The economic recovery is gaining momentum as Tanzania has recorded an increase in exports of goods and services, as well as the provision of loans to finance economic activities by the private sector.
According to the Bank of Tanzania’s monthly economic review, exports of goods and services amounted to $9.56 billion (about Sh21.9 trillion) in the year to October 31, 2021, higher than the $8.63 billion (about Sh19.8 trillion) in the corresponding period in 2020.
This was driven by a rise in exports of manufactured goods and non-traditional goods other than minerals, a trend of which analysts view as things have started resuming normal after taking a two- year hit from Covid-19.
Exports of goods increased by almost 10.4 percent to $6.7 billion, with non-traditional goods rising by 13.4 percent to $5,72 billion.
Exports of manufactured goods amounted to $1.17 billion (about Sh2.6 trillion) from $864 million (about Sh1.9 billion) in the year ending 2020, with significant rise in other exports products, particularly cereals.
Economist and business expert Donath Olomi told The Citizen yesterday that improvements in exports meant the impact of the pandemic on the global economies was going down.
“The current trend suggests that on one hand, markets are now opening up and on another hand, the logistics sector is now recovering to allow smooth movement of goods and raw materials,” noted Dr Olomi.
Further, it implies that individuals’ income increased and so did spending, added Dr Olomi, who doubles as the Chief Executive Officer of the Institute of Management and Entrepreneurship Development.
On the other hand, he said the current performance trend was attributed to an enabling business environment under the leadership of President Samia Suluhu Hassan.
“Friendly business environment has increased confidence in both local and foreign investors. Let us keep the momentum going, if we are to do even better,” stressed Dr Olomi.
Prof Abel Kinyondo of the University of Dar es Salaam’s School of Economics seemed to have been reading from the same page.
“In a short-term right signals from the President bolster traders and investors’ confidence to invest in the country,” he stressed while speaking to The Citizen over telephone.
The Head of State has been repeatedly quoted as singing about the need to create an enabling business environment to boost trade, and cementing international relations.
But for her good intention to be sustainable, Dr Kinyondo was of the view that the government should now move from good utterances to writing down laws, regulations and policies on the same.
“We need to create an environment for certainties. Investors need predictability in the legal framework because they want to be sure of their tomorrow. They want to be sure about investment returns,” he recommended.
“With legal framework, investors will perceive us as we really mean business,” Dr Kinyondo said.
He also suggested that the government should speed up the implementation of the Business Blueprint so as to make the business environment even more attractive to investors.
“All laws that impede the implementation of the Blueprint need to be amended.
The Confederation of Tanzania Industries’ (CTI) policy and advocacy director, Akida Mnyenyelwa, said an increase in the export value of manufactured goods was a good sign that the industry is recovering from the pandemic.
“When Covid-19 was at its peak last year, it was not easy to import raw materials due to logistic challenges by lockdowns,” Mr Mnyenyelwa told The Citizen yesterday – noting that the challenge took down production volumes. On the other hand, he said, increase in export value could mean Tanzanian manufactures had become competitive in both quality and price.
Analysts are positive that an increase in credit to the private sector will stimulate economic recovery. Credit extended to the private sector continued to pick up, recording an annual growth of 5.6 percent in October 2021 compared to 4.9 percent recorded in the corresponding period of last year.
Private sector credit growth is expected to maintain an upward trajectory towards average growth target of 10.6 percent in 2021/22.
This, according to the central Bank of Tanzania (BoT), is supported by ongoing implementation of policy measures rolled out by it in July 2021, coupled with recovery of the global economy that has begun to filter into the domestic economic activities. Banks’ interest rates charged on loans and those offered on deposits remained broadly unchanged in October 2021, compared to preceding months.
The overall and one-year lending rates averaged around 17 percent.
Meanwhile, negotiated lending rates charged to prime customers averaged 13.65 percent.
Costs of loanable funds are expected to decline over the medium-term, following the operationalisation of policy measures rolled out by the BoT in July 2021, coupled with the ongoing implementation of accommodative monetary policies.