What you need to know:
- This is mainly on the account of the Russia-Ukraine war that has disrupted global supply chains and caused oil trade uncertainties
Dar es Salaam. Tanzania has revised its Real Gross Domestic Product growth rate for 2022 to 4.7 percent as the ongoing tension in Ukraine weighs in on the ongoing economic recovery.
The projection is lower than earlier estimates of 5.5 percent.
Presenting a statement on the State of the National Economy in Parliament yesterday, Finance and Planning minister Mwigulu Nchemba said the economy will expand by 4.7 percent in 2022. “We project the growth at 4.7 percent, taking into account the impact of the Russia-Ukraine war which has caused continued uncertainty, supply disruptions and soaring food and energy prices in the world,” said Dr Nchemba.
However, the economy is expected to firm up next year, to 5.3 percent, with the minister banking his hopes on a number of measures that the government has been embarking on.
The measures include increasing involvement of the private sector in development, scaling up government’s capacity in dealing with natural and unnatural hazards and ensuring food security.
Last year, the real GDP grew by 4.9 percent as the economy started recovering from the impact of Covid-19 that disrupted economic activities around the globe.
As a result, the country’s GDP was quoted at Sh161.5 trillion compared with Sh151.2 trillion in 2020. Tanzania mainland, meanwhile, was projected to have 57.7 million people compared to 55.9 million in 2020.
In regard to that, the average per capita income was estimated to reach Sh2.798 million last year compared with Sh2.7 million in 2020.
In a bid to shape the country’s economy for the current and next financial years, Minister Nchemba said the government would keep the momentum going when it comes to creating an enabling business and investment environment.
The government, he pledged, would continue coming up with a friendly taxation system that was meant to bolster tax compliance and not hurt investors.
Transparent, equitable and efficient taxation frameworks and systems that ultimately culminate into effective domestic revenue mobilisation are argued to be critical in the achievement of Sustainable Development Goals (SDGs) in African Countries.
“With a friendly taxation system, we will be able to attract new investors as well as making the existing Small and Medium Enterprises prosper for sustainable development of our economy,” he hinted.
In doing so, he went further explaining, the country will broaden its tax base that could be translated into more revenue collection and lift a burden on a few taxpayers.
Taxation is one crucial way through which the government can mobilise revenue and it is said to be at the core of the implicit social contract between the state and its citizens.
Dr Nchemba said during the 2022/23 financial year, the government would put more efforts into investing in the sectors that would act as a catalyst for economic growth. He cited the sectors as agriculture, livestock keeping, fisheries and energy. “These sectors act as a catalyst for boosting production for domestic consumption and exports,” he stressed.
With the move, he detailed, the government could stand a chance to narrow the trade balance deficit, create more employment and take down inflation, which now is still not that bad, considering that it falls within a single digit.
Further, he said, the government will continue investing in strategic development projects including standard gauge railway, Julius Nyerere Hydropower Station and strengthening Air Tanzania Company Limited and the aviation sector at large.
Government plans in store also include revolutionising Information and Communication Technology, implementation of the port projects and those falling under natural resources and tourism, education, health and water sectors.
“We are planning to do all this for the prosperity of the private sector which is the catalyst for the economic growth,” noted Dr Nchemba.
On a global perspective, the International Monetary Fund (IMF) 2022 report has it that the economy grew at 6.1 percent last year compared with 3.1 percent registered in 2020.
The upward trend was triggered by deliberate measures, both fiscal and monetary, taken by various countries, and Covid-19 vaccine rollout that boosted investors’ confidence.
However, the global economy is projected to drop to 3.6 percent this year, with all blame being put on the Russia-Ukraine war.
Adding insult to injury, the economy is projected to fall to 3.3 percent next year if the turmoil is nowhere near to an end.