Tanzania Daily News (Dar es Salaam)
Sebastian Mrindoko
27 November 2011
Exporters have expressed deep concern over the free-fall of the shilling against world major currencies, calling for urgent action to fix the problem. This was said in Dar es Salaam over the weekend by the Tanzania Exporters Association (TANEXA) Executive Director, Mr Mtemi Lawrence while commenting on the effects of the depreciation of the shilling to exporters.
“Exporters are victims of the poor performing shilling. We need a proper way of addressing the problem instead of pollicising the issue,” he said. He said exporters use local currencies to buy goods and this has made the business tough when selling basing on world currencies. He said that despite the decrease in value of the shilling, the soaring inflation has pushed up prices of goods meant for exports, cutting down profits.
Despite the short term measures by the Bank of Tanzania (BoT) to contain the worsening shilling that has of late made it to show some improvements, the business community has continued to express concern on how the situation would chop their profit margin.The central bank’s intervention last week enabled the shilling to trade at an average of 1,700/- per US dollar.
The idea of using the current situation of a weak shilling to increase exports volume was challenged by Dr Haji Semboja from the University of Dar es Salaam who argued that such achievements do not come overnight. He advised that there should be short and long term plans for a consistent supply in the market.
“To achieve high level of exports performances, short and long term plans with sufficient investment resources geared at harnessing all opportunities must be worked out,” he said. Prof Humphrey Moshi of the Economics Department of the University of Dar es Salaam was recently quoted as saying that the export sector was facing supply constraints, that need to be addressed before embarking on opportunities which may arise due to shilling depreciation.
Instead, he recommended that more efforts be placed to revive the manufacturing sector first as well as constant supply of raw materials before embarking on the devaluation of the local currency.
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