Tanzania: Analysts endorse ‘Magunomics’

President John Magufuli’s cost cutting measures and ‘boils squeezing’ economics, for which the term ‘Magunomics’ has been coined, is set to uplift the development budget and accelerate economic growth.

Various economic analysts interviewed by this newspaper believe that the measures will improve social well-being and economic growth as more money would be available for development activities.

The budget for development expenditure on average was allocated between 8.0 per cent and 10 per cent per fiscal year. According to the analysts, the austerity measures under “Magunomics’’ would increase revenue, efficiency, productivity and equality, thus speeding ecogrowth and social well-being.

Prof Humphrey Moshi, seasoned economist with the University of Dar es Salaam, says “Magunomics’’ would create a level playing field among businesses people. “Corruption (in most cases) favours big businesses and harms small ones.

Minus it, it would create a level playing field,” Prof Moshi noted. He noted further that the strategies would also encourage investments from abroad, which the country needs most at the moment to upgrade the social and economic infrastructure. “For instance, the austerity measures on foreign trips are set to strengthen the shilling as it will diminish demand for the foreign currencies,” Prof Moshi argued.

Dr Hildebrand Shayo, a senior economist with TIB Development Bank, said “Magunomics’’ has been introduced to strengthen the delivery chain along the good governance resolve. “The government,” Dr Shayo said, “cannot deliver its development plans without having sufficient revenue”.

Therefore, the “boils squeezing’’ – including fighting corruption and checking tax evasion-- is very crucial to the intended reforms, the economists opines. Professor Haji Semboja of the University of Dar es Salaam told the ‘Daily News’ that “Magunomics’’ has two sides; direct and indirect—with both poised to uplift eco-growth at all frontiers.

“Directly as productivity, efficiency and revenues are going to increase,” Prof Semboja explained – and “indirectly as the president’s behaviour and working style normally would cascade to the entire system.”

However, Prof Semboja warned that the president and his lieutenants should accordingly be directed by the laws and regulations of the land and CCM election manifesto and policies.

While Dr Shayo observed that “Magunomics’’ might lead to an increase in prices of goods as businesses will be fully tax-compliant, Prof Moshi said that would not necessarily be the case since the country’s inflation “is mainly driven by food prices and not prices of imported goods’’.

Dr Shayo noted; “once tax is paid because of (Magunomics) it will create a true valuation of goods... but this will be outweighed by the social welfare development in the long-term.” This was opposed though.

“I don’t really agree,” Prof Moshi said, adding that tax-paying will increase domestic prices as the shilling seems to stabilise after the president’s austerity measures.

Other economists interviewed said that there are other effects of “Magunomics’’ as austerity measures might result into closing of some corner or briefcase shops, which are mainly run or depend on foreign trips by some government officials “for restocking’’.Briefcase shop is a term used to explain trading outlets that are stocked by imports entering the country through suitcases of travelling officials.

“These corner shops assist on stabilising prices at the market while also offering some employment,” Dr Shayo observed.
Source: Daily News, reported by Abduel Elinaza, from Dar es Salaam, Tanzania
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