The rise in oil prices in the second half of 1990 has caused widespread disturbance to the economies of developing countries throughout the world.

In the case of Tanzania the dominant influence has been the surge in oil prices in the last five months of 1990. This has been enough to cause serious loss estimated to be of the order of £40 million, or 2.8% of the Gross National Product. In terms of the fragile Tanzanian economy, an additional cost of this magnitude represents a severe burden on the economy and a critical setback at a time when there were real signs of progress. The consequence has been an addition to the already very serious negative balance on Tanzania’s foreign trade account and a grave setback for Tanzania’s industries struggling to make ends meet.

It is a cause of satisfaction that oil prices have now fallen to approximately the level at which they stood prior to the invasion of Kuwait.

Direct trade losses are believed to be minimal; trade with the Middle East does not feature as a separate item in the trade tables published in Hali Ya Uchumi. But importers generally have had to face increased sea freight costs and steeply rising insurance premiums, though these additional burdens are difficult to quantify. What is perhaps more significant is the possible 1055 of investment capital caused by suspension of the aid activities of the oil rich countries. It appears that in March 1990 Kuwait agreed to finance the rehabilitation and improvement of the Mwanza Textile Mill (MWATEX). On account of its preoccupation with domestic rehabilitation, it seems Kuwait will not honour such obligations in the near future. Some relief has been forthcoming from the donor community and in January it was reported that the United Kingdom Government had made a grant of £4.0 million to finance all oil imports over the next three months; virtually all of this money is reported to have been paid out. While this is a welcome contribution, it will offset only a small part of the losses incurred in the latter part of 1990.

Any setback to the transport sector must be serious to Tanzania, already burdened by bad roads, rail transport in need of repair and development and an over stretched air communications system. The Gulf Crisis has emphasised once again the extraordinary dependence of Tanzania on access to fossil fuels and the sensitivity of the economy as a whole to the terms of access.
J Roger Carter


Speaking to reporters just before the end of the Gulf War, Mwalimu Julius Nyerere accused the USA of manipulating the UN for its own ends. The UN should have emphasised use of other methods to drive Saddam Hussein out of Kuwait. Calling for a ceasefire to give a chance to diplomatic solutions to the conflict, Mwalimu asked “How can Saddam pull out of Kuwait while bombs are falling?”

Five weeks earlier, in Kampala, President Mwinyi reiterated his call to Iraq to immediately withdraw its forces from Kuwait to avoid further bloodshed. He expressed his sadness at the failure of the international community to avert the war – Daily News, Business Times.

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