Written by JAMES MWAKISYALA East African Business Week Magazine Nov 2009 Tanzania's economic growth has slumped by 2.8 per cent due to the negative effects of the global financial crisis of the last two years. Tanzania president Mr. Jakaya Kikwete revealed this in his address to 'The Economist Magazine Conference Business Roundtable' that was held in Dar es Salaam last week to deliberate on 'Implementing Effective Policy during the Slowdown.' Kikwete told delegates, who included Tanzania senior officials and donors representatives, that due to the adverse impact on the drivers of growth, the projection for 2009 had been revised downwards from 7%. This had been projected for 2009 to %. "Economic growth over the past seven years has been at an impressive annual average rate of 7.2% between 2002 and 2008. In 2008, economic performance was even more impressive with real GDP growth of 7.4 %, up from 7.1% in 2007. This gave us the confidence to project a 7.8% growth in 2009 and 8% in 2010," he lamented. Tanzania had to set aside US $ 1.7 billion as a stimulus package during the 2009/10 fiscal year to rescue sectors gravely affected by the global crisis. He told the chairman of the Business Roundtable, Richard Cockett - Africa Editor of The Economist Magazine, for Tanzania, "our policy and modest fiscal interventions sought to preserve the hard earned macroeconomic stability; ensuring food security and employment; ensuring the sustenance of social safety net programs; rescuing and preserving major investments particularly in energy and infrastructure; ensuring liquidity in the economy; and ensuring effective governance and management of the economy." He said the global financial and economic crisis has impacted on Tanzania's economic performance - the demand and prices of Tanzania's principal export crops, in particular cotton, coffee and horticultural produce have been weakened. Earnings from tourism and transportation (transit trade) as well as the inflow of foreign investment have been impacted negatively too. The economic stimulus plan that was put together in June 2009 entailed strict surveillance of the financial institutions as well. Attention was given to commercial banks operating in Tanzania to ensure that nothing adverse came out of their operations, and that they are in conformity with laws and regulations to ensure the financial system remains safe, stable, sound and resilient to the on-going global financial and economic crisis. President Kikwere said, "We sought to compensate crop buyers for losses incurred due to fall in the demand and prices of commodities in the world market during the 2008/09 season. We provided guarantee for rescheduling of loans, which borrowers have not been able to service and repay timely due to the crisis... we decided to provide working capital to investors at discounted rates. Under this arrangement, the Government provides soft loans to banks which in turn on-lend to the most affected businesses which cannot borrow at market interest rate during the current crop season." However he said, "We in Tanzania have fresh memories of some investments worth billions of dollars, which have either been suspended or cancelled. We have lost a lot. That is why we keep on praying for speedier resolution of the crises in the development economies in the West." He said the country is determined to attract the now scarce capital to Tanzania. "We will steadfastly continue with economic reforms and take measures to improve the business environment in our country we are motivated by the recent rankings in business environment by the World Bank." The ranking have removed Tanzania from being among the top 10 reforming countries in the world as was the case two years ago. At the same time Tanzania has dropped from being number 126 in the 'Doing Business 2009' ranking to number 131 in the 'Doing Business 2010' ranking. Despite the odds, he said Tanzania managed to do well in attracting foreign direct investments than several of its neighbours in the East African Community region. "We are determined to do more. We also managed to fulfill the promise on creating one million jobs. Up to July, 2009 a total of 1,271,923 jobs were created. However, the unemployment problem remains much bigger and has become more complex. University graduates are now joining the unemployment ranks." Commenting on the fight against corruption, he admitted it was as complicated as was challenging. "We are making steady progress and registering some success as we proceed. We are determined to stay the course. We are succeeding in building institutional capacity of our anti-corruption Bureau. Sensitization of people to join and assist in this noble crusade seems to be working and paying dividend. We have, now, 16 cases of grand corruption in the courts of law which underscores our determination in this fight and how far we have come." The recent report of Transparency International puts Tanzania ahead in the Eastern African region in the fight against corruption and so does the Mo Ibrahim Foundation Index on Governance.