JPM foreign travel ban saves Sh900bn

Dar es Salaam. Tanzania saved $429.5 million (Sh902 billion) from foreign travel in the 12 months between November 2015 and November 2016, a Bank of Tanzania (BoT) report shows.

The reduction in travel expenses is a result of President John Magufuli’s order limiting foreign travel by government officials, which he issued just a few days after he assumed office on November 6, 2015.

The BoT monthly Economic Review for December that was released last week says Tanzania spent $774.4 million (Sh1.7 trillion) in overseas travel between November 2015 and November 2016, a significant decrease from $1.2 billion (Sh2.64 trillion) spent in the same period between November 2014 and November 2015.

“Travel payments declined by about 36 per cent, consistent with the government move to reduce foreign travel costs,” reads part of the monthly Economic Review.

Travel includes foreign trips made by both private citizens and public officials for various reasons such as holiday/tourism, business, and conference.

The reduction in travel payments was in tandem with the general decline in imports with the exception of oil and industrial raw materials.

Service payments which include travel declined to $2.1 billion (Sh4.62 trillion) in the year ending November 2016 from $2.7 billion (Sh5.94 trillion) in the year ending November 2015.

“Payments under transportation, particularly freight which constitutes the largest share under the services payment, declined by 13.6 per cent consistent with the fall in goods imports,” the report adds.

The reduction in travel payments and in imports generally has saved the much needed foreign currency, experts say.

Those who spoke immediately after the ban in November 2015 said the curtailing of unnecessary foreign trips would also strengthen the shilling. “Frequent foreign trips increased the demand for the major foreign currencies, including, (and especially), the US dollar. So the ban will offer some relief that would strengthen the local currency,” said Mr Selemani Ponda, a financial expert told The Citizen soon after the travel ban.

Dr Razack Lokina from the University of Dar es Salaam also said a reduction in demand for the major foreign currencies would, eventually, boost the economy.

Analysis shows that the local currency stabilised for the most of 2016 but lost value towards the end of the year because of increased demand and due to the strengthening of the US currency. One required to part with Sh2,260/2,300 to get one dollar at the end of January while it cost only Sh2000/2100 for a dollar in November 2015.

In his November 6, 2015 speech, President Magufuli said foreign travel by government officials cost the government Sh356.3 billion in air tickets, allowances and training between 2013/14 and 2014/15. Breaking down that cost, he said that air tickets alone cost Sh183.16 billion, foreign training Sh68.612 billion and allowances Sh104.552 billion.

Institutions that spent the most were the Parliament, the Ministry of Foreign Affairs, Ministry of Finance, PM’s Office and the National Audit Office. “That money could have been used to construct a 400-kilometre road. When we restrict foreign travel, please understand us and support us,” President Magufuli told lawmakers in his maiden speech to the august House.

“We will curtail all unnecessary travel abroad. We will use our embassies and high commissions abroad. And for those necessary trips, we will limit the size of delegations,” he said.

But the travel ban also affected ticketing agents and airlines due to a reduction in the number of passengers. It is likely, therefore, that the amount saved would reflect in reduced earnings for those doing business in the transport sector, especially in aviation that has lately been engaging in stiff competition for the few travellers.