Sunday, October 20, 2013

Call for proper use of resources

Part of Dar es Salaam City. More investment is

Part of Dar es Salaam City. More investment is needed to develop the city’s infrastructure. PHOTO | FILE 

By Sturmius Mtweve, The Citizen

Dar es Salaam. Resources management and capacity building is seen as the best way to make Tanzania utilise abundant natural resources it has to support economic growth and human development, experts have said.

Despite the fact that the country is now growing at the rate of seven per cent, development growth and human development must go together, otherwise there will be inequality in wealth distribution.

Prof Delphin Rwegasira from the University of Dar es Salaam said important steps must be taken to ensure there was proper coordination of African resources to boost economic growth in the respective countries lest they become a lifetime curse.

Prof Rwegasira was speaking at the launch of the African Economic Outlook Report 2013 in Dar es Salaam recently. The report is produced annually by the African Development Bank (AfDB), the Organisation for Economic Cooperation and Development (OECD) Centre, the Economic Commission for Africa (ECA) and the UN Development Programme (UNDP).

Tanzania, as it has been for other African countries, has seen an increase in Foreign Direct Investment (FDI) inflows, but there are still some challenges on how these inflows are helping to spur human development and economic growth.

The 2013 Human Development Report: The Rise of the South: Human Progress in a Diverse World argues that striking transformation of a large number of developing countries into dynamic major economies with growing political influence is having a significant impact on human development progress.

But, this will depend on the extent to which the government is keen on creating capacities for managing the available resources and capacity building for people to reduce poverty levels.

Prof Rwegasira said there was a need for the government to do something – to create a conducive business environment in terms of the cost of doing business of which Tanzania has for some time now been ranked poorly in the global index.

“Investors will always like to do business in a cost effective environment, unfriendly business environments are chasing away investors and this makes the government lose the opportunity of collecting enough revenue,” he said.

For his part, United Nations resident coordinator and UNDP resident representative to Tanzania Alberic Kacou said according to the report, Africa’s economy was projected to grow by 4.8 per cent in 2013 and 5.3 per cent in 2014.

This is being influenced by financial flows to the region, including FDIs and remittances which are at high records of which the report estimates exceed $200 billion annually.

“More and more African countries adopt sound economic policies than before ensuring economic stability,” said Mr Kacou.

Furthermore, the report shows that this growth has been accompanied by insufficient poverty reduction, persisting unemployment, increased income inequalities and in some countries, deteriorating levels of health and education services.

For Tanzania, Kacou said the country had done rather well in economic growth, noting that the economy was growing well above the regional average, which was also substantiated by TIC executive director Juliet Kairuki, who said there had been an increase in number of investors retaining their investments in the country instead of exporting them.

Ms Kairuki noted that currently there had been an impressive improvement in the number of business licences being registered by the TIC. The agricultural sector constitutes 41 per cent of all projects, while the mining sector constitutes 21 per cent.

“Investors don’t export anymore, this is good for us because the government needs revenue from these investments for financing various development programmes,” she said, adding that the issue of improving infrastructure development remains central to Tanzania to continue defending the competitive advantage it had in the region taking into account that competition was becoming stiff.

Disincentive policies on exports

It was also revealed that the disincentive policy on export of agricultural produces in Tanzania was among the key factors that discourage farmers and producers from producing enough crops in the country on the grounds of ensuring food security and sustainability.

Prof Rwegasira said food sustainability could not be achieved by banning the export of agricultural products to neighbouring countries because this could as well be achieved by importing even it was going to be at a higher cost.

This calls for substantial initiatives to formulate policies to guide agricultural production and the opportunities available for exportation.

“The ban on agricultural exports is bad to the growth of the economy. We need to let those who can produce for export do so and lift the economic status of our nation and its people,” said Prof Rwegasira.

Over the past years, Tanzania, for example, had been banning the exportation of maize and rice to its neighbouring countries on the grounds of ensuring food security and sustainability.

This has been challenged by various experts in the field, saying the only motivation for farmers to produce in large quantities is the assurance of markets and good prices for their produce.

However, last year, the government lifted the ban, a move that brought about new hope for farmers in the country.