Tanzania has firmed up its position as East Africa’s fastest growing economy, boosting its chances of attracting high net worth investments.
Tanzania, the region’s second-largest economy after Kenya, grew by 6.9 per cent last year, racing ahead of Rwanda’s 6.5 per cent, Kenya’s 5.6 per cent and Uganda’s 5.2 per cent.
Tanzania romped to the high growth trajectory in 2014 when its economy grew by 7.2 per cent, outpacing Rwanda (six per cent), Uganda (5.9 per cent) and Kenya (5.3 per cent).
The International Monetary Fund expects Tanzania to maintain the pole position this year with an estimated growth of seven per cent against Kenya’s 5.9 per cent and Uganda’s 5.5 per cent.
In spite of strong growth, exports to Tanzania have fallen sharply as frequent trade disputes lock a number of products produced in Kenya from its markets.
Data released by Kenya National Bureau of Statistics (KNBS) shows Kenyan firms exported goods worth Sh33.7 billion to Tanzania last year, a 21 per cent drop from the previous year’s Sh42.7 billion.
By comparison, Uganda absorbed Kenya’s goods worth Sh68.6 billion, a 12.8 per cent growth over the 2014 export level of Sh60.8 billion.
Tanzania and the conflict-prone Burundi are the only markets in the region where Kenya’s exports dropped. Exports to Burundi decreased to Sh6.6 billion last year, 16.5 per cent down from Sh7.9 billion the previous year.
During that period, Burundi’s economy also decelerated to -7.2 per cent.
The KNBS figures show that Rwanda, which recorded a growth of 6.5 per cent against 6.0 per cent in 2014, raised its uptake of Kenyan goods to Sh17.95 billion, a 24 per cent growth over the previous year.
Last year, Kenyan exporters accused Tanzania of using national agencies to block the sale of their goods in its market in spite of the free trade agreement among the East African Community member-states.
The British American Tobacco Kenya is among the firms that went public about their dispute with the Tanzania Revenue Authority, accusing the taxman of levying up to 75 per cent excise duty on its products.
Despite the difficulty to sell in Tanzania, Kenya reported an 8.2 per cent rise in exports to Sh581 billion last year. By comparison, imports declined in the same period by 2.5 per cent to Sh1.578 trillion.
The KNBS attributes the decline in imports to a sharp fall in prices of mineral fuels as well as reduced demand for industrial machinery and aircraft. The growth in exports has been linked to improved orders for tea and horticultural produce.
Source: Business Daily
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