TANZANIA MARCH 2008 ECONOMIC ROUNDUP: TOURISM, PRIVATE

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000233 SIPDIS SIPDIS DEPT AF/E FOR JLIDDLE, AF/EPS FOR ABREITER, EB FOR DWINSTEAD E.O. 12958: N/A TAGS: ECON EAGR ECIN EIND EINV ELAB ETRD TZ SUBJECT: TANZANIA MARCH 2008 ECONOMIC ROUNDUP: TOURISM, PRIVATE SECTOR CREDIT, MINIMUM WAGE, EAC, SUMMITS REF: DAR ES SALAAM 000130 -------------- March 2008 Economic Issues -------------- ¶1. In this issue: -- Tourism Overtakes Agriculture in Economy -- More Credit Extended to the Private Sector -- GOT Hires Consultants to Study Minimum Wage -- CTI Bemoans Barriers to EAC Trading -- President Kikwete to Attend Arusha Tourism Forum in May 2008 -- Sullivan Summit June 2 - 6, 2008 -------------- Tourism Overtakes Agriculture in the Economy -------------- ¶2. The Governor of the Bank of Tanzania, Professor Benno Ndulu, told journalists in Dar es Salaam on Friday March 14, 2008, total exports for 2007 were about USD 3.5 billion with exports from agriculture reaching USD 350 million. While exports in agriculture remained steady, earnings from tourism rose in 2007 to USD 1 billion and mining brought in USD 800 million, surpassing agriculture as the leading sectors of the economy. Port services and transit cargo earned USD 345 million. Other activities that continued to drive economic growth in Tanzania were communications, financial services, construction trade, and manufacturing. -------------- More Credit Extended to the Private Sector -------------- ¶3. In February 2008, credit to businesses increased by 44.1 percent, above the annual growth rate of 41.0 percent attained in January 2007. This is in line with the Government of Tanzania's (GOT's) policy to make the private sector the engine of the economy. The credit growth in the private sector corresponds to increased economic activity in the economy coupled with an increased number of credit-worth clients. During February alone, a total of TSh 63.7 billion (approximately USD 53 million) was extended to the private sector by commercial banks, in addition to TSh 87.7 billion (approximately USD 73 million) that was extended in December 2007. The largest share of credit was extended to trading activities which accounted for 18.7 percent; personal loans accounted for 17.6 per cent, manufacturing 17.5 per cent, and agricultural holdings 10.3 percent, the transport and communication sub-sectors received 7.6 per cent, hotels and restaurants 3.8 percent, electricity 3.7 percent, building and construction 3.3 percent of the total credit extended to the private sector. -------------- GOT Hires Consultants to Study Minimum Wage -------------- ¶4. The Government of Tanzania (GOT) announced it has hired consultants to study the implications of the recently announced but hotly disputed minimum wage in the private sector (reftel). Minister for Labor, Employment and Youth Development, Juma Kapuya, announced on March 4 that the GOT had reached the decision to undertake a study of the new minimum wage after many private sector employers defaulted on the payment of the wage that went into effect on January 1, 2008. After receiving the consultants' findings and recommendations, the GOT plans convene a three-way "dialogue" involving the GOT, workers, and employers to find a solution to the problem. Kapuya said that in the meantime, the minimum wage in the private sector will remain as published in the Wage Order vide Government Notice No. 223 of 2007. -------------- CTI Bemoans Barriers to EAC Trading -------------- ¶5. The Vice Chairman of the Confederation of Tanzania Industries (CTI) Sharad Salgar said a litany of barriers still stand on the way of making the East African Community (EAC) an efficient trading bloc. The hurdles, both tariff and non-tariff, are chronic and range from exorbitant electricity costs, poor inter-regional infrastructure, and the incessant variation in common external tariffs (CET). Tanzania could benefit from an EAC Customs Union, but the country's existing infrastructure needs to be improved and the numerous non tariff barriers still need to be addressed. ¶6. These serious problems that hinder smooth implementation of the EAC Customs Union will impact the envisaged East African Common Market, said Salgar. In his view, for the larger EAC market to be stronger, individual countries should strive to develop their own DAR ES SAL 00000233 002 OF 002 markets first and then integrate into a stable regional market. -------------- -------------- President Kikwete to Attend Arusha Tourism Forum in May -------------- -------------- ¶7. President Jakaya Kikwete will attend the International Tourism Forum at the Arusha International Conference Center from May 19 to 23, 2008; the meeting is expected to attract high-profile foreign personalities in tourism, according to Ms. Bladina Nyoni, Permanent Secretary at the Ministry of Natural Resources. The Forum is being SIPDIS organized by the Africa Travel Association (ATA),an international travel industry association which promotes tourism to the African continent and intra-Africa travel partnership. ¶8. According to Nyoni, "We expect that about 500 delegates will attend the [ATA's 33rd annual congress], including tour operators, dignitaries, ministers and executives from Africa, Europe and North America." She added, "Participants to the congress are expected to establish and strengthen existing contacts, plans and programs aimed at boosting tourism amongst ATA members... [Tanzania, as the host country,] will benefit in terms of tourism management skills from the United States, as our local operators will have an opportunity to interact with US-based tourism experts." -------------- -------------- The 8th Sullivan Summit - June 2-6 2008, Arusha, Tanzania -------------- -------------- ¶9. The Sullivan Summit is scheduled for June 2 through 6 2008 in Arusha, Tanzania. The goal of the Sullivan Summit is to attract more than 3,000 entrepreneurs and other dignitaries from the United States, Africa, and the world. These include several African Heads of States and "Friends of Africa," as well as globally-acknowledged investors, manufacturers, corporate social responsibility (CSR) professionals and consultants, and investors and stakeholders in the agriculture and tourism industries. Others scheduled to attend include foreign policy specialists, commercial banking and investment professionals, energy providers, infrastructure designers and builders, educational promoters, marketers, as well as activists in the environment and geopolitics. Speaking at the Tanzania Chamber of Commerce and at a Radio 5 interview in Arusha on March 17, Ambassador Green reminded Tanzanians to take advantage of the opportunities offered by the Sullivan Summit, including the opportunity to learn from the many workshops and presentations and the opportunity to make contacts for business and investment. GREEN