Government has cut spending, this adversely impacted our business - Nissan Tanzania

Dar es Salaam — Vehicle imports through the Dar es Salaam Port dropped by 10.8 per cent in the seven months of this year compared with a similar period in 2015.

Tanzania Revenue Authority (TRA) figures show 53,275 vehicles were imported through the port, down from 59,694 the similar period in 2015.
"We cannot give the exact reason for the decline," noted the TRA director for taxpayers services and education, Mr Richard Kayombo.
Mr Kayombo said the drop had nothing to do with the economy.

However, motor dealers have linked the fall to government cost-cutting measures as well as increases in import duty rates. "The government has cut spending including that on buying new vehicles. So, this has adversely impacted our business," said Nissan Tanzania commercial manager Ash Ramraj.
"Nissan accounts for 11.6 per cent of the market share and is committed to operating in Tanzania," he said.
It focuses selling more pick-up models, which are suitable for Tanzania, which will implement more infrastructure projects during the industrialisation process.

A showroom attendant said importers were discouraged by high import duty.
"The new excise tax law puts the charge on imported vehicles at Sh6.4 million and Sh6.7 million for some models --a departure from the previous duty of Sh3.4 million," he noted.
According to him, high taxes have raised the cost of importing vehicles significantly, with prices of some models going up by more than Sh3 million.

He cited an example of the Toyota Noah brand whose price jumped from Sh12 million last year to Sh15 million this year.

The situation has reduced demand, according to him.
"Business is bad as customers are not ready to buy big cars due to increased prices. They opt for small ones because they can afford."
Bad business

Conti-Car sales showroom salesman George Ochola said:
"If you look at what people are currently purchasing, you will realise that they are buying cars that were imported prior to the new tax was imposed on imports. So bad is the business that there is no reason of importing more of them because we have enough stock. Sales are sluggish."
He also attributed the decline in vehicle imports to efforts by the fifth phase government to deal with tax evaders.

Before President John Magufuli came to power, some vehicles were brought into the country illegally. This is no longer the case now.

He also said since the money circulation was low and the government had cut costs, owning cars did not figure high on the list of priorities of many Tanzanians.
"Vehicle sales have dropped terribly, from 50 units we sold last year," noted Mr Ochola.
He also said sales had fallen partly due to the increased competition.

Tanzania Freight Forwarders Association vice president Edward Urio attributed the drop in imports to the imposition of value-added tax (VAT) on goods in transit.
"VAT has scared away importers. They have opted to use other ports such as Mombasa, Beira and Durban in the region whose charges are relatively cheap," he said.
"The majority of Congolese and Zambian importers have opted to use other ports such as Mombasa and Durban after the introduction of a single customs territory."

To the DRC government, the single customs territory was an added advantage as it takes full advantage of tax collection but for traders it translates to profit loss and thus opting for other ports in the region, according to him.

Dar port authorities were quoted by a section of the local media as saying that Congo vehicle imports through the port had fallen by a half to 1,247 vehicles in the first two months of this year compared with a similar period last year.

Zambia's vehicle imports through the port decreased to 2,692 between January and February 2016 from 6,042 during a similar period last year.

According to Prof Samuel Wangwe of Repoa, if the drop is huge on consumer vehicles this is good for economy as it is more economical to use public transport as an alternative. But it is bad if the case is for productive vehicles.

He suggests that people be encouraged to import more productive vehicles to boost the country's economy.
  • via The Citizen