Editorial

• Shilling stable this week
• Government Securities

Analysis

• Alternative income generating products which are renewable

Shilling stable this week
After a flurry of activity last week, the local FX market has been decidedly quiet, with little volumes noted overall.
Last week was the end of the quarter, and the year-end for the Government. Accordingly, dealers were focused on meeting their TZS requirements, which included selling dollars to raise local currency; this caused the shilling to appreciate below levels of 1,130.
However, once the month-end activity settled down, corporate customers entered the market, and so far the importers have been noticeable in their foreign exchange purchases, against traditional sellers of dollars who have not had much of an impact. Accordingly, prices for USD have been picking up across the week, with the latest prices quoted as of yesterday indicating that all banks have an offer (sell) price above 1,132.
The BoT has not participated in the markets this week, preferring to let the market find its price based on demand and supply. So far, although there has been pressure on the shilling, it is unlikely to cause much weakness and levels of above 1,140 are still some way away.
Indicative TZS rates
As At 16.00 06/07/2005 (buy/sell)
USD 1,125/1,134
GBP 1,972/1994
EUR 1,330/1,358
JPY 10.05/10.18
ZAR 163.50/166.75
KES 14.72/14.95
Local Money Markets
Reported volumes in the money markets were at the highest last Friday, a legacy of the month-end activity; volumes on that day were 19.70 billion in the O/N tenor. Volumes dropped during the course of this week, with volumes of less than 10 billion noted on Monday and Tuesday. Prices have remained range-bound; in the period under review, the lowest has been 4% and the highest 6.5%.
As indicated by the volumes and prices, the market continues to remain liquid, and there do not appear to be any liquidity constraints noted.
The BoT has not offered repos this week.

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Government Securities
In the T-bill/bond auction held yesterday (auction number 606) The Bank of Tanzania offered 48.60 billion of bills. Against that, 28.6 billion was tendered, and 23.10 billion was successful, with little change in the T-bill yields; the benchmark 91-day paper was unchanged at 10.22%
This is in marked contrast to last week, when the Bank of Tanzania took in all the amounts offered, thus pushing yields up across the board – yesterday’s results suggest that they are no longer mopping up excess liquidity, which should leave yields hovering at current levels for the moment.
Global Markets
The global foreign exchange markets over the course of the week have been rallying the dollar higher; there are several factors at hand underpinning this recovery. Firstly, strong USD data has been published recently, which suggests that the US economy continues to do well – accordingly, inflationary pressures remain strong, which reinforces the market’s belief that the US Federal Reserve will continue to increase their benchmark Fed funds rate. This bolsters the yield appeal of the dollar against the euro and the yen, all of which attract lower interest rates.
In the UK, there has been a spate of weak consumer and manufacturing data released recently, which has led the market to believe that the Bank of England would consider cutting rates there; for 10 months rates have been kept on hold at 4.75 percent but it is likely they may be cut to provide some impetus to the manufacturing sector, and also to the important housing market, which has lost steam in recent months.
Indicative Major Currency Exchange Rates  As At 16.00 06/07/2005 (buy/sell)
GBP/USD 1.7520/1.7610
EUR/USD 1.1875/1.1935
USD/JPY 110.50/112.25
The above is for information purposes only. Barclays Bank (T) Ltd. And its employees accept no liability whatsoever for any direct or consequential loss that may arise from its use.Barclays Bank (T) Limited, Treasury Department.
Tel: 2129745/6/8 ;Fax 2129749 Reuters Dealing BBTZ.

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Analysis  

Alternative income generating products which are renewable
The use of non-wood forest products, which has been ignored due to the prevalent use of wood products, can greatly reduce the depletion of forests in Tanzania, if proper information and guidelines are presented to Tanzanians, argues Timothy Kitundu.

Experts in Tanzania and other countries have carried out surveys that prove that the exclusive use of non-wood forest products, apart from supplementing nutrition to households and generating income, can greatly reduce the increasing dependency on the use of forest wood products.
Forests of Tanzania, like those of other tropical countries, provide many products which do not necessitate cutting down trees, and which provide food, fuel, fodder, thatching materials and medicine for the rural population. They supply income, yet little research has been done into improving the protection and management of these resources. Generally, there is little processing, and quality control requirements are not being enforced for them as most of them are traded in raw form.
The importance of forest products in Tanzania extends beyond the local subsistence economy. Available figures in the 90s indicate that the value of wildlife-based activities (excluding wood products) exceeded US$ 1.3 million, wildlife-based tourism contributed about US$ 94 million, honey and beeswax contributed about US$ 2.5 million while gum Arabic contributed US$ 0.9 million.
Doctor Peter Oduol of the World Agroforestry Centre Tabora, told a symposium on Gender and Forestry, that took place in Arusha recently, that Women's Groups in Tabora are now earning between US$ 50 to 80 per week, as a result of the processing and selling of indigenous fruits in the category of forest products.
According to Dr. Oduol, the project can be traced way back to 1998, when the International Centre for Research in Agroforestry and the Agricultural Research Institute, at Tumbi in Tabora, started training women's groups in the processing of indigenous fruits into jams, juices and wines.
To date, according to him, about 2,100 women from 41 women's groups have been trained in agroprocessing around Tabora. The trained women are now involved in manufacturing various products, which include peanut butter, pickles, juice, jam, wine chutney, cake, cooking oil and beer among other things.
Some research conducted by Hamza K. of the Sokoine University of Agriculture, on the contribution of forest products to household food security and income generation, in villages around Mgori forest in Singida, indicate that non-wood forest products are a significant contributor to this economy.
The research shows the vast potential of such riches from the forest, and if fully tapped could greatly reduce the dependency on using wood products, as a means of generating income, hence the exploitation of these other products protects forests and trees.
Indigenous fruits have a potential of 9,495,000 kg while the quantity harvested was 266,798 kg annually. Vegetables have a potential of 990,000,000 kg whereas the quantity harvested was 180,880 kg per annum.
In a study on the contribution of forest products to household economy and the welfare of women, in Meatu District, Shinyanga, conducted by Monica Kagya of the Forestry and Beekeeping Division, a total of 120 useful plant and animal species used as food were identified.
Their uses include food, medicine, fodder, fibres, construction materials, craft materials and gum. According to Kagya, the medicinal plants and gums business is more profitable in this area than other non-wood forest products, as they constitute 85 per cent of the total income earned by households through their sales. The total annual income accrued from these non-wood products stands at Tsh. 268,606.
The market prices for certain items are as follows: wild vegetables stood at Tsh. 1,000 per 4 kg, medicinal plants cost Tsh. 3,000 to Tsh. 5,000 per kilo, fruits were at Tsh. 1,000 per tin, gum was priced at Tsh. 350 per kg while fodder fetched between Tsh. 30,000 and Tsh. 50,000 per acre. The price of fibres (full oxcart) was at Tsh. 30,000 and honey fetched Tsh. 20,000 per tin of 20 litres.
The importance of non-wood forest products should now be taken seriously if at all Tanzania is to save forests from being depleted. Communities should be provided with information on the inventory importance of these resources to raise their awareness.
Moreover, communities should be trained in the managing, harvesting, processing and marketing of these renewable riches from the forests. Infrastructure within and outside the forests should be improved.

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