Your Excellency, Dr. Samia Suluhu Hassan,
The President of the United Republic of Tanzania,
Assalam Alaykum.
Greetings with utmost respect and honor. I sincerely hope that you and your family are in good health and high spirits. I offer my prayers for your well-being and success as you shoulder the weighty responsibilities of leading our nation, both domestically and internationally.
I felt compelled to write this letter after coming across discussions on social media about the surging prices of petrol and diesel, as well as the scarcity of US dollars in our country.
On August 2, 2023, the Energy and Water Utilities Regulatory Authority (EWURA) announced new prices for petrol, diesel, and kerosene, revealing a significant hike in fuel prices. According to the report, retail prices of petrol have increased by 463 Tanzanian Shillings (approximately 16.9%) from 2,736 Shillings in July to 3,199 Shillings in August. Similarly, diesel prices have risen by 391 Shillings (around 15.3%) from 2,544 Shillings in July to 2,935 Shillings in Dar es Salaam.
These escalating prices have raised grave concerns, especially regarding the cost of living and the rapid inflation affecting essential commodities. The government has attributed these price changes to challenges in accessing US dollars, changes in tax policies, rising global fuel costs (FOB), and import expenses.
To tackle these pressing challenges, I would like to propose three measures for the government’s consideration:
Measures to reduce imports of goods and services:
- The government should initiate the use of alternative energy sources, such as natural gas. Starting with all government vehicles, implementing Compressed Natural Gas (CNG) will reduce the considerable foreign currency expenditure on fuel imports. This move could lead to an annual reduction in government spending of approximately 500 billion Shillings. Therefore, installing CNG filling stations in all government warehouses should be prioritized.
- Emphasize the implementation of the Mchuchuma and Liganga projects to produce steel for both domestic consumption and international trade. This will save more than 1.1 billion US dollars, which is currently spent on importing steel, as indicated in government reports.
- Expedite the implementation of the Lindi Natural Gas processing project (LNG) and integrate it with the establishment of a large-scale fertilizer production plant. This step will conserve foreign currency used for importing fertilizers, which amounted to 503 million US dollars in 2022.
Specific tax measures:
- The government, through the Tanzania Petroleum Development Corporation (TPDC), should establish sufficient reserves to store at least six months’ worth of oil. This will shield our economy from the abrupt fluctuations in world oil prices.
- Consider reinstating the fuel subsidy for petrol and diesel until other measures to combat high prices are effectively implemented. We respectfully reiterate our call for a subsidy of 500 Shillings.
- Abolish the newly introduced 100 Shilling levy in the 2023/2024 financial year.
Measures to increase production and exports:
- Encourage the tourism sector by intensifying advertising efforts and improving tourism infrastructure to attract double the current number of tourists. With five million tourists per year, our country can triple the current foreign exchange earnings and create numerous job opportunities for Tanzanians.
- Boost agricultural exports by adding value to crops. For instance, processing cashew nuts alone can generate up to 500 million US dollars annually, and exporting soybeans to China can yield up to 1 billion US dollars. Similarly, enhancing sesame, pigeon peas, coffee, and cotton exports can result in higher foreign currency earnings through increased productivity.
- Improve efficiency in our ports to capitalize on transit trade by increasing the volume of goods passing to and from neighboring countries. Presently, transit trade yields approximately 1.9 billion US dollars annually, while our potential capacity could reach up to 12 billion US dollars per year.
In conclusion, the scarcity of foreign currency significantly contributes to the escalation of prices for imported goods and services. I sincerely hope that these proposed measures will be carefully evaluated and considered to alleviate the economic challenges confronting our nation.
Wasalaam,
Elia Wilinasi.
August 06, 2023