Poverty and Human Development Report 2009 - UNDP in Tanzania

Conclusion
Chapter 2
income poverty rates overall changed little between 2000/01 and 2007, as reflected in the
nearly constant levels of household consumption and income inequality over this period. At
national level, household consumption per capita increased by only 5%, implying an average
change of 0.8% annually. At the same time, income inequality remained at close to the same
level – the poorest group of households experienced a small fall in consumption, while the least
poor group experienced a slightly larger increase. results from expenditure patterns and asset
ownership, are consistent with the finding that income poverty levels have barely changed. As
a consequence, the MKuKutA target for income poverty reduction is now out of reach, and
tanzania faces a huge challenge to achieve MdG1 by 2015. to do so will require annual real
consumption growth of 3.2% per capita, four times higher than the existing level. encouragingly,
from a policy perspective, a significant proportion of households have consumption levels not
far below the poverty line.
data show that household consumption is extremely low. Almost 98% of households spend
less than tshs 58,000 per month per adult equivalent on food and basic necessities (2007
prices), and approximately 80% spend less than tshs 38,600 per month or tshs 1,380 per
day. to achieve meaningful change in household well-being, consumption levels must increase
significantly. Continued high rates of economic growth over the long term will be required.
since tanzania’s level of income inequality is currently low, even by international standards,
redistribution of income is not likely to be effective.
ownership of consumer durables, productive assets and the quality of housing did improve for
all wealth quintiles in both rural and urban areas. this was largely the result of falling prices for
these assets, which enabled tanzanians to buy more for less money. in part, this reflects the
positive change to a more liberalised market environment in tanzania.
poverty remains an overwhelmingly agricultural phenomenon, particularly among cropdependent
households. the majority of tanzanians remain engaged in agriculture, but it is
the least remunerative sector in the economy, with a household poverty rate of 38.7%. the
combination of the large portion of the population engaged in agriculture and high poverty
rates explains why three-quarters of the poor are dependent on agriculture. households are
diversifying out of agriculture seeking to improve their well-being. indeed, diversification of
income-generating activities is occurring across all wealth quintiles. however, the success of
households in diversification, as reflected in the amount earned from non-farm activities, varies
markedly across quintiles. the least poor households earn approximately eleven times more in
self-employment than do the poorest households. it would appear that the least poor households
diversify to exploit opportunities, while the poorest households diversify out of desperation
and for survival. these findings have strong implications for the development of MKuKutA ii.
Given that the majority of tanzanians will continue to reside in rural areas and derive livelihood
from agriculture, it is imperative to prioritise interventions that raise agricultural productivity.
furthermore, since capabilities to identify and implement non-farm income-generating activities
take time to develop, programmes have to be developed to nurture and sustain household
capabilities for successful diversification.
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