By ADAM IHUCHA--
Tanzania’s export value dropped by two
and a half per cent in the year ending November 2013, putting pressure on forex
reserve.
Last year, fresh economic data shows
export value dropped to $7.7 billion from previous year’s $7.9 billion
representing a 2.5 per cent drop.
During the period under review, forex
reserves shrank to $4.5 billion lower than the targeted $4.6 billion,
registering a 2.1 per cent drop.
Reserves are used to give the currency
market the needed buffers in times of shocks, and when the market is volatile,
the central bank would have the capability to intervene to calm the market.
The level of reserves is dependent on
factors such as the increase in the value of imports against exports and
movement in the value of currencies to the dollar.
Tanzania’s current reserves can only
facilitate the country’s import of goods and services for the period of 4.4
months, slightly below the projected target of 4.5 months, latest statistics
indicate.
The tumble in exports has been
attributed to a relative fall in global appetite for Tanzania’s key traditional
commodities such as coffee, cotton, cloves, sisal, tea and gold.
The Bank of Tanzania said in its
monthly economic review in September last year that the value of gold export
declined from $2.15 billion in the year ending September 2012 to $1.748 over
the same period last year.
Export value of gold plummeted due to a
fall in both export volume and unit price.
Export unit price for gold tumbled by
8.2 per cent to an average of $1,524.59 per 31 grammes from the price recorded
in the year ending September 2012.
The fall of gold export partly affected
the performance of export of goods and services that declined 1.4 per cent to
$8.242 billion during the year ending September last year compared with $8.362
billion recorded over the same period in 2012.
Gold is a key foreign exchange earner
for Tanzania, accounting for about 40 per cent of the country’s export
earnings.
The sector employs about 8,134
Tanzanians and 600 expatriates, in addition to supporting the economies of
Kahama, Tarime, Geita, Mwadui, Mbeya, Biharamulo, Mwanza, Nzega and Sengerema
towns.
“This trend reminds us the importance
and urgency of developing processing industries to add value to our crops and
products meant for export,” says President Jakaya Kikwete in his speech to
usher in a new year 2014.
“I’ve no doubt that this year we would
be able to fill this reserve gap” President Kikwete said.
President Kikwete also said the country
has lifted the full year economic growth forecast to 7.3 per cent, up from
previously 7.0 per cent, thanks to implementation of big results now (BRN)
projects.
The BRN schemes that are expected to
stimulate economic growth this year include agriculture, electricity, railway,
roads, ports, water, education and revenue collection.
For instance, the completion of a $1.2
billion natural gas pipeline from Mtwara region, southeast of the country to
Dar es Salaam in 2014 would double the country’s current power generation
capacity of 1,500 megawatts.
“If the construction of the pipeline is
completed as planned ... Tanzania will achieve its target of producing 3,000MW
of electricity by 2015,” President Kikwete said.
Revenue collection is impressive, if
the current average of between Tsh700 ($440.3 million) and Tsh800 billion
($503.1 million) per month is anything to go by.
Revenue collection from July to
November last for instance, soared Tsh3,555.5 billion ($2.23 million) to
Tsh3,008.1 billion ($1.9 million) collected over the same period in 2012,
representing 88.1 per cent of the Tsh4,036.8 billion ($2.5 million) target.
Some of the gaps in revenue collection
that hindered public service delivery were occasioned by delay in the
implementation of tax policy after the budget had been approved.
John Mnyika, a publicity and ideology
director at Chadema — the main opposition party said economic growth has failed
to trickle down to the pockets of the common citizens.
“We want the government to tell us what
is in store so that would reduce the cost of living,” Mr Mnyika explained.
According to him, although the country’s economy is growing and the inflation
rate is decreasing, the majority of Tanzanians are still living in abject
poverty.
Tanzania’s economy grew 7.1 per cent in
2013 as output in communications, financial services and manufacturing rose,
while inflation reduced by almost by half.
“The annual inflation rate fell from
12.1 per cent in December 2012 to 6.2 per cent in November 2013 and dropped
further to 5.6 per cent in December 2013, as a result of decrease in price of
the foods, mainly grains and non-food commodities.
The government targets is bring down an
annual inflation rate to 5 per cent by June this year. The growth in 2013
reflected rising output in several sectors, including communications (up 20.6
per cent), financial services (13.2 per cent), manufacturing (8.2 per cent),
mining (7.8 per cent), construction (7.8 per cent) and transport (7.1 per
cent).
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