The government of Tanzania has stepped up measures to mitigate effects of the dollar shortage on the country’s economy, key being supporting local business to boost exports and providing export credit guarantee schemes.
Director of Information Services and Chief Government Spokesperson Mr Gerson Msigwa spoke on the efforts during his regular briefings to the media in Dar es Salaam, over the weekend.
Mr Msigwa indicated that the government was dishing out export credit guarantee schemes for products being sold outside the country. Such a mechanism involves banks dishing out loans to traders by contributing 50 per cent.
“The government also supports local traders to produce more quality products in the course of promoting trade and exports,” said Mr Msigwa.
He, however, noted that since May this year they have started purchasing gold and by July about 400 Kg had already been procured, a measure that is aimed at strengthening its national reserve.
On the other hand, the central bank has been selling hefty amount of dollars to the banks at a reduced price for them to lower the exchange rates in the market.
Giving an example, Mr Msigwa said on Friday alone the Bank of Tanzania (BoT) sold about 20 million US dollars to the banks.
Similarly, the process of issuing licences to people who want to start engaging in forex business is continuing. At least 80 licences have been presented to traders since the process resumed, inviting more others to apply in accordance with the new licensing conditions.
Mr Msigwa also said a swap mechanism is being conducted, whereby the government provides traders with shillings in exchange of the dollar, adding that in the long run when there are more dollars in the market the reverse will be done.
Other strategies highlighted involve securing credit that will help the country to earn more US dollars.
The Chief Government Spokesperson stressed on three key issues which need to be taken into proper consideration amidst the dollar crisis including the public to collaborate with the government to control the black market.
He urged Tanzanians to increase efforts in production to boost the country’s exports and all transactions should be carried out using the shillings and not foreign currency.
“Currently, if you go at the port all transactions are done in Tanzania shillings,” said Mr Msigwa stressing on the need for ministries to embark on strategies to ensure production receives a boost in the country.
Mr Msigwa underscored some of the factors that triggered the problem including economic slowdown emanating from the coronavirus pandemic, the Russia-Ukraine war which broke out in February last year that caused commodity price surged, climate change and changing US policies.
Meanwhile, Mr Msigwa said the implementation of the ambitious 2,115-megawatt Julius Nyerere Hydropower Project (JNHPP) currently stands at 91 per cent as installation of various machines continues to be fast tracked.
“Water filling at the dam has reached 168 metres above the sea level…we anticipate to embark on wet testing between January and February 2024,” he said.
According to him, the goal is to ensure power generation kickstarts by June 2024, thereby ending all electricity challenges.
Due to an increase in economic activities in the country, he said electricity demand has increased at a supersonic speed in the previous year from 1,354 megawatts to 1,482 megawatts.
Following deliberate measures taken by the government through the Ministry of Energy and the Tanzania Electric Supply Company (TANESCO) to curb the issue power generation rose up to 1,913 megawatts.
He observed that the government has continued to take more measures to ensure power is generated through various means, noting that a geothermal plant has been installed at Ngozi area in Mbeya Region to start implementing a project that is expected to generate 50 megawatts by 2024.