Tanzania: Zanzibar Current Account Deficit Narrows

 

THE Zanzibar current account deficit narrowed to 34.3 million US dollars in the year ending July from 58.4 million US dollars in the corresponding period last year, mainly on account of increase in exports and official transfers.

The Bank of Tanzania (BoT) monthly economic review for August shows that the value of exports of goods and services rose by 21.8 per cent to 230.9 million US dollars in the period under review from the level recorded in the year ending July last year.

This performance was attributed to improved exports of cloves and seaweeds.

The value of cloves exports increased to 18.6 million US dollars from 1.2 million US dollars, while that of seaweeds rose to 5.4 million US dollars from 4.0 million US dollars.

Cloves have been the major foreign exchange earner in Zanzibar for the last 150 years, and they continue to be an agricultural mainstay of the island.

It stands as the most important cash crop in Zanzibar which is grown in all five regions, with South Pemba Region standing as the leading region.

Seaweed farming is an important activity for social and economic development in Zanzibar.

The farming has been confirmed to support livelihoods of coastal population, particularly women, and has become a major cash crop supplement to cloves on foreign currency earnings, reduce degradation of marine environment and destruction of coral reef caused by dynamite fishing.

The development of seaweed farming and its contribution to the livelihood of people can be effectively sustained through addressing the challenges of poor quality and limited availability of varieties with higher market potentials.

Other challenges include limited investment on secondary and tertiary processing of seaweed and inadequate farmers' skills in farming and postharvest handling techniques, such as drying.

Moreover, during the reference period, the import of goods and services increased to 389.9 million US dollars in the year ending July, from 293.4 million US dollars in the corresponding period in 2019.

This development was associated with a surge in imports of capital goods by 97.3 per cent.

The main drivers of the growth in capital goods imports were machinery, including boilers, electrical machinery and equipment; and building and construction materials, particularly iron bars and iron sheets.

On monthly basis, imports rose to 40.0 million US dollars in July from 16.3 million US dollars in June this year, and 19.4 million US dollars in July last year, mainly due to increase in imports of capital and nonfood consumer goods.

The increase in imports for the month of July made the current account deficit to more than double, 24.8 million US dollars from 9.0 million US dollars recorded in July last year.