President Samia outlines stimulus plan

President Samia Suluhu Hassan yesterday outlined a raft of measures her government will take to stimulate economic growth, which has been adversely affected by the global Covid-19 pandemic.

President Hassan – who assumed the presidency on March 19 following the death of her predecessor, Dr John Magufuli, on March 17 – spent almost a third of her 90-minute maiden speech to Parliament articulating what the government would do to regain investor confidence.

She also explained how economic diplomacy, provision of incentives to strategic projects, fighting corruption and getting rid of bureaucracy in issuance of work permits and approval of investment projects, among others, would boost investment to spur economic growth to at least eight percent annually.

That, President Hassan said, would put the country on a firm footing as it seeks to shake off the effects of the Covid-19 pandemic, which has ravaged the global economy in the past year.

“Due to Covid-19, economic growth dropped from an average of 6.6 percent to 4.7 percent last year. We need massive investment to spur economic growth,” she told a packed House.

President Hassan said her government would oversee changes to policies, laws and regulations governing investment with a view to making them more attractive to investors.

“We will continue to improve policies governing finance to ensure that inflation, interest rates and the local currency remain stable,” she said, noting that laziness, theft, embezzlement of public funds and misuse of other resources would not be tolerated.

The government, the Head of State added, would put more emphasis on regaining investor confidence by offering incentives meant to attract investment to strategic projects.

“The requirements needed for a project to be regarded a priority will be made open so that they can be understood by all,” she said, noting that such projects would qualify for tax and other incentives that may be agreed upon as part of efforts to expedite the investment process, and help the government create the eight million jobs promised in the ruling CCM’s 2020/25 manifesto.

President Hassan reiterated that investors have been complaining about Tanzania’s unpredictable investment climate, hostile tax collection tactics and bureaucracy, saying the situation would change with her at the helm as Tanzania’s sixth president.

“The sixth phase government will take an uncompromising approach on this, and we will start with the blueprint (for the improvement of Tanzania’s business climate, which was approved in 2018). Issuance of permits and licences will be streamlined, and so will the process of issuance of land to investors.”

Under her administration, President Hassan said, the tax collection would focus on compliance instead coercion and intimidation. In partnership with the Tanzania Private Sector Foundation (TPSF), the government plans to put in place a system through which members of the private sector can forward their complaints directly to the government.

Bold step

Analysts said the President’s speech was bold, and one that appreciated the fact that economic growth was a result of many factors, including respect for democratic principles, fighting corruption and maintaining good relations with development partners.

“By vowing to address bottlenecks hampering investment, the government will attract more foreign direct investment. Her commitment to improving the investment climate is very positive, but we will have to wait and see what happens,” said Prof Delphin Rwegasira of the University of Dar es Salaam.

An economist, Dr Abel Kinyondo, said: “The President sees the bigger picture that the economy cannot prosper in isolation, and that is why she laid emphasis on the fight against corruption, enhancing good governance and cultivating good relations with development partners and among political parties”.

Agricultural productivity

President Hassan stressed the need to boost agricultural productivity, saying it was unfortunate that although agriculture employs about 65 percent of Tanzania’s working-age population, the sector accounted for only 27 percent of GDP.

“This is largely due to low productivity. For instance, while in a full productive setting, one is required to produce eight tonnes of maize per acre, Tanzania’s farmers produce only 1.9 tonnes per tonne. Similarly, a Tanzanian cotton farmer produces 250 kilogrammes per acre instead of 1,000 to 1,250 per acre,” she said.

Although Tanzania is the second country in Africa in terms of livestock population, the sector only accounts for 7.4 percent of GDP.

“In the 2019/20 financial year, Tanzania produced 701,679 tonnes of meat and three billion litres of milk due to low productivity. Our cows produce only three litres per day on average instead of between 20 to 30 if modern technologies are put to use. Our cattle produce only 150 kilogrammes of meat instead of between 500 and 600 kilogrammes in some developed countries,” she stressed. Irrigation farming will be made a priority in the coming four years, with the size of irrigated land increasing from the 561,383 hectares to 1,200,000 hectares come 2025.

“That way, we will be able to reduce our dependence on rain-fed agriculture. Farmers will be required to farm on a commercial basis and contribute towards costs for preparing irrigation infrastructure,” she said.

On livestock, the focus will be helping livestock keepers to own few animals that yield better returns. Also, a total of eight shipping vessels will be bought during the coming four years.

In tourism, the target is to attract five million visitors annually by 2025, with earnings expected to rise from the current $2.7 billion to $6 billion.

Economic diplomacy

The government, said President Hassan, will strengthen the Foreign Affairs ministry to enable it to spearhead economic diplomacy.

This will go alongside improving the capacity of the country’s diplomatic missions abroad to effectively undertake the task.

“Economic diplomacy will be our emphasis,” she stressed, saying the country’s relations with the outside world would now hinge on economic partnerships.

However, the head of state said the drive needs a major overhaul of the Foreign Affairs ministry and improved capacity of the embassies.

“The work ethic at our embassies and the ministry has to change. They should be manned by competent, experienced and dedicated staff”, she said.

President Hassan said there would be no change in the country’s foreign policy after her accession to power last month following the demise of her predecessor President John Magufuli.

“If you call it a change, then it will be a renewed effort on economic diplomacy,” she said in a speech broadcast live by the electronic media.

She said the sixth-phase government would strengthen ties with the regional economic communities (RECs) and international organizations.

She cited the East African Community (EAC), the Southern Africa Development Community (Sadc) and the EAC-Sadc-Comesa Tripartite Free Trade Area, among others. She implored the Foreign Affairs and East African Cooperation ministry to hire competent staff able to woo strategic economic partners.

Plans are underway to open more embassies in key countries and consulates in strategic cities - even in states where Tanzania has an embassy.

“Our diplomatic staff have to be competent in striking deals in investment and trade promotion as well as seek strategic partners in tourism”, she said.

She also announced that the government will review and make the necessary amendments to the Foreign policy and make it address the current priorities and challenges in the world.

Tanzania has about 40 embassies and High Commissions abroad, most of them in Africa and Europe, but with increasing numbers in Asia lately.

President Hassan said Tanzania would honour all the international protocols on the environment, citing the Paris Agreement on climate change signed in 2015.

‘LNG song’

President Hassan said ongoing Host Government Agreement (HGA) negotiations between the government and international oil companies over execution of the Liquefied Natural Gas (LNG) plant must end now.

“It has been six years in a row without concluding HGA discussions so we can start actual construction of the LNG plant.

“The long wait is over, and we are going to do it now,” she noted as she was talking in Parliament yesterday.

Her orders meant to quickly finish the necessary procedures for the construction of the more than $30 billion (Sh69 trillion) project to kick off soon.