Directed by
Ideas for growth
Menu
Directed by
Ideas for growth
Menu
Projects
Publications

COVID-19 in Tanzania: Is business as usual response enough?

Tanzania’s unconventional approach to COVID-19 may be slow in response and may lack direction, but its uniqueness illustrates the need for governments to form context-specific smart containment strategies and recovery plans. To maintain multiple competing priorities, the Tanzanian government can increase public health funding to local health centres to implement mass testing, enforce social distancing and sanitation measures, and invest in formal small-holder farmers to produce for the domestic economy.

Governments in developing countries are not in the position to treat the COVID-19 pandemic as only a health crisis. For the African continent, COVID-19 has meant that several challenges and multiple crises will have to be dealt with at once. In terms of the potential economic crisis, it is estimated that 150 million people are at risk of losing their jobs and incomes across the formal and informal sectors. In countries with planned 2020 elections, such as Cote d’Ivoire and Ethiopia, the loss of livelihoods directly resulting from the pandemic has increased the likelihood of political and civil unrest.

The pandemic and the accompanying lockdowns have also worsened the already severe food insecurity problem, increasing the proportion of people living in extreme poverty. A recent study from the IGC shows that an estimated 9.1% of the population in sub-Saharan Africa have immediately fallen into extreme poverty due to COVID-19, and that 65% of the increase is from lockdown measures. More and more evidence increasingly demonstrates that lockdowns are not effective in developing country contexts. Countries should therefore be encouraged to systematically assess the trade-offs between the health crisis and other emerging issues, and form context-specific containment strategies and recovery plans. Although lockdowns have been effective in numerous contexts, countries such as Ethiopia and Tanzania have avoided full blanket lockdowns, and instead implemented a variation of social distancing measures to balance the trade-offs.

COVID-19 in the Tanzanian context

Tanzania is the second-largest economy in East Africa, with a population of almost 60 million and a growth domestic product (GDP) of US$ 52 billion (2018). Due to the pandemic, the World Bank projects that economic growth in Tanzania will drop sharply to 2.5% in 2020 from a much higher growth rate of 6.9% that the government announced in 2019. Much of this growth was driven by strong public investment and export earnings. The government’s firm focus and commitment during this pandemic have been to avoid a complete halt of economic activities. According to WHO, Tanzania has the second-highest number of COVID-19 cases in the East Africa community behind Kenya, with 509 cases and 21 deaths as of May 26th (22 days since last reported). However, given the low testing levels and the uncertainty around Tanzania’s released figures, it is highly likely that the true number of cases is substantially greater. The toll of the virus on the existing healthcare infrastructure has also been severe as hospitals in the commercial capital, Dar es Salaam, have struggled to manage the diversion of resources towards new COVID-19 patients, while treating other deadly diseases in tandem, such as Malaria.

Since the first COVID-19 case on March 16th, the Tanzanian government implemented noticeably less stringent responses compared to its neighbours. For instance, Rwanda closed its borders and implemented a full two-week lockdown since its first case, while Uganda and Kenya imposed a shutdown of economic activities and restricted mobility within the country through national curfews. In Tanzania, on the other hand, enterprises are allowed to operate, and citizens can attend religious gatherings with social distancing rules, while schools, universities, and other miscellaneous mass gatherings have been banned. The public was also urged to maintain social distancing, wear face masks, and maintain sanitary habits. The government additionally closed all international borders and suspended international travel in early April, and a mandatory 14-day quarantine at the point of entry in government-designed facilities was introduced.

Focusing on sustaining the economy

The government recently announced that it plans to reverse its suspension on international flights so as to revive tourism, and adopt social distancing and sanitation policies. The announcement was somewhat anticipated, given the sharp fall in tourism since the outbreak and the sector’s importance as a driver of Tanzania’s economy. In the 2019 financial year, tourism accounted for 11.7% of GDP and 25.8% of foreign exchange earnings, thereby being a major source of employment and tax revenue. The outbreak is predicted to be more severe in Zanzibar as tourism accounts for a third of its GDP and 80% of tax revenue. The ban on international travel and social distancing rules implies that most of the economic activities in the accommodation and food industries are on standstill. This has led to a negative multiplier effect in the economy through backward and forward linkages – as contracted suppliers in other industries working with tourism companies observe severe losses in their income. According to a World Bank report, tourism operators forecasted revenue contractions by 80% or more for 2020. The impact of the revenue loss would be felt greater for individuals (both in the informal and formal sector) being laid off without any substitute income.

Exports of agricultural and manufacturing goods have also dropped significantly, driven by supply chain and cross-border disruptions. General activities in the domestic private sector have also halted. Similar to many developing country governments, Tanzania’s dwindling government revenues have restricted its fiscal space and limited the capacity to respond through large fiscal stimulus. Tanzania is amongst 14 African countries that did not introduce any social safety measures, such as cash transfers. Instead, the government focused on responding with some economic measures through the Bank of Tanzania with various policies to ease liquidity and safeguard the stability of the financial sector. The bank reduced the discount rate, lowered the minimum reserve requirement ratio, incentivised the restructuring of loans for severally affected borrowers, and relaxed limits on mobile money users. The measure entails increasing the daily transaction limits by 2,000 Tanzanian Shillings (TShs) and daily balance by 5,000 TShs for all mobile money platforms, to encourage non-cash payments, and reduce gatherings in banks and mobile money kiosks. In the same month, the Ministry of Finance and Planning (MoFP) expedited domestic payment arrears and VAT refunds, giving specific priority to the Small and Medium Enterprises (SMEs) sector. Verified domestic payment arrears to the tune of 916 billion TShs were paid in March 2020.

Is it enough?

For a country that has the 6th largest population in Africa, and an urban population density of 3,100 per square kilometre in Dar es Salaam, (compared to Accra, Ghana, which has 1,300 per square kilometre), the current light mitigation approach poses a huge risk of exponential growth in transmission. Even with the present situation, it was reported that 5 cases were found in mid-March, but this shot up to 254 cases by mid-April. The rise of cases is speculated to be driven by community transmission in Tanzania’s main hotspots: Dar es Salaam, Dodoma, and Arusha.

Instead of restricting mobility altogether, thereby hindering economic activity and adversely impacting livelihoods in the bargain, the Tanzanian government can instead focus its strategy on increasing its capacity to maintain and manage the virus, while pursuing sustainable economic development. In other words, Tanzania can learn to adapt and live with the virus in a way that is not detrimental to the economy, but not overwhelming the health system either. There are two policy initiatives that the government can implement in the immediate term.

  1. One initiative can be to invest in formal small-holder farmers to produce food for the domestic economy. This will result in jobs being protected and create new avenues of government revenue.
  2. Furthermore, the government can increase public health funding to local and community health centres to implement mass testing and increase the capacity to track and trace. The likes of such initiatives have already been implemented in countries such as Ghana and Ethiopia.

The recent dispute between Kenya and Tanzania over COVID-19 tests for truck drivers crossing borders and the abrupt border closure in Zambia demonstrates the complexity of cross-border trade and COVID-19 in Africa. The issue entails two strands: (i) Tanzania’s role as a major trade transportation corridor and the risk of spreading the virus, and (ii) the impact of cross-border trade restrictions on livelihoods.

Out of the 55 countries in Africa, 16 countries are landlocked and 3 of these countries (Zambia, Uganda, and Rwanda) border with Tanzania,  relying on Tanzania’s trade corridor for their imports. Until recently, the government did not play a proactive role in maintaining low transmission in cross-border trade and resulted in border closures in Zambia, Mozambique and Kenya. However, as of recent, the Tanzanian and Kenyan government have come to a number of agreements; including issuing a 14-day COVID-19 free certificate, releasing public data on the status of COVID-19 without releasing the driver’s nationality, and replacing driver crews who may be at high risk of COVID-19.

Within the East African community, Tanzania’s total trade with other members in 2018 amounted to US$ 811.3 million, with Kenya being the leading destination. However, with vast majority of countries having shut their borders, formal and informal cross-border traders (majority farmers) from Tanzania have seen their incomes drop dramatically. Going forward, it is in Tanzania’s interest to contain the transmission of the virus along all its borders and coordinate closely with its partners, maintain diplomatic relationships, and ensure trade is not severely disrupted.

Conclusions

Many governments in developing countries cannot respond to COVID-19 as solely a health crisis, given the economic and political crises that also emerge. Tanzania’s unconventional approach to COVID-19 may be slow in response and may lack direction, but its uniqueness illustrates the need for governments to form context-specific smart containment strategies and recovery plans. The Tanzanian government can increase public health funding to local health centres to implement mass testing, enforce social distancing and sanitation measures, and invest in formal small-holder farmers to produce for the domestic economy. These initiatives enable the government to maintain multiple competing priorities; managing the transmission rate, while ensuring food security and protecting jobs. While the planned Tanzania presidential elections in October 2020 may be seen as diverting attention away from COVID-19, Tanzania’s favourable macroeconomic conditions and considerable fiscal space (relative to other countries) puts the country in a good position to respond. A smart containment strategy can be developed to incorporate flexibility in Tanzania’s response approach, including a graded action plan that can be used to complement the country’s long-term economic development goals.

Disclaimer: The views expressed in this post are those of the authors based on their experience and on prior research and do not necessarily reflect the views of the IGC. 

Comments

Leave a Reply

Comments will be held for moderation. Your email address will not be published.

Time limit is exhausted. Please reload CAPTCHA.