Zitto na Demokrasia

Zitto na Demokrasia

Suspend General Tyre,House team tells NSSF( Via The Citizen)

with one comment

Tuesday, 22 March 2011 22:58

By Edward Qorro
The Citizen Reporter
Dar es Salaam. The parliamentary committee on Public Organisation Accounts (POAC) has directed the National Social Security Fund (NSSF) to suspend the sale of General Tyre Tanzania Limited pending directives from the government.

The POAC chairman, Mr Kabwe Zitto, yesterday disclosed to The Citizen that NSSF should come up with plans of reviving the beleaguered company other than selling it.“Don’t even attempt to sell this company… why selling it while the country still needs it,” he queried.

According to NSSF managing director, Mr Ramadhan Dau, the company owes his office an outstanding debt of Sh15 billion, compelling them to render it for sale.

Mr Dau said that it was imperative to sell the company, as the money obtained would pay back NSSF debt. “We want to safeguard our members’ interests; we cannot achieve this if General Tyre is not delivering,” noted Mr Dau.

The NSSF boss said they had initially thought of seeking for a strategic investor, Firestone Tyres from Kenya, to take over the company but nothing has materialised out of the agreement so far.

When asked how NSSF was planning to recover the debt, Mr Dau said that the government would guarantee 85 per cent, whereas the remaining 15 per cent would be sorted out by NSSF itself.

For his part, Mr Zitto said there was a need of reviving all public companies and that selling them was not the best option of keeping the firms afloat.“Just hold on, don’t rush into selling it, as we are still waiting for further directives from the government,” he added.

Two years ago, the General Tyre closed operations, as the state planned to revive the Arusha-based factory amid the influx of cheap imported tyres, mainly from China.

The then deputy minister for Industry, Trade and Marketing, Dr Cyril Chami, was quoted as saying that the government was determined to revive the company and was holding talks with Continental AG of Germany, to terminate the existing contract so that a new partner could be sought to invest in the company.

Continental AG had apparently refused to re-invest in the company, saying that tyre manufacturing was no longer its priority. Dr Chami said productivity at the factory started to deteriorate at the end of 1990’s because of both importation of second-hand tyres and an increase in tyre vendors who provided cheaper options to customers.

But despite the government’s decision to ban the importation of second-hand tyres, General Tyre still failed to recover, and as the going got tougher, the factory was driven to borrow money from various foreign banks, including HSBC and City Bank, to service its operations.

The then deputy minister said the factory failed to repay the loans, forcing the government to provide a bond in 2005, for the factory to get Sh15 billion loan from NSSF to service the bank loans.

However, he said, the factory failed to get another loan that would enable it purchase materials for productions, and it was forced to close down in 2009.

The company was in the 1970s and 1980s one of the largest employers and commanded respect for its contribution to socio-economic development of Arusha.The once giant motor vehicle tyre manufacturing company used to supply its products to the Eastern and Central Africa before closing down two years ago.

Meanwhile, Mr Zitto commended NSSF for presenting an unqualified audit opinion before his committee.

“You have done a remarkable job, we have not come across any irregularities in your report. Keep the good work up,” remarked Mr Zitto.

Source: The Citizen


Written by zittokabwe

March 23, 2011 at 10:07 AM

One Response

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  1. Mh. Zitto.

    The idea of keeping General Tyre (T) Ltd under ‘our ownership’ sounds a good one but the biggest question would be; ‘who’s going take it and make sure they change the company from a white elephant of present to a money-making machine’. There’s nothing impossible here when plans are right and executable.

    It is pity to think a company which I did my work placement/field with during late 1990s when I was doing my undergraduate (engineering) at UDSM, it’s no longer operating and it’s on the verge of going to the grave, for good. It’s worrying.

    As an MP and a member of POAC, you got ‘all the rights’ to make sure General Tyre doesn’t die. Why? ; Because we need manufacturing at our own backyard to improve our economy.

    Now reflecting back what was happening during my time at the company, it’s no strange to realise the predicament it’s in at the moment. Everything was written on the wall. I believe, whoever is going to take over the company, he has got a lot of things to sort out in order to make it afloat. The degree of waste in its operations and an obsolete technology were among things which caused the company to plummet.

    Like what happened to dinosaurs many many years ago, General Tyre was one of the biggest employers in Arusha and some could argue the company was one of the ‘manufacturing icons’ in Tanzania. The company didn’t read the signs of times. General Tyre didn’t change to reflect the needs of the market. The company’s agility and nimbleness were put into test and it ultimately failed. Dinosaurs disappeared because they couldn’t change with time to accommodate a change of weather despite being most powerful and the biggest creatures to ever live on our planet earth.

    Aziz Senzia

    March 24, 2011 at 5:32 AM

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