Tanzania’s Economy Affected by Drought

http://www.bloomberg.com/news/2011-09-09/tanzania-s-economy-grew-at-slower-pace-in-first-quarter-on-power-outages.html

Tanzania�s Economy Grew at Slower Pace in First Quarter on Power Outages

By David Malingha Doya - Sep 9, 2011 7:03 AM PT
Tanzania�s economy, East Africa�s second-biggest, grew at a slower
pace in the first quarter as reduced power outages caused by a drought
curbed mining production.

The growth rate fell to 5.8 percent in the three months through March,
compared with 7.7 percent in the same period a year earlier, the
National Bureau of Statistics said in an e- mailed statement today
from Dar es Salaam, the commercial capital. The mining industry grew
2.1 percent, against 28.3 percent in the first quarter of 2010, while
the electricity industry expanded 4.7 percent compared with 5.1 percent.

�The economy suffered many shocks like shortage of power, higher fuel
and food prices,� said Yonoh Mtengule, chief economist at National
Bank of Commerce Ltd., the Tanzania unit of Absa Group Ltd. (ASA) �All
the key sectors that were accelerating the economy before were
curtailed, and a slowdown was inevitable,� he said today in a phone
interview.

Tanzania vies with Mali to be Africa�s third-biggest producer of gold
after Ghana and South Africa and has the world�s only known deposit of
tanzanite, a rare gem. The government is targeting an annual average
economic-growth rate of 8 percent from 2011-12 to 2015-16, the
country�s planning commission said July 8.

�The government may have to revise growth rates for this year
downwards because similar shocks against the economy continued in the
second quarter,� Mtengule said.

Power Rationing
Drought has drained Tanzania�s main hydropower dams, resulting in
power rationing amid a deficit of 264 megawatts on the national power
grid, Energy Minister William Ngeleja said in February. Electricity
demand in the East African nation of 40.5 million people is currently
840 megawatts, with installed capacity at 1,120 megawatts.

IHS Global Insight, the London-based research group, said it cut its
growth forecast for the country to 5.9 percent for the year from 6.3
percent previously.

�We believe that the economic cost from power shortages is expected to
be even higher in the second and third quarters, when widespread power
rationing brought production stoppages in the mining and manufacturing
sectors,� Mark Bohlund, senior sub- Saharan Africa economist at IHS,
said in an e-mailed note.

The statistics agency is scheduled to release second- quarter economic
data next week.

To contact the reporter on this story: David Malingha Doya in Dar es
Salaam via Nairobi at 440 or pmrichardson@bloomberg.net.
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