What you need to know:
- The dollar crisis featured prominently during talks between the Finance minister and CTI.
Dar es Salaam. The government has asked manufacturers to invest more in value-added products for export as a way of mitigating the impact of the shortage of the United States dollar on the economy.
Finance Minister Dr. Mwigulu Nchemba said on Monday that Tanzania will earn enough forex that way.
But manufacturers say that can only be possible if they are given priority in the government’s dollar disbursement plan.
They also want the government to adopt a system whereby manufacturers who have subsidiaries in other countries can do what is called a currency swap.
We have also suggested the need for a currency swap. As businessmen, if we have parent companies and can borrow dollars from abroad, we can use that procedure to reduce the current shortage of dollars,” said the Confederation of Tanzania Industries (CTI) chairman, Dr. Samuel Nyantahe.
Speaking during a meeting between Dr. Nchemba and CTI members where the issue of the dollar shortage featured prominently, Dr. Nyatahe said it was also important for Tanzanians to promote the ‘Buy Tanzania, Build Tanzania’ initiative.
“In terms of production, factories produce various products, including glass that is used in various buildings under construction that could be used locally. The call is for us to use our own, to buy our local products, to slow down the use of dollars in buying products from abroad,” he said.
But Dr. Nchemba urged CTI members to invest more in value-added products for exports to bring in more forex.
He said the move will be possible if manufacturers put emphasis on the production of goods that have a high demand locally, thus reducing the level of imports that deplete dollar reserves.
However, to achieve this, the Confederation needed to give priority to the use of domestic products instead of foreign ones. Dr. Nchemba said producers must increase their efforts in producing products that are currently being imported because local factories can manufacture them in the required quantity and quality.
“We should also increase production for export so that we can continue to get dollars. The government will continue to cooperate with you on ways of stimulating local activities and the use of funds available locally,” said Dr. Nchemba.
He said the government and members of the private sector must work out a plan on how to promote locally manufactured products among Tanzanian consumers to end the belief that products outside the country are of better quality than those produced locally.
To ensure the ability to produce for foreign markets, he said, the government was in the final stages of reviving the export guarantee scheme for producers who sell their products abroad.
“This matter is in the final stage. The scheme targets boosting production activities. Very soon, export-oriented factories will start to benefit from it,” said Dr. Nchemba.
He urged producers to stop looking at the Bank of Tanzania’s (BoT) policy of disbursing dollars as a solution to the problem. Instead, he said, raising exports was the only lasting solution to the challenge.
“The BoT’s intervention only comes in when the situation is getting out of hand, but the sustainable solution lies in boosting production for exports,” emphasized Dr. Nchemba.
He said the government remained optimistic that the situation would soon return to normalcy.
With the rising inflation in the United States, the Federal Reserve, which has the core responsibilities of setting interest rates, managing the money supply, and regulating financial markets, has been coming up with measures that end up reducing the flow of the United States dollar across the world, thereby affecting Tanzania and other countries equally.