INSIDE THIS ISSUE:

• News In Picture

• Finance Leasing Training By Amembal &

Associates

• Tanzania Draft Leasing Law And

Tax Recommendations Submitted to

Government

• Leasing Consultative Workshops For

Government Officials

• Lease Training for Central Bank Examiners

• Leasing News in The Market

• Key Issues Raised In The Training Sessions

• IFC – TANZALEP & TBA Partnership

• Knowledge Exchange And Sharing In The

Field

• Business Development Initiatives

• IFC – TANZALEP Shares Experiences with

the Rwanda Leasing Market

• Project Activities To date

• New TANZALEP Manager Appointed

• About The Project And Donors

TANZANIA LEASING PROJECT (TANZALEP)

FINANCIAL LEASING NEWSLETTER ISSUE # 03 (JANUARY – MARCH 2006)

READERS WELCOME NOTE

Dear Readers,

Welcome to this third edition of the International

Finance Corporation – Tanzania Leasing Project’s (IFC –

TANZALEP) quarterly electronic newsletter. The objective of

this newsletter is to update you on leasing issues in Tanzania,

as well as TANZALEP’s activities.

In the past quarter, the project started training

stakeholders in the market, while continuing its consultation

with Government on legislative, regulatory and taxation

proposals for leasing in Tanzania. In this period, TANZALEP

also submitted it’s legal and taxation recommendations to

the Government.

In the next quarter, TANZALEP will continue with the

training sessions of stakeholders, offer business development

support to the private sector and consult the private sector

on proposals made to Government. TANZALEP will also

be involved in awareness raising and sensitization to

government officials as well as the general public.

We welcome your comments and suggestions on issues

raised in this newsletter to help refine our activities.

TANZALEP TEAM

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Finance Lease Training By Amembal & Associates

From January 9th- 11th, 2006, TANZALEP organized “Winning with Leasing” a specialized training course on financial leasing at Moven Pick Hotel, in Dar Es Salaam.

The training was conducted by an IFC International leasing consultant and one of the world’s most prominent leasing experts, Mr. Sudhir Amembal. He is also Chairman and Chief Executive Officer of Amembal & Associates, a world leader in lease education, consultancy and publications.

The training equipped practitioners and stakeholders with basic leasing concepts and knowledge in lease accounting, lease taxation, lease pricing and structuring, benefits of leasing, and lease versus purchase analysis.

Amembal is also Chairman and Chief Executive Officer of Amembal & Associates, a world leader in Lease education, consultancy and publications. The training equipped practitioners and stakeholders with basic leasing concepts and knowledge in lease accounting, lease taxation, lease pricing and structuring, benefits of leasing, and lease versus purchase analysis.

NEWS IN PICTURE

From right ( front line ) are among high level government officials working at the Bank of Tanzania (BOT), Mr. Juma Reli, the Deputy Governor and Mr. Peter Noni, the Director for Strategic Planning and Performance Review, who attended one of the consultative sessions held in Dar Es Salaam, end of February 2006.

One of the world’s most prominient gurus in leasing, Mr. Sudhir Amembal (standing) during the “Winnning With Leasing” training session, mid January 2006, in Dar Es Salaam.

Tanzania Draft for a Leasing Law And Tax Recommendations Submitted to Government

In view of developing leasing and making leasing a competitive financial product in Tanzania, IFC – TANZALEP has released a draft of a leasing law as well as recommendations on taxation reform for Government consideration.

The draft was submitted to the Bank of Tanzania, in charge of the 2nd Generation Financial Sector Reform Programme, which will disseminate the same to different stakeholders for further consultation.

The key constraints for leasing that the draft leasing law and taxation proposals intend to address were discussed by government officials during the consultative session held on February 28th 2006.

Leasing Consultative Workshops For Government Officials

Between February 27th and 28th 2006, – TANZALEP held high level consultative sessions with government officials regarding leasing development in Tanzania. Issues under discussion included economic benefits of leasing, incentives for leasing and the need for a leasing law, among others.

Participants were drawn from the Bank of Tanzania (BOT), both Zanzibar and mainland branches, as well as Ministries in Tanzania mainland. The sessions were jointly conducted by –TANZALEP Project team and Rafael Castillo – Triana, an IFC consultant and International Legal & Leasing Advisor.

A cross - section of high level government officials listening to a presentation on “Economic Benefits of Leasing in Tanzania” by an International Consultant and Legal & Leasing Advisor, Dr. Rafael Castillo - Triana, at Dar Es Salaam International Conference Centre, on February 27th 2006.

Lease Training For Central Bank Examiners

During this period, IFC -TANZALEP conducted specialized leasing training for Bank of Tanzania – Bank examiners. The training was conducted by IFC’s International leasing Consultant, Dr. Rafael Castillo – Triana.

The training focused on regulation of banks and non – banks leasing companies, ‘best practices’ in regulation of leasing activities from experiences around the world, corporate governance and BASEL I & II principles.

Some BOT’s Bank Examiners who had a specialized training on “ Regulation of leasing activities from experiences around the world’’ as was conducted by IFC’s International leasing Consultant, Dr. Rafael Castillo – Triana, at the Dar Es Salaam International Conference Hall, on February 28th 2006.

Leasing News From The Market

Towards the end of February this year, IFC – TANZALEP conducted a consultative session on “Experiences of Developing Leasing Companies and Operations in Developing Countries” for prospective leasing companies, commercial banks and interested stakeholders based in Dar Es salaam.

The consultative session discussed funding of leasing operations, appropriate company structures, taxation incentives, practical legal issues in leasing operations, and corporate governance, among others.

Key Issues Raised in the Training Sessions

i. Draft Of Leasing Law

It is generally felt that there is need for a leasing law that will provide a minimum legal framework for financial leasing operations, as well as encourage investor confidence in the market.

Some of the more important elements of the draft law are to clarify the rights and obligations of parties to financial leasing, as well as the allocation of financial risks amongst parties.

It is felt that as financial leasing is essentially a contractual arrangement, a leasing law should only provide a minimum legal framework and should allow parties the freedom to contract.

ii. Taxation Recommendations

Most stakeholders feel that the current application of Value Added Tax on financial leases is uncertain, and there is need for this clarification to be provided for, either in the law or under regulations or through the issue of practice notes. Additionally, it is generally felt that owing to the direct relationship between leasing, capital investment and economic growth, certain tax incentives should be given to leasing companies in order to jump-start the leasing industry, as this will lead to capital investment, economic growth and a wider taxation/revenue base.

iii. Central Bank Regulation of Leasing

It is generally felt that leasing operations, whether carried out by banks or non-bank financial institutions will require some form of central bank regulation to ensure orderly, entry, exit, financing and corporate governance of leasing companies. Again it is felt that, central bank regulation of non deposit

taking leasing companies should be light and should be to enable regulation rather than control of leasing companies.

Knowledge Exchange And Sharing In The Field

Ms. Davorka Rzehak joined the IFC PEP Africa Johannesburg office as Operations Officer, in the Financial Markets department. She is on secondment from one of IFC’s key partners, the Swiss Secretariat for Economic Affairs (seco) and is now overseeing IFC leasing programmes in Sub Saharan Africa.

Over the past 5 years Davorka has been working as Program Manager for seco in Bern, Switzerland, where she was responsible for coordinating and monitoring the implementation of technical assistance projects in the area of private sector development in emerging markets. Her work focused on investment climate and financial markets, including leasing and corporate governance.

The IFC leasing initiative in Tanzania is a component under IFC PEP Africa’s Financial Markets Department, TANZALEP and other leasing projects in Africa will greatly benefit from Ms. Davorka Rzehak’s knowledge and wide experience in leasing.

TANZALEP Shares experiences with the Rwandan Leasing Market

IFC – TANZALEP in collaboration with the Rwanda Leasing Project, conducted a Financial Leasing Workshop on January 31st 2006, at the Intercontinental Hotel, in Kigali, Rwanda.

The main objective was to disseminate information to stakeholders based on a market study on the state of financial leasing conducted in Rwanda in August 2005.

The report highlighted various issues including the need for Rwanda to establish a clear taxation regime which will provide incentives and appropriate Value Added Tax (VAT) treatment on leased equipment.

The workshop was attended by bankers, the business community, politicians and government officials and the opening was graced by Rwanda’s Minister for Finance, Hon. Nshuti Manasse.

Business Development Initiatives

• Handbook On Leasing

The Project Team will shortly release a financial leasing handbook for practitioners.

The handbook will contain information on practical issues in financial leasing such as lease documentation, leasing versus other secured transactions, and accounting and taxation.

Future Activities

• Continued Consultation With Stakeholders

It is evident from the market that legal and taxation reform for financial leasing will require extensive consultation with stakeholders. The Team will therefore continue consultation with different stakeholders on the draft leasing law and the taxation recommendations.

• Public Awareness Campaign

In order to manage expectation, and because lease financing is not yet widely available in the market, TANZALEP had delayed its public information campaign. However, the Project will provide limited and targeted public information campaigns on leasing and TANZALEP project development. The campaign will be done through newspapers, web site, radio and outreach programmes, among others.

• TANZALEP Electronic Newsletter Hosted On The Tanzania National Web Site

The Team appreciates the collaboration between the Ministry of Planning, Economy and Empowerment which hosts the national web site and TANZALEP for agreeing to host the TANZALEP electronic newsletter where the public can access various information as part of public awareness about the Project.

• Website On Leasing

Preparations for developing a TANZALEP Web site are complete and the Web site will be launched any time from now.

• IFC – TANZALEP meets the Tanzania Bankers Association (TBA)

As part of the collaboration between IFC – TANZALEP and the Tanzania Bankers Association, a key stakeholder in leasing, the TANZALEP Team met with esteemed members of TBA at a TBA members meeting, on March 28th 2006 at the Dar Es Salaam International Conference Centre.

Although the Project has consulted extensively with individual commercial banks, the objective of the presentation was to set in motion the process of consultation with TBA as an industry on TANZALEP’S proposals.

Some TBA Members during a consultative session, held on March 28th 2006, in Dar Es Salaam, where a presentation on TANZALEP was made as a starting point for working collaboration between TBA and TANZALEP.

• New TANZALEP Manager Appointed

Ms. Taba Cookey has been appointed as Program Manager for IFC’s leasing projects in Tanzania and Ghana and will also be responsible for overseeing other IFC PEP Africa leasing programs in the pipeline. She will be based in Ghana.

Ms. Cookey joins IFC with substantial financial sector experience gained in Nigeria and Canada in commercial lending, corporate finance, financial sector research and regulation.

Just prior to joining IFC, Ms. Cookey worked at the Canada Deposit Insurance Corporation, where her responsibilities included ensuring corporate governance and risk management compliance. Given her wide ranging experience, she is expected to make significant contribution to the development of leasing in Africa. She can be reached by email at tcookey@ifc.org or by phone on 233 21 513153-7.

About The Project And Donors

TANZALEP was officially launched on the 24th May, 2005. The project is being implemented by IFC as a Technical Assistance project, made possible with the generous support of seco (www.seco-cooperation.ch).

CONTACTS

We would like to hear from you.

In case of any queries on TANZALEP, please do not hesitate to contact the following people below:

IFC – Tanzania Leasing Project (TANZALEP)World Bank Country Office

50 Mirambo Street, Garden Avenue, 4th FloorP. O. Box 2054 DAR ES SALAAM – Tanzania

Tel: +255 (22) 2163200 (Ext.3291)Fax: +255 (22) 2163328 / 2163295

Moyo Violet NdondeTeam Leader / Legal Advisor

Mndonde@ifc.org

Joass LyatuuFinancial AnalystJlyatuu@ifc.org

Elizabeth MassanjaPR / Program Assistant

Emassanja@ifc.org