Dar es Salaam. The government yesterday ordered manufacturers, distributors and traders of building materials to spiral their prices down.
This comes as prices for cement, steel bars and roofing sheets have risen in recent months, a rise analysts link in part to ongoing construction projects being implemented through the use of covid-19 donors fund.
Last year, the government received $576 million (about 1.3 trillion shillings) from the International Monetary Fund (IMF) to help buffer Tanzania’s economy against some of the impacts of the Covid-19 pandemic.
Some of the money was funneled into building regional Vocational and Educational Training (Veta) centers and classroom blocks across the country, which likely put pressure on prices for these commodities.
Manufacturers who spoke to The Citizen on the condition that they not be named, say the price hike was also precipitated by a rise in raw material costs amid Covid-19 which affected entire supply chains from unprecedented way.
But that aside, Investment, Industry and Trade Minister Ashatu Kijaji yesterday ordered companies to price products based on actual production and transportation costs.
Dr Kijaji ordered all regulatory authorities to put hoarders and black market users to the test.
“Products must reach the market on time and at competitive prices,” the minister noted.
Dr. Kijaji also ordered the responsible authorities to take tough action against competitors who colluded to raise prices.
“This is economic sabotage that the government will not tolerate,” she warned, urging producers to increase production according to their installed capacities.
Minister Kijaji also ordered producers to put in place a good distribution system that will leave no room for unscrupulous traders to raise prices.
She also instructed all regional trade officers to closely monitor the price trends of various products in their respective areas and submit regular reports to her ministry.
The Executive Director of the Tanzania Private Sector Foundation (TPSF), Mr. Francis Nanai, said engagement was the best way to deal with some kind of “misunderstanding” between the government and the private sector.
He believes that in a free market economy and if other things are held constant, prices should be determined by the market forces of demand and supply, and not otherwise.
However, he said that if there were any allegations of collusion, it could be investigated and tough action would be taken against dishonest traders.
“We do not tolerate collusion as it is economic sabotage,” Nanai noted.
“However, this should be dealt with fairly and peacefully and that is why engagement here is important for evidence-based decisions.”
A source familiar with the matter but who preferred not to be named said the surge in construction raw material prices was not the result of hoarding tendencies by manufacturers and traders, but rather an increase in operational costs. .
He said raw material costs for construction were high, with some rising by 400%.
He said prices for scrap metal, which is a major source of industrial inputs, jumped to 1,000 shillings per kilogram from 200 shillings in previous months. In addition, the cost of some imported raw materials for reinforced bars has climbed to $750 per metric ton (tonne: about 1.7 million shillings) from $420 (about 966,000 shillings) a few months ago.
Also, he said, the raw materials for the roofing sheets were untouchable.
“We recently had a meeting with the government and shared with them what was driving the prices up,” a credible source said.
Saying: ‘I don’t know what was considered for the government to come up with such guidelines requiring price cuts,’ Mr Nanai said.