Mr. Richard Cockett,
Magazine
& Chairman of this Roundtable,
Honourable Ministers,
Permanent Secretaries and Other Government
Officials,
Distinguished Participants,
Invited Guests,
Ladies and Gentlemen
At the outset allow me to welcome you Mr. Cockett and your staff to
Ladies
and Gentlemen,
I am happy with the theme of this year’s Conference. I find focusing on Implementing Effective Policy
during the Slowdown to be both timely and appropriate. Conceiving and
implementing effective policies to mitigate the impact of the current economic
downturn has been the preoccupation of my government since the advent of the
economic crisis close to two years now.
Indeed, it is the preoccupation of all governments the world over.
As you are aware,
However, the global
financial and economic crisis has adversely impacted on our economic
performance. The demand and prices of
our principal export crops, in particular cotton, coffee and horticultural
produce have been weakened. Earnings from tourism and transportation (transit
trade) as well as the inflow of foreign investment have been impacted
negatively too. Due to these adverse impacts on
the drivers of growth the projection for 2009 has been revised downwards to 5.0
percent growth as opposed to the projected 7.8 per cent. Indeed, the deterioration of the global
economy has had its roll on our economy as well.
Ladies and Gentlemen,
Before the onset of
global financial and economic crisis, the Tanzanian economy was already experiencing
inflationary pressures due to the lagged effects of rising world petroleum and
food prices earlier in the year. As a
result, annual inflation rose to 13.5 percent in December 2008. Following the decline in world commodity prices,
domestic inflation had eased to 12.1 percent by the end of September, 2009. However, the severe food shortages in our
region due to prolonged drought especially in
Ladies and Gentlemen,
As we all know,
For us in
1.
Preserving
the hard-earned macroeconomic stability;
2.
Ensuring
food security and employment;
3.
Ensuring
the sustenance of social safety net programs;
4.
Rescuing and
preserving major investments particularly in energy and infrastructure;
5.
Ensuring
liquidity in the economy; and
6.
Ensuring effective
governance and management of the economy, including strengthening of the
surveillance and regulations of the financial sector.
Ladies
and Gentlemen;
The economic stimulus plan we put together in June, 2009 took
consideration of these objectives. The plan entailed strict surveillance of the
financial institutions. Particular
attention was given to commercial banks operating in
In terms of fiscal measures, we sought to compensate crop buyers for
losses incurred due to fall in the demand and prices of commodities in the
world market during the 2008/09 season.
We provided guarantee for
rescheduling of loans, which borrowers have not been able to service and repay
timely due to the crisis. In addition we
decided to provide working capital to investors at discounted rates. Under this arrangement, the Government
provides soft loans to banks which in turn lend to the most affected businesses
which cannot borrow at market interest rate during the current crop season.
Other measures included stabilizing government revenues
and increasing capital for SMEs credit guarantee scheme and Export Credit
Guarantee Scheme and ensuring food security.
Commitment to Market
Economy
Mr.
Chairman, Ladies and Gentlemen,
I understand, that after the crisis ensued, there has been intense debate
about the efficacy of the market based economic system. Some people have openly expressed loss of
faith in the system. It is my humble
view that this crisis has not come about as a result of the free market economic
system per se. I see it as a problem
caused by weaknesses of regulation and oversight of the financial markets and
the general disequilibrium in the global financial system. The answer, therefore, lies with designing
and putting in place effective regulatory and oversight mechanisms to monitor
and regulate the global financial and economic system.
I say this to underscore the fact that the current global economic
crisis should not deter us from pursuing economic reforms and properly
anchoring the private sector as the engine of growth of the Tanzanian
economy. Indeed, the crisis has reminded
us of the crucial oversight role of the state in ensuring a robust regulatory
environment and enforcement of standards in the financial sector. It has also reminded
us of the important role Governments can play in stimulating the economy during
economic downturns.
Setting Attractive Business Environment
Ladies
and Gentlemen,
As a result of this crisis, global investment flows have declined and
capital is currently not easily accessible. We in
At the same time we are determined to do more internally to attract the
now scarce capital to
I personally took the report as a matter of serious concern that
demands serious action. I convened a
meeting of top officials from government ministries and agencies responsible
for the areas or issued raised as being responsible for our poor rating. We discussed the report, identified the areas
where we fell short and agreed on measures to take. We then set up a Task Force to review
business and investment support policies, regulations and administrative
procedures.
I have directed that the responsible people in government and the
private sector should ensure that the recommendations of the Task Force are
expressly implemented. There is no time
for delay and there should be no excuse from anyone for not doing his or her
part of the bargain.
Let me say, once more that, we will continue to pursue economic and
financial policies that are friendly to business, favorable to the growth and development
of the indigenous private sector and attractive to foreign capital.
Delivering on Election Promises
Distinguished Participants, Ladies and Gentlemen,
This is a fundamental election promise we made in
2005 and there will be no turning back. So
far so good, with regard to promoting economic growth, attracting FDI’s and
creating jobs. I believe had it not been
for the setbacks caused by high oil and food prices shocks and the global
financial and economic crises, we would have registered greater
achievements. We could, also, have been
on a good growth trajectory by now.
Despite the odds,
The other, and perhaps overarching election promise is with regard to
improvement in the living standards of Tanzanians. We designed a number of programmes for
improving the provision of basic social and economic services. We have, indeed, registered encouraging
successes. Education, at all levels, is now
accessible to more people as is access to health care, drinking water and electricity. It is also evident that more roads have been
built throughout the country and, there are more paved roads and rehabilitated
roads easing transport problems for the people and the economy.
Agriculture First
Ladies
and Gentlemen;
We
also designed programs directed at income generation. A number of micro-finance schemes have been designed. They seem to be working well though obviously
inadequate. Cognisant of the fact that
85 per cent of the people of
To give fillip to the efforts being expended under the ASDP, we came up
with a new strategy code – named Kilimo
Kwanza, meaning Agriculture First. This is a strategy meant to increase the pace
transforming our agriculture of involving the private sector in a more robust
way. Currently, the participation of the
private sector is lukewarm. With the Kilimo
Kwanza spirit we want the private sector to take its rightful place as the
prime mover of growth and development in agriculture as well. We want people in the private sector to be
farmers (big farmers), to supply inputs to agriculture and provide a stable and
lucrative market to farm produce.
Fight Against Corruption
Distinguished Participants, Ladies and Gentlemen;
With regard to the fight against corruption, I must admit it is a
complicated and challenging one.
Nonetheless, we are making steady progress and registering some success
as we proceed. We are determined to stay
the course. We are succeeding in
building institutional capacity of our anti-corruption Bureau. Sensitisation of people to join and assist in
this noble crusade seems to be working and paying dividend. We have, now, sixteen cases of grand
corruption in the courts of law which underscores our determination in this
fight and how far we have come. Our efforts
are being acknowledged globally. The
recent report of Transparency International puts
East African Community
Ladies
and Gentlemen,
With regard to the East African Community, I would rightly brag that
things are on course. We have made remarkable
progress so far and the prospects for the future look very promising. As you know, in 1996, we started with
cooperation among the three partner states of
Since January, 2005 the East African Community member states have
implemented the Customs Union phase with great success. Next year, the Customs Union will reach maturity
when goods from
So far the community has worked well for
Conclusion
Ladies and
Gentlemen,
In concluding, let me say three
things: First, in this era of anxiety about the global economy, it is important
that governments are flexible and have the capacity to put in place effective
policies to deal with new challenges and changing circumstances. That is, precisely, what our government is.
Secondly, it is important that we do not let pass an opportunity to
learn from what happened over the past year. After we pass through this sticky
period, the most important policies will not be the ones we made during the
slowdown but the ones we will design and implement to guard against the
recurrence of the crisis.
Thirdly, it is important to note that,
in this globalised world, the efficacy of local policies will depend on the
prevailing global environment. Sometimes the good policies we may put in place
here in
I suppose, therefore that, one of the questions we should ask ourselves
during the discussion is to what extent can we ensure that the international
context encourages the formulation of effective policies at the national level and
supports the success of those policies? How can policymaking be flexible, speedy,
and simple enough to ensure that policies created are in fact timely and
effective? How can we build the capacity among our policymakers and strengthen
our policymaking structures to enable us to see around the curve?
Mr.
Chairman, Distinguished Participants, Ladies and Gentlemen,
With those many words, I wish to, once
again, thank the Economist Magazine for organizing this conference. You have done us proud. I wish you very successful deliberations and
outcomes.
Thank
you for your kind attention.