WHO LOSES WHEN FISCAL POLICIES AND DEVELOPMENT CLASH?
Currently, there is playing out in Kenya as in the suddenly changed fortunes of Kenya's Atlas African Industries ltd, what happens when fiscal policies and development clash.
In December 2015, the directors of ATI had convinced shareholders to approve ambitious plans to tap opportunities in neighbouring Ethiopia through the establishment of a glass factory in Addis Ababa to produce 105m glass bottles.
The market was solid because bottles used there were imported and in fact an MOU had been signed with a major beer brewer in Ethiopia for offtake once it meets expected standards and the price was right.
Through a subsidiary set up in Ethiopia TEAP Glass PLC, 100 year lease on the site was acquired; and a leading Ethiopian firm was contracted to do the feasibility study, do all the required designs and quantity survey and, of course, about $5m was raised from existing and new shareholders for the project tagged 'The Chancho project'.
Naturally the Ethiopian government was in full support and put it on priority list; in fact it looked like a possible win win project for all concerned: shareholders, Ethiopian government, the immediate community and the brewery industry in Ethiopia.
Unfortunately, come June 20,2017 directors of ATI lltd are not only going to ask shareholders to forget Chancho project but also, to approve a wind down of the company.
How come? Simple, the tax people in Ethiopia refused to share in the dream. Hitherto, TEAP had acquired 49% interest in a company in Ethiopia Ardan Risk and Support Services in 2014 but Ardan was owing the tax man good money
So seeing the millions of dollars in TEAP account with Developnent Bank of Ethiolia, the Ethiopian Revenur and Customs Authority (ERCA) apprioprated $2.4m from it from the account in 2016.
Since then all efforts to convince it to return the money failed. Yet, 49% is not mahority shareholding, and the money was in fact for the Chancho project.
Now, Atlas African Industries is not planning to sell all it has acquired so far on the project, it is seeking to wind down because it has not been to raise new funds to duversify into gaming in different parts of Africa as it proposed to shareholders anew last December.
In December 2015, the directors of ATI had convinced shareholders to approve ambitious plans to tap opportunities in neighbouring Ethiopia through the establishment of a glass factory in Addis Ababa to produce 105m glass bottles.
The market was solid because bottles used there were imported and in fact an MOU had been signed with a major beer brewer in Ethiopia for offtake once it meets expected standards and the price was right.
Through a subsidiary set up in Ethiopia TEAP Glass PLC, 100 year lease on the site was acquired; and a leading Ethiopian firm was contracted to do the feasibility study, do all the required designs and quantity survey and, of course, about $5m was raised from existing and new shareholders for the project tagged 'The Chancho project'.
Naturally the Ethiopian government was in full support and put it on priority list; in fact it looked like a possible win win project for all concerned: shareholders, Ethiopian government, the immediate community and the brewery industry in Ethiopia.
Unfortunately, come June 20,2017 directors of ATI lltd are not only going to ask shareholders to forget Chancho project but also, to approve a wind down of the company.
How come? Simple, the tax people in Ethiopia refused to share in the dream. Hitherto, TEAP had acquired 49% interest in a company in Ethiopia Ardan Risk and Support Services in 2014 but Ardan was owing the tax man good money
So seeing the millions of dollars in TEAP account with Developnent Bank of Ethiolia, the Ethiopian Revenur and Customs Authority (ERCA) apprioprated $2.4m from it from the account in 2016.
Since then all efforts to convince it to return the money failed. Yet, 49% is not mahority shareholding, and the money was in fact for the Chancho project.
Now, Atlas African Industries is not planning to sell all it has acquired so far on the project, it is seeking to wind down because it has not been to raise new funds to duversify into gaming in different parts of Africa as it proposed to shareholders anew last December.
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