Consumer and industrial products companies need to identify and react promptly to shifts and changes in the consumer market. Tanzania is now heavily influenced by the international markets partly due to presence of multinational subsidiaries and low levels of which our current Government is involved in the market.
The current buoyancy in local demand and confidence is based on the continued international pricing support for resources as well as favourable government policies. This has created a significant increase in disposable income which can be seen from the massive growth in profits in retail sector companies. This demand led increase in spending has had, and will have a positive effect for the retail and consumer markets for the medium term.
The current local trading environment is one of strong inflationary pressures, based on rising input costs mainly due to fluctuating oil price and rising input costs based on the fluctuation of the shilling exchange rate. A round of interest rate hikes has occurred to counter these rising infl ationary pressures. Due to capital expenditure most companies have been expanding their capacity, resulting in large imports of capital items. This has negatively affected our Balance of Payments account further weakening the shilling, with the implication of rising inflation and medium to longer term continued interest rate hikes.