The current financial crisis has taken a global dimension, spreading from the US, Europe and the emerging markets. Spillovers from the developed-markets’ financial crisis and economic slowdown threatens the remarkable growth enjoyed since the mid-1990s. In Tanzania the effect on ...Click here to read more

The current financial crisis has taken a global dimension, spreading from the US, Europe and the emerging markets. Spillovers from the developed-markets’ financial crisis and economic slowdown threatens the remarkable growth enjoyed since the mid-1990s. In Tanzania the effect on agriculture production depends on the crops involved. For instance, cotton and sisal prices have gone down at a higher rate compared to coffee, whereas prices for tea, tobacco, cashew nuts and sugar are still stable. Economic growth in Tanzania is slowing down and likely to weaken even more sharply. Her exports to developed countries are falling, and short term credit is drying-up. This could trigger a fall in production and investment by the productive sector, and to cut into governments’ revenues and hence her ability to invest to meet education, health, transportation and gender goals.

The fall in export revenues, remittances and foreign investment have led to high current account deficits and rising inflation. Generally, global financial crisis could significantly set back the fight against poverty. Therefore, it is crucial at this juncture to consider strategic measures in order to minimize the impact of the current crisis and also be able to withstand any crisis in future.

On 2^nd April 2009, world leaders from the G20 countries – representing 85% of the world’s output – met in London to discuss measures that can be taken to minimize the effect of the crisis and to prevent any crisis in future. In their deliberations, they cited the following as causes of the crisis:

“During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.” (Declaration of G-20)

Hence, to curb the effects of the crisis the following measures were suggested by G20:

• Commitments to work together to restore growth and jobs, while preserving long-term fiscal sustainability.
  
  
  
  
  
  
• To Strengthen financial supervision and regulation: by putting in place a better and more credible system of surveillance and regulation to take account of macro-prudential risks and prevent excess leveraging .
  
  
  
  
  
  
• Fund and reform international financial institutions to overcome this crisis and prevent future ones.
  
  
  
  
  
  
• Promote global trade and investment and reject protectionism, to underpin prosperity.
  
  
  
  
  
  
• Build an inclusive, green, and sustainable recovery: Leaders reaffirmed their commitment to meeting the Millennium Development Goals and to delivering on development aid pledges.
  

• What do you think are the causes of the current global financial crisis?
  
  
  
  
  
  
• What is the nature of the effects of the crisis on Tanzania?
  
  
  
  
  
  
• Do you think the measures suggested by G-20 can be effective in minimizing the effect of the current crisis and make Tanzania withstand any crisis in future?
  
  
  
  
  
  
• What measures have been taken by Tanzanian government to curb the situation? In your opinion do you think these measures are effective?
  
  
  
  
  
  
• What measures do you think are appropriate for Tanzania to minimize the effect of the current crisis and to withstand severe effects of any future crisis?
  

Dear all,

It’s a pity that the planners are in Dar es Salaam and they seldom visit the farmers. Tanzania is infract not a country that should face food shortage! We have many good valleys that are fertile and erable.What we now need is to create a strong Farmers Union that should see to it that farmers do get the help they require in order to produce effectively and use irrigation farming technology and the solar energy to pump the water to their farms.

There should be en end of the political slogans otherwise.” Of course that rate is painfully slow. But we need to appreciate the fact that irrigation infrastructure development is an expensive undertaking, which needs a careful planning, especially for a sizeable infrastructure like dam, river deviation etc.. For sure at this rate of putting about 11,000 hectares annually, it will take us more than 230 years to put the remaining 2.6 million hectares under irrigation and assuming will not need to do major rehabilitation over time. So this strategy can no save us, and therefore need revisited it.”

Yes something is happening at a very slow rate.The government is getting help from Scandinavian countries (Denmark,Norway and Sweden).In Denmark most farmers have their own Wind Mills for electricity production and the country is a world known specialist in Wind Mills. Why can’t our government as for such a help from Denmark? Besides, Denmark farmers are also using irrigation farming.

It should not take 230 years to irrigate 2.6 million hectares.What sort of engineers and planners do we have in our Ministry?
Dr.Khamis
Sweden

Dear all,

It’s a pity that the planners are in Dar es Salaam and they seldom visit the farmers. Tanzania is infract not a country that should face food shortage! We have many good valleys that are fertile and erable.What we now need is to create a strong Farmers Union that should see to it that farmers do get the help they require in order to produce effectively and use irrigation farming technology and the solar energy to pump the water to their farms.

There should be en end of the political slogans otherwise.” Of course that rate is painfully slow. But we need to appreciate the fact that irrigation infrastructure development is an expensive undertaking, which needs a careful planning, especially for a sizeable infrastructure like dam, river deviation etc.. For sure at this rate of putting about 11,000 hectares annually, it will take us more than 230 years to put the remaining 2.6 million hectares under irrigation and assuming will not need to do major rehabilitation over time. So this strategy can no save us, and therefore need revisited it.”

Yes something is happening at a very slow rate.The government is getting help from Scandinavian countries (Denmark,Norway and Sweden).In Denmark most farmers have their own Wind Mills for electricity production and the country is a world known specialist in Wind Mills. Why can’t our government as for such a help from Denmark? Besides, Denmark farmers are also using irrigation farming.

It should not take 230 years to irrigate 2.6 million hectares.What sort of engineers and planners do we have in our Ministry?
Dr.Khamis
Sweden

Its obvious that the effect of global financial crisis in Tanzania stressed much on agricultural sector especially in the crops such as sisal and cotton, this is due to the fact its market is outside (meaning that those big countries affected much by this prevailing situation are the major buyers of our sisal and cotton), therefore failing to purchase our produce affected our stability in terms of sells. So looking on it critically the causes of this crisis in the Country is the habit of relying on a single market.

To my view I think the measures suggested by G-20 to curb the effect of the current crisis and make Tanzania withstand any crisis in future, are absolutely right, but this will depends on strong commitment of the leaders we have, including dealing with all macro economic variables like unemployment, interest rate and inflation (Both fiscal and Monetary policy).

The Government should invest in more leading sectors like agriculture, infrastructure etc these will stimulate the production of goods and services and in turn reduces unemployment as ‘somebody’s expenditure is other body’s income’

Konga Nasson

Morogoro

Dear Dr. Khamis and all, reacting "on the talk on irrigation farming, and nothing has happen",  as mentioned in your comment to this forum of 4th June 2009, that something is happening. According to Minister of Water and Irrigation speech in Parliament on 14th July 2009, He said:-

“Mheshimiwa Spika, katika kipindi cha mwaka 2005 hadi mwaka 2009, Wizara yangu iliendeleza eneo la umwagiliaji kutoka hekta 264,388 hadi kufikia hekta 310,745 ikiwa ni ongezeko la hekta 46,357. Kati ya eneo hilo, hekta 255,675 ni za mashamba ya wakulima wadogo na hekta 55,070 ni mashamba ya wakulima wakubwa wa mazao ya biashara. Katika utekelezaji huo, skimu 164 za umwagiliaji zimeendelezwa ikiwa ni pamoja na ujenzi wa mabwawa 20 kwa ajili ya umwagiliaji”.

Of course that rate is painfully slow. But we need to appreciate the fact that irrigation infrastructure development is an expensive undertaking, which needs a careful planning, especially for a sizeable infrastructure like dam, river deviation etc.. For sure at this rate of putting about 11,000 hectares annually, it will take us more than 230 years to put the remaining 2.6 million hectares under irrigation and assuming will not need to do major rehabilitation over time. So this strategy can no save us, and therefore need revisited it.

Coming from this field of irrigation, my personal suggestion is to go for smallholder approach, of developing indigenous irrigation schemes, of about 2 hectares per family and harvest the rainwater in small homestead ponds for irrigation to bridge the drought spell, as is now imaging from Shinyanga areas and others. Such approaches, as majaruba, is one of indigenous technologies, which has made Shinganya area to be the leading paddy producing area in Tanzania, with no all seasoned river flowing in these areas. Tanzania is 2^nd paddy producer in Africa because of this approach. Morogoro which is famous for more than 140 rivers, all seasoned rivers (with water throughout the year) and with an advantage of government backing (with a slogan of National GRAIN BASKET) is in this year food deficient, while Shinyanga has food surplus. 

Why that is so, it is because Shinyanga and areas like that, have both high population pressure, weather pressure and now ita has market pressure caused by good tarmac roads connecting to the marketing centers of Dar Port, and neighboring countries. But Morogoro is lagging behind because it has no weather pressure, no population pressure, so the government’s policy of making Morogoro to be the National Grain Basket, just like Kilimo Kwanza slogan can not work, because it has not discovered, the CORE PROBLEM or foundation stone for the agricultural development.  

I suggest to we go to areas of high population, weather problematic areas, and with marketing pressure/opportunities. I suggest government support these areas with good price/market (road infrastructures), credit, and capacity development (extension experts etc.). There, farmers will scratch their heads and come with a good solution of green revolution. Having many lakes and big rivers without human factor will not solve the problem.

LET US ALL LEARN TO LOOK THROUGH FARMERS’ EYE!!!!.

I am reaaly proud to be a member of taknet because it offers a platform for knowledge sharing from people with varied backgrounds and calibers.I suggest to moderatorts, to organise a forum/symposium so that we can pysically meet to debate of these topics. This wiill be very interactive and members will optimally contribute rather than restrict ourselves to only emails.It is also  impirtant fro members to familiarise each other.

Best regards to all members
MASSAWE DEOGRATIUS

This can be done through increasing budgetary spending.

Secondly, concerted efforts are needed ro mobilise domestic resources instead of continuing to rely on donors and conventional revenue sources like beer, cigarretes, etc.

Tanzania should consider how to utilize golden opportunities from untapped sectors of the economy like Agriculture and fishing.

Thirdly BOT should conteplate reducing interest rates as a was to enhnance interbanl bank lending and SME's access to loans to have vibrant economic activities in the country.

Thanks
Massawe, Deogratius
Assistant lecturer, Tumaini University Dar Es salaam College
Phone:0713564083
Email: massawedeogratius@yahoo.co.uk

In a bid to increase the mineral sector’s contribution to the national economy, the State Mining Corporation (Stamico) has signed an investment deal with a South African mining company worth USD20m (over 20b/-).

Stamico deputy chairman Ramadhani Hatibu said the project aimed at ensuring the mining sector contributed immensely to the improvement of household incomes in the country.

Elgin, a private South African black empowerment company, would, according to the deal, build a mining factory in Dodoma which would cater for all mineral sector’s needs in the country.

I have suggested on the investment in the Mining sector in Tanzania and the above action by STAMICO is in the right direction. But we don’t know what kind of factory is going to be built. I suppose it is a mineral processing plant that will make mineral concentrates that will be sold to smelters abroad.

I think the mining industry in Tanzania has been affected very much by the global crisis. Most of our mining companies have their roots in Canada,UK and Australia.

As I understand correctly there were some investments to be done regarding nickel deposits in Tanzania but because the global crisis the foreign mining company has put that project on hold. In addition, some companies have reduced the number of mining workers and stop drilling.

I would suggest that Tanzania could mine nickel and sale it in the world market as it is doing with gold. The companies could build the nickel plant when the crisis is over. So don’t waste time now and open nickel mines in Tanzania.

I would like to thank all who have so far contributed to this discussion forum with lovely and constructive ideas. I concur with Besha that in order to avoid repetition it is  good to have a summary of what we have so far solicited in our discussion forum and indicate the way forward.

Ideas from contributors mainly suggest the following:

• The causes of world financial crisis are as briefed in the concept note for this forum
  

• Tanzania should not depend on external AID (suggested by G-20) to minimize the effects of the current crisis and to withstand severe effects of any future crisis. External AID normally continues the pattern of external control of African economies ; Instead of depending on conditional external AID, it is suggested that Tanzania better enter an economic relationship with investment community and entrepreneurs of the African Diaspora that will bring talent and capital in a fair and non-exploitative manner. 
  

• Tanzania should use its resources (human, physical, time ) wisely distribute equally whatever is generated. This can be achieved if the government avoids/stops unnecessary expenditures and any extra expenditure that has to be incurred should be well grounded;
  

• Tanzania should make proper prioritisation when allocating resources and;
  

• The importance of modernisation of the agricultural sector in Tanzania should not be overlooked.
  

• "Umoja ni Nguvu".  Tanzania can succeed if  Tanzanians join their efforts and the country collaborates with other African countries in doing things. As Muhammad puts it "these four problems can only be addressed and reversed 'permanently' through regional integration (and then continent-wide unity) and the development of a domestic entrepreneurial mass that will make products and services, beyond commodity exports that the world and Africans will want. No single nation can do this on its own". This will help to boost intra-African trade.
  

• There is a need to establish a stable regional currency in an optimal currency area, with a streamlined tax structures that reward innovation and participation in a formal economy.
  

• That all Tanzanian need to change their "mind set" and commit themselves to change their country by working hard instead of spending most of the time in leisure.

Dear All,

We totally concur with Dr. Omar. Let us put our resources in supporting Peasant farmers to improve Agriculture sector and providing Homes to low income earners, we can immensely reduce a lot of social problems

In order to be integrative in scope and sustainable in results we shuould change our way of doing things in isolation we need team work with committed citizenship( we should stop waiting for the government only )everyone has the role to play/ participate to solve his/her  practical problems to attain our setted goal.
 
We should put mechanisms to use available resources( human, physical, time) not only in a competence based but also in a logical manner to have sound intergration( Kila binadamu anao mchango wake muhimu kwa shughuli yoyote inayoendeshwa basi tujue nani anaweza nini na anashirikianaje na wengine kukamilisha anachokiweza bila kukwamisha mchango wa mtu au upande mmoja) na hii ianzie ngazi ya jamii wanazo rasilimali zinazowazunguka wanayo maarifa ya kuzitumia,
 
wanao wabunifu hawajaunganishwa au muunganiko uliopo hauko logically wanahitaji utaalam na fedha za kujazilizia pale inapobidi na si mara zote fedha inahitajika.
 
mfano watu wameweza kujijengea nyumba wenyewe, kujilisha wenyewe bila kuitegemea serikali na wanaweza kufanya mambo makubwa zaidi wakiaminiwa kwa kuunganishwa na kuwekewa mtirirko mzuri wa kufanya mambo yao kwa kujiamini.

I do agree with Mr.C. Muhammad that the biggest problem facing Tanzania as well as all African countries is dependency.Around 40 percent of Tanzania’s budget is based on foreign aid from EU and Arab countries. These countries are now facing theGlobal crisis and will not effectively help Tanzania.

I have several times criticize this 40% dependency in every year budget discussions, from The year 2000. We have to depend on our selves as a country (Tanzania).We have to ask ourselves
1.       Do we need all those ministries and all those ministers at this time of Global Crisis?2.       Do we have to spend so much at this time of Global Crisis?
3.    Do we have to continue with the Dodoma Capital Project?
4.       Do we have to let TANESCO continue as it is?
5.       Why can’t we use Solar panels to generate cheap electricity for the whole Tanzania?
6.       Why can’t we get profits from our mining industry in the country?Our future is on our hands and nobody else. There is no foreign country that will build Tanzania

The way this topic was framed was excellent and very engaging.

 As an economist writing from the U.S., I agree with the description of how the crisis was created. I put a bit more emphasis on extreme securitization (which actually began to spiral out of control in the 80s - with mortgage backed securitization being exported around the world beginning in '84) at the root of the problem.

You can read my Securitization As Satan for more details at:

http://www.cedricmuhammad.com/securitization-as-satan

The key assessment is recognizing -as you already have - the four ways Tanzania and all of Africa are hurt:

- decrease in governmental aid

- loss of remittances

- decreased foreign trade

- decline in foreign direct investment

While I appreciate and am learning from the Tanzania-specific responses from those who have posted great comments, to me, these four problems can only be addressed and reversed 'permanently' through regional integration (and then continent-wide unity) and the development of a domestic entrepreneurial mass that will make products and services, beyond commodity exports that the world and Africans will want. No single nation can do this on their own.

A first step would be for Tanzania, the EAC, and all African nations to devote greater funding to massive infrastructure and trade facilitation - a prerequisite for boosting intra-African trade. Another key step would be the establishment of a stable regional currency and here I think the current EAC is not an optimal currency area, so I recommend that eastern and Southern Africa establish a monetary union. This along with a streamlining of tax structures that reward innovation and participation in a formal economy are some basic steps.

The G-20, IMF etc... at best can only make up for a shortfall in previously relied upon resources but of course they come with conditionalities and terms (much of which is not transparent) that continue the pattern of external control of African economies.

My great disappointment with Africa's Committee of 10 recommendations to the G-20 were that they were all dependency-oriented. You can read my open letter to 'The 10' here: http://www.cedricmuhammad.com/memo-to-the-african-unions-committee-of-10-re-the-g-20-summit-and-the-role-of-the-diaspora/ *

You will see that I believe that the investment community and entrepreneurs of the African Diaspora have much to offer Tanzania and Africa if It receives the right call and can enter an economic relationship with Africa that brings talent and capital to the table in a fair and non-exploitative manner. Much of what Tanzania and Africa want from the G-20, IMF, WTO, and World Bank, Asia and the Middle East, She can get from the wealth of the Diaspora, at a cheaper price and on much more equitable and beneficial terms.

They may borrow money for reason 'Y' but they come to spend on the purpose 'X'. The result is, the majority of citizen tend to be paupers ..... which is unspeakable poverty.

 Africa has 13% of the world population, but contribute less than 3% of the world GDP. This means that the real drivers of the world economy are not in Africa. Now, how do countries like Tanzania protect themselves from the world economic crisis while they are at the passenger's seat? We've to think in order to solve our problems intelligently.

We've to invest in people because the ROI is unlimited. It is high time for big decision to be made by our expert. We should now stop those political gambling in bringing development. The problem with politicians is that, if you give them an inch then they would come and take a mile!

Also statistics in economic growth should match with the improvement in the standard of living. The government should take a delibarate measures in curbing the crisis by forming a commission to oversee the situation. This is the time where our economists should work hard and be busy than they ever been.

Are these funds to be directed to the tourism industry and export operations or straight to the treasury for government and MP running expenditures??

Way above one's head to be honest.

Article published on Bloomberg News:

[http://www.bloomberg.com/apps/news?pid=email_en&sid=aSizAUaRnNJs]

By Sarah McGregor

April 27 (Bloomberg) -- Tanzania asked to borrow money from the International Monetary Fund as the global economic crisis erodes demand for its exports and slows tourism, IMF Managing Director Dominque Strauss-Kahn said.

Alongside this funding request, the east African nation has agreed with the IMF to implement policies aimed at “bolstering the Tanzanian economy,” Strauss-Kahn said in a statement published yesterday on the IMF website.

Strauss-Kahn did not say how much Tanzania wants to borrow under the IMF’s so-called Exogenous Shocks Facility.

To contact the reporter on this story: Sarah McGregor in Johannesburg at smcgregor5@bloomberg.net

How can anyone really justify such pays, and in addition to all that, even request for pay rise? This is way above above. I know it is a rant, but how else would anyone have as initial reaction even before you start thinking on making any recommendations. The bottom line is, this is wholly and totally unacceptable for countries with economic scales such as those of ours Tanzania.

Can anyone explain these to the Tanzanians in Manyoni or Sikonge or Maramba Muheza?? This is a serious systemic problem and the sad thing is, it is wholly institutionalized.

I read on the news recently we are to get another loan from IMF. Not bad. But what really are our priorities? I would suggest we need to be developing people and not creating and fostering a classed society. It is a dangerous trend and needs to be reserved. The challenge is, the legislatures themselves make these decisions selfishly.

Another point, their income should be taxed just like any other workers and businesses in the country.

Decline in exports means a substantial decrease in government revenues, which are needed for payments of government employees salaries and to run other social services programme in the country. Recently I heard that our "wabunge" want salary pay increase. Where will the money comes from at this period where financial crisis has weaken our fiscal stability? Does the salary rise to "Wabunge" will keep our economy safe? Don’t they think that such a demand will end up increase our foreign or domestic debt?. Let me share with you a comparative statistics on salary payments to legislative officials.

Currently our MP earns 7m/- ($5,292) per month, the proposed salary will increase to 12m/- ($9,078). This payment is equivalent to $11,335/month the Kenyan MPs receiving. If we calculate in in a year Tanzanian MP will earn $108,936 per year, while Kenyan MPs currently make $136,020 per year. Members of Congress in the United States make $174,000 a year, which is all taxable income unlike the Tanzanian and Kenyan salaries.

Tanzania`s GDP is $16.18bn and Kenya`s is $29.3bn, while the United States GDP is around $14 trillion, close to 1,000 times the size of Tanzania`s economy. Its logical that the proportional difference with South Africa and USA shouldn’t allow that increase. Should the proposed increase in pay go through for parliamentarians, Tanzanian MPs will be earning close to $30,000 more than their South African equivalents, who now earn R714,618 ($79,822) a year after giving themselves an 11 percent annual salary increase effective last April.

In my view this is unacceptable, the government should strengthen domestic resource mobilization through cutting unnecessary expenditures to keep our economy stable at this time of crisis.

Thank you

Yours

D.K. Kaino