Nairobi — The person who should be the most knowledgeable regarding the Tanzanian economy is the Governor of the Bank of Tanzania (BoT), Daudi Ballali.

Mr Ballali called a press conference in Dar es Salaam recently to speak on the economy. It was well-attended but it soon degenerated into a parrying match.

Many wanted to hear Mr Ballali defend himself and BoT against allegations of fraud. Instead, he made rather anaemic attempts at brushing aside the allegations, claiming that they were vindictive and Internet-based, not constituting irrefutable proof against him or the bank.

HE EQUALLY dismissed allegations of grossly inflated construction costs for the bank's Twin Towers - which reportedly ended up costing $340 million instead of around $80 million.

Anyway, the public wanted to hear the economic challenges ahead of the fourth phase of the government of President Jakaya Kikwete and the solutions at hand.

For instance, Mr Ballali's point that increased exports are the solution to the relentlessly falling value of the Tanzania shilling. That is just one solution.

ENSURING EFFECTIVE and sustained de-dollarisation of the economy - thereby giving the shilling a face-lift at the marketplace, so to speak - is another viable solution.

So, too, is keeping a tighter control on the day-to-day operations of the thousands of official and under-the-counter bureaux de change that have sprung up countrywide. Unscrupulous moneychangers continue to facilitate capital flight, money laundering, drug trafficking and speculative pressures on the hapless domestic currency.

"The depreciation should be a wake-up call for aggressive promotion of export-led production?" Mr Ballali says. Indeed so. But it is said, "Tanzania is currently among the top 10 foreign direct investment destinations in sub-Saharan Africa." What are the investments going into - and why?

Agriculture is still the biggest export-earner in Tanzania; but little investment is going into it. The minerals sector follows closely. But most of the earnings are retained abroad by the large foreign mining conglomerate! And, that is where much of the FDI has gone in recent years.

TANZANIA'S EFFORTS at export processing zones and special economic zones are a cruel joke on the economy. The investments that were so lauded have today dissipated in thin air thanks to unmitigated bureaucracy, high taxation and corruption.

Again, Tanzania is importing far more than it is exporting. The imports grew from an average $3.2 billion five years ago to $5.6 billion last year - against around $2 billion in export earnings. What is worse, some of the imports - especially costly petroleum and fertilizer - are promptly smuggled into neighbouring countries, courtesy of porous borders and greedy officials.

WHICHEVER WAY you look at it, Dar is fast becoming the scandal capital of sub-Saharan Africa, with a deleterious effect on the economy's performance.

What is more, the frauds contribute to unnecessary tax increases. For Mr Ballali to say (for instance) that the July 1 tax increase on fuel is a one-off event that should be tolerated for future benefit in economic projects financing is peddling sophistry.

Its adverse effects are already with us in the form of across-the-board price increases - and it is a safe bet that no serious projects are going to materialise from the increased tax revenue. Not with the current high incidence of fraud. Pity the economy.

Karl Lyimo is a freelance journalist based in Dar.