Issues in the World Bank Tanzania Economic Update-2021

Economics

What you need to know:

On March 3, 2021, the World Bank launched its Tanzania Economic Update (TEU) report titled ‘Raising the Bar: Achieving Tanzania’s Development Vision.’ The report covers a number of issues. They include Tanzania’s economy in global perspective which includes issues of recent economic developments as well as macroeconomic outlook and risks.

Recent drivers include increased production of goods and services in virtually all sectors of the economy. This in turn is thanks to improvements in business environment and investment climate. They include improvements in the legal, policy and regulatory frameworks; both hard and soft infrastructure but mainly the former; skills and talents in the labour force and much more along those lines. These made it possible to attract and retain investments and businesses from private sector in its very broad sense including local and foreign, formal and informal as well as micro, small, medium and large enterprises. It is to be noted that middle income status is not an automatic permanent status. It has to be protected and maintained to avoid falling back to lower ranks. It is also important to aspire graduating to higher ranks of income groups from the current low middle income.

Tanzania has been posting relatively good growth figures. It has been among well performing economies in the region using the GDP growth indicator. However, there are issues of concern in the nature of growth that has been observed. Generally it has been a non-poverty reducing and non-jobs creating growth among others. Non-poverty reducing growth can be attributed to the nature and types of growth poles and sectors. These are mainly sectors that use capital intensive as opposed to labour intensive production technology. They use machinery and equipment and are automated. As a result they do not employ many people because capital displaces labour. Because factor of production used is the one that get remunerated, capital gets more remunerated than labour. This partly explains the observed non-poverty reducing and non-jobs creating growth. Going forward: efforts should be on ensuring poverty reducing, jobs creating, inclusive and green growth.