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$Unique_ID{COW03653}
$Pretitle{262}
$Title{Tanzania
Chapter 4D. Foreign Trade}
$Subtitle{}
$Author{Donald P. Whitaker}
$Affiliation{HQ, Department of the Army}
$Subject{percent
imports
trade
exports
goods
government
tanzania
development
bank
million}
$Date{1978}
$Log{}
Country: Tanzania
Book: Tanzania, A Country Study
Author: Donald P. Whitaker
Affiliation: HQ, Department of the Army
Date: 1978
Chapter 4D. Foreign Trade
In view of Tanzania's great dependence on exports the performance of the
export sector between 1966 and 1976 was considered by the government to have
been disappointing. In that decade exports grew only moderately at an average
annual rate of under 4 percent, with sharp annual fluctuations in volume
occurring in the half dozen chief primary agricultural products and
particularly in coffee, cotton, and sisal, which made up between 40 and 50
percent of all agricultural commodity exports. Total exports of goods and
nonfactor services actually declined as a percent of GDP-at current
prices-from 26.5 percent in 1967 to 18.4 percent in 1975, and goods alone
dropped from 22.5 percent to 13.1 percent of GDP. The ratio would have
declined even further, except that from about 1972-73 period world inflation
resulted in substantially higher unit prices for the country's primary
exports.
During the same ten-year period imports grew in value at an average
annual rate of almost 14.5 percent. That high rate was related in large part
to the growth in volume of imports of capital goods for development projects
and of industrial raw materials and, from about 1973, to a jump in world
prices. From 1973 a significant element in the rate was the surge in oil
prices. In 1974 and 1975 the situation was further compounded by the need to
import food grains because of drought conditions (see Agriculture, this ch.).
Available data vary somewhat, but about the 1966-67 period imports of goods
and nonfactor services were approximately 26 percent of GDP. In 1974 they
were stimated at between 35 and 38 percent and in 1975 at 32 to 34 percent.
The result was a gradual widening of the resource gap from less than 0.5
percent of GDP in about 1967 to between about 13.4 percent and over 15 percent
in 1975.
Direction of Trade
At independence Great Britain was the principal single source of imports,
a position it retained until 1971, when the People's Republic of China (PRC)
assumed first place (see table 7, Appendix A). A surge in imports from the PRC
began in 1970 implementing an agreement between Tanzania and the PRC under
which large quantities of manufactured goods were imported for domestic sale
with the proceeds to be used to finance local costs in the construction of the
Uhuru Railway (see Transportation, this ch.). PRC preeminence declined after
1974, in part because of smaller imports of project supplies as work on the
railroad neared completion. Imports from the PRC in 1976 were half those of
the peak year 1973, when the PRC supplied over one-fifth of Tanzania's
imports.
In 1975 Great Britain regained its position as the leading single
supplier of imports in value and held its lead in 1976. Over time, however,
its share of total imports declined, from one-third of non-EAC imports in 1962
to slightly over one-fifth in 1970 and to only one-seventh in 1976. Aggregate
imports from the European Economic Community (EEC, also known as the Common
Market), excluding Great Britain and Ireland, remained above 20 percent of
non-EAC imports during this time and in 1976 constituted more than one-fourth
of total imports. The largest of the EEC suppliers was West Germany, which
accounted for nearly 40 percent of the EEC total in 1976. Japan was also an
important source of imports, providing from over 6 percent to 10 percent of
imports annually in the 1970s.
The relative importance of suppliers in the import trade pattern was
considerably disrupted in the mid-1970s as a result of the droughts in 1973
and 1974 and by the substantial increases in world petroleum prices. The
import of large quantities of grain from the United States beginning in 1974
and continuing into 1976 gave that country a leading role as a supplier,
second to Great Britain in 1975. Imports from Iran, the principal source of
petroleum at the beginning of the 1970s, more than doubled in value in 1973
and in 1976 were well over four times the 1970 level making Iran Tanzania's
second most important source of imports by value in that year. Saudi Arabia
also became a major trading partner from 1974 as a supplier of petroleum.
The destinations for Tanzanian domestic (non-EAC) exports after
independence were greatly widened by government efforts, and in 1976 exports,
although in some cases in quite small amounts, went to about eighty different
countries. Great Britain, the principal destination in 1962, continued to be
the main purchaser to the mid-1970s, but its relative share declined from
almost 35 percent in 1962 to a little more than 14 percent in 1976 (see table
8, Appendix A). The United States was also a major importer of Tanzanian
products during this period, usually occupying second or third position.
Members of the EEC (excluding Great Britain and Ireland) took over one-fifth
of exports annually during this time, the proportion rising to 28 percent in
1976. In 1976 West Germany absorbed almost 15 percent of exports, placing it
slightly ahead of Great Britain. In 1976 United States took about 10 percent
of exports and was Tanzania's third best customer that year. India was an
important trading partner throughout the period making substantial purchases
of raw cashew nuts and cloves. In East Asia, in addition to the PRC, Hong Kong
and Singapore were regular destinations for Tanzanian products in some value;
in 1976 they took 5.6 percent and 7.4 percent respectively of exports.
Trade with the socialist countries of Eastern Europe and Asia (excluding
the PRC) has had no particular political implications nor significance with
respect to the country's trade pattern other than to represent a certain
degree of intentional diversification of markets for exports and supplies.
Beginning at a very low level at independence both exports and imports rose to
a value plateau in about 1963 that continued until 1972. Imports consisting
principally of consumer goods and some project supplies during the 1968-72
period averaged under TSh44 million a year, and exports, almost entirely
agricultural commodities, averaged somewhat more than TSh41 million annually.
Throughout the 1968-72 period imports ranged between under 2 percent to about
3 percent of Tanzania's non-EAC trade and exports from about 2 percent to over
3 percent. In 1973 exports (not including those to Yugoslavia) almost doubled
in value and remained higher generally through 1976, mainly because of the
rise in world coffee prices-the largest buyer was the Soviet Union. Tanzania's
import costs also rose, however, and no change occurred in the socialist
countries' share of Tanzanian exports or imports.
The principal inter-Africa trade was with Kenya and Uganda, with whom
Tanzania was associated in the EAC common market until its effective
dissolution in 1977 (see Manufacturing Industries, this ch.; ch. 2). Imports
from Kenya in 1976, totaling TSh459.9 million, constituted 12.2 percent of
Tanzania's total. Exports to Kenya were just about half that in value; an
adverse trade balance had characterized the two nations' trade since
independence. Notably, however, the proportion of manufactured goods and
articles at 34.5 percent of exports in 1976 was substantially greater than
Tanzanian exports in those categories (9.5 percent) to the rest of the world.
Two-way trade with Uganda was on a much lower level than with Kenya and
during the 1960s was also consistently in deficit. After Ugandan President
Milton Obote was ousted by a military coup headed by Major General Idi Amin in
1971 relations between Uganda and Tanzania became strained, and tra