CTI Chairman Felix Mosha

The Confederation of Tanzania Industries (CTI) yesterday commended the government budget for 2012/13 fiscal year, saying it would stimulate economic growth and create employment.

Felix Mosha, the CTI Chairman, told a press conference in Dar es Salaam that the budget gives priority to strengthening the Central Railway Line which would provide easy transportation of industrial goods, especially bulk cargo.

“The railway services had deteriorated due to lack of strategic investor to run the entire operations, an aspect that caused the economy to paralyse to a greater extent resulting in high inflation rate, he said.

CTI also praised the level of funds allocation to construct the natural gas pipeline from Mtwara to Dar es Salaam to facilitate utilisation of the fuel for electricity generation. The move is expected to meet the ever growing electricity demands for industries and other consumers.

CTI also commend the proposal to increase Pay as You Earn (PAYE) threshold from Sh135,000 to Sh170,000, saying this would enhance take home income of employees to meet increasing costs of living.

However, CTI said the budget lacks strategic linkage between sectors of economy. “There is no link between agricultural and industrial sectors which are crucial in transforming the economy from a low to high level of development,” he said.

For example, the textile sector requires immediate rehabilitation given that out of 16 textile industries which existed before, only four are currently in operation countrywide. The sector makes major contributions to the economic growth, especially in creating employment, foreign exchange and poverty reduction.

One of the reasons contributing to the poor performance of the sector is unfair competition from imported textile products through under invoicing and under declaration. He recommended the Ministry of Trade and Industries to stick to removal of VAT on textile and textile products in ongoing parliamentary debates.

CTI also recommended reduction of skills and development levy from six percent to two percent respectively. Others are reduction of excise duty rate between 25 and 20 percent on non-petroleum products including beer and soft drinks. For wine and cigarettes, the duty is 12 percent to address the high inflation rate, and the reduction of excise duty of Sh69 per litre of water to Sh8 similar to locally produced fruit juices.

An economist, who is the committee chairman of the CTI tax body told the The Guardian on Sunday that there is no way the government could reduce the high inflation rate if it would not concentrate on railway and road infrastructure, the main transport links which serves for industrial goods from their manufacturing points.

Pankaj Kumar, currently the Chief Executive Officer of ALAF Limited, Tanzania’s manufacturers of modern iron sheets, noted that the country is lucky to have a good railway network and energy sources such as gas. If put to proper use, the country’s economy would grow as there would be enough power and good transportation.