Samia calls for more public investment in food security

Dar es Salaam. President Samia Suluhu Hassan on Wednesday directed public institutions to prioritise strategic investments in food security and foreign currency generation to support economic resilience and sustainability.

She said while the private sector has been the primary player in areas such as the food industry, public institutions need to step up their involvement in this area, particularly in the production of essential commodities like sugar.

Opening the three-day Chairpersons and CEOs Forum for Public Institutions in Arusha, President Hassan cited the nationwide shortage of sugar earlier in the year.

She said the entire sugar industry is dominated by the private sector, which, while implementing government policies, also operates based on their own strategies.

“As a result, you could have a shortage and not be able to do anything about it. What we did to address the shortage was to import sugar from outside of their operations, replenish the market and help the common citizen. Sugar prices dropped after the commodity was distributed across the country,” the Head of State said.

“But then we encountered resistance from these investors. They started questioning why we did that. So, you find yourself wondering, does this investor, as a Tanzanian, really care if his uncle in the village buys sugar at Sh6,000 per kilo just to protect the interests of his factory? Does he only care about his factory’s profits?

“But if we had public sector investors, when the private sector pressures us, we would have public sector sugar to rely on and there would be no more issues or cases of being frustrated,” President Hassan said.

The President also stressed the importance of foreign currency generation as a strategic priority.

According to the central bank, the shilling depreciated by over 16.6 percent in the past five years, trading at an average rate of Sh2,684 per dollar as of Wednesday from an average rate of Sh2,300.52 per dollar that was recorded in August 2019 before the Covid-19 pandemic.

The country and the rest of the world have faced economic headwinds as a result of the dollar shortage, as a consequence of the Covid-19 pandemic and other geopolitical factors.

President Hassan urged public institutions to study the established national approaches on this matter and identify opportunities for collaboration to boost Tanzania’s foreign currency reserves.

“Study those strategies and identify areas where you can collaborate to increase foreign currency generation,” she said.

Among initiatives by the Bank of Tanzania (BoT) is the purchase of six tonnes of gold this fiscal year, which will be the biggest amount by far since the government began buying the precious metal from small, medium, and large-scale miners as part of efforts to diversify the country’s foreign exchange reserves

Other measures by the government were to limit transactions in dollars which is expected to reduce demand for foreign exchange and increase reserves.

By investing in sectors such as tourism, mining, and manufacturing for export, public institutions can play a crucial role in boosting the country’s foreign currency reserves.

This, in turn, will provide a buffer against external shocks and contribute to overall economic stability.

Regarding international investments by public institutions, President Hassan said they will be more meaningful if these organisations have already created productivity within the country.

“So far, the contribution of public institutions to the national income is only one percent, significantly lower compared to the 30 percent contribution of public organisations in developed countries,” she noted.

Investment fund

As state-owned enterprises eyes international markets, A new investment fund designed to support capital needs will be formulated, according to Treasury Registrar Nehemiah Mchechu.

He said this new initiative is part of the new amendments to the framework governing public investments, Treasury Registrar Act, which is expected to be discussed in the ongoing parliamentary sessions.

“Considering the shortcomings identified in the current law, a thorough analysis was conducted to create a new law for government public investments was drafted. We are highly optimistic that this law will be finalized in this parliamentary session and within this calendar year,” he stated.

He said the new legislation will address challenges related to capital, a critical factor that has impeded the growth of public institutions.

The establishment of the investment fund is expected to alleviate these issues by providing a financial cushion for significant national projects.

“But priority will be given to proposals that promise substantial national benefits and contribute to the country’s income,” said Mchechu.

As per President Hassan, this concept is not new, likening it to the ‘Sovereign Wealth Funds (SWF) found in other countries.

“This money is not just for us, but for future generations. It is about building the future capital of the nation. This fund assures us of our financial security in the future,” she said.

The Minister of State in the President’s Office (Planning and Investment), Prof Kitila Mkumbo, reiterated the government’s commitment to leveraging public organisations to enhance the country’s competitiveness on the global stage.