Economists: Too early to measure performance for Magufuli

13Feb 2016
Dickson Ng`hily
The Guardian
Economists: Too early to measure performance for Magufuli

TANZANIANS should not expect immediate results to the country’s economic structural reforms the fifth phase government is putting in place, as it will take up to more than 100 days to bear fruits, economists suggest.

President John Magufuli

Dr Donath Olomi, CEO Institute of Management and Entrepreneurship Development IMED), in an interview with this reporter, said, “It is too early to measure tangible results, although the president has taken some commendable actions.”

The former senior lecturer of the University of Dar es Salaam Business School (UDBS) explained that in his 100 days in office, President Magufuli had managed to create a well-mannered financial administration in the country.

Moreover, Dr Olomi was of the view that the move could frighten potential investors, thus slow down their investment pace in the country. “Off course, it is a good move for the government to take stiff action against those involved in mismanaging public funds.

For instance, the Dar port missing containers saga,” he said. According to him, operations of many freight forwarding agents had been dismissed as a result, yet such agents employed many Tanzanians.

“When it comes down to microeconomics, these individuals will suffer. And, again, if investors are eying the education sector, the proposed directive school fees would stop them for a while.”

He added: “Even the financial institutions that were ready to fund these proposed projects will also hesitate to disburse the said loans. Off course the country’s financial system needed as shake up so am sure after six months, we are going to be in a position of measure Magufuli’s economic performance.”

Citing the government move to direct its institutions to open an account with the central bank, the IMED’s CEO says everything has positive and negative effects.

Banks’ attitude to transact with government is due to the fact that it is a zero risk, interest rate for instance might range between 13 to 14 percent, but if lending to private sector, risks are there and in order to condense it banks will have to increase their interest rate to 18 percent.

“The move will reduce government needs to borrow because money will be there, moreover, the move will push banks to lending private sector and this is a credit to the government.

But the situation will again force banks to increase interest rate winch in fact will be a blow to the private sector. However, it is too early to measure the government’s economic performance, let us give them time.” He observed.

For Prof Honest Ngowi, Head of Department of Short Courses, Research and Consultancy, Mzumbe University Dar Es Salaam Campus, says 100 days of Dr Magufuli’s era saw the government increasing effort as far as revenue collection which is according to him a major landmark.

“Moreover” worn Prof Ngowi “It isn’t easy to measure government revenue collection by just relaying on November and December months which saw an increased amount of government collection to 1.5tr/-.

The collection done in the two months was due to the president action to curb tax evasion,” he said He added: “So many were force to pay their tax arrears which in fact happened during November and December. Also the government’s cost cutting measure, of course it is a recommendable job but we need more time to firmly comment.

“The president has done some mileage when it comes to revenue collection, disciplining corrupt leader who were emblazing public funds but also taking legal action to tax evaders.

When you talking about country’s economy, then these actions are commendable,” said Prof Samuel Wangwe when asked for comment. According to Prof Wangwe whose tenure of office as REPOA’s Executive Director ended last year, told this paper that the fourth phase government was less concern about cutting unnecessary expenditure.

But Magufuli’s moves will lessened budget deficit which in fact will create a country’s foundation towards independent economy. With about 40-year experience in as an economist, Prof Wangwe says: “I thing we need to see the relocation of funds that will stimulate production to the individuals.

I do understand that this will take time so we need to be patient. Nevertheless, I don’t thing government directive to have its institution banking with central bank (BOT) public interest.”

He added: “Commercial banks are there to handle day-to-day transaction, BoT is a regulator I think it should remain as a regulator and strict measures should be taken to make sure that although these government institutions are transacting with commercial banks but financial discipline should be observed.”

Prof Wangwe’s concern on relocation of funds is echoed by Dr Bill Kiwia, a Lecturer at the Institute of Financial management (IFM) saying the money should be channeled to sectors that will directly help in poverty alleviation.

“…he has done as far as financial discipline is concern and making civil servants and businesses to be accountable. The challenge is the fact that money flow has been decelerated and this might temporarily reduce employment rates.

However, the long-run things will be settled,” observed Dr Kiwia. President Magufuli, who took office on November 5, last year, pledged to speed up growth by diversifying the mostly agrarian economy.