Tanzania Cracks the Whip On Dangote

Hardly five years since its triumphant entry into the Tanzanian market in 2015, Dangote Cement has fallen out with a government that touted it as a model investor.

This past week, the company was accused of not filing its operations report with the Tanzania Investment Centre (TIC) as per government regulations, and was given seven days starting September 30 to do so.

Speaking in Lindi region during an inspection tour of industries and a meeting with investors, Angellah Kairuki, the Minister of State in the Prime Minister's Office in charge of Investment, said it is only through the report that TIC and the government would get to know of the company's project history, plans for expansion, taxes paid, profits, challenges and recommendations.

She asked the company to file the report as soon as possible and henceforth every six months.

Ms Kairuki said in a release seen by The EastAfrican that Dangote Cement has not submitted its operation reports for the past three years contrary to the legal framework agreement between the government and investors in Tanzania.

Dangote Cement management said they were preparing the report, but did not say why they had failed to submit it in the first place despite it being mandatory.

Slowdown

Last month, Dangote Cement, Africa's largest cement manufacturer, reported a slowdown in performance at home in Nigeria and other key African markets such as Ethiopia and South Africa in the first half of this year, but recorded improvement in Tanzania.

The company tripled its market share in Tanzania to 22 per cent from seven per cent last year, after resolving operational challenges that resulted in a significant rise in sales.

In the first half of 2018, Dangote suspended operations in its Mtwara plant due to the high cost of fuel for its diesel generators after the Tanzanian government banned importation of coal from South Africa.

And in September last year, Dangote Cement started running its Mtwara plant on gas instead of coal, posting a 172 per cent rise in cement sales to 543,000 tonnes in the first half of 2019, up from 200,000 tonnes in the same period last year.

The switch to gas was a significant turnaround in saving costs and uninterrupted production, with uptake driven by the government's vast investments in infrastructure projects that are driving construction activity.

The Tanzania cement sector has been complaining of high costs of fuel and taxes and market unreliability.

Tanga Cement managing director Reinhardt Swart said in September that higher taxes imposed on locally produced clinkers were a burden to cement manufacturers.

Mr Swart said that some cement manufacturers were importing cheaper clinker and other raw materials. Tanga Cement processes its own clinker.

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