How Tanzania can stay on the middle-income track

Friday December 04 2020
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Prime Minister Kassim Majaliwa speaks at the commemoration marking the 60th anniversary of the Association of Tanzania Employers (ATE) in Dar es Salaam yesterday. PHOTO | ERICKY BONIPHACE

By Jacob Mosenda

Dar es Salaam. Economists and other analysts have identified factors which could prevent Tanzania from falling back to a low-income economy, after joining the lower-middle income group of countries in July last year.

The pundits yesterday warned that there indeed are countries that reached such a development stage - and then declined after disregarding key economic issues.

Tanzania aimed at attaining a middle income status by 2025. But, on July 1, 2020, the World Bank graduated the country from the low to lower-middle income status.

While this is a major step for the nation, attention should be paid to key sectors to bolster the country’s current economic status, analyst said at the celebration of the 60th anniversary of the Association of Tanzania Employers (ATE), an event graced by Prime Minister Kassim Majaliwa in Dar es Salaam.

In his presentation, Repoa executive director Donald Mmari stated that some countries attained the middle class economy status - only to slide back into a low-income economy.

He cited the example of Sri Lanka and Algeria which collapsed from upper middle-income to a lower-middle income status - while Sudan collapsed into a low economy status.


However, he said, Tanzania could avoid such a disaster by doing a number of things, including investing in Agriculture which engages 65 percent of the working population.

“The agricultural sector will make a significant contribution to GDP if we run it in a more productive way. Most people are self-employed in this sector, so if big investments are made in agriculture, this can result in big achievements,” he said.

Dr Mmari also touched on investing in Education, especially in secondary school education, so that graduates get the skills that enable them to be self-employed.

He also stressed focusing on technical/vocational training, as well as bolstering the Manufacturing sector based on technology so that Tanzania is not left behind by countries that use modern technologies in production, which enables them to dominate markets.

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Repoa executive director Donald Mmari makes a presentation at the commemoration of the 60th anniversary of the Association of Tanzania Employers (ATE) in Dar es Salaam yesterday. PHOTO | ERICKY BONIPHACE

Another thing, he said, is to widen the tax base so that the government can raise enough revenues, along with increasing the capacity to address disasters such as Covid-19 which wreak havoc on the economy.

“It is important to prepare for disasters that can damage the economy. This year we have Covid-19 - and, with a fully equipped pharmaceutical industry, we can respond quickly,” said Dr Mmari.

Taking a similar position, the Standard Chartered Bank’s CEO, Sanjay Rughani, said Tanzania needs a common economic strategy so that every stakeholder knows its economic direction.

Mr Rughani also touched on Agriculture, saying changes need to be made to make it more supportive for the industries.

“We need to change our farming from conventional farming to modern agriculture. If we do that, we will get five times more results than we have currently,” said Rughani, who is also the chairperson for the CEO RoundTable.

For his part, John Ulanga, Resident Representative of the TradeMark East Africa, said that in order for Tanzania to remain in the middle class, GDP must increase more than the population and not the vice versa.

“There is a great opportunity for Tanzania to sustain the middle economy status if we focus on increasing our GDP as we’ll be able to attract trust by financial institutions, investors and as a result improve social services,” said Mr Ulanga.

On its part, the government welcomed all the proposals saying that it also had the focus of ensuring the environment for business was conducive for investors.

“The government’s goal is to work with the private sector in improving the economy. We will continue to need your support so that we can together strengthen the economy,” Majaliwa said - urging employers to continue recruiting graduates to combat the employment crisis.

“Each country has its own way of fighting employment, and we are focused on building the capacity of our graduates so that they can contribute effectively to economic growth. I urge you to continue to help in this,” he said.