by Paul Gooday
Overall economic outlook
Tanzania continues to do well in maintaining overall macroeconomic stability. Along with institutional and policy reforms, this has been a fundamental factor behind the strong economic growth rates. The main drivers of growth have been agriculture, manufacturing, wholesale and retail trade, transport and communication activities. Tanzania has also continued to record strong export growth and the country’s medium-term growth prospects are around 7%, significantly boosted by natural gas discoveries. (African Economic Outlook)
Banking on trade with China
Tanzanians doing business with China can now pay for their supplies using the Chinese Yuan Renminbi (CNY), thanks to an initiative by the National Bank of Commerce (NBC). The bank’s initiative enables Tanzanian traders and businesses to pay for goods and services supplied by Chinese firms directly by using the Yuan, thereby reducing the costs incurred through exchange rates from purchasing other currencies. A recent survey released by, HSBC (based in Hong Kong) has stated that by 2015, one-third of China’s international business transactions will be made in Chinese Yuan. (The Citizen)
Bank of Tanzania (BoT) figures indicate that Tanzania’s exports to China, the world’s second largest economy, increased by nine times between 2005 (Tsh101 billion) and 2010 (Tsh908 billion). The total trade volume between the two countries reached USD 2.15 billion in 2011 and USD 2.5 billion in 2012. Analysts project that trade between China and Tanzania will continue to grow at more than 15 per cent annually. The BoT attributes the increase in trade volumes to receipts from travel and manufactured goods as well as traditional exports.
Chinese investment in Africa generally increased from USD900 million in 2000 to USD68 billion in 2010 aided by its ‘China-Africa’ policy – trading with Africa without any conditions.
The African Development Bank (AfDB) has approved two loans totaling USD232.5 million for the 157.5-kilometre road project from Arusha to Taveta and Voi in Kenya, crossing the border at Holili (Tanzania), This aims to reduce the cost of transport and enhance access to agricultural inputs, larger markets and social services within the East Africa Community. Tanzania will be awarded USD120 million. The project, which is expected to be completed by December 2018, is also jointly financed by the Governments of Kenya and Tanzania. The Africa Trade Fund has extended a grant for a small component for trade facilitation at the Namanga border, bringing the total cost of the project to USD 262.2 million.
AfDB’s Regional Director for the East Africa Resource Centre confirmed that the road had been identified in the East African Regional Integration Strategy Paper (RISP 2011-2015) and the East African Transport Strategy and Regional Road Sector Development Programme of November 2011 as a priority. The East African Community (EAC) seeks to improve regional transport infrastructure to encourage economic and social development in the region, promote tourism and foster regional integration, while reducing the cost of doing business by supporting cross-border and international trade.
The Arusha-Holili/Taveta-Voi Road is one of the transport corridors of the EAC region meant to increase competitiveness of the region on the global market and at the same time promote regional integration. The project road links the Northern Corridor to the Central Corridor across the common border of Tanzania and Kenya through Arusha, Minjingu (Lake Manyara) and Babati to Singida and Dodoma. The corridor at completion will link the port of Mombasa to northern and northwestern Tanzania and the landlocked countries of Uganda, Rwanda, Burundi and the Democratic Republic of Congo. (African Development Bank)
Tanzania becomes Japanese investment hub
The Japanese Minister for Economy, Trade and industries, Toshimitsu Motegi, announced that Japan had nominated Tanzania to be a major economic hub for business and investment in the African continent. The business community in the country have welcomed this development as a real opportunity to transform Tanzania into an industrial economy.
Among the projects lined up for implementation include the replacement of the central line railway network with the international gauge, and expansion of the port at Dar es Salaam to increase efficiency in service delivery. With the implementation of the plan, Minister Motegi said the industrial sector contribution to GDP, now below 20%, would more than double.
The Confederation of Tanzania Industries (CTI) chairman, Felix Mosha, stated that the governments’ efforts to improve the energy and infrastructure sectors were commendable but not enough. He reiterated that the budget increments in the energy and infrastructure sectors are welcome but remain small compared to the mounting demand for the services to reduce the cost of doing business. The sudden increases in certain charges and duties by regulatory authorities could discourage some potential investors.
If Tanzania is to achieve the Development Vision 2025, there would have to be improvements in the rules and regulations. Vision 2025 is aimed at developing the nation from an LDC (Lesser Developed Country) to a Middle Income Country. The Vision matches well with the Japanese plan to make the country a major economic hub for business and investment throughout the continent. The CTI believes the Japanese plan will enhance the growth of local businesses and encourage economic development. (Daily News)