World Bank

Despite the fact that the Tanzanian economy has record an impressive growth, it has eluded rural households which constitute approximately two thirds of the country’s population and 80 percent of poor who continue to survive in appalling conditions.

According to the latest Tanzania Economic Update of World Bank over the past one year, the country recorded a growth rate of over 6 percent in addition to a marked reduction in its fiscal deficit despite a difficult external environment.

Speaking at the launch of the report titled Spreading Wings: From Economic Growth to Shared Prosperity, Jacques Morriset, who is World Bank lead economist for Tanzania, Uganda and Burundi said facilitating the inclusion of rural households into the former country’s growth process should be the core of the policy debate.

It is the second of the biannual series that was launched by the Bretton Woods institution in Tanzania in February this year.

Its main aim is to foster constructive policy dialogue between stakeholders and policymakers and to stimulate debate on essential economic issues.

Morriset, who is the main author of the report said while there is no blueprint for the achievement of socio economic transformation, Tanzania can find inspiration in the experience of successful countries that had similar profiles a few decades ago.

According to the report, however, agriculture is not expected to record an increased growth rate in the near future.

He urged the government to facilitate inclusion of rural households into the country’s growth process at the core of the policy debate.

“Tanzania’s policymakers should seek inspiration from the experience of countries that had similar characteristics to this country before their economic transformation,” he observed.
 
According to him, the experience of successful emerging countries show that simultaneous increases in agricultural production, diversification from traditional crop activities and urbanisation can facilitate pro poor growth.

Strong fiscal performance exhibited by Tanzania, he also said, is further attributed to high tax collection to government’s efforts to restrain non priority expenditures.

Such adjustments did not apply to development expenditure, which continued to expand with the objective to address existing gaps in infrastructure all over the country, he said.

Further, he said, with such performance and despite persistent high inflation, Tanzania should continue to enjoy positive prospects with forecast GDP growth of 6.5 percent to 7.0 percent in 2014 if it is not impacted upon by other external shocks.

The report however warns that current performance will only endure if government places emphasis on fiscal and debt sustainability and the optimal use of public resources, and close monitoring of public accounts, including those of public agencies and enterprises operating in the energy sector.

It is also anticipated in the report that private sector expansion will remain biased toward capital intensive sectors with the exception of construction, which will benefit from the government’s infrastructure programme and from increased foreign direct Investment in the extractive industries.

Speaking during the panel discussion, renowned economist Prof Samuel Wangwe, hailed the report urging the government to put more efforts in support of agriculture and employment.
“Transform rural economy first, particularly agriculture and set employment as a national agenda,” he said.

For his part, the long standing expert in agriculture, Salum Shamte , said borrowing done by the government was good if a big chunk  of the money went to agriculture.