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Cablegate: Tanzania March 2008 Economic Roundup: Tourism, Private

VZCZCXRO8627
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHDR #0233/01 1011255
ZNR UUUUU ZZH
R 101255Z APR 08
FM AMEMBASSY DAR ES SALAAM
TO RUEHC/SECSTATE WASHDC 7465
INFO RUEHNR/AMEMBASSY NAIROBI 0937
RUEHKM/AMEMBASSY KAMPALA 3146
RUEHLGB/AMEMBASSY KIGALI 1091
RUEHJB/AMEMBASSY BUJUMBURA 2655
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000233

SIPDIS

SIPDIS

DEPT AF/E FOR JLIDDLE, AF/EPS FOR ABREITER, EB FOR DWINSTEAD

E.O. 12958: N/A
TAGS: ECON EAGR ECIN EIND EINV ELAB ETRD TZ
SUBJECT: TANZANIA MARCH 2008 ECONOMIC ROUNDUP: TOURISM, PRIVATE
SECTOR CREDIT, MINIMUM WAGE, EAC, SUMMITS

REF: DAR ES SALAAM 000130

--------------------------
March 2008 Economic Issues
--------------------------
1. In this issue:
-- Tourism Overtakes Agriculture in Economy
-- More Credit Extended to the Private Sector
-- GOT Hires Consultants to Study Minimum Wage
-- CTI Bemoans Barriers to EAC Trading
-- President Kikwete to Attend Arusha Tourism Forum in
May 2008
-- Sullivan Summit June 2 - 6, 2008

---------------------------------------------
Tourism Overtakes Agriculture in the Economy
---------------------------------------------
2. The Governor of the Bank of Tanzania, Professor Benno Ndulu,
told journalists in Dar es Salaam on Friday March 14, 2008, total
exports for 2007 were about USD 3.5 billion with exports from
agriculture reaching USD 350 million. While exports in agriculture
remained steady, earnings from tourism rose in 2007 to USD 1 billion
and mining brought in USD 800 million, surpassing agriculture as the
leading sectors of the economy. Port services and transit cargo
earned USD 345 million. Other activities that continued to drive
economic growth in Tanzania were communications, financial services,
construction trade, and manufacturing.

-------------------------------------------
More Credit Extended to the Private Sector
-------------------------------------------
3. In February 2008, credit to businesses increased by 44.1
percent, above the annual growth rate of 41.0 percent attained in
January 2007. This is in line with the Government of Tanzania's
(GOT's) policy to make the private sector the engine of the economy.
The credit growth in the private sector corresponds to increased
economic activity in the economy coupled with an increased number of
credit-worth clients. During February alone, a total of TSh 63.7
billion (approximately USD 53 million) was extended to the private
sector by commercial banks, in addition to TSh 87.7 billion
(approximately USD 73 million) that was extended in December 2007.
The largest share of credit was extended to trading activities which
accounted for 18.7 percent; personal loans accounted for 17.6 per
cent, manufacturing 17.5 per cent, and agricultural holdings 10.3
percent, the transport and communication sub-sectors received 7.6
per cent, hotels and restaurants 3.8 percent, electricity 3.7
percent, building and construction 3.3 percent of the total credit
extended to the private sector.

-------------------------------------------
GOT Hires Consultants to Study Minimum Wage
-------------------------------------------
4. The Government of Tanzania (GOT) announced it has hired
consultants to study the implications of the recently announced but
hotly disputed minimum wage in the private sector (reftel).
Minister for Labor, Employment and Youth Development, Juma Kapuya,
announced on March 4 that the GOT had reached the decision to
undertake a study of the new minimum wage after many private sector
employers defaulted on the payment of the wage that went into effect
on January 1, 2008. After receiving the consultants' findings and
recommendations, the GOT plans convene a three-way "dialogue"
involving the GOT, workers, and employers to find a solution to the
problem. Kapuya said that in the meantime, the minimum wage in the
private sector will remain as published in the Wage Order vide
Government Notice No. 223 of 2007.

-----------------------------------
CTI Bemoans Barriers to EAC Trading
-----------------------------------
5. The Vice Chairman of the Confederation of Tanzania Industries
(CTI) Sharad Salgar said a litany of barriers still stand on the way
of making the East African Community (EAC) an efficient trading
bloc. The hurdles, both tariff and non-tariff, are chronic and
range from exorbitant electricity costs, poor inter-regional
infrastructure, and the incessant variation in common external
tariffs (CET). Tanzania could benefit from an EAC Customs Union,
but the country's existing infrastructure needs to be improved and
the numerous non tariff barriers still need to be addressed.

6. These serious problems that hinder smooth implementation of the
EAC Customs Union will impact the envisaged East African Common
Market, said Salgar. In his view, for the larger EAC market to be
stronger, individual countries should strive to develop their own

DAR ES SAL 00000233 002 OF 002


markets first and then integrate into a stable regional market.

--------------------------------------------- ---------
President Kikwete to Attend Arusha Tourism Forum in May
--------------------------------------------- ---------
7. President Jakaya Kikwete will attend the International Tourism
Forum at the Arusha International Conference Center from May 19 to
23, 2008; the meeting is expected to attract high-profile foreign
personalities in tourism, according to Ms. Bladina Nyoni, Permanent
Secretary at the Ministry of Natural Resources. The Forum is being

SIPDIS
organized by the Africa Travel Association (ATA), an international
travel industry association which promotes tourism to the African
continent and intra-Africa travel partnership.

8. According to Nyoni, "We expect that about 500 delegates will
attend the [ATA's 33rd annual congress], including tour operators,
dignitaries, ministers and executives from Africa, Europe and North
America." She added, "Participants to the congress are expected to
establish and strengthen existing contacts, plans and programs aimed
at boosting tourism amongst ATA members... [Tanzania, as the host
country,] will benefit in terms of tourism management skills from
the United States, as our local operators will have an opportunity
to interact with US-based tourism experts."

--------------------------------------------- ----------
The 8th Sullivan Summit - June 2-6 2008, Arusha, Tanzania
--------------------------------------------- ----------
9. The Sullivan Summit is scheduled for June 2 through 6 2008 in
Arusha, Tanzania. The goal of the Sullivan Summit is to attract
more than 3,000 entrepreneurs and other dignitaries from the United
States, Africa, and the world. These include several African Heads
of States and "Friends of Africa," as well as globally-acknowledged
investors, manufacturers, corporate social responsibility (CSR)
professionals and consultants, and investors and stakeholders in the
agriculture and tourism industries. Others scheduled to attend
include foreign policy specialists, commercial banking and
investment professionals, energy providers, infrastructure designers
and builders, educational promoters, marketers, as well as activists
in the environment and geopolitics. Speaking at the Tanzania
Chamber of Commerce and at a Radio 5 interview in Arusha on March
17, Ambassador Green reminded Tanzanians to take advantage of the
opportunities offered by the Sullivan Summit, including the
opportunity to learn from the many workshops and presentations and
the opportunity to make contacts for business and investment.

GREEN

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