Following the decision earlier this year by the finance ministers of the East African Community (EAC) countries to maintain the community’s common external tariff at 25%, calls have been made in Tanzania for this to be returned to its previous rate of 35%. Indeed, prior to this, the cement industry had been listed as ‘sensitive’ to competition, and enjoyed a 55% common external tariff, and duties of 40% on foreign imports.
The Tanzanian government has rejected these calls, made its country’s cement producers, telling them instead, to provide evidence of their full production costs so that the government can help them to compete fairly with foreign competition. One of the greatest complaints that can be heard from within the Tanzanian cement sector is that cement imported from countries such as Pakistan, India and China can be sold at lower prices because production within these markets is heavily subsidised by their respective governments. There is, however, no such subsidisation in Tanzania; without adequate duties in place on cement imports, the price of domestically produced volumes can be substantially undercut.
Tanzanian Minister for Trade and Industry, Dr Abdallah Kigoda, has said that the government would put in place a series of provisions that would ensure the industry is able to operate at optimal levels, but there were currently no plans to lift the suspension of duties for imported cement.
The favourable conditions that the government seeks to provide include reliable electric power and infrastructure improvements that will support the domestic distribution of cement. Cement import levels in Tanzania currently stand at around 250 000 tpa, around 12% of the country’s annual demand.
Chairman of Tanzania Portland Cement Company Limited (TPCC) board, Jean Marc Junon, said, “The cement industry is still going through tough times with the suspended duties on cement removed, causing massive inflows of subsidised imported cement in the country.” This comment followed his request for the government to reinitialise the import duties, in order to support the country’s cement industry. Regardless of this request and statement, it is worth noting that with 41%, TPCC still holds the largest share of Tanzania’s domestic market.
Written by Jack Davidson
Read the article online at: https://www.worldcement.com/africa-middle-east/07122012/tanzania_cement_producers_common_externa_tarriff_imports_780/