Introduction
Tanzania has received wide recognition for
steering its economy in the right direction.
In its recent publication, “Tanzania: the
story of an African transition” the IMF argues
that in the last two decades the Tanzanian
economy went through a period of successful
transition in which economic liberalization
and institutional reform led to a recovery of
GDP growth to more than 7% per year since
2000.
Has this growth succeeded in improving lives
of people? This note demonstrates that
this “successful transition” has failed to bring poverty reduction,
most of the progress has occurred in Dar es Salaam and
not in rural areas, andis associated with the poorest getting poorer and the richest richer
At the same time Tanzania remains off track to achieving the poverty MDG
/MKUKUTA targets, and
does worse than comparator countries in Africa and Asia
Fact 1: Economic transition has not reduced
poverty significantly
Surveys carried out by the National Bureau of
Statistics (NBS) show the absence of any
noticeable poverty reduction. Between 2001
and 2007 the fraction of poor people
in Tanzania declined very little (NBS 2001;
2007). The decline is so small that it is not
possible to say with a high degree of
certainty whether poverty actually went down, or
whether it remained unchanged
Table1: Poverty incidence since 1991
1991 2001 2007
Dar es Salaam
28.1 17.6
16.0
Other urban
28.7 25.8 24.2
Rural 40.8 38.6
37.4
Tanzania Mainland 38.6
35.6 33.4
Source: National Bureau of Statistics 2001 & 2007
Overall, in the 16 year period between 1991 and 2007,
poverty fell by about 5%. But
most of this change can be explained by progress in Dar
es Salaam. In rural areas, and
other urban areas, the decline in poverty is too small to
give confidence that poverty has
actually fallen
Fact 2: There are more poor people today
than in 2001
While the percent of people living in poverty (i.e. on less than Tshs 500
per person per
day, see Box 1) went down slightly since
2000/1, because the population has increased,
the total number of people living below the poverty line increased by 1.3
million in the
same period (see Table 2 below).
Table 2: Increase in amount of poor (in
millions) between 2001 and 2007
Population
(TZ
mainland) Poverty rate(%) Number of people
inpoverty
2001 32.4 35.6
11.5
2007
38.3 33.4 12.8
Increase in number
of poor: 1.3 million
Source: Economic Survey – Table 33, National
Bureau of Statistics 2001 & 2007
Box 1: How is poverty
measured?
In Tanzania people are
considered poor when their consumption is less than the
national poverty line,
whereby consumption includes all goods bought and those
produced and consumed
at home, such as food, household equipment, clothes,
personal effects,
personal care, recreation, cleaning, domestic services, contributions,
fuel, petrol, soap and
cigarettes. Not all consumption items are included in poverty
calculations. Expenses
on health, education and water are excluded for instance.
The national poverty
line was estimated by the NBS in 2001 based on the 2000/01
Household Budget
Survey. It represents the cost of goods (food and other goods)
typically consumed by
poor households. In 2001 the national poverty line was Tshs
7,253 per person per
28 days. As prices increased by 93% between 2000/1 and 2007,
the 2007 poverty line
is Tshs 13,998 (7,253 x 1.93) or approximately Tshs 500 per
person per day.
Fact 3: The very rich got richer and the
extremely poor got poorer
Not only did poverty not change much since
2000/1, extremely poor households
became poorer, while very rich households got
richer between 2000/1 and 2007. This
is illustrated in the graph below that shows
the rate of consumption growth for each
income group. On the horizontal axis the
population is ranked from the poorest to the
richest, with the most poor on the left side
of the axis and the richest on the right side.
Fact 4: Tanzania is not on track to achieve
MDG/MKUKUTA poverty targets
Tanzania has signed up to the Millennium
Development Goals (MDGs). The First MDG
commits Tanzania to reduce poverty between
1990 and 2015 by 50%. In 1991/92
poverty was 38% in Tanzania, so the objective
is to reduce poverty to 19% by 2015.
Figure 2 below illustrates that Tanzania is
off-track to reaching this target. The bars in the
figure show actual poverty levels, and the
thin line shows the current trend line, while
the bold line is the decline in poverty that
Tanzania would have to achieve to reach the
MDG goal.
It is clear that already in 2000/01 Tanzania
was off track as the bar exceeded the trend
line by 5.9%. Between 2001 and 2007 the
situation got worse as the bar now exceeds
the trend line by approximately 7.6%. The
MKUKUTA target, which aims to achieve the
MDG target by 2010, is entirely out of reach.
Fact 5: Tanzania has performed poorly
compared to other countries
Tanzania’s performance in poverty reduction
compares poorly relative to comparator
countries which like Tanzania were relatively
stable and who underwent macro-economic
reform in the region (Ghana, Uganda) and in
Asia (Vietnam and India). Whereas in
Tanzania headcount poverty declined by 2.4%
between 1991 and 2007, it dropped in
Uganda, Ghana and Vietnam by 10 times as
much: approximately 23 to 24%. India too
achieved a much higher reduction in poverty
(by 7%) over a much shorter period.
Fact 6: Up to half the people are
undernourished
The first MDG also focuses on reducing
hunger. Tanzania has made progress
in this area and the fraction of malnourished
children has reduced since 1991.
Nevertheless almost 4 out of every 10
children aged 0 to 59 months are chronically
undernourished and about 1 out of every 5
children weighs too little.
In line with the slight increase in
consumption, calorie intake has increased since
2001, albeit marginally. As Figure 4 below
illustrates, about 25% of the population
consumes too few calories to sustain their
body and carry out light office work. Only
half the population consumes sufficient
calories to sustain the calorie requirements
required for heavy (agricultural) work. Yet,
it is precisely those consuming least
calories (poor households) that are most
likely to be involved in physically strenuous
activity.
Fact 7: People own more assets, but their
overall value remains the same
Since 2001 ownership of consumer durables
increased substantially. Ownership of
televisions more than tripled while ownership
of bed nets doubled. Items such as radios
and bicycles also saw considerable increases,
and the ownership of (mobile) phones
boomed: in 2007 a quarter of all household
owned at least one phone. The increase in
consumer durables is mirrored in improvements
in housing conditions, although there
the changes are less impressive (NBS 2008).
The increase in ownership of consumer
durables implies an increase in welfare and
may be somewhat surprising in view of the
small increase in consumption. A change in
relative prices appears to be behind this
increase. What has happened is that households
started to own more of those durables that
became (relatively) cheaper and fewer of
the items that became relatively more
expensive. This is illustrated in Figure 5 below.
The assets which saw the greatest increase,
such as watches and mosquito nets, are the
assets for which prices dropped most. The
reverse happened for consumer durables that
became relatively more expensive.
In line with the limited change in
consumption, the overall value of assets owned
remained almost constant. Excluding cell
phones, the value of assets declined slightly.
When mobile phones are included, the overall
value of assets increases by 3% expressed
in 2000/01 prices.
Conclusion
Economic liberalization in Tanzania has, to
date, failed on an important count: to reduce
income poverty for most people. This is not
to deny advances in other areas (e.g. more
poor children are enrolled in school, more
assets are owned) but it illustrates that for
the majority of Tanzanians the ability to
sustain themselves did not change significantly.
From this perspective, it is hard to argue
that the economic transition in Tanzania has
been a success. Addressing this challenge
honestly and imaginatively needs to be at the
top of the policy and political agendas
For Detail visit
www.policyforum-tz.org
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