News Column

Tanzania's Exports to SADC Countries Soars

July 31, 2014

Finnigan Wa Simbeye

TANZANIAN exporters sold more to Southern Africa Development Community than East African Community last year, Bank of Tanzania (BoT) said in its latest Financial Stability (FS) report.

The bank said in the report with foreword by the Governor, Prof Benno Ndulu, growth in Sub Saharan Africa (SSA) is expected to accelerate across all countries backed by rise in investment and commodity boom.

"The SADC sub-region, which absorbs 29.0 per cent of Tanzania's exports, grew 4.6 per cent in 2013 and is expected to go up 5.1 per cent and 5.2 per cent in 2014 and 2015 respectively," it stated.

It said the EAC sub-region which absorbs 10.0 per cent of Tanzania's exports grew 5.6 per cent in 2013 and is expected to rise by 6.4 per cent and 6.5 per cent in 2014 and 2015 respectively.

"However, weakening growth in emerging market economies, less favourable commodity prices and domestic risks, such as those related to weather and other supply-side shocks pose risks to individual countries," the FS report noted. Cross-border banking operations in the SSA region depict a growing trend as the national economies continue to integrate.

Apart from the leading multi-national banking groups, African banking groups are also expanding their presence, with South African and Nigerian banks leading in SSA region, while Kenyan banks are leading in EAC.

"Supervisory colleges have been set up to coordinate regulatory oversight for the regional banking groups. However, the region lacks explicit arrangements for handling cross-border banking crisis.

At the East African Community level, the EAC Monetary Affairs Committee is in the process of setting up institutional arrangements for coordination of financial crisis management," it stated.

Economic performance in Tanzania remained stable during the year ending March, 2014 as reflected by broad macroeconomic indicators, despite challenges posed by regional and global environments.

The economy remained strong in 2013 at 7.0 per cent growth, which was above the regional averages in SSA and the EAC, the report further elaborated.

The growth is expected to increase further to 7.2 per cent and 7.5 per cent in 2014 and 2015, respectively. Contributing factors to this outlook include government efforts to improve infrastructure, sustain prudent fiscal and monetary policies and increase in aggregate demand.

The Tanzanian shilling remained fairly stable against major currencies except the Japanese Yen. The shilling appreciated against the Indian Rupee and South African Rand which had depreciated against the US Dollar on account of capital outflows.

In real terms, the Tanzanian shilling appreciated against a basket of currencies of major trading partners. This could negatively impact Tanzania's export competitiveness if it persists for long.

The financial sector remained stable and efficient in providing financial services to the economy during the year ending March 2014.

"The banking sector which accounts for about 70 per cent of total assets of the financial system, continued to grow in line with strong performance of the economy," the BoT Financial Stability report stressed.

The growth was driven by stable macro-economic conditions, establishment of new banks and expansion of branch network, growing banks linkage with SACCOS, introduction of agent banking, expansion of mobile banking and integration of mobile financial services to the banking system.

During the year ending March 2014, the banking system remained profitable, liquid and adequately capitalized. However, asset quality deteriorated on account of increase in non-performing loans in the personal, trade, manufacturing and agricultural credit categories.

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Source: AllAfrica

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