President Jakaya Kikwete has recently announced a rescue package for the Tanzania economy in the amount of TSh1.7 trillion in order to help cushion his country from the effects of the global financial crisis.
Of this funding, TSh21.9 billion will be taken and directly channeled to area banks to cover the losses that cooperatives and firms have felt after buying products from farmers in the Tanzania agriculture sector.
In addition to the agriculture sector, other crucial sectors to the economy, such as the investment, infrastructure and food security sectors, are also expected to receive support from the rescue package.
In the announcement, which was reported by Business Daily, President Kikwete said that these funds would be sourced from the 2009/2010 government budget.
In addition, the President went on to say that the government is also planning to grant guarantees to financial institutions to cover loans in the amount of Tsh270 billion that had been given to companies who are now unable to repay the debt as a result of the current crisis.
Sectors included in this portion of the package are the manufacturing, industrial and tourism sectors, and will likely effect hotels and tour operators more specifically.
“The guarantee will be for 2 years and the government has already spoken to financial institutions which have extended loans to these firms not to charge interest for the period of the guarantee,” said the President.
Another portion of the rescue package involves the provision of affordable capital for businesses, which will involve the release of a government stimulus package through commercial banks in the amount of TSh200 billion.
In addition to this portion, the government is also planning to support guarantee schemes with the allocation of TSh10 billion for the export guarantee scheme and additional TSh10 billion for SMEs.
“The effect of this is that the TSh10 billion extra in the export guarantee scheme will enable the government to guarantee a total of TSh226.5 billion worth of exports,” said President Kikwete.
Originally, the SME Guarantee Scheme had begun with a capital of TSh500 million and this will also be used to help guarantee small businesses as much as TSh60 billion, significantly more that the TSh 6.5 billion that had been predicted earlier on.
In addition, President Kikwete has also said that because the country’s mining companies have also felt a loss of income as a result of the global economic crisis, they too will be granted a 2 years royalty leave.
“These firms are complaining of difficulties,” he said, “The state has decided to grant them a recovery grace period.”
During his recent speech to the MP’s, the president told the delegates that, while all of these measures were important to the country, the overall food security of the country has remained the government’s top priority.
To this end, Tanzania Investment Bank has been granted a TSh20 billion guarantee in order to allow for the extension of long term and cheaper loans in the food sector.
“Since this project will be done through financial institutions,” said President Kikwete, “we have an arrangement that those who will want to participate will have to raise another TSh20 billion.”
