The Chanzo’s Morning Briefing – July 28, 2021

In our briefing, today: Samia speaks out on controversial mobile money transaction levy; COVID-19: BoT announces new recovery package; and Samia holds talks with Africa CDC boss.
The Chanzo Reporter28 July 20215 min

Dar es Salaam. Good morning! The Chanzo is here with a rundown of major news stories reported in Tanzania on Tuesday, July 27, 2021.

Samia speaks out on controversial mobile money transaction levy

The government is expecting to receive the opinions of a committee formed to analyze people’s complaints about the recently introduced mobile money transaction levy on Thursday, July 29, 2021, with President Samia Suluhu Hassan saying that any government’s decision on the controversial levy will be based on the committee’s recommendations.

The levy, together with that on airtime, were introduced as part of the government strategy to finance its Sh36.6 trillion budget for the 2021/2022 financial year, with a total of Sh1.65 trillion expected to be collected from them. The mobile money transaction levy became operational on July 15, 2021, following an amendment of the Finance Act, 2021. The airtime levy is expected to become operational in the following month of August.

“I’d like to point out that these levies were introduced in good faith,” the Head of State said during a function to swear in the recently appointed ambassadors at the State House in Dar es Salaam.

She said that throughout the country, people have heavily invested in agriculture but face the problem of infrastructure especially during the time of transporting their produce to the market.

“So part of the money that will be collected from [the mobile transaction levy] will go to improve [Tanzania’s] rural road network. We have planned that this money will also go to improve the water sector,” President Samia added.

President Samia told Tanzanians that the government has heard their cries, adding: “We are going to analyze the best ways to deal with this issue. But these levies I’ll honestly say will be there. We’ll however find the best ways through which the levies will be implemented but without hurting the ordinary citizens.”

The thirteen ambassadors sworn in yesterday are among the 23 ambassadors that President Samia appointed in late May 2021. President Samia said the diplomats will be responsible for promoting Tanzania’s relations with other nations as well as promoting the country’s investment opportunities to prospective foreign investors among others.

She directed the ministry of foreign affairs to fast track the review of the Tanzanian foreign policy, calling the present foreign policy outdated.

“Our current foreign policy is 20-year-old, so many things have changed in the world and we do not have any other option apart from going with those changes,” President Samia insisted.

COVID-19: BoT announces new recovery package

Bank of Tanzania (BoT) announced several policy measures on Tuesday aimed at increasing credit to Tanzania’s private sector and lower interest rates. In a statement released yesterday. BoT says the measures will “hasten recovery of the economy” that continues to be seriously affected by COVID-19.

The measures, which became effective yesterday, July 27, 2021, follows the BoT analysis that showed that the pace of economic growth slowed to 4.8 per cent in 2020 from seven per cent in the preceding year.

Private sector credit has also been affected with the BoT saying that the credit has been ranging between 2.3 per cent to 9.1 per cent. This is happening at a time when interest rates on loans charged by banks remain to be high at about 17 per cent.

All these factors combined led the central bank to reduce the statutory minimum reserve requirement, which aims at increasing lending to agriculture as well as reducing the interest rates on loans to agriculture.

The BoT is also relaxing the eligibility criteria for a person who wants to work as an agent of a particular bank, with applicants for agent banking business now required to have a National ID Card or National ID Number. In the past, the applicant was required to have business experience of at least 18 months.

Other measures include limitation of the interest rate paid on mobile money trust accounts whereas now mobile money trust account balances held with banks shall be eligible to interest rate not exceeding the rate offered on savings deposit accounts by the respective bank.

BoT says this measure will contribute to lowering the cost of funds to banks, thus helping to reduce lending rates.

The BoT has also introduced a special loan amounting to Sh1.0 trillion to banks and other financial institutions for on-lending to the private sector. The special loan will be provided at three per cent per annum for pre-financing or re-financing of new loans to the private sector.

It has also reduced risk weight on different categories of loans in the computation of regulatory capital requirement of banks, a measure that is expected to provide the opportunity to banks to extend more credit to the private sector than before.

“[BoT] shall provide additional details to banks, other financial institutions and mobile money providers on the measures adopted,” the statement signed by the Bot governor Prof Florens Luoga said.

“In addition to these measures, the Bank of Tanzania has directed banks and other financial institutions to implement strategies of lowering lending rates and increasing deposit mobilization,” he added.

Francis Nanai, the Executive Director of the Tanzania Private Sector Foundation (TPSF), the umbrella body of private sector institutions in the country, applauded BoT measures, saying that it is evident that businesses have been “severely financially constrained” thanks to “the slowdown of economic activities.”

“We believe this move will have a positive ripple effect to other productive sectors as well,” Mr Nanai said in a statement yesterday.

Mr Nanai added: “[We’re] optimistic that this recovery package will stimulate economic activities and thus revamp the banking sector in promoting private sector-led economic development and people’s prosperity.”

Samia holds talks with Africa CDC boss

President Samia Suluhu on Tuesday met and held talks with the Director of Africa Centers for Disease Control and Prevention (Africa CDC) Dr John Nkengasong at the State House in Dar es Salaam where the latter recommended Tanzania’s efforts to contain the spread of the coronavirus pandemic in the country.

According to a statement released by the director of presidential communications Mr Jaffar Haniu, Dr Nkengasong said that Africa CDC in collaboration with the African Union (AU) would ensure that enough vaccines are secured for distribution and vaccination in the African region, including Tanzania.

Nkengasong added that Africa CDC would cooperate with Tanzania in building capacities for laboratories to enable them to identify various variants of COVID-19.

Yesterday’s meeting came ahead of today’s official launch of COVID-19 vaccination rollout in Tanzania that will commence with President Samia receiving the covid shot.

This is it for today and we hope you enjoyed our briefing. Please consider subscribing to our newsletter (see below) or follow us on Twitter (here) as that is the best way to make sure you do not miss any of these briefings.  And in case you have any questions or comments, please consider dropping a word to our editors at editor@thechanzo.com.

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