Dear Balozi,
I send my congratulatory message following the bold step by the Countrys leading exporter to trade its shares at Dar Bourse(DSE). It is an opportunity for Tanzanians to own part of this lucrative business and individually benefit from it. I have some issues that I would like to raise for your attention. I am using the opportunity in your capacity as Board of ABG to air my concerns. I understand that crosslisting of ABG shares at DSE has been a dream of many Tanzanians working with the company. I personally in 2009 intervened and asked BoT to relax the capital account and allow Tanzanians to buy ABG shares during its IPO in London. Crosslisting is thus welcome and encouraged. Below is a list of issues (which makes me have genuine reservations) about the move.
- In 2010 (from its prospectus) ABG had a turn over of $975m, EBITDA of $419m and a Net Income of $218m. As a result of that performance it declared dividend of $3.7 per share. I later learnt that ABG posted an incmoe tax expense of $86,471,000. However TRA did not receive this revenue as a corporate tax from ABG, thus this was definately not paid at source due to a fact that ABG resides in London. You will take a strong note that WHILE all ABG operations are in Tanzania,it is Her Majesty(HM) Revenue collecting its corporate tax. ABG has designed Tanzania (Dar) as a logistics Office while Jburg is largely procurement office and London HQ. This structural design is one of the ways Multi National Corporations(MNCs) use to minimise tax payments to developing countries. The source Domicile method is used by many tax avoiders and it is really causing alot of stress to governments in LDCs. You will as well note that while ABG declares profit in London, pays dividends and even corporate tax at domicile, no single ABG subsidiary in Tanzania declared profit and paid corporate tax in 2010. Bulyanhulu Goldmine (Kahama Mining ltd), NorthMara Goldmine ltd and Pangea Minerals (owning Tulawaka and Buzwagi) all didnt pay corporate tax in Tanzania in 2010, but ABG posted an income tax expense as shown above. From my knowledge of International Taxation, it seems ABG is enjoying a Double Taxation Treaty (DTT) between Tanzania and UK which is unfair in all measures. I am kindly asking you Balozi to consider this matter and raise it in your Board meetings so that ABG either relocate to Tanzania as its HQ or subscribe to a system whereby it pays its corporate tax at source rather than at domicile (with 5 officials only).
- I read from The Citizen and DailyNews that you raised the issue of wider benefits and that ABG brought back to Tanzania more that $540m as wages and salaries and other costs. I totally agree with your views of gross benefits (jobs, skills transfer etc) and looking at things in a bigger picture rather than just Government Take Statistic (Royalties, Taxes and other fees). However we must balance the two as the Government has a duty to provide for its citizens including the companies themeselves. These are Public goods like Defence, Law and order as well as infrastructural development, and Merit goods like Health, Education and even social security. Therefore focus on Government Take statistic is as crucial as Gross benefits. I understand that ABG is one of the largest contributor to NSSF. But we shouldnt close our eyes on the importance of government Revenue. I kindly ask you to understand when some of us repeatedly raise this issue. It doesnt mean i belittle the bigger picture NO as i am big fun of linkages approach of looking at mining sector and its contribution to our economy.
- From 7th December, ABG will start trading at DSE as a crosslisted company. 24% of the shares of ABG held by individuals and institutions will be traded locally, ofcourse at LSE prices. This doesnt mean Tanzanians will be buying some slice of ABG from itself but from investors owning the shares now. This isnt the spirit behind the Mining Act 2010 which aim at having part of the company to be owned by Tanzanians. I think ABG was supposed to sell atleast 10% of its shares to Tanzanians (reducing the shareholding of BarrickGold Corporation from 76% to 66%). You might argue that the market wouldnt absorb this amount but ABG could do a private placement to Tanzanias institutional investors like Pension Funds and even Unit Trust of Tanzania. Let Tanzanians buy the shares traded at LSE as they wish (ofcourse we are a free market country) but strategic shares sell to Tanzanian institutions (on behalf of the people) shall be explored. I kindly ask that ABG does this for its gesture to be meaningful. I will be shocked and saddened if Pension Funds will buy ABG shares to be crosslisted. I think ABG should engage our institutional investors through a private placement of 10% from shares held by BarrickGold Corporation in addition to crosslisting. This is good for ABG as i must remind you that according to the Mining Act 2010 the Government has the right to own up to 15% of each company and for ABG it will be a big trouble as the government will treat all subsidiaries separately and not as ABG. In real sense there is no ABG in Tanzania but Bulyanhulu Goldmine ltd, NorthMara Goldmine ltd and Pangea Minerals ltd. A strategic private placement by ABG to institutional invetors will place it on upperhand when the government decides to enforce the new law and this will be very soon.
I have written to you believing You are one of the Tanzanians highly trusted and with credibility to effect changes to our country. I hope you will take note of my views, weigh them and take forward the ones you think are relevant. We must together answer this paradox: A Rich Country with Poor People. It is very clear to me that mining sector will not alone end all poverty we have in Tanzania, but its contribution to poverty reduction is massive.
Zitto
CHANZO: An Open letter to Balozi Mwapachu on ABG crosslisting « Zitto na Demokrasia
saa nyingine zitto huwa ana mawazo mazuri sana kama haya lakini inapotokea mara anapigia debe tununue mitambo ya dowans, mara anapuyanga na jk kwenda south sudan na mara anadai chama chake kina udini ndipo hapo ninapoanza kumtilia mashaka na kuanza kumfananisha na 'double agent'.
munaonaje zitto akiwa raisi wa nchi hii 2015?coz he is very smat na anamawazo ya utaifa siku zote.
I doubt if Zitto is 100% clean
I doubt if Zitto is 100% clean
Well, let me comment on two issues:
1.
2. NICOL would have been the best vehicle to enable Tanzanians to raise huge capital to commonly participate in owning shares in these multinational mining companies. Unfortunately, Nicol's CEO Mr. Felix Mosha has mismanaged the good beginning and therefore not only bringing NICOL to bankruptcy but ruined the very important trust that was starting to takeoff namely to corporately investing in a bigger way. Sadly, no one has attempted to bring him to books, instead they have left him to lead CTI! We need NICOL back to empower us and enable us to have shares in these mining companies. Would Minister of Trade C. Chami or his assistance L. Nyalandu follow up this issue of NICOL?
I doubt if Zitto is 100% clean
inahusiana vipi na habari hii?????
munaonaje zitto akiwa raisi wa nchi hii 2015?coz he is very smat na anamawazo ya utaifa siku zote.
Hivi ndio vitu vinafanya tuonekane wote tuna maji ya nazi vichwani na waendelee kutuibia. Sheria ya nchi haina kuamua kui enforce au kutoi enforce, Zitto you are supposed to be among the most formidable legislators in the history of decolonized Tanzania, you should know better. That you must stand for enforcing the law of the country at all times, not "very soon." That is totally ridiculous.
If they are not violating any law and you think they should pay more then don't blame them for writing retarded laws, blame yourself, the parliament. A business exists for one purpose and one purpose only, to make profit, not to aid governments. Stop begging, plug the tax loopholes, and enforce the law.