‘Tread carefully with protecting industries’

13Jun 2020
By Guardian Reporter
Dar es Salaam
The Guardian
‘Tread carefully with protecting industries’

​​​​​​​PROTECTING local industries is not always crowned with success, a seasoned economist has stated.

Principal of Mzumbe University Business School in Dar es Salaam, Prof Honest Ngowi.

The Principal of Mzumbe University Business School in Dar es Salaam, Prof Honest Ngowi made this observation when participating in an online dialogue on the national budget organized by the Tanzania Gender Networking Programme (TGNP).

“You can go ahead and prioritize local factories but if not well prepared they may die and fail to fulfill expected results and thus affect economic growth. This should be taken very carefully. But if we succeed, the factories may bring wonders,” he asserted.

A cross section of economists interviewed yesterday issued mixed views on the 2020/21 budget proposals with some saying it gives hope of restoring financial health while some called for improvements on key issues raised.

Prof Ngowi commended the budget for eradicating several crop levies, noting that the move provides huge relief to farmers, traders and the public at large.

He underscored the need for the government to ensure that factories established are working and producing quality products to compete in the world market.

REPOA senior researcher Dr Donald Mmari said that whether the measures introduced by the budget were enough it was still too early to tell.

Tanzania’s economy is integrated to the global economy and the fact that the coronavirus was still impacting other countries was a sign that Tanzania too is exposed to these pressures.

“The fact is that the corona virus is still lingering in many countries globally. It is clear that Tanzania will not be left out, for example countries that bring tourists to Tanzania like the United States and Japan are still battling the pandemic,” he elaborated.

Other impacts to be seen include the short supply of commodities from countries battling the pandemic. Covid-19 impacts may take long to deal with in a way that this year’s budget cannot cover them all, he stated.

“We need the contribution of the private sector in dealing with the impact of Covid-19, so it is open ended as such disasters come with staggered effects,” said Dr Mmari.

He concurred with those who say the government should have supported the private sector as it has been hard hit by the pandemic.

Dr Donath Olomi, Chief Executive Officer of the Institute of Management and Entrepreneurship Development (IMED) said the budget to a considerable extent generating hope. The removal of targeted levies was good but some systems ought to be reviewed as well, he said.

He however said there was need to do more especially on  heavily investing in the agriculture sector and relooking at  land ownership systems which he said were not friendly to investors.

“For example, we remove these levies year after year. We need to create an ownership system where these levies can be removed for a certain period of time because investors need predictability,” he emphasised.

Dr Olomi said the move by the government to offer support to the Covid-19 affected sectors was a solid gesture.

“But the government should have gone far, for example, in  supporting Air Tanzania, it should have extended funds to the private sector as it has also been hit by the pandemic, to create a level playing ground,” he asserted.

Prof Ngowi said that apart from the budget providing substantial relief in various areas, creating a conducive business environment, major efforts should also have been directed towards improving social services so as to benefit the majority.

“It is not bad for the budget to focus on implementing mega projects. However social services also need more investments,” he declared.

Rishit Shah, tax expert from PWC (T) said that the budget has provided some relief on various taxes such as income tax, the Skills and Development Levy (SDL) as well as tax relief to primary cooperative societies.

Shah was speaking at a virtual budget review event organized by PwC (T).

“Several sectors now have something to smile about as generally this year’s budget has touched every area. However there is still a challenge on tax disputes,” he added.

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