IN the last 12 months, we have witnessed geopolitical instability and conflicts, increasing inflation, volatile energy prices, disruption of supply chains, the long tail of the Covid-19 pandemic and the rising interest rates.
All these storms have caused shockwaves across the globe that had trickled down to our local economy.
Over the same period, Tanzanian companies have demonstrated resilience, recovery and adaptability to survive in the post-pandemic-wartime era.
We’ve seen a record-breaking performance from the private sector companies in key economic metrics in 2022, signaling a positive outlook for 2023.
These achievements are the courtesy of strong macroeconomic policies and in particular, President Dr Samia Suluhu Hassan’s personal and government’s response to creating a better business and investment climate.
It goes without saying, the government’s recognition and embracement than ever before of the private sector as the catalyst for economic growth has also contributed a great deal to the feat.
For instance, in 2022, commercial banks in Tanzania saw their earnings raise to record levels in the first half, signaling the sectors net profit will surpass Sh1 trillion by early 2023.
This is attributed to strong company performance, private sector confidence, improved Non-Performing Loans (NPLs) and banks’ ability to support development through credit.
In addition, credit extended to the private sector grew at around 23.7 per cent in 2022, the highest in over a decade and significantly higher than 5.6 in the quarter ending December 2021.
Loans to productive sectors such as agriculture; mining; micro, small and medium enterprises; trade and manufacturing create a trickle-down effect on the economy.
The capital market, in the other hand, saw a strong growth perspective and business performance, thanks to a recent change of legislation, mainly liberalisation of the capital account to allow investors from East African Community (EAC) and Southern Africa Development Community (SADC) to participate in the local bond markets.
This saw Tanzania Share Index (TSI) rise by 9.1 per cent in 2022 compared to 2.9 per cent in 2021, raising Sh853.71 billion in one year to outpace many regional indexes.
This ultimately increased wealth for local businesses and allowed international investors to diversify their portfolios in Tanzania as an emerging economy.
Tanzania Investment Center (TIC), the country’s investment promotion agency, achieved a historic milestone by luring over $3.16 billion worth of investments to Tanzania in 2022, a growth of more than 250 per cent year on year.
The investment capital stream into the country leads to employment creation and augments the foreign exchange reserves at a time when imported commodities such as oil continue rising.
In addition, the Tanzania Revenue Authority (TRA) collected Sh2.77 trillion in tax in December 2022, the biggest monthly collection since the inception of authority in 1996.
This is a strong sign of the private sector’s willingness to pay taxes, improved relations between the government and taxpayers, as well as the rise in economic activities.
Given the global conditions in 2021/22, these accomplishments are not a little fete; they signify the growth of the country’s private sector, thus offering a clear positive trend in 2023, as we forecast another record-breaking year.
The World Bank forecasts that Tanzania’s economy will expand by 5.3 percent in 2023, which is way above Sub-Saharan Africa’s average growth of 3.6 per cent.
However, we shall proceed with caution, if the warning by the International Monetary Fund (IMF) Managing Director, Ms Kristalina Georgieva, that 2023 would be a difficult year for the global economy and that inflation will continue to rise, is anything to go by.
To achieve such growth, we urge the Tanzania government to maintain its pro-growth policies in 2023 as it seeks to maintain economic growth while cushioning the economy against adverse impacts.
Hence, we at the Tanzania Private Sector Foundation (TPSF) will continue having constructive dialogues with the government through existing platforms, including parliamentary committees, Tax Force on Tax Reforms, and ultimately the Tanzania National Business Council that President Samia Suluhu Hassan chairs.
This aims at ensuring a friendly business environment, attractive investment incentives and fiscal policies are in place in 2023/24 to stimulate growth while mitigating external shocks.
In addition, we foresee an increase in government debt as the country tries to finalise its capital infrastructure projects on roads, airports, railways, water and energy among others.
Investing in these key infrastructures will lead to an increase in the productive capacity of our economy, and, therefore, enhance its capacity to pay back without causing panic on the public debt.
However, the government can seek alternative financing options to diversify its debt burden such as by using private equities and the public-private partnership (PPP) in efforts to finance these strategic projects.
This will further spur private sector growth and maintain the debt to reasonable levels, given the potential for interest rates to increase as nations try to curb inflation in the year ahead.
An increase in energy supply will be another success factor for the private sector in Tanzania. Progress of the Julius Nyerere Hydropower Dam, the largest of its kind in the region, with the capacity of generating 5,920GWh of power annually, will certainly revolutionise the country’s industrial economy.
We will be able to host large and labour-intensive industries that require large energy input. With over 80% of rural electrification complete, this project will diversify our economies and spur businesses in most villages, creating employment and raising people’s incomes.
In 2022, Tanzania was one of seven countries selected for a pilot project on the African Continental Free Trade Area (AfCFTA) Initiative on Guided Trade trial. Given its strategic location and the growing manufacturing base, Tanzania’s three businesses should take advantage of the AfCFTA with market access of 1.3 billion people.
We should, therefore, ensure our policies enhance resilience by boosting intra-Africa trade, especially in manufacturing products to cushion economies from volatile commodity prices from Western and Eastern economies.
As Tanzania implements its 10/30 Agenda, global and regional demands for food surge, the agricultural sector, which provides livelihoods for most Tanzanians, will be another important sector of focus in 2023.
Tanzania can become a regional food basket, thanks to its 44 million hectares of fertile land. Farm productivity can be raised with the help of effective agricultural policy by prioritising mechanisation, irrigation, and investment in fertilizer plants, post-harvest loss, and value addition.
Agriculture, manufacturing, and energy are among key sectors that are most vulnerable to climate change, with drought affecting agriculture and reliable power supply.
These sectors employ over 70 per cent of Tanzanians, hence any drastic change in climate change will affect their livelihood and reduce our per capita income.
However, we are encouraged by the government’s efforts in developing policies to support climate resilience, including the National Climate Change Strategy 2021–2026. It is understood that in efforts to decrease greenhouse gases, Tanzania is promoting and attracting clean technologies and renewable energy.
The private sector highly applauds these efforts. We cannot deny the reality that we are living in the Fourth Industrial Revolution (4IR), which is characterised by the fusion of the digital and physical worlds.
Increased use of technology such as artificial intelligence, cloud computing, and the Internet of things has heralded a new era of economic disruption.
Tanzania’s young innovators and businesses are already proving to be an asset in molding the country’s future, and if allowed to thrive, they might be at the forefront of providing the much-needed solution.
Government decision-makers must become catalysts for entrepreneurial leadership if these young people are to succeed.
Creating a Startup Act could result in significant economic growth and help nurture this culture of innovation.
In conclusion, by improving institutional governance and enacting policies that can leverage the private sector, preparing climate and pandemic-proof companies, youth and women inclusion, maximising on efficient use of technology, and utilising the country’s resources for inclusive and sustainable development, we will, once again, see Tanzania breaking records in 2023.
Ms Angelina Ngalula is the Chairperson of the Tanzania Private Sector Foundation
No comments :
Post a Comment