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Wednesday, 25 June 2014 08:24

Tanzania Set to Become Regional Economic Giant

BY HENRY LYIMO

DODOMA, Tanzania, June 25, 2014 (TDN) — Tanzanians need to dump their inferiority complex as the integration process in East Africa gathers pace towards monetary union because the country is set to become a leading economic powerhouse in the region.

This is a general view shared here on Sunday at a seminar for Members of Parliament (MPs) on the Protocol to establish the East African Monetary Union to pave the way for a common currency.

The protocol for East African Community Monetary Union signed by leaders of the five countries of EAC member states in Kampala, last November is expected to be tabled in the National Assembly for ratification later this week.

Officials from the Ministry of East African Cooperation say the myth that Tanzania will be swallowed under the regional integration should be debunked as it is based on a wrong premise.

An official with the ministry, Mr Abdalla Makame, said future prospects for Tanzania under the EAC regional integration were bright as the country has comparative and competitive advantages over other members.

In his presentation at the seminar, he said the country was set to become a leading economic powerhouse in the region due to its rapid expanding economy, its enormous natural resources, as well as its strategic geographical position and strong macroeconomic policies.

Kenya is currently the leading economy in the EAC with a GDP of US$ 39 billion and a growth rate of 4.6 per cent for 2013 figures. Tanzania follows with a GDP of about US$ 30 billion and a 7 per cent growth rate for 2013 that is projected to reach 7.2 per cent this year.

He said heavy investments in upgrading the railway and road infrastructure and major developments in the energy sector would boost chances for Tanzania to benefit from the opportunities coming up under the integration process.

Another official from the ministry, Mr Elisa Mjema, said he was upbeat that Tanzania would become a leading economy in the region provided it sustained development projects in strategic areas.

"Why shouldn't Tanzania become the Germany of East Africa with all these major railway and road infrastructure developments and improvement in efficiency at the Dar es Salaam port?," he queried.

The Director of Economic Research and Policy of the Central Bank, Dr Joseph Masawe, said Tanzania was ready for the implementation of the process that will pave the way for the establishment of the monetary union through harmonisation of monetary and fiscal policies and establishment of an East African Central Bank.

In his presentation he said Tanzania was meeting most of the macroeconomic convergence criteria set as perquisite for the monetary union.

According to the EAC Monetary Union Protocol, the monetary union will be assessed on a ceiling of headline inflation to eight per cent which is to be sustained for three consecutive years and a ceiling of fiscal deficit, including grants of three per cent of the Gross Domestic Product.

Other criteria include a ceiling of gross public debt of 50 per cent of Gross Domestic Product in Net Present Value terms and a reserve cover of 4.5 months of import of goods and services. The inflation rate in Tanzania for May was recorded at 6.5 per cent, rising slightly from 6.3 per cent of the previous month.

The rate has been contained to a single digit. The country's foreign currency reserve is rising reaching to US$ 4.647 billion in April 2014 which is enough to provide cover for imports for 4.6 months.

The Minister for Finance, Ms Saada Mkuya Salum, said Tanzania was geared to become a leading economy in the region but Tanzanians need to change their mindset. He said a neighbouring country was playing a mindful game to instill fear among Tanzanians so that they would not realize the great opportunities to be availed in the integration process.

"Our mindset has to change. We need to change our conventional way of thinking. Our neighbours have realized our great potential in the region and are playing with our minds to divert our attention.

"Tanzania is the target because we are so important," she said. She said the government need to enhance financial discipline as it is vital in ensuring development projects were implemented and set targets were met.

The government had adopted a performance based disbursement in the 2014/15 budget as part of plans to tighten discipline in public finance management, she said.

The Deputy Minister for Finance and Economic Affairs, Mr Adam Malima, said Tanzania was geared to become an economic power base in the region but Tanzanians need to work hard to ensure the dream is realised. To build an economic mighty in the region and the desire to have it were to different things, he said.

 

 
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