How viable is Kikwete's fiscal stimulus package?

It has been accepted that the world financial crisis and economic downturn have affected various sectors of the economy, leading to the revision of projected GDP growth rates.

As observed by the President, the growth rate for 2009 has been reversed from expected 7.5 to 5-6 per cent. According to the economists, the growth rate will be 4 per cent while the International Monetary Fund (IMF) projects at only 3.5 per cent.

The sectors adversely affected are tourism, textile and leather, mining, horticulture, agricultural exports, foreign direct investment and decline in domestic revenue including various tax revenues like customs duty. VAT and excise duty.

The President announced a financial stimulus of Tsh1.7 trillion, which is not intended to replace the annual budget or other development programmes, but is intended to address transitional problems and emergencies, especially liquidity problems caused by the global financial crisis.

It is perceived to be a comprehensive plan to revive all the sectors affected by the global recession. The financial rescue program targets to protect jobs and income generating opportunities and enhance food security as well as sustain investment in the key sectors of the economy .

Due to the decrease in demand for commodities such as cotton, buyers including cooperatives and 24 private buyers in the cotton industry have suffered losses because of a fall in prices from 82 cents per kilo in 2008 to Tsh40 cents per kilo in 2009.

These buyers have fatten loans from commercial banks, which have not been repaid. This means the banks would be unwilling to extend loans for crop purchasing in the coming cotton buying season and farmers would not be able to sell their crops.

The measures taken include the commitment by the government to compensate the companies for losses incurred, amounting to Tsh21.9 billion. It also involves to guarantee some banks. Some of the other measures taken is to guarantee outstanding loans at a ratio of 1:5, meaning in case of possible default the government will pay 20 pc of the bad and doubtful debts owed to banks by cooperatives and other enterprises.

This will not involve debts incurred before the onset of the global economic recession. The amount guaranteed is Tsh270 billion, which means the loans will be repaid after two years during which compound interest will not be charged.

The Government is expected to pay Tsh45 billion for the guarantee of 70 per cent of the loans owed by the ailing enterprises to CRDB and other commercial banks.

The mining sector will, in the two years' period of the rescue package, get a tax holiday in repayment of royalties and this amounts to a loss of 500, 000 in lost royalties and the goal is to prevent them from closing their operations.

As a result of the global economic down turn to all sectors of the economy, 48,000 jobs have already been lost, especially in tourism, horticulture and mining industries as well as leather and textile sectors.

A few years ago credit guarantee schemes were started by the government and these include the SME Credit Guarantee Scheme and Export Credit Guarantee Scheme to enable banks to lend to SMEs and companies involved in export trade.

The SME Credit Guarantee Scheme has been increased to Tsh60 billion and Export Credit Guarantee Scheme to over Tsh250 billion. The export credit guarantee scheme lent to a maximum of Tsh161.5 billion while the SME Credit Guarantee Scheme lent to a maximum of Tsh6.5 billion. This involved the amounts contributed by the government and the banking sector to the schemes.

The scheme also targets to facilitate commercial banks, lending at lower and affordable interest rates to the companies so get cheaper working capital. The Government will lend Tsh80 billion to the banks at an interest rate of two per cent and the banks will be required to lend 1 ½ times of this amount for working capital of enterprises, which amounts to Tsh120 billion, bringing the total to Tsh200 billion.

This means commercial banks and financial institutions in Tanzania have lending rates of up 15-21 per cent to hedge against default to repay the bank loans. The central tenet of the proposed economic resume package is to ensure that there is increased production of food.

To ensure increased loans to farmers, the Tanzania Investment Bank will be recapitalized by Tsh20 billion. A further Tsh20 billion will be given to the Bank of Tanzania (BoT) for importation of tractors and other farm implements.

There will be a Tsh40 billion credit from India for importation of tractors. Subsidized fertilizers through use of the voucher system will be expanded to benefit more farmers with a proposed injection of Tsh46 billion by the Government. That amount will be increased to Tsh92 billion as the world bank is expected to contribute Tsh46 billion to Agricultural inputs funds.

The funds for the strategic grain reserves (SGR) will be increased in order to buy grains to stabilize food prices. Expert banks of ford have not worked because neighbouring countries are offering higher prices for maize and this will be an additional task for the SGR to ensure they buy market prices for farmers' crops equal to those offered by smugglers.

TASAF will get an increase of Tsh30 billion to implement its projects while the Agricultural Sector Development Programme will get a boost of Tsh30 billion. The Chinese Development Bank will cooperative with the Government of Tanzania to establish the proposed Agricultural Development Bank estimated to start with an estimated capital of US$500 million (Tsh660 billion).

The funding of infrastructure development is expected to be sourced domestically possibly through the issue of bonds, considering that there is a lot of money in the hands of the people considering the over subscription in the initial public offer of NMB, DCB and many other companies in the DSE.

The success of the Tsh1.7 trillion package depends on the fact that the recession will not last by more than two years and become bigger in impact. There is a need to re-examine past economic policies because some of these problems are not a result of global economic recession only.

The objective of the proposed fiscal stimulus is to boost production in various sectors of the economy. Other goals are to boost domestic revenue which has declined by ten per cent and create more jobs and income generating opportunities as well as to boost exports and foreign exchange earnings.

The upbringing of today's children in Tanzania

THE heading above actually implies early training of our children. In other words, it is the way in which somebody has been brought up, or trained and educated early in life. Afterall, the background of an adult matters as far as he/she was brought up, reared or nurtured by his parents during childhood and enabled him to attend a good school and complete his basic education.Therefore, parents should be urged to take care of not only their own children, but also those children, who are not theirs. Being a good parent is not only a gift to your child, but also a gift to the whole society, particularly in Tanzania today.Parents must have the courage to say 'No' to their children who misbehave or drink alcohol, smoke hashish, cannabis or cigarettes, use drugs and so forth. In which case, a 'collective disapproval' should be a powerful tool in regulating behaviour. It is also important for parents to intervene when they see other people's children behave badly. This means that at least every parent has an obligation to say something if children he sees are misbehaving. Suppose we are met by a volley of abuse then other adults have a duty to intervene. We do not want to live in walk-on-by society. Most of our children have the most quality of life in this developing country. The authority or Parliament at large has to reform the law accordingly on child-maintenance so to compel the relevant parents to stand by their responsibilities including disciplining their children.It seems that some of the parents are completely incapable of getting to grips with the challenges today’s families are facing, both economically and socially because of poverty or joblessness.Of course, much more investment is needed in education for the sake of our children today, who need quality education to become good and law abiding citizens of tomorrow. In 2009 we were all excited by the government’s ditermination to eradicate children’s ignorance and the prevalent poverty.Tackling poverty generally should be the great promise of the government, but the world economic crisis today leaves the country with the pangs of poverty rising. The figures have gone up because of temporary blip in the income of self-employed and the impoverished society.Some people argue that many of this country’s problems can be traced back to the collapse of the relationship between parents and children and between adults or call them old men and young people or youths. In our society, we should not expect a kid punishing an adult person.The society has the duty to tackle malaises including binge drinking and the unacceptable rate of teenage pregnancies. How can we expect young people to act responsibly in this developing nation when so many of them are hopelessly drunk?Another appropriate example; how can girls - after only children themselves - be expected to bring up children effectively? This must be a problem for everyone of us! Not even for the feckless fathers and teenage single mothers.We ought to accept responsibility for our own children and for the way the young pleople are growing up now, who will be the future leaders and loyal citizens of this nation.Also, our respective religions should as well be responsible for teaching the society’s children good things and that wedlocks or marriages should be taken as that cement which can bind and hold society together.Parents of young children, who have been through a wedding ceremony to which we normally contribute financially and in kind, are hundred times more likely to stay together than those who have not.Consequently, if we observe the acceptable marriage systems properly, there is a possibility in future to deal with rising crimes. On top of that we shall create a better disciplined nation, which will be free from the current vices being perpatrated by existing evils dominated by prevalent joblessness and abject poverty.

Letter from Edinburgh:Here is solution for Tanzania’s power shortage

As Tanzania faces perennial electricity shortage it is the responsibility of patriots to come up with new ideas for remedial action that can make power blues a thing of the past. Our ideas will help us make a collective action to confront this problem. We can’t defeat past failure with old tired ideas. We must come up with new ideas. Yes, new ideas are the weapons for success if we want to achieve adequate and reliable power supply for the long term.Tanzania’s energy sector has been in the hands of ruling elite for many years. Poor performance of Tanzania’s Electric Supply Company (TANESCO) has, of course, been a cause of heated controversy in the company and the political arena. But all of that doesn’t stop us to ask ourselves the two fundamental questions concerning our energy sector? One, what are the factors which will bring about the transition from one point to another? Two, who will provide the necessary leadership to take us from one point to another?The first question is important because it will help us to wake up from the relaxed state we are in; of waiting for help instead of generating new ideas to solve our energy problem. Developed countries are working hard to solve their energy problems. Recently Twelve European companies launched a 400-billion-euro (560-billion-dollar) initiative to plant huge solar farms in Africa and the Middle East to produce energy for Europe (not for Africa). This is evident that though the project will take part in Africa, its intention is not to solve the energy problem of Africa. Thus this means Tanzania’s energy problem can be solved by Tanzanian initiatives.This takes us to the answer of the first question on how we can move forward. The main solution will be a need of collaboration between TANESCO and the Tanzanian public which is urgently needed. This collaboration will be a part of the solution towards significant investments which Tanzania needs to invest in and eventually cover the growing demand for energy. Such results can’t be achieved if we continue to rely on Aid or other financing methods which charges Tanzania (us) very expensive high interest rates.As a way forward we can take advantage of the Capital Market and Securities (Collective Investment Scheme) Regulations, 1997 by establishing a National Energy Public Investment Fund (NEPIF). The fund will aim to promote the development and use of renewable energy (Solar energy and wind power). Moreover, by investing in conjunction with TANESCO, the fund can achieve its aim without taking the whole business and technical risks involved.For example if we aim to issue 4 Million shares in three years of establishment of the fund, I am sure the shares will be oversubscribed before the end of the third year. And if each share will be priced at 100 USD, we will be able to raise 400 Million USD which will be used for development of renewable energy.To make sure this investment scheme gives a chance for all Tanzanian’s from all walks of life; the scheme can provide investors opportunity to buy shares through TANESCO pay points infrastructure or through mobile phone banking like M-PESA which can enable people who have no access to banking facilities to use their mobile phone to take advantage of this profitable and developmental scheme.We are very excited to join the East African Power Pool, but the question is, do we have enough electricity to export to other countries in the power pool? Or we are going to be the importers of electricity like the way we import most of the goods. The nature of our aspirations of Exporting power to other country is positive, but we can’t realize them by leaving this issue to TANESCO alone. Thus this provides the answering of the second question; who will provide the necessary leadership to take us from one point to another? I believe that me and you should provide that leadership because; the public interest requires men and women of intelligence and good will to do things that will transform the society of today and tomorrow. Moreover, an example of the above is seen in TANESCO’s Corporate Business Plan (2007-2011) which doesn’t provide clarity of our desired ends. When it says it wants to export electricity to Kenya by 2010 while at the same time saying we won’t have enough electricity for ourselves for the next two years, it depicts contradiction and it doesn’t make sense. Therefore we need more ideas which will provide knowledge of all the available alternatives and means to achieve these ends. To conclude, I return to the first question which this commentary has sought to answer. What are the factors which will bring about the transition from one point to another in the energy sector? It is a difficult, potentially threatening question, but it is obvious that the starting point if we are serious, as a nation, about wanting energy sector improvement, starts with a general sense of responsibility and the need of the Public to come up with new ideas one of which is the establishment of the National Energy Public Investment Fund (NEPIF).

East Africa gets high-speed web

The first undersea cable to bring high-speed internet access to East Africa has gone live.
The fibre-optic cable, operated by African-owned firm Seacom, connects South Africa, Tanzania, Kenya, Uganda and Mozambique to Europe and Asia.
The firm says the cable will help to boost the prospects of the region's industry and commerce.
The cable - which is 17,000km long - took two years to lay and cost more than $650m.
Seacom said in a statement the launch of the cable marked the "dawn of a new era for communications" between Africa and the rest of the world.
The services were unveiled in ceremonies in the Kenyan port of Mombasa and the Tanzanian city of Dar es Salaam.
School benefits
The cable was due to be launched in June but was delayed by pirate activity off the coast of Somalia.
It's not good. It's hanging and keeps wasting time and frustrating me

The BBC's Ben Mwangunda in Dar es Salaam says five institutions are already benefiting from the faster speeds - national electricity company Tanesco, communications company, TTCL, Tanzania Railways and the Universities of Dar es Salaam and Dodoma.
The BBC's Will Ross in Nairobi says the internet revolution trumpeted by Seacom largely depends on how well the service is rolled out across the region.
To the disappointment of many consumers, our correspondent says some ISPs (internet service providers) are not planning to lower the cost of the internet, but instead will offer increased bandwidth.
But businesses, which have been paying around $3,000 a month for 1MB through a satellite link, will now pay considerably less - about $600 a month.
The Kenyan government has been laying a network of cables to all of the country's major towns and says the fibre-optic links will also enable schools nationwide to link into high quality educational resources.
But our correspondent says it is not clear whether the internet revolution will reach the villages, many of which still struggle to access reliable electricity.

Alarming Africa male gay HIV rate

HIV rates among gay men in some African countries are 10 times higher than among the general male population, says research in medical journal the Lancet.
The report said prejudice towards gay people was leading to isolation and harassment, which in turn led to risky sexual practices among gay communities.
But the risks are not limited to gay men, as many of the infected also have female sexual partners.
The report called for greater education and resources in the fight against HIV.
The Oxford University researchers found that the prevalence of HIV/Aids among gay men in sub-Saharan African has been "driven by cultural, religious and political unwillingness to accept [gay men] as equal members of society".
Lead researcher Adrian Smith told the magessa blog there was "profound stigma and social hostility at every level of society concerning either same-sex behaviours amongst men, or homosexuality".
"This has the consequence that this group becomes extremely hard to reach," he said.
Mr Smith said that gay male sex had always been acknowledged as being particularly dangerous in terms of contracting HIV/Aids.
But gay men were also more likely to be involved in other high-risk behaviours, including sex work, having multiple partners and being in contact with intravenous drug use, he said.

George Kanuma, a gay rights activist in Burundi, told magessa blog many men "hide their sexual orientation" to get married and have children, but continue to have sex with men.
"Most of them know that you can contract HIV/Aids or any infection when you are making sex with women, but not when you are having sex with another man," he said.
Mr Smith said there was "a desperate need for delivering a basic package of prevention for HIV", including ensuring supplies of condoms.
"There is also a need to sensitise, educate and train those involved in HIV, the interface with men who have sex with men, to educate those involved in care and prevention activities," he said.
The United Nations Aids agency estimates that 33 million people in the world have HIV, of whom two-thirds live in sub-Saharan Africa.

Neverland (Jacko) Vs Graceland (Elvis)

NEVERLAND LUNCH OWNED BY THE LATE MICHAEL JACKSON WORTH 35M POUNDS

ELVIS PRESLEYS GRACELAND WORTH 250M POUNDS