Zitto na Demokrasia

Zitto na Demokrasia

An Open letter to Balozi Mwapachu on ABG crosslisting

with 20 comments

Dear Balozi,

I send my congratulatory message following the bold step by the Country’s 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.

  1.  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 J’burg 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 didn’t 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).
  2. 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.
  3. 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 Tanzania’s 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

Written by zittokabwe

December 2, 2011 at 3:08 PM

20 Responses

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  1. Kwanza napenda kukushukuru mh.Zito kabwe kwa uzalendo wako wa kuipenda na kuipigania nchi yako.Nimeshtushwa na hii ishu ya kampuni ya ABG,na naamin kuwa ni makampuni mengi Tanzania yanakwepa kutoa kodi kwa njia za ujanja na kuikosesha nchi yetu mapato ambayo kwa namna moja au nyingine yangesaidia kutatua matatizo sugu nchini kama tatizo la umeme.Maoni yangu ni kwako wewe mh.Zito,kwa kuwa wewe unanafasi kubwa nchini na watanzania wengi wana imani kubwa na wewe kutokana na ujasiri wako na uzalendo,hivyo tunaomba swala hili ulifikishe bungeni ili liwe njia ya kuyatathimini makampuni mengine yenye kasumba hii ikiwezekana makampuni haya kuny’ang’anywa leseni au kufukuzwa kabisa nchini.Ahsante

    stanslaus sana

    December 2, 2011 at 3:34 PM

  2. Kwanza napenda kukushukuru mh.Zito kabwe kwa uzalendo wako wa kuipenda na kuipigania nchi yako.Nimeshtushwa na hii ishu ya kampuni ya ABG,na naamin kuwa ni makampuni mengi Tanzania yanakwepa kutoa kodi kwa njia za ujanja na kuikosesha nchi yetu mapato ambayo kwa namna moja au nyingine yangesaidia kutatua matatizo sugu nchini kama tatizo la umeme.Maoni yangu ni kwako wewe mh.Zito,kwa kuwa wewe unanafasi kubwa nchini na watanzania wengi wana imani kubwa na wewe kutokana na ujasiri wako na uzalendo,hivyo tunaomba swala hili ulifikishe bungeni ili liwe njia ya kuyatathimini makampuni mengine yenye kasumba hii ikiwezekana makampuni haya kuny’ang’anywa leseni au kufukuzwa kabisa nchini.Ahsante

    stanslaus sana

    December 2, 2011 at 3:34 PM

  3. Tunashukuru kwa kutujulisha hilo,napenda jinsi ulivyo jasiri kwa nchi yetu na watanzania wana imani sana na wewe.Mungu akubariki.

    stanslaus sana

    December 2, 2011 at 3:40 PM

  4. we have seen the economy of the rich nation collapsing we have to dopt new ways of handlling our economy

    Tumaini Geofrey Temu

    December 2, 2011 at 4:39 PM

    • Sitaki kuamini kuwa Serikali yenye dhamana ya kutunza, na kuhakikisha kuwa rasilimali za nchi hii zinaleta manufaa kwa wote hawana taarifa katika hili. U wapi uwajibikaji? U wapi uzalendo? Yako wapi maadili?

      Octavius Kisinda

      December 5, 2011 at 12:24 PM

  5. THANX A LOT ZITTO KABWE FOR PROVIDING GOOD NEWS..

    rashid issa

    December 2, 2011 at 5:13 PM

  6. Thanks zitto, you indirectly ask some hard hitting questions. This mining issue is one of complete and utter confusion as your conclusion puts it. Let us hope that Mr Mwapachu takes some of what you say into consideration and that ABG is looked into a little more before they consider jumping the gun on these final hours.

    Gaure (@Profesy)

    December 2, 2011 at 5:46 PM

  7. ndio kamanda naimani balozi atachukua jukumu lake kwa maslahi ya taifa letu na hii hali inatisha

    salum nassor

    December 2, 2011 at 6:04 PM

  8. I do agree with Mr. Stanslaus, Hon. Zitto your no 1 & 2 points are directly related with your activities as MP, it will be a shame to beg for HE Mr. Mwapachu to raise the matter with ABG BOD while it’s all about Tanzania Regulations, Principals, and Laws (Act), so please on next parliament section come up with so called ‘Hoja Binafsi’ to address all related issues citing AGB as example.

    Regarding CrossListing, there are allot of issues to be considered in depth before any transaction so as to protect Tanzanian Investors from burning their fingers, such us Exchange Rates and infrastructure in relation to Exit, bearing in mind these 410Mio Shares going to be cross listed are mainly own by London, N.America, Europe and Asia, only 5 Institution and 5 Individual from Tanzania bought these shares during IPO (as addressed during ABG Investors Presentation on Nov 29, 2011). These means AGB tries to put London Sellers with Tanzanian’s Buyers.

    Therefore, HE Mr. Mwapachu if AGB real want Tanzania to have a feeling of holding the company with direct return to them, the issue of Offer for Sale in Tanzania Market is Inevitable. And these is only by offloading 16% Barrick ABG shares reducing to 60%, because of the size that will be, lets 6% taken by Government of Tanzania and remaining 10% to the public in a prorata bases priority given in order starting with Tanzanian, East African, African and the rest of the world, these will have direct impact on investors capital appreciation and income gain in Tanzania Market, and also will pull up DSE turnover and liquidity which is the cry of investors and advisors since then. I don’t see what claimed by ABG through Cross Listing.

    Let’s not come with the issue of capacity and appetite of the Market, current EABL Offer was a trial to our Market and Brokers are talking of Oversubscription. Let’s use our banks to underwrite the issue and welcoming foreigners under prorata basis.

    George S.

    December 3, 2011 at 12:55 PM

  9. Saa nyingine Zitto uwa unamawazo mazuri sana lakini ipotokea mara Unazunguka na JK mara kwenda South Sudan, Mara unapigia debe tununue mitambo ya Dowans mara unadai chama chako kina udini ndio hapo ambapo ninaanza kukutilia mashaka!

    Alphonce Joseph

    December 4, 2011 at 11:46 AM

  10. If the leaders of this country especially MP’s may adopt the way ZITTO are doing these alot of problems it will no longer presemt in our country,CONGRATULATION HONOURABLE ZITTO FOR YOUR OPEN LETTER TO BALOZI MWAPACHU.ALSO BALOZI MWAPACHU FOR YOUR ADVISE TO HONOURABLE ZITTO.

    Subira A.Karunda

    December 5, 2011 at 2:01 AM

  11. Thanks zitto….at least tuna mzalendo mmoja bungeni.The double taxation issue shuld be addressed by changing the tax laws and the company laws, Umeseka kweli kabisa Tanzania hakuna ABG bali kuna kampuni nyingne ambazo ABG wanazimiliki…so the company and Tax laws have to be put in a way that we benefit as a country. U remember the issue of Celtel-Zain-Airtel sale…same thing was done, the way the companies are structured makes it diffucult for TRA to collect tax. Also TRA shuld try to get bright pipo wen they are recruiting…a gud example is the best students in our universities are always employed with the private companies and these are the ones who shuld be with TRA to try to work out the complex systems in Tax and company structure in these ever changing world of business!!

    Heriel

    December 5, 2011 at 2:02 PM

  12. […] poverty we have in Tanzania, but its contribution to poverty reduction is massive. Zitto CHANZO: https://zittokabwe.wordpress.com/2011…-crosslisting/ Invisible, Ben, Alpha and 14 others like this. Nobody can go back and start a new beginning, […]

  13. That is good Zitto! The most important thing is Mwapachu to respond to that open letter openly.

    KP

    December 6, 2011 at 8:11 AM

  14. NATAMANI SIKU MOJA ZITTO AWE MKUU, NADHANI SHERIA ZOTE KANDAMIZI ATAZIONDOSHA hasa akishirikiana na viongozi wengine wazalendo

    Adamu Andrea

    December 6, 2011 at 10:14 AM

  15. Bravo hon.Zitto!!! ninajivunia kuwa na mbunge mwenye uwezo wa hali ya juu,ALLAH AZIDI KUKUPA NGUVU!

    Nuru Masoud

    December 7, 2011 at 12:51 PM

  16. Thanx Hon. Zitto Zubery Kabwe, This is what we call fraud in such and this announcess it does not entertain fraud. Please blast kwenye mjengo

    Mohamed O. Daddy Namahala

    December 7, 2011 at 6:45 PM

  17. Zitto Unafaa kuwa Kiongozi Mwenye Dhamana ya Juu ktk Uongozi Ktk Nchi hii,,a good Economic analyst……kee it and big up Broo….”AKAGUMYE BHAGUMAKO” …guma Mwenewachu…

    Enock Nkongolo

    December 7, 2011 at 9:50 PM

  18. I am delighted!

    long b 4 I drimd of having such a leader not only mere politicians, Always kip that up sire!
    say wat u think is right for the people, and u kabwe, u do more and go beyond that. u sik 4 truth wherever and deliver, we nid u and a lot of politicians like u, where ar they!

    they ar there , thinking about posho. I curse them. If they were working in a colonial farm, who would they be? nyaparas and us? Labours, they would never think about mere labours.

    God bless u zt!

    you ar our voice!

    kingwana

    December 13, 2011 at 3:38 PM

  19. I am delighted!

    long b 4 I drimd of having such a leader not only mere politicians, Always kip that up sire!
    say wat u think is right for the people, and u kabwe, u do more and go beyond that. u sik 4 truth wherever and deliver, we nid u and a lot of politicians like u, where ar they!

    they ar there , thinking about posho. I curse them. If they were working in a colonial farm, who would they be? nyaparas and us? Labours, they would never think about mere labours.

    God bless u zt!

    you ar our voice!

    hamad kingwana (@kingwanah)

    December 13, 2011 at 3:42 PM


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