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Tanzanian sugar regulators are embroiled in a feud with producers as they seek to enforce price caps on the commodity, amid a nationwide shortage.

Retail sugar prices have gone up twofold from an average of Tsh2,300 ($0.91) in November to between Tsh4,000 ($1.58) and Tsh6,000 ($2.37) per kilogramme, with fingers being pointed at factory owners, importers and traders for the artificial shortage.

Across the EAC, sugar prices average about $1.30 per kilo in Kenya, despite a government waiver on import duty from January last year; $1.35 in Uganda, $0.44 in Rwanda, $0.83 in Burundi, $1.92 in DR Congo, $2.36 in South Sudan and $3.14 in Somalia.

In response to a public outcry over the rising prices, the Sugar Board of Tanzania last month announced shop price caps of between Tsh2,700 ($1.07) and Tsh3,200 ($1.27), depending on point of sale within the country, which were to become effective on January 23 and remain until June 30.

Industry players responded by saying the prices were too low and would render their businesses unprofitable. Tanzania’s seven main sugar factories have since halted or slowed down production, exacerbating the shortage in retail shops while prices have remained high.

This comes at a particularly bad time for the Islamic community as Ramadhan approaches, a period when demand for sugar is highest.

Agriculture Minister Hussein Bashe has warned sugar producers and traders to desist from trying to force a reversal of the price cap by lobbying government officials and ruling CCM party politicians “behind the scenes”. He asserted that such methods would be fruitless as “this is not a matter that can be resolved politically.”

“In this country, there are only four people who can summon and question me about the price caps: the President, the Vice-President, Prime Minister and Deputy Prime Minister,” Mr Bashe said. “There is no one else who can cancel that decision.”

Earlier, in a January 24 post on his X account, Mr Bashe invited industry stakeholders aggrieved with the sugar board’s move on price cap to his office for consultations and “stop looking for short-cuts.”

The seven major sugar factories in Tanzania currently produce an average of 1,000 tonnes per day against national requirements of 1,500 tonnes per day and 490,000 tonnes annually, with the gap covered by imports.

The government’s target for this year was 500,000 tonnes before the latest disruptions caused by rains.

Mr Bashe said on January 21 that the government would issue permits to local producers and traders to import 100,000 tonnes of sugar immediately but warned against abusing the permits by hoarding supplies to inflate prices.

“If the factory owners and wholesalers continue to hoard supplies in order to push prices up, the government will revoke its protection for them against sugar imports. We cannot protect factories at the expense of consumers,” he said.

According to Mr Bashe, sugar prices in the local market are expected to stabilise by mid-February and the total import allocation to have arrived in the country by the end of February.

“The ministry will also continue to assess the rain situation and damage caused to sugarcane farms since we don’t want to import amounts of sugar that could kill local production altogether,” he said. - BOB KARASHANI, The EastAfrican

 

NAIROBI, Dec. 28 (Xinhua) -- Kenya said Thursday that it would make the final interest payment of its 2 billion U.S. dollars Eurobond alongside the principal amount in the last week of June 2024.

Njuguna Ndung'u, the cabinet secretary for National Treasury and Economic Planning, said in a statement released in Nairobi, the capital of Kenya, that the country would not default on repaying the debt as it has a comprehensive plan for debt service payments.

He said the Kenyan government recently paid 68.7 million dollars in interest for the Eurobond that falls due in June 2024.

"The timely settlement of interest payments on the Eurobond has not only sent a positive signal to investors but also resulted in reduction in yields on Kenya's Eurobonds in the global financial markets," Ndung'u noted.

He said that the country expects substantial external inflows from the World Bank, International Monetary Fund, and other development finance institutions between January and March 2024.

"These inflows are poised to significantly bolster foreign exchange reserves," Ndung'u observed.

He added that Kenya maintains a robust economic outlook supported by policy reforms and collaborations with multilateral and bilateral development partners.

According to Ndungu, an ongoing fiscal consolidation program, coupled with an increase in revenue generation would help curtail borrowing, and reduce debt levels over the medium term.

Kenya's current public debt stands at 63.6 billion dollars and there have been fears of debt distress and default. - Xinhua

 

The World Bank has revealed that Tanzania's economic growth model is not inclusive enough as a result trapping many into the poverty cycle.

In its recently issued Country Economic Memorandum for Tanzania report titled Privatising Growth, World Bank also stated that many poor Tanzanians have come out of poverty in recent years, but many have fallen into it, too.

The bank said many Tanzanians are “clearly exposed to frequent income shocks; highly sensitive to such shocks, as they tend to own few assets; and they have limited access to social protection”.

“The prevalence of income shocks is clear: the median consumption per adult equivalent in 2021 was more than 10 percent lower than in 2014 due to overlapping shocks that occurred after 2019,” the report reads in part.

According to the lender between 2012 and 2018, poverty—measured against the national basic-needs poverty line—saw a relative reduction of only 6.4 percent. However, considering the country’s relatively high GDP growth rate over this period, the growth elasticity of poverty in Tanzania was close to zero—one of the lowest values in the world and below all major regional averages.

“As a result, the number of poor Tanzanians rose by 1.3 million over the same period, as the population continued to expand at a fast pace,” World Bank stated.

 Referencing the National Panel Survey (NPS) data, World Bank stated that 23 percent of households in the second wealth quintile and 18 percent of those in the third wealth quintile in 2021 were previously in the bottom quintile.

“Only 43 percent of those in the poorest quintile in 2021 were already there in 2014, which implies that more than half of those in the lowest quintile in 2021 had fallen down from a higher position on the wealth ranking,” the report read.

Tanzanians’ limited access to social protection is said to be evident also from the statistics.

“Per the latest available data, the total amount spent on social assistance in 2016 was equal to 0.45 percent of GDP, funded largely by development partners. This is a modest amount—by comparison, other African countries spend on average 1.6 percent of GDP—and clearly insufficient for the needs of the Tanzanian society,”

The bank stated even accounting for social insurance, Tanzania spends around 2 percent of GDP on social protection overall, less than countries with similar income levels. - THE CITIZEN

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