Business must plan for economic slump rooted by mounting oil price

By Hildebrand Shayo

More than two thirds of business in Tanzania believes that a decline of business’s future rooted by mouthing on oil prices and global credit crunch would have a negative impact on their business, but 33 percent of those anticipating worsening conditions do not have a business plan to help them to ride out a downturn.

The research from business analysis also found that 65 percent of small and medium sized business analysed in Mwanza, Dar es Salaam and Mbeya expect economic conditions in Tanzania to get worse over the next year.

With the transport sector facing mounting oil prices and employment creation initiative dragging its feet to cope with more job opportunities, business national widely are more likely to believe that an economic downturn would have a negative effect on their business with 24 percent believing it would have a strong negative impact that might trickle over to other sectors.

However, analysis of those in the business and financial sector are less likely to believe that a downturn would have a harmful impact on their business (62 compared with 68 percent) across all business, possibly due to the fact that many business in this sector are focused on the business-to-business markets and do not rely on the economic health of the deprived consumers.  

Although not all business in Tanzania would be affected equally by the economic downturn, our analysis signals that most business in Tanzania is worried to some extent so that is the time to take action and protect their companies. Those who plan now should be better equipped to withstand a storm.

From my analysis, and taking into account 2008/2009 fiscal budget forecast there are steps that can be taken to make battling a downturn in the economy that bit easier. For instance, having a sound business plan in place is an excellent start and can allow business to plan for various scenarios. Business may need to think about improving cash flow, diversifying, exploring new markets, becoming more efficient or focusing on their business unique selling point such as the quality of their customer services. In addition, if business have their business plans, it is vitally important to review it in the context of current world economic turmoil. Tanzania and business operating in Tanzania need to understand that we are not an island; we are part of global economy!

Fascinated on detailed analysis and full Dossier on “how business in Tanzania are struggling to survive with economic downturn, contact Dr. Hildebrand Shayo, Business Consultant on shayoh@lsbu.ac.uk

Daraja la Kinyerezi kutoka kilimani. Ni bonde la Mto Msimbazi.

Baadhi ya shughuli katika Bonde la Mto Msimbazi ni pamoja na kilimo cha mbogamboga. Mboga hizi ni salama. Wanatumia maji ya chemchem mtoni na si yale ya kutoka kwenye mifereji ya chooni.

Baadhi ya maeneo katika Mto Msimbazi kuna changamoto za kimazingira. Mmomonyoko wa udongo. Hii ni kazi ya mto pale unapojaribu kuchonga njia mpya ‘meandering’. Pengine ipo haja kwa serikali na wanamazingira kuchukua hatua za makusudi kabisa kudhibiti hali hii.

Baadhi ya taasisi kama vile Seminary Kuu ya Segerea wamefanya kazi kubwa kudhibiti mazingira katika sehemu fulani ya Bonde la Mto Msimbazi. Kuna msitu mkubwa katika eneo hili lililo kati ya Daraja la Kinyerezi na lile la Segerea.

By Dr. Hildebrand Shayo

As Members of Parliament in Tanzania expresses their fears that the economic hardships millions of Tanzanians are experiencing will lead to widespread social unrest in the near future if left unchecked, triggers one to wander what alternative strategy the same Legislators have in place to rescue the situation or are they waiting to go round the country to defend the 2008/2009 budget to their electorate using the little tax payer money that could otherwise used wisely somewhere else? We all know of a looming economic depression in the world, which would not spare poor countries like Tanzania.

In his presentation of this year’s fiscal budget, Tanzania Minister for Finance Honourable MP, Mustafa Mkullo said that the Tanzanian government sees economic growth rising to 7.8% in 2008 from 7.1% last year. He said the government’s intention was to get inflation below 7.0 % by mid-2009. In an economic survey presented to parliament ahead of his 2008/09 fiscal budget speech, Mustafa Mkullo also predicted the rate of growth to rise steadily in each year up to 2011. He said the economy will grow by 7.8 % in 2008, 8.1% in 2009, 8.8 % in 2010 and 9.2% in 2011. According to his speech, Tanzania’s GDP growth in 2007 was boosted by expansion in telecommunications, financial services and construction. He said, inflation will be kept below 7.0 % by the end of June 2009. Mustafa Mkullo`s forecast comes at a time when high food and oil prices are affecting economies worldwide, and this could be a challenge to growth as it fuels high inflation. He said, “we expect inflation to stay above 5% largely due to high global oil prices”…But what does this figures mean for the industry, retailers and above all the average Tanzanians who are waiting for quality life as promised during the 2005 general presidential and parliamentary election? Is the 2008/2009 an intelligent fiscal budget estimates or another unexciting fiscal estimate?

Since Honourable MP Mustafa Mkullo presented his fiscal budget for 2008/2009, I have been listening intently and reading with interest what the Tanzanian media has to say, seeking a general feel for the reaction to the latest fiscal stimulus that has been generally regarded as an intelligent budget. While I will not want to deal with 21 new identified taxable areas hinted in the house, that could increase revenue to be collected, my concern is whether the responsible ministry is preparing to release into the public domain a whole raft of supplementary documentation designed to flesh out the measures announced and /or add detail to what was not expressly covered in the speech. Is there need for money to be set aside for Ministers to go around the country defending what Honourable Mustafa Mkullo has presented in the August House or parliament and if so, will such initiatives have value for money?

In my view, the speech itself has become more of a parade than detailed fiscal policy and the supporting document has to be traced over to identify other supporting document which may also have an impact and above all what this budget has to offer in relation to job creation to an increasing number of young Tanzania graduation from universities, colleges and other training institutions?; the devil is in the detail! Even though some of you value details on budget, you will be either pleasantly surprised or disappointed that I intend to write nothing on the details of the 2008/2009 Tanzania fiscal budget. Rather, I would like to open a debate on what appears to be an air of general discontent prevalent today among the electorate in Tanzania.

Let us face it shouldn’t the budget be unexciting? After all the, the financial world wants stability, not feast to famine. In a stable world the budget shouldn’t give us any shocks, should not make us feel uncomfortable. With everyone trying to predict how the budget is going to affect him/her or what the detailed content is going to be, is it any wonder that the details in a budget is hard enough for a common man to understand?

Should we not be able to sit back and agree that the government of popular choice has demonstrated great stewardship of Tanzania’s economy and that we as Tanzanians can look positively forward to a stable future, trusting the economy is in the hands of capable stewards-the government? It would have been nice, but it doesn’t appear to have been the general reaction to this fiscal budget.

Trust is an interesting word especially when it concerns budgets. If you trust in someone, are you not giving them your vote, empowering them to act in your best interest? In a political context we trust government to do the right thing for the good of the country; and although it may not be good for us as individuals in the short term, we trust that it will even out over a long time. The difficulty comes when this trust begins to break down.

When President Jakaya Mrisho Kikwete won over 80% majority in 2005, he promised Tanzanians that life will not be the same again and his government was determined to ensure quality life for every Tanzanian. President Kikwete outlook was good, and I believe he is determined to leave a legacy that will cement a foundation that our future children will be proud off, but financial experts could only say that these plans would only work if on one hand, the predicted growth in the economy took place, leading to an increased revenue for the government to enable it fulfill its ambition, and on the other hand, we have real committed leaders and in this case MPs who sees beyond their five year term. Nonetheless, the economy inevitably has been on a downward spiral. Should we spend money we don’t have?

Donors are still not yet decided whether to support our country’s development projects given the corruption scandals. In Tanzania, we pay tax in an array of different ways, into a huge pot, which is then distributed, I know it is massively complex, but what would be wrong in knowing how much goes where? Is that not part of the trust we give the government in power?

There has been a big debate in the media recently about government misuse of taxpayers money or lost through projects and payments such as EPA and Richmond emergency electricity deal etc. There has also been a call from Legislators challenging the government to put in place affirmative actions geared at improving the agricultural sector and fear where 2008/09 budget estimates, is seen as little has been allocated to the agricultural sector making the long-awaited better life to all impossible. I think it is inevitable for the government to conduct its businesses in different ways. However, I know I speak for many Tanzanians when I say; I would like to know how the numbers are worked out. In essence, transparency goes with trust! In Tanzania we do not have “practical freedom of information” as it should be. I have not heard of a veto that can be applied to any request that is not deemed to be in the public interest. Indeed without well-regulated freedom of information, citizens trust will continue dwindle. Tanzanians not only want details of the budget, they want alternative strategies, both short term and long terms that will help them improve their lives, more jobs, good health care and education for their children.

I know, having read “standing orders” and work code and ethics, of course some things are kept out of reach for justifiable reasons, but in the context of where our monies are spend for the greater good of the country, and we have a right to know and we demand transparency. I know many of us and our leaders may not always like the answers, but we would at least have a point of reference. God Bless Tanzania.

Please note: the views and opinion of this article are those of the author: Email the author on shayoh@lsbu.ac.uk

Habari ni kutoka hapa:  http://www.africaexclusivenews.co.uk/issue2/Trust%20in%20Tanzanias%202008_09%20Fiscal%20Budget%20dwindles.html