ECONOMISTS and traders have hailed the government’s efforts to restore normalcy at the famous Kariakoo business centre in Dar es Salaam, saying the move was crucial for the stability of the country’s economy.
Spot survey conducted by the ‘Daily News’ on Thursday witnessed that almost all shops were opened in this busy shopping area.
On Monday and Tuesday, the traders closed their shops, calling for the removal of what they termed as nuisance levies imposed by the Tanzania Revenue Authority (TRA).
The traders lamented that the move by TRA to impose new legal provision on registration of storage facilities, was tantamount to double taxation, a situation which was affecting their businesses adversely.
However, the government swiftly intervened, with Prime Minister Kassim Majaliwa holding a meeting with traders twice – Monday and Wednesday, where he urged them to reopen businesses, while their concerns were swiftly being addressed.
In the meeting, Mr Majaliwa announced eight bold measures to bring normalcy at Kariakoo, including formation of a 14-man special committee which will probe and draw solutions to tackle traders’ grievances.
The committee comprises seven members from the government and seven others representing the traders.
Mr Majaliwa also announced a ban of taxes imposed by TRA on traders for storing goods in warehouses. He stressed that the facility owners are the ones who should make the payments because they are charging for the service.
He also maintained that his directive of suspending the tax collection taskforce was there to stay.
Speaking to the ‘Daily News’ yesterday, the Kariakoo Merchants Association Chairman, Martine Mbwana said all shops in the area were open and business was back to normal.
He said the traders have faith in the government and that is why they have all opened shops.
“The situation is safe, traders have opened their shops and are continuing their business as usual. We are grateful to the PM because he has been able to relieve the pain that the traders had been suffering.
Mbwana who was also picked in the committee formed by the Premier said the committee officially started work yesterday and today they are continuing with meetings, so that they can finish within the 14-day assigned by the government.
On his part, the businessman Mr Profil Beda expressed his faith in the Prime Minister’s statement and therefore, he no longer expects to see traders’ strike due to the problems arising from unfriendly measures by TRA and other organs.
He said they have counted enough losses for shutting down businesses and would not wish such to re-happen.
Several economists have also hailed the efforts to restore normalcy, saying it was crucial for the business hub to remain active and vibrant.
They said Kariakoo shops closing had a huge negative impact on the economy. Latest data shows that the Kariakoo Tax Region pumped a total of 127.442bn/- into government coffers during the first nine months of the current fiscal year.
Dr Hildebrand Shayo, an economist -cum-investment banker, stated that business closure even for hours could have a huge economic implication.
Dr Shayo said central business centres such as Kariakoo in major cities such as Dar es Salaam are areas of intense social and economic interactions and functioning receiving huge public and private investments as well as places of intense population flow in the urban setting.
Unquestionably, he said what happens at Kariakoo presents a dilemma for businesses and importantly creates discomfort for private investments.
“What happens at Kariakoo is sad economically. Primarily, through the supply side, high uncorroborated marginal tax rates can discourage work, saving, investment, and innovation, whilst specific tax preferences, that can well be explained by TRA themselves can affect the allocation of economic resources,” he said
He added, “It is too early to ascertain what is the overall economic impact of closing the shops or businesses’ normal routes at Kariakoo because it needs some serious analysis and use of data that I don’t have as of now, but what I can state here is that what happens leaves open questions on how large incentive and deficit effects are, and how to model them for policy analysis that can help to have the lasting solution that will have a win-win position to the business operators and the government.”.
Dr Shayo further said the TRA officers on the ground and the so-called tax force on taxation each use multiple models that differ in assumptions about how forward-looking businesses are, how their approach connects to the national economy, and how businesses and individuals respond to tax changes.
“Unless there is a harmonisation of the right approach, TRA issues as far as paying various taxes are concerned will go on and on and its impact on the economy will have huge multiplier effects,” said Dr Shayo.
Walter Nguma, Independent Economic Analyst said the Kariakoo market is a very important gateway for business in Tanzania and many countries come there to get various services including Zambia, Rwanda, the Democratic Republic of Congo (DRC), Burundi, Kenya and Uganda.
“In one day, between 200,000 – 400,000 people enter Kariakoo, so a lot of money is lost because the shops were closed on Monday and Tuesday,” he noted, hailing the government’s swift intervention to resolve the crisis.
Mr Nguma further said in Kariakoo, by quick calculations, there are more than 40,000 shops and there are booths of agents, food vendors, bodaboda, commuter buses for the past 48 to 72 hours they have lost a very large amount of income due to the closure of shops.
