Tourism was Tanzania’s leading source of forex—this according to data from the Ministry of Natural Resources and Tourism—but that was only true before the global Covid-19 pandemic hit.
Statistics from the ministry show that the country earned an impressive USD2.5B from the tourism sector in 2019. That was the highest it would rake in before Covid-19 befell the world in 2020. To date, the future looks grim.
The effect of the global pandemic on Tanzania’s economy in general has been devastating. Consider the fact that earnings from the travel subsector have plummeted by more than half its pre-pandemic earnings.
Records show the travel subsector revenue was down 59.2% in December 2020 falling to USD1.06B. The Bank of Tanzania’s (BoT) monthly economic review for January only paints a grimmer picture with the number of international tourists dropping drastically.
To quote the review “…the number of international tourist arrivals declined to 616,491 from 1,527,230 in the year ending December 2019,” translating into the number of international tourists dropping by more than half.
Exports, even traditionally well-performing ones like coffee and tea, all plummeted. Exports in general fell to USD8.8B in December 2020, from a high USD9.65B in December 2019.
Tanzania’s Central Bank explains the decrease as the direct result of a decline in export values of coffee and cotton, as well as reduced production volumes and low prices of tea and sisal.
Similarly, and owing to a decrease in imports of capital and intermediate goods, the import bill for goods and services decreased to USD8.9B having fallen from USD10.36B registered in the previous year. The BoT report blames much of the decrease on a drop in value transport equipment and oil.
Conversely, export value of horticultural products, manufactured goods and minerals increased to hit USD5.29B in 2020 up from USD4.16B in 2019, that is a USD1.12 billion increase.
In fact, the report shows that all mineral exports went up except for diamonds. But while export of diamonds dropped, gold exports increased and accounted for more than half (55.9%) of non-traditional exports. Gold exports increased both in volume and price by 33.5 per cent to clock in at USD2.95B. Gold is now Tanzania’s leading foreign exchange earner.
Tanzania is Africa’s fourth-largest gold producer after South Africa, Ghana and Mali.
Banking Sector Facing off Corona virus Threat
While the tourism sector suffered in the wake of Covid-19, the banking sector is reporting impressive results. Having approximately 50 banks, Tanzania has a very active banking sector.
The sector’s resilience is directly attributed to the government’s visionary fiscal policies. The BoT took measures to cushion the economy like lowering its statutory minimum reserve requirement for commercial banks and also lowered its discount rate.
Further still, it allowed banks to borrow with less collateral and even reduced charges on government securities from 10% to 5% for treasury bills and from 40% to 20% for treasury bonds.
The country’s two biggest banks, NMB Bank Plc and CRDB Bank Plc reported record high profits last year, the year that Covid-19 broke out and the world went into a shutdown that brought the global economy nearly down to its knees.
Local media reports that these two banks account for up to two thirds of the banking sector’s profit registered a total of Sh358 billion (USD154.4M) in net profits.