12 February 2013

Tanzania: Most LDCS Fail to Mobilise Resources Fully

SLOW recovery from the impacts of global financial crisis in most of the Least Developed Countries (LDCs) has made them fail to realise fully their development plans, condemning the nations to continue grappling with abject poverty.

Consequently, basic sectors like manufacturing, agriculture, mining and tourism have contributed marginally to economic growth as well as poverty reduction campaigns. Presenting a paper on Domestic Resource Mobilisation in the LDCs, Trends, Determinants and Challenges, Dr Debapriya Bhattacharya said lack of proper planning in utilisation of abundant resources has been a major challenge in attaining significant economic growth.

"Most LDCs are endowed with abundant resources like oil and gas but poor planning makes them fail to benefit, thus continuing to dwell in abject poverty," he made the remarks in a discussion between experts, on development challenges and tracking of the effective implementation of international commitments to the LDCs held in Dar es Salaam over the weekend. Despite the abundant contributions from development partners, little impact on economic growth has been witnessed.

He said LDCs' governments should direct benefits accrued from investments in various resources to the wellbeing of citizens. For example, lack of adequate infrastructure including electricity, transport, information and communications technology (ICT) as well as water and institutional capacity as among challenges haunting most LDCs.

Reliable and affordable infrastructure services are essential for efficient operation of existing productive assets and enterprises in LDCs, attracting new investment, connecting producers to markets, assuring meaningful economic development and promoting regional integration. In Tanzania, for example, the government has been committed to extending substantial investments into the modernisation of various infrastructures.

In the energy sector, the discovery of natural gas and subsequent investment will allow the nation to generate about 3000 MW in the next few years. However, the widespread abuse of discretionary exemptions, a large informal sector and non enforcement of property taxes have been key constraints to domestic resource mobilisation. The informal sector, accounting for half of the economy has been consistently prevalent due to mistrust and oppressive tax officials.

The LDCs currently consists of 49 countries with a total population of 880 million, where 75 per cent still live in abject poverty are characterised by many constraints such as low per capita income and human development as well as economic growth. The LDCs thus represent the poorest and weakest segment of the international community.

It is from this perspective that a programme of action for the LDCs was set forth during the fourth United Nations Conference held in Istanbul, Turkey in 2011 to track down the implementation of the development partners' commitments. The Economic and Social Research Foundation (ESRF) Executive Director Dr Bohela Lunogelo said the Southern Agriculture Growth Corridor of Tanzania (SAGGOT) is one of the projects under the programme assessment to boost agriculture's contributions to the economy.

"The expert group meeting will come up with the real situation on the ground on how SAGGOT is addressing agriculture-constraints aimed at liberating about 75 per cent of the people engaging in farming activities," he said. The dynamic, broad based, well functioning and socially responsible private sector is seen as a valuable instrument for increasing investment and trade.

"The private sector is an essential component in generating economic growth and eradicating poverty as well as serving as an engine for industrialisation and structural transformation," he said. Private sector is key to steady, inclusive and equitable economic growth as well as sustainable development in LDCs. Given the nature of LDCs economies, the development of small and medium sized enterprises holds a promising opportunity for the emergence of a vibrant business community.

However, structural constraints like infrastructure bottlenecks have limited the growth of private sector. Tanzania has already enacted the Public Private Partnership Act No.18 of 2010 deliberately to ensure that the two sectors jointly contribute to economic growth, in the effort to end abject poverty in the society. Retired ambassador Mr Marten Lumbanga said the LDCs including Tanzania should be cautious in attracting investments in order that they might generate the right revenues for the country's development.

"Some investors are smart in ensuring that they get premium returns while paying very little to the government in terms of taxes and other duties," he remarked. He cited the PPP as a significant instrument in attaining real development, particularly on the service industry whose contributions has remained low. "Service industry is one of the largest sectors in the world and could contribute immensely to Tanzania's development if there are serious plans set forth to create the win win situation," he said.

According to the Bank of Tanzania (BoT) monthly economic review for December last year, services receipt surged to 2,704.2 million US dollars (4.33tri/-) compared with 2,300.3 million US dollars (3.68tri/- recorded in the corresponding period in 2011. The performance was largely attributed to improvement in receipts from travel and transportation. The good performance in travel receipts is mostly associated with the continued increase in international arrivals. The number of tourist arrivals has been on a steady increase despite the Euro zone crisis.

Copyright © 2013 Tanzania Daily News. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.