Foreign travel ban to aid shilling!

The Confederation of Tanzania Industries (CTI)’s Director of Policy and Advocacy, Mr Hussein Kamote

THE shilling is set to gain following President John Magufuli’s restriction on foreign travel for government officers, as it will curb rising demand for US dollars that has contributed to weakening of the local currency, economists have observed.

In separate interviews with the ‘Daily News’, the economists observed that expeditions to foreign countries, particularly by government officials, are among factors that have been draining foreign currencies at the expense of the shilling.

The Confederation of Tanzania Industries (CTI)’s Director of Policy and Advocacy, Mr Hussein Kamote, told the ‘Daily News’ that apart from curtailing ballooning public debt, the restrictions will limit excessive demand for the US dollar that has been leading to the free fall of the shilling.

“The implementation of government measures on foreign trips on its public servants as well as minimal use of dollars on import of goods that can be made available locally will boost the value of the shilling,” the trained economist noted.
Dr Magufuli issued a directive to restrict foreign travelling during a meeting with permanent secretaries (PSs) and their deputies, the Governor of the Bank of Tanzania (BoT), Tanzania Revenue Authority (TRA) Commissioner General. In case of emergencies, he said officials would be allowed to travel abroad after securing express permission from him or the Chief Secretary (CS).

In his inaugural speech to the Parliament last week, President Magufuli said for the past financial year, the government spent more than 350bn/- (about 170 million US dollars) for air tickets, training conducted abroad and per diems.

Mr Kamote said there should be deliberate measures to restrict dollar demand for procuring goods and services, which are necessary to the economy, reduce or halt completely unnecessary expenditures.

For example, he said, there are services in some private and public sectors that are unnecessarily quoted in dollars, eventually exerting pressure into the shilling fall.

This may fuel up inflation due to increased prices of goods and services. The shilling has lost over 20 per cent of its value against the US dollar since January, this year, where according to the Bank of Tanzania (BoT) it traded at 1714/1731 against 2147/2168 as of Wednesday.

For his part, a senior lecturer at the University of Dar es Salaam (UDSM), Professor Humphrey Moshi, echoed Mr Kamote’s sentiments, stressing that the ban on foreign travel will reduce appetite for foreign currency.

“The move by Dr Magufuli will have a positive impact on the economy and help strengthen the local currency,” Prof Moshi told this newspaper in a telephone interview. The views were shared by Dr Honest Ngowi of Mzumbe University who was, however, of the view that the restrictions will have little impact on stabilising the shilling.

“Expenditures on foreign travels constitute a small component of foreign currency used in this country and thus I don’t expect it to have a significant impact on stabilising the currency,” the renowned economist remarked.

Dr Ngowi stressed that for the shilling to gain more against foreign currencies, the country ought to check capital flights and ensure it exports more than it imports.

/Daily News.