Inflation in Tanzania

Posted July 10, 2010 in Tanzania, Travel

I thought I'd need to haggle to get 67,000 Tanzanian shillings with my $50 USD bill when I arrived in Dar es Salaam, but the clerk gave me 74,000.

The Tanzanian shilling is suffering. When I flew in to Dar es Salaam this April a dollar was worth about 1,350 shillings; now, it's 1,490. In other words, the shilling has dropped 10 per cent in three months.

Why? Politics, according to analysts.

Every July, Tanzania's government begins a new budget. This year's budget costs 11.6 trillion shillings, up from last year's 9.5.

What's different about this year to justify 22 per cent more spending? Well, there were bumper crops and the mining sector is booming. But analysts say politicians are exaggerating these gains in advance of this October's election. They argue donor countries aren't giving more and tax collectors are collecting less than planned. According to Twaweza (a new non-governmental organization from the founder of government-watchdog HakiElimu), Tanzania's inflation, already the highest in East Africa, is higher than authorities are reporting.

The flagging shilling makes it clear: the international market thinks Tanzania will print lots of money.

Local prices haven't changed much, but they will soon. First, fuel prices will rise. And as one friend explained to me, "once the price of fuel rises, every other price rises too."

As a traveller I'm visiting at the perfect time: until local prices rise, my dollars are worth more than they should be. Oranges now cost 7 cents. And this is my first time in East Africa when I've been able to buy a pint of milk and a big box of Kellogg's Crunchy Nut for under $10.

I can now afford cereal here. So if you'll excuse me, I'm going to enjoy the sweet and creamy taste of not being a Tanzanian during an election year.