Govt threatens to revoke more than 500 companies ownership

02Jan 2016
Guardian On Sunday
Govt threatens to revoke more than 500 companies ownership
  • Dar poultry farm turns into bar village

DAYS are numbered for more than 500 private investors who breached terms of agreement in purchasing the once State run industries and farms, it has been revealed.

Treasury Registrar, Lawrence Mafuru

Treasury Registrar Lawrance Mafuru issued a list of all purchasers of privatized industries and farms yesterday revealing 161 such State privatized corporations in Dar es Salaam alone out of the 514 across the country.
“The government has directed all purchasers of privatized industries and farms to submit the implementation reports to the Treasury Registrar’s office indicating the extent of implementation of terms of the sale agreement,” Mafuru said in the statement.
Among the directives, the companies in question are also required to unveil information showing the shareholding structure, post privatization rehabilitation efforts and production capacity level in either processing, manufacturing or service delivery.
Such firms have also been asked to show profitability performance as a percentage of initial investment of the firm, how they contribute to the national economy through tax payment, dividend payment to the government and statutory contribution to pension funds among others.
However, a survey conducted by the Guardian on Sunday has revealed that many of the State privatized companies and farms have clearly breached the contracts agreement as per the government set directives.
One among such State corporation is NAPOCO, a poultry farm with two farms in Dar es Salaam at Ukonga and Gongolamboto areas in Ilala Municipality another one in Arusha Region.
At its Ukonga site, the farm has been encroached with numerous taverns and shops forgoing the initial call to advance the poultry industry.
As the government continues to tighten its grip on the current State firm owners for violating agreed terms and conditions, such privatized farms may sooner than later fall into government hands.
One of the booked firms is a famous tavern village in Dar es Salaam’s suburban area of Ukonga near the Julius Kambarage Nyerere International Airport (JKNIA).
It has its days numbered, as the government screws nuts to tighten its ongoing campaign to keep order in the state of affairs in the nation’s real-estate industry.
But unlike thousands of other buildings that have been either booked for demolition or surrendered to the fury of a bulldozer, the once-privatised Banana Bar Village located in an area more than double that of the National Stadium, will be seized back to its former State owner in the nearest future.
The village which is currently owned and run by one Chacha Kigua as a business enterprise hosting more than a score pubs, several car wash facilities, hair and beauty salons and chains of shop, has fallen into the doomsday government’s black book of corrupt entities of the once loose privatization policy.
Sources from the Ministry of Agriculture, Livestock and Fisheries confirmed last week that it would retain ownership of Ukonga National Poultry Company (Napoco) farm in whose space is the location of the tavern village owing to serious default of the agreement between the farm and the current owner.
“For your information, even the way it was given out were opposed to proper privatization procedure. Political interests were involved in the deal… no wonder that the owner is just a surrogate and the real ones are somewhere out there,” said the ministry’s official who asked for anonymity.
He said the terms of the agreement with those who acquired the privatized institutions included improvement of productivity and efficiency of the entities for economic growth and job creation.
But Kigua, the current owner of the village reportedly collects more than Sh70m every month as rental charges from his tenants in a situation where a space to house a bar is rented to the tune of Sh1m a month while a car wash facility and business stall for Sh600,000 and a Sh750,000 respectively.
It was not immediately established as to amount of revenue reaching the State coffers, as the village tenant-clientele said they pay their monthly rental bills to Kigua’s personal bank account.
One business owner at the village complex said every tenant would deposit rental charges in the private bank account on every 30th or 31st day of the month, or else risk confiscation or closure of the business, pending settlement of the bills.
He was speaking about not only a home to the booming liquor market, coupled with a competitive entertainment extravaganza ranging from live local and foreign football matches to DJs music plays and live bands, but an eatery Mecca for pork consumers, attracting strong army of customers on daily basis.
It has become a single largest employer of about 1,000 people in its variety of enterprises including popular and classic bar outlets such as Java Executive Lounge, Smart Park, Serengeti, Airtel and other companies.
But “I’m totally shocked by the bad news as I have just spent Sh50m on structure expansion and in installation of music system, flat screens and decorations,” said a bar owner on receiving information about the possible vacation.
Revelations over the marshaled demise of the village have surfaced in line with the latest report that Ukonga Napoco Farm is one the 541 privatized entities now operating under the office of the Treasury Registrar as of December 30.
It appears 70th in the list of companies falling under the agricultural sector just below another Napoco Majohe Farm, which is now turned into the Dar es Salaam College of the Ugandan-based Kampala International University (KIU).
The published list is a follow-up on the 30-day notice issued in November by Lawrence Mafuru, the Treasury Registrar, requiring proprietors of the privatized companies and farms to submit their development reports or else have their entities retained by the government.
The government has vowed to take back all industries and farms whose owners have defaulted the agreements made during their acquisition. The default includes selling off the machines without making any replacement and unlawful change of entities’ use, says the notice.
However, according to Mafuru, only very few purchasers responded to the call, prompting him to re-issue another notice. The notice requires all purchasers of privatized industries and farms who are mentioned in this list to submit the implementation reports to the office of Treasury Registrar.
Mafuru further says the reports to be submitted should among other things; indicate the extent of implementation of the terms of sale agreements “immediately to avoid unnecessary disturbances.”
For the sake of consistency, the Treasury Registrar gives details of how the report should be submitted, something that would make it hard for entities such as Ukonga Napoco Farm which exists de facto. The report should include shareholding structures, post privatization rehabilitation efforts, production capacity such as processing, manufacturing or service delivered level and job creation through permanent employment and outsourced services.
Equally important, the report has to have profitability performance that include net profit after taxes, wages, interest payment, dividends as a percentage of the initial investment of the firm. Also to feature in the report should be contribution to national economy through tax and dividend payment to government, if applicable, and contributions to pension funds.
Similarly, the report should include the evolvement of the average salary against the statutory minimum wage, other benefits provided to employees over and against statutory requirements, Corporate Social Responsibility for the target community and above all, the important factors that have contributed to the growth or failure of an entity in the reporting period.
“It’s obvious that these requirements will automatically make some entity owners to surrender because they have nothing to show,” says a person upon seeing the report requirement.
So far only 49 out of 514 privatized entities have gone through the Registrar’s monitoring and evaluation process. According to Mafuru, after scrutiny of individual Sale Agreements, they have noted serious breach of terms in aspects of dormancy and abandonment.
Also Mafuru says there are lapses in implementation of business plans as per sales agreements, default in payment of purchase price and change of the use of properties without the consent of Treasury Registrar.
The entities include New Savoy Hotel, Kunduchi Beach Hotel, New Safari Hotel and New Mwanza Hotel, Embassy Hotel, Hotel 77 Limited in tourism sector.

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