Journal of African Economic Perspectives

Determinants of Food Inflation in Tanzania: Comparative Analysis Before, During and After Covid-19 Shock

Mussa Ally Mwamkonko — 2024-07-18

This study examines determinants of food inflation before, during and after COVID-19 in Tanzania. The study used monthly time series data covering both pre-COVID and post-covid periods. The Chow test was employed to analyze whether the prevalence of the pandemic has influenced food prices. The results reveal that the price of fuel and global food prices account for food inflation in Tanzania. The effects, however, are bigger during and after the pandemic than before the crisis because of COVID-19-induced movement restrictions and lockdowns, which have battered the food supply chain. The study further finds that before the pandemic increase in extended broad money supply and government expenditure in the form of wages and salaries have no significant contribution to food inflation. However, after the pandemic, these accommodative expansionary fiscal and monetary policy measures to restore the economy to equilibrium resulted in inflationary pressure in the country. Moreover, the results show that the national food reserve has no significant effect on food prices, neither before nor after the pandemic. This outcome is partly attributable to the shortage of food caused by drought. Thus, to control food inflation, the government has to increase measures towards reducing fuel prices. These include reducing fuel import duties along with revising the whole fuel importation system. Also, the government needs to inspire its citizens to increase food production through increasing subsidies on agricultural inputs to cut down production costs. This is important to take advantage of high food prices in the international markets while maintaining adequate national food reserves. In addition, both fiscal and monetary authorities need to control public expenditures and money supply in the economy. While the government needs to reduce avoidable and unnecessary government expenditures the BOT has to ensure the growth rate of the money supply does not exceed the expansion of the economy.

Economics of On-Farm Climate Smart Agricultural Practices in Crop-Based Farming Systems in Morogoro Rural District

William George — 2024-07-18

Crop-based systems across Sub-Saharan African countries, including Tanzania is hampered by climate change. Government and private sectors introduced twenty climate-smart agricultural practices in the country. This study aimed to examine the profitability of using climate-smart agricultural practice in Morogoro Rural District. About 300 respondents were selected using a random sampling technique for interviews. A survey was conducted to collect data from the respondents using semi-structured questionnaires. A cost-benefit analysis was done to analyse the net returns of climate change mitigation interventions. The results showed that each mitigation intervention used by the smallholder farmers was financially feasible because the net returns were positive (revenues exceeded the costs). The varieties tolerant to drought (such as soybeans, maize and rice), row planting, and strip cropping were most financially viable. Less profitable practices included land rotation, tractor ploughing, and contour farming. Climate-smart practices with high profitability are recommended for enhancing farmers’ income.

Imports in East Africa: Boosting Manufacturing Performance or Impeding Domestic Growth?

Arbogast Moshi — 2024-07-18

While the debate surrounding trade protectionism and liberalization continues among policymakers, particularly regarding their impact on the development of domestic infant industries, the literature has largely neglected to provide empirical evidence on this matter. This paper addresses this gap by investigating the effects of imports on the economies of five East African countries. Specifically, the study assesses whether imports promote the development of the manufacturing sector or detrimentally affect the economy by introducing products that compete with domestic alternatives. Through the analysis of panel data from these countries spanning the period between 1997 and 2020, a pooled Ordinary Least Squares (OLS) model is employed to estimate the influence of imports on the manufacturing sector's performance. The results of the study reveal a negative correlation between the importation of goods and services in these five countries and the value added to the manufacturing sector. This suggests that the increase in imports has an adverse effect on the manufacturing sector's performance. This finding implies that imports in these countries do not complement domestic production; rather, they might directly substitute for locally produced goods. Consequently, it is recommended that these countries reevaluate their trade policies to ensure that imports are channeled towards products that can further the development of other sectors within their economies, such as the manufacturing sector.

Corporate Governance and the Value Relevance of Financial Information in Tanzanian Savings and Credit Cooperatives: A Panel-Data Approach

David A. Mwakapala — 2024-07-18

The study examined the influence of corporate governance on the relevance of financial information towards the value of Savings and Credit Cooperative Societies (SACCOS) in Tanzania. Thus far, evidence on how corporate governance influences the relevance of financial information in cooperative societies is limited globally, notably in emerging economies. Therefore, this research contributes to the body of knowledge by extending the application of agency theory to determine this relationship among variables. The study specifically employed a quantitative panel data set of 202 SACCOs from 2013 to 2020 that was gathered from yearly financial reports and processed through descriptive analysis and regression models. Descriptive statistics demonstrate that the SACCOs' value in Tanzania is increasing. Empirical results show a significant positive relationship between earnings financial information and the value of SACCOS; the book value of equity financial information insignificantly influences the value of SACCOS. The findings deliver empirical and theoretical backing for the notion that board size, skills and supervisory committee skills have a significant impact on the relevance of financial information towards the value of the firm. However, the examination showed no proof that the number of meetings affected the relevance of financial information. This implies that Policymakers should make reforms that will enable SACCOs to improve the quality of financial information and widen the publication of financial reports through effective corporate governance, including the emphasis on online publications.

Does Learning Orientation Enhance Financial Performance of Micro and Small Food Agro-processing Enterprises? Lessons from Tanzania

Eliakira Nnko — 2024-07-18

This study was set to investigate the relationship between learning orientation and financial performance of micro and small food agro-processing enterprises. The study was carried out in Arusha, Morogoro and Dar es Salaam regions in Tanzania. A quantitative approach and a cross-sectional survey design were employed. A total of 302 owner-managers were assessed using semi-structured questionnaire whereas stratified sampling technique was used to pick the sample. Data analysis was performed through structural equation modelling. The study confirmed positive link between learning orientation and the financial performance of food micro and small agro-processing enterprises in Tanzania. More specifically, both gross profit margin and net profit margin showed positive significant relationship with firm’s learning orientation. On the other hand, return on capital employed was found to have positive none significant relationship with learning orientation. The findings provide an indication that, deliberate efforts for improving learning behaviours are needed for improved financial performance of micro and small agro-processing firms. Hence, business owners of food agro-processing MSEs need to establish their learning frameworks by attending workshops, training and business exhibitions where they can acquire necessary business knowledge for improving their firms’ financial performance. Again, government and trainers can enhance learning habits of the agro-processing MSEs by establishing conducive environment for the enterprises to learn and acquire knowledge to positively enhance financial outcomes of these firms.

Impact of Financial Liberalization on Economic Growth: An Empirical Evidence from Tanzania

Obed A. Hungu — 2024-07-18

The current study analyzes the impact of financial liberalization on economic growth in Tanzania. It focuses on the inability to attain targeted economic growth. The study employed time-series data spanning from 1970 to 2017. The error correction mechanism was used for estimation. The study contributes to the literature by analyzing short- and long-run effects using financial liberalization index as a proxy of the financial reform in Tanzania. The study reveals that financial liberalization is positive and statistically significant, thus spurring economic growth in the long run, though in paucity of effect. Therefore, policymakers are advised to strengthen more effort on financial liberalization policies to attain the targeted growth level.