Only vibrant industry will save the shilling

Tuesday June 23 2015


Last week, Mwibara MP Kangi Lugola used humour to explain why the shilling had been in free fall in the last few years. The straight-talking CCM lawmaker said a country could not have a strong currency if it imported everything.

To drive his point home, Mr Lugola displayed cheap items such as socks, brushes, toothpicks, sweets, pencils, handkerchiefs, notebooks and chewing gum, saying they were all imported from China. He wondered why any of the items he displayed could not be manufactured in Tanzania.

Mr Lugola’s lecture sought to explain in simple terms why a country that relies heavily on imports should forget about having a strong and stable currency.

There could be other technical reasons behind the shilling’s fall, but the issue of imports needs to be fully debated and addressed. In the past two decades, we have become a nation that imports virtually everything from condoms to toilet paper. We even import used towels and underpants.

The future seemed bright for Tanzania in the first two decades of independence as the country boasted a manufacturing sector that was the envy of other developing nations in this part of Africa.

However, all we remain with now are fond memories and the country has become a dumping ground for all manner of imports.


We are not even suggesting that Tanzania should not import anything – far from it. There is no nation on earth that does not import anything from outside, but there has to be a balance between imports and exports.

Strong and prosperous

For an economy to be strong and prosperous, there has to be exports of raw material and finished goods. Typically, exports need to exceed imports for a currency to be stable, but Tanzania imports goods whose value is twice that of its exports.

We lead in cotton production in the region, but we still import used towels. We have the best timber in East Africa, but we import furniture from China. We have plenty of raw material for making paper, but we import exercise books from Kenya, China and elsewhere. Tanzania has the second largest cattle population in Africa, but we import milk and even meat.

With the resources that Tanzania has, we are supposed to be the region’s industrial powerhouse. The privatisation frenzy of the 1990s was meant to revive and revitalise industry, but it had the opposite effect. It effectively killed off our manufacturing sector.

When we allow cheap imported goods to flood the market, we are in fact initiating the death of Tanzanian industry because locally produced goods cannot compete with cheaper ones from outside. The result is that we end up killing jobs and creating a jobless society.

Tanzania needs to have a strategic plan to revive and strengthen its industry if it wants to have a strong economy and stable currency. The government should introduce more incentives to attract local and foreign investors to the manufacturing sector.

This is the most effective way of creating jobs and opportunities, which, in turn, has the knock-on effect of boosting economic growth.