How much it will cost the country

I saw this article from SUNDAY OBSERVER and I just had to share it with you all. Currently, there are strikes going on in higher learning institutions to complain about the level of funding the students get from the Government. This thing seems to happen every year; the Government never seems to be able to resolve it because they say they lack the funds to. Yet in these hard times, and a looming global economic crisis; at a time when teachers are complaining about the low wages they get, and citizens cry about the lack of affordable health-care, the Government has the audacity to propose an increase in Parliament!?

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2008-11-16 12:00:00
By The Guardian on Sunday Team

The newly proposed parliament size that will increase the number of MPs from the current 232 to 360 in 2010 will cost the taxpayers an extra stunning Sh43.94billion, should the proposal by the ruling party be approved.

The amount includes salaries and allowances for five years, interest- free car loan and gratuity for the lawmakers.

This amount can fully funds 5000 university students for four years or can build 380km of tarmac roads.

If the proposal submitted by the ruling party sail through, the taxpayers will have to pay Sh15.984billion as annual salaries and allowances to their law makers.

This amount is 55percent extra cost to what taxpayers who are reeling with war against poverty in a country where half of the 38million plus population still survive in a less than a dollar per day, pay their current 232 MPs.

With the current size of the parliament, the nation is paying a heft pay amounting to Sh10.3billion per year, apart from interest free loans granted to the legislators as well as the annually sitting allowances.

The interest free loans for the MPs� posh cars will cost Sh7.2billion if after 2010 election will adopt the proposed 360 lawmakers.

Not only that but also, taxpayers will have to dig deeper into their pockets to pay the gratuity amounting to Sh9billion to proposed 360MPs when their five year term expires.

This is a 55 percent extra to what the current legislators will pocket in 2010 when their term expires.

But this cost is subject to increase, depending on how the lawmakers would review their heft pays after the 2010 election as well as the country`s economic trend.

Currently, the MP receives Sh1.5million as basic salary, Sh700,000 as constituency allowance, Sh500,000 as fuel allowance, plus another Sh 500,000 as driver/ car maintenance allowance, per month.

The lawmakers also receive another Sh500,000 for personal assistants per month.

During parliamentary sessions a legislator earns Sh80,000 per day as sitting allowance.

The longest session is the budget session which takes more than 70 days from mid-June to August compared to three other sessions lasting a fortnight each in January, April and October each year.

The MPs also are entitled to receive a gratuity amounting to Sh25million after the end of their five years term.

In terms of size, the Tanzania parliament will be bigger than highly developed African countries like South Africa, according to the available online information.

South Africa with an estimated population of over 45million plus annual Gross Domestic Product valued at $170billion owns the quarter of Africa�s economy, according to the World Bank report of 2007.

In East Africa, the proposed parliament will be leading in terms of size, being followed by Uganda which has 332 MPs, while Kenya will be the third with 213 MPs.

THE SECOND GENERATION OF FINANCIAL SECTOR REFORMS

[Photo courtesy of: Muhidin Issa Michuzi]

OPENING SPEECH BY H.E. JAKAYA MRISHO KIKWETE, PRESIDENT OF THE UNITED REPUBLIC OF TANZANIA DURING THE CONFERENCE OF FINANCIAL INSTITUTIONS, ARUSHA, 6TH NOVEMBER, 2008


Hon. Mustafa Mkullo, Minister for Finance and Economic Affairs;
Madame Antoinette Sayeh, Director for Africa Department, IMF;
Mr. Gray Mgonja, Permanent Secretary, Ministry of Finance;
Professor Benno Ndulu, Governor of the Bank of Tanzania;
Deputy Governors of the Bank of Tanzania;
Leaders and Representatives of Financial Institutions in Tanzania;
Distinguished Invited Guests;


(I recognize Mzee Mtei, Bob Makani and Mr. Mbaya;
Ladies and Gentlemen.

Introduction
It is, indeed a pleasure for me to be afforded the opportunity to address such an important conference which brings together the practitioners of the financial institutions that are so key, to the realization of the growth and development of Tanzania.


Since independence, the hope for each Tanzanian has been better life. Building and nurturing a nation whose people are free of ignorance, disease and poverty have been the hallmark aspirations, guide and preoccupation of the successive administrations in our dear country.

Today, the
vision that underlies our socio-economic agenda and programs still carries these great dreams of each Tanzanian since dawn of independence.
History has over time taught us that success in achieving these goals sustainably lies ultimately in the private sector’s maximum involvement in economic activity.

It is in recognition of this important fact, that the reforms that we have undertaken over the past two decades have brought the private sector to the centre of the economic development agenda in our country.
As you all know, human intellect and entrepreneurship are among the greatest assets any nation can have.

But the best ideas, as truly as they are human, will hardly get off the ground effectively, without being properly nurtured and empowered. Financing is critical in this regard. It does not matter whether the idea is big or small.
A widow, who is struggling to feed her children, may identify a good market for pancakes that she knows she can easily take advantage of. A good market or a good idea without finance, will not enable this woman realize her ambition to change her life.
A graduate of agricultural science may identify a fertile peace of land suitable for a crop that has good local and global demand. He knows what to do to get maximum output from the land, but without finance his knowledge will be worthless. Likewise, an investor with an excellent idea about a good project is helpless without finance.

Tanzanians are a very resourceful people. They are full of good ideas which can transform this nation into the dreamland of our people. But, without proper financing though, those man y ideas will not be realized. It is just as good as having no ideas at all.

I am saying this, Mr. Governor and distinguished representatives of the financial institutions, just to remind ourselves of the importance of having a financial intermediation system that efficiently collects the funds from those who have money to spare, and channel them to those in need of funds for investment. Morden civilization has been made possible and sustained by credit flows—a fact that is even more clear now that, the world is going through a financial crisis.

Our entrepreneurs—small and large—need reliable, accessible and sustainable sources of financing. Providing funds at reasonable cost, remains a major challenge in our country, more so for people in the rural areas and small enterprises.

That is why, Governor and distinguished delegates, I consider this meeting to be an opportune moment for me to address officials who are best placed to give us answers as to how this gap can be filled and indeed, bring those answers to reality.

First Generation Financial Reforms in Tanzania
Before identifying the challenges ahead let me reflect on the ground that we have covered in addressing the financial sector problems in our country. We are, today, in the middle of financial sector reforms whose first phase started in the early 1990s.

Two important pieces of legislations were passed in the first half of the 1990s, namely:
The Banking and Financial Institutions Act 1991 which opened up the financial sector to private capital both local and foreign, and;
The Bank of Tanzania Act 1995 that shed the non-traditional functions off the responsibilities of the Bank of Tanzania and gave the Bank the independence it needs in pursuit of financial and price stability, which the Act made the primary objective of the Bank.

I am happy to have been associated with the conception and passage of the BOT Act. At that time I was the Minister for Finance.

Both acts have now been revised in 2006 to match with the changing times and needs of modern financial sectors.

Several additional laws were enacted which gave the financial sector its current market based character. The Foreign Exchange Act 1992, that among others provided for the administration and management of dealings in gold, and foreign currency and the Bureau de Change Regulations of 1992 that, provided for establishment of bureaus de change are cases in point. The other is Capital and Securities Market Authority Act 1994 that formed the Capital and Securities Market Authority and laid the ground for establishm ent of the Dar es Salaam Stock Exchange in 1996.

Today, distinguished participants, a decade and half since the financial sector reforms began, notable strides have been made in provision of financial services in our country. Allow me to mention some of them here. These include:
The number of financial institutions has increased and their efficiency in provision of services has improved.

From only three public owned banks in early 1990s, the number of banks has increased to 35; We have seen success in refocusing monetary policy to price stability as evidenced by the decline of inflation from rates ranging between 20 and 30 percent before 1995, to single digit rates since 1999. This is an indication that our economy has become remarkably resilient to shocks. For instance while the recent food and oil price shock has caused inflation to soar in many nations around us inflation in Tanzania has increased by much less;


Tanzanians have a wider range of instruments to put their savings in now. They are no longer limited to only cash and shilling bank deposits, but they can also put their savings in government securities, shares and foreign currency;
Exchange rate and interest rates are now market determined and I trust the markets are, as expected, making better allocation of the financial resources, on the basis of where the highest return is. This has contributed to the steady increase in the strength of our economy that we have witnessed in the recent past; and Credit to the private sector has expanded substantially as the government become less and less dependant on bank borrowing to finance its activities.

Ladies and Gentlemen;
These, are by any standard, not trivial achievements. They are significant and you deserve praise from all of us. You are the ones who are at the centre of it all. As we celebrate these achievements, I want us not to forget how far we have come and how far we still have to go.

Challenges to Financial Sector
Let me now say something about some of the key challenges that financial sector faces in the work of supporting growth of the Tanzanian economy and improvement of the livelihood of the this great nation of ours.

Ladies and Gentlemen;
Access to bank services in Tanzania is still very low even by sub-Saharan Africa standards. In 2004, only about 5 percent of our people had bank accounts compared to the sub Saharan Africa average of 26.8 percent.

The 2001 Household Budget Survey showed that the average distance to a bank in 15 out of the 21 regions of Tanzania Mainland exceeded 25 kilometres.
In some reforms new outreach challenges have surfaced. For instance, the question about how to broaden access to finance when private banks have rolled back their branch network to ensure profitability? Can we use modern technology to address this challenge?

As we all know the majority of Tanzanians live in rural areas and depend on agriculture for their livelihood. But, agriculture is faced with numerous constraints which can be overcome by availability of inputs and other resources. It is, therefore, important that we enable rural Tanzanians to have access to credit to enable them overcome the constraints. I have recently talked about opening a window in Tanzania Investment Bank to channel credit to agriculture as a first step towards the realisation of the age old dream of establishment of an agricultural bank.

This is a challenge that needs to be operationalized. An even bigger challenge for you is how to make sure that at the retail end, the credit will reach as many Tanzanians as possible. I am told in some countries banks set aside a certain percentage of their resources for agriculture credit. Can we emulate such examples?
Mr. Governor, Delegates, Ladies and Gentlemen;
Banks and financial institutions can also be helpful in supporting value addition to agricultural commodities. We now have examples of outgrower schemes which integrate production by small holders, large scale producers and processing plants. This is happening in sugar cane and sugar production, tea and even fruit production and canning in Morogoro. This approach has helped small farmers to get extension services and access to credit to mechanize cultivation and get other inputs. I challenge all financial institutions in the country to help promote and expand credit to the agricultural sector. This way Tanzanian farmers would be enabled to increase productivity hence raise their incomes and improve their livelihood.
There are new products that are just emerging now which could also be helpful both to small enterprise and rural communities. One of these is lease financing where with a small deposit and the asset as collateral, more Tanzanians can have access to small machinery and other equipment to improve productivity. In this regard, small tractors, bakery equipment, small transport equipment etc. will be easily available to small holders and enterprises. It is my hope that this instrument will not be used to finance purchase of luxury cars but to raise the opportunities for income generation for a much wider range of Tanzanians.
Affordable credit is an important facilitator for investment and growth. Credit in Tanzania is still too costly and therefore not within the reach of the majority of Tanzanians. Partly this situation arises from extremely high risk premium that banks place on potential borrowers and partly because of insufficient competition in the sector. The government over the past ten years has reduced substantially its share of total domestic credit and therefore, is much less of a problem in terms of crowding out the private sector. Unfortunately, most of the credit released tends to sit in the banks as excess liquidity instead of being lent out. As a result the cost of credit made to the private sector has to be borne by the small part that is lent. I am happy to note that the interest rate spread has been declining but the cost of finance still remains too high.
I have also learned that the Bank of Tanzania and financial institutions are working on credit reference bureau which will open up a possibility of using “moral” collateral where someone’s track record for servicing debt will serve as collateral. I hope this also will be given rapid push to be realized.
Ladies and Gentlemen;
Financial stability is an important goal to be achieved by operations in this sector. I am pleased that supervision of banks and deposit taking non-bank institutions has been strong and that the insurance industry has a strong regulator too. I am, however, still worried about the lack of strong regulator of pension funds which have tended to face major collapses—for instance in Latin America. A pension fund is a fiscal contingent liability because ultimately, the government has to shoulder the obligation to pensioners in the event of failure. It also poses big risk for financial instability because of pension funds’ wide integration to the whole financial system. The Social Security Act has been passed and the draft investment guidelines for pension funds have been prepared. I hope that concerned institutions will now move quickly to establish and operationalize the regulatory framework.

Concerning access to long-term finance we have been facing challenges in mortgage, infrastructure and venture capital areas. Household access to mortgage financing remains highly limited. A young employee’s desire to acquire a home is frustrated by the fact that it would take too long (and in most cases impossible) to save enough money to purchase or build one. Our financial system is yet to develop an accessible and reliable mechanism to meet the demand for mortgage financing. I take notice that some of you have begun to venture into this area—commendable effort—but it is still too little.


A Mortgage Finance bill has already tabled in the Parliament. After this bill is passed in law by the signature of the President it will help to expand mortgage finance, and that the expansion will help to provide funds for acquisition of low cost housing and not just for mansions and skyscrapers. As we venture into this we should be mindful of the current financial crisis which originated from subprime mortgage lending. We must make sure that the regulatory framework for this avenue of financing is effective and robust.


Ladies and Gentlemen;
We have been working on sovereign rating in preparation for issuance of sovereign bond to raise funds for infrastructure projects. The current financial crisis, that began in mortgage finance in US has not only raised the lending risk and the attendant increase in interest rates, but also has reduced the probability of success through credit rating as the crisis has shaken the credibility of the rating agencies themselves. This underlines the importance of looking inside for long term sources of infrastructure financing. In this regard, the challenge for the financial system is to provide mechanism for facilitation of such financing from within the country.

It is my hope that the set-up of TIB as the national development financial institution will strengthen the provision of long-term financing for growth enhancing projects in agriculture, manufacturing, tourism and other sectors, as well as provision of venture capital. This is an area that we can encourage the private financial institutions to venture into, albeit by opening some windows for long-term financing.


Before finishing, let me say something again about the current financial crisis. As developed nations struggle to rescue their financial systems, huge government resources have already been committed and will continue to be committed to that endeavour. This may cause stress on aid funds, but we still have trust on the promises that the international community has continued to make on its dedication to make provisions for the attainment of Millennium Development Goals.


One of the outcomes of the crisis has been the loss of trust among financial institutions and the accompanying credit dry up, which is now causing worries about impending recession in developed economies. I am comforted Governor by your assurance that our financial sector remains safe and that systematic steps are being taken to minimize our exposure to risk by transferring our official reserves to safer hands. I urge you, in the financial community, to work together to keep our financial system from being pulled into the turmoil.
Conclusion


Ladies and gentlemen,
Let me finish by reiterating that: absence of reliable and accessible source of finance for poverty reducing activities remains a big challenge to our nation. It is a challenge that falls directly on you, and our people are looking at you, and their government for the answers. The theme of this conference “Second Generation of Financial Sector Reforms”, gives me hope that all matters vital to filling this gap, will be carefully considered and workable solutions will emerge from this conference.

As you discuss and deliberate on various issues in this conference, let us make sure that we come up with answers on how we can meet the various challenges mentioned earlier. We all have our roles to play in resolving these challenges. I call upon all the key financial sector players to go from here with good implementable ideas and put them into practice.

Having said this, now I have the pleasure to declare this conferences e opened. I wish you fruitful deliberations and outcomes.
I Thank you for your kind attention!

The Unbanked in Tanzania

Hello Peter,

This will make an interesting discussion on your blog.

I got news that we have about 1,800,000 bank accounts in Tanzania, meaning less than 5% of the population is banked.

What conclusions can be drawn from this information?

- The unbanked are too poor to leave money in banks?
- They lack basic finance literacy?
- Existing banks are not aggressive enough in conquering the market (fewer branches, limited marketing initiatives, bank products out of touch with needs of the unbanked, ...)

... what else?

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Many thank yous Mdau Mboma for this discussion topic!

Dr. shayo muses over BoT's stance

By Dr. Hildebrand Shayo

Tanzania businesses in forthcoming recession!

The warning, caution and confidence issued by Profesa Benno Ndulu, the Governor of the Bank of Tanzania that the Tanzania's economic remain strong and is likely not to be pretentious by the global financial downturn sent waves through my mind that triggered me to suggest steps that Professor Ndulu overlooked in his analysis, that could help the Tanzanian business recover from the financial gloom terrorising the world financial market.

Although the waters are still turbulent, this is now the time for renowned and professional individuals like Professor Ndulu not to undermine Tanzanian by not telling them the reality.

While the normal way of reducing risk in a portfolio during a slump is by diversifying, certain assets tend to do better than others at different parts of the economic cycle. What the world is experiencing is a de-leveraging, where all asset classes are falling in value and will continue to fall in the next two years. No doubt the world is going through a period where shares, property, fixed interest and even commodities will go down.

That said, despite slowing global economic activity and the impending recession that Professor Ndulu seem not to put into his equation, it is not all doom and gloom for business and especially for those with a long-term approach.
I would like to remind Professor Ndulu that what he needs to remember is that market volatility and the indiscriminate selling the world financial sector is witnessing or has witnessed in the past few weeks will create opportunities to pick up bargains.

I would have thought Professor Ndulu would have coded among others, things like the need for business to consider diversifying their portfolio.

While there's no escaping the fact that it's not going to be plain sailing from on-going global financial turmoil’s, and that all equity portfolios will get rocked by further short-term volatility, he should have assured business with well-insulated portfolios that those with long and proven track records will be able to overcome the slump. He should also have tried to advice the business to look to professional managers who could help them benefit through the cycle.

Stating that Tanzania financial position is fine wasn’t enough, he should have reconsidered what happened to Iceland bank were UK government is struggling to recover its money invested by its business. To state that Tanzania banks are well-positioned for the slump and that Tanzania money in the foreign account is safe and is enough to allow “business as usual” isn’t correct, because Tanzania is not an island! Is Professor Ndulu aware on what Kenya stock market is facing following global financial downturn?

Professor Ndulu should have seen the need for corporate debt that seems not to feature in his statement. To me, corporate debt is one of the first investments to recover in a slump, and many bond experts are beginning to call the bottom of the market for this sector. At the moment, yields are likely to be attractive, because interest rates and inflation will or are expected to fall which is a fantastic backdrop for any finance executive.

In any slump, there are traditional areas which are viewed as immune or defensive such as pharmaceuticals stocks and healthcare company; along with utility providers. People need medicine and power, irrespective of economic conditions. I do understand that tobacco and liquor companies that Tanzania has been using as a “model of success” following privatisation, also tend to flourish under the spectre of a protracted recession.

Nothing regarding our gold reserve was mentioned in his statement! Gold
at times of financial crisis, is looked upon as a safe haven for distressed investors rocked by faIling share prices. In the current extraordinary circumstances, Professor Ndulu should have told Tanzanians where this asset class is going or taking Tanzania?

My view is that gold is a long-term story underpinned with supply and demand drivers that he might deliberately omitted in his statement. Does Professor Ndulu recognize that gold price has been rocky in the current crisis? Last year the gold price was $667 an ounce and it rose to a peak of more than $1000 on March 17th 2008. As price now remains choppy, what is the position of Tanzania that is said to produce a lot of this precious metal among gold producer in the world?

While I am not sure if BOT, that Professor Ndulu is the Governor will bail out private owned banks in Tanzania or nationalise part of them, make me speculate what a business need to do in Tanzanian context ?

I think, business needs to be careful not to be too defensive in the current slump. In a way, looking at a cynical portfolio after values have already fallen is a bit like locking the stable door after the elephant has already bolted.

To the business I think, it's important not to lose sight of your long-term objective, try and have the asset mix which is most likely to give the return you are looking for. If as a business you are too defensive now, you will risk missing the upturn when it happens.

Professor Ndulu should have encouraged the business to seek additional sources of diversification, encourage them the focus on investments with high earning visibility and supportive valuations. Telling us that daily interbank cash market in Tanzania was doing well and BOT is watching exchange rate movement is not enough! We need measures on how to help business to cope with financial downturn.

[SOURCE: MICHUZI BLOG]

Graft in Tanzania slightly worse: TI

By Rose Athumani

Tanzania took a slight knock in its efforts to combat corruption, dropping a few points in the 2008 global corruption rankings, according to a report released yesterday.

The country scored 3 points in the new rankings from 3.2 recorded last year by the global corruption watchdog, Transparency International (TI).

The drop means public perception of corruption in the country increased over the last year. The country remained just above the borderline of countries in which corruption was said to be rampant. More...


[SOURCE: THE CITIZEN]

Dar gets $200m more US grant

By Kagashe Beatus

The United States has increased its funding to Tanzania by $200 million (Sh240 billion), adding to the current assistance it gives the country.

The two governments signed five amendments to bilateral grant agreements in Dar es Salaam yesterday, increasing funding for existing programmes. More...


[SOURCE: ]THE CITIZEN

All set for key business roundtable

By Vicent Mnyanyika

Tanzanian will host an international business conference next month to discuss means of maximising the country's investment potential.

President Jakaya Kikwete is expected to open the meeting organised by The Economist, a prominent international magazine.

A statement released yesterday said the conference to be held on October 6 and 7 in Dar es Salaam would involve the Government through its various ministries. More...
(Related post: http://uchuminafedha.blogspot.com/2008/08/economist-conference-in-tanzania.html

[SOURCE: THE CITIZEN]

Borrow for development, Tanzanians told

JAPHET SANGA in Babati
Daily News; Tuesday,September 16, 2008 @07:42
PRESIDENT Jakaya Kikwete has exhorted Tanzanians to draw loans from financial institutions for their own development.

Launching a branch of the National Bank of Commerce (NBC) Limited here on Sunday, President Kikwete said people should not fear to borrow from banks as even "the rich like Bill Gates do borrow." More...


[SOURCE: DAILY NEWS]

Treasury Bond Auction Summary - 10/9/2008

New `dry ports` in Dar too taxing on importers

2008-09-15 09:32:09
By Michael Mbiro

The move last year to establish two Inland Container Depots (ICDs) as extensions to Dar es Salaam marine port to help decongest containerised cargo has turned out to becoming financial burdensome to importers, reliable sources have revealed.

A random survey conducted by this newspaper recently has uncovered that the initiative hatched by the Surface and Marine Transport Regulatory Authority (SUMATRA) in tandem with the Tanzania Revenue Authority (TRA), Tanzania Ports Authority (TPA) and members of the shipping fraternity, does not work in conformity with interests of importers. More...

[SOURCE: THE GUARDIAN]

Starting business now tougher, says W. Bank

Starting a new business in Tanzania is more difficult today than a year ago, a World Bank report says. And adding insult to injury, getting credit for start-up capital is equally more difficult.

The report tittled, 'Doing Business 2009', a copy of which was made available to The Citizen in Dar es Salaam, has detailed seven out of 10 indicators in which Tanzania has lost ground. More...


[SOURCE: THE CITIZEN]

Cotton prices crashing down contrary to predictions

2008-09-11 10:03:13
By Felister Peter, recently in Mwanza

Cotton farmers will be earning not as much out of every unit they will be selling this year because the global price for the commodity has tumbled compared to last year, reliable sources have indicated.

Price indicators for the crop were revealed recently in Mwanza region by the Kwimba District Commissioner Danhi Makanga. More...


[SOURCE: THE GUARDIAN]

Private tax collection system likely to reduce corrupt elements

2008-09-04 11:10:20
By Angel Navuri

Private tax collection is likely to reduce corruption at the collection point by offering mechanisms for penalising poor collectors, a recent study by Research on Poverty Alleviation (REPOA) has revealed.

According to the study, a private tax collector has in general a stronger personal interest in collection results and is prone to employ more effective mechanisms for penalising poor performance on the part of the collector. More...


[SOURCE: THE GUARDIAN]

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What are your views on this? Will a private tax collection system be truly able reduce corruption which we all know exists plentifully in TRA? Or will this move just be another opportunity for 'Mafisadi' to make some extra cents? What have we been reduced to, as a country, if even something as vital as taxation has to be done by private agencies?

Emerging markets offer concrete growth potential to Tanzania

2008-09-04 10:54:32
By Theo Mushi

Ten years ago, emerging markets were mugged in major crises. That followed their fantastic growth path which noticeably made global financial systems to feel the heat, especially during 1997-98.

Unfortunately, during those troubled years, those economies were labelled `emerging markets` coming as it were to characterise instability or at least some form of volatility.

It is believed that emerging markets are now a key determinant of global growth which is good news and also a potential problem. More...


[SOURCE: THE GUARDIAN]

Kikwete: Abject poverty looms despite good economic growth

DANIEL SEMBERYA AND
ELIAS MHEGERA

PRESIDENT Jakaya Kikwete yesterday declared that the
country still faced the challenge of promoting economic growth
to reduce surging poverty levels that were still prevalent despite
the impressive growth rates achieved so far.
In his address to the nation through the Parliament, the
President addressed several key areas that covered the state of
the economy, Union matters, the issue of Muafaka, corruption,
leadership code, judiciary, and women integration in the
political process. He said some of the challenges to economic
growth were due to natural catastrophes and shortages that
were not anticipated before. “The noise that the public
is making about increased costs of living is not out of the blue,
it is justifiable,” said President Kikwete, who acknowledged
the difficult economic and social conditions people were now
facing. He outlined the factors that had led to these conditions
as including the energy crisis that had brought about sharp
increases of oil prices and the 2006 drought that hit the
country hard, leading to scarcity of electricity. The President
also hinted at other economic challenges like global inflation,
which, he said, had been on the increase since the fourth phase
government came to power. More...


[SOURCE: BUSINESSTIMES]

Dar to seek sovereign debt rating

The Dar es Salaam-Morogoro road. Financing development projects through sovereign bond issues will assist Tanzania expand its fiscal space. Photo/FILE

By STAFF WRITER

Tanzania will soon seek a sovereign debt rating to enable it issue a sovereign bond in the international marketplace.

The Tanzanian government appears convinced that borrowing money from international markets through a sovereign bond is a better way of raising money than having to resort to heavy domestic borrowing.

Two months ago, Finance Minister Mustafa Mkulo presented to the National Assembly a budget that did not factor in domestic borrowing. More...

[SOURCE: The EastAfrican]

BoT to issue new rules to check MFIs

Bank of Tanzania headquarters in Dar es Salaam. Some lenders charge up to 200 per cent of the principal amount. Photo/FILE

By WILFRED EDWIN

The Bank of Tanzania is formulating a mechanism to regulate non-banking microfinance institutions, Bank Governor Prof Benno Ndulu has said.

The new regulations are aimed at checking on the mushrooming of such institutions that exploit investors, particularly the ignorant lot.

The move by BoT comes in the wake of growing public concern over a number of local microfinance companies offering “easy loans” at excessively high rates. More...


[SOURCE: The EastAfrican]

Budget support: Donors` stand ready soon

2008-08-28 10:00:36
By Bilal Abdul-Aziz

Development partners are charting ``the way forward`` for their general budget support (GBS) to Tanzania this financial year and will issue an official statement on the matter soon, The Guardian has established.

Serious discussions are understood to be going on against the background of donor dissatisfaction over corruption scandals at key state institutions, including the Bank of Tanzania. More...


[SOURCE: THE GUARDIAN]

$25m properties nabbed over BoT fraud

The Bank of Tanzania headquarters in Dar es Salaam. Photo/FILE

By MIKE MANDE, JOSEPH MWAMUNYANGE and WILFRED EDWINPosted Saturday, August 23 2008 at 08:15

The Tanzanian government has confiscated property worth more than $25 million from 13 firms in a massive crackdown against people involved in the multimillion EPA scandal.

The seized assets include four brand new Range Rover Vogue Supercharger 2006 Model cars — each valued at $136,916 — with a total value of $547,664 and four Mercedez Benz CLK 230 Kompressor Model cars — each valued at $28,139 — with a total value of $112,556. More...

[SOURCE: The EastAfrican]

INFLATION & CONSUMER PRICE INDICES: JAN - JUL 2008

I recently posted an article titled Tanzania inflation surges to 9.5% on the forum. That is obviously a very high rate, and according to some anonymous sources, the actual inflation may be even higher than that as the National Bureau of Statistics, NBS is apparently usually under political pressure from the government to play around with the figures so as to ensure the inflation is as small as they can report it, with the main target being keeping the rate under double figures always. So if the claims are indeed true, the actual inflation should be at least 10%; maybe even 11%!! This is very alarming for investors in the financial markets because the wighted YTM of 364-day T-Bill is only 11.50% whereas the total YTM for the 35-, 91-, 182- and 364- days T-Bills is 9.86%.

I extracted the following table of CPI and inflation development for Jan-Jul 2008 from the NBS website

(Click on the image to enlarge)


What do you think are the courses for such high inflation rates and what should we do to control the inlfation?