Tanzanian cement producers are calling for a return of import levies, as external competition threatens the domestic market.
Profits fall along with sales
Tanga Cement (also known as Simba Cement) has reported a drop in net profit by almost a third in the first half of this year compared to 1H12. The company has blamed greater expenses and increased competition for the fall in performance, which saw sales revenues fall by 8%. It is planning to install a second kiln at the cement plant in Tanga to increase clinker production capacity from 500 000 t to 1.275 million tpa. This will bring the company’s capacity in line with demand, negating the need for imports.
Between 2005 and 2008, the East African Custom Union Protocol subjected imported cement to 55% statutory taxes and duties. In 2008, a shortage of cement led the government to issue licenses to some cement importers to meet local demand. The East African Cement Producers Association (EACPA) claims that the taxes now levied on importers are less han 10%, and that the market is being flooded with ‘cheap imported cement’ from countries such as Pakistan. The EACPA would see the return of the 2005 agreement to prevent the domestic industry from collapsing due to declining profits.
Higher input costs
Tanzanian cement producers struggle with high input costs – in particular due to unreliable power and poor transportation infrastructure – that makes it hard to compete with cement produced elsewhere. Meanwhile, there is also the question of quality. Tanzania Bureau of Standards Acting Head of Certification Lazaro Msasalanga has said that local firms meet all international standards under the guidance of the International Organisation for Standards (ISO). However, there have been complaints recently of cement being smuggled into the country without regard for the proper quality inspections – potentially putting lives at risk.Representatives from the Tanzania Revenue Authority and Industry and Trade Ministry have established a task force to address this problem.
Edited from various sources by Katherine Guenioui
Read the article online at: https://www.worldcement.com/africa-middle-east/04092013/tanzania_calls_for_return_of_2005_cement_levies_149/