However, despite the previous arrangement that gave it the majority shareholder of 74 per cent with the German firm Continental Arktiengesellschaft (Continental AG) holding a 26 per cent stake, the firm  failed to take off, igniting widespread anguish especially to the community in Arusha.

 

Established in 1969 through a partnership between the government of Tanzania and General Tyre USA, the firm had an annual production of 320,000 units at its production peak.

 

Chief Secretary Ambassador Ombeni Sefue told the press yesterday in Dar es Salaam during the ceremonial hand over of shares between GTEA and the government that the firm is expected to start production before the end of this year after the government bought the remaining stake from the German firm.

 

Ambassador Sefue said the remaining 26percent shares in the GTEA from the German firm were bought at the cost of $1million (Sh2.1bn) to attain full ownership.

 

“We are working tirelessly to ensure the firm complies with al legal procedures to ensure we do not obstruct the new contract to be signed with other investors to revamp the industry,” he said.

 

 “So far several measures have been taken place including machines repair, construction of buildings, electricity maintenance and writing a new business plan,” he said.

The government has conducted market research to ensure that the firm sells its products in the East Africa Region and beyond, despite market dominance of imported tyres.   

 

The Permanent Secretary (PS) in the Ministry of Trade and Industries Uledi Musa said in the past there was reluctance on the part of investors to partner with the government to revamp the factory because other shares were being held by the German firm.

 

He said production is expected to nearly double to 400,000 tyres annually after the firms’ production commencement later this year and beat the past local youth.

 

“The National Development Corporation (NDC) under the Ministry of Trade and Industries has conducted an assessment of the factory to revive it,” he elaborated. 

 

 “NDC is still working on the preparation of a favourable investment climate to attract more investors to extend and install better infrastructure to increase the production of tyres,” he said. 

 

GTEA commence production in 1971 as one of the leading tyre manufacturing firms in the region. It sold its shares to Continental AG in the early 1990s after the latter acquired a loan of $10mn from the National Social Security Fund (NSSF) through government guarantee aiming at revitalizing the factory with 360 employees, to no avail.

 

 Treasury Registrar Lawrence Mafuru said that the firm finally collapsed in 2009 due to poor management, with the government commissioning NDC to revive the firm in 2012.

 

 NDC was also tasked to look for investors to expand the rubber plantation, he specified.

 

 “Reviving this factory will reduce the cost we incur to purchase and import tyres using foreign currency. This is part of a government plan to revive all manufacturing industries in the country including the Tanzania Telecommunications Co. Ltd (TTCL),” he said.

 

His remarks were echoed by the permanent secretary who said they are in the final process to regain total stakes at TTCL in the near future. 

Source : IPP MEDIA