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Economy: Bullish prospects as Tanzania marks 60th anniversary of Union
Rebounding tourism sector has contributed to positive economic growth numbers. PHOTO | FILE
What you need to know:
The positive growth projection is attributed to various factors, including an improved business environment, increased public investment, a resurgence in tourism activities, and the implementation of policies and reforms
Dar es Salaam. Tanzania is marking the Diamond Jubilee of the union between Tanganyika and Zanzibar amidst growing optimism about the future of the economy, a survey by The Citizen indicates.
The economy has continued to perform well despite recent global crises, which is a testament to the much-often overlooked resilience of the growth story.
By the end of 2023, Tanzania's mainland Gross Domestic Product (GDP) growth rate was above 5 percent, while that of Zanzibar was reported at 7.4 percent.
This year, Mainland Tanzania is projected to experience growth rates of around 5.5 percent, while Zanzibar is expected to grow strongly at 7.4 percent.
These growth projections are attributed to various factors, including an improved business environment, increased public investment, a resurgence in tourism activities, and the implementation of policies and reforms.
Towards Vision 2050
Tanzania is now preparing the National Development Vision 2050, which would replace the National Development Vision 2025 upon its expiry next year. The minister of Finance and Planning, Dr Mwigulu Nchemba, says the implementation of Vision 2025 has been largely successful in various sectors, including the economy, education, health, infrastructure, electricity, communications, and sports.
Before the implementation of the current vision, monthly tax collections were around Sh30 billion, but after the implementation, collections have exceeded Sh2 trillion per month.
"Before the vision, electricity was mainly available in regional and district headquarters, but now we are talking about a small number of villages and hamlets that are yet to be electrified after the implementation of the vision," noted Dr Nchemba.
Regarding education, Dr Nchemba stated that before the vision, it was common for primary school graduates not to be selected to join secondary education, but now graduating students seamlessly transition to secondary education.
Previously, while providing an overview of the vision, the Permanent Secretary in the ministry of Finance and Planning, Dr Natu Mwamba, mentioned that the implementation of Vision 2025 has enabled the country to achieve various successes.
These include transitioning into a lower-middle-income economy, with the nation achieving an average economic growth rate of six percent and reducing the poverty rate by over nine percent from 35.7 percent in 2000/01 to 24.6 percent in 2017/18.
Dr Mwamba also highlighted significant improvements in maternal and child mortality rates, primary school enrollment rates, water accessibility (86.7 percent in urban areas and 72.3 percent in rural areas), and rural electrification (reaching 69.8 percent in 2020).
Regarding the preparations for Vision 2050, Dr Mwamba explained that these preparations stem from four main factors, including sustaining the achievements made under Vision 2025, the need for a strategy to benefit from ongoing global economic and technological developments, and aligning national development agendas with regional and international strategies.
"Key issues are the blue economy, robotics, carbon trading, and the need for a strategy aligning the country's development agenda with other regional and international strategies," said Dr Mwamba.
He added that the preparations for Vision 2050 include evaluating the implementation of Vision 2025, which is crucial for identifying achievements, implementation steps, and challenges encountered during the implementation period.
Private sector views
The private sector stakeholders have voiced their views on the preparations for Vision 2050.
During a recent high-level consultative forum, the business community emphasised the importance of investing in innovation and technology to enhance efficiency and global competitiveness.
Suggestions put forward by the Tanzania Private Sector Foundation (TPSF) chief executive Raphael Maganga included promoting a strong digital economy, empowering businesses, and ensuring that Tanzanians play a central role in innovation in Africa and elsewhere.
"This vision should enable us to create an environment in which growth benefits all citizens. We need growth that is translated into quality education, health services, and opportunities for Tanzanians, irrespective of their backgrounds." Mr Maganga was quoted.
Challenges
One of the key issues during the past few decades has been the rising cost of living that does not align with people’s incomes.
The Bank of Tanzania (BoT), however, paints a rosy picture of the rate of the increase in commodities’ prices. Data from the central bank show that inflation is projected to remain low, between 3 and 5 percent for both Mainland Tanzania and Zanzibar, attributable to monetary policy impact, adequate food supply, and exchange rate stability.
However, upward risks to the inflation forecast remain, including increased oil prices due to OPEC+’s intention to cut production and geopolitical tensions in different parts of the world.
Tanzania is also facing a dual challenge of economic growth failing to translate into poverty reduction while grappling with the impending surge in population, according to the World Bank.
The WB states that 17 million people, approximately close to 28 percent of the total population, were still in poverty by 2022.
At the same time, the WB also projects that Tanzania's population will double every 23 years, potentially reaching nearly 140 million by 2050.
WB country director, Mr Nathan Belete, said this surge will intensify the demand for education and healthcare services beyond the economy's capacity, leading to challenges in job creation.
