ECONOMIC CRUNCH BEGINS TO HIT

Kikwete at IMF

Bob Geldof, IMF Managing Director Dominique Strauss-Kahn and President Kikwete share a joke at the IMF conference (Photo Stephen Jaffe/IMF/Getty Images)

At a meeting organised by Tanzania and the International Monetary Fund (IMF) in Dar es Salaam from March 12 to 13 President Kikwete said that the consequences of the world economic crisis were not yet too pronounced in Tanzania but the country was being affected. Examples: the postponement of a $3.5 billion investment in aluminum smelting and a $165 million nickel mining project. A Swedish company, SEKAB, which had leased 40,000 hectors of land in Bagamoyo and had invested $250 million in an effort to produce ethanol (see TA No 91), had now decided to abandon the project.

Other negative consequences of the economic downturn were the falling world prices for Tanzanian commodities. The 2009 price of cotton, one of Tanzania’s major exports, had fallen from $0.82 in 2008 to $0.45 this year. Arabic coffee had fallen from $158 to $104 per 50 kilometre bag and Robusta coffee had dropped from $93 to $65. The prices of most minerals except for gold had also fallen and there was expected to be a decline of from 7% to 18% in tourist arrivals in 2009.

Also affected had been Tanzanite where the fall in price was some 80%. In Mererani, Arusha district, the owners of the nearly 200 Tanzanite mining pits had reportedly opted to suspend their operations between October 2008 and January 2009 rather than operate at a loss. The situation had been made worse by political unrest in Thailand, one of the leading markets for Tanzanite gems.

The price of Nile Perch, of which 80% are exported, was likely to fall by 50% in 2009. This situation was complicated by stiff competition from Vietnam – Sunday Observer.

However, on the brighter side, Finance and Economic Affairs Minister Mustafa Mkulo said he expected that Tanzania would be among first the beneficiaries of the $750 million aid package agreed by the G20 powers at their meeting in London. “We have already communicated our interest in the package” he said. “How much we get depends on decisions of the IMF board” – The Citizen.

RSS feed for comments on this post · TrackBack URL

Leave a Comment

You must be logged in to post a comment.