Kenyan investors locked out of Tanzania telcos’ share sale

Boda254

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Feb 26, 2015
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Kenyan investors will be locked out of the upcoming initial public offerings (IPOs) of Tanzania’s privately-held telcos, including Vodacom, Tigo and Airtel, which must list on the Dar-es-Salaam bourse under a new law.

Orbit Securities, a licensed stock broker in Dar, told the Business Daily that the planned public offerings for mobile telephony companies will be limited to Tanzanians, according to guidelines from the capital markets regulator.

Tanzania’s eight telcos are racing to comply with a new law passed in June last year, which demands that all domestic mobile telephone providers issue at least 25 per cent of their shares on the Dar-es-Salaam Stock Exchange (DSE).

“At the moment its only locals who are allowed to participate in the IPOs. Once we are informed by the Capital Markets Securities Authority of the foreign participation, we shall let you know,” said Orbit Securities.

Dar’s move to continue slamming the door on Nairobi puts to question the East African Community (EAC) common market protocol, which provides for free movement of capital, labour, goods, and services.

To date, only two telcos have filed their listing prospectus with the regulator and the bourse: Vodacom Tanzania, controlled by British firm Vodafone and Tigo, backed by Stockholm-based Millicom.

Tanzania’s telecoms industry is seen as lucrative given the growth in mobile subscriptions that hit 39.2 million as at June 2016 with a mobile money market ranked second to Nairobi’s in Africa, whetting the appetite of Kenyan investors who were eying a piece of the cake.

Vodacom, which controls a third of the Tanzanian market, seeks to raise TSh500 billion (Sh23 billion) in the upcoming IPO, according to the issue prospectus.

The value of the Tigo IPO is yet to be disclosed. The company is ranked second with 11.6 million subscribers or 29 per cent of the total as at June 2016, according to the Tanzania Communications Regulatory Authority.

Aritel is ranked third in Tanzania with a 26 per cent market share in the period under review, official data shows.

Other players are Halotel with 2.7 million registered SIM cards, Zantel (1.4 million), Smart (881,756) and State-owned Tanzania Telecommunications Company Ltd with 304,058 subscribers.

Dar partly opened up its capital account to foreigners in 2011 but Tanzania is yet to remove all limits on foreign capital flows and purchase of government securities by non-locals.

The lockout of Kenyan investors comes despite Tanzania being a member of the EAC where partner states treat each other as local investors.

Tanzania is also a member of the East African Securities Regulatory Authorities, which agreed in 2012 to allow regional investors to freely invest in partner countries.

This is the umpteenth time that Kenyans have been blocked from taking part in offers at the Dar bourse, including DSE’s self-listing last year, Mucoba and Mwalimu Banks (2015), Precision Air IPO and Tanzania Breweries Ltd share sale (both 2011).
 

MAO

JF-Expert Member
Dec 23, 2008
264
250
Kenyan investors will be locked out of the upcoming initial public offerings (IPOs) of Tanzania’s privately-held telcos, including Vodacom, Tigo and Airtel, which must list on the Dar-es-Salaam bourse under a new law.

Orbit Securities, a licensed stock broker in Dar, told the Business Daily that the planned public offerings for mobile telephony companies will be limited to Tanzanians, according to guidelines from the capital markets regulator.

Tanzania’s eight telcos are racing to comply with a new law passed in June last year, which demands that all domestic mobile telephone providers issue at least 25 per cent of their shares on the Dar-es-Salaam Stock Exchange (DSE).

“At the moment its only locals who are allowed to participate in the IPOs. Once we are informed by the Capital Markets Securities Authority of the foreign participation, we shall let you know,” said Orbit Securities.

Dar’s move to continue slamming the door on Nairobi puts to question the East African Community (EAC) common market protocol, which provides for free movement of capital, labour, goods, and services.

To date, only two telcos have filed their listing prospectus with the regulator and the bourse: Vodacom Tanzania, controlled by British firm Vodafone and Tigo, backed by Stockholm-based Millicom.

Tanzania’s telecoms industry is seen as lucrative given the growth in mobile subscriptions that hit 39.2 million as at June 2016 with a mobile money market ranked second to Nairobi’s in Africa, whetting the appetite of Kenyan investors who were eying a piece of the cake.

Vodacom, which controls a third of the Tanzanian market, seeks to raise TSh500 billion (Sh23 billion) in the upcoming IPO, according to the issue prospectus.

The value of the Tigo IPO is yet to be disclosed. The company is ranked second with 11.6 million subscribers or 29 per cent of the total as at June 2016, according to the Tanzania Communications Regulatory Authority.

Aritel is ranked third in Tanzania with a 26 per cent market share in the period under review, official data shows.

Other players are Halotel with 2.7 million registered SIM cards, Zantel (1.4 million), Smart (881,756) and State-owned Tanzania Telecommunications Company Ltd with 304,058 subscribers.

Dar partly opened up its capital account to foreigners in 2011 but Tanzania is yet to remove all limits on foreign capital flows and purchase of government securities by non-locals.

The lockout of Kenyan investors comes despite Tanzania being a member of the EAC where partner states treat each other as local investors.

Tanzania is also a member of the East African Securities Regulatory Authorities, which agreed in 2012 to allow regional investors to freely invest in partner countries.

This is the umpteenth time that Kenyans have been blocked from taking part in offers at the Dar bourse, including DSE’s self-listing last year, Mucoba and Mwalimu Banks (2015), Precision Air IPO and Tanzania Breweries Ltd share sale (both 2011).
So you mean only Kenyans were locked out, but other East Africans are allowed? Poor article.
 

MK254

JF-Expert Member
May 11, 2013
19,453
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So you mean only Kenyans were locked out, but other East Africans are allowed? Poor article.
Kenya is East Africa and East Africa is Kenya, we are the major investors all over East and Central Africa, when you frustrate investors from East Africa, you are majorly targeting Kenyans.

It's very hard to understand what's up with your country and government, you are erupting with all manner of roadside directives that are not well thought out. You can't run an economy where you're hellbent on frustrating investors and private sector. I was reading the article below and just couldn't make up what's going on. Someone is misinforming your president.

============================================================

Economists predict a gloomy year ahead as the private sector continues to shrink due to austerity measures by President John Magufuli’s government, which is keen on procuring goods and services locally.

Prof Honest Ngowi, an economist at Mzumbe University, says Tanzanians should expect high tax rates, increased nuisance tax and declining lending by banks.

The government has already barred its institutions from depositing their funds in commercial banks, with Tsh500 billion ($231.5 million) already withdrawn from 54 banks and deposited in the central bank.

Prof Ngowi told The EastAfrican that the current cash crunch will continue to bite.

“The government is the biggest buyer of goods and services, and the directive to trade locally will continue to bite as long as it stands,” he said.

READ: Tanzania banks face losses as cash supply declines

Recently, the Magufuli administration issued a directive to all central government and local government authorities, public institutions and statutory corporations to engage in government-to-government business dealings, a move analysts say could negatively affect private sector companies.

According to the guidelines for the preparation of the government budget for the year 2017/18, issued by the Ministry of Finance and Planning, accounting officers of all public entities are to stop buying goods and services from private firms and instead deal with state-owned enterprises.

Prof Ngowi cited poor rains, which will hurt food security and accessibility of energy as hydro-power generation dams are likely to experience a decline in water levels — as another danger sign.

“The weatherman’s warning on low rains next year is of concern because it will not only bring about food insecurity but also a power crisis as the nation depends on it for 48 per cent of electricity generation,” he said.

Prof Ngowi added that the economic situation will also depend on other issues such as new administration in the US and how China’s economy performs in 2017.

“There is a direct link between China’s economy and Tanzania’s and we will need to see how the new president of the US will behave on aid and trade with Africa,” he said.

Prof Ngowi said government-to-government dealing will adversely affect the private sector and lower its capacity to employ and pay tax. As a result, government revenue will suffer.

The Economic Partnership Agreement (EPA) with Europe is also on the cards as an importation factor in how the economy performs.

“Should Tanzania and Burundi endorse the EPAs by January, it means that trade with Europe will ease, giving way to other cooperation that will affect the economy directly,” he said.
Brace for a tough year, economists warn Tanzanians
 

kilam

JF-Expert Member
Aug 5, 2011
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Wakenya wameanza kutulilia tena. Lengo la sheria hii ni kuhakikisha Watanzania wanafaidika na mapato makubwa ya kampuni za simu. Ingekuwa ni ujinga kama wageni wangeruhusiwa kununua hisa wakati lengo ni kubakisha asilimia fulani ya mapato Tanzania.
Habari hiyo imeandikwa kipumbavu na kishabiki kuonesha kuwa iliwalenga Wakenya. Sijawahi kusikia Watanzania wakilalamika wauziwe hisa za Safaricom.
Acheni kujipendekeza kwa Tanzania mfanye mambo yenu.
 

kilam

JF-Expert Member
Aug 5, 2011
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bado wanafikiria tutawaibia daraja na mlima...malimbukeni watz
Ungekuwa na akili ungefuatilia kujua sheria hiyo inasemaje. Hamna sehemu Kenya ilipotajwa kwenye sheria hiyo, lengo la sheria hiyo ni kuwawezesha Watanzania kufaidika na biashara hiyo kubwa.
Acheni kujipendekeza kwetu, nyie ni wageni kama wageni wengine msitegemee kudekezwa.
 

eddy25r

JF-Expert Member
Dec 25, 2016
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Hujawahi waskia watanzanai kuhusu hisa za safcom because because hawafungiwi nje na kenyan government
 

kilam

JF-Expert Member
Aug 5, 2011
1,973
2,000
Kenya is East Africa and East Africa is Kenya, we are the major investors all over East and Central Africa, when you frustrate investors from East Africa, you are majorly targeting Kenyans.

It's very hard to understand what's up with your country and government, you are erupting with all manner of roadside directives that are not well thought out. You can't run an economy where you're hellbent on frustrating investors and private sector. I was reading the article below and just couldn't make up what's going on. Someone is misinforming your president.

============================================================

Economists predict a gloomy year ahead as the private sector continues to shrink due to austerity measures by President John Magufuli’s government, which is keen on procuring goods and services locally.

Prof Honest Ngowi, an economist at Mzumbe University, says Tanzanians should expect high tax rates, increased nuisance tax and declining lending by banks.

The government has already barred its institutions from depositing their funds in commercial banks, with Tsh500 billion ($231.5 million) already withdrawn from 54 banks and deposited in the central bank.

Prof Ngowi told The EastAfrican that the current cash crunch will continue to bite.

“The government is the biggest buyer of goods and services, and the directive to trade locally will continue to bite as long as it stands,” he said.

READ: Tanzania banks face losses as cash supply declines

Recently, the Magufuli administration issued a directive to all central government and local government authorities, public institutions and statutory corporations to engage in government-to-government business dealings, a move analysts say could negatively affect private sector companies.

According to the guidelines for the preparation of the government budget for the year 2017/18, issued by the Ministry of Finance and Planning, accounting officers of all public entities are to stop buying goods and services from private firms and instead deal with state-owned enterprises.

Prof Ngowi cited poor rains, which will hurt food security and accessibility of energy as hydro-power generation dams are likely to experience a decline in water levels — as another danger sign.

“The weatherman’s warning on low rains next year is of concern because it will not only bring about food insecurity but also a power crisis as the nation depends on it for 48 per cent of electricity generation,” he said.

Prof Ngowi added that the economic situation will also depend on other issues such as new administration in the US and how China’s economy performs in 2017.

“There is a direct link between China’s economy and Tanzania’s and we will need to see how the new president of the US will behave on aid and trade with Africa,” he said.

Prof Ngowi said government-to-government dealing will adversely affect the private sector and lower its capacity to employ and pay tax. As a result, government revenue will suffer.

The Economic Partnership Agreement (EPA) with Europe is also on the cards as an importation factor in how the economy performs.

“Should Tanzania and Burundi endorse the EPAs by January, it means that trade with Europe will ease, giving way to other cooperation that will affect the economy directly,” he said.
Brace for a tough year, economists warn Tanzanians
Hard economic times dampen Christmas spirit for families


Auctioneers carry away office equipment on August 5, 2016 belonging to a company in Mombasa that had failed to clear a debt. PHOTO | KEVIN ODIT | NATION MEDIA GROUP

On Saturday, December 17, 2016, Gerrison Muema was working as usual as a tyre salesman on Kirinyaga Road in Nairobi. He has been doing that since 2012.

The 28-year-old kept a sharp eye on the cars slowly driving by, lest he lost a possible client. Gerrison is a salesman at Safe Auto Tyres and Accessories. Inside the shop, car tires and rims adorn the walls and shelves.

“From 2012, things have definitely changed. This shop had 25 workers until 2014. Now there are only 12. During Decembers of 2012, 2013 and the first months of 2014, we were doing very well. The business had 10 delivery vehicles. Now there are only four vehicles. The owner sold six,” he explains, never taking his eyes off the street.

As the business went from very good to good then to not-so-good, Gerrison made personal adjustments. He moved from the Sh12,000 a month house he lived in at Komarock in Nairobi in 2012 to a Sh7,000 a month one in Umoja in February 2015.

“My wife works for a printing firm here in town. There is fare to and from work for both of us, we have a househelp to tend to our daughter. Every day, I have to leave money for the househelp and the baby plus our evening meal. My salary and commissions together with my wife’s salary can’t meet these needs by a long shot.”

To keep up, Gerrison runs a gas dealership business on the side. The shop also sells electricity tokens and runs as an Equity Bank agent.

'HAVE CLOSED'

“Business is not good. Along this street, several businesses have closed,” he says.

Across in Kiambu County, one rental space in the tiny town of Gacio has changed faces three times in the last one year and a half. It was a milk store, the milk store closed, giving room to a movie rental store which stayed afloat briefly and then closed to give room for a beauty care shop, the current occupant.

It is not different in Rongai, Kajiado County where in a space of less than two years, a premise has changed from being a household goods shop to a butchery to a clothes shop now. All under different owners.

This against the backdrop of government data and even World Bank reports that are painting a rosy picture of the economy.

In March, the World Bank estimated Kenya’s economic growth rate for 2016 at 5.9 per cent and projected next year’s growth at six per cent.

This was reiterated by Kenya National Bureau of Statistics quarterly report, which indicated that Kenya’s economy expanded by 6.2 per cent in the second quarter of the year compared to 5.9 per cent in the same period in 2015.

But amid these positive projections, a Nation survey found gloom in many small businesses and large companies laying off workers as auctioneers repossessed cars and houses in record numbers.

MIDDLE INCOME

The association of auctioneers says the rate at which Kenyans are getting auctioned has more than doubled in the last 12 months. The hardest hit are middle income earners with a taste for classy and posh lifestyles.

Nixon Okumu, the chairman of National Association of Kenya Auctioneers in Nyanza/Western and the executive director of the Kisumu-based Joni Consult Auctioneers, says his firm has auctioned cars for over 400 loan defaulters this year. This is twice the numbers from last year. Nyanza/Western has 32 auction firms.

“People are being auctioned at unprecedented rate. They tell us that they supplied goods and services to county governments who delay payment,” Mr Okumu said.

The auctioneer says most are below the age of 45.

The Kenya National Bureau of Statistics has reported that about 2.2 million small enterprises have closed over the last five years, underlining a tough business climate.

It says the highest number of establishments shut in 2015, accounted for 35.4 per cent of the total closed in the last five years. About 1.2 million were closed in rural areas compared to one million in urban areas.

The survey cited shortage of operating funds as the main reason for business closure. This is after the businesses diverted operating capital to other uses.

It is not just small businesses that are struggling.

Three years ago, Equity Bank announced that it was freezing staff recruitment. As 2016 ends, 660 Equity bank employees exited the firm.

'VOLUNTARY RETRENCHMENT'

Sidian Bank announced in October that it planned to send 108 staff members home. Family Bank also offered an unknown number of its employees ‘a chance at voluntary retrenchment’. The national carrier Kenya Airways started the year by announcing that it planned to lay off 600 employees within the year.

The list of companies laying off their workers in order to cut costs or because they are posting losses is long and it includes supermarkets and media houses.

Auctioneers and asset recovery businesses offer a glimpse into the state of affairs. According to Francis Njagi, the owner of Smart Recovery Auctioneers, his business repossesses between five and 20 cars every month from individuals who can’t make their payments to their financiers or dealers.

“When someone obtains a Sh1 million car from a dealer by paying half and then agrees to pay the balance and interest in installments of say 10 months, if they default or miss making payments for say 3 or 4 months, we are called in.”

He says up to 80 per cent of cars being recovered are personal cars.

Mr Njagi has been an auctioneer since 1999 and he says business has is bad. “I struggle to auction off even half of the assets that my company repossesses. They don’t move.”

He is not alone. Former banker David Wanderi is the owner of Taifa Auctioneers Kenya. He says repossessions are many but the goods don’t move once seized.

“You are lucky if you advertise an auction and sell half of the property. After advertising 20 properties (land or houses or vehicles), only four or five will be sold,” he explained on phone.

GOOD YEARS

Mr Wanderi has been in the business since 1991 and says that 2000 to 2010 were good years. “Then people called to ask for vehicles, land and houses.”

He says in Kitengela for instance, land advertised for sale never lasted a week. It would be gone in three days. Today, even with the prices going down, people are still not buying.

“On average, we repossess 10 cars a month. Some months, it is embarrassingly high. Whether it is motor vehicles or land or apartments or houses, many people now just won’t honour their payment schedules,” Mr Wanderi says.

Mr Wanderi says his company also offers distress for rent service to property (homes or rental apartments) owners. “There was a time when people paid rent on time. Now some pay on the 17th and landlords just can’t handle such, so it is us who do it for them. Rent defaulters and late payments are on the rise.”

He said these some of these people use households to cover rent sometimes.

Those are the lucky ones; others are kicked out.” Calling from Rarieda, one Mr Onyango Omollo says; “You don’t need a PhD to know that the economy is not healthy. Just put Sh1,000 in your hand, go to the shop and buy three simple household items and watch what happens to that money.”

According to the CIA world Fact Book, unemployment in Kenya is at 40 per cent, with 7 out of 10 unemployed people being youths. An estimated 800,000 young people per year are expected to enter the job market.




 

kilam

JF-Expert Member
Aug 5, 2011
1,973
2,000
Usithani mko too special ati sasa mliliwe
Nyie fanyeni yenu, ni ujinga wa hali ya juu eti Tanzania itunge sheria ili kuwafurahisha Wakenya.
Kenya na Tanzania ni nchi tofauti, Jumuiya haifanyi nchi ipoteze uhuru wake.
 

MK254

JF-Expert Member
May 11, 2013
19,453
2,000
Hard economic times dampen Christmas spirit for families


Auctioneers carry away office equipment on August 5, 2016 belonging to a company in Mombasa that had failed to clear a debt. PHOTO | KEVIN ODIT | NATION MEDIA GROUP

On Saturday, December 17, 2016, Gerrison Muema was working as usual as a tyre salesman on Kirinyaga Road in Nairobi. He has been doing that since 2012.

The 28-year-old kept a sharp eye on the cars slowly driving by, lest he lost a possible client. Gerrison is a salesman at Safe Auto Tyres and Accessories. Inside the shop, car tires and rims adorn the walls and shelves.

“From 2012, things have definitely changed. This shop had 25 workers until 2014. Now there are only 12. During Decembers of 2012, 2013 and the first months of 2014, we were doing very well. The business had 10 delivery vehicles. Now there are only four vehicles. The owner sold six,” he explains, never taking his eyes off the street.

As the business went from very good to good then to not-so-good, Gerrison made personal adjustments. He moved from the Sh12,000 a month house he lived in at Komarock in Nairobi in 2012 to a Sh7,000 a month one in Umoja in February 2015.

“My wife works for a printing firm here in town. There is fare to and from work for both of us, we have a househelp to tend to our daughter. Every day, I have to leave money for the househelp and the baby plus our evening meal. My salary and commissions together with my wife’s salary can’t meet these needs by a long shot.”

To keep up, Gerrison runs a gas dealership business on the side. The shop also sells electricity tokens and runs as an Equity Bank agent.

'HAVE CLOSED'

“Business is not good. Along this street, several businesses have closed,” he says.

Across in Kiambu County, one rental space in the tiny town of Gacio has changed faces three times in the last one year and a half. It was a milk store, the milk store closed, giving room to a movie rental store which stayed afloat briefly and then closed to give room for a beauty care shop, the current occupant.

It is not different in Rongai, Kajiado County where in a space of less than two years, a premise has changed from being a household goods shop to a butchery to a clothes shop now. All under different owners.

This against the backdrop of government data and even World Bank reports that are painting a rosy picture of the economy.

In March, the World Bank estimated Kenya’s economic growth rate for 2016 at 5.9 per cent and projected next year’s growth at six per cent.

This was reiterated by Kenya National Bureau of Statistics quarterly report, which indicated that Kenya’s economy expanded by 6.2 per cent in the second quarter of the year compared to 5.9 per cent in the same period in 2015.

But amid these positive projections, a Nation survey found gloom in many small businesses and large companies laying off workers as auctioneers repossessed cars and houses in record numbers.

MIDDLE INCOME

The association of auctioneers says the rate at which Kenyans are getting auctioned has more than doubled in the last 12 months. The hardest hit are middle income earners with a taste for classy and posh lifestyles.

Nixon Okumu, the chairman of National Association of Kenya Auctioneers in Nyanza/Western and the executive director of the Kisumu-based Joni Consult Auctioneers, says his firm has auctioned cars for over 400 loan defaulters this year. This is twice the numbers from last year. Nyanza/Western has 32 auction firms.

“People are being auctioned at unprecedented rate. They tell us that they supplied goods and services to county governments who delay payment,” Mr Okumu said.

The auctioneer says most are below the age of 45.

The Kenya National Bureau of Statistics has reported that about 2.2 million small enterprises have closed over the last five years, underlining a tough business climate.

It says the highest number of establishments shut in 2015, accounted for 35.4 per cent of the total closed in the last five years. About 1.2 million were closed in rural areas compared to one million in urban areas.

The survey cited shortage of operating funds as the main reason for business closure. This is after the businesses diverted operating capital to other uses.

It is not just small businesses that are struggling.

Three years ago, Equity Bank announced that it was freezing staff recruitment. As 2016 ends, 660 Equity bank employees exited the firm.

'VOLUNTARY RETRENCHMENT'

Sidian Bank announced in October that it planned to send 108 staff members home. Family Bank also offered an unknown number of its employees ‘a chance at voluntary retrenchment’. The national carrier Kenya Airways started the year by announcing that it planned to lay off 600 employees within the year.

The list of companies laying off their workers in order to cut costs or because they are posting losses is long and it includes supermarkets and media houses.

Auctioneers and asset recovery businesses offer a glimpse into the state of affairs. According to Francis Njagi, the owner of Smart Recovery Auctioneers, his business repossesses between five and 20 cars every month from individuals who can’t make their payments to their financiers or dealers.

“When someone obtains a Sh1 million car from a dealer by paying half and then agrees to pay the balance and interest in installments of say 10 months, if they default or miss making payments for say 3 or 4 months, we are called in.”

He says up to 80 per cent of cars being recovered are personal cars.

Mr Njagi has been an auctioneer since 1999 and he says business has is bad. “I struggle to auction off even half of the assets that my company repossesses. They don’t move.”

He is not alone. Former banker David Wanderi is the owner of Taifa Auctioneers Kenya. He says repossessions are many but the goods don’t move once seized.

“You are lucky if you advertise an auction and sell half of the property. After advertising 20 properties (land or houses or vehicles), only four or five will be sold,” he explained on phone.

GOOD YEARS

Mr Wanderi has been in the business since 1991 and says that 2000 to 2010 were good years. “Then people called to ask for vehicles, land and houses.”

He says in Kitengela for instance, land advertised for sale never lasted a week. It would be gone in three days. Today, even with the prices going down, people are still not buying.

“On average, we repossess 10 cars a month. Some months, it is embarrassingly high. Whether it is motor vehicles or land or apartments or houses, many people now just won’t honour their payment schedules,” Mr Wanderi says.

Mr Wanderi says his company also offers distress for rent service to property (homes or rental apartments) owners. “There was a time when people paid rent on time. Now some pay on the 17th and landlords just can’t handle such, so it is us who do it for them. Rent defaulters and late payments are on the rise.”

He said these some of these people use households to cover rent sometimes.

Those are the lucky ones; others are kicked out.” Calling from Rarieda, one Mr Onyango Omollo says; “You don’t need a PhD to know that the economy is not healthy. Just put Sh1,000 in your hand, go to the shop and buy three simple household items and watch what happens to that money.”

According to the CIA world Fact Book, unemployment in Kenya is at 40 per cent, with 7 out of 10 unemployed people being youths. An estimated 800,000 young people per year are expected to enter the job market.



Hard economic times is a common phenomenon the world over and not news to anyone. But sisi hafanyi hiyo yenu ya kutamausha wawekezaji. Wajasiria wote Bongo wanaisoma namba.
 

kilam

JF-Expert Member
Aug 5, 2011
1,973
2,000
Hard economic times is a common phenomenon the world over and not news to anyone. But sisi hafanyi hiyo yenu ya kutamausha wawekezaji. Wajasiria wote Bongo wanaisoma namba.
Tatizo kubwa ni kuwa watu hawajazoea kulipa kodi Afrika. Watu wanataka elimu bure, afya bure, umeme bei nafuu n.k halafu hawataki kulipa kodi.
Utawala huu una nidhamu ya kukusanya kodi kwa hiyo wafanyabiashara walaghai lazima washindwe biashara.
Wengine nao biashara imewashinda wanaamua kumuangushia jumba bovu Magufuli.

Cheap imports, high costs: Why many businesses are closing shop
MONDAY DECEMBER 19 2016

By BRIAN NGUGI

A wave of company closures which has hit Kenya over the recent past has raised questions about the state of business environment in the country.

About 2.2 million small enterprises have closed shop over the last five years, underlining the tough challenges that the local business climate poses for investors.

Many of the firms cited a harsh business climate as the reason for their fall, top on the list being the high cost of energy, especially for manufacturers.

A fortnight ago business tycoon Peter Kuguru put his 20-year-old beverages company up for sale, marking the end of an era in which a Kenyan firm took global giant Coca-Cola head-on.

Mr Kuguru announced his Softa Bottling Company was folding up due to financial difficulties occasioned by failure to secure a joint venture partner.

The bottler’s products, including Softa soda, predominantly found acceptance among low-income consumers during its two-decade existence.

In an interview, Mr Kuguru gave a candid assessment of his company’s downfall after enjoying a stint as an emerging force in the industry.

READ: Kuguru reveals why he threw in the towel on Softa

Not alone

But his firm is not alone. Some 2.2 million micro small and medium enterprises (MSMEs) shut down in the last five years including 2016, according to a survey by the Kenya National Bureau of Statistics (KNBS).

The report, Micro, Small and Medium Establishments, says most of the businesses that shut down were in wholesale and retail trade as well as repair of motor vehicles and motor cycles sector which accounted for 73 per cent of the total closures.

The report says businesses went down at an average age of 3.8 years.

“Establishments that were started or acquired within the last two years were more vulnerable to closures and they accounted for 61.3 per cent of the total businesses closed,” the report states.

The highest number of establishments shut down was in 2015, accounting for 35.4 per cent of the total number of closed enterprises in the last five years. About 1.2 million were closed in rural areas compared to one million in urban areas.

The main reason cited for business closure was shortage of operating funds as reported by 30 per cent of the businesses owing to increased operating expenses, declining income and losses incurred from businesses. Diversion of returns and operating capital from the business to other uses also led to business closures.

Sameer Africa in September announced it had closed its Yana tyres manufacturing factory in Nairobi citing increased competition from cheaper imports, dealing yet another blow to Kenya’s ambition to industrialise.

The company, through a notice to the Capital Markets Authority (CMA), said its board had decided to discontinue local tyre production at its factory on Nairobi’s Mombasa Road.

READ: Sameer shuts down Nairobi tyre plant in favour of imports

The firm had earlier warned of a possible shutdown citing the government’s failure to curb dumping of cheaper and low quality imports in Kenya.

It will now outsource its tyres from producers in low cost China and India — a double whammy for the Kenyan economy in terms of job losses and waning momentum to industrialise.

“At a meeting held on Monday 29 August, the board of directors resolved to cease the manufacture of tyres and allied products at the Sameer Africa in Nairobi and to commence offshore production by tyre manufacturers domiciled in China and India,” the company said in the note to CMA.

Sameer expects its balance sheet to take a hit owing to the closure and has consequently issued a profit warning. It expects its profits to drop by more than 25 per cent in the current financial year.

“The company will incur a oneoff charge in respect of plant and inventory impairment and employee severance cost estimated at Sh725 million,” Sameer said, adding there will be layoffs, especially among employees directly involved in manufacture of tyres and tubes.

Sameer is majority owned by businessman Naushad Merali who has a 72.15 per cent stake in the company.

Closure of the factory, which has been in operation for decades, added to a long list of manufacturers who have exited the Kenyan market citing a harsh operating environment.

READ: Eveready sinks into loss after factory closure

Eveready East Africa closed its Nakuru-based battery factory in September 2014 in what the company attributed to increased competition from cheap dry cells imports, resulting in massive job losses.

A month later, chocolate maker Cadbury shut down its factory in Nairobi, dealing a blow to Kenya’s quest to industrialise by 2030.

Other manufacturers that have recently closed production lines in Kenya include Procter and Gamble and Reckitt Benckiser.

Most cited high cost of doing business mainly driven by high cost of energy as reason to relocate.

Industrial power costs

Kenya’s industrial power costs are higher than most of its African competitors, blunting the country’s competitive edge, according to the Kenya Association of Manufacturers (KAM) – a lobby for industrialists.

Kenya’s industrial power costs stand at an average of Sh17 per kilowatt hour (kWh) compared to Tanzania’s Sh12 per unit ($0.12), Egypt’s $0.11 (Sh11) and Ethiopia’s $0.09 (Sh9).

South Africa, the most industrialised economy on the continent, is $0.06 (Sh6).

Globally, Chinese industrialists get power at the cost of $0.03 (Sh3) per unit while India is at $0.09 (Sh9). Local manufacturers also shoulder the burden of erratic power supply, which stalls production and saps employee morale.

Sameer said it was finalising contract manufacturing agreements with companies in India and China as it shifts production from Nairobi.

In 2014, it contracted a Chinese firm to produce Summit tyres for the low-end market.

Sameer’s bid to form a joint venture with a technical investor — to modernise its tyre factory in Nairobi — collapsed last year after the parties failed to agree on the valuation of the business.

The firm plans to diversify to real estate in the wake of flagging fortunes in the tyre manufacturing business.

Asian makers are also subsidised up to 80 per cent of their sales, allowing them to gain market share in East Africa where cheaper tyres are in high demand.

Manufacturing’s contribution to Kenya’s gross domestic product (GDP) has averaged 11 per cent in the past 10 years showing a general stagnation of the sector.

The World Bank early this year warned that increased Chinese imports could lead to Africa’s “de-industrialisation” even before the region enters the industrialisation stage.

Analysts reckon that there is need for a policy rethink to lock out imports that local manufacturers can make, and letting in only capital goods such as machinery.

Different picture

As companies close shop citing a difficult business climate, a different picture is, however, being painted by government officials who insist that a raft of business reforms may be paying off.

READ: WERE: Why Kenyans can’t feel effects of rosy economic growth data

State officials point to Kenya’s standing in the latest World Bank Ease of Doing Business report, which says it has improved by 21 places.

The 2017 report shows that the country was placed at position 92 out of 190 countries surveyed, with Mauritius and Rwanda outpacing Kenya at 49th and 56th place respectively.

New Zealand replaced Singapore this year as the easiest place in the world to do business.

Kenya’s improvement was credited to five reforms in the areas of starting a business, obtaining access to electricity, registering property, protecting minority investors and resolving insolvency.

“This is a marathon and we will not be complacent until we attain position 50 by 2020,” said Industrialisation Cabinet Secretary Adan Mohamed in Nairobi while welcoming the results of the report. Kenya was also ranked as the world’s third most reformed country.
 

MK254

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May 11, 2013
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Tatizo kubwa ni kuwa watu hawajazoea kulipa kodi Afrika. Watu wanataka elimu bure, afya bure, umeme bei nafuu n.k halafu hawataki kulipa kodi.
Utawala huu una nidhamu ya kukusanya kodi kwa hiyo wafanyabiashara walaghai lazima washindwe biashara.
Wengine nao biashara imewashinda wanaamua kumuangushia jumba bovu Magufuli.

Cheap imports, high costs: Why many businesses are closing shop
MONDAY DECEMBER 19 2016

By BRIAN NGUGI

A wave of company closures which has hit Kenya over the recent past has raised questions about the state of business environment in the country.

About 2.2 million small enterprises have closed shop over the last five years, underlining the tough challenges that the local business climate poses for investors.

Many of the firms cited a harsh business climate as the reason for their fall, top on the list being the high cost of energy, especially for manufacturers.

A fortnight ago business tycoon Peter Kuguru put his 20-year-old beverages company up for sale, marking the end of an era in which a Kenyan firm took global giant Coca-Cola head-on.

Mr Kuguru announced his Softa Bottling Company was folding up due to financial difficulties occasioned by failure to secure a joint venture partner.

The bottler’s products, including Softa soda, predominantly found acceptance among low-income consumers during its two-decade existence.

In an interview, Mr Kuguru gave a candid assessment of his company’s downfall after enjoying a stint as an emerging force in the industry.

READ: Kuguru reveals why he threw in the towel on Softa

Not alone

But his firm is not alone. Some 2.2 million micro small and medium enterprises (MSMEs) shut down in the last five years including 2016, according to a survey by the Kenya National Bureau of Statistics (KNBS).

The report, Micro, Small and Medium Establishments, says most of the businesses that shut down were in wholesale and retail trade as well as repair of motor vehicles and motor cycles sector which accounted for 73 per cent of the total closures.

The report says businesses went down at an average age of 3.8 years.

“Establishments that were started or acquired within the last two years were more vulnerable to closures and they accounted for 61.3 per cent of the total businesses closed,” the report states.

The highest number of establishments shut down was in 2015, accounting for 35.4 per cent of the total number of closed enterprises in the last five years. About 1.2 million were closed in rural areas compared to one million in urban areas.

The main reason cited for business closure was shortage of operating funds as reported by 30 per cent of the businesses owing to increased operating expenses, declining income and losses incurred from businesses. Diversion of returns and operating capital from the business to other uses also led to business closures.

Sameer Africa in September announced it had closed its Yana tyres manufacturing factory in Nairobi citing increased competition from cheaper imports, dealing yet another blow to Kenya’s ambition to industrialise.

The company, through a notice to the Capital Markets Authority (CMA), said its board had decided to discontinue local tyre production at its factory on Nairobi’s Mombasa Road.

READ: Sameer shuts down Nairobi tyre plant in favour of imports

The firm had earlier warned of a possible shutdown citing the government’s failure to curb dumping of cheaper and low quality imports in Kenya.

It will now outsource its tyres from producers in low cost China and India — a double whammy for the Kenyan economy in terms of job losses and waning momentum to industrialise.

“At a meeting held on Monday 29 August, the board of directors resolved to cease the manufacture of tyres and allied products at the Sameer Africa in Nairobi and to commence offshore production by tyre manufacturers domiciled in China and India,” the company said in the note to CMA.

Sameer expects its balance sheet to take a hit owing to the closure and has consequently issued a profit warning. It expects its profits to drop by more than 25 per cent in the current financial year.

“The company will incur a oneoff charge in respect of plant and inventory impairment and employee severance cost estimated at Sh725 million,” Sameer said, adding there will be layoffs, especially among employees directly involved in manufacture of tyres and tubes.

Sameer is majority owned by businessman Naushad Merali who has a 72.15 per cent stake in the company.

Closure of the factory, which has been in operation for decades, added to a long list of manufacturers who have exited the Kenyan market citing a harsh operating environment.

READ: Eveready sinks into loss after factory closure

Eveready East Africa closed its Nakuru-based battery factory in September 2014 in what the company attributed to increased competition from cheap dry cells imports, resulting in massive job losses.

A month later, chocolate maker Cadbury shut down its factory in Nairobi, dealing a blow to Kenya’s quest to industrialise by 2030.

Other manufacturers that have recently closed production lines in Kenya include Procter and Gamble and Reckitt Benckiser.

Most cited high cost of doing business mainly driven by high cost of energy as reason to relocate.

Industrial power costs

Kenya’s industrial power costs are higher than most of its African competitors, blunting the country’s competitive edge, according to the Kenya Association of Manufacturers (KAM) – a lobby for industrialists.

Kenya’s industrial power costs stand at an average of Sh17 per kilowatt hour (kWh) compared to Tanzania’s Sh12 per unit ($0.12), Egypt’s $0.11 (Sh11) and Ethiopia’s $0.09 (Sh9).

South Africa, the most industrialised economy on the continent, is $0.06 (Sh6).

Globally, Chinese industrialists get power at the cost of $0.03 (Sh3) per unit while India is at $0.09 (Sh9). Local manufacturers also shoulder the burden of erratic power supply, which stalls production and saps employee morale.

Sameer said it was finalising contract manufacturing agreements with companies in India and China as it shifts production from Nairobi.

In 2014, it contracted a Chinese firm to produce Summit tyres for the low-end market.

Sameer’s bid to form a joint venture with a technical investor — to modernise its tyre factory in Nairobi — collapsed last year after the parties failed to agree on the valuation of the business.

The firm plans to diversify to real estate in the wake of flagging fortunes in the tyre manufacturing business.

Asian makers are also subsidised up to 80 per cent of their sales, allowing them to gain market share in East Africa where cheaper tyres are in high demand.

Manufacturing’s contribution to Kenya’s gross domestic product (GDP) has averaged 11 per cent in the past 10 years showing a general stagnation of the sector.

The World Bank early this year warned that increased Chinese imports could lead to Africa’s “de-industrialisation” even before the region enters the industrialisation stage.

Analysts reckon that there is need for a policy rethink to lock out imports that local manufacturers can make, and letting in only capital goods such as machinery.

Different picture

As companies close shop citing a difficult business climate, a different picture is, however, being painted by government officials who insist that a raft of business reforms may be paying off.

READ: WERE: Why Kenyans can’t feel effects of rosy economic growth data

State officials point to Kenya’s standing in the latest World Bank Ease of Doing Business report, which says it has improved by 21 places.

The 2017 report shows that the country was placed at position 92 out of 190 countries surveyed, with Mauritius and Rwanda outpacing Kenya at 49th and 56th place respectively.

New Zealand replaced Singapore this year as the easiest place in the world to do business.

Kenya’s improvement was credited to five reforms in the areas of starting a business, obtaining access to electricity, registering property, protecting minority investors and resolving insolvency.

“This is a marathon and we will not be complacent until we attain position 50 by 2020,” said Industrialisation Cabinet Secretary Adan Mohamed in Nairobi while welcoming the results of the report. Kenya was also ranked as the world’s third most reformed country.
Unaweza wafanya watu walipe kodi bila kuonekana kama unakomoa, hadi unafikia kuonekana kana kwamba unapigana na maskini na sio umaskini.

Halafu for your information companies are increasing in Kenya.

Number of companies registered in Kenya increases by 53 per cent

Companies registered in Kenya over the last five years have more than doubled, signaling an improving business environment. The International Monetary Fund (IMF) using data from the Kenya National Bureau of Statistics (KNBS) found that registration of companies in Kenya has increased by 52.9 percent over the period.

Joseph Maina of IMF said this indicated a significant transition of informal institutions into more formal ones. "This means the environment is becoming conducive for institutions to register. There are incentives that the Government is giving," said Mr Maina. He noted that the incentives might be in terms of accessing procurement services from the Government or accessing certain financial services. The increase in company registration was both for domestic and foreign companies. Foreign companies are however growing at a greater pace than the domestic companies, said the report.

A recent report by the World Bank on ease of doing business showed Kenya had moved up 28 places in the ranking. This was at the back of such factors as introduction of stamp duty, digitisation and automation of government services. The IMF report also showed Kenya had experienced an increase in foreign direct investments (FDI) into the country, with Kenya's former colonial master - the United Kingdom - leading the pack of countries that pump in the most FDI into the country. China is the second highest source of FDI, and its contribution has been peaking over the last ten years, according to the study.

Mr Maina noted that although many companies have registered, not many of them have gone further and listed in the capital markets such as the Nairobi Securities Exchange (NSE). Out of 310,000 registered companies only 65 have been listed, said the report. He reckoned that this could be due to the fact that most of the companies are family-owned whose owners do not want to cede control of the companies. "For some, requirements for listing might be a little high," he added. The report also showed trade had increased, though is still low. The expenditure growth in the last four years almost tripled from $1 billion in 2010 to around $2.5 billion.

It means that companies are investing and expanding their books. The report was an assessment of how the non-bank listed companies performed over time. It looked at 49 listed companies, and two non-listed companies. It used data obtained from financial statements of companies.
Read more at: Number of companies registered in Kenya increases by 53 per cent
 

waltham

JF-Expert Member
Jan 23, 2014
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Hard economic times dampen Christmas spirit for families


Auctioneers carry away office equipment on August 5, 2016 belonging to a company in Mombasa that had failed to clear a debt. PHOTO | KEVIN ODIT | NATION MEDIA GROUP

On Saturday, December 17, 2016, Gerrison Muema was working as usual as a tyre salesman on Kirinyaga Road in Nairobi. He has been doing that since 2012.

The 28-year-old kept a sharp eye on the cars slowly driving by, lest he lost a possible client. Gerrison is a salesman at Safe Auto Tyres and Accessories. Inside the shop, car tires and rims adorn the walls and shelves.

“From 2012, things have definitely changed. This shop had 25 workers until 2014. Now there are only 12. During Decembers of 2012, 2013 and the first months of 2014, we were doing very well. The business had 10 delivery vehicles. Now there are only four vehicles. The owner sold six,” he explains, never taking his eyes off the street.

As the business went from very good to good then to not-so-good, Gerrison made personal adjustments. He moved from the Sh12,000 a month house he lived in at Komarock in Nairobi in 2012 to a Sh7,000 a month one in Umoja in February 2015.

“My wife works for a printing firm here in town. There is fare to and from work for both of us, we have a househelp to tend to our daughter. Every day, I have to leave money for the househelp and the baby plus our evening meal. My salary and commissions together with my wife’s salary can’t meet these needs by a long shot.”

To keep up, Gerrison runs a gas dealership business on the side. The shop also sells electricity tokens and runs as an Equity Bank agent.

'HAVE CLOSED'

“Business is not good. Along this street, several businesses have closed,” he says.

Across in Kiambu County, one rental space in the tiny town of Gacio has changed faces three times in the last one year and a half. It was a milk store, the milk store closed, giving room to a movie rental store which stayed afloat briefly and then closed to give room for a beauty care shop, the current occupant.

It is not different in Rongai, Kajiado County where in a space of less than two years, a premise has changed from being a household goods shop to a butchery to a clothes shop now. All under different owners.

This against the backdrop of government data and even World Bank reports that are painting a rosy picture of the economy.

In March, the World Bank estimated Kenya’s economic growth rate for 2016 at 5.9 per cent and projected next year’s growth at six per cent.

This was reiterated by Kenya National Bureau of Statistics quarterly report, which indicated that Kenya’s economy expanded by 6.2 per cent in the second quarter of the year compared to 5.9 per cent in the same period in 2015.

But amid these positive projections, a Nation survey found gloom in many small businesses and large companies laying off workers as auctioneers repossessed cars and houses in record numbers.

MIDDLE INCOME

The association of auctioneers says the rate at which Kenyans are getting auctioned has more than doubled in the last 12 months. The hardest hit are middle income earners with a taste for classy and posh lifestyles.

Nixon Okumu, the chairman of National Association of Kenya Auctioneers in Nyanza/Western and the executive director of the Kisumu-based Joni Consult Auctioneers, says his firm has auctioned cars for over 400 loan defaulters this year. This is twice the numbers from last year. Nyanza/Western has 32 auction firms.

“People are being auctioned at unprecedented rate. They tell us that they supplied goods and services to county governments who delay payment,” Mr Okumu said.

The auctioneer says most are below the age of 45.

The Kenya National Bureau of Statistics has reported that about 2.2 million small enterprises have closed over the last five years, underlining a tough business climate.

It says the highest number of establishments shut in 2015, accounted for 35.4 per cent of the total closed in the last five years. About 1.2 million were closed in rural areas compared to one million in urban areas.

The survey cited shortage of operating funds as the main reason for business closure. This is after the businesses diverted operating capital to other uses.

It is not just small businesses that are struggling.

Three years ago, Equity Bank announced that it was freezing staff recruitment. As 2016 ends, 660 Equity bank employees exited the firm.

'VOLUNTARY RETRENCHMENT'

Sidian Bank announced in October that it planned to send 108 staff members home. Family Bank also offered an unknown number of its employees ‘a chance at voluntary retrenchment’. The national carrier Kenya Airways started the year by announcing that it planned to lay off 600 employees within the year.

The list of companies laying off their workers in order to cut costs or because they are posting losses is long and it includes supermarkets and media houses.

Auctioneers and asset recovery businesses offer a glimpse into the state of affairs. According to Francis Njagi, the owner of Smart Recovery Auctioneers, his business repossesses between five and 20 cars every month from individuals who can’t make their payments to their financiers or dealers.

“When someone obtains a Sh1 million car from a dealer by paying half and then agrees to pay the balance and interest in installments of say 10 months, if they default or miss making payments for say 3 or 4 months, we are called in.”

He says up to 80 per cent of cars being recovered are personal cars.

Mr Njagi has been an auctioneer since 1999 and he says business has is bad. “I struggle to auction off even half of the assets that my company repossesses. They don’t move.”

He is not alone. Former banker David Wanderi is the owner of Taifa Auctioneers Kenya. He says repossessions are many but the goods don’t move once seized.

“You are lucky if you advertise an auction and sell half of the property. After advertising 20 properties (land or houses or vehicles), only four or five will be sold,” he explained on phone.

GOOD YEARS

Mr Wanderi has been in the business since 1991 and says that 2000 to 2010 were good years. “Then people called to ask for vehicles, land and houses.”

He says in Kitengela for instance, land advertised for sale never lasted a week. It would be gone in three days. Today, even with the prices going down, people are still not buying.

“On average, we repossess 10 cars a month. Some months, it is embarrassingly high. Whether it is motor vehicles or land or apartments or houses, many people now just won’t honour their payment schedules,” Mr Wanderi says.

Mr Wanderi says his company also offers distress for rent service to property (homes or rental apartments) owners. “There was a time when people paid rent on time. Now some pay on the 17th and landlords just can’t handle such, so it is us who do it for them. Rent defaulters and late payments are on the rise.”

He said these some of these people use households to cover rent sometimes.

Those are the lucky ones; others are kicked out.” Calling from Rarieda, one Mr Onyango Omollo says; “You don’t need a PhD to know that the economy is not healthy. Just put Sh1,000 in your hand, go to the shop and buy three simple household items and watch what happens to that money.”

According to the CIA world Fact Book, unemployment in Kenya is at 40 per cent, with 7 out of 10 unemployed people being youths. An estimated 800,000 young people per year are expected to enter the job market.



KENYA'S investments in Tanzania have reached 1.685 million US dollars in 518 projects creating 55,762 jobs. The Executive Director of Tanzania Investment Centre, Juliet Kairuki, revealed this in Nairobi recently in Tanzania-Kenya business forum during an official state visit of President Jakaya Kikwete to Kenya.Oct 12, 2015

meanwhile tanzania investments in kenya are -1 to infinity
 

Dhuks

JF-Expert Member
Mar 15, 2012
1,624
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Last time Safaricom floated its shares to the public, they were available to all EAC members as local investors but the Tanzanian government told its citizens not to buy them. Tanzania is just a xenophobic country when it comes to foreigners; the rulers may change but that is part of their collective DNA
 

Saint Ivuga

JF-Expert Member
Aug 21, 2008
50,946
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KENYA'S investments in Tanzania have reached 1.685 million US dollars in 518 projects creating 55,762 jobs. The Executive Director of Tanzania Investment Centre, Juliet Kairuki, revealed this in Nairobi recently in Tanzania-Kenya business forum during an official state visit of President Jakaya Kikwete to Kenya.Oct 12, 2015

meanwhile tanzania investments in kenya are -1 to infinity
You can close up and go back home like uchumi supermarket.
 

kilam

JF-Expert Member
Aug 5, 2011
1,973
2,000
Last time Safaricom floated its shares to the public, they were available to all EAC members as local investors but the Tanzanian government told its citizens not to buy them. Tanzania is just a xenophobic country when it comes to foreigners; the rulers may change but that is part of their collective DNA
We know you better, greedy and selfish. Where did you get this trash 'Tanzanian government told its citizens not to buy them'?
You guys need to realize that Tanzania and Kenya are different countries.
 

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