Inside Politics

Kenyan firms anxious over boycott calls in Tanzania

Wednesday, August 4th, 2021 00:00 |
Tanzania currency.

Kenyan companies with subsidiaries in Tanzania are watching anxiously as political tensions rise in the country amid calls by the main opposition party for mass boycott of products and services that generate huge revenues to government.

With Kenyan firms being among the major investors in the country, this move will eat into the margins of firms operating in Tanzania.

When Presidents Kenyatta and Samia Suluhu held talks in Nairobi, the total value of trade between the two countries was estimated at Sh58 billion, a slight decrease from Sh60.4 billion recorded in 2012. 

Yesterday, the Party for Democracy and Progress also known as Chadema asked its seven million registered members to scale down on consumption of beer, and urged them to limit mobile money transactions to the bare minimum. 

The simmering tensions have been generated by the arrest and detention of Party Chairman Freeman Mbowe for organising a constitutional review meeting in Mwanza.

“The mobile telecommunications sector contributes 11 per cent of government revenue in Tanzania,” said Catherine Ruge, a former Chadema Member of Parliament (MP) for Serengeti. 

Ruge, a certified public accountant (CPA) said it was high time Tanzanians of goodwill fighting for a free democratic space boycotted the services to send a clear message to the government that they derived authority from the people.

Two Kenyan companies that will be closely watching the unfolding proceedings, which can have an implication on their revenue are Safaricom and East African Breweries Ltd (EABL).

Whereas Safaricom operates M-Pesa in a joint venture with Vodacom, EABL has a subsidiary, Serengeti Breweries Ltd (SBL), businesses that depend on volumes. 

Mbowe, who has been in custody since July 21, will be arraigned in a Dar es Salaam court tomorrow, to face terrorism charges.

Authorities have barred supporters from attending the proceedings, raising the levels of tension a notch higher.

Another product to be affected will be beer, which Godbless Lema, also a former Chadema MP, now exiled in Canada, said earned the government TSh1 billion (Sh47 million) a week in revenues.

 Only one beer

“On one beer, there can be a profit of between TSh500 to Tsh1,000. If 1.5 million Tanzanians decide to reduce alcohol by only one beer, the government will lose TSh1 billion per week in tax revenues,” said Lema, who lost his Arusha City seat in the 2015 elections.

Investors have cause to worry since the Chadema leaders are digging in for the long haul, through the theme Boycott, Divest And Sanctions (BDS), a non-violent concept to demand for a new constitution, where they are thinking of “Katiba Mpya Nights,” boycotting of churches, and businesses owned by the ruling party Chama Cha Mapinduzi (CCM) cadres among other measures.

Available data from Vodacom Tanzania Ltd indicate that there are a total of 112,000 M-Pesa agents in Tanzania who earn a commission from Vodacom.

According to the data, there are 1,200 daily transactions from Tanzania to Kenya, while on a monthly basis a total of 35,000 transactions are moved with the year’s figure pegged at 440,000. 

On the other hand Kenyans make 3,200 transactions every day, 98,000 per month and 1.1 million per year. As at December 2020, Vodacom had over 15.6 million customers.

Last year, the two firms completed the acquisition of the Mpesa brand from Vodafone through a newly-created joint venture, giving them an opportunity to expand Mpesa, Africa’s largest payments platform into new African markets.

“This is a significant milestone for Vodacom as it will accelerate our financial services aspirations in Africa,” said Shameel Joosub, Vodacom Group CEO.

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