Tanzania’s Draconian law to kick out investors in hunting
ARUSHA, Tanzania (eTN) – The Tanzania hunting industry is facing a bleak future as the key foreign investors are considering moving their multi-million-dollar investments elsewhere due to unfriendly
ARUSHA, Tanzania (eTN) – The Tanzania hunting industry is facing a bleak future as the key foreign investors are considering moving their multi-million-dollar investments elsewhere due to unfriendly law.
The investors are particularly concerned by the recent legislative changes that compelled all foreign hunting firms operating in Tanzania to cede 25 percent of their shareholdings to locals.
As if that was not enough, the wildlife conservation Act of 2009 further provides that the foreign-owned companies allocated hunting blocks should not exceed f15 percent of the total hunting companies at any particular time.
If the law is anything to go by, only 9 foreign hunting firms out of 27 will be allocated hunting blocks, locking out in the cold 18 others with estimated combined investment capital of US$700 million.
About 65 hunting firms applied for 156 hunting blocks concessions for the period 2013 to 2018, and the government is yet to announce the successful companies.
Information reaching eTN indicates that some key hunting corporate firms with majority foreign shareholders are currently mulling over laying off thousands of workers anytime soon.
And if the law implemented as it is now and 18 major firms are forced to leave Tanzania, nearly 5,200 helpless Tanzanians will loose their jobs, with the treasury poising to suffer nearly US$15 million in tourism-related taxes annually, while suppliers will miss earnings amounting US$67 million a year.
One of the giant investors told eTN on condition of anonymity that a majority of them are considering shifting their capital, technology, and skills to other destinations like Uganda, Rwanda, Zambia, Botswana, Namibia, South Africa, and Zimbabwe with similar hunting blocks.
Two years ago, Tanzanian parliamentarians sanctioned the wildlife conservation Act of 2009 amid fanfares and went home peacefully, little knowing that not everything that glitters is not gold.
Now, a year since the law came into force, it turned out to be the worst enemy of the lucrative hunting industry, direct foreign investments, and to the country economy.
For instance, section 39 subsection (3) of the said act empowers the minister to order the foreign hunting outfits to cede a 25 percent of their subscribed shares to the citizens in a bid to qualify to operate in Tanzania’s soil.
The law further provides that the percentage of foreign-owned companies allocated hunting blocks shall not exceed 15 percent of the total hunting companies at any particular time.
A visiting Tumaini University lecturer of Wildlife, Corporate, and Land Laws, Mr. Nyaga Mawalla, said that the WC Act of 2009 is contravening the investment guarantees offered to investors under the Tanzania Investment Act of 1997 and the constitution of United Republic of Tanzania.
“Most of these companies had applied under the Tanzania Investment Act number 26 of 1997 and, therefore, they are bonafide investors, and they enjoy [an] investment guarantee of [a] predictable investment climate,” Mr. Mawalla said.
He added that the TIC Act section 22 (b) provides that no person who owns, whether wholly or in part, the capital of any business enterprise, shall be compelled by law to cede his interest in the capital to any other person.
The don who is also an advocate of the High Court of Tanzania cited the Wildlife Conservation Act of 2009 section 39 subsection (3) as totally against the TIC Act number 26 section 22 (b).
“We pledged that our laws and regulations will be predictable, and we will never force them to transfer their shares, but in the middle of nowhere, the same people enact a law and impose a provision that force[s] them to cede 25 percent of their shares – very unfair,” Mr. Mawalla argued.
On top of that, Mr. Mawalla further criticized the WC Act provision that provides that foreign-owned companies allocated hunting blocks shall not exceed 15 percent of the total hunting firms at any particular time, saying it contravenes the constitution.
He argued that the law is discriminative, because it locks out in the cold the Tanzanians who bought 25 percent shares from the foreign companies as required by the same law.
“The Constitution of the United Republic of Tanzania of 197, bill of rights, part 3, which provides for the basic rights and duties, Article 12 (1) provides that all persons are equal before the law and are entitled, without any discrimination, to protection and equality before the law,” Mr. Mawalla explained.
Sub-article 2 of the same article, the law lecturer said: “No law enacted by any authority in the United Republic shall make any provision that is discriminatory either of itself or in its effect.”
Mr. Mawalla explains that Sub-article 5 of the constitution provides that “Discriminate means to satisfy the needs, rights, or other requirements of different persons on the basis of their nationality, tribe, place of origin, political opinion, color, religion, sex, or station in life…”
“But the Wildlife Conservation Act No. 5 of 2009, favor hunting firms owned by a majority of Tanzanians, discriminating those Tanzanians who purchased 25 percent shares from the foreign firms,” the don said.
The spokesperson of the Natural Resources and Tourism Ministry, Mr. Matiko Mwita, said that arguments with regard to the bad law were supposed to be raised during the enactment and not now.
“Why [are] these people are criticizing the Wildlife Conservation Act this time around when we are in the process of allocating hunting blocks?” Mr. Mwita queried, adding that his ministry was not responsible to make laws.
The key Ministry Public Relations and Communications Manager said that his docket was only implementing the laws, regardless whether they are good or bad.
With regard to when they will announce the awarded companies, Mr. Mwita said the process is still underway, promising to issue a comprehensive statement next week.
Tanzania has formulated new rules to help tap at least US$30 million more from its struggling hunting industry, which sector policymakers see as a key economic growth driver from 2013.
Experts say the sector will bring home US$53 million, up from an annual US$20 million, bringing it closer to being one of Tanzania’s largest foreign exchange earners.
Natural Resources and Tourism Minister Ezekiel Maige said the rules should help the industry make a bigger contribution to the economy, due to its huge potential.
Under the tourist hunting rules, the wildlife-rich country will see the license fee for its prime hunting blocks rising from US$27,000 to US$60,000 a year.
The revised guidelines also categorized the hunting blocks into 5, depending on the type and number of animals to be hunted.
Mr. Maige said category I has 24 blocks with a hunting permit fee of US$60,000 each, while group II has 98 blocks and a hunting fee of US$30,000 a piece.
Category III, with 18 blocks, has a hunting license fee of US$18,000 each; while class IV and V with 8 hunting blocks each will have a permit fee of US$10,000 and US$5,000, respectively.
The categorization was done according to the animals to be hunted, block size, and availability of wildlife resources to ensure sustainable tourist hunting and diversity of animal species.
Other factors include hunting bloc accessibility, in terms of terrain and infrastructure from the country’s commercial city of Dar es salaam or the safari capital of Arusha, reliable water supply, and scope of human activities within the block.
Mr. Maige said that in establishing a hunting block, the boundaries of the proposed blocks are demarcated by Global Positioning System (GPS), according to their potential for wildlife recovery in a given time frame and investment.
Though the minister was silent on the trophy fee, word has it that under the new structure, the trophy fee for hunting a lion is most likely to have risen to US$12,000, up from just US$2,500.
Hunters may also be required to pay US$15,000 to kill an elephant, from the previous fee of US$5,000. Hunters are still silent on the fee increase.
Of the African hunting countries, Tanzania undoubtedly stimulates the imagination.
It has long been considered a prime hunting destination in Africa.
Fulfilling the dream of a traditional big game hunting safari continues to be a big draw to Tanzania’s unspoiled wilderness.