The determinants of tea export performance in Tanzania for the period 1975-2005

This study examines the determinants of tea export performance in the context of Tanzania’s economy. In pursuit of the study objectives, ordinary least squares (OLS) techniques is employed to the test study hypothesis. The estimation results show that real exchange rate, Tanzania main trading partners income and the ratio of foreign direct investment to Tanzania’s GDP have significant impact on Tanzania tea export growth. The policy implication of the study findings is that, an appropriate mechanism be should be put in place to keenly observe the growth in trading partners’ demand for Tanzania tea exports. There also should be an improvement in the competitiveness of export products and diversification of export destinations. Although real exchange rate increase has a positive effect on tea exports, it should be controlled as persistent depreciation of local currency is pertinent to domestic inflation. Finally, there is a need by government authorities to diversity areas of investment by giving a priority to agriculture, unlike the current FDI inflows which is skewed to the mining sector.