Government acts on cost of living outcry

Dar es Salaam. The government is introducing several measures during the coming financial year in its efforts to contain the spiralling cost of living, fuelled primarily by a rise in global demand after repeated lockdowns caused by the Covid-19 pandemic and global supply chain disruptions.

Tanzania, like many other countries, was currently bearing the brunt rising prices of fuel, wheat, fertiliser and cooking oil among others due to supply chain disruption after Western powers imposed economic sanctions on Russia following the latter’s invasion of Ukraine.

Presenting the Sh41.48 trillion Budget for the financial year 2022/23 in Parliament yesterday, The Minister of Finance and Planning, Dr Mwigulu Nchemba, said the Budget - which goes alongside implementation of the 3rd Five-Year Development Plan, will see the government putting much energy into investing in the sectors that would act as a catalyst for economic growth.

The 3rd Five-Year Development Plan, which runs from financial year 2021/22 to 2025/26, is themed “Realising Competitiveness and Industrialisation for Human Development” and according to Dr Nchemba, the government’s priorities in the 2022/23 financial year will be in the productive sectors including agriculture, livestock, fisheries, energy, investment and trade.

“President Samia Suluhu Hassan has directed that this year’s budget should focus on providing relief to people and accelerating economic recovery. This budget will therefore base on revenue and expenditure policies, value for money, fight against corruption and investing in productive sectors so as to create jobs for youth,” he said.

He said the government has raised the budget for the agriculture from Sh294 billion to Sh954 billion so that ultimately, Tanzania should be able to produce enough food to meet its domestic demand and export thereby cushioning the country from any foreign shocks.

He said the ultimate goal for the government was to create three million jobs for youths and women in agricultural sector by 2025. “This will be done through expanding the irrigation area to 8,500,000 hectares equivalent to 50 percent of the total area cultivated in the country by 2030,” he said.

Meanwhile, said Dr Nchemba, the Government intends to either reduce or relocate the few livestock at Kongwa ranch in order to transform about 30,000 acres into Sunflower plantation and construct the largest edible oil processing factory in East Africa.

He also detailed a number of projects that will be implemented in the fisheries and livestock areas during the coming financial year.

Small scale traders, commonly known as machingas, will also receive a special focus in President Samia Suluhu Hassan’s goal of creating jobs.

Apart from identifying, allocating, supervising, protecting and enabling small scale entrepreneurs (machingas) as one of the key drivers of the economic growth, the Government will continue to identify and link them with Financial Institutions to access affordable loans…,” he said.

He said the government will continue with the provision of fuel subsidies and also allow suppliers who are capable of importing the product [fuel] at affordable prices.

“It will also establish Fuel Price Stabilisation Fund after price stability in the world market and the National Strategic Petroleum Reserve and Single Receiving Terminal,” Dr Nchemba told the House yesterday.

Regarding price increase for edible oils, Dr Nchemba said, the government will impose strategic fiscal measures to contain rising prices in the importation of crude edible oils to local producers so as to increase production, reduce prices and increase employment.

Dr Nchemba proposed to zero rate VAT for locally produced fertiliser for producers. “I further propose to reduce royalty charges on minerals used in energy and fertilisers production in industries,” he said.

In trying to bring relief to consumers, Dr Nchemba is also reducing mobile money levy by 43 percent (see related story on page 4).

He also proposed to exempt VAT on Ultra High Temperature milk and yoghurt, to enable domestic milk processors to compete in the regional and international market and create more employment for improved livelihood.

The government also plans exemption of VAT on dairy packaging materials with a view to providing relief to the dairy industry.

In an attempt to ensure that cashew nut farmers have enough inputs for the crop, Dr Nchemba proposed to amend The Cashewnut Industry Act, No. 18 with a view to ensure that the revenue from the export levy from raw cashew nuts is divided on 50 to 50 basis whereby the first portion of the money will be channeled to the Ministry of Agriculture for input subsidy and the Agriculture Development Fund (ADF) while the other half will be remitted to Consolidated Fund.

The losers in Dr Nchemba’s plan include TV views who will be required to pay a fee of between Sh1000 and Sh3000 for using a decoder and smartphone, tablets and modems dealers as the government plans to abolish VAT exemption on the products.

Among the losers also air charter suppliers, tenants, small-scale miners and Bus and truck owners.

The government now plans to introduce income tax of Sh3.5 million on each truck and passenger buses per year.