HIDES AND SKINS BUSINESS IS THRIVING IN TANZANIA!
BY POLYCARP MACHIRA
In less than a month since The Guardian revealed that Tanzania loses Sh25million ($ 15,000) in hides and skin export levy, latest revelations have shown how a senior government official plotted to deny the government over Sh56 million ($34,560) in export revenue.
A coordinator of hides, skins and leather development in the Ministry of Livestock Development and Fisheries, Nelson Kilongozi who is said to be behind the smuggling has formed his own company to export hides and skins.
The company, Chiganye Agro-Allied Enterprises, was issued with business license number 1793301 by the Ilala Municipal Council on 30th September this year.
Details gathered show that the company was issued with a certificate of registration for premises of hides, skin and leather on 21 August this year and a one year premises license for hides, skins and leather trade by the Ilala municipal authorities on the same date.
Records show that the company owned by Nelson Kilongozi and Jonathan Mwita Maswi was this month involved in under-declaration of goods that were destined to India.
On November14th, 2014 the company submitted export documents for 75 tonnes of air dried hides declaring the price as $0.60 or Sh600 per kilo and $10,800 in total, which would earn the government about $6480 in revenue.
The Guardian on Sunday reliably learnt that the right value of the consignment with Invoice number 011/14 was $30,600 and would earn the government $18,360 in revenue.
On the same date the company submitted another invoice, numbered 012/14 for approval to export 75 tonnes of dry salted hides with the declaration price of $0.55 (Sh550) per kilo with a total value of $9,900 that would earn the taxman $5,940 in customs duties.
However the real value of the goods, according to leather experts was $27,000 that would earn the government $16,200 in revenue. “In total, the company was denying the government $34,560 in revenue,” authoritative sources affirmed.
More details emerge that the senior officer sometimes back while on a government funded trip to India, used the opportunity to look for business partners.
His main clients, according to the documents are based in India.
Before forming his own company, the officer was on record as helping traders to smuggle raw leather outside the country.
Reliable source from the ministry confided with this reporter that the said person has agents in almost all regions in effort to deny other traders raw materials.
His business associate, Maswi is just one of the people he uses to block competitors from buying raw materials in the market, the sources noted, specifying that the said group is also linked to smuggling of Tanzanian skin and hides to an Indian trader in Uganda.
Efforts by this reporter to reach the said officer for comments proved futile as his mobile could not easily be reached.
Recently, this paper exposed that Tanzania exports in average 20 containers of raw hides every month amounting to a loss of over Sh500m, a month.
It has been learnt that exporters under-declare the prices, quantities and qualities of raw hides, thus denying the government the right revenues from export taxes and foreign exchange.
The declared export prices are not even half of the local prevailing buying prices, which simply confirm the illegality of the declaration.
According to an invoice, seen by The Guardian on Sunday, the declared export prices are only about a quarter of the actual prevailing international prices for Tanzania hides. In one invoice, it was unveiled that exporters declared a 20 ft container to contain between 10,400 and10,500 kilograms of air dried hides with the lowest grade of fourth and fifth, claiming to have been bought at $0.62-0.70 per kilo.
The same container of dry salted hides, according to documents produced by the exporter contained between 12,500 and 15,700 kilograms valued at fourth or fifth grades and were bought at between $0.50 and $.0.60.
The paper has however learnt that the current market prices for both types of hides locally are between Sh2,000 and Sh2,300 or $1.2-$1.39 with the export price ranging between $ 2.60-$2.70 a kilo.
On the other hand, it has been revealed that the minimum weight a twenty foot container is not less than 15,000 kilograms yet the exporters claim it is 12,000 kilograms. The declared qualities, according to an expert in the leather sector who preferred anonymity are so low that it is completely impossible that all Tanzanian hides are of such poor quality.
An invoice signed on May7, 2012 indicates that the price of dried cow hides was $1.70 per kilo and a full container of the same is valued at $17,850, yet the same price as indicated in an invoice signed on July 13, 2014 shows that the price is $0.62 per kilo, meaning that a whole container is valued at $6,506.
The figures show that through the declaration which is currently at its peak, the exporters freely get away with $11,200 per container.
Some stakeholders’ attributes the under-declaration has heightened since July this year when the government reduced export levy on exports of raw hides and skins from 90 to 60 percent of FOB value or Sh900 to Sh600 per kilo whichever is higher.
The aim was to curb illegal export or smuggling that had mushroomed in the trade and enable traders to export the raw materials at a reasonable levy rate.
SOURCE: GUARDIAN ON SUNDAY
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