2009-01-04 11:42:59
By Staff Reporter
If you banked your hopes on the country`s top banker, believing that Tanzania is far away from the World`s powerful countries currently hit by financial crisis, and therefore can’t be affected, you were dead wrong.
The truth is that from the Chairman of a company at the upper echelons of society to those at the lowest rungs like coffee or cotton grower in a remote village, everyone will fall victim to the historic global financial turmoil which has caused economic recession ever witnessed since the great depression period.
As Tanzanians recover from the cheer of Christmas and New Year festivals, they will inescapably be hit by blows of the crisis during 2009 - described by President Kikwete in his end-of-the- year speech as `a tough year economically`.
To start with, the global economic recession will seriously hit tourism - a $1billion industry - with earlier predictions showing that revenue will decline by over 30 percent during this year.
In his end of the year speech, the President told the nation that in 2008, the global crisis reduced tourism earnings by 18percent.
Tourism is the country`s number one foreign exchange earner and one of the key indicators of the Gross Domestic Product(GDP), currently valued at $19billion.
With the credit crisis highly ruining US and Europe - the major source of tourists for Tanzania market-the year 2009 will be tough for the country`s tourism sector.
Another victim of the ongoing historic global financial turmoil will be the cotton sector which, during 2008, lost revenues by 54.4 per cent or Sh40.9billion.
The sector offers economic support to about 14million people in the Western Cotton Growing Areas, for whom the crisis will have an adverse impact.
Alarmed by the situation, President Kikwete this week said during his end of the year speech, ``by March last year a kilo of ginned cotton was $0.82cents but by the end of the year prices fell to $0.45cents…cotton traders told me how they have been highly affected by the ongoing crisis.``
The third casualty will be coffee, which last year suffered a 32 per cent loss due to global financial crisis.
Coffee exports earn the country around $90million per year.
By December last year, Arabica price fell by 34 per cent, reaching $104 for a 50kg bag, while Robusta price plummeted by 30 per cent, fetching $65.46 per bag.
On the trail is the Nile Perch industry which exports 80 per cent of its fish fillet to the European market, but due to the ongoing financial crisis, exports are projected to fall by 50 per cent.
This will be a thorn in the flesh to the already troubled sector which, in the past three years, has suffered heavily due to sharp dwindling of Nile Perch population in Lake Victoria and stiff competition from Vietnam.
Annually the Nile Perch industry exports fish fillet and related products valued at $200million, supporting 300,000 people directly and another 3million indirectly.
Currently, the only relieving aspect of the global economic crisis to Tanzanians is the plummeting fuel prices which by the end of last year reached $36per barrel of crude oil.
However according to the Economist magazine`s special edition of the World in 2009, fuel prices at the global market will surge to $75 by the end of this year.
However demand for oil in the rich world will fall in 2009 by around 1 per cent because of the ongoing global economic crisis.
Surprisingly, earlier projections by the Economic Intelligence Unit shows that food prices will drop by 25 per cent especially for maize, wheat and soybeans, while rice prices will also fall slightly by 19 per cent.
But millions of people according to the projections will still go hungry in developing countries during the year.
Summing up what need to be done, President Kikwete wants a special campaign to develop the domestic market which for so long time has not been effectively utilised by Tanzanians as well as the neighbouring countries.
For instance today, domestic tourism accounts for 40 per cent of all tourists who visit South Africa annually, while in US nearly half tourists are locals.
But, whether his free lecture to the Tanzania Tourism Marketing Board will this time be taken seriously by the concerned authority or not is a debatable issue.
In a country of 40million population, if at least 5 per cent of the population will visit various tourists’ attractions and spend an average of $100 annually, the sector will record $200million revenues generated from domestic tourism.
- SOURCE: Sunday Observer
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