Tanzanian Firms Call for Bailout As Earnings Dip, Economy Slows

By Bob Karashani

Business leaders in Tanzania requested for an economic bailout from the government amid sharply declining revenues due to a slowing economy hit by the coronavirus pandemic.

The Tanzania Private Sector Foundation executive director Godfrey Simbeye said they were in talks

with the Bank of Tanzania (BoT) on a new arrangement that would enable large commercial bank borrowers to repay their loans and avoid potential mass defaulting due to the global crisis.

"We are also preparing a special fund to help cushion the business community from the challenges they face in these trying times," Mr Simbeye said.

A team of technical experts, appointed by finance minister Philip Mpango, are still working on an assessment of the economic impact of Covid-19 on the country and potential policy responses, according to ministry spokesperson Benny Mwaipaja.

"The team will deliver its recommendations to the government on what fiscal and monetary steps to take," Mr Mwaipaja said.

Tanzania Oil & Gas Service Providers (chairman Abdulsamad Abdulrahim proposed that the government appoint a "joint coalition" of top business executives in the country to provide guidance.

"The coalition could serve as a post-pandemic advisory panel that will work on guidelines, recommendations and other solutions that will help jump-start the economy," Mr Abdulrahim said.

His views were backed by James Humbo, chief executive officer of the Dar es Salaam-based management consultancy firm Everths and Company, who called on the government to "tap expertise not only from the business community but across different sectors including healthcare."

"This will ensure a diversity of perspectives, which is what we need right now," Mr Humbo said.

Tanzania's parliament is currently holding its annual budget session in the capital Dodoma where three parliamentary sub-committees so far have called for quick government action to stimulate business and economic activities.

The committees suggested measures including cuts or deferments on various taxes and loan interest payments until the situation stabilises.

"Covid-19 is a global phenomenon and the impact on global value chains is already being felt," said budget committee chairman Mashimba Ndaki.

Industry, Trade and Environment Committee chairman Suleiman Saddiq said the government should act now rather than wait until businesses are brought to their knees and forced to start cutting jobs, a step that would only worsen the situation.

"Something should be done so that manufacturers don't suspend production," Mr Saddiq said.

In its monthly review report for March 2020, the Bank of Tanzania said the impact of the pandemic on Tanzania's economy was mild up to February as other countries had not yet imposed trade restrictions and lockdowns, but became more visible in March as the spread of the pandemic intensified globally.

But the bank was cautious and said the extent of the impact will be reported in more statistical detail in subsequent editions of its monthly review.

The report also indicated that the Tanzania Revenue Authority now faced an uphill task to meet the Tsh23 trillion ($10 billion) internal revenues target outlined in the government's 2019/2020 budget in the last quarter of the fiscal year (April-June).

Revenue sources listed in the budget included import taxes, VAT and sales tax receipts, and excise duty on local goods, all of which have been badly affected by declining business activity.

The Dar es Salaam Stock Exchange's all-share index dropped by almost 16 per cent in March as share prices fell sharply among listed companies and foreign participation also declined.