Country Report Tanzania September 2009

Outlook for 2009-10

• The president, Jakaya Kikwete, will remain fairly popular as he enters the final year of his first term, despite slowing economic growth, continued corruption scandals and high inflation that is hurting living standards.
• The ruling Chama Cha Mapinduzi (CCM) is likely to choose Mr Kikwete as its candidate in the 2010 presidential election. He is expected to win, but with a smaller majority on a lower turnout as the electorate expresses its discontent.
• The global slump will hurt the economy through a slowdown in foreign direct investment, trade and tourism. The Economist Intelligence Unit forecasts real GDP growth of 4.5% in 2009 and 5% in 2010.
• Inflation will ease in 2009-10, but stubbornly high food prices, which account for over 50% of the consumer price index, will prevent it from falling faster. We forecast an average inflation rate of 11.1% in 2009 and 8% in 2010.
• A more stable economic outlook, an easing of demand for foreign exchange and periodic intervention from the central bank is forecast to stabilise the average exchange rate at TSh1,334:US$1 in 2009 and TSh1,394:US$1 in? 2010.
• The current-account deficit is forecast to narrow to an average of 9.4% of GDP in 2009-10 as a result of high gold prices, a strong performance from manufacturing exports and a dip in oil prices, which will lower imports.

Monthly review

• Voter registration on Zanzibar was suspended after violence broke out. Supporters of the opposition Civic United Front were unable to register while it was claimed that under-age CCM supporters had been registered.
• An opinion poll by the Steadman Group shows that 58% of Tanzanians have trust in the president and 52% approve of the government's performance.
• The central bank has continued to loosen monetary policy. Interest rates dropped sharply in August: the 91-day Treasury bill rate fell from 10% in May to 3.3% and the bank rate fell from 6.95% to 5.2%.
• A US-traded company, Lake Victoria Mining, has announced a significant gold discovery in Singida. Meanwhile the government wants to introduce a law allowing it to purchase a set stake in mining companies in the country.
• In July the head of the International Atomic Energy Agency, Mohamed ElBaradei, visited Tanzania. The country has an estimated 53.9? Mlb of uranium deposits and commercial production is scheduled to begin in 2011.
• The government forecasts that cement production capacity will rise by 20% in 2009, but three large cement companies have lowered production owing to concerns about cheap imports and want the cement tariff raised to 40%.

This report covers the following industry codes:
SIC Code: 49;10;37;53;60;2834;80;48
NAICS Code: 22;212;336;44;52;3254;62;517