Browsing by Author "Epaphra, Manamba"

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    The financial sector reforms and interest rate spread: The Tanzania’s Experience
    (University of Dar es Salaam, 2004) Epaphra, Manamba
    This study makes use of time series (data) technique to uncover the main determinants of the bank interest spreads in Tanzania for the 1986-2002 period. In estimating the model we first test for cointegration using the Johansen procedure, and a general-to¬ specific procedure is applied to obtain a parsimonious model. We find that in the long run, interest rate spread is negatively related to liquidity, decomposition of deposits and the ratio of non-interest bearing deposits to total operational asset, and positively related to size of the banking system. In addition, the role-played by discount rate and inflation are highlighted. The results suggest that bank discount rate is the most relevant macroeconomic variable to explain the behaviour of bank interest spread in Tanzania. The results warrant some policy recommendations. Since high interest spreads reflect lack of competitiveness and inefficiency in the financial system, policy should be directed at improving financial management, strengthening of supportive information and bank supervision. Tanzania like any other developing country should maintain macroeconomic stability, for instance reduction in the central bank discount rate would be necessary to reverse the widening trends in interest spreads in the liberalized financial system.
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    The revenue implications of trade liberalization in Tanzania
    (University of Dar es Salaam, 2012) Epaphra, Manamba
    This study examines the argument that trade liberalization depresses the import duty revenue, and consequently adversely affects the total tax revenue since import duty revenue constitutes a large share of government revenue in Tanzania during the 1979/80-2009/10 period. The study is thought to be significant because Tanzania experiences difficulty in replacing import duty revenues loss as a consequence of trade reform by strengthening its consumption tax system. In the course of analysis, cointegration analysis and error correction modelling are employed. The empirical results show that import duty revenue-to-GDP ratio is positively related to tariff rates, implying that a reduction in the tariff rates may result in a significant loss of import duty revenue. The results also show that the removal of protectionist policies led to an increase in import-to-GDP ratio which in turn led to rising shares of import duty revenue in GDP. Furthermore, the study applies the Fisman and Wei (2004) approach to quantify the impact of tariff rates on the tariff evasion by examining the relationship between the tariff schedule and the tariff evasion. The results indicate that the tariff evasion is positively correlated with tax rates, implying that any increase in tax rate is likely to produce a reduction rather than an increase in tax revenue mainly due to under-invoicing of imports. Finally, the results generate some policy implications. The proper issue in tax design under trade liberalization, Tanzania needs to strengthen the domestic tax system and raise tax revenue without increasing tax rates by reinforcing tax and customs administrations, reducing tax exemptions and tax evasion so as to maintain fiscal stability.