The World Bank touting the country’s recent impressive growth, has called for more investments in education to promote skills and facilitation of business development to maintain the momentum.
It has also asked the government to install transparency in public expenditures and give more priority to self-employment training in order to consolidate the trend.
The Tanzania Economic Update released by the Bank in Dar es Salaam yesterday forecast that the country could grow at around 6.0 per cent in 2011/12, but quickly adds: “This good performance would nevertheless represent the lowest rate achieved since the early 2000s and a slowdown compared to 7.3 and 6.5 per cent observed in 2009/10 and 2010/11.”
The report notes the deceleration was partly the result of the new restrictive fiscal and monetary measures, adopted by the government in the second half of 2011.
“Tanzania needs to find new drivers of growth after three years of rapid fiscal expansion,” said Jacques Morisset, the World Bank Lead Economist for Tanzania.
He adds: “The challenge is to create new impulse for growth through better education outcomes and skills, which will in turn sustain job creation and transformation of firms.”
The report also noted that signs of economic transformation have emerged from the private sector with technological and educational improvements as main drivers, adding: “Small and medium firms are now the fastest source of employment growth and manufacturing exports have been booming since 2005. The good signs can be further encouraged by smart supportive policies.”
In the report, WB also stressed the need for the government to employ more efforts to meet the Millenium Development Goals (MDGs).
Morisset told reporters yesterday shortly after official launching of the report that the government should find ways to support small business enterprises, a move which would help to increase individual and national income, thus mitigate the impact of poverty.
The Bank report analysing value for money in education said while it accounted for 20 per cent of public expenditures in the year 2000-2011 it actually did not do well.
“Worse still, the pass rates in primary and secondary schools have actually declined since 2007,” Stevan Lee, co-author of the report said, noting that the major challenges in the educational sector are limited resources and fast growing school populations.
He said fiscal conditions will severely limit the potential for growth in expenditure on education in coming years.
However, student population is increasing rapidly, growing by more than 30 percent per year at secondary school. It is difficult for the government to control the population growth.
“Getting better value for money will require some reallocation of fiscal and human resources across districts, improvements in teachers’ capabilities and in financial management and synergies with the private sector and parents”, he said.
BoT governor, Prof Benno Ndulu, commenting on the report, agreed with the analysis, but noted that it omitted contributions of the private sector.
“The private sector contribution to the country’s economy has increased significantly,” said Ndulu pointing out the construction sector contributed about 10.5 percent, commercial sector 18.5 percent, manufacture 8.5 percent to the economy.
He said the total contribution of the sector to the Gross Domestic Product has increased from 16 percent a few years ago to 29 percent currently.
He stressed the need for the government to properly manage natural resources in order to improve their contribution to the country’s economic growth.
On education, Prof Ndulu said the major challenge “is how to get children into learning environment. We have to provide right materials, teachers and minimise school absenteeism…this would help improve education sector.”
For his part, the Confederation of Tanzania Industries (CTI) chairman Felix Mosha described rising inflation and interest rates as major risks hampering expansion of private sector.
He asked the government to adopt affirmative measures to support development and growth of manufacturing and agriculture sectors, which he said would have greater impact on the economy.