Poverty and Human Development Report 2009 - UNDP in Tanzania

Cluster I Conclusions and Policy Implications
CLUSter I- CONCLUSIONS aND pOLICY IMpLICatIONS
data on indicators for MKUtUta’s cluster i show that tanzania has sustained historically high
rates of gdP growth since 2000. Yet only slight reductions in household income poverty have
been achieved over the same period. in part, increased public spending and capital investment
have accounted for much of the distribution of gdP growth from 2000 to 2007, while household
consumption has grown less rapidly. however, comprehensive analysis of recent poverty trends
is required to inform the strategic choices in the next phase of MKUKUta towards realising
national goals, including poverty reduction targets, of vision 2025.
the economy is showing signs of structural transformation with an increasing share of gdP from
services, mainly transport/communication, wholesale and retail trade, and construction, and
from manufacturing, albeit from a small base. in contrast, the share of the agricultural sector in
total gdP has reduced. however, the decline in agriculture’s contribution to gdP and increasing
levels of off-farm employment are not associated with productivity growth but rather with
continued low returns in the sector and limited incentives for increased production and trade,
especially in food crops. farming households continue to be the poorest. these are not positive
developments. the majority of smallholders remain effectively cut off from the national growth
story with little access to technological improvements and inputs that enhance productivity.
on a positive note, analysis in chapter 2 indicates that rural households own more consumer
durables than in 2000/01, and the quality of their housing has improved. rural residents have
also benefited from increased public spending on education and health services.
Unemployment nationally has fallen. the labour market continues to absorb the majority of
new entrants, but most jobs are concentrated in the informal sector and characterised by low
productivity and low earnings. Many farmers are also under-employed. this contrasts with
significant and steady increases in foreign direct investment, especially in mining and tourism.
the former has driven major gains in exports and capital investments, but linkages to local supply
chains and employment opportunities are still limited. business surveys commonly report that
the lack of adequately skilled workers is a major constraint to development. a growth strategy
must, therefore, prioritise investment in quality education and vocational and skills training.
energy and transport infrastructure are also commonly cited as constraints. electricity provision
is improving, but still subject to outages caused by inadequate maintenance and investment
in infrastructure. the proportion of national and regional roads in good and fair condition is
also rising. however, a high proportion of district and feeder roads remain in poor condition.
further investment in both roads and port facilities are needed to realise tanzania’s comparative
advantage as a trade and transport hub for neighbouring landlocked countries.
the year 2008 was also characterised by a number of shocks, including increased domestic food
prices and rising domestic oil prices triggered by a hike in global oil prices. inflation reached double
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