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Topic : Growth and Poverty Reduction in Tanzania: Why such a Mismatch?  

Evidence from Poverty and Human Development Reports (PHDR) and the three Household Budget Surveys (HBS), and consultations with the public on the lessons learned during implementation of Poverty Reduction Strategies in Tanzania reveals little progress (if any) in the areas of income poverty and i ...Click here to read more

Comments From TAKNET Members
John Ernest kitoka  : Monday, February 23, 2009    
  Hey dear discussants,

I am a new entrant in this forum.And i really really love the ongoing discussions.

Well, I think hardly any right thinking person out there is opposed to the whole idea of economic growth. What should indeed be the crux of a deeper intellectual reflection is "the fundamentals".Are the fundamentals right?...In other words,what is it that we need to do to get the economy growing right?.....the neo-liberal economists of the day have always had a ready one fitting-all answer for all the economic situations and histories:Privatize, Devalue currency,Liberalize, cutdown lobour costs.....etc

In my opinion, the neo-liberal capitalist recipe is a non-starter and a quagmire that has chronically failed to place the pro-people development at the core of its theoretical and practical tussle.Do you still believe in such economics??

For God's sake...."economics"...i would dare say," is now a new colonial science". Beware guys



Joseph Michael Abila  : Friday, February 20, 2009    

Hi comrades,

I am Michael Abila, a new member into this valuable knowledge network. The discussion going on is interesting.

I stand to feel that our growth pattern is on right course. Only problem is policy mismatch. While economic growth is doing well, the drivers of such growth happen to be few sectors which common/poor Tanzanians do not belong. Under such scenario, you cannot expect any significant change in people's livelihoods, unless such growth is correctly matched with redistribution policies targeting the most vulnerable.

M. Abila


Balandya Elikana  : Thursday, February 19, 2009    
  Poverty reduction (if not eradication) is the central goal (commitment) of any nation’s development/growth strategy. In Tanzania this commitment is expressed in the National Strategy for Growth and Reduction of Poverty (NSGRP), or MKUKUTA in its Kiswahili acronym. The relationship between growth and poverty reduction is complex and not automatic, and one cannot associate poverty reduction with growth alone. The MKUKUTA for example, though emphasizes growth as the main vehicle for poverty reduction; it doubtless recognises growth as insufficient condition; equity and conditions that foster it are quite as vital (MKUKUTA Chapter IV Pg. 23).

It is however, undeniable that without growth there cannot be any hope for poverty reduction. Empirical evidence suggests that, countries which have been able to substantially reduce poverty are ones’ that managed to sustain high growth rate over a long period. China for example was able to reduce poverty from 50 percent to 8 percent with a sustained growth of about 8.5 percent over a period of 20 years (1981-2000; see H. Lopez and L. Serven-2005). Thus, in order to have any chance of reducing poverty the economy (GDP) has to grow (above the population growth rate) over a long period. It is this level of growth that is associated with sustainable increase of per capita (mean) income and therefore, poverty reduction.

According to available statistics from various sources of the Government of Tanzania (e.g. Economic Survey, Poverty and Human Development Report, etc. of various years) annual Real GDP growth has averaged 4.0% during 1995–1999; 5.8% during 2000–2004 and above 6.5% during 2005-2007 as compared to an annual growth of 2.5% during 1990–1994.

Despite the registered growth rate which is higher than the annual population growth rate of more than 2%, the level of poverty has not been reduced significantly, with the majority of the populations being not able to access basic needs (food, safe water, health services, etc). The 2007 Household Budget Survey (HBS) reveals that the percentage of Tanzanians living below the basic needs poverty line has slightly fallen from 35.7% in 2001 to 33.3% in 2007 (a decrease of 2.4%). With the population of 38.3 million, about 12.8 million people live in poverty. The situation in rural areas (where the majority live) is not encouraging either, as the incidence of poverty has decreased by only 1.3% (from 38.7% to 37.4%) during the same period.

The above statistics indicates that growth has not manifested itself into poverty reduction in the country. This suggests that growth alone cannot adequately explain poverty reduction in the country (or society). While I agree that growth is a necessary condition, other factors matters and needs to be taken into account when analyzing the effectiveness of growth for poverty reduction or when designing policies/strategies for growth and poverty reduction. There are many factors that can be considered including, the rate of growth itself (whether or not is higher enough to significantly reduce poverty), inequality and income distribution, sectoral composition of growth, access to resources, etc.

My contribution today focuses on sectoral composition of growth. When analysing the effectiveness of growth on poverty reduction, sectoral composition matters a lot as it determines sectors which are capable to significantly reduce poverty. In Tanzania, the growth of rural sector and in particular the agricultural sector is crucial for poverty reduction. Note that 80% of the poor live in rural areas; out of them 81% live in households where the main activity of the head of household is agriculture (see, Poverty and Human Development Report 2005). Sectoral composition therefore deserves great attention if growth can be able to reduce poverty for the majority poor.

The available data shows that the agricultural sector (including hunting and forestry), which is the main income generating activity for the rural majority, and employs a large section of the poor people has either stagnated or growing slowly. Over the period 2000-2006, agricultural sector growth has averaged above 4.0% (Economic Survey, 2007). This rate of growth is not higher enough to reduce poverty for the majority of the rural poor. The MKUKUTA for example states that if poverty is to be reduced by 50% by 2010, the agricultural sector growth has to be sustained at a rate of 10% for a period of at least five years (2006-2010). This has not been realized as we reach 2010, which is the end of MKUKUTA implementation. The sector’s share contribution to GDP is also consistently declining. It has declined from 30.3% in 1998 to 25.8% in 2007 (see, Economic Survey 2007 pg. 10).

The other sector which is capable of reducing poverty significantly is manufacturing (sub-sector of industry and construction). It can reduce poverty by employing a large size of population and assisting the agricultural sector to grow through backward and


Oswald Mashindano  : Tuesday, February 17, 2009    
  Dear Members

First of all, please accept my apology for my long silence. Secondly, thank you so much for your contributions on GROWTH-POVERTY mismatch. In my opinion, this is a good start, and it has been very live and active discussion. My initial reaction to most of the contribution/contributors is that we are making very important contributions, but not focusing on the subject on our table. Only one (which is not the main question) out of the 5 discussion questions is addressed. With exception of one contributor, the rest of us have been addressing livelihood (and the quality of life) and therefore the alarming poverty spread in the country. The discussion has basically been identifying the route causes of poverty in Tanzania and somewhat suggesting remedies. While this is pertinent and relevant to Tanzania, it does not provide answers to the question we posed for this forum.

The overall question we are trying to answer here is related to “Growth and Poverty Reduction in Tanzania: Why such a Mismatch?” The following background might be of use in understanding the agenda this forum intends to focus upon.

Evidence from Poverty and Human Development Reports (PHDR) and the three Household Budget Surveys (HBS), and consultations with the public on the lessons learned during implementation of Poverty Reduction Strategies in Tanzania reveals little progress (if any) in the areas of income poverty and inequality. The findings show disparities across social groups, gender and geographical location. The overall impression (conclusion) is that “overtime growth has helped the poor but was much better for the rich”. Relying on growth alone to reduce poverty is therefore neither equitable nor efficient.

Findings from the reports and surveys mentioned here show that while economic growth has made notable change overtime, reduction in poverty has been insignificant and un-proportional. The change in growth between 1991/92 and 2000/01 and between 2000/01 and 2007 Household Budget Surveys has been 206% and 15% respectively, whereas, a decline of the proportion of people living below basic needs poverty line (change in head count ratio: basic needs) in Tanzania Mainland has been only 2.9% and 2.4% between the two periods respectively. When a change in head count ratio using food poverty line is used - a similar trend is revealed; whereby the proportion of people living below the line was reduced by 2.9% and 2.2% only, in the two periods respectively – a very insignificant and un-proportional reduction.

Growth has not therefore translated into poverty reduction despite the fact that the economy recorded a significant change in growth between the two Household Budget Surveys (i.e. between the 1991/92 to 2000/01 HBS and 2000/01 to 2007 HBS). The growth process in Tanzania has not therefore been pro-poor, which raises two critical questions as to why does this mismatch emerge, and where does it originate.

This discussion topic is therefore intended to address a number of questions related to this discrepancy. The objective is to uncover the barriers which have been obstructing spillover benefits from economic growth achieved in Tanzania since early 1990s, thus permitting trickle down of the benefits. The following areas should therefore be the focus of the anticipated discussion:

• Is economic growth in Tanzania a real phenomenon (is it true that there is growth)?

• What are the growth drivers in the country?

• Has growth adequately been translated in to poverty reduction and improved quality of life of the people?

o If yes: What are the available evidence and/or indicators?

o If not: What are the reasons behind existing mismatch (between growth and poverty reduction)?

• What are the potential strategic interventions to address this discrepancy?


Admin  : Tuesday, February 17, 2009    
  With the poverty issues, what we are actually missing is the political will to drive this wheel to the destination. When government got to power they claim to take on board all the good things that the previous one had done good. A basic question we are posing and which may actually be of important with all the policies which were mainly in place from 2000s are they realily what we are building on or we have lost the direction and take a different road. If you go to SME policy, it looks as if everything had gone at the last page of projects and implementation schedule 2008. I would expect to see an evaluation document that gives us the picture of what we did with that policy and how much was not achieved and plans ahead of that. If we dont check on how much we have achieved/not achieved we might end up forming new programs and projects everyday which we may actually ending achieving nothing. That is one policy live alone many others like the national trade policy of 2003, Youth and employment policy, etc. How can we claim to actually either win or lose the battle of poverty reduction. This will remain the spirit of intention and determination of achievement. Why cant we take up simple example of football team evaluation which evaluates its performance either immediately after the match or some few times before the match through a friendly match.

Posted on Behalf of msjastin@yahoo.co.uk


Al-Amin Yusuph  : Wednesday, February 11, 2009    
  Let us use very simple speak: The discussion is based on the premise that the country's economy is growing while the reduction of poverty is not commensurate to the growth. So it is like, we gained a shilling more, but we do not see that shilling gained in the people.

What it means here is either; one, the economic growth is not a result of the majority of Tanzanians growing economically, so when you take those economic indicators, the growth related to the minority obscures that of the majority. Or it might mean, the growth is not reinvested back to the people, or in poverty reduction. And from some of the discussions that I see above, it seems we are investing in more flashy neon lights (modernization), than in health, education, roads, agriculture, infrastructure etc.

Or it might even mean that the few who run and maybe own the sectors that contribute to the nations success, reinvest in activities that contribute to the economic growth of the minority. Is there any other explanation? Ohh, yes, it might also mean that the reinvestments are not done in the country. Err....yes another meaning might be...It can also mean that the growth is not yet re-invested in poverty reduction, it is still somewhere on hold. And when the investment is done we will see changes. And above all, in Market economies, you cannot determine how one invests, or re-invests their capital, isn't it?


Fulgence J. Mishili  : Friday, February 6, 2009    
  Isaac, all that you have said is true. Nonetheless you should understand that serious planning and implementation of production and marketing program will include all that you have said. You can not talk of communication improvement before identifying the potential and priority areas to start that improvement. Further, proper marketing analysis and planning will help in identifying local and international customers for our produce and products.  

Safari Isaac  : Friday, February 6, 2009    
  Thinking about production and marketing alone might lead us to forget about important linkages in the entire process and the desired objective.They all are very important, but so what?Come to Tanzania and one will find that at the end we should come to alleviating poverty and attain a high level development. Agriculture should enable us to move away from where we are right now.How would the increased production and marketing lead us to where we want?The answer is specialization and increased domestic consumption.It is the domestic market which will tell the realities that will drive our economy to prosperity and the external market will add to our effort and contribution.Let our governments improve communication systems in order to facilitate information flow.Entrepreneurial education should be provided to our small farmers and businesses.Agricultural supplies should be available as they will be needed. The governments should be prepared to buy any surplus in order to encourage producers.  

James Gondwe  : Friday, February 6, 2009    
  Economic growth is idealistic if it is not translated to social development. In Africa if economic growth is to reduce poverty, there is need to focus on the policies that would result in recognition and improvement of the informal economy. The major problem is our development theories and strategies are a reflection of the precepts of modernization which hardly recognise the existence of the informal economy. Yet the majority of the poorest of the poor have their lives being anchored by the informal economy. Poverty reduction could be a reality if resources and policies are harnessed towards the deregulation and improvement of the informal economy. For example public spaces should be recognised as sources of livelihood strategies of the poor. There is need to deliberately set up some social and economic avenues where the five assets, human capital, physical capital, infrastructure capital, social capital and natural capital of the poor involved in the informal economy should be improved. The spread effects of economic growth could radiate to the poor if their livelihood strategies are enhanced. In short for the government to reduce poverty, the informal economy should be viewed from the postmodernist point of view which recognises its existence as a life supporting machine of the poor.  

Petro J. Emmanuel  : Friday, February 6, 2009    
  According to the Household Survey of 2000/01, some 20 per cent of rural people live in extreme poverty and about 39 per cent are considered poor. Within the agriculture sector, food crop producers are generally poorer than cash crop farmers, but both operate under cyclical and structural constraints, are subject to frequent natural calamities (drought and flooding), and lack market linkages, inputs, credit and irrigation water. Income inequality for rural areas has remained more or less constant and is rooted in inequitable access to productive assets, including land, financial services, livestock and education. According to a poverty profile survey of rural households, the percentage of the rural population producing food for home consumption has dropped by 10 per cent in the last decade. Few rural households have access to safe drinking water, primary education and medical treatment. There is also clear evidence that poverty increases with the distance from markets, drinking water supplies and health clinics.

Poverty in developing country has come to be a song of every one from the government leaders to the family level and it is been interpreted differently among the community from different geographical location.

For the developing countries like Tanzania in order to alleviate both income and non – income poverty the strategies should be developed once after analysis the root causes of poverty and priorities the causes by apply community participation approaches.

Mr. Petro J. Emmanuel

The government should promote and support the small and medium enterprises by provide regular entrepreneurship training and access them with financial services which the majority will raise income through agriculture, business, food processing whereby people can play part in poverty eradication.


Ntiyanka Manasseh Mambwe  : Thursday, February 5, 2009    
  Well a review in the overall economic system of the county if often seen a binding every one to a traditional perspective, however, the Economy of Tanzania if a phenomen, in a sence that we do directly feel the urge to foster healthy poverty reduction methods unlike the other neighboring countries, we still lag behind in several key sectotrs.

Nevertheless, competitveness in whatever perfomance of our economy might have potentials to double its self in a o period of time, and the week effectiveness in follow ups to corect the balance of payments that surfaaace in the Total Productivity , we are to fall back in many ways.

Economies of east africa as we might put it , are connected in terms of intrinsic and extrinsic characteristics of geographical off sets, and luckly we are place in a position that is open to the out side worl in terms of sea linings that means we have a potential of doubling our trade withe the rest of the world.

we might look at the current leadership and point out weeknesses but never dared to consider that they are under pressure to meet the needs of the the entire country and playing a key role to meet the demands of the funding nations, refering back to the post leaderships , like one of the discussants put it, "proper planning system" its what we need . the tendency of forcusting the huge budgets that are short term and siphoning the entire budget into single pockects is what every one should fight with no reservation.

Planning and settig up goals that are within our reach is what we should seek, and continuity , .i.e to say( 1st five year plan, 2nd year plan, ) I mean having a continued planned vision that is followed by the entire system )

planing that is meant to be worked on by every goverment that comes to power, and maintaing the sequency is vital.

The other Phenomenom is on the rate of investments though the are foreign investors but they have been given sectors that are single sided, that they employ less people and their way of operation is not well monitored.

such shortfalls take us back.

Manasseh M


Bariki Karosi Kaale  : Thursday, February 5, 2009    
  Dear friends

From my point of view, lack of effective integrated strategic planning is one of the key drivers for poverty -locking us to vicious circle of under development. I have picked energy to illustrate the issue.

Afforable, reliable and sustainable energy services is a pre-requisite for livelihood. Unfortunately in Tanzania we are concentrating development funds in developing the electricity sector that accounts for 2 percent of the total energy consumed in the country and ignoring the traditional energy sources like firewood and charcoal that are used by over 95 percent of the total population. For sustainable economic growth we need to intensify integrated energy planning in Tanzania. I have attached a brief case study on the subject. I will appreciate to receive members wisdom and suggestions on how we could contribute in intensifying availability of energy services to all Tanzanians in particular for the household sector.


Bariki K. Kaale


Fulgence J. Mishili  : Thursday, February 5, 2009    
  Much as it is important to focus our attention to production issues, we should nonetheless not forget the marketing issues. For many years our research focus in agriculture was mainly on production side which is good. However marketing side also deserved a considerable attention in order to help “if there is any help” our small scale farmers to climb out of poverty. The pertinent questions that we should ask ourselves are; Does farmers have good access to the market both local and international? Does the market pay what the farmers expect or at least to recover their costs of production? In short, I guess we need a package of plans, strategies and policies which will help to rescue our agricultural sector in Tanzania.  

Festo E. Maro  : Thursday, February 5, 2009    
  our agriculture sector is dominated by smallholder farmers almost 98%, mechanization or fertlizer subsidies trade off myth can be partially solved. The immediate cry from smallholder farmers is price of fertilizer which keep on rising. I was in Njombe, Kongwa, and Mbiga districts villages recently. Judging from their perspective at the moment is fertlizers subsidies than mechanization. Once there is increase in yields due to fertilizers, farmers will gradually see by themselves a need for tractors or plaugh (due to cummulative savings from the sales of surplus). Farmers strategies to cope from increase in inpuuts prices is reduction of production area as I observed from them. This is dangerous considering 60% of their substistence production is sold locally and remained is exported. If this is not taken seriously there will be even more food shortage and increase of poverty incidences in the country. This will be attributed to the failure of MKUKUTA to bring about the change to the pro-poor population.  

Peter Nyanje  : Thursday, February 5, 2009    
  Judging from what is happening, the so called ambracing pro-poor policies is a far teched dream. Just look at what is happening to billions which has been recovered from EPA. We were told by the President that the funds would be directed to revamp agriculture. This sounds like a pro-poor policy (if it a policy anyway). The plan we were told was that the funds would be used to strengthen a bank which will deal with financing the agriculture sector. But when the supplementary approrpriation bill was tabled in the parliament, we learnt that only 3bn/- is actaully directed to the bank and the big chunk of it has been allocated for other ministries, presumably what they are doing is strengthening agriculture. More of the fund will be used to incree the amount of subsidised fertilisers. But given the state we are in, what is important, subsidised fertilisers or mechanising the agriculture?  

Festo E. Maro  : Wednesday, February 4, 2009    
  Economic growth is good for the poor is well accepted as a result our government adopted MKUKUTA. However this was very ambitious in the sense that it seeks to promote growth of the entire economy and at the same time reducing poverty in the whole country. The strategy as good as it is, only end up creating growth with little trickle down effects to reduce inequality. However, this phenomenon is old as the study of economics. For the government to realize the benefits of growth, it has to pursue pro-poor policies which targets inequality reduction.  

Oswald Mashindano  : Wednesday, February 4, 2009    
  Dear members of the TAKNET Forum!

As you may be aware, TAKNET has been officially launched today at the New Africa Hotel. This launch was officiated by Dr Naomi B. Katunzi, the Permanent Secretary, Ministry of Communication, Science and Technology.

One of the three discussion themes is Growth and Poverty in Tanzania where we encourage contributors to focus on the factors which can explain the mismatch between the impressive economic growth rate attained by the country since 1991/92 Household Budget Survey, and the extent at which poverty has been declining in Tanzania. Thus, we would kindly like to invite you to join into discussion in specific issues spelt out below, or other related matters of your primary concern.

• Is economic growth in Tanzania a real phenomenon?

• What are the growth drivers in the country?

• Has growth adequately been translated in to poverty reduction and improved quality of life of the people?

o If yes: What are the available evidence and/or indicators?

o If not: What are the reasons behind existing mismatch (between growth and poverty reduction)?

• What are the potential strategic interventions to address this discrepancy?

Best Regards

Dr Oswald Mashindano



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