The role of exchange rate in small open economies : the case of Tanzania

Includes bibliographical referencesThis thesis addresses exchange rate behaviour in a de-facto partially dollarized economy. Over the past two decades the Tanzanian Shilling has been increasingly displaced by the United States dollar. This change has been prompted by instability of the local currency, and by the practices of foreign firms, which have used a dual pricing system at rates disadvantageous to the local currency. The implications of Tanzania's dollarization are traced through three related investigations: whether theTanzania Shilling to United States Dollar exchange rate overshoots, whether it has impacted the monetary transmission mechanism, and whether dollarization has substantively affected the pattern of Tanzania's foreign trade. The first study uses the Structural Vector Autoregression to test if the overshooting hypothesis holds for the TZS-USD exchange rate.The results suggest that foreign currency deposits are encouraged by the volatility of the exchange rate.In addition it is noted that the exchange rate demonstrates delayed overshooting, while a contractionary monetary policy leads to appreciation in the exchange rate for at least a year before returning to equilibrium. The determinants of the exchange rate in Tanzania are trade openness, real interest differentials, labour productivity and government expenditure. The second study uses a Bayesian Vector Autoregression to investigate the monetary transmission mechanism in the presence of dollarization. The results indicate that positive shocks on the interest rate contract money supply, which leads to lower output growth and inflation, while the exchange rate appreciates. The degree of dollarization also has a negative impact on the monetary supply of the local currency, as the central bank seeks to maintain a relatively constant rate of total money supply. This has the effect of lowering the inflation and interest rates, and is also associated with further depreciation of the exchange rate. The positive shock on the exchange rate (depreciation) is associated with an increase in dollarization.The aggregate demand shock fuels inflation and, in Tanzania's case, it has increased money supply, due to the persistent demand for real monetary balances. The third study uses a Dynamic Stochastic General Equilibrium to describe the conduct of monetary policy in a small, open, and partially dollarized Tanzanian economy. The structure of the model incorporates the expectations of agents and the dynamic relationships are explained in terms of structural representations that characterize the behaviour of the firm, household and central bank. The parameters in the model are estimated with Bayesian techniques, after it has been applied to Tanzanian data. The effects of individual shocks, including those that may be used to describe the conduct of monetary policy, are then considered. These simulations suggest that despite the existence of partial dollarization in the Tanzanian economy, monetary policy has important, short-term, real effects. The fourth study uses an Autoregressive Distributed Lag approach to investigate the short and long run exchange rate sensitivity of foreign trade. Principal components analysis is also used to reduce the dimension of the dataset. It finds evidence that the depreciation of the Shilling typically has an immediate positive impact on the trade balance, and exchange rate depreciation increases the trade balance in both the short and long run. However, exports show signs that support the J-curve hypothesis, though the associated parameters are not significant. Imports are not reduced by a rise in the Shilling, as traditional theory would suggest. This is ascribed to the country's de-facto partial dollarization. Since over 40 per cent of money supply arecurrently held in dollar denominated accounts, trade is largely immune to domestic currency fluctuations. This study also notesthat the use of foreign currency has tended to rise during periods of substantial economic growth. Although no causality is argued, this does suggest that the parallel use of foreign and domestic currencies is not detrimental to Tanzania's economic growth

Assessment on Economic Support and Value of Hygiene of Butcher shops among Beef Consumers in Tanzania.

The study was conducted to reveal consumer support to hygiene of butcher shop using a linear restriction approach to beef retailers’ sales income; and direct evaluation through choice based experiment. The average retailer’s sales income as an aggregate consumer expense on beef was realized to be affected by hygienic appearance for building, serving-storage equipment and attendants (p=005). Consumer choice preference to hygiene was positive (p<0.001) and they were willing to pay more for hygiene than the beef intrinsic attributes (p=0.05). It was concluded therefore that consumer expenses and choices for beef is motivated by hygiene. Retailers should be encouraged to improve the hygienic standard of butcher shops as a consumer requests besides abiding to rules and regulations. Key words: conjoint analysis, consumer, hygiene, income, linear restriction, retailin

Meat yield and quality of Tanzania Shorthorn Zebu cattle finished on molasses/maize grain with agro-processing by-products in 90 days feedlot period

This study was conducted to evaluate the effects of feeding molasses or maize grain with agro-processing by-products on yield and quality of meat from Tanzania shorthorn zebu (TSZ) cattle. Forty five steers aged 2.5 to 3.0 years with 200 +/- 5.4 kg body weight were allocated into five dietary treatments namely hominy feed with molasses (HFMO), rice polishing with molasses (RPMO), hominy feed with maize meal (HFMM), rice polishing with maize meal (RPMM) and maize meal with molasses (MMMO). Ad libitum amount of each dietary treatment and hay were offered to nine steers for 90 days. Cooking loss (CL) and Warner Bratzler shear force (WBSF) values were determined on M. longissimus thoracis et lumborum aged for 3, 6, 9 and 12 days. Steers fed on HFMO diet had higher (P 0.05) nutrient intake (86.39 MJ/d energy; 867 g/d CP), weight gain (919 g/d) and half carcass weight (75.8 kg) than those fed other diets. Meat of steers from all diets was tender with average WBSF values of 47.9 Ncm^(−2). The CL (22.0 +/- 0.61%) and WBSF (53.4 +/- 0.70 N cm^(−2)) were highest in meat aged for 3 days followed by 6, 9 and 12 days. WBSF values for meat aged for 9 and 12 days from steers fed HFMO and RPMM diets were similar and lower than those on other dietary treatments x aging periods. Overall, molasses and hominy feed can be used to replace maize meal in feedlot finishing diets to spare its use in animal feeds

Preliminary Evaluation of Slaughter Value and Carcass Composition of Indigenous Sheep and Goats from Traditional Production System in Tanzania

The aim of the pilot study was to evaluate slaughter characteristics and carcass composition of indigenous long fat tailed sheep and Small East African goats purchased from the auction markets slaughtered at 1.5 to 2 yrs of age and 20 kg to 25 kg live weight. The animals were slaughtered according to halal standard procedures. The left half carcasses were jointed into eight wholesale joints, and dissected into muscles, fat and bone, which were weighed separately. Sheep had greater (p<0.05) slaughter BW (22.29 kg vs 20.50 kg) and empty BW (20.17 kg vs 18.67 kg) than goats (p<0.05). Dressing percentages were lower (p<0.001) in sheep than goats when carcass weight was expressed as percentage of slaughter BW (42.31% and 47.15%) and empty BW (46.75% and 51.79%). Sheep carcasses had lower (p<0.001) proportion (66.18% vs 71.64%) of muscles and higher (p<0.001) proportion of fat (7.41% vs 3.44%) than goat carcasses. Sheep had proportionally lighter (p<0.001) shoulder (18.89% vs 22.68%) and heavier (p<0.05) proportion of chump (7.916% vs 6.76%) and main rib (8.12% vs 7.07%). Sheep had more (p<0.001) muscles in the leg (28.83% vs 27.08%) and main rib (7.62% vs 6.36%) than goats. Sheep had less (p<0.001) muscles (20.28% vs 23.56%) in shoulder joints when expressed as percentage of total muscle of carcasses. It is concluded that there are differences in sheep and goat both in terms of carcass and joint yields and composition. The present study also implies that there is need to consider setting different meat cuts and prices for these cuts when one takes into account the differences in muscle distribution within joints in sheep and goats

Chemical Composition and Meat Quality Attributes of Indigenous Sheep and Goats from Traditional Production System in Tanzania

The aim of the study was to compare chemical composition and quality attributes of meat between male long fat tailed sheep (n = 17) and Small East African goats (n = 17) existing in Tanzania. Animals of 1.5 to 2 yrs in age and live body weight of 22.59±0.50 kg were purchased from livestock auction markets. Animals were fasted for 18 h and slaughtered according to standard halal procedure. Left carcasses were dissected into muscles, fat and bone and the muscle and fat were mixed together and chemically analysed. Meat quality attributes were measured based on Muscle longissimus thoracis et lumborum excised from right sides of carcasses. Goat carcasses had significant higher (p = 0.0302) moisture content (70.65% vs 66.96%) and lower (p = 0.0027) ether extract (2.49% vs 5.82%) than sheep but there was no significant species differences in protein and ash content. Sheep had lower (p = 0.0157) ultimate pH (5.74 vs 5.88) and higher (p = 0.0307) temperature (3.77°C vs 3.15°C) than goat carcasses. Sheep meat had lower (p = 0.0021) shear force values (29.83 N vs 34.07 N) than goat. Within species, at day 9 of ageing, meat tenderness improved (p = 0.0001) by 44.63% and 34.18% for sheep and goat. Pooled data showed that at d 9 of ageing, meat tenderness improved (p = 0.0001) by 39.25% (from 39.54 N to 24.02 N) compared to tenderness of meat which was not aged at day one of slaughter. The present study demonstrated the differences in chemical composition and quality attributes of meat existing between sheep and goats originated from East Africa