TANZANIA's economy is likely to grow at approximately seven per cent annually for the next two years, with inflation stabilising at around five per cent largely due to falling food prices and tight monetary policies, the World Bank's latest Tanzania Economic Update released on Friday reveals.
However, economists argue that despite the positive prospect, the pace is not enough and are calling for prudence in public spending, with inclusive economic strategies to get out of extreme poverty of millions of Tanzanians.
Participants to the forum on Tanzania Economic Update held in Dar es Salaam under the theme 'Raising the Game: Can Tanzania Eradicate Extreme Poverty," demanded resource spending diversification for the 80 per cent of the population that is engaged in agriculture to get the 'real feel' of economic growth. The country's latest Household Budget Survey shows that 12 million Tanzanians are still trapped in poverty today.
Out of the number, 4.2 million live below poverty line, earning less than 26,000/- a month. To them, life means constantly choosing between difficult options such as keeping the eldest child in school or pulling him/her out of class permanently to help till the family farm.
However, the World Bank report further reveals that the economy remains vulnerable to external shocks, particularly fluctuations in common prices. It suggests that variations in gold and oil prices should be monitored closely. "The major risk is fiscal.
The government will need to adjust its accounts in the next couple of years so as to keep its debts and debt-service to reasonable levels. The necessary adjustments will require a combination of increased domestic revenues and controlled expenditures, suggests the report.
It adds that the government must resist political pressure to loosen its control over expenditure, particularly in the context of the forthcoming elections. Future economic growth will also depend on the ability of the government to remove existing constraints on businesses," reads part of the report .
The World Bank County Director for Tanzania, Uganda and Burundi, Philippe Dongier said Tanzania's economic growth is driven by a number of industries predominantly located in cities and other sectors like communication, transportation, construction and retail trade.
The report urges increasing productivity in agriculture and creating more good jobs off the farm. Global experience shows that even when agriculture productivity increases, the poorest families tend to be left behind.
"This underscores the importance of highly targeted safety net programmes to support the most vulnerable," Mr Dongier observed The bank's Lead economist for Tanzania, Uganda and Burundi and author of the report unveiled on Friday, Jacques Mirisset, said while investment in infrastructure, agriculture, education and health are essential for inclusive growth, welltargeted cash transfer programmes can improve the living conditions for extremely poor households.
Ms Mwanjaa Mohamed from Fukayosi village in Bagamoyo, Coast Region, is among the beneficiaries of the cash transfer programmeimplemented by the Tanzania Social Action Fund (TASAF), showing promising results in addressing the needs of the poorest households.
"I lost all four of my children some years back. I am left with five grandchildren to take care of. It was extremely difficult for me to support the family but with the monthly cash support by TASAF the children go to school and life is better today than before," Mwanjaa said.
A senior lecturer at the Mzumbe University in Morogoro, Dr Honest Ngowi, said tangible economic growth should be reflected on creation of more jobs, increased capacity to access basic social needs, education, health, water, among others, in addition to sustainable household food security.
"More than 800,000 university graduates are not absorbed to the labour market. Tanzania's macroeconomic success has not been felt by the majority of the rural population that is still living in extreme poverty," Dr Ngowi observed.
The Executive Director for the Women Fund Tanzania, Ms Mary Rusimbi, underscored the need for the country to focus on specific socio-economic priorities instead of embracing several of them without tangible results.
A leading corporate lawyer and economist, Dr Eve-Hawa Sinare, was explicit on the envisaged seven per cent growth of the GDP, saying there was not much to celebrate for. She called for deliberate control measures particularly on government expenditure, saying that some of the public facilities were not improved to the standard because millions of cash was spent on sending abroad 'important' people for medication.
"Sitting allowances is another expenditure malady which should be checked upon," she said. The Deputy Chief Executive Officer, Presidential Delivery Bureau, Mr Peniel Lyimo, assured the delegates of a brighter future of the country's economy and spoke about ongoing government initiatives to foster partnership with the private sector to transform agriculture.
Successful rural economies such as Malaysia and Vietnam, have implemented systems to connect their farmers to markets. To facilitate growth and equity, they have also encouraged the cultivation of high-value, non-traditional crops and developed off-farm activities. They have also managed migration flows toward urban centres