Analysts’ views as Tanzania surges with Sh7.1trillion economic gain

Dar es Salaam. Tanzania's economy flourished in 2023, achieving a real Gross Domestic Product (GDP) of Sh148.3 trillion. However, analysts caution that targeted strategies are needed to ensure this impressive growth translates into job creation and poverty reduction.

The 5.1 percent growth rate, from Sh141.2 trillion in 2022 came as the country remained resilient in the face of global headwinds such as the consequences of the Covid-19 pandemic on key supply chains, climate change and political tensions.

Speaking yesterday in Dodoma during his State of the Economy address at the parliament minister of State in the President's Office (Investment) Prof Kitila Mkumbo said the benefits of growth have not been evenly distributed, particularly among the nation’s poorest citizens.

“The leading sectors in 2023 included arts (17.7 percent), finance and insurance (12.2 percent), mining (11.3 percent), and accommodation and food services (8.3 percent),” he said.

Prof Mkumbo noted that sectors traditionally expected to provide substantial employment saw slower growth rates.

He said agriculture, which is vital for the majority of Tanzanians, grew by only 4.2 percent, and manufacturing and trade expanded by 4.3 percent and 4.2 percent, respectively.

"The growth in our economy has depended heavily on public investment in infrastructure, while the private sector has not fully taken its role in driving economic growth as anticipated," he said. Speaking with The Citizen at different times, experts shared insights highlighting the importance of targeted strategies to enhance productivity, add value to raw materials, and support the informal sector, all of which are vital for inclusive economic growth and job creation

The University of Dar es Salaam’s Economist, Dr Wilhelm Ngasamiaku, said one of the key strategies is to increase mechanisation in the agriculture sector.

This, he said, will enhance productivity and efficiency.

“Industrialisation is crucial to adding value to agricultural products. By processing raw agricultural outputs domestically, we can create more jobs and boost the sector's contribution to the economy,” said Dr Ngasamiaku.

Agricultural trade economist from the University of Dodoma (Udom), Dr Lutengano Mwinuka, said the country would need to focus on value addition in rapidly growing sectors to maximise their potential for job creation.

He added that supporting the informal sector is also essential because the majority of people have been employed in it.

“This can be achieved by providing easier access to financing, healthcare services, infrastructure and a conducive business environment. By doing so, we can stimulate the informal economy and its employment opportunities,” said Dr Mwinuka. Data showed that the country’s portfolio remains heavily dependent on products with low added value.

The minister stated:  “Manufacturing, which was projected to contribute 24 percent to the nation's exports by 2025, accounted for just 17.1 percent on average over the past five years (2019-2023), barely improving from 16.9 percent in 2019/20.”

Speaking on economic targets for 2024 Prof Mkumbo noted that the government's target is to achieve 5.4 percent growth, a significant improvement from the 5.1 percent achieved last year.

He said the country also plans to maintain its headline inflation levels between 3 and 5 percent in line with the targets of the East African Community (EAC) and Southern African Development Community (SADC).

"The goals are to achieve tax revenue of 12.9 percent of GDP in 2024/25, up from an expected 12.6 percent in 2023/24; to maintain a budget deficit (including grants) not exceeding 3 percent of GDP; and to have foreign exchange reserves sufficient to cover at least four months of import requirements," said Mkumbo.