Tanzania economic difficulties can be attributed to many factors
which include rising unemployment, poor productivity, inaccessibility to credit
facilities, and the current state of country’s infrastructure. On both short
and long terms, these factors must be closely scrutinized for any
meaningful economic change in the next five to ten years. The country’s
economic outlook might look much gloomier in days ahead. Otherwise natural gas
discovery in Tanzania will be something to cheer about, if right investment and
economic decisions are made
Wages in almost all sectors of the economy do not reflect the
actual cost of living. Consumers are having little to spend that would foster
economic growth. Currently, a Tanzanian consumer is spending the little he/she
has just to get by. Majority are living hand to mouth, providing for their
families basics of life such as food, and shelter. Very few can afford spending
on capital goods. Neither do they have the luxury to save or sustainably invest
which is not good for economic vitality.
Consumer spending power is the foundation of a nation’s economic
strength. When that power (purchasing power) diminishes, the economy crumbles.
Even though Tanzania Bureau of Statistics places the inflation rate at
10.4percent for the month of February 2013, the actual number could be much
higher considering various economic events in the past few months. Depreciation
of the domestic currency and Commodity prices could perhaps highlight where the
economy stand in the short term
The rate of unemployment in Tanzania is particularly troubling.
When you have four out of ten young men jobless, by any standards, something
must be wrong. According to the International Labor Organization, Urban
unemployment in Tanzania has passed 20 percent threshold while youth
unemployment stands above 40 percent. In other words, unemployment may prove to
be a thorny issue to the government, unless extra ordinary measures are taken
to curb the most severe aftereffects
Whenever credit facilities become inaccessible to ordinary
citizens, country’s economy hangs by the thread. In that sense, small scale to
mid level entrepreneurs that creates most jobs crucial in keeping the economic
engine running, are facing enormous difficulties in borrowing from domestic
lending institutions. Or if they do, exuberant charges and interest rates are
levied on the borrowed capital, which in turn forces the borrower to basically,
work for the lender; a discriminative practice that retards economic growth.
Under conventional business practices, startup-businesses have no room to grow
when they can’t borrow
Bank of Tanzania recorded a $250.6million deficit in the month
of December 2012, that means the country is importing and consuming more than
it is producing and exporting, and the immediate effect of that, has been the
shilling losing ground against major foreign currencies especially the US
Dollar.
In a span of two months, the Tanzanian shilling has lost 4% of
its value against the US dollar. From Tsh. 1565 to Tsh.1616 per US Dollar
between January and March alone; a weaker currency translates to higher cost of
foreign goods, high cost of living and the diminished value of individuals’
wealth. This means the country is not doing too well economically.
Both short and long term goals must be geared towards boosting
the country’s productivity, as well as improving the country’s infrastructure
to attract Foreign Direct Capital. These are essential ingredients in boosting
the economy and correcting country’s balance of trade
Considering the country’s natural wealth, turning the country’s
economy around could be a short term project if the government is willing to do
so. Natural gas discovery in Tanzania’s southern corridor is a key to the
country’s long term economic ascendance, given robust economic blueprint.
Nonetheless, there must be a political will to push the country forward by
tackling the culture of ten-percent in dubious contracts. Otherwise, Tanzania
economic outlook may be off the cliff in both short and long-terms
Mungu ibariki Tanzania, John Mashaka
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