ACT Wazalendo pokes holes in the budget and pushes for economic reforms

Dar es Salaam. ACT Wazalendo has urged the government to accelerate the Natural Gas Processing Project (LNG) and integrate it with a major fertiliser production plant to protect the currency's value from depreciation.

The Tanzanian opposition party said the recommended move would significantly reduce the current use of foreign exchange for fertiliser imports, which amounted to $503 million, which is equivalent to Sh1.308 trillion for 2022 alone.

Party leader Dorothy Semu read the party’s recommendations during the Sh49.35 budget analysis session, which took place here on Saturday, June 22, this year.

During the 2024/25 budget analysis, Ms Semu was accompanied by the party’s vice chairman for Mainland Tanzania, Mr Isihaka Mchinjita; shadow Finance, Planning, and Social Protection minister, Ms Kizza Mayeye; and deputy shadow minister of Finance, Planning, and Social Protection, Mr Shangwe Ayo.

Speaking during the event, Ms Semu said Finance minister Mwigulu Nchemba acknowledged that, without highlighting the shilling stabilisation measures, the depreciation of the country’s currency adversely contributed to the debt surge.

“The country should enhance its export capabilities by expanding exports of agricultural products after value addition,” she said.

“The government should also prioritise the commencement and implementation of the Liganga and Mchuchuma projects. Produced iron from the country’s lucrative deposits should satisfy both domestic purposes and exports, noting the potential savings of $1.2 billion currently utilised on iron imports, as reported by the government,” she added.

During the analysis, the opposition party also urged the government to enhance infrastructure development and promote tourist attractions to double the current number of tourist arrivals.

Furthermore, Ms Semu recommended improved port efficiency to leverage the country's geographic advantage, potentially increasing trade earnings from the current $1.9 billion to $12 billion annually.

According to her, motor vehicles' transition to compressed natural gas (CNG) to curb foreign currency expenditures by Sh7.2 billion annually used for the importation of petroleum products and gas would be the best government decision.

“The tabled budget is primarily in favour of administrative expenses and debt servicing. It will also benefit large businesses with an anticipated trickle-down effect,” she said, expressing concerns that the move will not benefit the country’s poverty alleviation.

She said her party was advocating for bottom-up policies by empowering citizens, branding the current tabled estimations, the debt servicing, and the administrative costs budget that will add more pain to citizens.

“Out of the Sh49.34 trillion budget for 2024/25, at least Sh34.6 trillion (70 percent) would be spent for salaries, allowances, government vehicles, and debt servicing. Only Sh14.75 trillion (30 percent) is earmarked for the implementation of development projects such as road construction, building health centres and schools, procurement of medicines, medical equipment, and reagents, the execution of water, and the purchase of agricultural inputs,” said Ms Semu, unveiling a stark imbalance in resource allocation.”

Furthermore, the analysis also revealed the government's gap in revenue targets, with Ms Semu garnering Sh35.25 trillion by April 2024 against the Sh44.39 trillion target, attributing the setback to corruption, mineral smuggling, and loan and grant over-reliance.

According to her, the national debt had surged to Sh91.7 trillion, reaching April 2024, noting that the staggering increase escalates repayment costs and exacerbates economic challenges for ordinary citizens.

She said the budget's orientation towards debt servicing and administrative costs at the expense of citizen-centric development projects underscores the need for comprehensive economic reforms.

“We call for inclusive policies that prioritise economic stability, poverty reduction, and sustainable growth for the benefit of Tanzanians,” she said.

Ms Semu reiterated that in the 2024/25 budget, the government has introduced taxes, levies, and deductions that threaten opportunities and the livelihoods of self-employed citizens.

“Some of the newly introduced measures that will exacerbate hardships include the three percent withholding tax on income from the transfer or exchange of digital assets and the five percent withholding tax on payments to resident businesses engaged in digital content creation,” she said.

“These taxes on online platforms will reduce the opportunities that youth are utilising to employ themselves, bearing in mind that the sector should be nurtured instead of stifled with unfair taxes,” she added.

Elaborating further, Ms Semu said a two percent income tax has been introduced chargeable to owners of medium-sized businesses for purchasing agricultural, livestock, fishing, and forestry products, as well as Sh382 per kilogramme of compressed natural gas (CNG).

She noted that the government has ignored the voice of citizens by failing to remove or reduce taxes that were criticised in the current financial year, like the failure to amend the 50 percent fee on withdrawal costs.

“An Sh1,000 levy on each 50 kilogramme bag of cement will further escalate prices and worsen the living costs of citizens, making them unable to afford decent housing due to rising costs of construction materials. The government's responsibility should have been to ensure Tanzanians have adequate housing instead of adding obstacles,” she said.

According to her, the introduction of a two percent levy on small-scale miners will be a burden, particularly for those with low production capacities, as it disregards profits and focuses solely on gross sales.