Analysis

Is militarisation a panacea to Tanzania’s economic ills?

The government deployed military officials to cordon off forex shops

 

Bank of Tanzania headquarters in Dar es Salaam

SUNDAY January 27, 2019

By Joe Lihundi

Tranquility News Reporter, Arusha

The Tanzania government’s decision to deploy military officials to cordon off each bureau de change in Arusha last month has been begging more questions than answers.

 

The men in uniforms were among the Bank of Tanzania (BoT) Intelligence Unit officials and others from various public institutions engaged in a crackdown on allegedly wayward operators of forex shops in the city.

 

The BoT Governor, Professor Florens Luoga, defended the move a day after the crackdown, saying police officers were busy guarding national Form Two examinations.

 

However, Arusha Urban Member of Parliament Godbless Lema, who doubles as Shadow minister for Home Affairs, faulted Prof Luoga, saying the ongoing exams notwithstanding, there were still sufficient police officers to oversee the crackdown.

 

“It’s wrong to engage military officers in civilian matters,” stressed the outspoken lawmaker when addressing media practitioners in the city shortly after the crackdown, without quoting any legal instrument to support his argument.

 

Dr Gasper Mpehongwa, former Development Studies lecturer based in the city, said save for the deployment of the military officers for such an ordinary exercise, the BoT crackdown on the financial sector was a legal operation.

 

“The government could deploy other officials, including the military officers and Tanzania Intelligence and Security Service officers, provided they dressed in police uniforms,” he explained.

 

Dr Mpehongwa said other countries deployed prisons officers in police uniforms. “The idea behind is to protect military officers, who are the highest security organs, from performing civilian duties,” he added.

The Bank of Tanzania Governor, Professor Florens Luoga, addresses journalists in Arusha, Tanzania, on the closure of forex shops in the city.

He said the incident was even worrisome because it came few days after the government deployed military officers in hauling cashew nuts in the southern regions of Lindi and Mtwara.  

 

Dr Mpehongwa observed that many Tanzanians were still not convinced by the decision despite its good intention to rescue farmers of the crop.

 

“Before the cashew nuts’ dust had settled, the government deployed military officers in another civilian operation,” he wondered

 

He cautioned that military officers could neither solve economic nor political challenges except experts in those areas.

 

“The forex shops remaining closed since then raises unnecessary alarm, it scares residents of the city and tourists in need of the service,” he said.

 

The chief executive officer with Tanzania Tour Operators association, Mr Sirili Akko, however, said the impact of the crackdown on the industry was minimal, as commercial banks were buying and selling foreign currency.

 

“The challenge is to keep the commercial banks working extra hours in a bid to fill the gap of the bureau de change,” he said.

 

Why Crackdown on forex shops

Prof Luoga said the BoT Intelligence Unit’s six month study had revealed mushrooming of money laundering through the forex shops and that attempts to arrest perpetrators of the vice in two previous crackdowns had failed. 

A Tanzania People’s Defence Forces officer guards a forex shop to prevent customers from entering inside in Arusha last month. 

“There was a strong and wide syndicate which ensured it was a hard nut to crack,” he explained, as he thanked residents of Arusha for enabling the crackdown to be accomplished peacefully.

 

“After consultations with several investigation organs, it was agreed that an impromptu inspection of both registered and black market bureau de change should be carried out at the same time,” he explained.

 

Prof Luoga said should operators of the forex shops be found to have breached rules and regulations of their business in ongoing interrogation, the law would take its course.

 

BoT had already taken some measures against violation of rules and regulations guiding bureau de change operations in the country, including suspending issuance of licences for the shops and revoking the existing ones.

 

“All applications have been suspended and new applications won’t be accepted, pending preparations for new rules and regulations,” he said.

 

Legal mandate

Mr Lema called on President John Magufuli to sack Prof Luoga allegedly for relying on military officers to perform his duties.

 

He apparently forgot that the BoT Governor could not have deployed the military officers without seeking permission from President Magufuli, the Commander In-Chief (CIC).

 

President John Magufuli of Tanzania discusses with Tanzania People’s Defence Forces shortly after he inspected tracks deployed to southern regions of Lindi and Mtwara to haul cashew nuts.

Article 148 of the 1977 Union Constitution empowers the CIC to command armed forces to engage in any other matters he deems necessary, be it in or outside the country.

 

In addition, Articles 21 to 24 of the National Defence Act, 1966, explains on how the armed forces can provide aid to the civil power.

 

Article 22 of the Act, for instance, says military officers called out for service in aid of the civil power may exercise duties of a police officer.

 

Why Arusha was targeted

Dr Mpehongwa wondered that the BoT crackdown targeted Arusha only instead of forex shops countrywide.

 

Arusha is a Tanzania’s tourism hub, headquarters of the East African Community and many other international institutions, the first market place for raw and slightly processed tanzanite and is home to key players in the horticultural industry.

 

Unlike the Tanzania’s commercial capital — Dar es Salaam, Arusha boast having highest foreign currency in circulation in the country, attracting both registered forex shops and black market as well.

 

Not all that glitters is gold; the high foreign currency in circulation has also been attracting criminals, ranging from con men to armed bandits, mostly targeting the forex shops, tanzanite dealers, tourists and diplomats.

 

The government’s recent decision to put up the first Tourism and Diplomatic Police Post in the city along with tourism stakeholders explains the gravity of crime.

 

President John Magufuli of Tanzania directed the Tanzania People’s Defence Forces to construct a wall around tanzanite mines at Mirerani in Simanjiro Region. PHOTOS | AGENCIES

The high foreign currency in circulation has also been promoting dollarisation in the city, with artisanal miners inflating prices of land, real estate and other essential goods and services.

 

The Magufuli Administration has of late come with militarisation approach apparently to curb dollarisation and its impact on the economy of the city and the nation at large.

 

First, it deployed military officers to Mirerani to construct and oversee an over Sh5 billion (about 2.3 million) worth wall around tanzanite mines.

 

Revenue accrued from tanzanite mines have reportedly increased few months after Dr Magufuli inaugurated the wall.

 

The immediate former Minister for Mining, Ms Angela Kairuki, was reported as saying that tanzanite revenues had risen to Tsh1.28 billion ($460,987) in September, from a low of Tsh166 million ($74,439) registered in January 2015 as a result of new laws and regulations boosting exports and increasing payment of royalties to the government.

 

Just as the taxman started counting gains accrued from the wall, the government engaged military officers once again in the purchase and transport of the stranded cashew nuts as well as in the crackdown on defaulters of the forex business.

 

Will the militarisation approach serve as a panacea for dollarisation and other economic ills facing Arusha and other pockets countrywide, it remains to be seen. Many fear, nevertheless, that the militarisation approach will end up scaring investors.

 

MORE INFO: DOLLARISATION

 

 

 

Dollarisation is the economic and business practice in which residents of a country with own currency use the US dollar in price tags of goods and services in the market.

 

These include dollar price-tagged air tickets even for some domestic flights, hotel services especially accommodation, various fees, including school fees, consultancy and other service fees and even fees payable to various government ministries, departments and agencies.

 

Other dollarised areas are the real estate industry including plots, farms and houses. It has also been observed in some airport shops, some sections of some supermarkets and similar business outfits.

 

The government itself goes on record as charging tender price packages for offshore oil and gas prospecting blocks in US dollar, regardless of the fact that the trend leads to the local currency losing value over time.

 

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Close