Look At the Growing African Economic Insigificance in the World

How Governments in Developing Countries can Tackle the Third Wave of Global Financial Crisis

Developing countries have started to be hit by the third wave of economic crisis as many experts expected. Tanzania particularly has seen her revenue sharply dropping and reports are out that she is seeking financial assistence to IMF, the Tanzania President Jakaya Kikwete during his May Day Speech revealed that Tanzania has lost 255 billion shillings in revenue and that the figure is expected to raise 488 billion by the end of the year because of the global economic crisis.

Technically the financial crisis is going to hit developing countries through two channels, namely Trade Channel and Finance Channel. Trade channel, as demand for consumption in developed countries has dropped this will affect exports mainly from developing countries which supply products that are elasticity sensitive. High income earners in developed countries already have their expenditure on luxury items like jewery reduced. This will reduced/decreased exports earnings of low income countries, and therefore affect Governments abilities in providing social services like medicines, schools and improving social infrastructure. It is important during this hard times, Governments in developing countries take immediate measures to invest in social infrastructures that are accessible to lower income earners in these countries. The measures taken by the Government of Tanzania by abolishing importation of luxury cars and seminars are good examples of pro-poor measures. The money to be saved will be invested in agriculture and according the information revealled by the Prime Minister Mizengwe Pinda, other saved money from vihicles are diverted to buying hospital ambulances, to improve health services provision to rural areas.

The finance channel will results to reduced credit flow to poor coutries and will cause many projects under implementation to be abandoned because of lack of funds and planned projects to remain in the books. This is because lenders in the north are not able provide credit and banks are survaving on Government bailled out funds which are implicitly imbeded with protectionism with the purpose of safeguarding employment in the north. The will results into massive unemployement in the South, for example the American bail out is containing the buy American clause, meaning that the bail out money are prevented to flow to other economies.

Governments in the South (developing countries) with the little resources at their disposal should be able to prudently invest in public and social infrastructure in order to improve their competitiveness and provide safe nets to pro-poor sectors. Furthermore, investment policies should target investments in sectors that are crisis proof and investment in dynamic products. Dynamic products have been proved also to be crisis proof, that is attract investments in IT and IT parts, compturer parts, investment in call centres and information technology in general.

Other sectors that are crisis proof are investment in services sectors, investment in logistics and overseas call centres.

Participating in the Global Crisis Discusions

Mr. Geoffrey Kabakaki and fellows participated in the World Economic Forum at Danvos Swiss among others the current Global economic crisis was discussed

Swiss Classic Music during Easter

Prof. Reinhold Friedrich and his classic music bands entertaining during easter celebrations in Interlaaken

Trade Policy Tools as are Used in Tanzania

Trade policies come in many varieties. Generally they consist of either taxes or subsidies, quantitative restrictions or encouragements, on either imported or exported goods, services and assets. In this section I want to describe many of the policies that Tanzania have implemented or is implementing. The purpose of this discussion is to raise awareness among scholars of the likely effects of each policy, by defining and describe the use of each policy.
The main trade policy tools are
1. Import Tariffs
2. Import Quotas
3. Voluntary Export Restraints (VERs)
4. Export Taxes
5. Export Subsidies
6. Voluntary Import Expansions
· Other Policies

Among the above mentioned policy tools import tariffs, export taxes and others trade polices (namely Government procurements, health and safety standards and red-tape barriers) are the ones mainly used and Tanzania economic management. Therefore only through these tools the Government has been able to intervein and moderate the economy. These trade policy tools have positive and negative impacts to the country depending on the nature of intervention.

Import Tariff

Intervention under this tool has been through annual tariff changes by the Government, either by raising import duty or lowering it to some products. Since January 2004 with the coming into force of the EAC Customs Union, this responsibility of altering import duty has been transfered to the EAC Council of Ministers. Essentially at national level, tariff reforms has resulted into reduction of import duty to average of 12% and this among others made prices of imported goods lower so resulting into some consumers welfare effects in the country. A t international level, the lowering of import duty has created what the trade experts call "Water", and this water has made negotiations under WTO difficulty because of water developed countries cannot find new market access opportunities to trade off with developing countries. The water is the result of widening differences between applied tariffs and the bound tariff under WTO. Therefore, all the efforts made by developing countries of restructuring their tariff structure including Tanzania has resulted into their punishment. Developed countries are seeking for new market access opportunity by ignoring the own tariff reduction made because they argue that those restructing were made by developing countries outside multilateral negotiations and that was to their own interests and cannot be counted now.

To be continued -------

WTI Students Vist to Interlaken

World Trade Institute Students visited the annual celebrations of the Classic Music in Interlaken City in Switzerland. From left is Mr Geoffrey Kabakaki ( the first Tanzania even to attend the MILE Program), Mr Rajnish (from India), Prof. Dr. Thomas Cottier (WTI Mangaging Director), Ms Daisy (from China) and Ms Aya (from Egypt).

Tandika in Dar Es Salaam should be an Economic Model of Tanzania

Tandika area is the only place in Tanzania if not in all East African where there existing a concentration of small sized garmets and tailoring activities, which could be raised to acquired the needed economices of scale in the garmet sector in Tanzania. What is needed to be done is for the targeted intervention by introducing modern and coordinated management and linking these small tailors to the textile manufacturers like Karibu, Nida and others.

Tandika has more than 2000 small tailors undertaking tailoring activities saving Dar Es Salaam area, regions and even neighbouring countries like Malawi and Zambia where traders come to Tandika to buy clothes for schools and other purposes. Such a concentration if well managed and linked to textile industries in Dar Es Salaam can be able to increasing garmets and clothes production in Tanzania and even save the USA market under AGOA.

These small entities can be enabled to access loans from the banks in order to increase their capital and be trained to increase standadrs of the clothes they make. Such a concentration was well utilised in Bangaladesh, and now Bangaladesh is leading country in clothes and garmets production among the developing countries.

If this was successful in Bangaladesh why not in Tanzania? and already we have a place to start, which is Tandika. Yes we can let us start!