M a r k e t N e w s

Tanzania: Fresh Growth Figures Change Direction of Economic Debate

Posted on : Tuesday, 11th October 2016

 Dar es Salaam — Some experts hope that Tanzania will achieve a 7.2 per cent economic growth rate by the end of this year despite the fact that some of the government's decisions may deter the attainment of the goal.

Figures produced by Finance and Planning minister Philip Mpango in June this year showed that last year, the economy grew by seven per cent and that this year, the target is to reach 7.2 per cent.
Some analysts are however pessimistic that if some of the ongoing decisions are sustained, the 7.2 per cent target may not be easily achieved.
Those who have openly voiced their concerns to the effect of turning the debate into a political affair include the ACT-Wazalendo leader Zitto Kabwe and the leader of the opposition bench in the National Assembly, Mr Freeman Mbowe.
"Just recently, we heard the President saying people were hoarding money in houses, resulting into a decrease in the volume of money in circulation... ..When a Parliamentary Committee tells you that there is a drop in goods passing through our ports; when transporters are complaining; when the number of tourists visiting our country is going down; when hotels are closing shop and turning into hostels; what kind of data do you need to know that the economy is doing poorly?" Mr Mbowe said in the fourth session of the 11th Parliament in Dodoma a few weeks ago.
And, with the National Bureau of Statistics (NBS) showing that Tanzania's gross domestic product (GDP) grew by 5.5 per cent in the first quarter of 2016 compared to 5.7 per cent in the corresponding period of 2015, debate on the health of the economy has remained steadfast amid varied opinions.
However, last week's release of the GDP growth figures for the second quarter of the current calendar year may have shifted the debate towards the other direction.
In the new figures, the NBS says the GDP grew by 7.9 per cent during the second quarter of this year from 5.8 per cent that was recorded during the same period last year.
According to Prof Semboja Haji of the University of Dar es Salaam, the second quarter figure was an indication that the 7.2 per cent target would be met.
"If this continues, the 7.2 per cent target for 2016 will be easily met," he told The Citizen.
NBS's latest data received a big boost when the World Bank said last week that Tanzania is one of the countries in Africa whose economies were doing well.
"After slowing to 3 per cent in 2015, economic growth in Sub-Saharan Africa is expected to fall further to 1.6 per cent in 2016, the lowest level in over two decades... ..While many countries are registering a sharp slippage in economic growth, some others - Ethiopia, Rwanda, and Tanzania - have continued to post annual average growth rates of over 6 per cent," the WB said last week.
NBS director general Albina Chuwa believes the 2016 target will be met, hoping however, that all other factors remain constant and banking her hopes on the performance of the sectors have driven the growth during the first half.
During the second quarter, transport and storage grew by 30.6 per cent to lead a pack of best performing sectors during the second quarter under review.
Mining and quarrying came second, with a growth rate of 20.5 percent while information and communication increased a rate of 12.6 per cent.
However, in an apparent reaction to the government's move to conduct all public meetings and conferences in government-owned facilities, at a time when the tourism sector is also facing some challenges, the accommodation services sector recorded a slower growth rate of 2.6 per cent.
Similarly, the real estate recorded a lower rate of 2.3 per cent while the growth rate for the construction sector also went down to 9 per cent during the second quarter of 2016 from 13.2 per cent that was posted during the same period in 2015.
Way foward
Analysts believe that if the goal is to be attained and to start making sense in the lives of Tanzanians, the government needs to devise strategies that will make the growth inclusive.
Such strategies should include encouraging the formalization of micro and small enterprises; ensuring that the austerity measures, currently in place, are not sustained as well as going into it that the government spends much of funds on infrastructure projects to stimulate growth of other economic sectors.
"In an economy like ours, the government is one of the major purchasers, so when there is over austerity in its expenditures, it reduces the volume of money in circulation would and thereby adversely affecting growth of some economic sectors," said Prof Ngowi.
Achieving inclusive growth also entails making sure that small-scale traders have access to the technological know-how, the financial tools and the ability to change the regulatory framework to work in their favour, according to Prof Semboja.

Source : allafrica.com
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