Eastern Arc Mountains and Coastal Forests of Tanzania and Kenya ...

(d) Forestry Based Industries and Products Programme that attempts to enhance forest industrydevelopment, through promoting private sector investment and improving productivity andefficiency.Program formulation was completed in June 2001. Implementation arrangements are now beingdeveloped through partnerships with the main stakeholders, including local communities, theprivate sector and local governments.Economic SituationNational StatisticsBoth Kenya and Tanzania are grouped among the poorest nations in the world. Three of themajor economic indicators from 2001 for these two countries deserve particular attention: the lowper capita incomes ($271 in Kenya, $260 in Tanzania); the percentages of the populations earningless than one dollar a day (43 percent in Kenya, 50 percent in Tanzania) and; the economicgrowth rates (1.2 percent in Kenya, 5.6 percent in Tanzania). The post-independence histories ofthe economies in these two countries have been quite different.After independence, Kenya built up a strong economic lead over its neighbours in Eastern Africathrough the encouragement of market-oriented policies, smallholder agricultural production,public investment, tourism and incentives for private industrial investment. Over a 10-year periodfrom 1963-1973, Gross Domestic Product (GDP) grew by an average of 6.6 percent a year (USState Department Country Reports, 2002a). By 1997 it had dropped to 2.3 percent, then to 1.8percent in 1999 and became negative (0.4 percent) in 2000 (USAID 2000). A variety of factorswere responsible for the long decline. These included unfavourable terms of trade (increased oilprices, decreased tea and coffee prices), government invasion of the private sector, decliningtourism, political uncertainties, corruption and sheer bad governance (leading to the suspension ofbilateral and multilateral aid in 1991) (USAID 2000). Were it not for vigorous growth in the cutflower and horticultural export industries and the entrepreneurial skills of its people, Kenyawould have been in a much worse situation by 2000. A new government was democraticallyelected at the end of 2002 and there are considerable expectations that the economy will improve.Tanzania was a one-party state with a socialist mode of development from independence in 1961until the mid-1980s. Despite a substantial influx of foreign aid, the economy did not prosper.Beginning in 1986, the government began to liberalize its control of the economy and toencourage participation in the private sector. In 1996, a three-year Enhanced StructuralAdjustment Facility was agreed between the IMF and the Tanzanian Government. Over the nextfour years, economic growth averaged around 4 percent, rising to 4.9 percent in 2000 and to 5.6percent in 2001 (USAID 2002). Economic growth is most evident in Dar es Salaam. Althoughthe figures look good, Tanzania’s economy is overwhelmingly donor-dependent, with theexternal debt at more than $8 billion and debt servicing absorbing 40 percent of governmentexpenditure (USAID 2002b).34