‘We’re not frustrating investors’

TANZANIA Consumer Advocacy Society has reiterated the need to protect consumer interests in the cement market after the government approved the proposed Scancem International DA’s acquisition of Tanga Cement.

After a protracted legal battle, the merger between Scancem International DA and Tanga Cement finally appeared to sail through last week following the government’s sanctioning of the merger at the second attempt after initial proposal had hit a snag after a successful protest by consumer advocacy associations and other stakeholders within the cement industry.

And, the government re-assured Tanzanians that the 400 million US dollars (about 942bn/-) investment to be injected by Twiga Cement at the Tanga based factory will significantly improve production capacity, create more employment opportunities as well as swell the government coffers.

This was jointly said in Dodoma on Monday by the Minister for Finance and Planning, Dr Mwigulu Nchemba and Minister for Investment, Industry and Trade, Dr Ashatu Kijaji, when they held a meeting with Tanga Cement management.

Dr Kijaji said it was inevitable for Tanga Cement to secure new investor because it was running under losses for the five years consecutively, putting in jeopardy the job security for at least 3,000 employees of the factory.

She said the 942bn/- investment capital will enable the factory to increase production capacity enough to facilitate the supply of cement in the East African Community (EAC) bloc and the African Continental Free Trade Area (AfCFTA) in general.

Dr Mwigulu said the government’s decision to rescue the Tanga Cement was timely and was well-grounded, advising his fellow minister to fast-track the investment process

Speaking in response to the government’s decision, the Executive Director of the Consumers Advocacy Society, Bernard Kihiyo said their protest against the merger was not meant to discourage investors, but rather to protect the interest of cement consumers in the country.

“We don’t want to frustrate investors, we don’t want to frustrate anyone, we just want to ensure consumer interests that are always protected,” he insisted, adding; “we wanted to see this matter amicably resolved according to the governing laws for the interest of everyone.”

“As a country, our focus is on Foreign Direct Investments (FDIs). FDIs inflow is the very important to spur economic development, we need balance of trade, we need to address budget deficit and we need to attract foreign currencies,” he added, insisting the investment drive must however prioritise national as well as consumer interest.

“Our role as consumer Advocacy society is to work closely with all regulators to create a healthy business environment and complement the government’s efforts to improve the business environment in the country,” he stressed.

He said the government should ensure the proposed Scancem DA’s acquisition of Tanga Cement doesn’t lead to a monopoly by one company as that may destabilise the cement industry.

“While we must do everything to encourage investment flows, we must beware of predatory practices where a giant company can suffocate other competing companies and monopolise the production and supply chains,” he said.

According to him, a company may become a monopoly by controlling the entire supply chain, from production to sales through vertical integration, or buying competing companies in the market through horizontal integration, thus, becoming the sole producer.

Mr Kihiyo argued that the existing laws, particularly the Fair Competition legislation, is a deliberate effort by the government to ensure fairness and protect consumers, hence the laws must be adhered to and respected.

Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace.

The country’s Fair Competition Act seeks to protect consumers and competition by preventing anticompetitive, deceptive, and unfair business practices.

He applauded the government’s investment drive championed by President Samia Suluhu Hassan and urged relevant authorities to support the Head of State towards achieving the envisaged economic development.

Last Friday, the government was compelled into making clarification on the disputed acquisition of Tanga Cement Company Ltd by Scancem International DA that also controls the majority shareholding in Twiga Cement.

In 2021, Scancem, a subsidiary of Heidelberg Cement AG, which owns Tanzania Portland Cement Plc (Twiga Cement), and AfriSam Mauritius Investment Holdings Limited, owner of Tanga Cement, agreed for the former to acquire a 68.33 per cent stake in Tanga Cement.

The Fair Competition Commission (FCC) approved the acquisition, but the decision was quashed by the quasi-judicial Fair Competition Tribunal (FCT).

In December 2022, Scancem International applied again to the FCC in a bid to acquire Tanga Cement. This new application was approved by the FCC in February 2023.

The move sparked concern among Members of Parliament, with some seeking from the government why the FCC approved the application, which had previously been rejected by the FCT.

Winding up her ministry’s budget, the Minister for Industry and Trade, Ashatu Kijaji said the approved merger application was a fresh one, different from what was rejected by the FCT.

“We respect the laws of the country, and that is why we did not deal with the decision quashed by the FCT. We only worked on the fresh application,” Dr Kijaji told the Parliament.

 Dr Nchemba also told the august House on Friday that the government itself has a lot of interest in the cement factory because 68 per cent of the factory shares belong to Afrisam Mauritius and the rest are owned by the government and public institutions, hence, the issue will be handled with utmost care.

On Friday, Minister Kijaji also told MPs that the government had deregistered Chalinze Cement Company, which was one of the applicants of FCT.

Reacting, Mr Melchisedeck Lutema, a lawyer who represented the appellants in their petition lodged with the FCT against the decision by the FCC to approve the merger, claimed on Monday that his client was denied the right of response in the case and that the firm has appealed against the decision to deregister it.