WHEREAS the contest on who is in the cards to get to the top post to replace the outgoing sixth central bank governor Prof Benno Ndulu, my anxiety isn’t on the appointment of Prof Florence Luoga, a notable lawyer on taxation, human rights law and procurement, but more on the impact of the Central Bank of Tanzania as a dignified financial institution and overseer of economic growth.
Section 8(1) and Section 8(2) of the Act is crystal clear on terms and circumstances that would lead to the appointment of the BOT Governor.
Whereas no question on the recognition, meticulous and painstaking exercise that led to the verdict made to hire a prominent lawyer to the top post, anybody would agree that President John Magufuli has established yet another landmark BOT’s governors history.
Time came when many consider that to be a governor of such a financial organ you must have somehow gone through the hallways of the World Bank.
The right highquality, home-grown aspirant to push ahead matters of economic and financial policies and financial stability that Tanzania need currently than has ever before is now on Prof Luoga Though Prof Benno Ndulu legacy will remain binding as per his office term i.e. strong economic growth, managing inflation, building trust and confidence of BOT, the impact of central bank on the improvement of finance on economic growth and progress is what of substance to the newly-appointed governor to hit the ground running.
In any country dispossessed of relevant and operational development investment, strong macroeconomic stability economic growth is inexcusable. Driving development finance in a given nation lines, investment creation, great throughput, enhanced standard of living for the people and above all, stable and prosperous economy is of paramount importance.
This is why the role of the central bank is critical that make strategies and appropriate levels of intervention that deliver investment to the productive sectors of the economy significant.
In other places, the feedbacks of foreign exchange markets, domestic stock markets, and sovereign bond blow-outs to central bank governor changes. As Tanzania isn’t an island of its own the new appointment of a central bank governor will no doubt bring vibration that might be in line with the hypothesis that newly appointed central bank governors agonize from a systematic credibility encounters at the beginning of their term.
Whereas the central bank of Tanzania might be baffling on which administrative structure is in place to provide as per its mandate, it is central to see that it is accountable to warrant development finance and the financial creativities involved in the formation and execution of strategies, structures, drivers and innovations for the provision and supply of credit, loans, finance, payments and funds to the productive sectors of the economy to support deliver economic services in an effective, efficient and sustainable manner to achieve economic growth and development envisioned in Tanzania.
The central bank team should take up the task of providing innovative thinking on how to support Prof Luoga to increase productivity, investment, employment and output of the productive sectors while at the same suggesting new landscapes that Tanzania will need as it fights for economic independence.
Admitting mistakes made in the 1980s when liberalising the financial sector and many other reforms including the selling of Tanzania’s strong banks such as NBC, this time around there is no scope for repeating such mistakes.
Moving ahead, with transparency thinking and reinforced with good governance is what the country needs. BOT at the present is thought to be playing smart development finance role for supporting the sectors of the economy creatively--commercial agriculture, industry and entrepreneurs with the supply of finance, credits for growth and expansion of Tanzanian economy.
Why? Inadequate and insufficient capital to productive sectors will result into low productivity, low yield, and low revenue, low saving, low asset creation and hence lead to regressive economy growth.
The Central Bank of Tanzania role in stimulating economic growth and generally a strong economy goes beyond the conduct of monetarist policy.
Largely, lack of access to adequate finance and capital desirable by Tanzania economic sectors of the economy continue to be the major challenge that lead to their inability to source sufficient and operative inputs to expand output, productivity, income, saving, investment and employment opportunities.
There are various ways in which one can swiftly see how BOT can rekindle economic activities and fruition in Tanzania.
These are kind of concerns the bank should be steering to attain instead of waiting for prescriptions from World Bank, IMF, Paris and London clubs, African Development Bank and other international financial donors and creditors whose prescription occasionally doesn’t cure our economic health problems that although linked to international networks are distinctive to our business environment.
Midst many models that Central Bank of Tanzania can use to torch desired growth is to see the significance of small and medium enterprises equity investment scheme strategically.
Given that finance and credit to small and medium enterprises in Tanzania is well scheduled to enhance ownership of business, then delivery of sufficient finance and credit to the Tanzania enterprises will enhance investment, productivity, selfreliance, business ownership and sustainable employment prospect.
These would then support the Tanzania economy to cultivate local technology, skills, generate decent occupation, inspire investment and productivity and of course stimulate economic growth.
A structure like when soundly sustained and well– financed will escalation small and medium entrepreneurs’ investment locally hence create what is known as wealth creation for many principally middle and lower cadre in the economy value chain.
Apart from thinking from end to end small and medium enterprises equity injection, the significant important of the industrial and manufacturing development in an economy cannot be over underscored.
These are the twin sectors that in my outlook govern the nation’s level of knowledge, practical knowhow, manufacturing products and hence industrialization.
Central Bank of Tanzania architects should design creatively a structure that would accelerate the provision and supply of finance and credit to Tanzanian industries and manufacturing sectors through mandated government organization.
Sustained and sufficient provision of finance and credit to these sectors will help the Tanzania economy to accelerate and achieve industrialization, progressively advance in manufacturing sector, advance technology, machines, enter mass production and hence export.
Industrialization is a key to any significant economic development. Tanzania small and medium scale industry needs sufficient capital formation to compete with multinational companies and foreign industries.
If the central bank can be creative their innovative injection and support will increase speed and stimulate the production of manufacturing products and facilitate economic growth and development in Tanzania.
The impact of central bank on economic growth and development at any point in time must maintain financial system to operate sufficiently and effectively such that the real sectors of the economy get the indispensable financial funding to achieve economic growth and development of the economy as whole.
One thing that as country shouldn’t forget is that central bank governor changes apparently integrate new evidence about the future course of monetary policy, thereby affecting not only exchange rates and domestic bond yields but strong of the direction of the county’s economy.