Tanzania waives import duty on cement to ease supply deficit

Tanzania waives import duty on cement to ease supply deficit
05 November 2007

Cement producers in the East Africa Community region will, in the next six months, benefit from a temporary 15 per cent import duty tax reduction in Tanzania.

The reduction is a temporary measure to cover a supply deficit in the Tanzanian market.

The decision is expected to benefit producers in Kenya, Uganda and Rwanda.

Cement from countries outside the EAC will continue to attract 25 per cent import duty and a 20 per cent surcharge tax.

Peter Stanslaus of the Ministry of Industries, Trade and Marketing said the government ordered the tax reduction after cement manufacturers hit their production ceiling because of growing domestic and foreign market demand.

Tanzania has three cement plants — the Tanzania Portland Cement Company Ltd, Tanga Cement Company Limited, and Mbeya Cement Company Ltd — with a combined production capacity of 1.6 million tonnes against an installed capacity of 1.7 million tonnes.

Importers will thus be required to apply for an import permit with a minimum import capacity of 100 tonnes.

Recently Tanzania has experienced rising cement prices — reaching a high of $14 per 50-kg bag, from $10— attributed to the growing of trade with DR Congo, creating a shortage at home.

Increased cement exports to DR Congo, Rwanda, Burundi, Malawi and Zambia where it fetches up to $25 per 50-kg bag at the retail market, have caused a slow down in the domestic construction industry.

Klaus Hvassing, chairman of the Tanzania Chapter of the East African Cement Producers Association told The EastAfrican that recent fuel hikes and growing demand for cement from dealers in the Great Lakes region was the main cause of surging of prices in the local market.

Mr Hvassing said that the cement market has developed a momentum following the shortage in the market.

“In such a tight market there is potential for priceS to go up quite sharply, but this shouldn’t be blamed on the manufacturers.

It is only the distributors who were raising the prices due to poor infrastructure to get the product to the market,” he said.

Even before the installed capacity limits, cement availability in the northern zone has has been a problem due to poor roads thus forcing consumers from the region to source the product from Kenya.

Last year, Tanga cement said transportation hitches due to lack of locomotives in the lake zone, pushed down by 25 per cent sales of cement in the region, as products from Kenya and Uganda penetrated the market.

It has always been difficult for cement industries and other manufacturers to penetrate that part of northern zone due to poor roads.

The rail— a major means of carriage, is dilapidated.

However, experts say per capita consumption of cement in Tanzania is still low.

For example, in South Africa it is about 250- 300kg per capital, while in Tanzania is 40kg per capita.

As the combined installed capacity for the three industries reaches ceiling, the total domestic consumption as of last year stood at 1.4 million tones.

The booming of the domestic construction industry and now that of foreign market is also a good sign for the industry’s growth, analysts say.
Published under Cement News