By Happiness Maruchu
It has almost been a custom after the tabling of the national budget to the parliament by the Minister of Finance and Planning, voices of reflection from a wide array of stakeholders are echoed through various mediums. Whether the time is strategic for such or not remains debatable nonetheless it is imperative for every stakeholder from the micro to meso and macro levels to engage and as a key stakeholder it is my duty to contribute my opinion to this kind of a public debate.
As a Tanzanian, both sectorial and national budgets are crucial because they have a bearingon social and economic welfare. Being an employee and consumer of various public services such as transportation, health, electricity, water, housing not overlooking other statutory obligations such as the pay as you earn, social security to mention a few. The national budget presents an opportunity to rethink personal plans and expenditure patterns as any adjustments in fiscal policy or investments that may cause the costs of goods or service, to either to go up or down have a direct impact on individuals. Similarly, for the folks in the private sector, the fiscal policy reform is of interest.
In this writing, the position is that of a consumer of public service and of those on the lower streams of the supply chains who have no one to speak for. We know, the investors have the private sector foundation, and there are a variety of seller associations but little do we hear of any association representing the different household consumer groups in the country. As a result, some groups benefit little if not at all in the national cake. From the look of things is like scramble and partition is taking a different turn from boundaries to natural resources and benefits in which the strong grow stronger and the story continues.
Reflecting on the tabled 2018/19 national budget, which is soon going to be passed by the parliament into a law, I wish to share an opinion in good faith. Increasingly Tanzania has recorded an above average rate of economic growth up and above 7% for the past two years compared to its East Africaneighboring countries. In aggregates this rate is commendable as it suggests among others the increased volumes of trade on national outputs.However, it should not be forgotten that the national target is to have the economy growing at 8% per annum according to the 25 years National Development Vision.
As a nation, we want to be rated among the middle income economies because then it qualifies the country as a haven for investors which in-turn will stimulate business. Besides, who doesn’t like a country with attractive and easy transportation infrastructures, access to internet connectivity, reliable power supply but good living standard for individuals is more than these. It should be noted that the growth of the economy is attributed to by sectors which absorbs only a minority in the supply chains such sectors include transportation, communication, mining and quarrying. In these sectors the majority are on the demand side. Again these sectors have little inter-sectorial linkage to the extent the groups in the sectors with the majority give little as input. This results in a minimal or noripple effect of the rate of economic growth in the living standard of the majority in this case we mean majority population (rural dwellers who are farmers, of who more than 65% are women). The growth of the economy must reflect and translate in the net social economic gains of individuals. Or better still would be the government to design, promote and invest on strategies to incentivize the marginalized to be on the supply side of these sectors for shared benefits not just the demand side.
If the economic growth is to be meaningful, as it is said in the sustainable development goals 2030 and African development agenda 2063, it must be inclusive and sustainable. As a gender activist my wish is to have an economic growth that is attributed to the majority of population such as women and youths in order as to ensure such growth goes hand in hand with poverty reduction.Yes we have heard that per capita GDP has increased on annual basis i.efrom Tanzania shillings 2,086,168 (2016) to 2,275,601 (2017) shillings equal to 9.1% increase indicating growth in the Gross National Income (GNI), but the issue remains what has caused the rising GNI; is it the economic activities of the majority or the minority? The answer is obvious. The economy is still in the hands of the minority despite the efforts being made by the current government.
While the measures taken by the government to correct some mistakes within the system are important to clean up some messes, that will not necessarily address the issue of income inequality among Tanzanians. This is evident because the budget language is full of words such as investors as opposed to entreprenuers, Public Private Partnership (PPP) as opposed to public service (government), indicating that the budget targets the folks in the private sector with huge capital more or less in the middle or upper streams in the value chains where women, youths, people with disabilities and poor men can barely identify with or be found.
I like the argument put forward by Prof. Honest Ngowi during the Budget Breakfast organized by the audit firm Ernest and Young (EY) on inflation. Ngowi calls us to reflect whether the decline in the prices is a result of low spending causing the suppliers to reduce prices so as to continue in business or is a result of adherence to the good fundamentals of controlling price fluctuation. Whichever the reason as consumers we commend the government, as in a way the stability and in some cases lower prices are helping to mitigate the effects of decreased money in circulation and controlling the cost of life from going rapid.
Despite the many critiques we can dish, I conquer with many that there are several positive actions on the tax structure reforms that have been proposed by the Minister of Finance and Planning.
The proposed removal of Value Added Tax on sanitary pads for example is a good beginning towards addressing gender inequalities through fiscal policy. Indeed the sanitary pad campaign has yielded positive results but what I am not sure of is whether this exemption will translate into a significant price reduction. Economists advise that it would be meaningful to zero rate all manufacturers of sanitary pad on input VAT because then it would reduce the cost of production and therefore significantly cut the price of these items, this way both producers and consumers would benefit significantly. Otherwise saving 7000 per year from the average of 36,000 currently spent annually on sanitary pads seems like immaterial. Again the issue on Menstrual Hygiene Management wasn’t all about lack of sanitary pads but also conducive environment for Menstrual Hygiene Managementi.e presence of water, proper pit latrines, sanitary disposal and changing rooms for girls and women. Most of these were given as a directive through the budget guidelines to Regional Secretariats and Local Governments to ensure funds are allocated to construct or rehabilitate the related infrastructure. The question remains did LGAs take this seriously as to include in their budgets and if they did will they be given a priority in budget disbursement when and if the resources are scarce? Or it was just a political directive? Experience tells that gender issues are not a priority given that most budget and planning officers at local level are men. Aluta Continuer!
Again we commend the administration of the fifth government for a demonstrated high level of consistency and persistency in many aspects including the flagship projects. If this trend continues truly speaking come 2020 Tanzania will have made remarkable progress in urban infrastructures and sub urbans but will still have a bigger problem on rural and feeder roads which are under TARURA. Speaking of consistency, the removal of VAT on additives for animal and poultry feeds is also a positive thing. As we can remember last year the government removed VAT on incubated eggs. There are more women and youth in the poultry industry on the supply side and so this will mean that if suppliers of animal and poultry feed will reduce the price then women involved in keeping poultry and livestock can afford to buy feeds. Add value however more support is needed for such small scale producers to secure reliable markets for their poultry products at a better price. So I emphasize on investing to find strategies to stimulate demand as well.
On the other hand, men in the pastoral societies or those engaged in livestock keeping will be able to increase their cash flow and obtain markets for animal skins if new leather industries are established following the tax exemption incentive. But unlike the women, there has been a tendency of men to abandon families once they earn more money and go out to marry other second and third wives something that worsen the poverty levels of the household. Caution must be taken. It will be helpful if suppliers of animal skins were more organized and have payments done through family accounts so that the income is shared. Saying so because there are more girls forced to miss schools to go cattle rearing especially among the society of the Sukuma andMaasaiwhile the boys attend school.
Not least is the 10% from LGA own source allocation for women, youth and people with disabilities. Mr. Felix Mlaki disagrees with the idea of no cost loans. I understand him coming from a private sector even more the banking sector. Infact there are reasons why we need to begin shifting our minds from free things to paying for things. As a country the one way to reduce the national debt is to avoid borrowing both externally and internally which will mean more collection of domestic tax and nontax revenues to finance our budget. So I understand the finance analyst however we must not forget that these groups are mostly in the agriculture sector where the banking sector is very reluctant to provide credit due to the vulnerability of agriculture. Again women, youth and PWDs are highly discriminated when it comes to access to credits from the financial institutions because they do not have collaterals yet we are talking of financial inclusivity? The 10% free of interest is crucial as part of empowering these marginalized groups.
However from the beginning the administration of the 10% has had major challenges which I think its important for them to be addressed if truly we mean to empower these groups. Firstly is the issue of capacity of the groups interms of business development and loans management, secondly is the issue of diversity of the groups, i.e why give funds to groups that are so diverse in terms of what they do and not consider organizing a group of poultry farmers and give them an incubator for instance, thirdly is the issue of too small a fund compared to the number of people in need. A question for reflection is, being a revolving fund wouldn’t it be a good idea to give capital machines for instance and task the groups to support in kind more other similar groups start a similar business in their household? That way we create more opportunities to improve household incomes not by giving money but assets to generate income and support services? This is a food for thought. Again there have been a handful of complaints concerning who gets the loans, I suggest we put in place mechanism to ensure that the funds are given out on no regard to political affiliation, power or any other discriminatory criteria and important is the government through the minister of finance needs to report the numbers of groups who have benefited in disaggregates (sex, age and geographic).
Conclusively, with all the positive things being done, the government needs to be mindful of the percentage of local content in the flagship projects which are being implemented, perhaps it needs to report annually the numbers of locals who have been employed and of which population group and in which subsector in the value chains. The tax reforms need not only to protect the local industries but coming from a marketing field the protection of consumer preferences and respecting choice is crucial. Increasing import and excise duties on imported goods and services will not necessarily create or stimulate demand for locally made goods on the contrary the quality and prices of local goods essentially have that potential. The good sells itself. Public Private Partnership (PPP) seems a good approach of raising funds for development projects and is winning more yes, but it needs to be implemented in a way that does not shift the burden of cost recovery to the final consumer of services because as we know the private sectors cares more about money than mere public service delivery with minimum margins.
While boasting about the comparative rate of economic growth and increasing per capita GDP, lets not forget to tame the fast growing population rate which now stands at 3.1% up from 2.2% (2016); we know unless dependency decreases and more population is producing, this rate could as well change drastically and drag down the numbers. Meanwhile I continue to commend the government for efforts to mobilize more domestic resources with minimum burden placed on the poor and marginalized, more creativity and sensitivity is needed on the side of the government to ensure that all Tanzanians feel valued and included in the development agenda. As we move towards the other financial year, we urge the government to continue employing measures that will give incentives to women and youths to go more into agribusiness, cash crop farming and high tech farming and invest create a good base for them to build up capital so that even if financial institutions would not lend them still they can be able to acquire fixed assets such as land and current assets in form of financial capital.
I have not discussed much on the issue of allocation to social services because reading from the budget guidelines there was more directives to LGA concerning allocating resources to a number of health, water, sanitation and hygiene, gender based violence and security of girls outside schools; the only not seemingly directive which needed to stand out was allocation to issues of maternal health. But really the challenge is always on disbursement of which perhaps there will be improvement on revenue collection to finance the national budget something that calls for a deeper reflection from all stakeholders at all levels.In the next article, I will discuss further on the empowerment of marginalized groups especially women and youths through budgetary allocations and other macro policy measures.
Happiness Maruchu is a researcher working for TGNP Mtandao in Dar es Salaam