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Inflation could be tamed

Inflation could be tamed

The central bank governor, Prof Benno Ndulu, was quoted as saying that the country expects bumper harvest in agriculture from the current rains and also pegged hopes on the fall of oil prices in the world market.

Despite the emergence of other key sectors like mining and tourism, agriculture still remains the backbone of the national economy and accounts for about half of the GDP, three quarters of merchandise exports and a reliable source of food and provides employment opportunities to about 80 per cent of Tanzanians.

It has linkages with the non-farm sector through forward connections to agro-processing, consumption and export. The sector also provides raw materials to industries and a market for manufactured goods. Contribution of the agricultural sector on the GDP has been growing at around 3.3 per cent per year since 1985, the main food crops at 3.5 per cent and export crops at 5.4 per cent per year.

High food costs and the energy sector which relies much on thermal power are to blame on the unstoppable inflation. Statistics show that food accounts for around 72 per cent on the inflation rate with the balance apportioned to energy costs as well as some other market forces such as the free fall of the shilling. Costs of living have gone up as a result of the high inflation which has also caused unbearable conditions to the poor who can hardly afford a meal a day.

A kilo of sugar, for instance, currently changes hands for 2,200/-, up from 700/- mid last year. Farmers are the biggest victims because they cannot sell their crops to the lucrative urban markets due to high transport costs. Again, efforts to help peasant farmers out of abject poverty make no headway with these barriers.

Much as the government has embraced free market economy, fair business practices must be observed fully. Government organs like the Energy and Water Utilities Regulatory Authority (EWURA), Surface and Marine Transport Regulatory Authority (SUMATRA) and the police must work jointly to ensure rogue traders get no room to make quick money from unfair practices. If all these efforts are put in place, the impact of inflation will be low to the common citizens.

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Author: EDITOR

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