Tanzania: Economy to Register Modest Growth

THE economy is predicted to grow at about six per cent this year, high in global context but the lowest national rate in 12 years, accordingt to a World Bank report.

The report, Tanzania Economic Update made available in Dar es Salaam last week says the challenge for policymakers will be to resist new external and domestic shocks with a drastically reduced fiscal buffer. "looking forward, additional drivers of growth are needed to diversify the economy, to provide more extensive and better social and infrastructure services and promote more job growth and innovation," the report says.

The Bretton Woods institution says the ongoing power blues have contributed to economic slow down. Electric output has dropped by 22 per cent in the second semester, even though only 13 per cent of the population has access to power. "The second explainable reason for the slower rate of growth is the recent adjustment to sustainable fiscal and monetary policies," the bank says.

"The restrictive monetary policy has already pushed interest rates up and reduced credit to the private sector," it added. The bank says the construction and manufacturing sectors slowed down by 5.2 per cent and 0.7 per cent respectively in the third quarter of last year compared to similar quarter in 2010, reflecting higher energy and borrowing costs.

The WB, first of kind report, which will be published biannually, raises concern over failure of an average economic growth of seven per cent to eradicate poverty as over one-third of the population still survives below the poverty line. But, the Bank says the country has been performing well over the past few years, thanks to effective demand policies.

"If Tanzania aims at reducing the income gap between itself and middle income countries, it has to grow faster and better," World Bank's acting Country Representative Jacques Morisset said. "For the (economic) growth to trickle down, the country has to consistently grow at between six and seven per cent, but quality education and job creation will have better impact on the national development."

Meanwhile, another report named "Stairways to Heaven: Fiscal Prudence, Value for Money in Education, and Economic Transformation of Firms" shows that since 2005 the combined expenditure on education and health has increased by 190 per cent in real terms, or an average 10 per cent per capita per year. "While low rates of return are the result of multiple factors, they are partly due to the persistent low quality of education, with many school leavers unprepared for the labour market," the report shows.

The Bank of Tanzania Governor Prof Benno Ndulu said the first challenge was to put children into schools, followed by what the nation wants out of the education sector. "The second challenge is where we are and what we want out of education," charged Prof Ndulu, formerly a lecturer at the University of Dar es Salaam (UDSM).

The Infotech Founder and Chairman, Mr Ali Mufuruki said the report should not only target pass rates but whether the type of education offered supports other sectors for economic growth. "Suppose we attained a 100 per cent pass rate but the system cannot absorb all the leavers we will still have many youths on the streets...the best way is to improve vocational training and prepare our people for self employment," said Mr Mufuruki who is also the Woolworth CEO.

The economic update, however, indicates there are three findings that give directions for improving the efficiency of the education system, calling it a three-step approach. The steps comprise developing an information system by which levels of performance of education structures in different districts could be measured. The WB urges that currently no one is able to determine the level of efficiency in schools.

Then it is necessary to reallocate financial and human resources to relatively underserved districts. This calls for a more equal distribution of resources between districts. Another suggestion is that the government should take steps to replicate and spread the practices of district that achieved relatively good results but also monitoring closely the districts which achieved lower than average results relative to the resources they received.

The World Bank urges "ensuring that a great number of districts achieve results commensurate with the level of resources invested in their educational systems could result in savings of up to 340bn/- per year. "(Because), if the education system continues to fail to produce sufficient number of graduates, the availability of the necessary human resources will remains limited," it noted.






Copyright © 2004-2014 Africagrowth Institute. All rights reserved