Abstract

Honest Prosper Ngowi

This paper is on the current global financial crisis and its impacts in Tanzania. The author gives an overview of the meaning, nature, causes, general impacts and possible solutions for the crisis in Tanzania. Informed mainly by a review of literature and analysis of the same, it is found by the author that the crisis officially started to manifest itself in September 2008 in the financial markets in the United States of America (USA). Since then it has spread not only to financial but also to the real economy of many parts of the world especially in Europe and Asia where the first round effects are rapidly being experienced. In Africa in general and Tanzania in particular, the second round effects (bounce-on effects) are increasingly being experienced. The many direct and indirect, long term and short term impacts are emanating from the recession that is unfolding as a result of the crisis. There have been several strategies to deal with the crisis at macro and micro-level in various countries. These include but are not limited to various bailout plans and stimulus packages for various economies in general and specific sectors and industries in particular. Tanzania, as is the case with many other developing countries is suffering from the second round effects of the crisis. The impacts on the country so far include but are not limited to potential and actual reduced economic growth, reduced foreign currency earning as a result of reduced exports, reduced tourism and its earnings, reduced remittances and reduced Official Development Assistance (ODA) . These impacts are likely to have many farreaching and profound negative implications on many other aspects in the country. Among the policy implications based on the discussions in the paper include the need to be proactive instead of being reactive in addressing the crisis in general and its impacts. Among other things, there is a need to be vigilant as the crisis keeps on unfolding and to take measures to reduce the negative impacts of the crisis.