by Ben Taylor
Government cuts growth forecast, secures IMF loan
In September, the Tanzanian government slashed its growth forecast for 2021 to 4%, down from 5.6% announced in June. This was expressed in a letter to the International Monetary Fund (IMF). The government attributed the lowering of growth projections to the decline in performance of key sectors due to Covid-19.
“Some key sectors have been seriously hit by the third wave of Covid-19 in the first six months of 2021 that has forced us to review projections,” said Emmanuel Tutuba, permanent secretary in the Ministry of Finance and Planning. He noted that the tourism sector in particular suffered in the first and second quarters.
Growth figures and forecasts have been a source of tension in recent years between the government of Tanzania and major development partners including the IMF and the World Bank.
IMF Resident Representative, Jens Reinke, commented that the government has shown commitment for economic recovery following the Covid-19 pandemic. He made the remarks in approving an IMF loan worth USD $567 to help finance the urgent balance of payment needs, stemming from the effects of coronavirus pandemic.
The government also announced it will also table a supplementary budget before Parliament in February 2022, after the disbursement of the IMF funds. “This is a new source of income that will need approval of Parliament in agreed areas,” said Mr Tutuba, describing this as a normal legal requirement.
Later, the Bank of Tanzania’s monthly economic review for the year to October 31, 2021 reported an 11% rise in exports of goods and services compared to the equivalent period 12 months earlier. Exports amounted to USD $9.6 billion in the year to October 31, 2021, up from $8.6 billion in previous year.
This was driven by a rise in exports of manufactured goods and nontraditional goods other than minerals. Exports of goods increased by 10.4%, with non-traditional goods rising by 13.4%.
Analysts attributed the trend both to a recovery from the past impact of Covid-19 and in part to the efforts of President Samia Suluhu Hassan to establish a more supportive business environment.
“The right signals from the President bolster traders and investors’ confidence to invest in the country,” said Prof Abel Kinyondo of the University of Dar es Salaam’s School of Economics. He recommended, however, that these signals needed to be translated into legislative and policy reform in order for the positive trend to be sustained.
New statistical masterplan forthcoming
The World Bank senior economist in Tanzania, Rob Swinkels, has said the organisation is working with the government of Tanzania to support implementation of the new Tanzania Statistical Master Plan (TMSP) 2022-2027. Mr Swinkels gave the assurance after meeting with the National Bureau of Statistics (NBS) on the matter.
He said the bank is the long partner of the government in the development of the statistics system, which among others, is in response to demand for better information on updates in living standards and policy implementation. He added that the Bank has supported the implementation of TMSP 2010-2018, together with other development partners.
Speaking at the meeting, the Director General of the Tanzania National Bureau of Statistics, Dr Albina Chuwa said, “The World Bank project will help us achieve our vision for statistical development to support the government with quicker and better data to underpin the policy process”.
In a separate development, NBS has requested USD $80m financial support from the World Bank to help in conducting the 2022 Population and Housing Census. The request was by Dr Chuwa, saying the support would go into the purchase of more equipment to be used in the census whose preparations are at an advanced stage.
UK government pursues increased trade with Tanzania
November 2021 saw a UK-Tanzania Business Forum held in Dar es Salaam. It brought together government and business to discuss the trade and investment relationship between the two countries, and opportunities for increased economic partnership.
The UK Prime Minister’s Trade Envoy to Tanzania, Lord Walney (John Woodcock), was in attendance as part of his first visit to Tanzania since his appointment to the role in August. He expressed the UK’s commitment to increasing Tanzania’s exports to the UK market, and investment by British businesses in Tanzania.
“Our particular focus will be on supporting quality and sustainable UK investments into Tanzania that create jobs, inclusive economic growth and mutual prosperity,” he said.
UK Trade Envoys are parliamentarians appointed by the Prime Minister, drawn from both Houses and across the political spectrum. The roles are unpaid and voluntary. These new appointments bring the total number of Trade Envoys who help support the UK’s trade and investment agenda to 36, covering 76 different countries.
Currently, trade between the two countries is highly imbalanced, with the value of Tanzania’s exports to the UK reportedly standing at a mere £29 million per year, while its imports are worth £127 million.
To raise Tanzania’s exports to the UK, Prime Minister Kassim Majaliwa urged the UK to bring in capital and inject it into various sectors especially in value addition. Mr Majaliwa also said UK-funded technical assistance and analysis will help to inform the prioritisation of economic reforms that the private sector could benefit from. He said Tanzania will continue to create an enabling business environment to increase investor’s confidence.
Industry and Trade minister Kitila Mkumbo said it was the government’s wish to see more Tanzania’s products sold in the UK market. “The trade volume between Tanzania and the UK is relatively large. But it is one-sided as it favours the UK more. We import more than what we export,” said Prof Mkumbo.
The forum was attended by over 20 companies from the UK, 150 British and Tanzanian (joint ventures) companies attending in-person and a further 300 participating virtually. It was organised by TanTrade, the British High Commission, the Tanzania Private Sector Foundation and Zanzibar National Chamber of Commerce.
UK aid to Tanzania in precipitous decline
Official aid provided by the UK to Tanzania has fallen sharply in the 2021-22 budget, to £28.5m. This represents a 68% drop compared to 2020-21 (£89.2m) and a massive 86% drop compared to 2015-16 (£204.8m), according to figures released by the Foreign, Commonwealth and Development Office (FCDO).
The drop is most directly linked to the UK government’s decision to abandon its commitment to provide 0.7% of GDP in official development assistance, which came into effect in the most recent budget. It is also linked to the incorporation of the former Department for International Development (DfID) within the Foreign and Commonwealth Office (FCO), now renamed as FCDO. However, though these changes have accelerated the decline of UK aid to Tanzania, the decline started several years earlier.
In 2020, Prime Minister Boris Johnson mentioned Tanzania explicitly as an example of a country where too much aid was provided, in contrast to countries in eastern Europe such as Ukraine and the Balkans, which are more strategically important to the UK.
Development practitioners within Tanzania responded with dismay to this argument, saying they were “left questioning the UK government’s assessment of what constitutes British interests.”
“We believe the move is short sighted, as there are global benefits to providing humanitarian aid to developing countries like Tanzania. A glaring example of this is the current coronavirus pandemic. A unified global response to the pandemic is in everyone’s interests, including the UK’s.”
A representative of the British High Commission in Tanzania responded that “bilateral aid represents one element of the UK’s contribution to Tanzania’s development. UK businesses and investors are a key source of foreign direct investment. And significant amounts of UK aid are channelled through non-bilateral mechanisms, including through major contributions to International Financial Institutions and multilateral programmes. Taking all channels into account, the UK remains one of the largest providers of aid to Tanzania.”
Some analysts have also linked the specific decline in aid to Tanzania to the country’s recent record on governance and democracy, and even to its unusual response to the Coronavirus pandemic.
“Where we have any such concerns on these issues, we have raised them with the Government of Tanzania,” said the BHC spokesperson. “The UK’s relationship with Tanzania remains vibrant and strong. In the year ahead, we will have a major focus on girls’ education and support for Tanzania’s efforts to improve its business environment and build a resilient and productive economy. We will also be working in partnership with Tanzania on climate change, tackling transnational serious and organised crime, and strengthening democratic institutions and the development of civil society.”