TANZANIA has sustained high economic growth over the past five years, growing at an average of 6.9 per cent which is translated into improved living standards.
Economic growth is the most powerful instrument for reducing poverty and improving the quality of life in the country.
This outstanding performance did not come overnight, but was contributed largely by major economic reforms made by the fifth phase government under President John Magufuli.
Investments in major flagship projects namely the Standard Gauge Railway (SGR), flyovers, bridges, roads, ports and airport expansion made the construction sector become the major contributor to economic growth by 25.6 per cent.
One of the positive results witnessed during this period is the growth of the country's GDP to 124tri/- compared to 52.9tri/- registered in 2015.
The average per capita income earned per person in US dollar terms rose to $1,063.3 (equivalent to 2.38m/-) compared to $622 (979,513/-) in 2015.
Moreover, Tanzania has entered into a bracket of middle-income countries with Gross National Income (GNI) per capita of between $1,026 and $3,995, which translates into improved living standards by way of higher quantity and quality of goods and services consumed.
Others are better quantity and quality of social services like health, education and water, lower mortality and morbidity rates, higher literacy rates, lower poverty levels as well as more quantity and quality of economic infrastructure.
An increase in GDP will raise demand for money because people will need more cash to make transactions.
In other words, real money demand rises due to the transactions' demand effect. Investments in infrastructure projects, implementation of the industrialisation drive are among the areas that have generated virtuous circles of prosperity and opportunities.
The economic growth generates job opportunities and demand for labour, the main and often the sole asset of the poor. In turn, increased employment opportunities have been crucial in delivering higher growth.
Strong growth and employment opportunities improve incentives for parents to invest in their children's education by sending them to school.
This shows a clear positive link between growth and poverty reduction. This may lead to the emergence of a strong and growing group of entrepreneurs, which should generate pressure for improved governance. Strong economic growth registered in the past five years is, therefore, a fundamental factor that advances human development, which, in turn, promotes economic growth.