudani Ltd. Oryx Oil Co. Ltd. Score Supermarkets Vodacom (T) Ltd Southern Sun Hotels Afrigrafix Ltd. Linlan (T) Ltd. Seounguk Trading Co. Ltd. Dispositek Africa Ltd. Sea Breeze Marine Ltd. Kilwa Ruins Ltd. East African Drilling Ltd. Cape Holdings Ltd. Corstor (T) Ltd. Global Outdoor Systems Ltd. Tredcor (Tanzania) Ltd. Cynics Ltd. Golden Leaf Growers Co. Ltd. Drill Master

76% 66% 100% 100% 50% 49% 50% 20% 50% 100% 100% 48% 50% 100% 51% 100% 100% 99% 95% 69% 100% 5% 100% 66.6% 10% 1% 10% 50% 100% 100%

Services Services Services Services Services Tourism Services Tourism Mining Services Tourism Services Petroleum Services Telecommunication Tourism Manufacturing Manufacturing Manufacturing Services Tourism Tourism Manufacturing Tourism Transport Manufacturing Manufacturing Tourism Agriculture Services

1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 1999 2000 2000 2000 2000 2000 2001 2001 2001 2001 2001 2001 2001 2001 2001 2002 2002 2002 2002 2002 Sources: TIC and US Geological Surveys (in http://minerals.usgs.gov/minerals) Notes: * Available information was in US$ but here converted into Tshs, ** Own estimates comparing the Kahama and Geita projects.

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Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Mafia Morogoro Moro/Arusha Shinyanga Throughout TZ Zanzibar/Mafia Arusha Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Dar es Salaam Kilwa Musoma Mwanza Mwanza Dar es Salaam Dar es Salaam Dar es Salaam Morogoro S'nyanga

20 50 9 30 35 63 100 25 2000** 58 114 96 56 3000 588 200 25 120 24 40 8 100 25 70 7 15 9 24 10 14

832 555 800 1040 2665 366 1790 2625 268590* 458 3501 4456 1520 9520 406800 10500* 279 735 346 437 492 468 4263 1197 276 423 346 346 49 536

In July 1997, Anglo American Corp. entered a new joint venture agreement with Sutton Resources Ltd. of Canada. As a result, Anglo was granted the right to acquire a 60 percent interest in the separate Kabanga property by committing to spend US $ 27 million, including at least US $ 7 million within 24 months, on exploration, feasibility studies and arrangement of project financing. In tourism, the Ngorongoro Crater Lodge located on the rim of the crater re-opened its doors in October 1997 after being completely reconstructed. The Ngorongoro Crater Lodge became the flagship of South African Conservation Corporation Africa in the company’s Tanzania circuit. The circuit includes other tourist hotels such as Grumeti River Camp, Maji Moto tented Camp, Mnemba Island Lodge and the Klein’s Camp. In the manufacturing sector, several companies were established during 1997. These included the Megapack (T) Ltd in Dar es Salaam for the production of bear and soda plastic crates; the Afri Bottlers Ltd in Mbeya for the production of soft drinks; the Bahati Holding Ltd. in Arusha for the production of mineral water; and the Karibu Food Ltd in Dar es Salaam for the production of food products. There were also entries into the agro-processing industry and the construction sector. In the agroprocessing industry, the Government sold the Mufindi Pyrethrum Extraction Plant to South African International Chemical Products Ltd for about US$ 1 million. In the construction sector, the International House Properties Ltd. was established in Dar es Salaam. The company now holds about 630 square meter of lettable space and a 160car parking facility. The influx of South African companies in 1997 also affected the service sector. These companies included the TV Burudani Ltd. in Arusha providing for entertainment; the International Trade Finance & Commodity Co. Ltd. in Dar es Salaam providing for financial services; and the Seraceb (T) Ltd. in Dar es Salaam providing for security services. All these services companies were established as joint ventures. More mining activities were implemented during 1998. Maiden Gold NL of Australia entered a joint venture with the South African Avgold Ltd. to explore Maiden’s 11 prospecting licenses in southern Lake Victoria greenstone environments, including the Nyanzaga prospect and the area around the old Jubilee Reef gold mine. Avgold purchased a 20 percent interest in Maiden with an option to acquire an additional 40 percent interest. During the same year, AngloGold Ltd. changed its focus on the exploration program to improving minable reserves at Buzwagi and Nyamulilima Hill. AngloGold also paid about US$ 2 million for a 60 percent share of 11 licenses for the areas covering south of Lake Victoria belonging to Maiden Gold of Australia. During 1998, other sectors of the economy were not left behind. In manufacturing, the Government sold 55 percent of the Kilombero Sugar Company (a subsidiary of Sugar Development Corporation – SUDECO) to the Illovo Sugar Ltd. In energy, the former electricity generation SA State Corporation, Engen, invested US$ 22 million in building and renovating Tanzania’s oil refining capacity in Dar es Salaam. The deal included a license to distribute petroleum products and an option to open a chain of petrol stations throughout the country.

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In the transport sector, the Trans Africa Railway Corporation – whose main shareholder is a company called Comazor – constructed a container trans-shipment centre between the Tanzania Railways Corporation system and the TAZARA railway at Kidatu.3 Another company, which came in 1998’ was the Inter Africa Outdoor Advertising Co. and specialized in manufacturing outdoor displays. The company has now a capacity of producing about 400 pieces of metal products per day. Other companies during this year included the Consolidated African Diamond (T) Ltd., and the two companies, which were providing back up services to the mining sector – Harwood International Ltd. and Karibu Mining Services Ltd. In tourism, there was a tour operator company established in Morogoro, namely, the Kumbuka Safaris. In Agro-processing, Wonder Foods Tanzania Ltd was established in 1998 to pack, market and distribute milk powder in the country. Since 1998, the company has expanded its operations into tea processing, blending, packaging and distribution. The company supplies at least 20 tons of tea per month, which is 15 per cent share of the domestic tea market. Among the company’s plans is the addition of one item to its product line every year. During 1999, South African companies continued to proliferate into the country. In Dar es Salaam alone, at least 7 new companies were registered. These included the Sandrive Tamrock (back up services to mining), Krone Capital Corp. Ltd. (back up services to mining), Siemens Ltd. (construction), Coin Security (T) (security service), Gray Security Services Ltd. (security services), Hydromulch East Africa Ltd. (environment restoration and landscaping for construction industry) and Dalnik Metal Ltd (leasing of mining equipment). In Morogoro and Arusha, a tour operator company by name of Kubwa 5 Safari was launched. In Zanzibar and Mafia, the Triangle Tourist Resort Ltd. started operations. There were also a timber processing company, namely Usa Managed Resources Ltd. operating in Arusha and a tourist company, Chole Mjini Conservation Development Co. Ltd operating in Mafia. In July 1999, the Amalgamated Banks of South Africa Group Limited (ABSA) started negotiations with the Government over the purchase of the 70 percent of the shares of NBC (1997) Ltd. The deal required ABSA to pay a total of US$ 18.75 million. In August 1999, ABSA started managing NBC Ltd. at the request of Government but at their cost, with the understanding that if they did not buy it, they would be compensated for the costs incurred. The deal to buy the 70 percent stake was finalised in March 2000 with the Government retaining the rest of the share. By the end of 1999, Ashanti had completed construction of 50 percent of its new $165 million Geita project. Owing to a large gold hedging loss in 1999, in April 2000, Ashanti signed an agreement with AngloGold Ltd. of South Africa. According to the agreement, AngloGold was to pay Ashanti US $ 205 million in cash for a 50 percent share of the Geita project. It was also agreed that AngloGold would finance the project at a total amount of US$ 130 million. Ashanti was to repay US$ 65 million, or half the project-financing loan, to AngloGold from future Geita project cash flow. 3

Two reports give varying reports of the size of this project, one valuing it at US$ 2.5 million, the other at US$ 20 million. This discrepancy has still to be resolved.

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AngloGold also acquired shares in the US$90 million North Mara project belonging to the East African Gold Mines Ltd. (EAGM) of Australia. According to the information received from the TIC, four South African companies were licensed in 2000. These companies are the Score Supermarkets, the Africa Pay TV (APTV), the Oryx Oil Co. Ltd., and Vodacom. In addition to this information, Ongeri (2000)4 shows that in the tourism sector, the Southern Sun Hotels launched a US$13 million project to establish the Holiday Inn in Dar es Salaam, which is now in operation. More South African companies have begun operations during the 2000/01 period. These companies include Protea (Hotels – Mbweni Ruins, Zanzibar Beach Resort, Pangani River, Aishi Machame, Amani Beach, and Dar es Salaam Apartments), Nandos (Restaurant), Woolworths (Clothes), Shoprite (Supermarket) and MultiChoice (Communication). During 2001, according to TIC, several South African companies were registered. In Dar es Salaam, there were Afrigrafix Ltd., Linlan (T) Ltd. , Seounguk Trading Co. Ltd., Dispositek Africa Ltd., Sea Breeze Marine Ltd., and Kilwa Ruins Ltd. In other regions there were the East Africa Drilling Ltd in Musoma and two South African companies – Cape Holdings Ltd., and Corstor (T) Ltd. in Mwanza. Between January and September 2002, TIC gave licenses to the following companies to operate in the country: Global Outdoor Systems Ltd. (manufacturing), Tredcor (T) Ltd. (Manufacturing), Cynics Ltd. (Tourism), Golden Leaf Growers Co. Ltd. (Agriculture) and the Drill Master (Services). According to PSRC, Net Group Solutions was allowed to manage TANESCO while South African Airways was the successful bidder to run the Air Tanzania Ltd. In brief the trend of South African companies entry into the country reveals that the inflow built-up steadily between 1994 and 1997, and from 1998 the flow picked up dramatically. 2.2. A Tentative Description of the Impact of SA FDI in the Tanzania’s Economy5 The study has not yet attempted an evaluation of the impact of SA investment in Tanzania, although this section includes some preliminary observations on possible effects.

4

See http://www.hartford-hwp.com/archives/36/371.html

5

The analysis of the impacts of the flow of South African companies in the country and implications for future policy are left for a subsequent stage of the study

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2.2.1.

Modern Technology

South African companies have managed to introduce modern technology in the Tanzania’s economy through backward and forward linkages with the local companies; training; and modern management techniques. As regards backward linkages, Wonder Food (T) Ltd. provides one example of the potential for these linkages. In order to process its products the company for examples, requires packaging machines and blending equipment. But these can be supplied by Super Doll – the local trailers Assembly Company. Forward linkages can be established through the use the technology-embodying products produced or imported by the foreign company. The use of these technologyembodying products partly calls for skill transfer through training. ABSA, for example, is conducting staff training for its workers in order to cope with bank’s technology-embodying products, which include the Automated Teller Machines (ATM), computers, and satellite networking. Technology can also be transferred through market channels and management techniques. For example, with the introduction of SAB management methods, skills and principles, into the Tanzania Breweries, SAB has provided an excellent example of progress towards best practice in the brewery sector6. However, South African investors have been largely specializing in medium- to largescale companies (See Table 3). Given such specialization, these companies may bring technologies and know-how that may be inappropriate for the needs of the many small-scale Tanzanian enterprises. Table 3: Major Foreign Affiliates in Tanzania, 2001 Company name Kahama Mining Geita Tanzanian Telecommunications Company Vodacom Tanzania Breweries Tanzania Cigarette Company Golden Pride Afrika Mashariki Mtibwa Sugar Kilombero Sugar Co. Serena Hotels Mic Tanzania Merelani National Bank of Commerce Indian Ocean Hotels Holiday Inn Source: UNCTAD, 2001. Note: “jv” means joint venture.

Home Country Canada Ghana/South Africa Netherlands/France United States/South Africa South Africa Japan Australia Australia Mauritius UK/South Africa Pakistan United Kingdom South Africa South Africa United Kingdom South Africa

6

Investment (Mill US$) 610 400 120 120 120 80 77 72 48 40 33 27 20 15 15 13

FDI form and Industry New, gold mining M&A, gold mining Privatization., jv., telecom New, telecommunication Privatization, jv, manufacturing Privatization, jv, manufacturing New, gold mining New gold mining Privatization, jv. Manufacturing Privatization, manufacturing New, tourism New, telecommunication, jv. New, mining Privatization, banking New, jv. Tourism New, Tourism

Tanzania Breweries was initially owned by SAB and the Government, with a small percentage of shares held by private investors. Following its listing on the Dar es Salaam Stock Exchange in July 1998, the shareholding has become more broadly-based, with the public being involved in the purchase of shares

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2.2.2.

Competition

The entry of South African firms provides a vivid example of the benefits from competition. Competition from South African companies has resulted into the improvement of product quality, the availability of additional products in the market, and expansion of the product market. The Tanzania Breweries, for example, has managed to introduce new brands in the market. Three new beers (Kilimanjaro Premium Lager, Castle Lager and Ndovu Lager); launched in the Tanzanian market in recent years have proved successful in the market. The new brands have done remarkably well to grow the beer market and replace imported beers. In this competitive market, pricing is carefully adjusted according to consumer views, needs and brand perceptions7. However, by the same token, competition from South African firms, which benefits consumers, may be providing difficult competitive challenges to established Tanzanian producers. In order to survive in the competitive environment, South African companies tend to spend a lot of money in advertisement in the form of sponsorship. Tanzania Breweries, for example, is committed to providing recreation and entertainment by sponsoring various sports, and funding sporting facilities. The company has sponsored the Safari Premier Soccer League at a cost of TSh140 million per annum and contributed TSh105 million for upgrading the national sports stadium during the 2000-2001 period. Vodacom, another South African company is now sponsoring the premier soccer league after the league sponsorship contract between the Football Association of Tanzania (FAT) and the Tanzania Breweries Ltd. (TBL) was terminated in August 2001. Vodacom is now spending millions of Tanzania Shillings in this sponsorship. 2.2.3.

Employment

South African companies are becoming important employers in Tanzania, both through the generation of new jobs and taking over the workforce of companies acquired. The service sector (including security services, back up services to the mining sector, banking services and entertainment services) has featured largely (See Figure 2). However, about 90 percent of this employment belongs to the NBC (1997) Ltd. The net employment effect of South African investment has to be analysed with some care, as one expected outcome of privatisation is the rationalisation of work force of the previous parastatals.

7

See http://www.sab.co.za/results/corprev98/Tanzania.pdf

12

Figure 2: Sectoral Distribution of Employment from South African Businesses, 1993-2002 Others 1%

Tourism 2%

Telecommunic ation 1%

Manufacturing 13%

Mining 6% Services 77%

Source: Table 2

2.2.4.

Investment in Agriculture

South African investors have directed their interests towards breweries, mining, hotels, transport, and the financial sector. The agricultural sector, which is the mainstay of Tanzania’s economy, has attracted very low South African FDI over the past decade. Between 1993 and 2002, South African companies have invested less than 1 percent in agriculture of their total investment in the country (see Figure 3). (This excludes the privatised companies, which have indirect involvement in the agricultural sector, such as Kilombero Sugar Company and Tanzania Breweries). The projects involved are Usa Managed Resources Ltd. (timber) and Golden Leaf Growers Co. Ltd, both planning to invest about TSh331 million. Figure 3: Sectoral Distribution of South African Investment, 1993-2002

Tourism 4%

Construction 0%

Agriculture 0%

Transport 0% Manufacturing 13%

Telecommunicat ion 44%

Mining 32% Petroleum 2%

Services 5%

13

Source: Table 2

3.

MAIN SA INVESTOR FRIENDLY POLICY TRENDS IN TANZANIA

3.1. Political Shift Towards a Cooperative Relationship with South Africa The political relationship between Tanzania and South Africa dates back to 1959, when Tanzania’s former President Nyerere pioneered a movement against the South African Apartheid regime. Mr. Nyerere and Father Trevor Huddleston were principal speakers at a meeting in London to launch the Boycott Movement in June 1959. In 1960, the movement was renamed Anti-Apartheid Movement. Subsequently, Tanzania was one of the leading campaigners against the apartheid regime. In 1961, Tanzania together with other countries prompted a decision to exclude South Africa from the Commonwealth in light of South Africa’s apartheid policies. For three decades, Tanzania was host to many political exiles and was one of the main centres for ANC activity outside of South Africa. After F. W. de Klerk of the National Party was elected a president in 1989, the apartheid regime started to crumble. In 1990, de Klerk lifted restrictions on 33 opposition groups, most of which had been banned for their anti-apartheid activities and Nelson Mandela, was released after 27 years in prison. As a result of these political developments, President George Bush in 1991 lifted most U.S. economic sanctions against South Africa. In 1994, following the country's first universal suffrage elections, South Africa became a democratic country with Nelson Mandela’s ANC party declared victorious and Mandela becoming the first president of the democratic South Africa. The change in political relationship between Tanzania and South Africa occurred in 1994 when the formal diplomatic relations between the two countries were established. Upon South Africa's return to the Commonwealth, the diplomatic relations have been conducted at the level of High Commission. Since 1994, relations between South Africa and Tanzania have been warm8, and have included an emphasis on the continued expansion of trade between the two countries and regular political contact at the highest levels. Under bilateral relation, Tanzania has so far signed the following agreements with the South African Government: • Memorandum of Understanding on Cooperation in Industry and Trade Programmes 8

According to the Guardian of Wednesday, October 23, 2002, President Benjamin Mkapa's answer to criticisms against increased investments from South Africa in the Tourism Investment Forum held in Arusha in October 22, 2002 and organized by the Development Bank of South Africa (DBSA) is that "A critical factor of economic development is capital. South Africa has it, Tanzania does not. We would be patently foolish not to access South African capital for our development…………Apartheid South Africa was our enemy. Post-apartheid South Africa is our friend, and our partner in development"

14

• •

General Agreement on Cooperation in the Economic, Scientific, Technical and Cultural Fields. Exchange of Notes to Establish Representative Offices.

Under multilateral relation, the SADC – a regional organisation of which both countries are members – has created an important venue for closer cooperation between the two countries. SADC aims at providing for regional peace and security, sector co-operation and an integrated regional economy. It has laid the basis on which regional planning and development in southern Africa should be pursued. Within the context of the SADC, the integrated development of the region as a whole has been a priority. Despite vast disparities in the levels of development and structural features of the 14 SADC member countries, all members can potentially benefit significantly from regional integration and co-operation. After becoming a member of the SADC in 1994, South Africa has been heavily involved in its activities and has been assigned the Financial and Investment Sector of the SADC as its special area of responsibility. Given this responsibility and its vast investment potential, South African Government can play a leading role in the development of the SADC regional economy. It is noteworthy that Uganda and Kenya are not members of SADC. Since 1994 the South African Government has regarded the Southern African region as the most important priority of its foreign relations. To illustrate the importance attached to this region, the first foreign policy document adopted by this government was in fact a "Framework for Co-operation in Southern Africa" approved by Cabinet in August 19969. 3.2. Policy Shift Towards Promotion of Private Investment Prior to the implementation of economic reform, Tanzanian policy had emphasised the dominant role of State enterprises (parastatals) in large-scale investment. At independence in 1961, Tanzania had a very small private sector, and it was believed that private investment initiative would not be sufficient to act as an engine of growth, provide adequate marketing and distribution channels or act as an efficient allocation of resources. Economic differentials between ethnic groups were very substantial. It was perceived that the concentration of economic power in a few individuals would exacerbate these economic differentials. Thus, starting in 1967, the Government through the Arusha Declaration adopted economic interventions and state entrepreneurship policies, which were regarded as critical for fast economic development. The main objective was to ensure that the corporate sector of the economy was in the national hands rather than being controlled by either foreign investors or the local minority that enjoyed business dominance upon independence.

9

See http://www.dfa.gov.za/for-relations/multilateral/sadc.htm

15

By the early 1980s, it proved almost impossible for the Government to manage its investments in State Corporations without difficulties. The Government was not getting proper returns from past investments and assets were being misused. In addition, consumers, farmers and manufacturers were being poorly served by most of these State Corporations. Consequently, from the mid 1980s, Tanzania embarked on wide ranging liberalisation policies and economic reforms. The objectives of these efforts, among others, were to turn the country into an economy, which is open, market oriented and dependent on the private investment. Efforts to promote private investment, both local and foreign, paved a way to the introduction of the 1990 investment code. The early 1990s also saw the Government establishing the Investment Promotion Centre (IPC) under the 1990 Investment Act. The IPC was established with the key aim of promoting and facilitating investments in Tanzania. The private investment response to these early initiatives, and particularly to the formation of IPC, was however, lacklustre. The 1990 investment Act did not give the IPC sufficient responsibility to promote, coordinate and facilitate private investment in the country. Most of these activities were done in respective ministries. Due to the poor performance, the Government and donor community were especially concerned that the country would continue to be dependent on aid and public investment. Consequently, in August 1997, the National Investment (Promotion and Protection) Act of 1990 was repealed, and a new Tanzania Investment Act was enacted, creating the Tanzania Investment Centre, a one-stop centre that would promote, coordinate, and facilitate investment. Under the Act, the Tanzania Investment Centre (TIC) was given a significantly expanded mandate compared to that of its predecessor, IPC. The Act identified investment priorities, introduced a new company registration process and determined investment incentives and investors’ rights. Under the new company registration process, all foreign investors wishing to operate a business venture in the country have to meet the requirements set in the 1972 Business Licensing Act, which is administered by the Business Registration and Licensing Agency (BRELA) of the Ministry of Industry and Trade. The TIC then offers Certificate of Incentives to the registered foreign companies given they meet the minimum level of $300,000 investment capital. Despite the establishment of TIC, investments in mining, petroleum, and tourism sectors still continue to be coordinated by the respective ministries. In the mining and petroleum sectors, investment ventures have to be approved by Mining Act 1998 (previously by the 1979 Mining Act) and Petroleum Act 1980, respectively. These registrations are under the administration of the Ministry of Energy and Minerals. The Hotels Act of 1963 and the Tourist Agency Licensing Act of 1969 govern investments in tourism enterprises. 3.3. New Regulatory and Incentive Framework for the Mining Sector Since 1964, the Government owned all mineral rights in Tanzania. The State Mining Corporation (STAMICO) controlled the mineral industry and operated most mines

16

and plants. Further steps were taken in order to ensure that the mining sector was under public control. According to the Policy Issue Papers of 1983, the mineral wealth of Tanzania was regarded as the nation’s heritage and therefore gave the state majority ownership in mining activities. During this period, administration of the mining was the responsibility of the Ministry of Water, Energy and Minerals and investment in the mining sector was governed by the provisions of the 1979 Mining Act. From the mid 1980s, like other sectors in the economy, the mining sector was subjected to economic reforms and restructuring undertaken by the Government. These reforms marked a shift from the economic dependence on Government intervention towards private sector development and market-oriented economic management. As part of the efforts to create a favourable environment for foreign investment, the Model Agreement of 1988 removed the Government majority ownership requirement in the mining sector. As a result of efforts of improving the country’s attractiveness to the international investment community, the country has been very successful in attracting mineral exploration and investment. This triggered a ‘gold rush’ particularly in the greenstone belts at the southern end of Lake Victoria. Besides South Africa, exploration companies from Australia, Canada, Japan, the United Kingdom, and the United States have been very active in Tanzania since 1993 and 1994. In October 1997, the Ministry of Water, Energy and Minerals issued a new minerals policy, giving priorities to private sector initiatives, the rationalization and organization of artisanal and small-scale mining and product marketing, and new initiatives to mitigate the adverse environmental and social aspects of mining. The policy was also aimed at promoting the role of the Government as a regulator, promoter, facilitator, and service provider to the private sector and not as a direct player in production activities. During 1998, the Government passed a new Mining Act of 1998 to replace the old Mining Act of 1979. The Ministry of Energy and Minerals administers the new Act through a new office of the Commissioner for Minerals. During the same year, Tanzania Investment Centre was formed. The Tanzania Investment Act sets corporate tax rate for the mining sector at 30% and provides additional customs rates, capital allowance deductions, depreciation, and other tax incentives. Mining royalties are set at 3% of netback value, with a rate of 5% for diamonds. No royalties are paid on cut and polished gemstones. The new Financial Laws Act of 1997 also provided improved fiscal incentives for the mining sector. In general, there has been a dramatic growth in the mining sector during the 1990s. Between 1992 and 1997, for example, annual exploration expenditures are reported to have increased from US$ 6 million to US$ 80 million. The growth in the sector has been largely a result of Government policies since 1990, which triggered the entry in foreign mining companies including those from South Africa. In 1998, Tanzania was

17

the leading country in Africa in terms of the number of exploration activities above traditional mining countries of South Africa and Ghana. In the recent years most of the increase in the mineral exports was attributable to gold exports. This is a result of the recent large-scale investment in gold. Gold exports increased from US$3.34 million in 1998 to US$120.53 million in 2000. During this period, diamond exports increased to US$45.75 million from US$12.11 million, and gemstone exports, to US$18.50 million from US$8.13 million. South Africa has been one of the world’s major mining and mineral processing nations. Given abundance of mineral resources in Tanzania and the investor friendly environment South African companies were easily attracted into the country. Several South African mining companies operated and some still operate in Tanzania include the de Beers Centenary AG, Skeat Mining Company, RandGold Resources, JCI Ltd., Anglo American Corp, Alpha (Pty) Ltd., and Avgold Ltd. 3.4. Privatization of State Corporations and Some Controversies 3.4.1.

The Program for the Privatization

The program for privatization of State Corporation dates back to 1992 when under the Public Corporations Act, 1992 (later amended in 1993 and 1999) the Presidential Parastatal Sector Reform Commission (PSRC) was established. The PSRC was established in order to drive the process of privatisation and create a competitive economy, which will operate successfully at international, regional and domestic levels. Prior to 1996, privatization did not involve the major utility companies and the Government’s resurgent strategy towards the poorly performing national Utilities had been to restructure and subject the Utilities to Management Performance Contracts. However, the Government had to revise this strategy after discovering that it could not cover the huge costs required for rehabilitation and restoration of operational capacity of the Utilities. Beginning in 1996, the Government opted to allow private capital to contribute in covering these costs. As a result, the Government included Utilities and infrastructure ventures in the privatization agenda. By mid-2002, many utilities had been subject to privatization. South Africans involvement in privatisation has included investing more than US $ 150 million in Tanzania Breweries, Kilombero Sugar Company, National Bank of Commerce and Air Tanzania Company Ltd. Currently, more than 15 national Utilities and major transactions have been earmarked for privatization10.

10

The Utilities and major transactions processed by the PSRC include Dar es Salaam Water Supply Authority, Tanzania Telecommunication Company, Tanzania Railway Corporation, Tanzania Harbors Authority, Tanzania Electric Supply Company, Southern Paper Mills, Seven Prime Hotels and Lodges (Mount Meru Hotel, Lake Manyara Hotel, Ngorongoro Wildlife Lodge, Lobo Wildlife Lodge, Mafia Island Lodge and Hotel Seventy Seven), National Micro finance Bank Limited, National Insurance Company Limited and Kagera Sugar Company Limited.

18

3.4.2.

Controversies Surrounding Privatization of Utility Companies

The privatization process of the national Utilities has not been without controversy. Two major controversies surrounding the privatization of the national Utilities involve South African investors - the privatization processes of the National Bank of Commerce (NBC – 1997) Limited and the Tanzania Electricity Supply Corporation (TANESCO). At this stage, this study does not take a position on these issues, but merely records the controversies as part of the background relating the SA investment in Tanzania. 3.4.2.1.

Divestiture of NBC (1997)

The divestiture of NBC (1997) Limited started effectively in 1998. In the late 1998, the Amalgamated Banks of South Africa Group Limited (ABSA) was selected to run NBC (1997). The Government through Presidential State Corporation Sector Reform Commission (PSRC) was to sell 70 percent of its shares to ABSA. However, ABSA demanded various changes in the Memorandum of Understanding leading to the sale of NBC (1997) becoming a protracted process. Specifically, ABSA demanded relief in the purchase price of $21.834 million due to the devaluation of the Tanzanian Shilling between July 1999 and December 1999 and the deterioration of the financial performance of the NBC (1997). In view of this, ABSA proposed to have the purchase price fixed at Tshs 15 billion ($18.75 million) and that payment be spread to compensate for the financial deterioration. The two parties reached an agreement and the Memorandum of Understanding was signed between them in Dar es Salaam in March 2000. The agreement reached was that ABSA would pay a total of Tshs 15 billion for the purchase of the 70 percent of the shares of NBC (1997) Limited. The payment would be done in four instalments – Tshs 12 billion to NBC (1997) Limited as capital on the losing date of the transactions and Tshs 3 billion to NBC holding Corporation as premium in three equal instalments of Tshs 1 billion beginning at the fourth anniversary of the closing date of the transactions. A lot of questions emerged regarding transparency of the NBC (1997) divestiture process. Some senior Government and NBC officials alleged that some officials close to the President, the Bank of Tanzania (BoT) and the Treasury conspired to misinform the president on the desirability of the deal to privatise the NBC (1997). Claims that the NBC was a loss-making bank were deliberately exaggerated to undervalue the bank. For example, the argument that for the 15 months ending December 31, 1998 the bank recorded an operating loss of Tsh17.1 billion as per directors' report of May 27, 1999, was wrong. This report was among the criteria used to value the NBC (1997) Ltd at Tsh15 billion. As regards employment, it was agreed that ABSA group would observe the existing employment and labour relation laws as well as the existing Trade Union Agreement in case of any retrenchment. In the event of any staff retrenchment, the related costs

19

would be borne by the Bank. However, there were allegations that ABSA planned to sack up to 700 staff and begin closing branches. To this effect, ABSA responded by saying no branch would be closed but expressed their interest of being fair to staff but would have to act if staff could not be retrained or were incompetent. According to UNCTAD (2001) the number of staff was reduced from 1176 in 1999 to 934 in 2001. However, salaries were increased by 25 per cent. In addition, the company conducted staff training through telephone etiquette (‘Golden Voice’ training programme) and the new integrated computer system. As regards improper financial operations, ABSA was claimed to have been remitting millions of dollars overseas without permission from the Central Bank. As a result, they were fined for that and forced to return some $ 8 million. ABSA was also seeking tax exemptions on Customs duties on its imports, on income tax, on share profits, and on withholding tax. ABSA also wanted to be given title deeds of all NBC properties ahead of purchasing the 70 per cent shares, among other demands. It was doing so even before it paid up its Tsh15 billion ($18 million) purchase cost – in Tanzania currency. ABSA had also successfully demanded Tsh15 billion from the NBC spin-off bank, Micro-finance Bank (NMB), an amount equal to what it is supposed to pay to purchase NBC (1997) Ltd. ABSA had not until then paid any money to the Tanzania Government, as it waited Tanzania to comply with its sale conditions. Some Reactions from the ABSA Group According to Jean Brown, the ABSA Group executive director suggestions that ABSA had given the Government of Tanzania any extra-ordinary conditions were to be dismissed. The Bank was only negotiating terms according to the legal framework of the agreement so that the bank could benefit from some of the incentives including tax exemption on capital goods and title deeds for land of the properties, which NBC Ltd. owned. Other investors were entitled to these incentives. As regards confusion in the local press suggesting that the Government of Tanzania got a raw deal from ABSA and that it had accepted a reduced price of US$ 18.75m instead of US$ 21million, it is claimed that there were no new negotiations on the price. The price was already decided before the signing of the Memorandum of Understanding. What happened is that ABSA was supposed to buy the 70 percent stake at US$ 21million or an equivalent of 15bn/- in July 1999 when the exchange rate was 700 shillings to a dollar. By December 1999 the shilling value had dropped to 800 to a dollar and ABSA had to pay US$ 18.75 million, which was an equivalent of 15bn/- then. The Director also responded to questions regarding the National Micro-finance Bank's (NMB Ltd.) 15bn/- debt owed to NBC Ltd. and recovered by ABSA in a move, which seemed to suggest that ABSA got NBC Ltd. for free. It was almost as if ABSA had paid Tshs 15 billion, to Government, for NBC Ltd., only to claim an equivalent amount from Government in outstanding debts. Brown said, "The fact of the matter is that this was money due to NBC Ltd. by NMB in the form of an inter-bank transaction which was caught up in the system dating back to the splitting of the former NBC into three entities in 1997 - NBC (1997) Ltd.,

20

NMB Ltd. and NBC Holdings. It was in fact discovered by the Bank of Tanzania while reconciling inter-branch account transactions between NBC (1997) Ltd. and NMB Limited". 3.4.2.2.

Divestiture of TANESCO

TANESCO is still in the process of being privatised. As part of the process, a South African firm, namely NET Group Solutions signed a lucrative management contract to run TANESCO. It was agreed that the firm would fill the four senior management posts: Chief Executive Officer, Chief Operations Officer, Chief Customer Services Officer and Chief Financial Officer. In addition, the firm would pocket a total of $64.2 million in the next two years. Concerns about this contract led 46 members of parliament demand the Government to reveal the details of TANESCO’s management contract in February 2002. However, the Government rejected. These concerns revolve around the following areas. First, according to the media investigation, the NET Group Solution is a small firm and very little known. Given its size, it is doubtful whether it has adequate capacity to handle Tanzania's national electricity grid. The company is very little known evidenced by the fact that even its Internet website was just launched this year (2002). Secondly, concerns have also been directed to the firm’s local partner. It was revealed that the firm's local partner is a company owned by a close relative of a senior Government officer and most shocking was the fact that the directorship of the local firm includes primary schoolchildren. This, lawyers say, is contrary to the Company Ordinance Cap 212 and the company should thus be struck off the register of companies. Thirdly, 6,000-strong TANESCO workforce went up in arms, demanding to sign a voluntary agreement between the workers and the Government on their benefits ahead of the management takeover of TANESCO. There is a general feeling that unless TANESCO workers get their voluntary agreement as proposed and provided for by Tanzania's labour laws, they could plunge the country into darkness in desperation. Fourthly, according to ‘Mtanzania’ newspaper of 22 April 2002, the engagement of the Management Contractor would result in: •

• •

3.4.2.3.

The closure of three factories - Mbeya Poles, Tanalec ABB and Tanzania Cables as a result of tax exemption to be given to Net Group Solutions and their subsequent procurement of poles, transformers and cables from South African companies; The cessation of rural electrification projects on the grounds that they are too costly; and Preparation of a conducive environment at TANESCO for ESKOM of South Africa to take over. Other Privatisations

21

The Government this year (2002) was planning to privatise the Tanzania Railways Corporation (TRC). Some South African investors have already shown their interests. The divestiture of TRC is well underway. The PSRC has identified two fully prequalified and two conditionally pre-qualified bidders for the concessioning of TRC: Comazar Consortium (Great Lakes Railway Co.) of South Africa and Genesee and Wyoming Inc. of USA have fully pre-qualified to bid for the consessioning of TRC while CANAC of Canada and SNCF International of France have pre-qualified subject to finalizing their consortia. The four pre-qualified short listed bidders will be invited to submit bids to lease, manage, and operate railway infrastructure and to provide freight and passenger services on the existing TRC network. The Government hopes to identify the concessionaire during the fourth quarter of 2002. 3.4.2.4.

Reaction by the Government on the Controversies

Due to the major controversies surrounding the privatization of the utility companies, the Government through the PSRC, issued some clarification on the privatization process. • That privatization of State Corporation companies is done transparently without favouring or hurting any investor. • That tenders to invite potential investors are advertised in both local and foreign media as well as in the PSRC website. • That the existing conditions concern all potential investors without discrimination. • That every bidder gets a chance to inspect the State Corporation to be privatised and make financial assessment before deciding to present his bid. • That all the bids are sorted out by experts who represent all the stakeholders. • That any investor who wins is invited to sign the Memorandum of Understanding with the Government. • That the investor who wins, will be unveiled to the public through the media According to this privatization procedure, it is clear that investors bring their applications for tender for purchasing a company on their own will without any Government’s interference and after having being satisfied by their own assessment of financial feasibility of the company. An investor whether local or foreign therefore gets an opportunity to choose where to invest according to privatization procedures In this case, what guarantees a winner is not the size of the company. But rather, the plans that are presented by the investor to the Government which include how the investor will run the company, sources of capital, markets, and technological transfer. All these plans are prepared by the investors without any Government interventions.

22

4.

TANZANIA’S COMPETITIVE ADVANTAGE IN EAST AFRICA

Tanzania’s South African investment potential can be related to its comparative position, particularly with regard to its East African neighbours. While Tanzania has somewhat different features from Kenya and Uganda – a larger population and labour force but lower per capita GDP and lesser degree of industrialization – the three countries are more or less equally attractive (See Table 4). Table 4: East African Comparisons: Selected Indicators, 2000 Tanzania Population (Million) Labor Force (Million) GDP at current prices (Mill $) GDP at 1995 prices (Mill $) GDP per capita (1995 prices $) GDP growth rate (annual) Structure of the Economy (per cent) Agriculture/GDP Industry/GDP Manufacturing/GDP Services/GDP Trade/GDP Foreign Direct Investment Inflows/GDP Exports of goods and services/GDP Imports of goods and services/GDP Source: World Development Indicators, 2002 – CD ROM

Kenya

Uganda

33.7 17.3 9027.5 6418.6 190.5 5.1

30.1 15.5 10357.0 9876.1 328.2 -0.2

22.2 10.9 6170.2 7728.0 348.0 3.5

45.1 15.8 7.5 39.1 37.9 2.1 14.7 14.7

19.9 18.7 13.1 61.3 62.1 1.1 26.5 26.5

42.5 19.1 9.1 38.4 35.9 3.6 10.1 10.1

As the literature suggests, FDI potential is related closely to a number of key factors including: market size and growth; labour costs and skills; infrastructure; the costs of doing business; and natural resources. In addition, possible factors that have attracted FDI include inefficiency in the Government intervention that necessitated privatization, mineral potential and the availability of conducive infrastructure, area advantage with rich endowment of tourist attraction, social and political stability, and healthy institutions. The discussion on why Tanzania has a better position in attracting South African FDIs will be related to the economic and social indicators in general and on competitive rankings from the World Competitiveness Forum (See Table 6). 4.1. World Economic Forum’s Indicators The World Economic Forum since 1998 has been conducting surveys on the competitiveness of some of the African countries. The report so produced is called “Africa Competitiveness Report” and it ranks 24 African countries and analyses their competitive strengths and weaknesses. The analysis covers political, economic, and social factors that may affect each country's competitiveness. The countries are then ranked in the following areas: openness, Government, finance, infrastructure, labour 23

and institutions. The following are summary of results from the comparison of the East African countries using some of these competitive indicators. 4.1.1.

Openness

Openness sums up export and import growth in a country. According to the Africa Competitiveness Report, Tanzania import growth has been relatively slow. Although surveys show that hidden import barriers have not posed serious problems to importers, the higher average tariff in Tanzania relative to other East African countries is sufficient to curtail the growth of imports. However, on the other side of external openness, Tanzania is said to have given much more priority to the export promotion than the other two East African countries. For example, export credits and the exchange rate policy have been more favourable for export expansion. According to Table 5, annual South African export growth to Tanzania, though lower than to the other East African countries, has been stable in the past decade. Table 5: South African Trade With East African Countries 1992-1997 1998-2001 TANZANIA Exports – average annual growth (in percent) Imports – average annual growth (in percent) KENYA Exports – average annual growth (in percent) Imports – average annual growth (in percent) UGANDA Exports – average annual growth (in percent) Imports – average annual growth (in percent) Source: Appendix 1.

4.1.2.

14.2 112.0

13.8 8.3

46.9 59.1

6.1 -0.8

367.7 131.5

124.6 26.5

Infrastructure

World Economic Forum’s competitiveness indicators point to Tanzania’s infrastructure as a serious deterrent to FDI. Infrastructural problems include electricity charges, which are two times higher than in Kenya and Uganda and water supply, which is erratic and unsafe. Further, Tanzania Internet usage is hampered by the limited bandwidth of the telecommunications network and frequently interrupted electricity supply (See Table 6). However, the major utilities in Tanzania have been subject to large-scale privatization programme that the country is pursuing. These privatisations are among the major sources of attraction for South African investment! 4.1.3.

Government Intervention

Tanzania has more or less similar incentives for the promotion of foreign investment as Uganda and Kenya. For example, the country’s corporate tax rate is the same as that of Uganda standing at 30 percent, whereas Kenya’s rate is slightly higher at 32.5 percent. However, surveys show that the business sector in Tanzania does not expect

24

too much from the Government. There are also notable differences in terms of nonprice interventions. Table 6: East African Comparisons: Competitive Factors (Ranking 24 African Countries)11) Factors Openness/1 Hidden import barriers Export position Real exchange rate Exchange rate policy Government Corporate tax (rate) Enforced Government regulations/1 Tax evasion /1 Time for permits (percentage of time) Government officials /1 Business /1 Finance Confidence in System /1 Time to transfer money (average no. of days) Infrastructure Quality of road infrastructure/1 Total railways (country average) Telephones (country average) Electric power supply /2 Clear customs time (clearance time) Telephone price /1 Internet access /1 Air transport, quality/1 Port facilities, quality /1 Labor/1 Local labour market Hiring Practices Working hours Organized labour Institutions Legal system Quick legal system Enforced court system Certainty of rules and laws Public Security Organized crime Civil Service stability

Tanzania Kenya Uganda Ranking Quantity Ranking Quantity Ranking Quantity 12 16 7 4

3.72 3.45 4.37 4.74

15 20 19 19

3.51 3.03 3.73 3.68

18 17 16 17

3.10 3.33 4.00 3.96

4 13 18 15 10 16

30.00 3.72 2.42 14.4 3.20 3.70

6 22 22 9 19 2

32.50 3.34 2.23 10.47 3.74 4.61

5 16 14 18 16 11

30.00 3.66 2.78 14.77 3.56 3.81

20 11

4.12 21.20

15 14

3.88 23.00

21 13

4.29 22.20

16 9 17 17 17 12 9 15 12

3.52 0.11 0.00 0.67 18.60 3.13 2.17 2.80 2.95

24 11 12 22 18 24 20 9 23

5.44 0.09 0.01 0.76 19.90 4.73 3.12 2.34 4.58

12 16 21 16 21 8 13 13 21

3.36 0.06 0.00 0.62 24.90 2.91 2.76 2.70 4.18

7 15 8 5

2.85 3.36 4.10 4.94

10 6 5 18

3.00 4.49 4.30 4.24

6 1 2 7

2.80 5.20 4.80 4.73

14 11 8 18 11 8 4

3.51 4.62 3.19 2.42 3.61 4.09 2.88

22 22 22 22 24 21 22

4.13 5.12 3.93 2.25 4.78 2.69 4.66

13 18 21 20 14 19 15

3.49 4.83 3.78 2.37 3.99 2.96 3.96

11

The countries are Nigeria, South Africa, Ethiopia, Eritrea, Democratic Republic of Congo, Angola, Zimbabwe, Tunisia, Mauritius, Botswana, Cote d’Ivoire, Tanzania, Malawi, Kenya, Madagascar, Senegal, Cameroon, Burkina Faso, Morocco, Mozambique, Uganda, Morocco, Ghana and Egypt.

25

Source: World Economic Forum, 2000 Notes: In the rankings 1 means ‘best situation’

Tanzania is ranked as being more effective in enforcing various regulations than the two other East African countries. Despite being effectively enforced, there are still concerns on the percentage of the management time spent by the officials negotiating or obtaining licenses. Tanzania has relatively high transaction costs resulting from fiscal requirements, planning processes, business registration, import/export procedures, legal systems as well as bureaucracy and petty corruption. These problems have been highlighted in the Tanzania Investor Roadmap (The Services Group, 1999) and are currently the focus of proposed policy reform. 4.1.4.

Finance

According to the Africa Competitiveness rankings, Tanzania is more disadvantaged in terms of a well performing financial system than its East African neighbours. However, perhaps the presence of ABSA, which operate throughout the country, will be an attraction for South African companies. 4.1.5.

Labour

With respect to labour force and skill availability, Tanzania is not particularly attractive. During 1960-1994, the contribution of education to growth was below the African and other regional averages; the same is true for the contribution of physical capital to growth. In Tanzania, worker productivity is said to be low. Similarly, labour costs are considered to be very high by investors, in part due to significant fringe benefits and levies charged. The relatively low skilled labour may however prove not a problem to South African companies as they have been willing to embark on extensive staff training programmes. The training impacts knowledge of their modern technology that is not available in any of the East African countries. 4.1.6.

Institutional Framework

According the Africa Competitiveness Report, Tanzania has relatively effective legal system that enforces commercial contracts; a fair, impartial and quicker court system that resolves business disputes; and quality public security services. In addition, the country has no uncertain laws or Government policies or organized crimes that impose significant costs on businesses. 4.2. Other Indicators 4.2.1.

Mineral Endowment

Tanzania has a very large potential in mining compared to the other East African countries. The important minerals include gold, gemstones, coal, and base metals. Although the mining sector’s contribution to the economy was in the past minimal

26

averaging about 1.5 percent of GDP for much of the period since 1967, the past decade experienced high growth in the sector. Between 1989 and 2000 the sector’s output has recorded an average annual growth rate of about 13.4 percent. In Uganda, political and economic instability experienced in the country in the 1970s led the mining industry to decline to its present level of contributing only about 1% of the Growth Domestic Product (GDP). The decline was a result of resource depletion as well as instability. Kenya is the least endowed East African country as far as minerals are concerned. However, the country has well-developed cement processing plants that satisfy the domestic market and export to the regional market. 4.2.2.

Strategic Geographical Position

Tanzania's geographical location is also proving to be an advantage. South Africa in particular is courting the country as a gateway to East Africa and the Great Lakes region, building on Tanzania's membership of the Southern African Development Community. Trans African Railways has helped secure a rail and ferry route all the way from Johannesburg to Kampala, Uganda. 4.2.3.

Tourism

Tanzania ranks number one in not only East Africa but also the whole of Africa for the area set aside for wild animals and variety of species. Tanzania is endowed with all the “If a line had to be drawn key attractions necessary for the development around one place in Africa of a successful tourist industry. Tanzania has that contained the highest, a larger coastal area than Kenya. The country longest or largest owns the highest mountain in Africa – snowgeographical giants, one could only choose capped Mount Kilimanjaro with the Mawenzi Tanzania. About a quarter and Kibo peaks providing potential mountain of the country is officially climbing activities. protected – a monumental tribute to its natural wealth” by Conservation Corporation Africa.

The country has a wide variety of game reserves with a large coverage. In 1994, there were eleven national parks, namely Serengeti, Ruaha, Ngorongoro, Mikumi, Tarangire, Katavi, Kilimanjaro, Rubondo, Manyara, Arusha and Gomber Stream which, together with the Ngorongoro Conservation Area, cover an area of approximately 46,000 square kilometres and occupy about five percent of the total land area. Added to the vast size of the country, these attractions provide tremendous opportunities for the development and promotion of various tourist activities from game-viewing and photographic safaris, to game hunting, beach holidays, mountain-climbing, film making and sight-seeing. In Uganda the sector suffered tremendously from the years of political turmoil in the period 1970 to 1986. This period saw deterioration in the services offered by hotels, neglect of game parks and reserves and depletion in animal population, which in addition to the incessant political turmoil, acted as deterrents to tourism.

27

4.2.4.

Historical Factors

Tanzania enjoys relatively special historical relationship with South Africa compared to other East African countries. Since 1961 when Tanzania attained its independence, it had been providing moral, political and material assistance to African liberation movements. The country hosted the African Liberation Committee from its inception in 1963. In addition, the country gave land and other assistance various South African projects including the African National Congress of South Africa for its headquarters in Morogoro and the Solomon Mahlangu School. What is not clear is how this connection with the ANC and the new political leadership in South Africa affects the thinking of South African firms is seeking investment opportunities. Box 1: The ten top reasons why investors should invest in Tanzania as given by President Mkapa during the International Investors’ Round Table held on 17th July, 2002 in Dar es Salaam: 1. Political Stability is the hallmark of political life in Tanzania. We are much better off in this respect than many of the other countries in Africa and around the world with larger American investments. 2. Correct Economic and Fiscal Policies that have been applauded by the IMF and World Bank, and all bilateral donor countries. We have in place the right macro-economic fundamentals for investment and trade. 3. Abundant Natural Resources that are mostly underutilized, including arable land, mining, tourism, as well as opportunities in infrastructure, utilities, transit trade, aviation and so on. Few countries in Africa can claim to supersede us on this score. 4. Investment Incentives that offer a well-balanced package. In mining, for instance, Tanzania is widely acknowledged as having the most favourable investment incentives and regime worldwide. 5. Transfer of Capital and Profits is allowed, and currency is freely convertible. Net profits, dividends, royalties, and such other payments are freely allowed. 6. Investment Guarantees and Settlement of Disputes. Investments are protected against arbitrary nationalization and expropriation. A commercial court has been established, and international arbitration is provided for. 7. Assistance in Establishment of Enterprises. The Tanzania Investment Centre is being strengthened to be a truly one-stop centre for investors that will assist investors in all issues. The National Investment Promotion Policy provides a comprehensive framework to facilitate investment and travel. 8. Transfer of Technology Agreements. There are no restrictions in enterprises entering into technology transfer agreements. 9. Obtainable credits for domestic sources by foreign investors. Any foreign business operating in Tanzania may obtain credit for domestic financial institutions up to set limits. 10. Geographical Location. Tanzania is well positioned geographically. It is a gateway to six landlocked countries, and as a member of regional economic groupings, such as the soon to be launched East African Community and the Southern Africa Development Community, we are part of a market of almost 250 million people."

4.2.5.

Political Stability

Political factors have to some extent been explaining the flow of FDI among nations. Although all East African countries claim to be politically stable, there have been a few incidences of inter-ethnic violence in Kenya and border insecurity in Uganda. In 28

Kenya, the impending succession to president Daniel Arap Moi has generated a lot of uncertainties for foreign investment. In Uganda, regional instability makes border security a matter of concern. The responsible groups are Lord’s Resistance Army in the north and the Allied Democratic Forces (AFD) in the southwest. In addition, urban terrorism and violence are an obstacle to attracting Foreign Direct Investment into Uganda. Tanzania has enjoyed a remarkable degree of political peace and tranquillity since it gained independence, with two peaceful presidential transitions and a smooth transition from a single to multi party system. There has been tension and conflict in Zanzibar, but this has not affected the mainland. Political risk assessment may well identify Tanzania as a comparatively favourable investment location. This study has not yet explored how far this factor has influenced South African business judgements.

29

5.

REFERENCES

Brendan Vickers, (2002), “Foreign Direct Investment (FDI) Regime in the Republic of South Africa. United Nations Conference on Trade and Development (2001), Investment Policy Review, United Nations, Geneva, December 2001. United Republic of Tanzania (1997), Acts supplement: The Tanzania Investment Act, 1997 World Economic Forum, (2000), The Africa Competitiveness Report 2000/2001, New York, Oxford University Press, 2000. Websites: http://www.cdr.dk/working_papers/wp-99-1.htm http://www.dfa.gov.za/for-relations/multilateral/sadc.htm http://www.dti.gov.za/econdb/raportt/biltrad.html http://www.facts.com/cd/o94317.htm http://www.hartford-hwp.com/archives/36/371.html http://www.nbctz.com http://www.psrctz.org http://www.sab.co.za/results/corprev98/Tanzania.pdf http://www.time.com/time/europe/biz/magazine/0,9868,104683,00.html http://minerals.usgs.gov/minerals/pubs/country/africa.html#tz

30

APPENDIX SOUTH AFRICAN TRADE WITH EAST AFRICA (Imports from, and export to an East African Country) Summary Tanzania Imports R million constant 2000 prices

1992

1993

1994

1995

1996

1997

1998

1999

2000

18

37

24

22

18

23

29

27

24

36

105.22 -34.65

-8.06

-18.4

27.13

26.19

-8.87

-9.61

47.32

Imports - annual growth Imports R million constant 2000 prices - SA total

82936

Imports SA total - annual growth TANZANIA's share of total SA imports Export R million constant 2000 prices

0.02 48

Export - annual growth Export R million constant 2000 prices - SA total

Trade Balance R million constant 2000 prices

97773 115032 135922 145471 150983 159474 155183 187113 204369 17.89

17.65

18.16

7.03

3.79

5.62

-2.69

20.58

9.22

0.04

0.02

0.02

0.01

0.02

0.02

0.02

0.01

0.02

160

527

857

664

1062

1150

1105

1343

1441

62.54 -22.48

59.85

8.29

-3.89

21.56

7.26

231.04 229.18

122598 122347 135310 140746 147883 155675 160530 174377 209705 237780

Export SA total- annual growth TANZANIA's share of total SA export

2001

-0.2

10.6

4.02

5.07

5.27

3.12

8.63

20.26

13.39

0.04

0.13

0.39

0.61

0.45

0.68

0.72

0.63

0.64

0.61

29

122

502

834

645

1038

1120

1078

1319

1405

1997

1998

1999

2000

2001

107

71

40

43

84

-33.2 -33.77 -42.99

8.14

92.98

Summary Kenya 1992 Imports R million constant 2000 prices

42

Imports - annual growth Imports R million constant 2000 prices - SA total

82936

Imports SA total - annual growth KENYA's share of total SA imports

0.05

Export R million constant 2000 prices

259

Export - annual growth Export R million constant 2000 prices - SA total

1993

1994

1995

1996

50

42

153

160

18.93 -16.23 260.41

4.6

97773 115032 135922 145471 150983 159474 155183 187113 204369 17.89

17.65

18.16

7.03

3.79

5.62

-2.69

20.58

9.22

0.05

0.04

0.11

0.11

0.07

0.04

0.03

0.02

0.04

381

1072

1213

1216

1871

1395

1310

1533

1707

47.41

180.8

13.18

0.23

53.92 -25.46

-6.11

17.07

11.32

122598 122347 135310 140746 147883 155675 160530 174377 209705 237780

Export SA total- annual growth

-0.2

10.6

4.02

5.07

5.27

3.12

8.63

20.26

KENYA's share of total SA export

0.21

0.31

0.79

0.86

0.82

1.2

0.87

0.75

0.73

13.39 0.72

Trade Balance R million constant 2000 prices

216

330

1029

1059

1055

1764

1324

1269

1489

1622

Summary Uganda Imports R million constant 2000 prices

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

0

1

2

4

2

3

12

22

4

17

1701.43

43.48

Imports - annual growth Imports R million constant 2000 prices - SA total

82936

Imports SA total - annual growth

83.71 -50.03

59.75 227.86

85.92 -79.22 263.68

97773 115032 135922 145471 150983 159474 155183 187113 204369 17.89

17.65

18.16

7.03

3.79

5.62

-2.69

20.58

9.22

UGANDA's share of total SA imports

0

0

0

0

0

0

0.01

0.01

0

0.01

Export R million constant 2000 prices

5

14

34

153

153

205

334

271

347

466

151.84 133.24 338.02

0.3

34.11

62.31

-18.6

27.7

34.44

Export - annual growth Export R million constant 2000 prices - SA total

122598 122347 135310 140746 147883 155675 160530 174377 209705 237780

Export SA total- annual growth

-0.2

10.6

4.02

5.07

5.27

3.12

8.63

20.26

13.39

UGANDA's share of total SA export

0

0.01

0.03

0.11

0.1

0.13

0.21

0.16

0.17

0.2

Trade Balance R million constant 2000 prices

5

13

32

148

151

202

321

249

342

449

Trade Turnover R million constant 2000 prices

6

16

37

157

155

209

346

294

352

484

177.1 123.73 320.74

-1.2

34.49

65.26

-14.9

19.44

37.52

Trade Turnover - annual growth

31

Trade Turnover R million constant 2000 prices - SA total 205534 220121 250343 276669 293354 306659 320004 329560 396819 442150 UGANDA's share of total SA Trade Turnover

0

0.01

0.01

Source: http://www.dti.gov.za/econdb/raportt/biltrad.html

32

0.06

0.05

0.07

0.11

0.09

0.09

0.11