Government Expenditure to Combat Pandemic Situation

JAMES MATHEW MGAYA – Art in Tanzania internship

Other Africa countries have prioritized the pandemic and the accompanying lockdowns measures that have worsened the severe food insecurity problem, increasing the population of people living in extreme poverty. While Tanzania has opted for a different approach. Though Tanzania’s unconventional approach to COVID-19 may be slow in response ad seem to lack in direction, its uniqueness illustrates the need for government to form context-specific smart containment strategies and recovery plans. The Tanzania government’s expenditure was to maintain multiple competing priorities, so far the government did not ignore the pandemic by increase public health funding. Tanzania’s interest was to contain the transmission of the virus along all its borders and coordinate closely with its partners, maintain diplomatic relationships, ensure trade is not severely disrupted, and invest in formal small-holder farmers to produce for domestic economy.

How did it work?

Tanzania used its government expenditure to refocus on financial services which makes them among 14 African countries that did not introduce any social safety measures, such as cash transfers. Instead, the government focused on responding with some economic measures through the Bank of Tanzania with various policies to ease liquidity and safeguard the stability of the financial sector. The bank reduced the discount rate, lowered the minimum reserve requirements ratio, incentivised the restructuring of loans for severally affected borrowers, and relaxed limits on mobile money use.

Tanzanian government expenditure focused on increasing its capacity to maintain and manage the virus, while pursuing sustainable economic development. In other words, Tanzania can learn to adapt and live with the virus in a way that is not detrimental to the economy, but not overwhelming the health system. They fund health centres and witness the Covid-19 emergence facilities and also Government built special covid-19 health centres to combat it and increase public health funding to local health centres to implement mass testing, enforce social distancing, and sanitation measures.

Tanzanian government expenditure uses the Strategic Cities Project for Tanzania development objectives to facilitate the Additional Financing (AF) which enhances the development impact and sustainability of the investments financed by the original project by investing in equipment and operation, and maintenance capacity for existing infrastructure, and deepening local government capacity for urban management. These initiatives enable the government to maintain multiple competing priorities, managing the transmission rate, while ensuring food security creating and protecting jobs. 

Conclusion

The COVID-19 pandemic will have short-, medium-. and long-term effects on territorial development and sub-national government functioning and finance. One risk is that many governments respond to focus only on the short term. But the Tanzanian government use it’s expenditure to longer-term priorities must be included in the immediate response measures in order to boost the resilience of regional socio-economic systems. Much effort of Tanzanian government redirected to growth of economy during pandemic so as government expenditure was driven by strong public investment and export earnings. The government’s firm focus and commitment during this pandemic have been to avoid a complete halt of economic activities. 

Resources

The International Growth Centre – COVID-19 in Tanzania: Is business as usual response enough?

THE PROSPECT FOR TANZANIA ECONOMY AFFECTED BY COVID -19 GLOBAL PANDEMIC

B Nyamboge Mwema Nyawangwe – Art in Tanzania internship

As well as it is known COVID-19 is a global pandemic in the whole world today. Tanzania is among one of the many countries that has been affected in many ways and one of the major areas is in the economic sector. Since last April to May 2020 there was a huge rise of cases regarding COVID-19 which led to lockdowns including shutting down of various public places like schools. The average has reduced highly since last year since and people are no longer quarantined, despite that, the recently new president ordered for more research/investigation with regard to COVID-19 and measures to prevent it from spreading are still taken. Despite Tanzanian boarders being still open several measures are still undertaken by the government and individuals to protect against the spread of COVID19. Some of these measures include the one’s set by WHO like wearing face masks, social distancing in public places and washing hands or using hand sanitizers.

Given the fact that majority of Tanzanian’s are backward economically and can’t afford means of protections such as hand sanitizers, face masks etc., this people are forced to stay at home as to avoid crowds, hence a lot of people have failed to keep up with their daily jobs. This is especially to rural people who are self-employed hence when they don’t work means no income generated and therefore reduction of expenses reducing general revenues. Some companies also have been forced to deduct  workers’ salaries and also expel some workers as to keep up with the financial flows.

Despite the rate of COVID-19 gradually falling but other countries are still highly affected by the disease which is more likely contributing to affecting Tanzania economy, currently and the future. Some of the major areas directly linked with the economy have shown this impacts.

In Public financing/ Government.

The government is facing and will continue facing problem in public budgeting and social services delivery to its people, this is because it has increased demand for public expenditure mainly in procuring tools needed due to COVID-19 such as sanitizers, medical equipment’s and so forth. The government revenues are expected to keep failing due to variety in cash flow obtained in direct and indirect taxes, levies and fees. As it is known with COVID-19 most of companies decreased workers and also most of workers payments were declined also others were forced to stop working naturally due to factors within.

In tourism sector; 

One of the major sources of the government income in Tanzania is through tourism. Which has far more tattered, very few tourists are coming to the country due to restrictions set in countries hence the demand has quite declined. The government has reckoned that this year probably only few tourists will come to Tanzania for the holidays which is about a quarter of the normal rate. Places like Zanzibar has been so much affected since most of their economy depend on tourism. The chain that links from the places that tourist visited and stayed like hotels to the people working there and the suppliers of products or services their jobs have frozen due lack of tourist.  

                

Trade

Tanzania mostly depends on exported products and very few are made within. Trade global chains are disrupted, and some factories have been shut down, most of products are running out hence sellers lack products to sell and money circulation has been declining. Most of the country boundaries have been closed not allowing products to go out or come in for some time. This has also led to rise of prices of some products causing some people not to afford them which leaves these products unsold especially those that are not basic needs or that are luxurious products. Export and import of products has been generally affected due to shutdown of some factories which has highly affected the economy.

In banks and financial institutions;

This are among major helpers of the economy that have been highly affected due to COVID-19,  there has been reduction of bank deposits given all factors generated that has causes slow generation of income, Foreign financial flows have fallen due to no transactions of money from other countries due to the lockdown hence lack of foreign currency within, also there has been deterioration between the customers and bank relationships since it has been hard  to establish a common ground due to operational challenges from both sides.

Conclusively;

As for Tanzania as long as COVID 19 continues to exist despite it being within the country or outside its impact on the economy will always be valid and continue to affect the major sectors of the economy, which will keep causing decline of general income gained by individuals and the government at large. Such hard times require hard decisions on best measure as to what should be undertaken as to try and maintain the economy to avoid great depression.

Already some measures have been taken as to help overcome the economic problems generated due to COVID-19 for example in banks and financial institutions follows the Bank of Tanzania policies measures, this is by issuing relief packages towards their customers especially the small and medium enterprises which include payment holidays ranging from 3-6 months and restricting of loans to extend repayment periods.