By Jaston Binala from Dodoma
Tanzania’s economic policy direction ‘post-Covid 19’ should embrace self reliance, coupled with emphasis on agricultural transformation, experts have recommended.
The recommendations come from a two-day business, economics and finance conference in Dodoma, central Tanzania, where experts met November 25-26, 2021 to brainstorm on the country’s survival, following a devastating impact of the global Covid-19 pandemic.
“I think the one thing I would want the audience to go home with, is one of the key lessons about Covid 19 pandemic–[which] should be the importance of self reliance,” Col. Joseph Simbakalia, a retied military engineer with a knack in finance and the economy told the audience speaking from the high table, “because we saw the global destruction of supply lines.”
He added: “I think increasing self reliance for ourselves—and that is maximum utilization of our resources; and collectively with our neighbors is really the answer. But beneath that I would say self reliance in thinking—so; you know, policy research, policy analysis, policy formulation, and what you are going to do.”
The 20th Conference of Financial Institutions jointly organized by the Bank of Tanzania (BoT) and the Tanzania Bankers Association (TBA) was opened by President Samia Suluhu Hassan.
Another twist toward self reliance could be a shift away from foreign loans toward Tanzania’s gold deposits instead of loans from lenders like the International Monetary Fund, according to Col. Simbakalia,
“In the remarks of the Central Bank Governor, he said that the bank is going to start buying gold; and I said bravo, because with the pandemic, I remember there were days some of our companies couldn’t export because the customers were not buying, ships were not going, and these are our forex earners. And you find that for the most part we depend on export of services, of goods to create foreign reserves when in fact we could get our small scale miners whom we pay in shillings to start creating reserves,” Col. Simbakalia said.
”I calculated that the 367 million dollars we are getting from IMF is only 12 tons of bullion gold. That means our small scale miners produce a ton a month,” he said. “I am quite sure they are quite capable of doing that.”
Col. Simbakalia was contributing ideas as a discussant during a panel discussion titled Economic Growth and Sustainability During and Beyond Covid-19 Pandemic: Priorities and Policy Options.
The panel discussion was led by the Agricultural Economist, Prof. Anna Tibaijuka, former Executive Director of UN-Habitat and Member of the Tanzania Parliament.
Other panel members included main speaker Prof. Samuel Wangwe and Ms. Judith Karangi, a Senior Executive from the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA).
Karangi asked Tanzanian banks to start considering small scale miners more like any other SMEs instead of labeling them as ‘high risk’. She also encouraged banks to consider employing mineral experts to help them understand small scale miners. She then concluded her presentation with an idea related to self reliance.
“One of the things which we discussed at the African Union Private Sector Forum last week was [that] whenever we speak agriculture, we speak of China being producers of equipment; can’t we have our own technologies so that even if there is a pandemic and there is no import and export we can still be able to keep agriculture on track’” she said.
In a lead presentation that set in motion this discussion, Prof. Samuel Wangwe advised that policies to address problems brought by the Covid 19 pandemic should be “multi-dimensional” but including a long term agenda.
Manufacturing has been affected, tourism has been affected seriously, global value chains have been interrupted; Incomes have contracted–where those in towns have especially been more seriously affected.
“This is the context in which we are addressing [the Covid 19] issue,” he said. While it is important to deal with the immediate problems caused by the pandemic, he said, policies should endeavor to create a long term solution.
“The response must be able to address a wide range of sectors: domestic health facilities, manufacturing of medicines including vaccines, strengthening health systems– investments need to be better prepared for a similar crisis,” Prof. Wangwe said.
The economy should be geared for transformative growth, he said, explaining that transformative growth would be one that is high, inclusive; one which creates jobs and is sustainable. To achieve this policy should be designed in a way that reflects the Tanzanian situation–which is mainly agricultural.
“In our situation,” he said further, “we have agriculture releasing labor to the cities, but it is not finding industry to absorb that labor; so that labor is finding its own way in the informal economic activities—and yet agriculture is still very poor; poverty is rampant”.
So we are having people running away from agriculture where productivity is low, running away to the cities where they find a lot of poverty; they are running away from poverty to poverty.
“In this situation we have to start transformation which addresses agriculture,” Prof. Wangwe said. People need to move out of agriculture but they should do that not pre-maturely as is the case now, but rather after transformation into industrial agriculture as is the case in the US and other developed countries.
The panel chairperson, Prof. Tibaijuka, an agricultural economist herself, found Prof. Wangwe to have made a lot of sense.
She took the mic and told the audience there was once a lot of labor in the agricultural sectors of the United Kingdom and the US. Now agriculture employs very few people in these countries because the labor has all left for work in cities; but this has happened after the transformation, she said. Here in Tanzania, too, people will have to leave agriculture, but not now. The timing is not right.
The bright side though, is that the Bank of Tanzania has already created conditions to kick start the transformation. A flood of money is being directed into the agricultural sector. The question though, is whether banks and the farmers themselves can play their cards well to enable the envisaged transformation.
In his opening remarks, the Governor of the Bank of Tanzania Prof. Florens Luoga said in support of the post covid-19 economic recovery, BoT has implemented measures to lower the cost of capital for business, to increase liquidity to banks, and to facilitate lending to agriculture
The policy measures include lowering the statutory minimum reserve requirement from 7 percent to 6 percent in May 2021 and to provide relief to banks that extend loans to agriculture at interest rates not exceeding 10 percent.