How Tanzania’s rising inflation impacts cross border trade in East Africa

In recent times, Tanzania has been in the spotlight for various business developments, including an unexpected increase in inflation rates and efforts to bolster cross-border trade with Kenya. Ivan Tarimo, a Partner at Bankable, shed light on the current economic landscape during an interview with CNBC Africa. Initially, Tarimo highlighted that Tanzania's inflation had been relatively stable, hovering around record lows of approximately 3%, and has recently edged up to about 3.7%. This stability was attributed to favorable crop harvests and minimal disruptions due to droughts. However, there are signs of potential price pressures as economic activities pick up. Despite the slight uptick in inflation, Tarimo emphasized that it remains below the target of 5%, indicating a manageable situation. Moving to the topic of cross-border trade, Tarimo commended the collaborative efforts between Tanzania and Kenya to facilitate smoother trade interactions. He highlighted the importance of consistent messaging from the leadership of both countries to promote economic synergies and regional integration within the East African community. The positive momentum in cross-border relations bodes well for enhancing economic prosperity and fostering closer ties between the neighboring nations. Addressing previous disagreements over dam construction on the Mara River, Tarimo expressed optimism in the ongoing negotiations, emphasizing the significance of collaboration and compromise for sustainable development. Shifting focus to the construction of Dodoma as Tanzania's new capital, Tarimo provided insights into the progress of this ambitious project. The relocation of government activities and offices to Dodoma signifies a significant step towards realizing this vision. While the transition poses challenges, plans are in place to develop infrastructure and ensure the city's growth. Lastly, Tarimo discussed the revitalization of Tanzania's national carrier, highlighting the government's commitment to enhancing the airline industry. The national carrier has undergone a rejuvenation process with new routes to South Africa and upcoming flights to India. Despite the competitive and capital-intensive nature of the aviation sector, Tanzania is determined to strengthen its presence in the regional and international markets. Tarimo acknowledged the industry's challenges but expressed confidence in the carrier's potential to drive tourism and contribute to the country's economic growth.