Inflation rate stabilises but
shilling drops sharply against US$
By Timothy Kitundu
Poor exports and weak agricultural sector keep shilling down
A weakened shilling seems to be here to stay, and experts agree that the present
situation will continue for some time. International as well as domestic factors
explain the trend.
The outgoing President of the Tanzania Chamber of Commerce, Industry and
Agriculture (TCCIA) Basil Saprapasen says: “Our exports are small … they include
non-traditional exports like tea, gold, coffee and tourism. Our agricultural
sector is not growing.”
According to Saprapasen, Tanzania cannot expect the shilling to appreciate
against the dollar as the economy indicates a negative growth from 6.2 per cent
in 2003 to the present 5.3 per cent.
Domestic issues which have had a negative impact on the economy according to
Saprapasen are the result of the poverty reduction strategy and the HIV/AIDS
policy being at crossroads. Both have led to a depreciation of the shilling
against the Dollar.
The Economist Intelligence Unit (EIU) Forecasts and Estimates in its latest
report says that the downward pressure on the shilling is likely to intensify in
2005 when falling global gold prices will reduce export receipts as imports
picks up due to pre-election spending.
The EIU further predict that the shilling will continue to depreciate and do so
rapidly in 2005, averaging Tsh. 1,317 to one US $ and ending the year 2005 at
Tsh. 1,375 to one US$. In its Economic Bulletin for the quarter ending March
2004, the Bank of Tanzania (BoT) reveals that the shilling depreciated against
the US $ by 4.5 per cent, moving from Tsh. 1,053.3 per US $ as at December 2003
to Tsh. 1,100.4 as at March 2004. BoT also says that the total volume of
transactions conducted by the Bureau de Change system during the preceding
quarter declined by 18.0 per cent to US$ 125.5 million (Tsh. 126 billion) from
US$ 153.1 million (Tsh. 154 billion) transacted during the quarter ending
December, 2003.
Fiscal discipline will stabilise
inflation at 4.4%
By Timothy Kitundu
Inflation in Tanzania will remain stable at 4.4 per cent in 2005, provided there
is a fallback in oil prices and fiscal discipline in the next twelve months,
predicted the Economist Intelligence Unit (EIU).
In its recent country report titled Tanzania at a Glance, EIU revealed that
although inflation was low in 2003, averaging 4.4 per cent, the year-on-year
rate rose in late 2003 and in 2004 hitting 6.5 per cent in April 2004 driven by
a sharp increase in food prices caused by shortages in some parts of the
country.
“Even though there are indications that harvests are returning to normal, the
increases in food prices are likely to continue until mid-this year and will
only moderate in the second half of the year,” reads part of the report.
Besides the economic growth, the report expects the agricultural sector to
rebound in 2004/05 after last year’s drought. The sector will be supported by
the ongoing strong growth in the manufacturing sector and in retail, trade,
tourism-related activities and infrastructure development.
The report further reveals that although it is only a small share of the total
economy, high rates of growth in the mining sector will continue to contribute
strongly to overall GDP growth as existing operations improve production.
As a result, real GDP is expected to grow by 5.8 per cent for 2004 and 6.1 per
cent in 2005. However, the economy is not yet dynamic to achieve the annual
growth rates of 7-8 per cent needed to have a significant impact on poverty.
“Poverty will be overcome only with further reform, as structural constraints,
including weak marketing institutions, poor rural infrastructure, and a shortage
of credit and agricultural inputs continue to limit growth,” reads part of the
report.
Programme to strengthen local
markets launched
By Kim Aidan, Morogoro
The International Fund for Agricultural Development (IFAD) has commenced a
programme involving 12 districts in the Southern and Northern Zones aiming at
developing markets for agricultural products.
According to IFAD coordinator, Nathanael Katinila, eight districts have already
begun to feel the consequences of taking part in the programme, which started
last year. In the long run it is hoped that by enhancing markets for
agricultural products, income and food security will increase for small scale
farmers.
The project also aims at training crop producers and joining them to markets,
improving financial services for purchasing and selling crops; and strengthening
market infrastructures in villages.
TPB reduces loan interest rates
By Angela Mazula
Tanzania Postal Bank (TPB) has introduced a new service where customers could
get a loan with an interest rate of 7 per cent per annum. This, they feel, will
help the institute to get more customers who are now approaching local financial
institutions for soft loans.
Environment is facing threats
from mining activities
Tanga Govt waits for orders before removing miners
Nestory Ngwega,Tanga
GOVERNMENT in Tanga Region has not received any formal order from the Minister
of Minerals and Energy, Mr. Daniel Yona, to remove all gold miners at Sakale in
Mheza District.
The Minister announced the decision earlier this month to remove the gold
rushers at Sakale, but the local government had to wait till final orders were
received by the Tanga Regional Commissioner, Captain Jaka Mwambi in an interview
with The Express.
He said he was waiting for the order before the decision could be implemented.
“I have learnt about the decision only through the press,” he added.
He said that his office was aware about the kind of damage miners were doing to
the environment and therefore his Government would take immediate action to
remove the miners from the area as soon as the Minister’s letter reaches his
office.
He however said that he was happy with the Minister’s announcement because the
removal of the miners would save the environment of Sakale and other areas in
Mheza District and Lushoto which attracted many gold rushers. The area is
claimed to be a rich source for gold.
Meanwhile the miners have complained that the Minister’s decision was contrary
to the agreement between the Government and the miners that the former would not
remove them but rather help them in developing the mining industry.
They asked Government not to take such action, instead it should lay down
principles on how the miners need to go about their job without destructing
environment.
Citizens encouraged to trade in
shares
By Timothy Kitundu – Bagamoyo
The District Commissioner for Bagamoyo, Hawa Ngulume wants to encourage more
Tanzanians to take an active role in the stock market by investing in shares. By
this way they can have ownership in the public firms being privatized as their
original capital was realized through efforts of Tanzanians themselves.
There is a dire need for Tanzanians to be empowered so that they can participate
in owning the country’s economy towards prosperity individually and as well as
collectively.
Hawa Ngulume, the District Commissioner for Bagamoyo said this while opening a
four-day training for Journalists organized by the Dar es Salaam Stock Exchange
held at Paradise Holiday Resort.
“The current economic situation in the country requires Tanzanians to fully
participate in running the economy so as to ensure sustainable economic
stability and confidence to foreign investors which will result into economic
growth,” she said.
According to Ngulume, Tanzanians have been unable to make full use of DSE as
their economic powers were limited hence they could hardly purchase shares.
She said, the limited economic powers of Tanzanians reveal the actual economic
situation of the country as the Gross Domestic Product (GDP) of Tanzania was
rather small.
“The domestic production is too small in Tanzania which puts the country in the
list of weak economies in the world,” she added.
Due to the small production the per capita income of Tanzanians was also
marginal, a fact that has reduced their ability to participate in owning shares
in the firms that have been privatized.
Lack of knowledge about stock markets for most Tanzanians, she added, was also
an obstacle because very few Tanzanians understand the concept of stock markets.
This has also immensely contributed in deterring Tanzanians to participate in
this exercise.
In order to enable majority of Tanzanians to participate in this exercise,
education and awareness campaigns was required for all stakeholders including
media house owners, the government and all its institutions and the community in
general.
Local industries should seize EAC
opportunity: Musiba
By Angela Mazula
The Tanzania Private Sector Foundation (TPSF) has urged the government to create
conducive business environment to enable the business community compete on even
terms with the introduction of the EA customs union, said Elvis Musiba.
Speaking during a conference held in Dar es Salaam at Confederation of Tanzania
Industries (CTI) offices the TPSF Chairman said local business people should not
be worried of the products of Kenya or Uganda.
He said that instead they should seize the opportunities of producing better,
fairly-priced quality goods that can compete in a bigger market.
Msiba said that the government should play its part by solving problems like
high electricity costs and water shortage, which affect production and increase
costs.
Unless we solve these problems, our industries cannot compete with those of our
neighbours in the East African Community but we should at least produce quality
products to start with,” Musiba said.
He added that after pulling out from COMESA, Rukwa and Mbeya Regions were now
disadvantaged because of exporting goods to Malawi. Now they are subjected to
crop tariffs of between 7 and 13 per cent of their goods.
Musiba said that the foundation has already interacted with the government on
the advantages and disadvantages of being part of COMESA. “Advantages outweigh
the disadvantages, so we hope that the government would reconsider its stand on
the issue,” he said.
'NEPAD should focus on women'
By Joshua Mshana
THE implementation of New Partnership for Africa’s Development (NEPAD) should
focus on combating rural poverty and economic empowerment of women in the
society.
This was said by Nombulelo Siqwana-Ndulo of South Africa’s commission on Gender
Equality in the UN Development Programme (UNDP) Report.
“Poverty has disproportionately large impact on women. Unless an analysis of
rural poverty is underpinned by a gender approach- that examines what women can
and cannot do due to the position they occupy in society-development, projects
will not be able to pull these women out of poverty and into the mainstream,”
she pointed out.
If NEPAD was meant to fight for the eradication of poverty and uplift of the
socio-economic conditions of the masses, its protagonists must take it to the
rural areas.
The spokesman of Malawi Economic Justice Network (MEJN), Dalitso Kubalasa, says
that the Network remains hopeful that a genuine NEPAD can help Africans to
reduce poverty, achieve gender equity and attain global economic viability.
NEPAD aims at poverty reduction while urging greater integration in Africa into
the World economy through expanded trade and foreign investment. NEPAD promoters
are too optimistic about the benefits of globalization and worries that policies
of economic liberalization will further hamper achievements of MDGs.
The report says that civil society groups should adopt constitutions that
embrace AU and NEPAD and should develop fair and transparent election processes
within their own structures.
Tanzanian traders irked over duty
charges at Kenyan borders
By Angela Mazula, Arusha
Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) in Arusha is
trying to workout a solution after its members complained that commodities
exported to Kenya from Tanzania are still being charged with taxes at the
Namanga border entry point.
”Kenya Revenue Authority’s Customs Department at Namanga border entry point is
still charging duties from Tanzanian traders,” said the TCCIA Regional Executive
Officer, Edwin Shetto.
“Under the East African Community Customs Union Protocol, goods from Tanzania
and Uganda should be exported duty free to Kenya, while the commodities
originating from Kenya to Uganda and Tanzania should attract 10 to 25 per cent
tariff for a transition period of five years,” he said.
“Following the confusion, TCCIA have taken up the matter by contacting the
Tanzania Revenue Authority, Customs Department at border entry point in Namanga
for clarifications…but the TRA officials there told us that they have no
official complaint over the issue,” he claimed.
“We are trying to convene a round table discussion with TRA senior officials
next week to establish whether the traders’ concern are genuine,” Shetto pointed
out.
A number of Tanzania traders have been complaining for being taxed when they
attempt to export their goods to Kenya even after the official commencement of
the EAC customs Union Protocol on 1st January 2005. “When we ask why we are
still harassed by the KRA officials they tell us that they have not yet received
legal notice from either Kenya Government or EAC Secretariat over the matter,”
Hamad Hamad told The Express at the border.
DSE wants further promises from
govt
By Timothy Kitundu
The government has been criticised by the Dar es Salaam Stock Exchange (DSE) for
being reluctant to reduce the corporate taxes and give tax amnesty to those
wishing to get listed at the Dar es Salaam Stock Exchange (DSE). The development
of a capital market and an active stock exchange have especially suffered, it is
felt.
Gabinus Maganga, Chairman of the DSE Board of Directors told journalists in
Bagamoyo on Tuesday that more investors and listed securities are needed, hence
deliberate measures are essential to attract potential investors as well as
companies to list at the DSE.
Since 2001, the Capital Markets and Securities Authority (CMSA) and the DSE have
been pressing the government to provide additional incentives but the government
has yet to give its response.
“The current corporate tax rate is 30 per cent. To encourage more, and in
particular family owned companies to go public and list, a proposal was made to
the government to consider and approve a lower rate of 20 to 25 per cent for a
period of three to five years,” he said.
According to Maganga, as far as tax amnesty is concerned, the government has
also been requested to declare a tax amnesty for privately owned companies that
do not maintain proper and accurate books of accounts.
However, according to Maganga the government has so far approved and authorized
a number of fiscal incentives to those who participate in investing in listed
securities, which include the payment of only five per cent withholding tax for
listed securities as opposed to a tax rate of 12.5 per cent for investors in
non-listed shares.
“Moreover, a foreigner or local investor who holds more than 20 per cent of the
shares in a listed company will pay a zero withholding tax,” he said.
Another incentive that has been approved by the government is that for the
purpose of computing corporate tax on profit made by a listed company. Costs
incurred on issuing a public floatation are allowed to be charged to the
company’s profit in particular year for the purpose of computing corporate tax
payable.
In terms of capital gains tax, a rate of 10 to 40 per cent is charged upon sale
of an asset on the appreciation value over costs incurred on it. However, the
government has approved the exemption of and authorized that any ‘gain’ or
surplus earned on the sale of listed shares be fully exempted.
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