Money
transfers dominate foreign exchange
By Timothy Kitundu
Workers’ remittances are a key source of foreign exchange for developing
countries, including Tanzania. They amount to more than US$ 100 billion (Tsh.
110 trillion) a year and are expected to rise, but transaction costs remain high
experts and officials have said.
A recent review obtained by The Express from the African Economics Editors Forum
in Johannesburg shows that remittance inflows for 90 developing countries
amounted to about US$ 100 billion (Tsh.110 trillion) in 2003, according to the
International Monetary Fund (IMF).
The World Bank says the figure could have risen to US$ 126 billion (Tsh. 138.6
trillion) in 2004. “This rising trend is likely to persist as population aging
continues and pressures for migration from developing to advanced economies
increase,” the IMF said in a report last week.
In its World Economic Outlook report, the IMF urged governments to make it
easier for migrant workers to send money home by cutting transfer costs, which
often cut into 5 to 10 per cent of the amount being send.
It is a topic, the IMF said, that had received little attention. A country like
Mexico probably receives about US$ 15 billion (Tsh. 16.5 trillion) a year in
remittances, while in many Caribbean nations remittances often exceed 10 per
cent of gross domestic product (GDP).
“Unlike exports and private capital flows, which are sensitive to global
economic conditions, remittances have proved more resilient to economic
downturns,” it noted.
For many countries, remittances constitute the single-largest source of foreign
exchange, exceeding export revenues, official aid, foreign direct investment,
and other private capital inflows.
They play a key role in boosting economic growth, maintaining macroeconomic
stability and reducing poverty as well as allowing households to step up
expenditure on basic consumption, housing and education.
A senior World Bank economist meanwhile said that perceptions that remittances
were solely flowing from developed to developing nations might not be true. “My
own belief is that South-South flows are a lot larger than North-South flows,”
said Dilip Ratha of the World Bank’s Development Prospects Group.
The World Bank estimates that African immigrants transferred US$ 6.1 billion
(Tsh. 6.71 trillion) to families back home in the last year. The Comorian
community in France, for instance, sends about 20 billion in Comorian francs per
year, which amounts to 15 per cent of GDP.
Govt
looks for individual initiatives to slow down unemployment
By Timothy Kitundu
To combat rising unemployment figures, the government has embarked on a strategy
to make it easier to gain capital through accessing credit solutions.
Dr. Abdallah Kigoda, Minister of State, President’s Office, Planning and
Privatisation said this on Monday when launching the Eurafrican Bank Business
Empowerment Programme at the New Africa Hotel.
“Statistics indicate that each year, 700,000 school and college leavers enter a
labour market with weak prospects of gaining employment,” he said.
Kigoda pointed out that people have to move away from the idea that the
government is the sole employer and acknowledge that private sector initiatives
have gained momentum.
In order to boost the efforts and development of micro and small scale
enterprises, the government is in the course of various stages of implementing a
wide range of measures.
“I would like to express our appreciation of private sector initiatives to
address the impediments that constrain the transformation of the large informal
sector. Growth of the SME sector is critical in generating new employment
opportunities and higher incomes,” he said.
Juma Kisaame, Managing Director of Eurafrican Bank, said that banks are
generally reluctant to lend to SMEs.
To help reduce this risk, he said, Eurafrican Bank’s Business Empowerment Forum
will focus on equipping existing and potential entrepreneurs with soft skills,
through teaching SMEs how to withstand the onslaught of new institutions, how to
overcome the tendency to defend past legacies and traditional business models
and not being afraid of using unconventional strategies that will produce
unconditional financial returns.
Bid for TRC
opened
By Timothy Kitundu
The Presidential Parastatal Sector Reform Commission (PSRC) yesterday opened
bids for the divestiture of the Tanzania Railways Corporation (TRC) from two of
the three pre-qualified bidders.
The bidders who submitted their bids at an initial deadline of November 11, 2004
and whose bids were opened yesterday include the Great Lakes Railway Consortium
of South Africa and Rites Consortium of India. The NPLI/Spoornet Consortium of
South Africa did not submit a bid.
PSRC Executive Chairman, John Rubambe told members of the press after the
ceremony that bidders are bidding for the concession of TRC operations to
provide passengers and freight railway services on the TRC network.
According to him, the winning bidder will be the one submitting substantially
response bids for the concession agreements with an acceptable technical
proposal and offering the highest fixed concession fee payable to the Reli Asset
Holding Company (RAHCO).
“Today (yesterday), we have announced the names of the bidders who have
submitted bids. The technical bid submission will now be evaluated by the
Evaluation Team in line with the bidding arrangements,” he added.
He said those bidders whose technical bid is acceptable will have their
financial bid opened next month. The main criteria for winning are to
demonstrate the ability to run the firm under a concession.
It is expected that the winning bidder, according to him, will be announced in
June 2005 with the concession agreement expected to be signed by November 2005.
The concession agreement will be signed by the operating company which will be
formed by the winning bidder and RAHCO as the asset holding authority.
He said mobilization is estimated to take about six months to allow the private
operator to recruit staff, purchase inventories and prepare for taking over
operations at the commencement date of the concession agreement. The private
operator is expected to take over operations by the end of November 2005.
More aid but
far from target
By Express Reporter
Official Development Assistance (ODA) to developing countries
increased to US$ 78.6 billion in 2004, its highest level ever, according to OECD
(Organisation for Economic Co-operation and Development) on Monday. Taking into
account inflation and the fall in the US dollar, this represents a 4.6 per cent
rise in real terms from 2003 to 2004.
Several factors accounted for the rise in real terms in 2004. Contributions to
international organisations increased by US$ 3.7 billion, aid to Afghanistan and
Iraq was up by a total of at least US$ 1.5 billion, technical co-operation
grants rose by US$ 1.2 billion, gross debt relief grants fell by US$ 2.1
billion, and net lending fell by US$ 1.3 billion.
Fifteen of the 22 world’s richest countries reported increased ODA in 2004. The
United States remained the largest aid donor in volume terms, followed by Japan,
France, the United Kingdom and Germany. The only countries to exceed the UN
target for ODA of 0.7 per cent of GNI (gross national income) remain Denmark,
Luxembourg, the Netherlands, Norway and Sweden.
Despite increased aid, it only counts for one fourth of UN’s target.
TCCIA moves
towards self-sustainability
By Angela Mazula
The Swedish government, through the Swedish International Development Agency
(SIDA) has extended its support of the Tanzania Chamber of Commerce, Industry
and Agriculture (TCCIA) to 2007. Soon thereafter, it hopes that TCCIA will
manage without external aid.
SIDA recently signed a grant worth Tsh. 3 billion with TCCIA, but encouraged
TCCIA to start preparations for becoming a self-sustainable organization.
Speaking in Dar es Salaam, Swedish Ambassador to Tanzania Torvald Akesson said:
“Our experience in Tanzania suggests that strong business organizations like
TCCIA are needed for development.”
Sweden has been satisfied with the utilization of the money by the TCCIA.
“Sweden has been convinced that TCCIA will utilize the money as planned,”
Akesson said.
Elvis Musiba, TCCIA President said that with the support from SIDA, TCCIA is
optimistic that they will be independent by 2007.
Meanwhile, Musiba expressed optimism over Tanzania’s decision to rejoin the
Common Market for Eastern and Southern Africa (COMESA.)
Musiba said that the benefits to be enjoyed by rejoining COMESA are many.
Bearing in mind the slow pace at which SADC trade liberalization is taking
place, rejoining COMESA Free Trade Area (FTA) is welcomed, he said, as it will
lead to greater utilization of capacities in industries and farms.
DCB declares
unexpected profits
By Timothy Kitundu
Dar es Salaam Community Bank (DCB) Limited yesterday announced
increased profits; making a pre-tax profit of Tsh. 118 million as at 31st March
2005, thus off-setting the December 2004 accumulated loss of Tsh. 109.6 million.
Speaking in Dar es Salaam Tuesday, the Bank’s Chief Executive Officer, Edmund
Mkwawa said that to the Bank this is considered a major leap as most new banks
operate between 3 to 5 years before reaching the point when the bank breaks
even.
“In our case, we have managed to reach that point within 3 years, well ahead of
the schedule, and at the current trend, we should be able to declare dividends
at the end of the year 2005, also one year ahead of schedule,” he added.
Mkwawa said, during the period under review, the bank prided itself of a total
assets base of Tsh. 12 billion. Total deposits reached Tsh. 10 billion while
total credit had reached Tsh.7 billion.
In terms of lending, he said, by the end of March 2005, a total of Tsh. 1,281.6
million had been disbursed to 9,278 beneficiaries, as compared to December 2004
when Tsh. 1,126.7 million had been disbursed to 8,553 beneficiaries.
According to Mkwawa, total outstanding loans under the solidarity group lending
scheme as at December 2004 stood at Tsh. 182.3 million.
“This year we intend to strive to extend our Solidarity Group Lending scheme to
more areas in Dar es Salaam to the extent of doubling the amount of credit
extended under the scheme,” he said.
Unlike other banks, Mkwawa said, DCB has been channelling 70 to 80 per cent of
its resources towards poverty alleviation activities, with the main source of
funds for such activities coming from indigenous financial intermediaries,
particularly pension funds.
The bank, he added, intends to introduce two new products this year namely forex
operations and money transfer operations, as a sub-agent of Western Union Money
Transfer.
Tobacco
traders united for higher yields
By Joshua Mshana, recently in Tabora
The Association of Tanzania Tobacco Traders (ATTT) is working
towards the expansion of the crop which plays an important role in the country’s
economy. In an interview with The Express, ATTT’s General Manager, Henk Faber
said.
ATTT’ goal is to find markets and provide services to farmers and their primary
societies so as to develop tobacco growing, particularly in Tabora Region, where
much of the tobacco is grown.
“We provide logistical services and organize the market and preparation of
societies. We don’t buy tobacco; we only do administrative process and provide
fertilizers to tobacco farmers,” Faber said.
The challenge which the Association is facing is debt recovery from farmers.
Another challenge is to produce the type of tobacco which is required in the
world market.
The Association has extension officers who advices tobacco farmers on better
farming methods which will enable them to maximize production and increase the
quality of tobacco.
“This season we expect that there will be an increase of harvest despite bad
weather (drought). We anticipate a turnover of between Tsh. 14 million and Tsh.
16 million.
ATTT advised farmers to form a group of 10 people, which will be their trustees
for a loan. If any member fails to pay, the group has to pay on their behalf.
Farmers are advised to adhere to the advice of agricultural experts
(agronomists) so as to ensure that the quality of tobacco becomes high and meets
international standards. This will enable farmers to penetrate and compete on
the international market.
Women get
loans
By Damas Ayuke, Kigoma
Kigoma Ujiji Town Council, through its Development Fund, has given
loans amounting to Tsh. 154 million to 2,570 women between 1995 and 2004.
Formation of women groups in Kigoma Ujiji Town Council, has been a challenge for
women joining the commercial sector, said Kigoma Ujiji Town Council Executive
Director, Laban Tanda.
Many women engage in food vending business and other petty businesses.
Between 1998 and 2004, a total of 9,505 loans amounting to Tsh. 1.3 billion were
provided to various clients by PRIDE Tanzania, Kigoma Branch and a big
percentage of the clients were women.
Small Industries Development Organisation (SIDO) in Kigoma Region provided 1,815
loans amounting to Tsh. 625 million, during the same period.
TCCIA
urges patriotic ownership
By Sebastian Gabunga, Mwanza
President of Tanzania Chamber of Commerce and Agriculture (TCCIA),
Elvis Msiba has urged people to buy shares in TCCIA Investment Company.
“We should not allow outsiders to own our properties and it is a shame to allow
decisions for our economic sector to be made from outside the country,” he said.
He said that it should be remembered that during this era of globalisation,
foreigners are allowed to come into the country and participate in various
economic undertakings, including buying companies or public parastatals sold by
the government.
Therefore, he said, it is important for Tanzanians to buy shares in companies
and various public parastatals which are being privatised.
TCCIA has established an investment company aiming at collecting capital and
thereafter buy shares in companies and various parastatals.
To start with, he said, TCCIA Investment Company Ltd intends to buy shares in
the National Microfinance Bank (NMB) and then buy government shares in the
National Bank of Commerce and in Tanzania Portland Cement (Twiga).
Teachers
given loans by school
By Joshua Mshana
The management of Mbezi Beach Secondary School is providing loans
without any interest to their teachers and workers.
Kiramuu Mbowe, Headmaster of the school said this in an interview early this
week.
“In order to improve the living standards of teachers and workers of the school,
we have given some of them loans amounting to Tsh. 45 million and we are
deducting the repayment of the loan in their salaries,” he said.
According to Mbowe, the amount of money which is being deducted from the
salaries is small. Some of the beneficiaries of the loan have managed to buy
business vehicles and they are earning a modest income through the trade.
Tourism on
the rise
By Joshua Mshana
The development of the tourism sector has enhanced the image of
Tanzania abroad. It has attracted more tourists and foreign investors to come to
Tanzania.
This is according to John Nathanael Kiama, General Manager of one of the newest
hotels in the country.
“Tanzania is the fastest growing economy in East Africa and it is attracting
more tourists and foreign investors. This makes the tourism sector contribute
more to the economic development of the country.
When we have more hotels, more tourists are coming as they can be accommodated
and therefore they contribute to the development of the national economy by
bringing in foreign exchange,” he pointed out.
The Ministry of Tourism and Natural Resources is doing what they can to promote
Tanzania abroad. The Tanzania Tourist Board (TTB) estimate that, this year the
tourism sector will grow.
Kiama said they had decided to construct the hotel in order to cope with the
forces of trade liberalization and open market economy which is characterized by
stiff competition.
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