BUSINESS & THE ECONOMY

Exchange rate: $1 = 1,250 TShs £1 = 3,300 TShs

A visiting mission from the International Monetary Fund (IMF) in February extolled Tanzania’s economic growth trends despite ongoing global turmoil in trade and industry. The mission was impressed that the country`s economy has grown steadily to 7.5% in 2007/08, even as they noted that manufacturing and construction had continued to experience expansion. The mission suggested that for continued growth to be maintained the government had to strengthen domestic revenue collection efforts and judicious public spending and continue with a quality monetary policy. Monetary targets for end-2007 had been met thanks to improvements in the Bank of Tanzania’s conduct of open market operations; interest rates had declined sharply from the high levels reached in 2007. The outlook for 2008/09 was positive as investment, both foreign and domestic, was expected to remain buoyant, underpinning continued high economic growth. Tanzania faced two major challenges. First, domestic monetary policy had to be seen striving to return inflation to its target level while ensuring sufficient liquidity to allow further healthy growth in bank credit to the private sector.

The agreed priorities should focus on agricultural development, education, health, and infrastructure. The mission welcomed the decisive action taken by authorities to address the recommendations of the special audit of the External Payment Account (EPA) at the Bank of Tanzania. The year 2008 ‘Doing Business Report’ has painted Tanzania positively, although there was still said to be room for improvement. Tanzania improved from the previous year’s performance by 20 ranks, a performance which experts consider to be low compared with the resources potential the country is endowed with. Areas that required immediate improvement, included getting licences; employing workers; registering property and acquisition of credit from financial institutions. In these areas, Tanzania’s performance had not been impressive considering that it scored 170, 151, 160 and 115 positions respectively out of 178 countries.
On the ease of doing business across the globe, Tanzania ranked 130, behind Uganda, with the best countries and their rankings in brackets being Singapore (1), South Africa (35), Kenya (72), Zambia (116), Uganda (118). There had also been no improvements in terms of the duration through which an applicant waited to obtain a business license – 308 days in 2008. In dealing with licences in Tanzania, an applicant has to through 21 procedures – Guardian.

The Government announced in January an increase of the minimum wage for civil servants from TShs 80,760 to TShs 100,000 per month from July. Then, on January 11 it said that it had reduced the minimum wage for workers in export-oriented and labour-intensive private industries from TShs 150,000 to TShs 80,000 per month. The government had had lengthy discussions with stakeholders and the wage board and said that it had to accommodate genuine fears of losing external markets to competitors if exports become too expensive. A proposed increase in the statutory minimum wage from TShs 48,000 to TShs 150,000 alone would have eroded the manufacturing industry’s unit selling price margins by between 73% and 800% – Guardian.

The Government has been trying to introduce legislation to commercialise electricity supply in the country. TANESCO has been forced to increase tariffs substantially. It needs TShs 1.6 trillion to improve power production and distribution infrastructure. The 400-MW Kiwira power project, 400-MW Mchuchuma project, and 1,200-MW Stiegler`s Gorge projects should be expedited.
But MP’s opposed a proposed government Bill which they said would open the doors to private players, particularly foreign investors. This would be unfair because of the shaky purchasing power of most Tanzanians and TANESCO’s financial woes. We should first empower the state-owned firm financially and stabilise its performance before allowing in private players,” observed one MP – Guardian. Tanzania has saved almost $1 million since 2004 by substituting imported diesel with locally produced natural gas generating electricity. 12 companies are exploring oil and gas reserves in twelve blocks along the coast from Mtwara to Tanga and villagers in Songo Songo are now enjoying power, clean water and clinics and the project has generated employment for the local population – East African.
At the end of April the Dar es Salaam Water and Sewerage Company (DAWASCO) published the names of prominent people who had not paid their water bills. Those named included the MP for Kyela Dr Harrison Mwakyembe, the Executive Director of the Tanzania Investment Centre, Emmanuel ole Naiko, two permanent secretaries, the Tanzanian Christian Church and a former minister. DAWASCO said that it was losing TShs 2.5billion monthly in unpaid water bills, mostly well-to do customers – Guardian.

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