Why BoT is optimistic on dollar availability
What you need to know:
- At some point, the shortage was so severe that importers, especially those of petroleum products, said last month that they were increasingly adopting the Euro as an alternative to the vehicle currency.
Dar es Salaam. The Bank of Tanzania (BoT) is optimistic that the dollar shortage that has beclouded the country for a couple of months is about to end, thanks to an increase in export earnings from gold, food products and tourism arrivals.
Tanzania, just like many other countries, has had a shortage of the US dollar for several months now, primarily due to a shift in international trade dynamics, fluctuations in commodity prices, and geopolitical tensions.
The BoT said in May last year that it was adopting multifaceted approaches to reverse the situation.
At some point, the shortage was so severe that importers, especially those of petroleum products, said last month (June, 2024) that they were increasingly adopting the Euro as an alternative to the vehicle currency.
The executive director for the Tanzania Association of Oil Marketing Companies (Taomac) executive director Raphael Mgaya was last month quoted as saying that forex required for products to be sold in June included $86.7 million and Euro 43.8 million from the official market, excluding dollars from the black market.
But in what sends an encouraging message, the BoT Governor, Mr Emmanuel Tutuba, told The Citizen last week that Tanzania was currently exporting products that were generating increased foreign currency inflows into the country.
The products include some food products like rice, meat, fish fillets, sesame seeds and pigeon peas through the Tanzania Mercantile Exchange (TMX).
As such, he said, they were accessing dollars, which they exchanged in the banks.
“We are also exporting gold from both small and large miners, which is also boosting the dollar’s availability in the country,” he said.
He noted that tourist arrivals have also been picking up, with the number of tourists who come with forex entering the country increasing.
Official figures show that Tanzania’s export earnings stood at $14.5 billion during the year ending May 2024, being an increase of 15 percent compared to what the country earned during the year ending May 2023. “A notable export increase was observed in gold; services in particular travel (tourism), traditional goods, horticulture products, as well as fish and fish products,” the BoT said in its Monthly Economic Review for June 2024.
Gold exports earned Tanzania $3.1 billion during the period, higher than the $2.9 billion realised during the preceding year.
At the same time, Tanzania earned $3.6 billion in tourism receipts during the year ending May 2024, up from $2.87 billion during a similar period last year.
“The rise in travel receipts was supported by improvement in the tourism sector, with tourist arrivals increasing by 21.9 percent to 1,961,870,” the BoT says.
Tanzania’s exports of traditional goods increased to $1.051 billion in the year ending May 2024, higher than $761.6 million in the same period in 2023.
The increase was primarily driven by high exports of tobacco, cashew nuts, and coffee, manifested in both prices and volumes.
Analysts say with tourism accounting for a sizable share of Tanzania’s forex earnings, an improvement in the sector looks promising.
“The dollar is important for our imports of fuel, cooking oil, and lubricants, among other products; therefore, during this season we also get more dollars from exports and tourism,” said Prof Abel Kinyondo of the University of Dar es Salaam.
