Poor revenue collection likely to affect ambitious proposals

Poor revenue collection likely to affect ambitious proposals

They say there is need for the government to reduce the number of priorities from seven to three in order to implement them effectively given the level of available resources. For instance, the Confederation of Tanzania Industries (CTI) suggested that the budget should concentrate on improving sectors that drive the economy. 

The CTI Chairman,  Mr Felix Mosha, says the sectors are availability of adequate and quality electricity, rehabilitation and improved railway systems and strategic linkage between sectors of the economy, especially agriculture and industries. 

“The budget lacks strategic linkage between sectors of the economy,” Mr Mosha said. He was giving CTI’s views on the 2012/13 budget that was read in Parliament last week.  He said because of inefficient power supply last year, the growth in manufacturing activities  dropped to 7.8 per cent from 7.9 per cent of 2010.

The sector is expected to contribute 15 per cent of GDP by 2015.  “This is the result of rising of cost of production caused by power shortage and high transport costs,” Mr Mosha said.  CTI’s second Vice Chairman, Pankaj Kumar said although the minister’s budget speech mentioned a number of strategies to end the power blues in the short and long terms, in the past nothing has materialised. 

“If the electricity problem is not fixed, we are creating a trading state, a market for goods from the rest of East Africa,” Mr Kumar, who is also a CEO of Alaf Limited, said.  He said last year the manufacturing sector operated at 50 per cent capacity only due to power problems.

“This creates demand that can only be met by imports from within and beyond EAC states,” he said.  A prominent businessman, Gulam Dewji, said because of poor linkage between agriculture and industries, farmers’ produce, especially cotton and cashew nut, are fetching poor prices as a result of exporting them raw. 

“...And the situation will continue to be worse. Unless we add value to our produce,” said Mr Dewji, the founder of Mohamed Enterprises Limited, a major player in general produce marketing.   He added: “A kilo of cotton fetched 1000/- last year but this year has gone down to 450/. 

This has demoralised farmers to increase production next season as their earnings have dropped by more than a half!”  In the1970s and 1980s, Tanzania was the Manchester of Africa in producing clothes and apparels but that glory is now history after its textile mills dropped from 16 to the current four. 

The textile sector makes major contribution to economic growth especially, in creating jobs and foreign exchange earnings. As a result, poverty reduction is dying a natural death.  “CTI is not sure of the survival of the remaining four mills due to unfair competition from imported textiles and textile products through under invoicing and under declaration,” Mr Mosha said. 

To boost the sector, manufacturers have advised the government to waive VAT on textile and textile products. PricewaterhouseCoopers budget review commentary indicates that agriculture sector grew by 3.6 per cent in 2011 compared to 4.2 per cent in 2010.  

The commentary dubbed: “Growing tomorrow’s economy,” attributed the decline to “decrease in growth rate due to inadequate rains during the 2009/10 agricultural season, which affected crop production”. Speaking at the Ernst & Young budget review forum, experts said the finance bill had no clear dimension that could be understood and lacked sectoral integration to spur economic development. 

The Finance Minister, Dr Mgimwa, said in his maiden speech that the government would “review the incentives granted to local industries, which use local inputs including textile and edible oil industries.”  On electricity, the budget, emphasis will be placed on the availability of electricity by increasing generation, transmission and distribution capacities. A total of 498.9bn/- has been allocated for that purpose.  

The minister also said on transportation focus will be strengthening the Central Railway line, which involves renovation of the train engines and wagons.   A total of 1.4tr/- has been allocated to infrastructure rehabilitation, including roads, airports and inland ports.

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