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The National Fertilizer Company of Nigeria, NAFCON and the Federal Superphosphate Fertilizer Company, FSFC, come under scrutiny as the Obasanjo administration searches for food security.

Last week, the Minister of Industry Dr. Iyorchia Ayu, constituted two judicial commissions of enquiry to look into the affairs of the National Fertilizer Company of Nigeria NAFCON, Onne, in Rivers State and the Federal Superphosphate Fertilizer Company (FSFC), Kaduna. But farmers and agricultural science experts are highly sceptical of the possibility of opening the can of worms firmly guarded by the two companies in the last five to six years. “Perhaps, the panel set up by the minister is a right step to expose the huge fraud that is rocking the two parastatals. But I doubt if the panels will be able to open the scam. I doubt it”, a senior officer in the Ministry of Industry told TheNEWSBusiness in Abuja last week.

Addressing journalists in Abuja, Ayu, whose ministry supervises the parastatals said that the ministry has named acting management teams for the fertilizer companies and panels to look into the affairs of both, adding that, the panels would be inaugurated by President Olusegun Obasanjo “very soon”.

He named retired Justice Mustapha Akanbi and Justice Michael Ekundayo as chairmen of the panels for NAFCON and FSFC respectively. Mrs. Fabiya Amakri and Mr. O.N. Agulu were appointed as acting managing directors for the two parastatals. They replace Messrs S.U Essien and Ibrahim Usman of NAFCON and FSFC respectively.

Informing journalists that both companies were in a “pathetic and unsatisfactory” state, the Minister said that “the condition in which we found the two companies were such that in respect of NAFCON, it was saddled with a huge debt of over N10 billion while the FSFC Kaduna had a debt of over N2 billion,” adding that the sulphuric acid plant of FSFC had been dismantled”.

An agricultural science expert in the Ministry of Agriculture, Abuja told this magazine that the probe panels and the newly appointed acting chief executives would be “doing a great service to this nation and helping to bring the agricultural policy back to its glory, if they take stock of what has happened in the past five years and see where we went wrong. The 1991 Fertilizer policy which was enacted on 14 May 1991 could be described as one of the worst things that had happened to the fertilizer procurement and distribution programme”.

This magazine gathered that the policy has created loopholes which local producers exploited to their full advantage and to the detriment of Nigeria and farmers. Indeed, findings reveal that the policy gave NAFCON, which was made “the leader of the local producers,” some undeserved monopoly in the procurement and distribution of all local fertilizers. “They were mandated to procure all locally produced fertilizers from themselves and other privately owned blenders, distribute, transport and monitor such fertilizers,” another source in the Ministry of Industry said.

The policy, sources added, empowered NAFCON to do whatever it wanted and pass whatever bills it “unilaterally” prepared to the Federal Ministry of Finance which paid them directly. TheNEWSBusiness gathered that the height of this trend was reached in 1996 when NAFCON submitted its bills to the Ministry of Finance and got paid without a contract at all. Attempts to retrieve the so-called contract document failed when the then Honourable Minister of Agriculture and Natural Resources, Alhaji Muhammadu A. Gambo directed the officials that wrongly signed it to do so. “This is how the fertilizer sector broke down and was cancelled in November 1996 by the late General Sani Abacha’s regime,” an Industry ministry source told this magazine.

Since the government stopped the procurement of fertilizer through importation owing to “NAFCON’s fraudulent practices,” The News Business findings reveal that the decision has greatly affected the estimates of fertilizer requirements as the so-called local producers and blenders could not meet the federal government’s supply target.

For example, the Agricultural Project Monitoring Unit (APMU), of the Federal Department of Agriculture projected a total requirement of 2,310,214 metric tonnes from 1991 rising to 6,577,658 metric tonnes in 1995. However, a recent agricultural ministry study on fertilizer privatization estimated a projected demand of 1,035,000 metric tonnes and a projected supply of 1,179,000 metric tonnes through domestic and import supply to satisfy the demand by the farmers.

However, a study by the agriculture ministry projected the supply of 1,179,000 metric tones for the 1996 season, immediately after the 1991 fertilizer policy was cancelled, it was identified that NAFCON supplied 202,000 metric tonnes of urea and 200,000 metric tonnes of NPK 15:15:15. While blenders supplied 204,000 metric tones of DAP, 132,000 metric tonnes of MOP and 134,000 metric tonnes of lirea. The importers took delivery of 33,000 metric tonnes of SSP and 130,000 metric tonnes of NPK brand of fertilizer in spite of the Federal Government’s policy not to import fertilizer.

But then, findings by agriculture ministry revealed that the claims of NAFCON and local blenders to local production of fertilizer is a ruse. “The so-called local manufacturers of fertilizer has been a ruse all along. They were exposed when government stopped the importation of fertilizers. NAFCON and the so-called local blenders rely on 90 per cent of imported raw materials to produce urea,” a source in the agriculture ministry added.

This magazine further learnt that even when the local blenders or manufacturers produce fertilizer, they did not have adequate facilities for quality control. “Judging from the level of their output in the past six years, the local producers do not seem to have the capacity and technical know-how to produce more than 500,000 metric tonnes of fertilizer in a year and this is only slightly over one third of the total quantity required by the farmers in the country,” an expert in the agriculture ministry said

British American tobacco (BAT) Uganda yesterday launched their new Champion brand of cigarette on the market. Corporate and Regulatory Affairs Manager, Jimmy Kiberu, said this increased their brand portfolio to eight including Sportsman, Rex, SM, Kkaali, Embassy, Safari, Benson and Hedges.

Kiberu said in view of the limited sales of Champion and production technicalities, Champion will initially be imported from Nairobi, where it has already been on the market.

“This will enable us to exploit our capacity and benefit from economies of scale in the liberalised market,” he said.

Kiberu however warned that the brand came at a time of increasing competition, from both legitimate and smuggled cigarettes, since the liberalisation of the cigarette market this year.

Meanwhile BAT has hiked cigaratte prices effective September 6.

In yesterday’s statement, whole sale prices for Embassy and Rex have risen to Shs 18,400 per bomba, Sportsman and Sweet Menthol to Shs 13,850, Champion to Shs 8,700, Safari Shs 9,100 and Kali Shs 5,900.

“The upward adjustment has been necessitated by general increase in dollar terms of cost of importing materials used in the factory,” Kiberu said in a statement.

The South African based Chief Director of Equator Breweries, Dr Dominic Toru Drabi, has arrived in Uganda to attend the hearing of a case on alleged infringement on their trade mark, Crown Lager, by Nile Breweries Ltd.

He is also to discuss the issue between his company and Mr. Hillary Onek over the sale of the company’s land and equipment worth sh1.4b. Onek had been appointed financial director of Equator Breweries.

The matter is before court. Nile Breweries released crown lager brand to commemorate the wedding of Kabaka Ronald Mutebi to Sylvia Nagginda Friday. Mengo received sh100 from each bottle sold. Equator Breweries lawyers have asked the court for an injunction on the production and distribution of Crown Lager. But the court adjourned hearing to tomorrow, to allow Equator Breweries to exhibit their marked bottles in court for comparison with those of Nile Breweries.

Speaking at the lawyers, Kituuma Magaala and Company Advocates chamber, Drabi declined to comment as doing so would prejudice judgment. “I have been leaving in South Africa for years. I have talked to friends and investors and we have mobilised resources to invest in Uganda.

We are not small people. We shall shock every body by the huge investment we are to make in the country,” Drabi said.

He said they would invest about sh29b.

AES Corporation President Dennis Bakke visits Uganda Friday to meet key stakeholders in the energy sector. AES Nile Power Public Relations Officer, Sarah Birungi, yesterday said Bakke’s visit was prompted by concerns that they don’t have a project here whereas they have been here for five years.

“He is coming to see what is happening here. He is concerned that despite all the expenses we’ve incurred in the last five years, we still don’t have a project,” Birungi said. Bakke, who is also AES’ Chief Executive Officer, will be accompanied by a former US Secretary for Energy in the first Clinton administration, Mrs. Hazel O’Leary.

Hazel, an accomplished energy consultant, is an AES board member. During their visit they are scheduled to meet some MPs.

Bakke’s visit will be his second to Uganda. “If possible he may meet the President because he is really very concerned about the delays here,” said Birungi. The group which plans to build a 250 MW dam at Dumbell island near Bujagali Falls, is awaiting approval of their power purchase agreement by Parliament which wants the Electricity Bill first.

Health & Racquet Club owner LeisureNet intends to power up its already ambitious foreign expansion plans and become the largest health-club chain in Germany by the end of the year.

LeisureNet has already announced that it will increase the number of its gyms abroad from nine to 20 by the end of the year, ending up with seven in Germany, one in Spain, eight in Australia and four in the UK.

Financial director Mico Smuts said yesterday that the scheduled openings were progressing so well that it could open 18 gyms in Germany alone by the end of the year.

The company aims to generate sufficient momentum to become the market leader in Germany, which has a highly fragmented industry. Smuts acknowledged that these ambitious plans could strain the business, but he said it was necessary for the company to move quickly to head off other players, including some wealthy UK groups which might consider entering the German market.

The club’s model was well ahead of those on offer in most European countries, except possibly for the UK where competition was stiff but finance was readily available.

The domestic gym division would also expand at a greater pace in the second half of the year, with 11 more gyms due to open after only two were opened in the first half.

Smuts said the company’s SA model was already being modified by what was being learnt in Europe, which tended to place more emphasis on the leisure aspect of the clubs rather than on the traditional fitness focus.

This had encouraged the company to upgrade some of its clubs, including the highly controversial upgrading of the Sandton club.

The company reported solid earnings, with headline earnings per share growing 15,5% to 18,6c (16,1c) on a weighted average basis in the six months to June.

Turnover increased 45,6% to R541,7m compared to R372m in the comparable period last year. Headline earnings increased 50,3% to R45m.

The scheduled openings in Europe and Australia will mean 30% of the company’s earnings will be derived from foreign sources by the company’s year-end in December, compared to 14% during the current reporting period.

The company expects 80% of its attributable profit will be earned from its foreign operations within five years. It expects listing in Australia and somewhere in Europe within three years, in addition to its SA listing.

Smuts said it was possible that the Australian listing could take place earlier, possibly within 18 months, if the financial conditions were right.

Standard Equities analyst Grant Swanepoel said the results were better than they might appear because about 25% more shares were issued in December, which diluted the company’s earnings a share ratio.

Gyms typically took nine to 15 months to come into operation, and the company was going through a capital expenditure phase that would only show in increased earnings next year. Swanepoel expected earnings growth of 16% this year and 34% next year.

The company’s share price, which had been drifting downward for the past four months, rose from 310c to 315c yesterday, following large volumes last Friday.

The precarious economic situation prevailing in the CAR since the civil strife of 1996-97 has led to deepening poverty and deteriorating living conditions at the household level, civil society and humanitarian sources have said.

Because each employed person supported about 20 family or community members, the rise in unemployment and the irregular payment of civil servants’ salaries has meant that many have fallen into destitution, a humanitarian source in the capital, Bangui, told IRIN.

“Most families are down to eating one meal a day,” another humanitarian source said, adding that a lack of variety in cassava-dependent diets was compounding nutritional problems, making people weak and more susceptible to disease.

Preliminary results of a recent UNICEF survey showed that over 79 percent of children under five years of age were anaemic, of which 23 percent had severe anemia. The study also revealed an increase in the prevalence of diarrhoeal diseases and a doubling over the past two years in the incidence of malaria among children.

Meanwhile, public health services were poorly equipped and plagued with staffing problems, sources said. Tough economic times were leading many people to resort to traditional medicines or self-treatment, and mortality rates were increasing, they added.

“There are at least 30 people a day being buried in just the official cemeteries of Bangui, whereas it was 16 to 20 people two years ago,” one civil society representative told IRIN. “Living conditions in the city’s neighbourhoods are deplorable and the situation in the interior of the country is even worse,” the source added.

The CAR is ranked in the bottom 10 countries of the 174 that are included in the most recent UNDP Human Development Index. Of those countries in the low human development category, the CAR has registered the second slowest progress in human development between 1975 and 1997 (for 79 countries with available data).

About 63% of the country’s population is estimated to be living in poverty, according to government figures. Only 45 percent of the population has adequate access to basic health care, while 87 percent of the rural population has no access to potable water. Chronic malnutrition affects about one quarter of children under five years of age, and the maternal mortality rate in 1998 was estimated at 948 per 100,000 births.

In response to widespread food insecurity in the country, WFP has recently approved a US $7.3 million project that will provide food assistance to some 260,000 people over the next four years. A WFP report said the project’s beneficiaries will include primary school pupils in rural areas, malnourished children in nutritional rehabilitation centres and participants in adult literacy programmes.

Catherine Sappot of the Association des Femmes Juristes de Centrafrique told IRIN recently that the situation had deteriorated over the past year because the government, the international community and donors have placed priority on preparing for the 1998 legislative elections and the 12 September presidential polls.

The poor economic situation has also created “dramatic” problems in the education sector, with the widespread hiring of underqualified teachers and rising numbers of out-of-school children, Sappot said. As many families could no longer afford to pay 250 francs (CFA) in monthly school fees for each child, parents were forced to choose which of their children to educate “and generally they choose boys,” a trend that has aggravated gender disparities in education, she said.

“Some say there are no human rights violations in the country because there are no political prisoners. But children here are being deprived of their right to education and a decent life,” Sappot told IRIN.

This item is delivered by the UN’s IRIN humanitarian information unit (e-mail: irin@ocha.unon.org; fax: +254 2 622129; Web: http://www.reliefweb.int/IRIN), but may not necessarily reflect the views of the United Nations. If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer.

es-Salaam - Barely A month after announcing its intention to pull out of the Common Market for East and Southern Africa (Comesa), Tanzania is reviewing its membership of other organisations with a view to saving annual fees.

The Minister for Foreign Affairs and International Co-operation, Mr. Jakaya Kikwete, told The EastAfrican: “Ministries are currently scrutinising the lists of regional and international organisations that we belong to, to try and see which ones we should retain membership of and which ones we must quit.”

Tanzania is a member of more than 200 regional and international organisations to which it is obliged to pay annual membership contributions.

“These obligations are overwhelming,” said Mr. Kikwete, adding: “in some organisations, we are required to pay as much as $300,000 as annual contribution.”

He said Tanzania owes billions of shillings to international organisations in outstanding membership fees. However, he could not state offhand how much the country pays out in annually.

Recently, it was revealed that Tanzania owes the Arusha-based Eastern and Southern Africa Management Institute arrears of $78,000 for annual contributions.

“We’d rather remain members of a few organisations in which we can be effective participants rather than paying lip-service membership. We have been members of many organisations which are not beneficial to us.”

Mr. Yona said some of the organisations to which Tanzania belongs have the same objectives. He cited the case of Comesa, the Southern African Development Community and the East African Co-operation.

Tanzania’s membership in the 200-plus organisations includes regional groupings, international financial institutions, United Nations organisations, agriculture and research organisations and international treaty organisations.

Some of the other regional groupings to which the country belongs are the Organisation of African Unity, the Indian Ocean Rim Co-operation and the Kagera Basin Organisation.

The country is also a member of regional and international finance organisations such as the African Development Bank, the PTA Bank, and the World Bank and the IMF, among others.

It also belongs to all the UN organisations including the UN High Commissioner for Refugees, the UN Children’s Fund, the Food and Agriculture Organisation and the World Food Programme.

Tanzania is also a member of the Geneva-based International Labour Organisation, the World Meteorological Organisation and the World Intellectual Property Organisations.

es-Salaam - President Benjamin Mkapa has referred a report on Tanzania’s new economic plan back to the grassroots.

Dubbed Vision 2025, the blueprint for the country’s long-term development was drafted by a team of experts comprising academicians, businessmen and bureaucrats.

Sources at the Planning Commission told The EastAfrican that “the president’s move aims at shifting the authority of the plan from those who drafted it to the would-be implementers.”

Recently the experts met with permanent secretaries, directors of planning and regional and district administrative officers in Morogoro to discuss how to best implement the envisaged development plan.

“Involving key executives will simplify the implementation of the policy,” said a Planning Commission source.

Resolutions from the Morogoro executives’ meetings are expected to constitute the final draft of the medium-term plan for Vision 2025.

It is expected to be translated into Kiswahili, the lingua franca, to enable all Tanzanians to understand its contents.

Vision 2025 was conceived in 1996 to set development and economic targets in the various social, industrial, manufacturing and mining sectors. It aims to enable these sectors to contribute 40 per cent of the national income by the target date. The blue print also aims at attaining a per capita income of $2,000 per annum, up from the current $120, as estimated by the recent Human Development Index (HDI).

It also aims at raising life expectancy from the current 49 years to 70 years by the year 2025.

Tanzania’s life expectancy has dropped significantly, from 56 years at the beginning of the decade to 51 years in 1997, and down to 49 years today, according to HDI report.

The reverse trend has been attributed mainly to the HIV/Aids pandemic.

Vision 2025 also aims at improving the agricultural contribution to the economy by modernising the sector, departing from hand-hoe subsistence farming to commercial farming.

A section of people, including former Cabinet Minister Nalaila Kiula, have, however, criticised President Mkapa’s blueprint for development.

Debating the 1998/1999 estimates for the President’s Office (Planning and Parastatal Reforms) the legislator dismissed the vision as “utopian and a waste of time,” saying preparations of the national vision should not be taken as a matter of fashion.

“We cannot simply join the bandwagon of visions and dream of development. Our country is becoming poorer and poorer as manifested by shortages of medicine, teachers in primary schools and bad roads,” said the CCM legislator, adding: “We must now identify our priorities and let us forget about vision

es-Salaam - Tax holidays enjoyed by investors in the banking sector will be abolished in order to boost government revenue, Tanzania’s Finance Minister Daniel Yona has said.

The government has already reduced tax holidays from five to two years in an apparent response to pressure from the International Monetary Fund and the donor community.

The five-year tax holiday was meant to attract financial investors to Tanzania. Prior to liberalisation, the state had a monopoly in the banking business and it was difficult to attract investors without generous incentives.

Finance Minister Yona said: “We have already reduced the tax holiday from five to just two years and will remove it altogether in the near future to boost revenue collection. Foreign banks will in future be obliged to pay all taxes.”

Asked about the possibility of the newly privatised bank, NBC (1997) Ltd enjoying the two-year tax holiday now applicable, the Minister said since the former state bank was not new “but a going concern in which the government will sell 70 per cent of its shares, it cannot enjoy this tax holiday.”

NBC (1997) Ltd has been taken over by the Amalgamated Banks of South Africa (ABSA) Group. An interim team that will manage the 35 branch commercial bank has already moved into its Sokoine Drive headquarters in Dar-es-Salaam.

Mr. Yona said banks that had been recently registered will enjoy the two-year tax holiday, noting that most banks that had been given the five-year tax holidays were nearing the end of their grace periods.

Foreign banks that have come into the country since the enactment of the Banking and Financial Institutions Act of 1991 include Standard Chartered Bank (Tanzania) Ltd, Stanbic Bank Tanzania Ltd, Trust Bank (T) Ltd, Citibank (Tanzania) Ltd, Habib African Bank (Tanzania), Eurafrican Bank (T), Kenya Commercial Bank and and International Bank of Malaysia.

Several banks with a large local participation, including CRDB, the People’s Bank of Zanzibar, First Adili Bancorp, Akiba commercial Bank and Exim Bank Ltd, have also come on to the scene.

Recent figures put losses from the smuggling of oil and petroleum products at some Tsh50 billion ($62.5 million) in 1998. Estimated losses for this year are put at Tsh70 billion ($78.12 million).

Mr. Yona said the TRA would be equipped with computers, vehicles and staff training to enable it to plug loopholes used by unscrupulous business people.

Mr. Yona said: “Tanzania is losing a lot of money through smuggling. The burning issue of smuggling could be extinguished faster if the TRA received full support from the public and state organs.”

Additional reporting by Asha Mnzavas.

A range of incentives is to be offered to companies listed on the Uganda Securities Exchange (USE) Ltd.

The incentives, approved recently by the Ministry of Finance, Planning and Economic Development, include exemption from capital gains tax for institutional investors, while listed companies will not be required to remit stamp duty.

Mr. Gabriel Opio, the Minister for Investment and Planning, said the government was considering deducting the interest costs of loans used to buy shares and bonds from taxable income.

The establishment of a fully-fledged stock exchange in Uganda has been a long-drawn out process, with not a single company, either private or public, listed since its launch in the middle of 1997. The USE only became operational in January 1998, with the launch of the East African Development Bank (EADB) bonds.

The Capital Markets Authority (CMA) and the business community now want the government to give a tax amnesty to companies which might have under-declared their returns, to encourage them to start listing shares on the stock exchange.

Financial market analysts say the government’s failure to declare a tax amnesty has discouraged private firms, fearful of opening up their books to scrutiny and being forced to pay past taxes, from joining the stockmarket.

For some time now, the CMA has been holding discussions with officials of the Ministry of Finance, seeking to have an amnesty declared for past taxes.

“Many private companies are willing to sell shares on the exchange in order to raise capital, but they cannot do this for fear of opening their books to the tax men,” a CMA official told The EastAfrican recently.

Apart from the EADB Ush10 billion ($7.4 million) bond, the USE has been able to attract the PTA Bank bond of Ush15 billion ($10 million) and the central bank’s Treasury Bills, which were recently made transferable.

Officials of the exchange said last week that plans have been finalised for the listing of the first public company on the stock exchange. Mr. Simon Rutega, USE boss, said that the partly government-owned Uganda Clays is coming on the market in October.