Tanzania: Onset of Bombardier Q400 Boost Tanzanian Growth Strategy
Posted on :Thursday , 6th October 2016
Despite the fact that I am aware of diverse views on the subject of two newly acquired Air Tanzania Limited 76-seater Bombardier Q400 commercial aircraft of Canadian make, each of us has a duty to reason what we believe about the prospects of coming back of long-gone glory days under this government led by President John Pombe Magufuli.
As I leave politics to politicians, my focus in support to this achievement is on the economic footprint of the decision seeded in Tanzania as many of us watched and read about launching of the technologically fuel efficient advanced Q400 aircraft in our growth strategy as a nation.
Looking at this venture in my scrutiny, I can see the economic benefits that can be measured by contribution to GDP, jobs creation and above all tax including income tax receipts from employees, social security contributions and corporate tax levied on profit resulting from the sector and its supply chain although criticisers with positive mind may further argue the economic value to be created is more than three levels I have mentioned because the principal benefits to be created are from the customers, the passages or shipper from visiting family and friends to shipping high value products using the air transport mode service.
Building on his Excellence Dr Magufuli the President, outlook to regenerate airstrips that could accommodate this type of aircrafts, the networks created between cities, tourist attractions, and markets represent a significant infrastructure asset that I consider will generate benefits through enabling new type of investment ventures, business clusters, specialisation and spill-over impacts on Tanzanian economy productive sectors.
On enabling long-term economic growth I see yet another light at the end of the tunnel. Subject to sector practices and destination need flight per day along routes to be established will increase connecting passengers and businessmen catching up with their business deals than ever before at a competitive rate.
In fact integration into the regional air transport network will transform the possibilities for the Tanzanian economy by opening up foreign market to Tanzanian exports, lowering transport costs, particularly over long distances that would help to increase competition because ATCL will be in a position to service a wider area and potentially reduce average costs through increased economics of scale once dominated by some kind of monopoly colourfully noticed in fare charged between destinations.
Furthermore, on one hand, with this launching I can envision increased flexibility of labour supply which in my analysis will enhance allocative efficiency and in a way within five years or so bring down the natural rate of unemployment in Tanzania.
On the other hand, launching in my view will encourage Tanzanian businesses to invest and specialise in areas that play to the economy's strengths while speeding the adoptions of new business practices, such as just-in timeinventory management that relies on quick and reliable delivery of essential supplies with an overall raising productivity and ultimately the economy's long-run supply capacity.
As a Tanzanian and in support of initiatives and measures undertaken by Dr Magufuli to truly transform Tanzania towards its journey to become middle income country, I am thrilled because I do understand how aviation enhances economic performance.
For those who didn't know the fact is improvements in connectivity contribute to the economic performance of the wider economy through enhancing its overall level productivity.
Improvement in productivity in firms outside the aviation sector comes through two folds. One, through the effect on domestic firms of increased access to new market and increased foreign competition in the market and two, through the freer movement of investment capital and workers between cities or town.
In this way, improved connectivity will encourage firms to specialise in areas where business possess what in economics is termed as cooperative business advantage with ultimate creation of opportunity to better exploit economies of scale, driving down costs and prices and thereby benefiting consumers in the process.
To close my viewpoint, my opinion on the coming of these Q400 bombardier apart from transformative effects on the wider economy, air transport service, the airlines, airports and ancillary services etc.
all together demonstrate that step taken will provide significant economic benefits to the Tanzanian economy and its citizens, some of
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