TANZANIA – Tanzania glass container manufacturer, Kioo Limited has acquired a US$10 million working capital loan from the International Finance Corporation (IFC).
Kioo is wholly owned by African Developments Limited an associate of the Madhavani Group, based in Uganda and is one of the leading business groups in East Africa with interest in Uganda, Rwanda, Tanzania, the Middle East and India.
According to reports by Africa Private Equity News, the loan will go towards long-term working capital funding, and necessary equipment maintenance and upgrades, to help mitigate the impact of the Covid pandemic on Kioo.
The funding comes days after the packaging maker got a sigh of relief after the East Africa Court of Justice (EACJ) suspended Kenya’s decision to impose a 25 per cent tax on imported glass bottles.
In March 2020, Kenya amended its Excise Duty Act 2015 by imposing a 25 percent duty on imported glass bottles, excluding packages for pharmaceutical products.
Kioo Ltd challenged the decision in the EACJ, arguing that the amendment would discriminate against glass products manufactured in the other EAC partner states and give preferential treatment to locally-manufactured glass bottles in Kenya which are not subject to excise duty.
In the application, the company said imposition of the excise duty was a beach of various provisions of the EAC Treaty, the Customs Union Protocol as well as the Common Market Protocol.
The regional court granted an interim order to prohibit the government of Kenya from implementing the amendment, pending the hearing and determination of the case.
EACJ judges Monica Mugenyi, Audace Ngiye and Charles Nyachae pointed out that their decision does not reverse application of the impugned law, but was a suspension of its application to the company.
Kioo Ltd exports almost 60 percent of its production to the EAC partner states.
Other than restricting glass manufacturers from other countries to access the Kenyan market, the newly imposed excise tax is also seen to hinder operations of the Kenyan glass purchasers who will have to rely on supplies from the two glass producers in the country.
To this end Kioo argues that they, together, cannot meet the total domestic demand but also do not currently have the capability to supply the technology that it offers.
