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How to stimulate economic growth for rural dwellers

22nd April 2012
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Dr Abdallah Kigoda

The establishment of the Tanzania Agricultural Development Bank (TADB) has been mentioned by the Parliamentary Standing Committee on Finance and Economic Affairs as one among strategies to help stimulate economic activities of the rural population.

A committee report tabled on Friday in Parliament by Dr Abdallah Kigoda urged the government to quickly establish the bank that should engage in disbursing loans to farmers.

Dr Kigoda said in his report that the bank should have enough capital to be able to serve a wide rural population. The committee chairman said unless deliberate efforts are taken to come up with affirmative programmes to help the rural population, it would serve no purpose to continue preaching to the public that Tanzania ’s economic growth was on the right track.

“It is not a strange thing to hear people asking questions regarding the real meaning of economic growth. This happens because the country’s economic growth has failed to have a trickle down effect to ordinary citizens,” Dr Kigoda states in his report.

He said much as leaders have been showing figures to prove how the country’s economy has been growing periodically such growth has not reduced unemployment or poverty among ordinary people.

In 2010 the country’s Gross Domestic Product (GDP) grew at the rate of 7 per cent compared to 6 per cent of GDP growth recorded the previous year. In the first quarter of 2011 the GDP grew at the rate of 6.3 per cent.

He said considering the fact that the agricultural sector employs about 73.7 per cent of the country’s population and it grew at the rate of 4 per cent in 2011 the government ought to come up come with strategies to boost the sector.

The committee report lists some shortcomings that have been noted in the implementation of ‘Kilimo Kwanza’programme, urging that they be rectified. He said the government should increase the allocation for agriculture, including employing scientific methods and strategies in implementing the programme (Kilimo Kwanza).

Other recommendations include improving Contract Farming System ( CFS),introducing policy and legal incentives to attract more investments in the sector, reducing corporate tax to companies investing in agriculture, earmarking land for agriculture ( land bank) in each district, improving communication and transport infrastructure in rural areas and improve market system for the produce.

The committee further proposed other strategies to boost agriculture which include waving tax to all irrigation equipment and packaging material ( major tax reforms) as it is done in Mauritius and Brazil and having in place a transparent policy governing exportation of food crops to avoid random government interferences.

 

Other recommendations listed in the report include protecting oil producing crops, introduction of agro-based processing industries and reinstating the previous system of rewarding good performers in every ward.

Speaking on inflation Dr Kigoda said on November last year price rises reached 24.7 per cent with the skyrocketing of food prices being the main contributor. On November last year the price of rice and sugar each increased by 50 per cent while that of meat increased by 30 per cent. The price of fish rose by 40 per cent.

The committee observed that though some external factors behind inflation contributed by only 30 per cent the remaining 70 per cent was contributed by hike in food prices.

The committee proposed strategies to rectify the situation as including transporting food from areas with excess to those hit with shortage, improving national grain reserves and reducing levies on fuel and on major food items such rice, maize flour and sugar.

SOURCE: GUARDIAN ON SUNDAY
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