The agricultural sector plays a major role in the economy, employing nearly 80 per cent of the workforce. Photo/REUTERS
Tanzania’s economy is among the best performers in sub-Saharan Africa, thanks to efforts over the past two decades at achieving and maintaining stability.
Sound macroeconomic policies, market-oriented reforms and debt relief have provided a conducive environment for steady economic growth, ranging between five and seven per cent per annum since 2000.
A recent study by the Southern African Development Community shows that the monetary policy has successfully controlled inflation in recent years, bringing it to single digit levels.
Between 2003 and 2007, inflation averaged 5.8 per cent although it accelerated due to high international oil and food prices, reaching 10.7 per cent in June 2009.
As drought and food crisis caved in, inflation fell to single digits in 2010.
The study indicates that the agricultural sector plays a major role in the economy and employs nearly 80 per cent of the workforce.
Unfortunately, high dependency on this sector renders the economy particularly vulnerable to adverse weather conditions and unfavourable prices in international primary commodity markets.
The study illustrates that the low level of industrial development makes the negative economic impacts associated with agricultural dependency more severe.
The country looks to the recently announced Kilimo Kwanza, to boost farmers’ productivity and incomes on a sustainable level.
The development strategy for agriculture aims to achieve a green revolution through improved institutional arrangements, land use and financing as well as the implementation of an industrialisation strategy that is expected to transform the sector.
According to the study, the key sectors experiencing growth are mining, construction, manufacturing and tourism. But poor transport infrastructure is a major bottleneck.
Past finance has been insufficient to cope with growth and ensure an appropriate infrastructure platform that will help to achieve the millennium development goals and the National Development Vision 2025.
The business environment on the other hand remains unattractive to both local and international investors.
Reforms implementation in the sector have been sluggish and the lack of consistency between various policies towards the private sector have also had a negative impact on the investment climate.
Other legal and regulatory changes have added to the complexity and impediments of the business environment.
Consequently, Tanzania business sector continues to under-perform, and was ranked in the 131 place in the latest 2010 Doing Business Report.
Despite the high rate of economic growth in recent years, the study notes that poverty is still pervasive in Tanzania.
Recent robust economic growth has not translated into a corresponding improvement of quality of life and social wellbeing for millions of citizens.
The level of poverty remained high at 33.6 per cent and the absolute number of the poor has increased by 1.3 million during the same period as per the Household Budget Survey 2007.
Agriculture, on which the majority of the poor depend on for a living, grew only at around 4.5 per cent which was not high enough to raise the poor above the poverty line given the high population growth in rural areas.
