Tanzania experiences serious economic contraction in two years

FOR the first time since the outbreak of COVID-19, Tanzania has admitted the GDP downturns as a result of the coronavirus pandemic, which has triggered the sharpest economic contraction.

President Samia Suluhu Hassan revealed this last during the May Day celebrations, saying the country’s economy has dropped from 6.9% to 4.7%. This Gross Domestic Product (GDP) — the broadest measure of economic activity — shrank at rate of 32% of the downfall which is regarded as a high-pitched in economics.

Despite of obvious business closure and shaken economy triggered activities, her predecessor, President John Magufuli, who has been discrediting the pandemic – claiming “the blood of Jesus, has kicked off Coronavirus” – kept on saying that it has never affected economy.

“We and the world know how the pandemic has been affecting our economy, no one spared, but it was awkward to hear that our former president Magufuli was denying the existence of the pandemic and claiming nothing was affected,” said Dr. Lenny Kasoga, an economist and retired university don.

Dr. Kasoga acclaimed President Samia for being open and tells the truth to the public on almost everything that was hidden by her predecessor.

The university don said while the drop in GDP was largely driven by a decline in industries production and consumer spending, the economic fallout was cushioned somewhat by an unprecedented level of spending on huge projects – which actually does not show immediate benefits to the general public.

An economist from the University of Dar es Salaam, Dr. Abel Kinyondo, speaking on mega projects in middle-low income country Tanzania, he praised the development of massive investment in infrastructure, saying the infrastructure would benefit Tanzania in the next 15 to 30 years to come – not now.

Amin Kassanga, a renowned transport in Dar es Salaam who owns fleet of cross-border trucks equates the pandemic to a cyclone, which no one could hide. He said what President Magufuli was doing was not right and it was just a matter of time to rebound – which actually happened even before his death. Magufuli died on March 17, 2021 from what the government announced as “cardiac problems.”

He said business has started to recover from the effects of the pandemic, warning that the government should stick to telling the truth on the development of Coronavirus as it has not “gone” yet.

The World Bank (WB) said the emergency of the COVID-19 novel plunged the economy into a recession in 2020, and the pace of recovery remains uncertain both among advanced and emerging economies.

WB said the pandemic-related health restrictions and the adoption of precautionary behaviors by firms and consumers have greatly slowed economic activity, while uncertainty regarding the post-pandemic economic landscape and some key policy decisions have discouraged investment.

Reports from Bank of Tanzania (BoT) shows that Tanzanis’s economy is projected to grow at 5.7 percent or higher, due to sustained public investments, normalization of global trade and the rolling out of measures to improve the business environment and bank lending to the private sector.

BoT Governor, Prof. Florens Luoga, said economic growth was fairly satisfactory compared to our regional peers, despite global effects of Covid-19 on economies. The economy grew at 4.7 percent in the first 3 quarters of 2020, driven by construction, agriculture, transport, mining and quarrying.

“Given the relatively good performance of some sectors in the fourth quarter, a growth projection of 5.5 percent in 2020 could be realized,” he said.