{{The World Bank has warned Tanzanians on the danger of too much openness to international trade, saying it creates the risk of exposing the country to global shocks in terms of prices and quantities.}}
According to the latest report of the World Bank on the country’s economic outlook, those risks have become more visible over the past few years with successive financial and fiscal crises in developed countries as well as increased volatility in the world commodity prices.
“That said, the heavy reliance on export of gold and the import of oil is currently a risk for Tanzania. Gold now accounts for more than 40 per cent of the total value of merchandise exports.
A sudden decline in the world gold prices would have a dramatic impact on the total value of Tanzanian exports…a decline in gold prices of 30 per cent would reduce this value by almost 15 per cent,” reads part of the report.
“Similarly, with crude oil making up a third of the country’s imports, an increase in the price of this commodity could be destabilising,” part of the report reads.
The World Bank report also pinpoints other weak areas facing the country. It named them as inability to maximise the benefits associated with openness to international trade.
“One reason is that the vast majority of merchandise exported are low-value-added products such as minerals and unprocessed agricultural goods, which have minimal direct impact on the creation of employment and the development of technology in the domestic economy,” the report further pinpoints.
At present, Tanzania should diversify its exports and ensure that imports are made more accessible and cheaper for a large number of consumers and local firms, according to the World Bank.
“The priority of the country should be to reduce transport costs to facilitate trade with the rest of the world. Since approximately 90 per cent of Tanzania’s international transactions transit through the Dar es Salaam port, improvement of this facility should be prioritised by policy makers,” the report says.
Commenting on the report, the senior lecturer of economics at the University of Dar es Salaam, Prof Humphrey Moshi, said that high transport costs resulting from inefficient Dar es Salaam port and railways transport system has been increasing the cost of doing business in the country.
Prof Moshi, however, said that the country should not continue to rely on the World Bank reports which were incomplete in finding solutions for economic problems facing it.
“We should avoid depending on World Bank reports and advice because they are yet to solve economic problems facing us.
The World Bank, for instance, has to focus on finding lasting solutions to the weak agriculture sector which employs the majority of Tanzanians,” he said.
He cited the case of the BRICS nations including Brazil, Russia, India, China and South Africa which have designed their own development policies with successful results.
In its report, the World Bank – however – is optimistic that the country would continue to attain a stable economic growth rate at seven per cent in the 2013/14 financial year due to a fast expanding sector such as mining, transport and telecommunications.
NMG
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