Editorial
Analysis
BoB comeback good news for farm
sector
After 37 years of ‘nationalisation exile’, the Bank of Baroda (BoB) is making a
comeback.
The bank, which made its name in the 1960s, challenging Standard Chartered and
Barclays, is set to start operations of its fully owned subsidiary at the corner
of Ohio/Sokoine Drive, Dar es Salaam, on October 13, this year.
BoB received approval from the Bank of Tanzania (BoT) on November 22, 2003, last
year and Dar office completes the East African picture as the Bank also operates
in Kampala and Nairobi.
The opening of Dar office, according to the bank’s Managing Director, is
expected to consolidate the bank’s presence in the region and boost trade
opportunities between India and East Africa.
The bank starts with a working capital of Tsh. 6.10 billion (US$ 6.10 million)
as stipulated by BoT for commercial banks starting in Tanzania.
The bank said it will start by providing standard services with innovative
products, mainly to suit middle class and low income businesses. On top of that,
BoB is eyeing to lend to the agriculture sector.
That is why we welcome back BoB. Middle-income group is the wheel of economy
development in any country.
Helping this group will enhance, among other things, education through education
loans.
Without empowerment of the middle income level group, economic development and
fight against poverty remain a distant dream. BoB, despite generating profit, is
set to become part of country’s development.
BoB has advised the Bank of Tanzania to design a law or regulation, which will
direct banks to lend, say five per cent of their total deposits, annually to the
agriculture sector.
The law or regulation will put each bank under the obligation to finance the
neglected sector. This is how the government could force the development of the
economy.
BoB established in 1908 in Baroda, India, has vast experience in lending to the
middle class group and to the agriculture sector. The experience we hope would
be well utilised in Tanzania to foster the country’s economy growth.
Government must scrutinise
up-country buses
In recent months there have been tragic accidents involving commuter buses
travelling in various areas of the country. The fatal accidents are increasingly
becoming a menace to the society. They cost the lives of many innocent
Tanzanians. We are convinced that some of these accidents are bad luck but
others could have been avoided had the drivers been extra careful.
In many circumstances the buses travelling to several places in Tanzania are
said to have overturned or swerved off road and crashed. According to reports
bursting tyres and technical problems that drivers often encounter while
travelling cause most accidents. There is one aspect we tend to forget and this
is reckless driving, we cannot afford to ignore this point.
Recently a Scandinavian Express bus, which was travelling from Kyela in Mbeya to
Dar es Salaam, had an accident in Mikumi area. Two people including a driver
were reported to have died. In another incident, four people were reported dead
and 22 others were seriously injured when a Scandinavian Express bus crashed
after its front tyre burst in Mbarali in Mbeya. This is indeed sad news.
These are just two examples, which should cause the government to scrutinise the
up-country commuter buses. As can be recalled, there were also many accidents
said to have been caused by bursting tyres in the past.
Reckless driving is perhaps something the responsible government body needs to
keep an eye on. We are not saying that the drivers are reckless but at least
there must be investigations carried out whenever there is an accident to
establish the causes.
When you drive to Arusha, for instance, you find that the drivers, especially
those of buses, often ignore or even abuse road safety regulations. This is
dangerous, not only for their own lives but also for lives of other motorists.
Most drivers often compete with one another to arrive earlier at the
destinations they are going; sometimes precariously overtaking one another. Such
action happens in the absence of traffic police and especially in remote areas.
We think that it is high time for the department responsible for road safety to
start reviewing road safety rules and how the motorists follow them. There are
two issues, which need careful attention: the traffic police need find out why
bursting tyres is a common cause of accidents involving commuter buses and why
speeding is common on our roads.
Analysis
Liquidity paradox in Tanzania
By Abduel Kenge
It is very normal that in one part of the world there is plenty of commodities,
say food and water, and at the same time, there is another part of starving for
the same. Just like there is enough food in the world to feed everybody, yet two
billion people are hungry; just like there is plenty of water, yet a lot of
people don’t have clean water for humanitarian use.
The same paradox is found in Tanzania’s financial sector. On the one hand,
Finance Minister Basil Mramba talks about excess liquidity in the market and, on
other hand, Agriculture and Food Minister Charles Keenja, talks about lack of
credit for the agriculture sector.
As of March 2004, commercial banks had total deposits of Tsh. 2.3 trillion but
lent only Tsh 873 billion in total to Tanzanian economy, of which about 15-20
per cent is estimated to have been lent to the agriculture sector. At the same
time, there is Tsh. 960 billion of excess liquidity in the economy.
The problem is the distribution of liquidity among the banks as 90 per cent of
this excess cash is within three banks — National Microfinance Bank (NMB), CRDB
Bank and National Bank of Commerce (NBC) Ltd. Most is invested in government
securities.
The key challenge is to channel this Tsh.960 billion of excess liquidity to the
agriculture sector.
The CEO of Standard Chartered Bank (T) Hemen Shah suggests: “One key way is to
channel some of this liquidity to the banks which want to make significant
stride towards lending to the (agriculture) sector.”
Standard Chartered says it needs to raise between Tsh. 50 to 70 billion of
deposits as it has already exhausted its 80 percent deposit-to-loan ration
ceiling rate stipulated by Bank of Tanzania (BoT). To raise the deposits the
bank has create a new product, dubbed Agriculture Deposits account. This could
be a fixed deposit account or an operating account.
All funds raised under Agriculture Deposit account, to be deposited by
government, parastatals, private companies and individuals, will be lent only to
the agriculture production and processing sector.
Standard Chartered has already brought in Tanzania agro-finance experts from
Zimbabwe to help creating a lending mechanism and has already visited 40
establishment in the past six months. The bank has identified a total of Tsh. 55
billion worth of funding needs in the production sector — farming.
The Bank of Baroda (T) Ltd., which will open its first branch mid next month,
has suggested that the regulator — BoT —have a prudent regulation stipulating
that a portion of the banks’ total deposits be directed to the agriculture
sector or a weak sector, that will put each bank under the obligation to finance
such sectors.
“This is how the government (of Tanzania) could force the development of the
economy. The regulation should direct banks to lend, say five per cent, of their
total deposits annually to the said sectors,” says Vinod Seth, Managing Director
of Bank of Baroda.
Barclays Bank (T) Ltd. is also working on a special lending scheme for farmers
and agro-traders that could be ready in the next six weeks to boost the long
ignored agricultural sector and improve food production and raise income to the
rural areas.
The scheme, dubbed the ‘Structured Trade and Commodities’, will initially start
with a capital of US $25 million (Tsh. 25 billion). Bank officials are
optimistic that the programme will work as they look on the success of Zambia
under a similar lending facility.
According to Barclays Tanzania Managing Director Karl Stumke, the scheme will
target commercial farming. However smallholder farmers will also benefit if they
form cooperative groupings.
To access the bank loans, Barclays will make farms analyses, including the soil
quality, rainfall for past five-year, production output and then establish the
borrowers’ commitment as farmers. The land or crops will form the collateral,
the official said.
Should the banks scheme to lend agro-sector pays dividends, fight against
poverty could easily be won as it would revamp the sector dominated by
smallholder farmers (peasants) cultivating an average farm sizes of between 0.9
hectares and 3.0 hectares each. About 70 percent of Tanzania’s crop area is
cultivated by hand hoe, 20 percent by ox plough and 10 percent by tractor.
Agriculture accounts for about half of the national income, three quarters of
export merchandise and is source of food and provides employment and income to
over 80 percent of the 34 million Tanzanians.
The lending scheme comes at a time when the Tanzania Investment Center (TIC) has
earmarked 3.5 million hectares of land under the ‘Land Bank’ scheme to be made
available to people seeking invest in agriculture.
Poverty driving girls to
hazardous work places
By Timothy Kitundu
Zainabu (not her real name) works in a small makeshift food stall, popularly
known as mama lishe or mama ntilie. The location is Mtoni Kijichi in Temeke
district. She is 16 years old. Actually if you look at her closely, you might
think that she is older than her age.
I came to learn about this young girl when I stopped at the makeshift food
stall to buy a bottle of soft drink. The way the supervisor was going around
giving commands to the girl made me sick as she could not even take a breath
with clients coming in and going out continuously.
I sought an interview with the young girl, in which she revealed that she was
employed by the owner of the food stall, a couple of months ago. Her father who
was a motor vehicle mechanic died a year ago, leaving Zainabu with her young
sisters and a brother under the care of their mother.
According to Zainabu, she had never seen the inside of a school classroom, most
probably due to customs of her tribe that require a girl to undergo initiation
after attaining puberty, and for Zainabu, puberty coincided with the school
enrolment time. She was obliged to opt for initiation.
She is paid a meagre Tsh.500 after toiling for a whole day. She has to walk
over five kilometres to her work place, which she mentioned as Mbagala
Rangitatu, as the Tsh.500 shillings cannot take care of the commuter fare, which
is Tsh.300 a day. Zainabu makes between Tsh.15,000 and Tsh. 20,000 for her
employer daily.
“The money I get does not help me much, but I have no alternative…something is
better than nothing,” she laments. It is more saddening to note that she wakes
up at about five a.m. just to arrive at her ‘work place’ a few minutes to six
a.m. She starts her day by preparing the place for serving breakfast.
Zainabu is not alone in this sort of occupation, where due to low payment,
involvement in commercial sex is apparent. There are thousands of young girls,
who are exploited by unscrupulous employers, on the pretext that they (the
employers) are maintaining a mutually beneficial relationship, where the girls
gets paid for her services.
But observers say that the primary aim of recruiting young girls is not just to
work, for example, in food stalls, soft drink parlours and even in pubs, but to
attract clientele (most of them men and boys), who later lure them into having
sex in exchange of a few shillings.
It is also alleged that under such circumstances, it is difficult for these
girls to refrain from going with whoever comes forward as they need a few more
shillings to supplement the small wage received from their employers.
A report released by the International Labour Organisation (ILO) cites the
neighbouring Zanzibar Island as a good example, where there is an increasing
number of girls between the years of 12 and 14 joining prostitution rings.
The report, which was undertaken jointly by ILO and UNICEF, further indicates
that the girls are paid between US$50 and 100 (about Tsh. 50,000 and 100,000)
and are backed by experienced commercial sex workers, who act as pimps for the
girls, collecting the money and later sharing it with the girls.
Stating that the Mainland is more involved in child prostitution, the report
further reveals that 51 per cent of the girls engaged in commercial sex on the
Isles come from the Mainland, while three per cent are from Zanzibar, Kenya and
Uganda.
The main concern of the ILO is not child work as such; rather the concern is
work which is detrimental to children’s physical and mental development such as
child labour in exploitative conditions, work in servitude (slavery and bondage)
and work performed by very young girls.
ECPAT International, an organisation working against the Commercial Sexual
Exploitation of Children (CSEC), made a situational analysis on CSEC in 2000 in
six countries in East Africa and despite the specific differences, the findings
presented general similarities in relation to the various aspects of the
problem.
The report further points out that of the three forms of CSEC (child
prostitution, child pornography and trafficking and sale of children for sexual
purposes), the problem of child prostitution is most profound. It is rapidly
increasing, practised in the open and is tacitly approved by communities as a
survival strategy.
Having seen the magnitude of the problem, what remains now is to tackle it. The
economies of child labour are known in general terms. The supply of working
children is found primarily among poor families in need of the supplementary
income (as in the case of Zainabu) provided by their children’s labour.
Again the burden of expenditures required to attend school as well as the loss
of income provided to the family by children attending school, combine to make
education too costly for such families. Time has now come for parents to be
educated, sensitised and empowered economically to enable them cover the obvious
gap
The move by some trade unions and other organisations towards identifying and
withdrawing children from Worst Forms of Child Labour (WFCL) and providing with
an alternative solution is commendable. Their strategy of identifying such
children should not be limited to homes and working places, rather it should
extend to informal enterprises such as the mama lishes or mama ntilies and some
pubs where hundreds of young girls are subjected to child labour, given low pay
prompting them to fall prey to CSEC.
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