Legal UpdateTanzania Legal and Policy Review Amidst COVID-19 Pandemic

Introduction

In light of the recent COVID-19 pandemic, the Government of Tanzania has announced a set of financial and Traveling measures in response to the impact on the economy. So far, the Central Bank of Tanzania (Bank of Tanzania) through its press statement dated 12th May 2020 announced policy measures to safeguard the financial sector stability in the country. Further, the Ministry of Health, Community Development, Gender, Elderly and Children (Ministry of Health) also announced measures relating to International travel following a decreased trend of admitted COVID-19 infection cases in the country. In this article, we shall outline the said policy measures as well as other government directives issued amidst the Covid-19 pandemic.

The Central Bank Policy Measures

The Bank of Tanzania has announced policy measures aimed at cushioning the economy from the adverse effects of COVID -19 pandemic. On its policy statement released to the public, the Monetary Policy Committee (MPC) of the Bank of Tanzania, approved the policy measures with the aim of safeguarding the financial sector stability and continue facilitating the financial intermediation process in the country.

The policy measures that have been approved include:

1. To lower the Statutory Minimum Reserves (SMR): The Bank of Tanzania has lowered the Statutory Minimum Reserves requirement from 7% to 6% with effect from 08^th June 2020. SMR is the specified percentage of the amount of deposits that Banks/Financial Institutions owes to its customers. Thus, according to the Banking and Financial Institutions Act, 2006, S. 21 empowers the Bank of Tanzania to prescribe from time to time to the Banks and Financial Institutions. The policy measure is expected to provide additional liquidity to banks.
2. Lower the Discount Rate: the Bank of Tanzania has decided to reduce the discount rate from 7% to 5% to enable banks to borrow from the Bank of Tanzania at a lower cost in order to enable Banks to then lower their lending rates to their customers. According to the policy statement, the policy measure is effective from 12^th May 2020. The discount rate is the lending rate at which the Central Bank lends to other banks.
3. Reduce Haircuts on Government Securities: In Financial Markets, haircut refers to a reduction applied to the value of an asset. For that purpose, the Bank of Tanzania has reduced haircuts on government securities i.e. for Treasury Bills from 10% to 5%t and on Treasury Bonds from 40% to 20% effective 12^th May 2020. The measure is meant to increase the ability of Banks to borrow from the Bank of Tanzania with lesser collateral that it was before. Meaning that the Banks (Borrowers) can still borrow more despite the lower market value of the collateral.
4. Loan Restructuring for Customers: The Central Bank has signaled the regulatory approval on Banks to allow restructuring of loans on customers with financial difficulties in repaying their loans due to the COVID-19 pandemic. The policy measure requires Banks to assess and case by case of each customer for the possibility of restructuring of loans. However, the Bank of Tanzania will provide regulatory guidance to financial institutions in carrying our loan restructuring in a transparent and impartial manner.

5. Mobile Money Operators: The Bank of Tanzania has directed Mobile Money Operators to increase daily transaction limits for mobile money customers from Tanzanian Shillings 3,000,000 to Tanzanian Shillings 5,000,000 as well as increasing daily balance amounts from Tanzanian Shillings 5,000,000 to Tanzanian Shillings 10,000,000. This measure aims at promoting and encouraging digital payments thereby reducing congestion in banking premises (social/physical distancing)

In addition to the policy statement, the Bank of Tanzania has confirmed that the county has adequate foreign exchange reserves for the importation of goods and services. In addition, the Central Bank has further reiterated that transactions between residents should be made in Tanzanian Shillings. It is important to note that the Central Bank Policy statement did not indicate the duration upon which the policy measures will be enforced

Government Travel Advisory Measures

According to the Travel Statement Advisory No. 3 issued by the Government on 18th May 2020 through the Ministry of Health, Community Development, Gender, Elderly, the Government noted there was a decreased trend of admitted COVID-19 pandemic cases in the country. Consequently, the Government reviewed the earlier Travel Advisory No. 2 of 04th April 2020 to accommodate new measures related to International travel as follows:-

1. All travelers whether foreigners or returning residents entering or leaving the United Republic of Tanzania will be subjected to enhanced screening for COVID-19 infection. The government abolished the 14 days mandatory quarantine upon arrival.

2. All international travelers and Conveyance operators should observe adherence to Infection Prevention and Control measures such as hand hygiene, wearing masks and keeping physical distancing as appropriate.

3. All travelers are required to truthfully fill out Traveler’s Surveillance Form and submit to Port Health Authorities upon arrival;

4. All arriving/departing conveyances must provide Advance Passenger Information so as to allow the Points of Entry Authorities to scrutinize the manifest for possible high-risk passengers.

5. Pilot/Captain/Driver in command of conveyance should prior to arrival submit to Port Health Authority the dully filled conveyance health declaration forms.

6. Conveyances will be subjected to decontamination if deemed necessary.

7. Furthermore, the Government issued measures relating to truck/vehicle carrying Goods and Services:

• have only 2-3 crew Members per vehicle to facilitate smooth border crossing in the region;
• will be decontaminated if crew members are suspected to have COVID-19 infections
• crew members have to declare their final destinations at the Points of Entry (PoE), and during their journey are allowed to only stop at Government designated locations.
• crew members will be subjected to enhanced screening at Points of Entry and may be quarantined or isolated at designated facilities in case they are suspected of COVID-19 infection.
• in case crews are quarantined/Isolated while in transit, truck owners/operators must make necessary arrangements to back-up their crew to ensure that goods are delivered to the intended destination;
• the crew for cargo vessels will be quarantined at designated hotels or within their vessels for the period of their stay;

The Occupational Health and Safety Measures

According to the public statement issued by the Occupational Safety and Health Authority (OSHA) on 14^th April 2020, the Authority stated that it will continue conducting the general inspection of workplaces in enforcing the workplace safety but also, follow up on government directives on precautionary measures to prevent the spread of Covid-19 infections such as Wearing Face Masks, Installing Handwashing facilities, Use of Sanitizers, Social Distancing (Office Occupancy)

Conclusion

Generally, there has been no specific legal or legislative response in Tanzania that addressed the COVID-19 pandemic other than the normal Government announcement and directives. As such, in the recent developments, on 16^th June 2020 when the President of the United Republic of Tanzania, Dr. John Pombe Magufuli state of the nation address, announced that, from 29^th June 2020 all business must resume to normal. This includes reopening all schools and other sectors that were closed due to the COVID-19 pandemic.

Download: FIN & LAW -Client Update- MAY 2020 -Tanzania Legal and Policy Review Amidst COVID-19 Pandemic

DISCLAIMER: THIS PUBLICATION HAS BEEN PREPARED FOR GENERAL INFORMATION ON MATTERS OF INTEREST ONLY. IT DOES NOT CONSTITUTE LEGAL OPINION OR PROFESSIONAL ADVISE ANYHOW. YOU SHOULD NOT ACT UPON THE INFORMATION CONTAINED IN THIS PUBLICATION WITHOUT OBTAINING SPECIFIC PROFESSIONAL ADVISE AND GUIDANCE. NO REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED) IS GIVEN TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS PUBLICATION. FIN & LAW DOES NOT ACCEPT OR ASSUME ANY LIABILITY, RESPONSIBILITY OR DUTY OF CARE FOR ANY CONSEQUENCES, LOSS OR INCONVENIENCE FOR ANY CONSEQUENCES OF YOU OR ANYONE ELSE ACTING OR REFRAINING TO ACT, IN RELIANCE ON THE INFORMATION CONTAINED IN THIS PUBLICATION OR ANY DECISION BASED ON IT.