EXTERNAL SECTOR 

MERCHANDIZE EXPORTS

42 .              The value of merchandize exports  increased to US $ 902.5 million in  2002, compared to US $ 776.4 recorded in 2001. This was an increase of 16.2 percent compared to 17.1 percent  and 22 percent in 2001 and 2000, respectively.  The increase of export earnings in 2002 was explained largely by exports of non-traditional commodities especially minerals, fish and fish products as well as manufactured goods, while export of traditional goods continued to decline.

 

Traditional Goods

43 .              The value of traditional exports declined by 10.8 percent from US $ 231.1 million in 2001, to US $ 206.1 million in 2002. The decline in the value of exports of traditional commodities was mainly attributed to falling production caused by law producer prices offered  and hence resulting into inability of farmers to meet production costs. World market price for coffee, cotton, tea and clove fell. The fall of price contributed to the low price offered to. As a whole, the value of traditional exports contributed only 22.8 percent of  total foreign exchange earnings from merchandise exports in 2002, compared to 29.7 percent in 2001.

 

Coffee

44 .              The volume of coffee exported in 2002 decreased by 24.8 percent, from 48,390 tons in 2001 to 36,370 tons in 2002. The value of coffee exports also decreased by 38.2 percent from US $ 57.1 million in 2001 to US $ 35.2 million in 2002, due to the fall in both quantity exported and unit price.  The price of coffee in the world market declined by 17.9 percent from US $ 1,179.1 per ton in 2001 to US $ 968.4 per ton in 2002. The coffee price declined mainly due to unexpected excess supply from Brazil which led to accumulation of stocks in the world market. The production of coffee in the country decreased following low price offered by private dealers.

 

Cotton

45 .              The value of cotton exports decreased by 15.1 percent from US $ 33.7 million in 2001, to US $ 28.6 million in 2002, following a decrease in the volume exported as well as the fall in prices in the world market. The volume of cotton exported in 2002 decreased by 9.5 percent to 33,320 tons as compared to 36,820 tons exported in 2001. The price of cotton in the world market continued to fall and reached US $ 859.4 per ton in 2002, from US $ 915.3 per ton in 2001.  For five years consecutively, the price of cotton has been falling mainly on account of oversupply from major producing countries particularly the USA, China and Pakistan as well as increased use of genetically engineered cotton.

 

Sisal

46 .              The value of sisal exports decreased from US $ 6.7 million in 2001 to US $ 6.6 million in 2002. The decrease was attributed to decrease in the volume of sisal exports. The volume of sisal exported decreased by 8.5 percent from 13,860 tons in 2001 to 12,690 tons in 2002. The world price of sisal increased by 7.1 percent from US $ 482.0 per ton in 2001 to US $ 516.4 per ton in  2002.

 

Tea

47 .              The value of tea exports increased slightly from US $ 29.0 million in 2001, to US $ 29.60 million in  2002. The volume of tea exports increased by 5.9 percent from 22,960 tons in  2001, to 24,310 tons in  2002.  The price of  tea in the world market  decreased by 3.7 percent to US $ 1,217.8 per ton in 2002  from US $ 1,264.4 per ton in  2001. The  decline in tea prices is partly attributed to excess supply of tea  in the world market.

 

Tobacco

48 .              The value of tobacco exports increased by 55.6 percent from US $ 35.7 million in 2001, to US $ 55.5 million in 2002, following the increase of both price and volume exported. Tobacco prices in the world market increased by 14.8 percent from US $ 1,906.2 per ton in 2001, to US $ 2,188.6 per ton in 2002, whereas the volume of tobacco exported increased by 35.5 percent from 18,720 tons in 2001, to 25,370 tons in 2002.

 

Cashew nuts

49 .              The value of cashewnuts exports decreased by 17.7 percent from US $ 56.6 million in 2001, to US $ 46.6 million in 2002.  The price of cashew nuts in the world market increased by 3.4 percent from US $ 595.4 per ton in 2001 to US $ 615.7 per ton in 2002.  The decrease of export value was mainly due to the decrease of volume of cashewnuts exported by 20.4 percent from 95,040 tons in 2001, to 75,680 tons in 2002.

 

Cloves

The value of cloves exports decreased by 67.9 percent from US $ 12.3 million in 2001 to US $ 4.0 million in 2002.  This sharp decrease is attributed to the fall of price in the world market by 35.6 percent from US $ 5,026.8 per ton in 2001, to US $ 3,237.2 per ton in 2002 as well as a  fall in export volume by 50.2 percent from 2,450 tons in 2001, to 1,220 tons in 2002.

 

Non-Traditional Exports

50 .              The value of non-traditional exports increased by 27.7 percent from US $ 545.3 million in 2001, to US $ 696.5 million in 2002. The increased exports were attributed to exports of minerals, fish and fish products, manufactured goods and horticulture products. The value of non-traditional exports contributed 77.1 percent to all merchandise exports as compared to 70.3 percent in 2001 and 55.8 percent in 2000.

 

Minerals

51 .              The value of mineral exports increased by 27 percent from US $ 302.23 million in 2001 to US $ 383.76 million in 2002. The contribution of gold in the total mineral exports was US $ 341.1 million which is equal to 74.5 percent. The increased mineral export was due to increased production by the mines.

 

Fish and Fish Products

52 .              Export of fish and fish products increased by 20.7 percent from US $ 96.8 million in 2001, to US $ 116.8 million in 2002. The increased exports were mainly due to an increase in production as well as good market for these products in the European Union and other parts of the world.

 

Horticultural Products

53 .              The value of horticultural products exports recorded slight decrease of 1.4 percent to US $ 10.9 million in 2002, from US $ 11.0 million in 2001. Despite of the slight decrease in the value of exports, the market for the products is still promising. However, what is required is to improve quality, increase quantity and improve delivery systems to the consumers.

 

Manufactured Goods

54 .              The value of manufactured goods exports increased by 17.3 percent from US $ 56.2 million in 2001, to US $ 65.9 million in the 2002. For three consecutive years, the exports of manufacturing goods have been increasing significantly.  This is a result of the efforts made to revive the manufacturing sector in the country particularly after privatizing many of the industries and promoting investments.

 

SERVICES EXPORTS

55 .              Receipts from services decreased by 2.0 percent to US $ 665.8 million in 2002, from US $ 679.3 million in 2001. The decline in services receipts was due to fall in receipts from transportation by 11.0 percent, government services by 7.0 percent, and other business services by 4.3 percent.  However, receipts from travel, insurance services, finance services, computer services and recreation services increased.

 

IMPORTS OF GOODS

56 .              The value of imports (f.o.b) decreased by 3.2 percent in 2002, to US $ 1,511.3 million from US $ 1,560.5 million in 2001. Imports of all categories, namely, capital goods, intermediate goods and consumer goods registered a fall of 2.5 percent, 4.0 percent and 3.2 percent, respectively.

 

Capital goods

57 .              The imports of capital goods decreased by 2.5 percent to US $ 721.2 million in 2002, from US $ 739.7 million recorded in 2001. The decrease in imports was mainly on account of a decline in imports of machinery and plants and equipment due to completion of major mining projects. However, importation of transport equipment continued to increase due to the expansion of transport sector in the country. 

 

Intermediate goods

58 .              The value of imports of intermediate goods, decreased by 4.0 percent in 2002, to US $ 423.0 million, compared to US $ 440.8 million recorded in 2001. The value decreased due to a fall in price of petroleum in the world market from US $ 223.4 per ton in 2001, to US $ 220.2 per ton in 2002. However, importation of fertilizer and industrial raw materials continued to increase.

 

Consumer Goods

59 .              In 2002, imports of consumer goods such as food and foodstuffs decreased by 3.2 percent to US $ 516.6 million, from US $ 534.2 million in 2001. The decreased importation of food and foodstuffs by 13.5 percent was mainly attributed to the improvement in domestic food supply situation in the country.

 

Services Payments

60 .              Payment for services in 2002 increased by 2.6 to US $ 712.6 million, from US $ 689.6 million in 2001. The increase in services payments was attributed to the increase in transportation, tourism and communication services. The increase in payments for communication services from US $ 10 million in  2001 to US $ 51.9 million in 2002 is largely attributed to expansion of the telecommunication network in the country. In 2002, total receipts from services were 93.4 percent of total service payments as compared to 98.5 percent in 2001.

 

TRENDS IN SELECTED REGIONAL AND BILATERAL TRADE

61 .              Tanzania trades mostly with countries with which she has special economic and trade arrangements including the European Union (EU), African countries, Southern Africa Development Community (SADC), East African Community (EAC), and the USA.  Exports of goods to the EU market has been increasing consecutively from 1999, reaching US $ 473.7 million in 2002.   This situation has enabled Tanzania to maintain trade surplus with EU since 2000. Goods which contributed significantly to the surplus are minerals, traditional commodities, horticulture products as well as fish and fish products. Exports to SADC member countries fluctuated between US $ 24.2 million in 1997 and US $ 13.8 in 1999.   However, in 2002, exports increased by 144.3 percent to US $ 51.3 million. Exports to the EAC member states have been increasing from 1997 to 2001 though in 2002 declined slightly by 6.4 percent recording US $ 40.8 million. Exports to the EU market accounted for 52.7 percent of total export of goods in 2002 while exports to African countries (including SADC and EAC) contributed 11.0 percent.

 

62 .              In 2002, total imports (c.i.f.) decreased by 3.8 percent to US $ 1658.4 million. Imports  from the EU increased by 3.4 percent from US $ 389.7 million in 2001 to US $ 391.0 million in 2002. In the same period, imports from the SADC and EAC member countries decreased by 4.7 and 9.0 percent, respectively.   However, trade with African countries has been increasing, in general since 2000. This is a pointer to existence of opportunities that could be exploited better under initiatives such as NEPAD, SADC and EAC. Table No. 3.1-3.3 shows the trends  of trade between Tanzania and her major trading partners.

 

Table No. 3:  BALANCE OF TRADE BETWEEN TANZANIA AND REGIONAL

ECONOMIC GROUPINGS,  1997-2002

Source: Bank of Tanzania, President’s Office, Planning and Privatization

·    = Provisional

Table No 3.2: TANZANIA’S EXPORTS BY COUNTRY/REGION OF DESTINATION

        

      Value in Mil. US $

 

Source:  Bank of Tanzania

*   =   provisional figures

Table No. 3.3.:        TANZANIA’S IMPORTS (C.I.F) BY REGIONS/COUNTRIES OF ORIGIN

       

Value in Mil US $

	Region/Country	1997	1998	1999	2000	2001	2002*
1	European Union (EU) including Norway and Switzerland	367.1	514.57	413.09	344.61	389.74	391.05
2	Africa
2.1	Southern African Community (SADC)
	South Africa	95.99	130.72	170.8	174.38	203.44	188.78
	Zimbabwe	4.73	14.56	5.6	4.52	3.01	1.98
	Zambia	25	17.04	7.26	2.4	1.8	4.32
	Mozambique	5.08	5.49	0.05	0.12	0.43	0.03
	Democratic Republic of Congo(DRC)	0.19	0.5	0.11	0.11	0.24	0.37
	Swaziland	8.95	11.53	12.52	12.86	12.65	15.62
	Total Import from SADC	139.94	179.84	196.34	194.39	221.57	211.1
2.2	East African Community (EAC)
	Kenya	95.66	105.79	95.05	93.37	96.08	95.21
	Uganda	1.92	2.25	6.03	5.62	11.37	2.66
	Total ( EAC)	97.58	108.04	101.08	98.99	107.45	97.87
2.3	Other African Countries	0.18	0.05	0.09	0.01	0.17	0.02
	Total (All African Countries)	237.7	287.93	297.51	293.39	329.19	308.99
3	Northern America
3.1	USA	52.63	81.31	99.29	58.92	65.31	91.38
	Canada	12.5	16.67	26.65	32.3	23.08	17.69
	Total	65.13	97.98	125.94	91.22	88.39	109.07
3.2	Other American Countries	15.48	38.86	37.87	24.53	7.87	8.03
	Total (All American Countries)	80.61	136.84	163.81	115.75	96.26	117.1
4	Other Countries
	Japan	74.04	130.96	178.16	142.27	150.7	138.72
	United Arab Emirates (UAE)	93.45	59.73	51.01	56.95	108.98	97.08
	China	61.54	48.75	58.01	68.03	70.55	78.97
	India	77.51	89.76	94.57	88.78	87.47	106.84
	Gross Total ( NO: 4)	306.54	329.2	381.75	356.03	417.7	421.61
	Other Countries	634.85	649.39	732.09	780.16	899.16	841.23
	Grand Total	1320.3	1588.7	1572.8	1533.9	1714.4	1658.4

 

Source: Bank of Tanzania

*    =  provisional figures

BALANCE OF PAYMENTS

Balance of Merchandise Trade

63 .              During 2002, deficit in the balance on goods decreased by 22.4 percent to US $ 608.7 million, from US $ 783.9 million recorded in 2001. The decrease in deficit was caused by the increase in the value exports and decrease in the value of imports.

 

Balance on Services

64 .              The balance on services for 2002 recorded a deficit of US $ 46.7 million, compared to deficit of US $ 10.3 million recorded in 2001. The increased deficit was mainly caused by increased payments in transportation services as compared to the receipts recorded from the same service.

 

Balance on Various Receipts and Payments

65 .              Deficit in the balance of various receipts and payments such as compensation of employees, investment income and interest payments, increased by 6.5 percent to US $ 90.5 million in 2002, from US $ 85.0 million recorded in 2001. The increased deficit was mainly due to increase of interest payments on loans.

 

Balance on Current Transfers

66 .              Balance on current transfers increased by 5.3 percent to US $ 420.6 million in 2002, from US $ 399.4 million recorded in 2001. The increase was  on account of a slight increase of grants to the government from US $ 347.1 million in 2001, to US $ 358.9 million in 2002.

 

Current Account Balance

67 .              Deficit on current account balance that comprises balances of goods, services, various receipts and payments and current transfers, decreased by 32.3 percent to US $ 325.3 million in 2002, from US $ 480.0 million recorded in 2001. The decreased deficit was mainly caused by increase  in exports, decrease in imports and  increase in grants.

 

Balance on Capital Transfer and Financial Account

68 .              Balance on capital transfer and financial account, that includes  foreign direct investment and loans increased by 97.8 percent to US $ 589.9 million in 2002, from US $ 298.3 million recorded in 2001. The increased balance was due to reduction in debt servicing by the government. During 2002, the government received new loans amounting to US $ 177.0 million compared to a payment of US $ 128.4 million. For 2001, government received loans of US $ 157.2 million compared to a payment of US $ 395.9 million. This trend is an outcome of the efforts made on debts relief under HIPC initiative.

 

Overall Balance of  Payments

69 .              The overall balance of payments for 2002 recorded a surplus of US $, 285.3 million, compared to a deficit of  US $ 50.9 million recorded in 2001. The favourable balance was due to increase in goods exports, decrease in goods import, and increase in aid and decrease in foreign debt repayment.

 

Foreign Currency Reserves

70 .              Gross official reserves increased by 32.2 percent to US $ 1,529.0 million in 2002, compared to US $ 1,156.6 million recorded in 2001. The foreign currency reserves for 2002 was equal to 8.9 months of imports, compared to 6.3 months of imports in 2001.

 

Exchange Rate

71 .              In 2002, the exchange rate was on average of Tshs. 966.6 per US $ compared to  an average of Tshs. 876.4 per US$ in 2001.  This amounted to a depreciation of the Tanzania shilling by 10.3 percent.
 Table No.17            Table No.18                 Table No.19              Table No.20

Table No.21            Table No.22                 Table No.23               Table No.24

TRADITION AND NON-TRADITION EXPORTS(US$ Milion)

COFFEE AND COTTON EXPORTS(Qantity-Tons'000)

PERCENTAGE CONTRIBUTION OF EXPORTS 2001

PERCENTAGE CONTRIBUTION OF EXPORTS 2002

TREND OF COFEE AND COTTON PRICES(Us$/Ton)

TREND OF BALANCE OF PAYMENTS