What government’s 2023/24 Budget should aim to achieve

Dar es Salaam. Finance and Planning minister Mwigulu Nchemba will have to scratch his head and come up with policy measures that will help to contain the spiralling cost of living as he presents Tanzania’s Budget for the 2023/24 financial year in Parliament today.

Tanzania’s annual headline inflation rate for May 2023 was 4.0 percent from 4.3 percent recorded in April 2023.

While the 4.0 percent is the same as it was in May 2022, a closer look at official figures shows that prices of almost all food products have gone through the roof during the past 12 months, sending shock waves among consumers in urban centres, including Dar es Salaam, Mwanza, Tanga, Arusha, Moshi and Dodoma.

While the price rise has been a boon for farmers, Tanzanians in major urban centres are waiting to hear what the government will do to counter further increases [of prices] as Tanzania and its regional peers contend with food deficits occasioned by Africa’s heavy reliance on food imports amid a disruption of supply chains due to the war in Ukraine, which started at a time when supply was already down as a result of the global Covid-19 pandemic.

The Citizen’s analysis of prices for food items such as maize, rice, beans and potatoes, among others, shows that they [prices] have tremendously risen during the past twelve months.

A close look at data from the Ministry of Investment, Industry and Trade shows that the wholesale price for a 100-kilogramme bag of maize have risen by between 6.5 and 43 percent on average while that of rice has skyrocketed by between 27 and 51 percent on average during the past 12 months.

Similarly, the 100-kilogramme bag of beans currently fetches between 36 and 100 percent more of what it used to cost in June last year, available data shows.

If a local food vendor charges you more for your chips mayai [the potato-egg omelette] then understand it is because a 100-kilogramme bag of potatoes now costs an average of between 43 and 86 percent more than it used to in June 2022.

President Samia Suluhu Hassan told residents of Magu in Mwanza on Tuesday to make proper use of their produce and guard themselves against the possibility of a global hunger situation.

She said due to the global hunger threat, her government was completing the process of buying and keeping more food in its strategic grain reserves as a way of ensuring food security for Tanzanians.

Earlier this week, statistics revealed by the Global Food and Nutrition Dashboard showed that millions of people are at risk of starvation in the East African Community (EAC) this year due to a combination of natural calamities and conflicts. In the Democratic Republic of Congo (DRC), at least 25 million people are facing food scarcity while in South Sudan, Kenya, Uganda and Tanzania, the population facing food insecurity stands at 7.7 million, 5.43 million, 2.5 million and 1.1 million respectively.

Cost of production

The director for policy and advocacy at the Confederation of Tanzania Industries (CTI), Mr Akida Mnyenyelwa, told The Citizen yesterday that with the spiralling cost of living manufacturers were counting on the government to come up with measures that would reduce the cost of production, thus enabling industries to increase production and ultimately the cost of goods.

He noted that this year’s budget and the challenges facing the economy have come at a time when manufacturers were still on the recovery mode from the negative effects of the global Covid-19 pandemic. The war in Ukraine and the sanctions netted on Russia have disrupted the supply chain therefore raising the costs of production which manufacturers and other traders transfer to the final consumer.

“We hope this year’s budget will focus on developing all sectors of the economy for the development of our country,” he said.

The communications director for the Tanzania Business Community (TBCo), Stephen Chamle said TBCo expects the government will reduce various taxes and customs duties that have been part of increasing the cost of goods and products.

“For instance, Ugandans use our port and others within the region yet imported goods are cheaper in Uganda than they are here. This is purely due to the high tax rates here in Tanzania,” he said.

He said they also expect that the government will increase its tax base to net more of the country’s 61 million and thus stand a chance of reducing the tax rates instead of relying on the few taxable individuals. Sustaining the tempo of improving they business climate, he said, should also rank high on the government’s agenda as a means of attracting new investment and boosting the confidence of those who have already invested to keep investing more.

“If the government improves its business and investment environment it will encourage more people to start businesses which creates competition and ultimately reduces the price of goods and products,” he said.

He said the government’s regulatory organs must be effectively turned bodies that facilitate the flow of investments. That done, it will encourage more and more investments which will help to boost the volume of money in circulation.

An economist from Mzumbe University, Prof Aurelia Kamuzora, told The Citizen that she expect a budget that will lower the costs of living.

This, she explained, could be possible by coming up with measures that could boost economic inclusion.

“We don’t expect the government to give money to its people, but rather come up with a boosting measures package that will encourage them to take part in economic activities,” said Prof Kamuzora.

She was of the view that considering the fact that the agriculture sector employs the majority of Tanzanians—-over 65 percent, a special treatment should be provided to the sector.

She also said the likes of treatment should also be provided to the water sector so that women should not spend much time in searching for water.

This is important because it will enhance women to have enough time for participation in economic activities.

“Experience shows that if women participate in economic activities, the returns will always be high and the countries like Finland and Norway could attest to this,” said Prof Kamuzora.