Jan. 3, 2018

Prof. Benno Ndulu


Prof. Benno Ndulu

Governor, Bank of Tanzania (BOT)

TBY talks to Prof. Benno Ndulu, Governor of Bank of Tanzania (BOT), on improvements in the inflation rate, boosting FDI into Tanzania, and shaping policies to stimulate international commerce.


Prof. Benno Ndulu was appointed Governor of the BOT in January 2008. He started his career at the University of Dar es Salaam in the early 1980s before joining the World Bank as Lead Economist. He is best known for his involvement in setting up and developing one of the most effective research and training networks in Africa, the African Economic Research Consortium. He received an honorary doctorate from the International Institute of Social Studies (ISS) in The Hague in 1997. Following his PhD degree in economics from Northwestern University in Evanston, Illinois, he taught economics and published widely on growth, adjustment, governance, and trade.

Tanzania maintains the lowest inflation rate in the East African Region. What measures has the BOT successfully put in place to achieve this?

Headline inflation in Tanzania averaged 5.6% in 2015 and 5.2% in 2016, which is within the medium-term target of 5% and the East African Community's (EAC) ceiling target of 8%. In June 2017, headline inflation was 5.4%, the lowest in the East African Region. Throughout the period, core inflation was anchored below 3%. This strong performance is largely attributed to excellent macroeconomic policies, a tight monetary policy stance pursued by the bank, and sustained stability of the nominal exchange rate against major currencies, complemented by other prudential measures to ensure the appropriate level of liquidity in the economy. The observed stability was further supported by improvement in food supply in the region, subdued global oil prices, and fiscal consolidation.

What are your inflation targets for the coming year?

Inflation is forecasted to remain a single digit and around the medium-term target of 5% in the coming year. This outlook is based on the projected favorable food supply situation, the stability of the shilling exchange rate against major currencies, and subdued global oil prices. Good weather has brought to an end the food supply shortage that had prevailed in the Southern Africa region, thus lowering the risk regional inflation pressure. The Bank of Tanzania will continue to implement prudent monetary policy to sustain the general macroeconomic stability.

What initiatives has the BOT been undertaking to boost international commerce and attract FDI to Tanzania?

The bank has been undertaking a number of initiatives aimed at boosting international trade. One such initiative is the establishment of export credit guarantee scheme. The scheme provides guarantees to commercial banks for credits extended to exporters. A number of projects have benefited from the scheme, including the Kagera Sugar Company, which secured a loan for extension of its production capacity to meet the demand for sugar in both domestic and export markets. With regard to FDI, the bank, in collaboration with National Bureau of Statistics (NBS) and Tanzania Investment Centre (TIC), monitors all FDI inflows in the country. The monitoring is done through periodic surveys, where all the information concerning the type, magnitude, direction, and composition of FDI are captured. The survey provides recommendations on investment promotion policies and strategies.

How are you working alongside the Ministry of Industry, Trade, and Investment to help shape policy frameworks on this front?

The BOT does work with the Ministry of Industry and Trade in developing and supporting policies designed to boost international commerce. For instance, the bank organizes dissemination workshops for stakeholders including the Ministry of Industry, Trade, and Investment to share the results and policy recommendations for appropriate policy formulation. Implementation of some of the recommendations falls within the jurisdiction of the Ministry of Industry, Trade, and Investment.