Factors Affecting the Export Performance of Sesame in Tanzania

Abstract

This paper examines the factors influencing sesame export performance in Tanzania from 1990 to 2023. It relies on secondary data sourced from the Food and Agriculture Organisation, the World Economic Indicators, and the World Bank. The study conducted two key preliminary tests, stationarity and co-integration, to assess the properties of the time series data. Based on the findings that the variables were stationary at first difference and co-integrated, the Vector Error Correction Model was employed for analysis. The results reveal that Tanzania’s Gross Domestic Product, world sesame prices, and exchange rates are the primary determinants of sesame export performance. Specifically, a one US Dollar increase in the exchange rate was associated with a US Dollar 0.036 million rise in sesame export performance. In comparison, a one US Dollar billion increase in Tanzania’s Gross Domestic Product led to declines of US Dollar 0.003 million. Similarly, a $ rise in the world price results into US Dollar 0.11 million fall. In contrast, foreign direct investment, production quantity, and trade liberalisation did not significantly impact export performance. Drawing from these findings, the study emphasises that policymakers should focus on maintaining a competitive exchange rate, promoting Gross Domestic Product growth and finding ways of increasing the bargaining power of sesame in the world market to take advantage of price rise. Furthermore, there is a need to revisit and strengthen current policies related to production, foreign direct investment, and trade liberalisation to better support export growth. More efforts are called in improving product quality, value addition to the crop, as well as improving transport and storage facilities.