Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized THE WORLD BANK GROUP AFRICA REGION POVERTY REDUCTION & ECONOMIC MANAGEMENT JUNE 2014 ISSUE 5 http://www.worldbank.org/tanzania/economicupdate 88932 The Magnetic Power of Cities Who Wants a Job? THE WORLD BANK TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK PAGE http://www.worldbank.org/tanzania/economicupdate. b T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Table of Contents .....................................................................................................v Foreword. Acknowledgments.................................................................................. vii Key messages............................................................................................ ix Part I: The State of the Economy............................................................. 1 1.1 Recent Developments................................................................................................ 3 1.2 Outlook: Short to medium-term prospects.........................................................15 1.3 .... 21 The Next Challenge: Creating Jobs for Faster and More Equitable Growth. Part II: Promoting Growth and Job Creation in the Context of Urbanization............................................................................................ 29 2.1 A profile of Businesses in Tanzanian cities..........................................................32 2.2 .........................................................................35 Small Businesses, Big Challenges. 2.3 .....................43 How to Harness the Potential for Growth of Urban Businesses. Statistical Annexes................................................................................. 53 1. Key Macroeconomic indicators 2005-2013........................................................54 2. Real GDP growth rates 2000-2013......................................................................55 3. ..56 Shares of economic activities in GDP (current market share) 2000-2013. 4. Quarterly GDP growth rates 2002-2013.............................................................57 5. Fiscal framework as a percentage of GDP 2007/8-2013/14..........................58 6. Provisional monthly government expenditures 2013/14................................58 7. Balance of payments (percentage of GDP unless otherwise indicated) .................................................................................................59 2005/6 – 20013/14. 8. Monthly imports of goods and services (US$ million) 2012-13.....................59 9. Monthly exports of goods and services (US$ million) 2012-13..................... 61 10. Inflation rates 2011-2014........................................................................................ 61 11. Monthly food crop prices (Wholesale) 2012-14................................................62 12. Average wholesale prices 2012-14.......................................................................63 13. ...........................................................................64 Interest rates structure 2012-14. 14. Monetary aggregates 2005/6-2013/14..............................................................65 15. National debt developments.................................................................................65 16. .............................................................................66 Poverty by geographic regions. PAGE http://www.worldbank.org/tanzania/economicupdate. i TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK List of Figures Figure 1: GDP growth robust at an average close to seven percent................................ 3 Figure 2: Tanzania’s growth remains high compared to her neighbors........................... 3 Figure 3: Sector growth in the first three quarters of 2013................................................ 4 Figure 4: Sectoral composition of growth.............................................................................. 4 Figure 5: Inflation has declined significantly in recent years.............................................. 7 Figure 6: Decline in broad money and private sector credit growth over the last couple of years.......................................................................................................................................... 7 Figure 7: Tanzania’s exchange rate dynamics....................................................................... 8 Figure 8: Higher reserves, lower current account deficit................................................... 8 Figure 9: The shift from aid to private capital inflows......................................................... 8 ......................................11 Figure 10: The Government missed its fiscal target in 2012/13. Figure 11: Domestic revenues have flattened in 2012/13..................................................11 Figure 12: Unpleasant reality check: More recurrent expenditure, less development expenditure in 2012/13........................................................................................................... 12 Figure 13: Public debt and debt service on the rise........................................................... 13 Figure 14: Tax revenues have been lower than budgeted in the first three quarters of 2013/14....................................................................................................................................... 14 Figure 15: Low execution of public spending in the first three quarters of 2013/14..... 14 Figure 16: Public debt service payments.............................................................................. 21 .......................................................... 21 Figure 17: Net present value of Public Debt to GDP. Figure 18: Tanzania has one of the lowest earning rates per worker in the world (2012, US dollar).......................................................................................................................22 ...........................................................................23 Figure 19: Rapid urbanization in Tanzania. Figure 20: As nations develop, the population is concentrated in towns and cities...25 Figure 21: Firm concentration around urban centers........................................................27 Figure 22: The gradual transformation of the Tanzanian Economy............................... 31 Figure 23: Number of non-farm enterprises (2010/11)..................................................32 Figure 24: Growth of non-farm enterprises, 2008/9-2010/11........................................32 ..................................................... 37 Figure 25: A snapshot of education levels in Tanzania. PAGE http://www.worldbank.org/tanzania/economicupdate. ii T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK List of Tables Table 1: Export and Import performance in 2012 and 2013, in US$ million................... 9 Table 2: Macro-economic projections (% of GDP, unless otherwise indicated)...........15 Table 3: Dar’s growth is outpacing the country . ...............................................................24 Table 4: Number of households owning durable goods in Dar es Salaam ..................26 Table 5: Summary of improvements needed to harness the growth of urban businesses ................................................................................................................43 List of Boxes Box 1: Pulse of the Economy.................................................................................................... 5 Box 2: The potential impact of natural gas on Tanzania’s domestic businesses......... 16 Box 3: Ghana as a Cautionary Tale........................................................................................20 Box 4: Capturing the Benefits of Dar es Salaam’s Rapid Urbanization is important for the National Economy, but there are significant hurdles..................................................24 ............................................................26 Box 5: Growing demand for goods in urban areas. Box 6: X-ray of businesses operating in urban centers.....................................................33 Box 7: Small urban non-farm businesses as a vector of employment: Let the numbers speak............................................................................................................34 Box 8: From household enterprise to conglomerate.........................................................35 ....................................36 Box 9: Growing small businesses in an environment of distrust. Box 10: Two examples of excessive administrative burden.............................................. 41 ...........................44 Box 11: Swahiliwood: Tanzania’s movie industry as a growing niche. Box 12: Tanzania Virtual Business Incubator.......................................................................46 Box 13: Promoting financial inclusion through technology..............................................50 PAGE http://www.worldbank.org/tanzania/economicupdate. iii TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK PAGE http://www.worldbank.org/tanzania/economicupdate. iv T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Foreword True to its performance over the past debt-service payments at the expense of decade, Tanzania’s economic growth development spending. The Government has continued on sound footing. With has also continued to accumulate arrears GDP growth anchored at seven percent, with suppliers and pension funds, which inflation in the range of six percent, and a reached almost five percent of GDP at end- much improved current account balance, March 2014. the country’s economy has outperformed those of many other developing and Although fiscal developments warrant industrialized countries. concern, recent history reminds us that Tanzanian policymakers have been able However, some clouds have recently to navigate through stormy skies before, appeared on the horizon. In 2013 Tanzania notably during the agitated times of reported its weakest export growth since the global financial crisis in 2008/9. the late 1990s. While this slowdown is Nonetheless, the stakes are high this time principally the result of lower commodity around because public debt and debt- prices on international markets (particularly service payments have increased rapidly, gold), it is a stark reminder that Tanzania while the fiscal space has been reduced, remains vulnerable to external shocks. forcing expenditure adjustments. This Of greater concern is the deterioration is taking place not too long before the of the overall fiscal deficit which reached November 2015 national elections, which 6.8 percent of GDP – one percent higher may limit the scope for fiscal adjustment. than initially targeted in 2012/13. Over the first three quarters of the current year, the This fifth economic update also examines fiscal situation has remained fragile. The prospects for economic prosperity in the ambitious revenue targets were missed context of rapid urbanization; in particular, by almost US$ 1 billion resulting in cuts how the growth of cities can be harnessed to in the purchase of goods and services as create productive jobs for a labor force that well as much needed investment projects. is expected to double in the next 15 years. The composition of public expenditures is By 2030, Dar es Salaam will be a mega city thus increasingly biased toward wages and of over 10 million people. As demonstrated PAGE http://www.worldbank.org/tanzania/economicupdate. v TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK by many countries in the world, cities uncertainty, corruption, and insecurity that encourage the creation and expansion of characterizes the business environment. businesses by reducing distances between This economic update argues that these suppliers and customers. Can Dar es challenges need to be addressed with Salaam and other Tanzanian urban areas a sense of urgency. As with the previous become thriving cities? Can they avoid editions, I hope that this latest economic becoming metropolis slums? update will help stimulate a debate among stakeholders in Tanzania on what Urbanization comes with significant is unquestionably a central topic for the challenges, notably in terms of increased country’s future. pressure on infrastructure, housing, and service provision. The quality of the business climate in urban Tanzania Philippe Dongier will need to be improved, as most small Country Director for Tanzania, Uganda and and large entrepreneurs suffer from the Burundi PAGE http://www.worldbank.org/tanzania/economicupdate. vi T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Abbreviations and acronyms BoT Bank of Tanzania BRN Big Results Now DART Dar es Salaam Rapid Transit DAWASCO Dar es Salaam Water and Sanitation Company DSA Debt Sustainability Analysis EAC East African Community FDI Foreign Direct Investment GDP Gross Domestic Product GPS Global Positioning System HBS Household Budget Survey HIPC Heavily Indebted Poor Countries ICT Information and Communication Technology IDA International Development Association ILO International Labour Organization IMF International Monetary Fund KWFT Kenya Women’s Finance Trust LGA Local Government Authority LNG Liquefied Natural Gas MFI Microfinance Institutions MoF Ministry of Finance NBS National Bureau of Statistics NPS National Panel Survey NSSF National Social Security Fund OECD Organization for Economic Co-operation and Development PPPs Public-Private Partnerships PSI Policy Support Instrument PSPF Public Service Pension Fund REPOA Policy Research for Development SMEP Small and Micro Enterprise Programme TANESCO Tanzania Electrical Supply Company TZS Tanzanian Shilling US$ United States Dollars VAT Value Added Tax VBI Virtual Business Incubator WDR World Development Report PAGE http://www.worldbank.org/tanzania/economicupdate. vii Acknowledgment This fifth edition of the Tanzania Economic Update was prepared by Jacques Morisset in close collaboration with Victoria Cunningham (Part I) and Mahjabeen Haji (Part II). The authors are grateful for comments and inputs provided by Emmanuel A. Mungunasi, Andre Bald, Loy Nabeta, Paolo Mauro, Thomas Baunsgaard, Megha Mukim, and Yutaka Yoshino. The report also benefited from the insights of two peer reviewers, Paolo Zacchia and Luc Christiensen. The team received guidance from Albert Zeufack and Philippe Dongier. Irfan Kortschak provided copy editing services, Justina Kajange provided other invaluable assistance during the report’s preparation (Photography: Angela Ambroz & Venance Nestory). PAGE http://www.worldbank.org/tanzania/economicupdate. viii T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Key messages By 2027, more Tanzanians will live in requires the provision of adequate social urban areas than in the countryside, and and physical infrastructure. Unfortunately, Dar es Salaam will be a megacity with a in all of these areas, Tanzania is at risk of population in excess of 10 million. The falling behind. growth of most emerging nations has Part 1: The State of the Economy been characterized by similar patterns of transformation, involving the movement of In 2013, the rate of economic growth a significant proportion of the population increased to seven percent, which is away from rural areas and agriculture, close to Tanzania’s 10-year average and and towards manufacturing and services significantly higher than the rate achieved in the cities. The process of urbanization by other EAC countries. Inflation decreased creates great opportunities for growth to about six percent, after rising to almost and transformation in Tanzania. Indeed, 20 percent at the end of 2011. The balance cities can play a significant role in fostering of payments improved, largely due to a equitable economic growth and creating sharp increase in private capital inflows. productive job opportunities, reducing These private inflows compensated for the distance and expanding markets. slight deterioration in the trade balance and decreases in aid inflows. The level But urbanization also comes with significant of international reserves was equivalent challenges. In particular, these arise from to the value of more than four months the lack of a conducive environment to of merchandise imports at the end of foster the growth of small businesses, 2013. These achievements emphasize the which in turn is related to the uncertain rule strengths of the Tanzanian economy. With of law, excessive bureaucracy, corruption the recent discovery of massive natural and rent seeking, congestion and lack of gas reserves, the country has become basic services. These challenges can be increasingly attractive to international addressed through the implementation of investors. smart policies to facilitate positive growth in urban areas. The growing concentration On a less positive note, in 2013, Tanzania of the population in urban areas also reported her weakest export performance PAGE http://www.worldbank.org/tanzania/economicupdate. ix TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK since the late 1990s. The value of gold fiscal deficit, only 82 percent of the revenue exports declined by 20 percent due to target was achieved, with the total value a decline in international prices, while of collected revenues almost US$ 1 billion the value of several agricultural exports less than initially envisaged. As a result, also declined, though to a lesser extent. the authorities had to cut or postpone the These developments highlight Tanzania’s implementation of a number of investment persistent vulnerability to variations in programs as well as goods and services commodity prices on international markets. purchases. Despite these measures, the total value of arrears continued to grow, Additionally, and of greater concern, the reaching almost five percent of GDP at the overall fiscal deficit deteriorated sharply to end of March 2014. This excludes arrears levels equivalent to 6.8 percent of GDP in accumulated by public enterprises such as 2012/13. Not only did the Government miss TANESCO with their suppliers. If taken into its initial target by more than one percent of consideration, these could add up to two GDP, its most significant failure to achieve percent of GDP to the total value of the its targets since the 2008/9 global financial Government’s arrears. crisis, but also the reasons for the failure are rather alarming. The level of collection While these developments may not of domestic revenues was poor, while the have immediate consequences, they ratio between current expenditures and nevertheless signal discontinuity from development expenditures deteriorated. Tanzania’s recent history of prudent Although expenditures were forecast to macroeconomic and fiscal management. If rise, the balance between recurrent and left unaddressed, they could have serious development expenditure has not been implications including jeopardizing the as expected, with recurrent expenditures implementation of the ’Big Results Now’ increasing at a more rapid rate than initiative, which depends heavily on the development expenditures. A large Government’s capacity to finance priority proportion of the deficit was funded by investment projects. Indeed, Tanzania can commercial borrowing on the domestic remain on a positive growth trajectory into market. The value of these loans was the future, so long as the Government higher than the target agreed upon with can consolidate its fiscal deficit. Economic the IMF by 1.2 percent of GDP. These loans growth, projected to stay at around seven were still insufficient to close the fiscal gap, percent, should continue to be driven by since arrears including with pension funds, the same rapidly expanding sectors as grew to almost four percent of GDP by the in previous years. The rate of inflation is end of June 2013. expected to stabilize at around five percent per annum, provided the economy is not The first three quarters of 2013/14 proved negatively impacted by food and energy to be equally problematic. In spite of the price shocks. The current account deficit Government’s commitment to reducing the should remain at around 12-14 percent PAGE http://www.worldbank.org/tanzania/economicupdate. x T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK of GDP, with the deficit being financed Part 2: Promoting Growth and Job by growing private capital inflows. The Creation in the Context of Urbanization revenues from investments related to Tanzania’s rapid urbanization is contributing the exploitation of natural gas are not to the transformation of the economy and expected to begin flowing before 2016 or its labor force. Already, there are visible 2017, if the decision is confirmed by foreign signs of change with the contribution of companies. the agricultural sector to GDP declining The Government has reiterated its relative to that of other sectors. New commitment to bringing down the overall businesses are thriving in urban areas and fiscal deficit to about five percent of GDP grew twice as fast as businesses in rural in 2013/14, and then to around 4.5-5.0 areas between 2008/09 and 2010/11. percent of GDP in subsequent years. While Today, the number of non-farm businesses Tanzania’s track record speaks for itself, in urban Tanzania is estimated to be in more efforts are required to collect a higher excess of two million, with the number level of revenues from Value Added Tax; to growing rapidly. The unemployment rate is better control current expenditures; and to quite low, at around four percent. However, prioritize public investment in line with the this low rate disguises the fact that many BRN initiative. The fiscal risks are still high, people do not have productive jobs with as the authorities may have to service sufficient earnings to sustain themselves the growing value of arrears with sources above the poverty level. While there are such as pension funds in order to deal a number of large successful firms in with the fragile situation of several public urban areas, a significant proportion of enterprises. employment in these areas is provided by small, unproductive non-farm enterprises Beyond the fiscal adjustment, the that lack the capacity to expand and Government will have also to address the become competitive. structural transformation that has resulted from rapid population inflows into urban They are small, young, fragile, informal and Tanzania. There is a pressing need to unspecialized businesses and are operated create productive jobs for the fast-growing by owners with limited skills. These labor force, particularly in urban areas. owners have been described as ’reluctant Today, there are approximately 23 million entrepreneurs’, as they often establish Tanzanians on the job market, with this businesses for the sole reason that they number projected to reach 45 million by have no other option for survival. Typically, 2030. Action should be taken to ensure these enterprises are involved in general that Tanzania’s cities, particularly Dar es trading activities and are not well equipped Salaam, become thriving metropolises to expand and become competitive. They rather than metropolis slums. are not very profitable and the average PAGE http://www.worldbank.org/tanzania/economicupdate. xi TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK business reports monthly profits of less uneducated labor force, and by the limited than TZS 282,000 (US$ 176). About 90 ownership of property and assets. A labor percent of these businesses have less than force with a low level of skills and facing two employees (including the owner), and the constraints related to the business operations are sporadic over the year. Only environment creates further obstacles for four out of 10 businesses survive, and most the development of small businesses. never expect to grow. Moreover, access to credit is difficult, Success for Tanzania rests with its ability as traditional bank financing is often to transform a fraction of these firms not available to small businesses due to into vectors for economic growth and job the high transaction costs associated creation. For the moment growth is neither with managing small loans. This has led feasible nor realistic. They are not capable to the widespread use of informal and of growing past a certain point. For many of semi-formal sources of credit that can be them even mere survival is problematic. On expensive too in their own way. Congestion the other hand, a smaller share of dynamic costs are also disproportionately high. For firms with potential to achieve improved example, residents of Dar es Salaam spend growth and profitability are generally approximately 34 percent of their average managed by higher skilled owners with monthly incomes on transportation, better access to transportation, markets limiting the resources and productive time and basic infrastructure such as electricity; available for operating a business. in addition to better access to, and ability to utilize, external capital. The challenge for The business environment is characterized Tanzania therefore is to replicate the success by excessive administrative burdens, stories of the few dynamic firms that have corruption, and sticky labor laws, all of which managed to flourish despite the odds and to act as disincentives to the formalization of encourage others to emulate their example. business and hiring outside the household. The prevailing distrust in the business Larger firms are more likely to have the environment is fostered by inconsistent capabilities to overcome the challenges and erratic changes in policies, with costs inherent in operating in Tanzania’s business embedded in the uncertain rule of law. The environment. On the other hand, small- unpredictable functioning of the judicial scale entrepreneurs with limited human and system combined with the lack of clearly financial resources are disproportionately defined property rights over land used for burdened with these constraints. The business premises leads to more time being average Tanzanian completes only seven spent on risk mitigation strategies rather years of education, with only around 12 than on productive business activities. percent of the population completing secondary education. This is reflected Despite these multiple challenges, small in the country’s young and relatively urban businesses have great potential to PAGE http://www.worldbank.org/tanzania/economicupdate. xii T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK grow. However, there is no single blueprint Time is of the essence. While urbanization for success. Rather, a minimal set of creates opportunities, the rapid influx of improvements should target constraints that people into urban areas is placing rapidly hinder businesses from achieving economies increasing pressure on existing services and of scale and agglomeration effects. These infrastructure. While Tanzania has made include (i) alternative methods of building some progress, it must nevertheless strive skills for firms; (ii) reducing congestion harder if it is to achieve its aspirations of costs; (iii) reducing excessive administrative becoming a middle income country and procedures and insecurity; and (iv) breaking fostering equitable growth that benefits all the trap of informality. of its citizens. PAGE http://www.worldbank.org/tanzania/economicupdate. xiii Th T e Wo he rlld W or dBBa an k Po nk ve P ov rt y R er Re d u c t i o n a n d E Ec o on Ma no m i c M na an ge ag me em en nt Un tU Af n ii t A ri c a R fr Re g i o n THE BANK WORLD BANK THE WORLD 1 The State of the Economy PAGE http://www.worldbank.org/tanzania/economicupdate. 1 Part I: The State of the Economy ♦♦ In 2013, the Tanzanian economy followed the same positive trajectory as in recent years, growing at a rate of about seven percent and with inflation leveling at six percent. Despite the fact that exports recorded their worst performance in the past 10 years, the balance of payments improved slightly during the year, with higher private capital inflows compensating for the deterioration in the trade balance. ♦♦ However, the overall fiscal deficit reached a value equivalent to 6.8 percent of GDP in 2012/13, which is 1.3 percentage points higher than initially targeted by the authorities. This deterioration is explained by lower than envisaged levels of revenue collection and a relatively high level of recurrent expenditures rather than by an increase in development spending. A large proportion of the deficit was financed by public non-concessional borrowing and through the accumulation of arrears with contractors and pension funds. ♦♦ Looking to the future, no major changes are expected in Tanzania’s growth path, so long as the Government successfully implements measures to consolidate the deficit at around 4.5-5.0 percent of GDP. The authorities must strive to improve revenue collection, an area in which poor performance has been recorded over the past two years. The authorities must also control current expenditures to provide fiscal space for their ambitious public investment programs and to maintain fiscal and debt sustainability over time. ♦♦ Despite Tanzania’s good macroeconomic performance over the past decade, it has been unable to generate a sufficient number of productive jobs providing decent salaries. Unique opportunities can however, be seen in the agglomeration effects of the ongoing rapid urbanization for firms to develop and create productive jobs, which in turn will stimulate economic growth through productivity gains and higher demand for local products. PAGE http://www.worldbank.org/tanzania/economicupdate. 2 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK 1.1 Recent Developments grew by more than 2.5 percent of GDP, In 2013, the Tanzanian economy continued to while development expenditures declined grow at a good rate of approximately seven by approximately 0.7 percent of GDP. While percent. At the same time, inflation leveled this deficit was largely financed by growing to approximately six percent. However, public commercial debt, it was also despite this excellent performance, some accompanied by a significant increase in clouds have appeared on the horizon. arrears which are now estimated to reach Firstly, the rate of growth in the value of a value equivalent to four percent of GDP. exports declined to approximately one These arrears have been accumulated percent. This was largely due to decreases principally with road contractors and in global commodity prices, particularly the pension funds. price of gold, which dropped to its lowest level since the late 1990s. The impact of Economic growth remained robust with commodity prices on Tanzania’s growth leveled inflation demonstrates its continued vulnerability to external shocks and to volatility in the price In 2013, Tanzania continued to achieve of its major export commodities. rapid, stable economic growth. The In 2013, the rate rate of growth stood at approximately of growth stood Secondly and more importantly, the fiscal seven percent, which is consistent with at approximately seven percent, deficit deteriorated from 3.7 percent Tanzania’s ten-year historical average (see which is consistent of GDP in 2011/12 to 6.8 percent in Figure 1) and significantly higher than the with Tanzania’s 2012/13. Without significant increases in rate of growth achieved by neighboring ten-year historical domestic revenues, recurrent expenditures Uganda and Kenya (see Figure 2). average. Figure 1: GDP growth robust at an Figure 2: Tanzania’s growth remains high average close to seven percent compared to her neighbors Source: World Bank, IMF. PAGE http://www.worldbank.org/tanzania/economicupdate. 3 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK As with recent years, economic growth contributes to approximately 25 percent in 2013 was driven by growth in a few of GDP (see Figure 4), remained lower select sectors, particularly the ICT, than that of the overall economy. The financial services, construction, trade consistently lower-than-average rate and mining sectors (see Figure 3). of growth of the agricultural sector With the exception of mining, activities explains the relatively slow decline within these sectors are largely of poverty in rural areas and the concentrated in urban areas. They are accelerated pace of migration from also relatively capital intensive, creating rural to urban areas. Because these a limited number of jobs, except through two phenomena have had and will construction activities. By contrast, the continue to have a significant impact on rate of growth of the labor-intensive Tanzania’s economic and demographic The consistently agricultural sector, which employs profile, they will be described in greater lower-than-average rate of growth of three quarters of the workforce and detail in later sections of this update. the agricultural sector explains Figure 3: Sector growth in the first three quarters of 2013 the relatively slow decline of poverty in rural areas and the accelerated pace of migration from rural to urban areas. Source: Tanzania National Bureau of Statistics Figure 4: Sectoral composition of growth Source: Tanzania National Bureau of Statistics PAGE http://www.worldbank.org/tanzania/economicupdate. 4 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK According to the KPMG/World Bank also relatively positive regarding the ‘Pulse of the Economy’ survey, Tanzanian prospects of their own businesses next business people remain optimistic year. However, the level of optimism of regarding the overall performance of respondents was significantly lower than the economy, with 64 percent of survey in December 2013, with only around half respondents stating that the economy of these respondents expressing the belief performed better or the same in 2014 that 2015 would be better than 2014, than in the previous year (see Box 1). compared to more than 80 percent six The majority of survey respondents were months ago. Box 1: Pulse of the Economy The views of the business managers of the top 100 mid-sized companies in Tanzania have been collected every six months since April 2013 (*). How do you believe the Tanzanian economy is performing compared to last year? While still optimistic, the majority of business leaders are less positive about the state of However, the level the economy now than they were six months ago. According to the survey, 64 percent of optimism of of business managers still believe that the economy is doing at least as well as last respondents was year. However, this is a decline from the 79 percent who expressed a similar opinion in significantly lower December 2013. Of the survey respondents, 36 percent felt that the performance of than in December 2013, with only the economy has declined, a significant increase from the 22 percent who expressed a around half of similar opinion only six months ago. these respondents expressing the belief that 2015 would be better than 2014. How do you expect the Tanzanian economy to perform in the coming year? Nevertheless, managers continue to be optimistic regarding the future prospects of the economy, with 83 percent of respondents expressing the belief that the economy will remain the same or improve over the coming year. On the other hand the proportion of respondents who claimed that the performance of the economy will decline over this period has increased by eight percent over the past six months. PAGE http://www.worldbank.org/tanzania/economicupdate. 5 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK     How do you think that your own business will perform during the next 12 months compared to its current level of performance? The most notable result of the survey was the significant decrease over the past six months in the proportion of business managers who were optimistic that the performance of their own businesses would improve over the next 12 months. The proportion of business managers expressing this optimism declined from 85 percent six months ago to 49 percent. More than half of the respondents believed that the level of performance of their own businesses would either stay the same or decline. Food inflation,     which accounts for approximately half (*) Data was compiled by KPMG, through electronic questionnaires. Responses were anonymous. of the overall price Source: KPMG/World Bank index, has mostly continued to decline The rate of inflation continued to decline in January 2014, this had only a limited over the past 18 over the year, reaching 6.1 percent in direct impact on the overall inflation rate, months. March 2014. From a peak of 20 percent due to its relatively low weight in the recorded in December 2011 during the households’ consumption basket, as only global food and fuel price spike (see 18 percent of households having access to Figure 5), Tanzania’s rate of inflation is electricity. 1 Food inflation, which accounts now lower than that of neighboring Kenya for approximately half of the overall price and Uganda. While electricity tariffs index, has mostly continued to decline increased by an average of 40 percent over the past 18 months. 1 Second round effects may exist in the longer term such as higher cement prices. PAGE http://www.worldbank.org/tanzania/economicupdate. 6 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Figure 5: Inflation has declined significantly in recent years Inflation (Percent) Inflation (Percent) Source: BoT/IMF The steady decline in the rate of inflation substantial increase in real interest rates has been achieved largely through occurred as inflation declined faster than the prudent application of monetary nominal rates, leading to a slower rate of policy. The rate of growth of broad money growth in the value of credit to private In 2013, the steady reached only 10 percent in 2013, while the sector. The stickiness of the nominal rates decline in the rate rate of growth of nominal private sector is partly explained by the prudent behavior of inflation helped credit reached 15.3 percent (see Figure of commercial banks and, perhaps, by the to moderate 6). These figures are consistent with the lack of competition in the credit market, the strong measures implemented by the Bank of which remains highly fragmented in spite trend towards appreciation in Tanzania to tighten reserve money as a of the increasing number of commercial the real rate of means to control inflation. However, a banks operating in Tanzania. exchange. Figure 6: Decline in broad money and private sector credit growth over the last couple of years Source: BoT. In 2013, the steady decline in the rate of largely due to the positive inflation differential inflation helped to moderate the strong between Tanzania and her main trade partners. trend towards appreciation in the real rate of This recent development has helped maintain exchange (see Figure 7). This is good news given Tanzanian exports’ competiveness during a that the real rate of exchange index appreciated period when lower commodity prices negatively by almost 30 percent between 2011 and 2013, affected the value of some of its main exports. PAGE http://www.worldbank.org/tanzania/economicupdate. 7 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Figure 7: Tanzania’s exchange rate dynamics Source: IMF and World Bank Stable external balance but weak export approximately US$ 4.5 billion by the end performance and shift from aid to private of the year, a figure sufficient for four capital inflows months of imports (see Figure 8). However, this apparent stability masks the slowdown Tanzania’s external balance improved in the rate of growth of exports and the Indeed, lower average global gold slightly during 2013, with the level of underlying shift in financing from official prices have led to a international reserves increasing to aid to private capital inflows (Figure 9). decline in the value of Tanzania’s gold exports by almost Figure 8: Higher reserves, lower Figure 9: The shift from aid to private 20 percent since current account deficit capital inflows 2012. 20.0 18.4 5000 100% 18.0 4500 16.0 14.0 4000 80% 14.0 3500 11.1 USD Million 12.0 10.1 3000 % of GDP 9.0 9.4 60% 10.0 2500 8.0 2000 6.0 1500 40% 4.0 1000 2.0 500 20% 0.0 0 0% -20% Current account deficit Aid FDI Non concessional borrowing Other private Gross official reserves (righ-handed axis) Source: IMF The performance of exports was weak to a decline in the value of Tanzania’s gold in 2013, largely due to lower commodity exports by almost 20 percent since 2012. prices on international markets. Indeed, The value of agricultural exports also fell lower average global gold prices have led sharply. This is largely explained by the PAGE http://www.worldbank.org/tanzania/economicupdate. 8 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK declining prices of all agricultural exports, rate of growth since the late 1990s. However, with the exception of tobacco. The volume despite this low rate of growth, the current of exports of cotton, sisal and tobacco all account balance improved by approximately declined by more than 30 percent, which four percentage points of GDP in 2012/13 compounded the decline in the value of compared to the previous financial year agricultural exports. Fortunately, this decline when the high cost of oil imports resulted was compensated for by an increase in the in a significant increase in the overall value value of re-exports, demonstrating the of imports. The current account deficit still significance of Tanzania’s role as a hub for remains at a relatively high level compared seven neighboring countries. At the same to levels recorded in Tanzania’s recent time, the value of the revenues derived from history and to its neighboring countries. This While the overall tourism also increased. While the overall imbalance reflects the high level of domestic performance of performance of exports is not a cause for investment relative to the level of domestic exports is not alarm, it nonetheless represents the lowest savings. cause for alarm, it nonetheless represents the Table 1: Export and Import performance in 2012 and 2013, in US$ million lowest rate of growth since the 2011/12 2012/13 % change 2011/12 2012/13 % change late 1990s. Exports, goods 7318.2 7507.9 2.6% Imports, goods 12936.3 12869.1 -0.5% & services and services Agricultural 761.1 819.9 7.7% Capital goods 3725 3456.1 7.2% -­ exports Transport Coffee, value 145.7 204.6 40.4% 1038.7 1132.5 9.0% Equipment Building and Cotton, value 87.6 159.3 81.8% 774.8 825.2 6.5% construction Tea, value 52.7 58.2 10.4% Machinery 1911.5 1498.3 21.6% -­ Intermediate Tobacco, value 271.9 227.7 16.3% -­ 4548.2 4762.1 4.7% goods Cashew nuts, 150.9 138.6 8.2% Oil imports -­ 3586.1 3922.8 9.4% value Minerals 2387 2002.6 -­ 16.1% Fertilizers 160.3 140.3 12.5% -­ Industrial raw Gold 2330.7 1888.2 -­ 19.0% 801.7 699 12.8% -­ materials Manufactured Consumer 922 1006 9.1% 2339.6 2261.6 3.3% -­ goods goods Fish and Fish Food and 150.5 140.1 -­6.9% 673.4 655.6 2.6% -­ Products foodstuffs Horticultural All other 27.7 52.3 88.8% 1666.2 1606.1 3.6% -­ Products consumer goods Other Export Imports, 559.2 522.5 -­6.6% 2321.2 2387.1 2.8% Products services Re-Exports 155.1 160.4 3.4% Transportation 1149.2 1058.5 7.9% -­ Services 2448.4 2804 14.5% Travel 983.6 998.8 1.5% receipts Transportation 509.9 703 37.9% Travel 1533.3 1629.5 6.3% Note: Declines above 10% are highlighted in red, while increases above 10% in green.Source: BoT PAGE http://www.worldbank.org/tanzania/economicupdate. 9 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK In 2013, the current account imbalance was in 2008/9 when the global financial was increasingly financed by private crises forced the authorities to revise their capital inflows. Until recently, official aid fiscal policy in the middle of the year. was the largest source of capital inflows, accounting for almost 50 percent of total The underlying causes of the capital inflows in 2007/8. Gradually, however, deterioration in the fiscal balance are the relative proportion of FDI inflows has reason for concern. The first cause was increased, followed more recently by the the low level of collection of domestic relative proportion of public commercial revenues (see Figure 11) due to weak tax borrowing. These two last sources of administration and the fact that easily financing accounted for approximately 56 achievable improvements have already percent of total capital inflows in 2012/13, been implemented, making further compared to only 38 percent in 2007/8. The improvements increasingly difficult. In increase in the proportion of private capital earlier years, Tanzania achieved excellent inflows and commercial borrowing is a increases in its levels of collection of tribute to the development of the Tanzanian domestic revenues, with the total value of economy with international investors these revenues increasing by more than showing increasing interest in the country. six percent of GDP in the period from However, it has significant implications for 2005/6 to 2011/12. However, the value fiscal and debt management as discussed of these revenues actually declined by the equivalent of 0.1 points of GDP in 2012/13 in the next section. During this last compared to the previous financial year. year, the value Unexpected deterioration in the fiscal deficit During this last year, the value of all forms of all forms of In 2012/13, the Government failed of tax and non-tax revenues declined tax and non-tax to achieve its fiscal target by a wide or remained flat, with the exception of revenues declined margin (see Figure 10). The Government corporate income tax which increased due or remained flat, with the exception set the initial target for its overall fiscal to the higher level of collection from mining of corporate income deficit at 5.5 percent of GDP, which was companies. The weak performance in the tax, which increased subsequently revised to 5.8 percent. collection of VAT was surprising and cannot due to the higher However, the realized figure is as high as be explained by policy changes. Rather, it level of collection 6.8 percent. This failure to achieve the is likely that poor performance in this area from mining target is at variance with Tanzania’s track was due to an increase in exemptions2 or a companies. record of prudent fiscal management, with high level of evasion.3 This issue requires the Government meeting or exceeding its further attention from the authorities targets in 2010/11 and 2011/12. The only and emphasizes the need to adopt and other time in the past decade that the implement the revised VAT Act recently Government failed to achieve its targets approved by Cabinet as soon as possible. 2 The Tanzanian authorities are working on reducing tax exemptions, in part through the public expenditure review process. However, levels remain high compared to her neighbors. 3 VAT exemptions (including those for gas-related equipment) were introduced in the Finance Act 2012. PAGE http://www.worldbank.org/tanzania/economicupdate. 10 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Figure 10: The Government missed its Figure 11: Domestic revenues have fiscal target in 2012/13 flattened in 2012/13. Overall expenditure is Source: IMF and MoF growing at a far more rapid rate than development The second cause was the increase in expenditures. The value of recurrent expenditure public expenditure by the equivalent of expenditures increased by 2.5 percent of whose value as a 1.2 percent of GDP in the period from GDP, mainly due to a higher wage bill and proportion of GDP 2011/12 to 2012/13. While increased the cost of transfers to public enterprises, is falling. levels of expenditure were expected under particularly TANESCO. By contrast, the value the terms of the approved budget, it was of development expenditures declined by intended that this would be primarily the 0.7 percent of GDP. Overall expenditure result of increased expenditure on the is growing at a far more rapid rate than public investments necessary to address development expenditure whose value as infrastructure bottlenecks. This strategy a proportion of GDP is falling. As a result, is central to the implementation of the the ratio of development expenditure to Big Result Now initiative launched in mid- recurrent expenditure declined significantly 2013. However, the executed budget in 2012/13, in stark contrast to the increases demonstrates that increases were not recorded in the previous year. This may have primarily driven by such investments (see implications for productivity and value for Figure 12). Rather, the biggest contributing money given that development expenditure, cause for the increase in public spending if invested wisely, generates higher returns was a rise in the value of recurrent than recurrent expenditure. PAGE http://www.worldbank.org/tanzania/economicupdate. 11 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Figure 12: Unpleasant reality check: More recurrent expenditure, less development expenditure in 2012/13 Source: IMF, Tanzania Authorities, and World Bank The third cause is embedded in the In the absence of significant increases in deep structural transformation of the the collection of domestic revenues 4, the Tanzanian economy. For most of the Government has financed its funding gap 2000s, economic growth was principally through commercial borrowing on both driven by an expansive fiscal policy, which domestic and international markets. As a Debt service in turn was made possible by ongoing result, public debt has risen by 10 percent payments increases in external aid. Indeed, the size of of GDP since 2008/9, reaching US$ 12.4 have increased the central administration budget jumped billion (or 40.9 percent of GDP) at the end significantly, from three percent from 15.2 percent of GDP in 2000/1 to 27 of June 2013 (see Figure 13). Debt service of total public percent in 2009/10. Over the same period, payments have increased significantly from expenditure in the value of aid inflows increased from three percent of total public expenditure 2009/10 to more three percent of GDP to approximately 10 in 2009/10 to more than eight percent than eight percent percent, an average rate of 12 percent per in 2013/14, reverting to pre-HIPC levels in 2013/14. year. This rapid increase ended in 2010/11 and limiting the fiscal space available to when aid inflows stabilized at approximately the Government. In February 2013, the nine percent of GDP. This has had strong authorities issued a US$ 600 million bond implications for the Government, which in addition to contracting a number of loans has had to look for other sources to finance with international agencies and banks, its fiscal policies. including a loan of US$ 1.2 billion from 4 The first intent from the authorities was to boost domestic revenues. Revenue targets were overly ambitious in the approved 2012/13 and 2013/14 budgets. For example, the 2012/13 budget projected an increase of over three percent of GDP in domestic revenues. However, as described in the text, the performance has been far from initial targets. PAGE http://www.worldbank.org/tanzania/economicupdate. 12 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK China to finance the gas pipeline currently reached almost three percent of GDP in under construction. Concurrently, the total 2012/13, higher than the ceiling agreed value of the Government’s domestic loans upon under the IMF PSI program. Figure 13: Public debt and debt service on the rise Not only was the value of the overall fiscal deficit equivalent to approximately 6.8 percent of GDP, but the value of the arrears accumulated with suppliers and pension funds was estimated to reach Source: IMF and World Bank four percent of During 2012/13, a portion of the public resources in the future. In addition, GDP. fiscal deficit was financed through the arrears between the Government and its accumulation of arrears. Over the year, contractors were applied unilaterally, which the value of the central government’s may result in a loss of confidence that may accumulated arrears with private suppliers have long-lasting negative consequences, rose significantly, reaching 1.2 percent of including higher borrowing costs and/or GDP by the end of June 2013. This figure an unwillingness on the part of contractors did not include the value of accumulated to do business with the Government. arrears with the Public Service Pension Fund (PSPF), which are estimated to reach By the end of June 2013, the Tanzanian up to US$700 million, or an additional two Government’s fiscal situation was clearly percent of GDP. Neither does it include the fragile. Not only was the value of the overall value of arrears accumulated by government fiscal deficit equivalent to approximately agencies and public enterprises such as 6.8 percent of GDP, but the value of the TANESCO, whose accumulated arrears arrears accumulated with suppliers and reached a value close to 1.4 percent of pension funds was estimated to reach four GDP by the end of December 20135. These percent of GDP. In June 2013, Parliament arrears will have to be paid eventually, approved a budget whose goal was to absorbing a significant proportion of consolidate the fiscal deficit at five percent 5 In principle, the central government is not responsible for the arrears contracted by public agencies and enterprises. However, in reality, it is generally the lender of last resort as illustrated by the recent experience with TANESCO. At the verge of bankruptcy in 2011, the Government had to help this enterprise through massive direct transfers from the budget and by guaranteeing the commercial debt contracted by this enterprise. PAGE http://www.worldbank.org/tanzania/economicupdate. 13 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK of GDP, a sharp adjustment compared to the authorities collected almost US$1 2012/13. This target was expected to be billion less than target during this period. realized, in spite of the significant projected To address the shortfall, the authorities increases in both current and capital public have reacted by reducing the level of expenditure, through ambitious targets for public expenditures (see Figure 15), with the collection of domestic revenues, with the result that slightly less than two projected increases in these revenues by thirds (about 61 percent) of programmed more than three percent of GDP. development expenditure were executed by March 2014. The largest cuts were Despite these ambitious expectations, made in the disbursements of goods and the Government continued to miss its services and transfers and in development revenue target by a significant margin, spending. By contrast, public wages and The cash pressure collecting only 82 percent of the interest payments were almost fully paid. on the budget budgeted revenues between July 2013 As a result, the shift towards the increased increased as the and March 2014 (see Figure 14). While proportion of recurrent expenditure arrears continued this poor performance is partially explained to rise, reaching relative to development expenditures was almost 2.5 percent by legal complications associated with the accentuated during this period. The cash of GDP (excluding introduction of new taxes in the banking pressure on the budget increased as the pensions) by the and communication sectors, it occurred arrears continued to rise, reaching almost end of March 2014. for all taxes including custom duties, VAT 2.5 percent of GDP (excluding pensions) on local goods, and income taxes. Overall, by the end of March 2014. Figure 14: Tax revenues have been Figure 15: Low execution of public lower than budgeted in the first three spending in the first three quarters of quarters of 2013/14 2013/14 Source: MoF In early February 2014, during the fiscal year. However, the achievement of mid-term review of the budget, the this target will require serious efforts in Government reaffirmed its commitment terms of revenue collection and further to reducing the fiscal deficit to five cuts in expenditure. The Government percent of GDP by the end of the current faces a significant challenge to finance PAGE http://www.worldbank.org/tanzania/economicupdate. 14 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK the ’Big Results Now’ initiative. This will its historical trajectory. However, it require careful consideration of the trade- will be challenging for the authorities offs between recurrent and development to make the necessary adjustments to expenditure, in addition to a sustained preserve fiscal space, particularly given effort to improve revenue collections. the Government’s ambitious public investment program, the ’Big Results 1.2 Outlook: Short to medium- Now’ initiative. It may also be difficult to term prospects achieve fiscal control in light of the next In the absence of major domestic general elections, which are scheduled and external shocks, the economy is for November 2015. However, despite projected to achieve a growth rate of these difficulties, failure to control the approximately seven percent in the growing public sector deficit carries risks coming year, a figure consistent with in both the short and long term. Table 2: Macro-economic projections (% of GDP unless otherwise indicated) 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 (e) (p) (p) (p) Real GDP growth 6.7 6.7 7.0 7.0 7.0 7.0 Inflation (CPI, %) 7.0 17.8 11.3 6.1 5.3 5.1 Broad money (M3) 22.0 11.8 13.0 -- -- -- Revenue The contribution 16.4 17.6 17.6 18.6 19.3 19.5 (excluding grants) of the construction sector to Total Expenditure 27.0 26.3 27.8 27.2 27.5 27.1 growth should Overall balance -6.6 -5.0 -6.8 -5.2 -4.9 -4.0 be increasingly (including grants) significant, as Investment 34.5 35.5 34.4 33.4 32.1 31.5 the result of the execution of Current account -9.4 -18.4 -14.3 -14.5 -13.3 -12.3 large investment balance projects. Gross official reserves 3,610 3,797 4,351 4,633 5,153 5,641 (US$ million) Source: World Bank and IMF It is likely that the Tanzanian economy will to benefit from the sustained increases continue to grow at a rate of approximately in domestic demand resulting from seven percent per annum over the next few technological change and from the process years, with this growth largely driven by of urbanization. The contribution of the the same sectors that have driven growth construction sector to growth should be in the recent past. The communications, increasingly significant, as a result of the finance, and retail sectors should continue execution of large investment projects PAGE http://www.worldbank.org/tanzania/economicupdate. 15 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK funded by the public sector and through construction of several energy plants. The PPPs. Some of these crucial projects development of the natural gas industry include the reconstruction of the port of should also drive growth, although this Dar es Salaam, the rehabilitation of the impact is unlikely to be significant before railways on the central corridor, and the 2016 (see Box 2). Box 2: The potential impact of natural gas on Tanzania’s domestic businesses The recent discoveries of massive offshore reserves of natural gas in the south of Tanzania have the potential to have a radical impact on the nation’s economy. While final decisions are still to be made, there are three main gas companies involved in deep water exploration in Tanzania (British Gas, Statoil and ExxonMobil) and these are projected to invest US$20-25 billion over the next 10 years. However, it is important to maintain realistic expectations regarding the impact of these investments on local development and direct job creation. First, the exploitation of natural gas and the fiscal revenues derived are not expected to flow before 2022- 2023. Second, the natural gas industry is not labor-intensive and is expected to create only 300 to 500 direct jobs in the operational phase. Third, the needs of the gas industry in terms of skills are very specific. While unskilled and low skilled jobs will be created, many positions will require particular skills that are currently difficult to find in Tanzania. Industry standards governing matters such as health and safety The development are often high, so training will have to be provided to enable Tanzanians to become of the natural gas employable in the industry. industry should also drive growth, Local private sector growth, and therefore job creation, may occur through the although this impact is unlikely to development of two types of linkages: be significant before (1) Up/midstream linkages: Judging from international experience with other projects 2016. of this magnitude, the LNG plant construction should generate between 8,000 and 10,000 direct jobs over a period of four to six years, starting in 2016 when final investment decisions will be made. These jobs will involve a variety of skill levels and activities related to gas infrastructure development. More importantly, the investment will also be likely to create new demand for supporting and related economic activities, including construction, food production, and business services. Thus, the exploitation of natural gas will create a significant amount of indirect employment, potentially in the range of 20,000 to 35,000 jobs. Although the number of indirect jobs will drop significantly once the construction phase is over, a well-thought out strategy will minimize the impact of this by connecting these jobs to other sectors and by improving the competitiveness of the local private sector to increase their market nationally, regionally and internationally. PAGE http://www.worldbank.org/tanzania/economicupdate. 16 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK (2) Downstream linkages: The availability of additional natural gas in the domestic market creates an opportunity to attract and develop energy intensive industries, such as cement and fertilizer production. If sufficient incentives for investors are put in place, including fair pricing systems, reliability of access to gas, and ease of doing business, several industries that use gas as a feedstock could decide to set up operations in the country. In turn, this would create more job opportunities. In addition to these two types of linkages, the gas industry will also result in the The rate of development of new infrastructure such as ports, which, if strategically planned, inflation is could be used to create and boost other economic activities, including through the projected to development of growth poles and special economic zones. Such a strategy has been stabilize at around recently applied by Madagascar, in partnership with Rio Tinto, and in Mozambique, five percent. with some degree of success in each case. However, this projection is based Furthermore, once substantial fiscal revenues are generated by the industry, the on the assumption Government will have the opportunity to promote the development of physical and that there will be no food price human capital in the country, both of which are key factors for enhancing the overall shocks, as food productivity of the economy and for increasing the number of available productive prices contribute jobs. This, however, supposes an agreement on how to distribute those revenues to more than 50 between the experience of central and local governments, as well as the existence percent of the capacities to manage and absorb those revenues. Consumer Price Index. These induced jobs, defined as direct and indirect jobs created by the reinvestment of revenues from the oil and gas industry, can also be estimated by using multipliers developed in previous studies. The ratio of induced to direct jobs could potentially vary from between 6.6 to 8.4, which means that the number of induced jobs created could reach from 60,000 to 80,000 jobs. Source: Tanzania Country Economic Memorandum, 2014 The rate of inflation is projected On the external side, the current account to stabilize at around five percent. deficit will remain relatively high, at 12-14 However, this projection is based on percent of GDP. This should continue to the assumption that there will be be financed by a combination of official no food price shocks, as food prices aid, FDI, and commercial loans. The trend contribute to more than 50 percent of will be towards an increased contribution the Consumer Price Index. Monetary of private capital inflows, particularly policy should remain cautious, as in through the expected massive FDI inflows recent years. associated with the extractive industries. PAGE http://www.worldbank.org/tanzania/economicupdate. 17 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Exports should increase, driven by regional will reduce loopholes and exemptions. trade, as long as commodity prices Further attention should also be given to (principally gold) remain relatively stable. 6 the collection of import duties, given the Imports will continue to grow at a rate of surprisingly weak performance in this area around 7-10 percent in the next couple of despite the continued and sharp increases years, in line with the projected growth in imports over the past two years. On the of the economy, with an elasticity of one expenditure side, the biggest challenge will between imports and GDP growth being be to control the wage bill and to reallocate the rule of thumb for Tanzania. It is worth a larger proportion of resources toward the reiterating that the massive FDI inflows priorities defined in the BRN initiative. This associated with the exploitation of natural will require close monitoring, particularly gas are not expected to begin before 2016. given that aid inflows are not projected Massive FDI inflows The net impact of these inflows on the to increase over the next couple of years associated with balance of payments is likely to be limited, and that significant revenues will not be the exploitation of as international experience indicates that derived from the exploitation of natural gas natural gas are not expected to begin approximately 90 percent of inflows of this for some time. Despite these challenges, before 2016. nature are usually used to finance imports, Tanzania has demonstrated a good record as neither the equipment nor the materials in terms of macroeconomic and fiscal necessary for these technology-intensive management over the past decade. If this investments are not available in Tanzania. can be maintained, it is likely that the fiscal deficit will be brought under control. This baseline scenario assumes that the Government will consolidate its overall The achievement of this fiscal consoli- fiscal deficit at around 5.0-5.5 percent dation will enable Tanzania to maintain of GDP in 2013/14 and at around five its status as a low distress country. The percent in 2014/15, stabilizing the total latest IDA-IMF Debt Sustainability Analysis public debt at around 45 percent of GDP. (DSA) shows that Tanzania’s risk of debt These targets, however, will not be easy to distress is low.7 However, this result has achieve. The level of revenue collection is become more sensitive to fiscal consolidation expected to improve during 2014 due to the (see baseline scenario in Figures 16 and 17). recent agreement reached with telephone This increased sensitivity, while manageable, companies to replace the proposed is explained by the recent rapid increase in subscriber identity module (SIM) card tax non-concessional borrowing by the public with a higher excise tax rate of 17 percent, sector. This risk highlights the importance up from the current rate of 14.5 percent. of a sound debt management strategy, a However, it is vital that the new VAT Act conservative approach to non-concessional is implemented as soon as possible, as it borrowing, and improvements to the 6 World Bank’s latest projections forecast a declining trend in gold prices for the next decade, but this trend is quite modest. 7 For details, see IMF, April 2014. PAGE http://www.worldbank.org/tanzania/economicupdate. 18 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK authorities’ capacities to plan and execute several construction companies and one of public investments in order to ensure future the most important pension funds (PSPF). debt and fiscal sustainability. If the central Government does not repay all these arrears immediately, any solution, Managing Risks including rescheduling, will still absorb a The recent volatility in commodity significant share of public resources in the prices has made Tanzania’s ongoing future. To illustrate, the amount of arrears vulnerability to external shocks accumulated with road contractors was abundantly clear. While increasing equivalent to approximately 70 percent diversification in terms of Tanzania’s trading of the budget allocated to the Ministry of partners and products has helped to reduce Works in the approved 2013/14 budget. this vulnerability, variations in gold and oil prices continue to have a significant impact Another source of concern is the financial on the trade balance. To a large extent, the fragility of several public agencies and decline in gold prices explains the stagnant enterprises. While significant progress performance of exports in 2013, due to the has been achieved within TANESCO, contribution of this commodity to the total with a 40 percent average increase in value of merchandise exports. Similarly, electricity tariffs implemented in January oil accounts for about one-third of the 2014, the value of arrears accumulated total value of imports. The increase in the by this enterprise with suppliers and gas value of commercial debt also exposes developers remains significant at around the country to variations in international $320 million in May 2014. Furthermore, the The accumulation interest rates. TANESCO deficit is sensitive to a number of of these arrears factors outside the Government’s control. has begun to While the Tanzanian authorities should For example, an increase in world oil prices create problems, continue to monitor external events, would automatically lead to higher power leading to cash they should prioritize the management generation costs thus exacerbating the constraints for several of issues on the domestic front, TANESCO deficit. Other enterprises, such construction given the potential of these issues to as the water company DAWASCO, have companies and exacerbate cash pressures on the overall also accumulated arrears which might over one of the most state budget. While these fiscal risks are time lead to additional pressures on the important pension not new, they are yet to be addressed. State’s finances. funds (PSPF). The most important risk relates to the increasing value of arrears, which is now Dealing with these risks will require estimated to reach more than four percent additional efforts in terms of fiscal of GDP. These arrears are concentrated in management. Hence the Government may public works, particularly transportation, be tempted to postpone fiscal adjustments and pension funds. The accumulation until after the elections of November 2015. of these arrears has begun to create It may even be tempted to wait for the problems, leading to cash constraints for fiscal revenues that are expected from PAGE http://www.worldbank.org/tanzania/economicupdate. 19 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK the exploitation of off-shore natural gas. risk-free as illustrated by the example of However, neither of these two options are Ghana very recently (see Box 3). Box 3: Ghana as a Cautionary Tale Over the past few years, the fiscal situation has significantly deteriorated in Ghana through a combination of political expenses and borrowing against current and future oil revenues. As a result, the overall fiscal deficit increased from 4.3 percent of GDP in 2011 to 11.8 percent of GDP in 2012, despite a 2012 target of 6.7 percent. Ghana’s fiscal overspend has led to a significant increase in debt service payments, In other words, which may in turn bring instability on the financial market. The increase in Government Tanzania would no borrowing has resulted in higher interest rates and the gradual crowding out of credit longer be classified to the private sector. Concurrently, the local currency has lost about 20 percent of its as a low debt value against the dollar over the last six months. distress country and a significant Source: Bank of Ghana, ‘Annual Report’, 2012 proportion of public resources would In order to evaluate the risks associated exploitation of natural gas. The debt need to be used to with postponing the fiscal adjustment, service level will increase rapidly, reaching service the debt. it is possible to envisage two scenarios. 20 percent of projected domestic revenues The first scenario assumes that the overall by 2020, or almost six percent above the deficit level will remain at its 2012/13 baseline scenario (see Figure 16). The level (where the primary balance is 3.6 ratio between net present value debt and percent of GDP) for the period from GDP will also increase, exceeding the 50 2013/14 to 2020/21, while the second percent threshold by 2021 (see Figure supposes that the adjustment will take 17). In other words, Tanzania would no place after the general election. The first 8 longer be classified as a low debt distress scenario, obviously extreme, shows that country and a significant proportion of the Government will run into problems public resources would need to be used to long before it derives revenues from the service the debt. 8 The overall deficit is maintained to 6.8 percent of GDP in 2013/14 and 2014/15, and is brought down to 5 percent of GDP in 2015/16 and 4.5 percent subsequently. A primary balance of 3.6 percent is equivalent to a fiscal deficit of 6.8 percent. PAGE http://www.worldbank.org/tanzania/economicupdate. 20 Thedebt The debt service service level level willwill increase reaching20 rapidly, reaching increase rapidly, 20 percent percent of of projected projected domestic domestic revenues revenues by 2020, or almost by 2020, almost six percent six percent above above the the baseline baseline scenario scenario (see (see Figure Figure 16). 16).The ratio between The ratio between net present value net present valuedebt debt andandGDP GDP willwill also also increase, increase, exceeding the exceeding the 50 percent threshold 50 percent threshold by by 2021 2021 (see Figure (seeFigure 17). 17). In In other other words, words, T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n Tanzania would Tanzania would no longer be classified no longer classified as as aa lowlowdebtdebt distress distress country country and anda a THE WORLD BANK significant significant proportion of proportion of public resources would public resources need wouldneed toto be be used used to to service service thethe debt. debt. Figure 16: Figure PublicDebt Public 16: Debt service payments service payments 17: Figure17: Figure Net Net present present value of of value Public Public Figure 16: Public debt service Figure Debt Debt toto17: GDP GDP Net present value of Public payments Debt to GDP 26 .0 26 .0 55.0 24.0 24.0 55.0 Debt-­‐service  payment  over  revenue  (%) Debt-­‐service  payment  over  revenue  (%) 24.0 50.5 50.5 24.0 50.0 50.0 48.448.4 21.1 21.4 21.4 22.0 22.0 20.7 21.1 20.7 46.346.3 19.6 19.6 44.1 44.1 20.0 20.0 45.0 45.0 42.1 42.1 %  of   GDP %  of  GDP 40.0 40.0 18.0 18.0 16.6 16.6 38.0 40.0 40.0 38.0 15.6 15.6 18.3 18.3 36.5 36.5 16 .0 16 .0 17.1 17.1 17.0 17.0 16.1 16.1 16.4 16.4 35.0 35.0 14.0 13.0 14.0 13.0 36.5 36.5 36.1 35.4 36.1 35.4 35.035.0 34.6 14.2 14.2 14.3 14.3 34.6 34.634.6 34.134.1 33.3 12.0 30.0 33.3 12.0 13.0 13.0 30.0 2014 2014 20152016 2015 2018 2019 2017 2018 2016 2017 2019 2020 2021 2020 2021 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 20202020 2019 2021 2021 Baseline Baseline Baseline Baseline Scenario   1A 1:   Scenario   djustment   delayed   djustment   :  A delayed  after  2015 fter  2 015 Scenario   Scenario  1:  A1d:  Adjustment   justment   delayed   delayed   a after  2fter   015 2015 Scenario   2N 2:   Scenario   o   :  N aa o  djustment djustment Scenario   Scenario  2:  N2:  a o   N o  adjustment djustment Source: Source: Source: World World WorldBank. Bank. Bank. The second scenario Thesecond scenario shows shows the trade-off involved the trade-off involvedif if thethe Government Government The second scenario shows the trade-off employment opportunities in productive postponesfiscal postpones fiscal adjustment adjustment. While While there there isissome some fiscal fiscal space space to to postpone postpone the the involved fiscal fiscal if the up adjustment adjustment Government to 2016, up to 2016, the postpones money spent money sectors spent inin that the the provide next next two two decent years years willsalaries will have tofor have to be be fiscal adjustment. financed financed through While there is through additional additional some fiscalinvolving borrowing, borrowing, its expanding involving loans loans workforce. that that will will haveAs haveatoresult, to be be the repaid repaid later. later. space This This has implications has the fiscal for implications to postpone debt-service debt-service adjustment vast payments, payments, majority of which which will will workers increase increase remain by by confined an an accumulated accumulated value of US$ valueof 1.2 billion US$ 1.2 theperiod in the billion in period from from 2015 2015 to to 2021 2021 (see(see Figure Figure 16 16 up to 2016, the money spent in the next to employment within very small non- forforthe thetrend). trend). two years will have to be financed through farm businesses, the so-called household 1.3 1.3 The TheNext additional Next Challenge: Challenge: borrowing, Creating Creating involving loans Jobs Jobs enterprises, for for and Faster in Faster and and subsistence More More farming. Equitable Equitable Growth that will have Growth to be repaid later. This has However, the rapid urbanization process implications for debt-service payments, creates an opportunity to generate Tanzaniawill Tanzania have to willhave to manage manage itsits fiscal consolidation fiscalconsolidation inin the the coming coming years. years. At which the would same increase time, itby an must accumulated strive to employment create a greater At the same time, it must strive to create a greater number of productive opportunities number of through productive jobs jobs for value for its fast-growing its of US$ fast-growing 1.2 labor billion in the period force labor from force .. multiple SoSofar, agglomeration the far,the country country hashaseffects to within failed failed to create create sufficient sufficient employment employment opportunities opportunities in productive in productive firms and sectors sectors sectors of that that provide activities. provide A decent decent number of 2015 to 2021 (see Figure 16 for the trend). salaries salariesfor for itsexpanding its expanding workforce. As a workforce. As result, aresult, the the vast vast majority majority of of workers workers remain remain countries have successfully leveraged the While there is urbanization process to achieve this, as the some fiscal space 1.3 The Next Challenge: Creating 21  |  P 21  |  P age a  g e   2009 World Development Report clearly to postpone the     Jobs for Faster and More fiscal adjustment demonstrates.9 Equitable Growth up to 2016, the money spent Tanzania will have to manage its fiscal Tanzania’s failure to generate a sufficient in the next two consolidation in the coming years. At number of employment opportunities in years will have the same time, it must strive to create productive sectors is clearly reflected by to be financed a greater number of productive jobs the country’s average wages, which are through additional borrowing. for its fast-growing labor force. So far, still among the lowest in the world (see the country has failed to create sufficient Figure 18). The low average wages are 9 World Bank, “World Development Report: Reshaping Geography”, 2009. PAGE http://www.worldbank.org/tanzania/economicupdate. 21 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK reflected by the still relatively high levels long-term income from labor. A recent of poverty, especially in rural areas (close World Bank study shows that the most to 35 percent in 2012). The correlation effective means for a country to alleviate between poverty and average per worker poverty and create shared prosperity is to earnings is not surprising, given that improve average labor incomes through the most direct way for a household to the creation of additional jobs with higher escape poverty is to generate a sufficient, average salaries over time.10 Figure 18: Tanzania has one of the lowest earning rates per worker in the world (2012, US dollar) United States North America Hong Kong SAR, Chi na Ireland Belgium France Sweden Luxembourg Japan Germany Switzerland Chile Slov ak Republic Lat via Cyprus Czech Republic Kazakhstan Mal aysia Peru Thailand Uzbeki stan China Moldova Ecuador South Africa Brazi l Kuwait Guatemala Egypt, Arab Rep. Morocco Indonesia Al geria Ukraine Sudan India Philippines Bolivi a Iraq Nigeri a Vietnam Mozambi que Ghana Bangladesh Senegal Angola Mal i Cote d'Ivoire Keny a Uganda According to some Cameroon Burki na Faso Ethiopia reckonings, Dar Zambia Tanzania Mal awi Niger es Salaam is the Madagascar Zi mbabwe Congo, Dem. Rep. second most rapidly 0 10000 20000 30000 40000 50000 60000 70000 expanding city in Source: World Bank the world, with secondary cities such as Arusha Tanzania’s labor force is expanding The process of urbanization is evident and Mwanza also rapidly, with an average of almost one in any of the country’s cities. According growing fast. million new workers entering the labor to some reckonings, Dar es Salaam is the market every year. Approximately three second most rapidly expanding city in the quarters of these new entrants into the world, with secondary cities such as Arusha workforce are absorbed by the agricultural and Mwanza also growing fast. The 2012 sector. However, with the rapid pace of population survey shows that approximately urbanization, this picture is changing fast. 15 million Tanzanians, or 27 percent of 10 Gabriela Inchauste, João Pedro Azevedo, Sergio Olivieri, Jaime Saavedra, and Hernan Winkler, “When Job Earnings Are behind Poverty Reduction”, November 2012. PAGE http://www.worldbank.org/tanzania/economicupdate. 22 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK the total population, live in urban areas.11 themselves being transformed into urban This is a significant increase compared areas, particularly those in close proximity to 1990, when the urban population was to cities. A better means of distinguishing only 4.5 million, or 18 percent of the total between rural and urban areas would be population . In fact, these published figures 12 on the basis of population density. Using underestimate the magnitude of urban the estimates provided by a 2009 World Residents of rural areas move to expansion, as many new migrants continue Bank study,13 it can be extrapolated that cities because to be registered as living in rural areas approximately 20 million Tanzanians, or 45 educational and despite their spending significant periods percent of the population, currently lives in employment in the cities. Furthermore, these figures areas with a population density higher than opportunities are are based on the static administrative 150 people per square kilometer. This figure limited in rural definition of urban areas which fails to will reach 45 million, or 54 percent of the areas, but also capture the fact that many rural areas are total population by 2030 (see Figure 19). because life is also generally better in Figure 19: Rapid urbanization in Tanzania urban centers. Note: The projections are extrapolated using the growth rates reported between 2002 and 2012. The share of urban population is measured by two alternative definitions: (i) the official definition used by the National Bureau of Statistics in the Census; and (ii) the OECD cut-off point of 150 people per km2. Source: Authors calculations based on 2012 population census A significant driver of urban growth is factors and pull factors. Residents of rural the rapid rate of population growth, areas move to cities because educational which in turn compounds the effect of and employment opportunities are limited migration from rural to urban areas. in rural areas (push factor), but also Tanzanians are migrating from rural areas because life is also generally better in to urban areas because of both push urban centers (pull factor), as evidenced 11 Source: 2012 Population census. 12 World Development Indicators, 2014 13 E. Muzzini and W. Lindeboom,“The Urban Transition in Tanzania: Building the Empirical Base for Policy Dialogue,” Stock No. 37274, World Bank, Washington, DC, 2008). PAGE http://www.worldbank.org/tanzania/economicupdate. 23 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK by the lower poverty rate in Dar es Salaam, other basic services. For example, in urban which stands at 4.1 percent, compared areas, approximately 85 percent of urban to an average of 33.3 percent in rural households have access to improved water areas. Urban workers are more likely to supplies, compared to only 43 percent of settle in wage employment in the private households in rural areas. Similarly, 34 and public sector or to establish more percent of urban households have access profitable businesses. They are also more to electricity, compared to only 1.3 percent likely to be able to access electricity and of households in rural areas.14 Box 4: Capturing the Benefits of Dar es Salaam’s Rapid Urbanization is important for the national economy, but there are significant hurdles Dar es Salaam is growing fast - its Table 3: Dar’s growth is population increased at an average rate outpacing the country of 5.8 percent annually, from 2.5 million Dar es Mainland inhabitants to 4.4 million between 2002 Salaam Tanzania and 2012.15 At this rate, Dar es Salaam’s 1967-78 7.8 3.2 population will reach 10 million by 2027, attaining ‘mega city’ status. In general, the 1978-88 4.8 2.8 increased population has been absorbed 1988-2002 4.3 2.9 by outward expansion, and its form shaped by sprawl and informality. This is 2002-2012 5.8 2.7 leading to the proliferation of unplanned Source: ‘Population Growth and Spatial areas, the creation of more ‘slums’, and Expansion of Dar es Salaam’ RurbanAfrca (2013) greater congestion in the city. Ward of Dar es Salaam according to Ward of Dar es Salaam according to population count in 2002 population count in 2012 (in no. of inhabitants) (in no. of inhabitants)   14 Tanzania NPS 2010/11 15 Population Growth and Spatial Expansion of Dar es Salaam’ RurbanAfrica (2013). PAGE http://www.worldbank.org/tanzania/economicupdate. 24 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK If the urbanization process is managed well, tremendous benefits can be captured from the agglomeration effects. And given the importance of Dar es Salaam for the national and regional economy, it is critical to change current urban development trends. However, Dar es Salaam has fundamental barriers limiting the quality and potential of its future development. These include backlogs in infrastructure investments; underperforming own-source revenue collection systems; the mushrooming of informal settlements; sprawling energy intensive settlement patterns; the absence of effective metropolitan planning and governance arrangements; and capacity constraints for management and service delivery. All of these factors impact the current and future quality of life, business environment, competitiveness, opportunities for jobs, and achievement of poverty alleviation goals. These issues need to be addressed while they are still manageable in order for Dar es Salaam to build a foundation for its future status as mega-city. Source: ‘Population Growth and Spatial Expansion of Dar es Salaam’ Rurban Afrca (2013) The rapid pace of urbanization in Tanzania rate of 4.9 percent in Africa.16 Across the is not unusual. As nations develop, globe, per capita incomes are on average urbanization is a common phenomenon. five times higher in those nations in which However, the rate of urbanization has been more than 50 percent of the population faster in Africa than in Asia, with the rate lives in urban areas than in countries in of urban growth in Asia from 1900s-2010 which the majority of the population lives standing at 3.5 percent, compared to the in rural areas (see Figure 20). As nations develop, Figure 20: As nations develop, the population is concentrated in towns and cities urbanization is a common phenomenon. Source: WDR 2009 R. Jedwab, L. Christiaensen, M. Gindelsky, “Rural Push, Urban Pull and... Urban Push? New Historical Evidence 16 from Developing Countries,” Institute for International Economic Policy Working Paper Series, IIEP-WP-2014-4, January 2014. PAGE http://www.worldbank.org/tanzania/economicupdate. 25 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK The increasing concentration of the As a result, cities have been by far the most population in urban areas is caused by the dynamic areas of economies around the world. widespread expectation that economic conditions are better in these areas, The urbanization of the Tanzanian which itself offers additional opportunities economy has already started. Today, it is for business and for job creation. estimated that economic activities in urban Economic theory has demonstrated that areas contribute to approximately half of the the concentration of potential customers country’s GDP. Non-farm businesses, located and workers in a reduced space can help in cities, have been growing at an average As a result, cities have been by far the businesses to grow faster through so-called rate of 12-15 percent per year between 2008 most dynamic areas agglomeration effects, with these effects and 2011, partly due to the growing customer of the economy occurring within and between firms. 17 market for durable goods (see Box 5). It is in most countries Through proximity, firms may reduce their expected that the number of such businesses around the world. internal transaction and transport costs, will double in approximately seven years. The making them more competitive. They can also concentration of businesses around urban recruit qualified employees more easily and areas is illustrated by Figure 21, which shows benefit from better access to infrastructure the concentration of businesses in the textile and resources such as electricity and roads. and agribusiness sectors around urban areas. At the sector level, economies of scale can Most of these businesses are located within be achieved by grouping activities such as the Dar es Salaam agglomeration and in the training of workers, and developing joint Arusha/Kilimanjaro, in close proximity to energy infrastructure and transport modes. customer and supply markets. Box 5: Growing demand for goods in urban areas The combination of rapid economic growth and urbanization has led to an increase in the demand for durable assets in Dar es Salaam over the past 10 years. Table 4: Number of households owning durable goods in Dar es Salaam Durable goods 2001/2002 2011/12 Fridge/Freezer 85,939 360,884 TV 85,558 620,786 Video 63,902 427,539 Computer 5,971 106,535 Stove (electric/gas) 57,088 115,174 Car 25,077 63,629 Source: Household Budget Surveys, 2001/02 and 2011/12 17 For a good review of this literature, see Ciccone, Antonio & Hall, Robert E, “Productivity and the Density of Economic Activity,” American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March 1996. PAGE http://www.worldbank.org/tanzania/economicupdate. 26 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Figure 21: Firm concentration around urban centers Manufacture of Food Products (Sales) Manufacture of Food Textiles (Sales) Source: Tanzania Country Economic Memorandum, 2014 The increasing concentration of A word of caution is necessary. Given population and firms in urban areas that Tanzania will become a predominantly can be leveraged to enable Tanzania urban nation in the near future, a focus to fulfill its ambition of achieving on the development of urban areas is However, success is not automatic, middle-income status by 2030. Many warranted. However, this should not be at as the enabling other countries around the world have the expense of the rural sector. At present, conditions successfully facilitated their transition most Tanzanians continue to live in rural necessary for new to emergence through such means. areas. Even if their number is declining each firms to emerge However, success is not automatic, as the year, the Government must attend to their and for existing enabling conditions necessary for new needs. But the Government will only achieve firms to expand firms to emerge and for existing firms this by facilitating the transformation of must be in place. to expand must be in place. This is not the agricultural sector from subsistence to a trivial issue for a country ranked close commercial farming. This transformation to the bottom in the 2014 edition of the will also be crucial to bringing food to urban Doing Business Report. The second part markets and creating additional jobs along of this economic update will pay close the value chain. These synergies between attention to how Tanzania can address the rural and urban sectors are important for this challenge in urban areas. Tanzania’s economic development.18 These synergies between rural and urban economies were discussed in details in the Second Economic 18 Update. They are also analyzed in the forthcoming World Bank, Tanzania Country Economic Memorandum, “Productive Jobs Wanted”, 2014. PAGE http://www.worldbank.org/tanzania/economicupdate. 27 Th T e Wo he rlld W or dBBa an k Po nk ve P ov rt y R er Re d u c t i o n a n d E Ec o on Ma no m i c M na an ge ag me em en nt Un tU Af n ii t A ri c a R fr Re g i o n THE WORLD BANK 2 Promoting Growth and Job Creation in the Context of Urbanization PAGE http://www.worldbank.org/tanzania/economicupdate. 29 Part II: Promoting Growth and Job Creation in the Context of Urbanization ♦♦ The rapid rate of urbanization in Tanzania has led to the growth of non-farm businesses, with the number of businesses increasing by almost 15 percent per year. Tanzania’s structural transformation is clearly under way. ♦♦ Most urban businesses are small, informal, unspecialized, young and fragile. Such businesses are unlikely to become vectors of growth and employment in the coming years. However, if only 20 percent of these businesses were able to add a single additional employee, this would lead to the creation of almost 400,000 new jobs in urban areas every year. ♦♦ Running a small business in urban Tanzania is a difficult endeavor. While key constraints vary according to the nature of the business, its sector of activity, and its geographical location, the most important include: (i) the lack of the required skills of the labor force; (ii) the lack of access to external finance; (iii) the cost of connectivity; (iv) the burdensome and insecure administrative environment; and (v) the weak rule of law. ♦♦ There is no blue print for harnessing the potential for growth of urban businesses, but a minimal set of improvements is needed to address the low level of skills in the labor force, high congestion costs, administrative barriers and insecurity, and obstacles that hinder businesses from achieving economies of scale. Such efforts will require a significant policy change at the core, rather than at the margins, and strong leadership from both the public and private sectors. “I can’t make ends meet by farming Tanzanians who enter the labor market these days,” laments Robert Umala, a every year. Productive jobs, or jobs that young farmer from Western Tanzania. “yield sufficient returns to labor such that “All my friends are moving to the city the worker and his/her dependents are to find work. There is a better future permitted a level of consumption above there.” Securing a job with decent pay the poverty line,”19 are the most reliable is the aspiration of around 800,000 means for poor members of society to 19 International Labor Office, Employment Sector, “Understanding deficits of productive employment and setting targets: a methodological guide,” ILO Employment Sector, Geneva, 2012 PAGE http://www.worldbank.org/tanzania/economicupdate. 30 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK escape the poverty trap. For many poor recent years, the contribution of the agricultural Tanzanians, securing such jobs involves sector to GDP has declined relative to that migration to the urban centers. Thus, of other sectors, with this decline expected over the past few years, a large number of to continue into the future. Other signs of migrants from rural areas have made the transformation over the past decade include move to Dar es Salaam or to secondary changes in the concentration of economic cities such as Arusha and Mwanza to seek activities across different sectors (see Figure improved economic opportunities. 22). While the contribution of the agricultural sector to overall economic output has The rapid process of urbanization is declined significantly over the last decade, the Today, a significant contributing to the transformation of the contribution of sectors such as manufacturing, proportion of urban employment Tanzanian economy and its labor force. Over construction, trade and services has increased. is provided by small non-farm Figure 22: The gradual transformation of the Tanzanian Economy enterprises. Source: World Bank, IMF. In recent years, non-farm businesses Rather than securing such work, migrants have accounted for a large proportion from rural areas in particular face the risk of job opportunities. In Tanzania’s urban that they will make the transition merely centers, it is estimated that there are from subsistence farming to subsistence more than two million such businesses. employment in cities. A significant share However, the process of urbanization alone of urban employment is provided by small will not necessarily lead to the creation non-farm enterprises that are largely of additional productive jobs. The rate of unproductive and ill-equipped to expand explicit unemployment in Tanzania is low, and become competitive. at around only four percent. However, this figure is extremely misleading, because it Tanzanian policy makers have to build contains no indication of the number of upon the opportunities created by people who are not employed in secure, urbanization to promote the growth of productive jobs that provide decent salaries. productive businesses and the creation PAGE http://www.worldbank.org/tanzania/economicupdate. 31 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK of productive employment opportunities. centers, including two million non- However, this is easier said than done. farm businesses (see Figure 23). The Creating such opportunities will require concentration of businesses in cities a significant policy change at the core, has been growing over time, with the rather than at the margins, to allow for the evidence showing that the rate of growth emergence of a new class of productive of such businesses over a two-year period businesses in Tanzanian cities. (2008/09 - 2010/11) was twice as high in urban areas as in rural areas (see Figure 2.1. A profile of Businesses in Tanzanian cities 24). Similarly, over the same period, the total number of non-farm businesses At present, approximately three million increased by 23 percent, while the number businesses operate in Tanzania’s urban of farms declined by three percent. 20 Figure 23: Number of non-farm Figure 24: Growth of non-farm enterprises (2010/11) enterprises, 2008/9-2010/11 The development of mobile Source: Tanzania NPS (2008/09 and 2010/11) technologies and the increasing sophistication of The vast majority of urban non-farm the development of mobile technologies the transportation businesses are unspecialized and involved and the increasing sophistication of the sector have in general trading activities. However, in transportation sector have allowed many allowed many recent years, the fastest-growing sectors have business owners to track their goods and business owners to been the communication, financial services to establish better connections between track their goods. and transport sectors. These specialized suppliers and customers. There has also sectors offer new job opportunities for been a high level of dynamism in the young and educated workers and have construction and manufacturing sectors, the potential to harness a higher level of although these sectors have also been synergy between sectors. For example, characterized by high levels of volatility. 20 Source: Tanzania National Panel Surveys, 2009/09 and 2010/11. PAGE http://www.worldbank.org/tanzania/economicupdate. 32 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Most businesses in urban areas consist non-farm businesses operating in urban of small, informal and unproductive areas, almost 90 percent of their owners enterprises. These enterprises, often state that they are self-employed. They referred to as ‘household enterprises . 21 are generally informal and unspecialized, They operate for are typically not well equipped to expand with largely unskilled operators. They limited periods and become competitive, as most involve operate for limited periods each day, and each day, and are self-employment and are run from are often extremely fragile (see Box 6 often extremely household premises. Of the two million for details). fragile. Box 6: X-ray of businesses operating in urban centers 1. Small n About 93 percent of urban enterprises report two employees or less, with approximately 84 percent confined in self-employment; n Only 0.4 percent report more than 10 employees; 2. Unskilled n Only three percent of business owners have post-secondary education (mostly in Dar es Salaam); 3. Informal n Only a small percent of firms are registered (1.5 percent), but many more pay other fees, with 20 percent reporting some relationship with administration (professional registration, local authority license, daily license); 4. Unspecialized n About 60 percent of urban businesses operate in the areas of general trade and non-farm based agriculture; n Specialized services sectors such as communication and financial services represent only 2.7 percent of firms; 5. Young n A quarter of all non-farm businesses are less than a year old; n Two thirds of businesses are less than five years old; 6. Fragile n Fourty percent of businesses have a survival rate of less than five years; n Only 6-8 percent of non-farm businesses grow; n On average, a firm operates for eight months in a year. Source: Tanzania Country Economic Memorandum, 2014 21 J. Kweka and L. Fox, “The Household Enterprise Sector in Tanzania: Why It Matters and Who Cares,” World Bank Policy Research Series, n. 5882, 2011. PAGE http://www.worldbank.org/tanzania/economicupdate. 33 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Most business owners in urban areas are productive employment opportunities. termed ‘reluctant entrepreneurs’. That 22 The small share of firms that are profitable is, they become entrepreneurs because tend to be managed by owners with a wage employment is not an option and higher level of skills and better access to self-employment is their only means of transport (to access markets), access to survival. The businesses operated by basic infrastructure (electricity and mobile these reluctant entrepreneurs achieve low phones), and access to external capital. levels of profitability, with approximately 90 percent of such businesses reporting Increasing the level of productivity of these a monthly profit of less than TZS 282,000 businesses could have a dramatic impact (US$ 176), and with the average firm on Tanzania’s economy. If only 20 percent reporting monthly profits of only TZS of existing small firms in urban Tanzania 150,000 (US$ 94).23 With these low were capable of providing employment to profits, these businesses are barely capable a single additional employee each year, of providing a livelihood to the operator close to 400,000 additional jobs would be and are extremely unlikely to generate created in urban areas (see Box 7). Box 7: Small urban non-farm businesses as a vector of employment: Let the numbers speak Total urban non- farm businesses 2m fraction of firms with 2 or less workers x 0.93 The businesses 1.86m firms accounted for almost all job creation between operated by 2008/9 and 2010/11 these reluctant entrepreneurs GOAL: Get a higher share of small firms to stimulate job creation achieve low If 20% of existing firms levels of (with 2 or less workers) profitability. double their workforce = 372,000 New jobs created Source: Calculations based on Tanzania NPS 2008/9 and 2010/11 Larger businesses also play an important role productive, as they are more likely to achieve in driving employment growth. While large economies of scale and to have the capacity urban businesses consist of a small proportion to provide training and other support for of the total number of urban enterprises, professional growth. Such businesses also there are approximately 8,840 enterprises create opportunities to develop linkages that employ more than ten workers.24 These between large and small businesses, notably firms are likely to create jobs that are more through suppliers’ networks. 22 Banerjee, A. and E. Duflo, “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty”, Penguin Books, ISBN 978-1-58648-798-0, 2011. 23 Tanzania National Panel Survey for 2010/11 24 Tanzania National Panel Survey for 2010/11 PAGE http://www.worldbank.org/tanzania/economicupdate. 34 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK However, given that the overwhelming businesses are not capable of growing past majority of Tanzanian enterprises are small a certain point, with a greater proportion businesses; equitable growth will only struggling merely to survive. Rather, the goal be achieved through the transformation for Tanzania is to replicate the success story Small scale of these firms in a manner that enables of the few firms that have managed to thrive, entrepreneurs them to become vectors of economic flourish and grow despite the odds. These face multiple growth and job creation. Of course, not all firms can provide some insight into how operational firms will grow and create more productive the process of urbanization in Tanzania can constraints on a job opportunities. For most of Tanzania’s be leveraged to facilitate equitable growth, daily basis, with existing businesses, the prospect of such as well as create productive employment most lacking growth is neither feasible nor realistic. Many opportunities (see Box 8). the capacity to deal with them adequately. Box 8: From household enterprise to conglomerate In 1968, Said Salim Awadh Bakhresa opened a shoe repair shop in Dar es Salaam. Forty years later, his family owns the largest industrial conglomerate in the country. During the 1970s, he built on his original business to open restaurants and bakeries. He entered into milling and then the food and beverage business in the 1980s, before diversifying into manufacturing (polypropylene woven sacks) and transport in the 1990s and 2000s. The company now employs more than 2,000 people and has an annual turnover exceeding US$ 600 million per year. Source: Manson, K. “Family businesses in Tanzania take on international giants.” Financial Times, September 30, 2013. 2.2 Small Businesses, Big The example of Victoria, a small business Challenges owner in the Dar es Salaam area, illustrates the climate of distrust within The operation of a small business in which small urban businesses operate Tanzania clearly involves significant (see Box 9). At the end of the day, Victoria challenges. Small scale entrepreneurs has to spend more time on dealing with face multiple operational constraints constraints related to the business on a daily basis, with most lacking the environment rather than in productive capacity to deal with them adequately. business activities. PAGE http://www.worldbank.org/tanzania/economicupdate. 35 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Box 9: Growing small businesses in an environment of distrust Victoria is in the fifth year of running a small electronic equipment business in Dar es Salaam. The business operates on a small margin and has not grown to the point where she can afford to hire an extra handHer often justifiable lack of trust in the environment she operates in acts as a major constraint against growing her business. For example, she has to implement a standard policy of requiring 100 percent upfront payment for goods purchased from her in order to guard against the risk of not being paid after the merchandise is delivered. Such a policy, while perhaps necessary, is detrimental to the expansion of business as clients who do not have the necessary resources to pay upfront could be driven away. This lack of trust extends to employees. If Victoria had the resources to hire an extra worker, she would only recruit from her family circle or at least from her own ethnic group. But the employment of workers from affinity groups may not result in high levels of efficiency, as workers thus employed are not necessarily the most competent for the job. Distrust also restricts her access to credit, which is vital for expansion. With no access to credit, firms are forced to postpone crucial investment and other decisions. The informal loan sharks who have the capacity to provide credit often end up raising interest rates to ridiculous levels, as they face high levels of default and do not trust the borrower to repay the loans provided. At the same time, a small businessperson such as Victoria has a strong fear of borrowing, because she feels the terms and conditions of any loan that she is able to secure are designed to ensure that she will forfeit whatever asset she borrows against. Distrust in the general environment is exacerbated by the common occurrence of armed robberies and theft in business districts. While Dar es Salaam does not face the The key same level of criminality as Nairobi or Lagos, the level of insecurity has nonetheless constraints increased considerably in recent years. Bigger businesses have the capacity to protect that businesses themselves through insurance and better security systems, but smaller businesses are in Tanzanian simply unable to do so, as they lack the capability and resources. cities face vary according to Source: Morisset, J. (September 2013), “Is Trust a Crucial Factor in Business Success,” World the type of Bank Blog Post, in Future Development Economics to End Poverty. Available here: (http://blogs. business, sector worldbank.org/futuredevelopment/trust-crucial-factor-business-success) of activity, and The key constraints that businesses in Dar es Salaam generally see more dramatic importantly, Tanzanian cities face vary according to increases in consumption; however, there geographical location. the type of business, sector of activity, may be other advantages for migrants to and importantly, geographical location. secondary cities, including closer location For example, while a significant proportion to the village of origin, lower transport and of migrants from rural to urban areas other costs, and less saturated markets. end up in Dar es Salaam, an even larger Thus, a discussion of the development proportion end up in rural towns and of secondary cities as a path towards secondary cities. Those that migrate to more inclusive growth is necessary. PAGE http://www.worldbank.org/tanzania/economicupdate. 36 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK The constraints that are faced by small 3. Cost of connectivity; business owners in Dar es Salaam are 4. Burdensome administrative fundamentally different from those in environment; secondary cities. For example, congestion 5. Uncertain rule of law. costs are a key issue in Dar es Salaam, but Underdeveloped skilled labor force less so in secondary cities. For those in secondary cities, the lack of connectivity On average, Tanzanians complete only The constraints with regional and global markets often seven years of any formal education, that are faced by represents the biggest obstacle. Similarly, with only 12 percent of the population small business limited and unreliable supply of electricity having completed secondary education owners in Dar es Salaam are is a major constraint for highly intensive (see Figure 25). Small business owners in fundamentally energy industries, such as cement and Tanzania are generally younger and less different from fertilizer producers, but a marginal educated than average, with most of these those in secondary constraint for a small trader. owners under the age of 35. They also cities. possess limited property (80 percent have no With this variation in mind, the constraints rental or property rights on the premises from faced by small businesses in Tanzanian which they operate) and few assets (only 1.2 cities may include the following: percent own motor vehicles; 0.5 percent own 1. Undeveloped skills of the labor force; computers; 0.3 percent own machinery; and 2. Lack of access to external finance; 17.3 percent own any office equipment).25 Figure 25: A snapshot of education levels in Tanzania Source: Tanzania National Panel Survey, 2010/11 25 Tanzania National Panel Survey, 2010/11 PAGE http://www.worldbank.org/tanzania/economicupdate. 37 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK The low level of education among which must be paid by employers. This tax business owners is not compensated for burden discourages hiring and acts as a through the hiring of skilled employees. disincentive for businesses to move out of Indeed, only ten percent of firms employ the informal sector. workers other than members of the owner’s Difficulties accessing finance household.26 While family members of the owner may or may not be competent Traditional bank financing, whether secured workers, they are hired mainly on the basis or cash-flow based, is often unavailable to of trust rather than their possession of the small businesses, mainly due to the high necessary business and/or technical skills. transaction costs involved. Commercial banks are unlikely to provide very small While many businesses do not hire loans, mainly due to the high level of fixed workers external to the household costs involved in administering such loans. because of the trust issue, deficiencies At the same time, small entrepreneurs do in the functioning of the labor market not have the knowledge and time to satisfy are also a factor. The cost of identifying all the requirements set by commercial and hiring external workers with the banks. This explains why only ten percent appropriate skills is significant for small of firms in Tanzania are able to access enterprises due to the lack of available formal external finance.27 The average mechanisms to share information. The amount of loans is also very low. costs associated with the formal process of hiring employees also acts as a disincentive The low level of access to formal credit to hiring externally. has led to the development of informal and semi-formal channels of credit. These Overregulation reduces the channels essentially reduce transaction competitiveness of the labor market costs and bridge the gap, albeit imperfectly, and creates disincentives for growth between supply and demand for credit. At the same and formalization. Sticky contractual In Tanzania, these semi-formal initiatives time, small arrangements between firms and workers, in urban areas include: (i) microfinance entrepreneurs with restrictions on fixed-term contracts, institutions; (ii) supplier/trade credit; and do not have the for example, make it more difficult to hire (iii) mobile banking options. knowledge and workers. Another example is the over time to satisfy all taxation of labor through mandatory (i) Microfinance institutions: the requirements contributions to pension funds, with Microfinance institutions (MFIs) set by commercial banks. these contributions set at 20 percent of provide financial services to Tanzanian the employee’s wage, and the high skill households and small enterprises, development levy, set at five percent, mostly in the form of microcredit. While 26 Tanzania National Panel Survey for 2010/11 27 World Bank, Tanzania Country Economic Memorandum, “Productive Jobs Wanted”, 2014. PAGE http://www.worldbank.org/tanzania/economicupdate. 38 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK the microfinance industry in Tanzania other types of trade credit, a majority is relatively young and limited in scale, of households (92 percent) use credit it has expanded over the past decade, from retail kiosks and a quarter of providing a semi-formal financing households use non-monetary items mechanism for small businesses in trade credit, which includes items with lower transaction costs than such as radios.30 One of the main commercial banks. However, due to the prerequisites for supplier credit is relatively high risk of default, increased trust, which is created through operational costs, low population repeated transactions or membership Today, the MFIs densities, and lack of infrastructure, in an affinity group, which reduces in Tanzania MFI activities are concentrated mostly the risk of default. collectively serve in urban areas, leaving rural areas a client base of (iii) Mobile banking: The rate of usage largely underserved.28 Today, the approximately MFIs in Tanzania collectively serve a and level of access to mobile 400,000 telephones is high in Tanzania, client base of approximately 400,000 businesses, which with approximately 70 percent of businesses, which accounts for only accounts for households owning or using mobile only five percent five percent of the total estimated phones.31 A high proportion of users of the total number of businesses that may require of mobile telephones engage in estimated number external finance.29 of businesses mobile money transactions, with that may require (ii) Supplier/trade credit: Supplier an estimated 20 percent of mobile external finance. credit is typically used as a means phone owners using mobile phones of short-term financing, with a to send or receive money.32 For supplier filling an order without many households, mobile-based requiring cash up-front on delivery. remittances serve as a primary point Unlike microfinance, supplier credit of entry into semi-formal financial is practiced widely in both urban systems and the use of financial and rural areas. Approximately 50 services.33 The benefits of mobile percent of households report using banking include lower transaction trade credit from traders, buyers, costs and lower levels of risk of delivery processors, retail kiosks, and through and default, given that information non-monetary loans. In addition to can be collected on payment history 28 Transparent Pricing in Tanzania website: (http://www.mftransparency.org/microfinance-pricing/tanzania/) 29 PRIDE MicroFinance Tanzania website: (http://www.pride-tz.org/) 30 Tanzania Finscope Survey Data, 2009 31 Mobile phone access includes both households that own mobile phones and those that can readily access one when needed. Source: Tanzania Finscope Survey Data, 2009. 32 World Bank, Tanzania Country Economic Memorandum, “Productive Jobs Wanted”, 2014. 33 World Bank, “Global Financial Development Report 2014: Financial Inclusion,” Washington, DC: World Bank, 2014. PAGE http://www.worldbank.org/tanzania/economicupdate. 39 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK through mobile phone usage. This 34 percent of average monthly incomes.34 reduction in transaction costs is These costs are certainly lower in especially significant in areas with secondary cities, making them perhaps low population densities and low a more attractive target for business per capita incomes, which describes development, even though agglomeration most cities outside of Dar es Salaam. effects would be more limited there than in One of the significant potentials Dar es Salaam. of mobile technologies lies in the Therefore, it opportunity for the development of Administrative burden is no surprise partnerships with microfinance and that Tanzania traditional bank financing service Another disincentive for small businesses ranks close to is the administrative burden in Tanzania. the bottom of providers. the 2014 Doing The cumulative costs of doing business in The costs of urban congestion Business report, Tanzania reflect the unfavorable business coming in at 145th environment in the country. These place out of 189 Many small businesses operate in limited costs are evident in processes such as economies. spaces and in sectors that have low entry establishing a business; obtaining permits; and exit barriers. These sectors include registering property; obtaining credit; and food preparation, trade in fruits and hiring workers. These and other processes vegetables, retail, construction, repairs, internet cafes, and a myriad of other involve a range of idiosyncratic fees and activities that can be carried out at home. levies at the local government level. Access to a wider customer base is also Therefore, it is no surprise that Tanzania constrained due to factors such as limited ranks close to the bottom of the 2014 areas of operation, lack of available space, Doing Business report, coming in at 145th and the high costs of congestion, which out of 189 economies, with no significant make it difficult to relocate within the city. progress in recent years. In comparison, neighboring economies such as Rwanda, A recent study on the Dar es Salaam Zambia, and Kenya were ranked at 32nd, agglomeration indicates that on average, 83rd and 129th place respectively, all higher people spend 170 minutes per day in than Tanzania.35 Examples of excessive travelling. This is equivalent to a loss of administrative burden in different sectors US$ 17 per month, which is approximately in Tanzania can be seen in Box 10. 34 For more details, see: Tanzania Economic Update, “Raising the Game – Can Tanzania Eradicate Extreme Poverty?” Issue 4, World Bank, December 2013. 35 World Bank, Doing Business Report, 2014. Available online: (http://www.doingbusiness.org/data/ exploreeconomies/tanzania/) PAGE http://www.worldbank.org/tanzania/economicupdate. 40 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Box 10: Two examples of excessive administrative burden Equally important is the fear of government involvement in the firm’s operations. Source: “Big Results Now” (BRN) Lab, March 2014 While formal firms are also affected by penalized by the uneven playing field, as excessive and idiosyncratic administration they have less bargaining power when costs, informal businesses may incur even negotiating penalties and fees with higher bureaucracy and corruption costs. government officials and municipalities, There may be implicit collusion between and a smaller political voice. They are also the few large businesses in Tanzania and less likely to have the financial and human resources to deal with excessive regulation. political interests that skew the availability of resources to the disadvantage of smaller There are three common but misleading businesses, keeping them from growing. assumptions made about the burden Often, smaller businesses, particularly those associated with excessive administrative in the informal sector, are disproportionally procedures: PAGE http://www.worldbank.org/tanzania/economicupdate. 41 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK (i) Businesses are affected only by the is characterized by high levels of mistrust. monetary costs of administration: Firms have developed different strategies Equally important is the fear of to cope with this including employing government involvement in the firm’s only family members but oftentimes such operations. Recent studies have measures only result in higher financial and indicated that many informal firms resist opportunity costs. Rather than focusing registration due to the fear of increased on achieving productivity gains through oversight and interference, even if the innovation and other means, businesses costs of registration are minimal. 36 spend a disproportionate amount of time on protecting themselves in the context of (ii) Procedures are equal for all types of higher levels of uncertainty and distrust.37 businesses: A great deal of attention has been given to the reduction of This lack of trust has significant registration costs, notably through implications for potential investments the creation of one-stop shops. in human and physical capital. Most This addresses only the one-time businesses will be reluctant to invest cost to firms, not the frequent in equipment, land, or real estate and recurrent administrative costs development in a highly uncertain context. associated with trade, transport, Similarly, they are unlikely to invest in the employment, sales, and permits to training of their workers. be renewed on a recurrent basis; In Tanzania, this mistrust unfortunately (iii) Average administrative costs matter also clouds people’s perceptions of the most to firms: Except for extremely institutions that are supposed to protect high costs, business owners are them. A survey conducted in 2009 showed Consequently, more concerned regarding sudden that almost 90 percent of Tanzanians believed many businesses changes or the unpredictability that the police force and the judicial system are forced to associated with the implementation were corrupt.38 Even when protections operate from their exist in theory, implementation has often owners’ homes or of regulations and procedures. In to remain mobile Tanzania, cases have been recorded of been inconsistent and widely seen as such. to avoid sanctions. businesses shutting down operations Secondly, there is a lack of legitimacy of due to sudden, unexpected property rights, particularly with regard changes in taxes or regulations. to land used for business premises. Uncertain rule of law Small businesses operating in urban As illustrated by the example of Victoria areas are faced with scarcity of operating (Box 9), Tanzania’s business environment space and the absence of recognition 36 Bruhn, M. and D. Mckenzie “Entry regulation and formalization of microenterprises in developing countries”, World Bank Policy Research Working Paper 6507, Washington, D.C., June 2013. 37 Bruhn, M. and D. Mckenzie “Entry regulation and formalization of microenterprises in developing countries”, World Bank Policy Research Working Paper 6507, Washington, D.C., June 2013. 38 There is a growing literature arguing that the uncertainty around the cost of investment is more important than the cost itself. See Dixit and Pyndick, for a seminal contribution. PAGE http://www.worldbank.org/tanzania/economicupdate. 42 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK of property rights. Consequently, Harnessing the potential for growth of many businesses are forced to urban business is a significant challenge. operate from their owners’ homes or While there is no blue print for success, to remain mobile to avoid sanctions. a minimal set of improvements is needed Such businesses need space to expand to address issues such as the low level of and grow. They also need secure property skills, high congestion costs, administrative rights so that they are able to use land barriers and insecurity, and obstacles as collateral for loans. Their problems are that hinder businesses from achieving exacerbated by the decentralized local economies of scale (see Table 5). This government system which has multiple list is not exhaustive, but it is difficult to Harnessing and idiosyncratic levies on traders though envision greater productivity and business the potential with little legitimacy, transparency or success without higher levels of employer for growth of and employee skills; better access to accountability. urban business markets at reasonable costs; a more is a significant 2.3 How to Harness the secure business environment; and some challenge. Potential for Growth of incentives for small businesses to grow Urban Businesses beyond the household enterprise level. Table 5: Summary of improvements needed to harness the growth of urban businesses Objectives Actions 1. Develop combined training and financing programs for small business owners; Build skills 2. Provide outsourcing mechanisms to small business owners; 3. Training on the job. 4. Improve strategic urban planning and implementation, including large investment projects such as railways; Reduce congestion costs 5. Increase virtual connectivity. 6. Promote the development of special zones in cities. Reduce excessive 7. Reduce administrative burden; administrative procedures 8. Improve security in the business environment; and insecurity 9. Facilitate access to land and business premises. 10. Encourage external hiring by improving information Break the trap of availability and reducing regulatory costs. informality to achieve 11. Build financial infrastructure and support new initiatives economies of scale to enable access to external finance. 12. Encourage small firm associations and small business incubators. PAGE http://www.worldbank.org/tanzania/economicupdate. 43 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK These suggestions for improvement enterprises, which are generally more cannot be considered individually. Rather, dynamic and more responsive to training it is the synergies achieved through their and financial assistance programs.41 combined effect that will have a real transformative impact. For example, even All these actions are cross-cutting, the most skilled craftspeople will not be because they affect the vast majority able to operate optimally if they cannot of businesses operating in urban areas, access a market for crafts beyond their own especially the small ones. However, neighborhood due to high transport costs. some targeted actions might be required Only a small Rent-seeking officials can kill an informal to improve the demonstration impact fraction of low- skilled workers but potentially profitable business with with rapid results to counter the limited can be expected solid market networks through harassment absorptive capacity of both the public to leverage the and the imposition of local non-transparent and private sector. In that context, skills they derive levies. Improvements would come as a the recent World Bank’s Country from training result of a combined package of actions. Economic Memorandum (2014), using programs. Achieving improvements will also require a combination of sophisticated new determination and patience, as well as analytical tools, has identified a few sectors realistic expectations. Only a small fraction in which Tanzania may have an existing of low-skilled workers can be expected or latent comparative advantage. These to leverage the skills they derive from sectors include some manufacturing training programs. Bureaucrats will not subsectors (metal scrapping, leather) easily relinquish their ability to impose and services (tourism, logistics). It has to levies on businesses, as such levies often be kept in mind that this list is indicative, represent their main source of income. as many dynamic industries including Recent experience in countries as diverse those in Tanzania, are more the result as Senegal and the Dominican Republic 39 40 of spontaneous creation than state suggests that training programs should planning, as illustrated by the example of be targeted to start-ups and young the booming film industry (see Box 11). Box 11: Swahiliwood: Tanzania’s movie industry as a growing niche The Tanzanian film industry is a nascent and largely informal industry, but one that is expanding rapidly and gaining popularity within the Tanzanian population. Currently, there are about ten new low-budget movies being produced each week in Tanzania, with about 4-6 released onto the market which consists mainly of Swahili-speaking countries within the East African Community. 39 World Bank, Senegal Country Economic Memorandum, “Looking for Work – the Road to Prosperity”, 2007 40 Drexler, A., G. Fischer, and A. Schoar, “Financial Literacy Training and Rule of Thumbs: Evidence from a Field Experiment”, Development Economics , 7994. CERP, London, UK, 2010 41 Bruhn, M. et al., “What Capital is Missing in Developing Countries?”, American Economic Review: Papers & Proceedings, Vol.100:2, 2010 PAGE http://www.worldbank.org/tanzania/economicupdate. 44 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Production: There are about 50 independent producers in Tanzania, of whom around 70 percent are based in Dar es Salaam. Most production companies consist of a single producer, with other crewmembers being hired on a freelance basis. A typical production house can produce a complete low budget/low quality film in a short period of time, often in less than a week. The cost of production for a budget film is also low, typically amounting to less than US$ 5,000. Distribution: While there are about 24 small distributors in the market, there is one leading distributor, Steps Entertainment, which has a near-monopoly on distribution networks around the country, and its own chain of wholesale outlets. Distributors often invest in films prior to production and are responsible for public relations, advertising, and duplication costs and services. Target audience: There about 10,000 video exhibition halls (bandas) and approximately 25,000 video rental libraries across the country that mainly target lower income segments of the population. The cost of renting a movie from these outlets is approximately TZS 500 (US$ 0.31), while the cost to watch a movie in a banda is TZS 100-200 (US$ 0.06 - 0.13). With an average of about 62 customers per day, a banda generates revenues of approximately TZS 12,000 per day (US$ 7.50). Potential for growth: Within this fast growing niche industry, there are some potential There is opportunities for building industry infrastructure and creating jobs along the value encouraging chain. Demand appears high, with 76 percent of interviewed outlet owners stating that evidence that they had achieved three-fold growth in the last three years. managerial and technical skills Source: (1) Kamin, Louise, “Swahiliwood: A Platform for Enter-Educate Feature Films”, MFDI, can be fostered September 2011 (2) Interviews with MFDI creative staff and founder, John Riber. among small entrepreneurs by combining The actions below illustrate how the four Action 1: Develop evidence-based both training objectives can be achieved: 42 training programs for small business and financing owners. There is encouraging evidence programs. Objective 1: Build skills for business that managerial and technical skills can owners be fostered among small entrepreneurs To enhance the personal assets of Tanzanian by combining both training and financing entrepreneurs, two complementary measures programs. The Harambee program in are proposed below. The third proposed South Africa is an example of such a measure is for firms with external employees. successful vocational initiative.43 42 For fuller details, see World Bank, Tanzania Country Economic Memorandum, “Productive Jobs Wanted”, 2014. 43 McKinsey Global Institute, Africa at Work: “Job Creation and Inclusive Growth”, August 2012 PAGE http://www.worldbank.org/tanzania/economicupdate. 45 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK In Tanzania, the PRIDE program has profits of about 20-30 percent.44 The recent showed positive outcomes in terms experience of the virtual business incubator of developing better levels of business in Tanzania for young female entrepreneurs knowledge, increased sales, and returns on is also encouraging (see Box 12). Box 12: Tanzania Virtual Business Incubator (VBI) The Tanzania VBI supports the growth of businesses owned by women through the provision of training and business development services to strengthen skills related to entrepreneurship. Approximately 550 women-owned enterprises were targeted in the textile, tailoring, handicrafts, poultry, processing, food vending, trade, and services sectors. Participants paid nominal fees for training and travel to training locations, and were offered two types of training: n Basic program with class-based entrepreneurship and product development training; and, n Technical assistance program consisting of personal coaching and mentoring to small groups or at their business premises. Analysis is still ongoing, but initial results indicate progress in terms of the following indicators: 1. Profits: Significant improvements reported in average monthly sales and profits over the period June 2009 - June 2012; 2. Business registration: More than 40 percent of the 100 women visited in June 2012 had registered or were in the process of registering their business; 3. Improvement in premises/bookkeeping: Some businesses improved their premises in accordance with regulatory requirements, while others had implemented better bookkeeping systems; 4. Access to finance: More than 70 percent of women involved in the program have opened savings accounts or accessed loans through banks. The recent experience Source: World Bank Gender Note Module 3 (http://www.worldbank.org/en/topic/gender) of the virtual business Action 2: Provide outsourcing tasks may benefit the operations of a small incubator in mechanisms to small business owners, business. Some initiatives elsewhere have Tanzania for who cannot be expected to accumulate all shown considerable success, including young female the necessary skills for the development those involving the provision of subsidies entrepreneurs of their businesses. For example, a good to encourage small firms to use consulting is also carpenter is not necessarily an efficient services for financial and accounting tasks encouraging. manager. Therefore, outsourcing some in Ghana, Mexico, and India.45 44 Berge, L. et al. “Human and financial capital for microenterprise development: Evidence from a field and lab experiment,” Discussion paper, Institut for Samfunnsøkonomi, ISSN: 0804-6824, 2011. 45 Mckenzie, D. “What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?” Policy Research Working Paper 6202, World Bank, Washington, DC., September 2012. PAGE http://www.worldbank.org/tanzania/economicupdate. 46 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Action 3: Incentivize on-the-job training. of Dar es Salaam, particularly in secondary In addition to vocational training, on-the- cities. The job training must be further encouraged in Action 4: Improve physical connectivity. development of Tanzania. So far, generally only large firms The combination of strategic planning special zones provide such training for their employees. and the implementation of transformative for businesses For small and growing companies, the investment projects should be a priority. is critical costs of providing on-the-job training For example, the DART project should to address may be prohibitive. Government support improve urban mobility by: (i) improving congestion is justified, as private sector initiatives the mode of collective transportation; and costs and to may exclude small informal firms and (ii) constructing trunk roads, bus stations encourage entrepreneurs. In Kenya, the Jua Kali and terminals, and pedestrian walkways. In agglomeration voucher program had positive impacts on Dar es Salaam, it is important to improve effects. the level of skills received and employment existing transportation service networks gained. In this case, beneficiaries received with better systems for payment collection, a voucher that was exchanged to pay a assuring riders of seats, an expansion training provider, covering 90 percent of of routes, marked buses, and a central training costs. mechanism for user feedback/complaints. Objective 2: Reduce congestion costs Action 5: Promote virtual connectivity. The widespread usage of mobile phones A combination of improved urban planning has already changed the manner in which practices and strategic investments many enterprises, including small ones, are a priority to improve connectivity – conduct their business. Mobile phones particularly in a metropolitan region like Dar are widely leveraged to transmit market es Salaam. Cities need to improve urban information; to stay connected with planning practices so that they can build suppliers and customers; and, increasingly, infrastructure necessary to accommodate to conduct financial transactions. They can the growing number of people and future also be used in other innovative ways. For business expansion. Catalyst investments example, GPS systems can track buses like the Dar es Salaam Rapid Transit (DART) and inform customers of arrival times and are central for transforming the city’s delays by SMS. Such tracking systems can growth, improving mobility, and providing also monitor the movements of goods in better quality services (and alternatives to trucks. Technological innovations create cars). Further investments in urban roads opportunities to reduce transaction and are needed, also with a priority on securing transportation costs and to significantly future right of ways before they are lost to increase efficiencies for business owners. encroachment. Action 6: Promote the development of The challenges related to urban special zones in cities. The development congestion in Dar es Salaam can be of special zones for businesses is critical addressed by improving both physical and to address congestion costs and to urban connectivity within the city and by encourage agglomeration effects. This promoting strategic development outside can be achieved not only around Dar es PAGE http://www.worldbank.org/tanzania/economicupdate. 47 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Salaam but also in secondary cities. In Dar the costs associated with administrative es Salaam, opportunities for development procedures and to improve the security of exist in both the outskirts of the city (for the business environment. example, through the establishment of special economic zones in Bagamoyo), Action 7: Reduce administrative burdens. and through the development of strategic Reducing administrative costs involves connective infrastructure within the city bringing administration closer to businesses (for example, the bridge to Kigamboni through a process of decentralization. In which should be operational in mid- particular, it may involve the establishment 2015). The development of cities in other of one-stop shop business centers that areas of Tanzania is also critical, given would be available through premises the current patterns of rural-urban operated by district, municipal and town migration, which show that a greater councils, with simplified and standardized portion of rural migrants within Tanzania procedures being defined so that different move to secondary cities rather than to local authorities follow the same set the business capital, Dar es Salaam. This of procedures and guidelines in the pattern of urbanization has implications for registration of a business. Another related poverty reduction, with evidence from rural measure would be to reduce the number Kagera, Tanzania, over the period 1991/94- of central and local agencies that collect 201046 suggesting that approximately half revenues through fees and inspections. the households that moved out of poverty Finally, higher levels of transparency and did so by moving away from agriculture efficiency could be achieved through into secondary cities rather than to the the publication of the performance of all capital city. This highlights the need to administrative agencies that interact with develop infrastructure both in the outskirts businesses. By making this information of the capital and in secondary cities, not public, the Government could achieve only to reduce congestion in large cities, higher levels of accountability and develop a sense of competition between agencies, particularly Dar es Salaam, but also to with the highest performer being Higher levels of achieve poverty reduction for a larger recognized and possibly rewarded by top transparency proportion of the Tanzanian population. policy makers every year.47 and efficiency could be Objective 3: Reduce excessive Action 8: Improve security in the business achieved administrative procedures and insecurity environment. Security is a typical public through the Today, small businesses spend a significant good. Government involvement may publication be required to disseminate security of the portion of their financial and human performance resources on dealing with excessive information; to invest in critical of all administrative burden and on mitigating infrastructure such as streetlights and administrative risk in an insecure business environment. storage facilities; and to strategically place agencies that The two following actions aim to address trained police forces. The Government interact with 46 L. Christiaensen, J. De Weerdt, Y. Todoc, “Urbanization and poverty reduction: the role of rural diversification and businesses. secondary towns,” Agricultural Economics 44 (2013) 447–459, March 2013. 47 McKinsey Global Institute, “Africa at Work: Job Creation and Inclusive Growth”, August 2012 PAGE http://www.worldbank.org/tanzania/economicupdate. 48 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK may also indirectly encourage businesses scale may be achieved, these include: (i) to achieve improved security through hiring workers external to the household; (ii) measures such as providing financial accessing external sources of finance; and incentives for business associations to (iii) participating in business associations collectively invest in security. that reduce the transaction costs involved in obtaining information. These three Often, firms will Action 9: Facilitate access to land and channels require businesses to become not hire external business premises. The vast majority of more visible and formal, but they also workers because small businesses are run from households, provide incentives for businesses to expand the search process often taking up space on sidewalks or internally and/or to group together through is lengthy and the public land in urban areas. Others are the establishment of partnerships, alliances, associated costs run from small workshops, without any business organizations, and other means. are high. secure property or rental rights. Measures to strengthen property rights for business Action 10: Encourage external hiring by owners involve complex considerations. improving information availability and A first concrete step may be to simplify reducing regulatory costs. Policymakers existing registration procedures that act can encourage active external hiring by as a barrier for small entrepreneurs. The reducing the associated costs. This could pilot project undertaken in Ilala district in be achieved through improving search Dar es Salaam aims at legitimizing small mechanisms for potential employees and entrepreneurs by providing a secure lowering regulatory costs. Often, firms workspace through a close partnership will not hire external workers because the between the local authorities and search process is lengthy and the associated business leaders. While the pilot project costs are high. There is no central database is still ongoing, initial results have been and the few existing employment agencies encouraging.48 do not target small businesses. The Objective 4: Break the trap of informality Government can play a coordination role to achieve economies of scale and provide employment and information services through the creation of a National Dynamic firms are those that are able Research Observatory for Employment to achieve economies of scale, allowing and Qualifications, as Tunisia did in them to reduce their fixed costs in order 2000 in order to develop a labor market to become competitive. Good policy can information system and database to support the achievement of economies of provide information related to the skills scale, despite the fact that the achievement available in the labor market.49 The current of such economies of scale is difficult for taxation of five percent on labor (used to small informal firms. There are three main partially finance labor training programs) means by which improved economies of is also too high by international standards. 48 Awinia, C. “Structural Barriers, Constraints, and Urban Youth Employment; the Case of Ilala Municipality, Dar es Salaam.” Research Report 49 Fourcase. “Labour market and training observatories in the Maghreb countries,” Vocational Training Policy Analysis, ISSN 0378-5068, , B., 2006. PAGE http://www.worldbank.org/tanzania/economicupdate. 49 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Action 11: Support new initiatives to technology with more financial channels enable access to external finance. For has shown potential in the region (see smaller businesses, semi-formal channels Box 13). Concurrently, innovative financing of finance can serve as a stepping stone instruments can help to leverage better towards access to formal finance. To access to formal credit for businesses, promote a more robust system of semi- including leasing, which can provide more formal financing, the Government could affordable financing for capital assets promote clusters by developing firm such as equipment and vehicles. Lower associations and economic zones to transaction costs could also be achieved For smaller leverage supplier credit; by supporting by the development of a unique national ID businesses, microfinance institutions; and by system and an effective credit bureau, as semi-formal creating an enabling environment for indicated by the success of Rwanda with channels of mobile banking platforms.50 The use of such a system.51 finance can serve as a Box 13: Promoting financial inclusion through technology stepping stone towards access Tanzania ranks second highest in terms of the rate of mobile financial transactions in to formal Africa. At the end of 2013, Tanzania had over 11 million active mobile money subscribers finance. (approximately 44 percent of the country’s adult population), with 74,000 mobile money agents spread over 19 percent of the country’s total landmass. This has spurred the use of innovative platforms for collaboration between MFIs and mobile phones. For example, MFIs such as Tujijenge in Tanzania have started to use mobile platforms such as Vodacom to collect loan repayments. A borrower with less than US$1,800 in loans from Tujijenge now has to use M-Pesa (Vodacom’s mobile money platform) for loan repayment. In Kenya, several MFIs offer the repayment of loans via mobile banking platforms for both individual and group loans. These include Small and Micro Enterprise Programme (SMEP) and Kenya Women’s Finance Trust (KWFT), who started using M-Pesa in 2009 for loan repayments. M-Kesho is another product which results from a partnership between Safaricom (M-Pesa) and Equity Bank, and allows customers to save more (by enabling deposits at all M-Pesa outlets) and to accrue interest on their accounts. These are examples that can be emulated in Tanzania as demand grows for more sophisticated financial products in the semi-formal financing space. Sources: (1) Presentation by Governor of BoT, “Taking MFS to the Next Level in Africa: Tanzanian Experience”, AMPI, February 2014; (2) T. Beck and S. Maimbo, eds, “Financial Sector Development in Africa: Opportunities and Challenges.” Directions in Development, Washington, DC: World Bank, 2012. 50 Kweka, J. “Commercial Banking and Financial Inclusion in Tanzania: Are There Options?” Draft Report, World Bank, Washington DC, December 2013. 51 Berg, G. and M. Fuchs., “Bank Financing of SMEs in Five Sub-Saharan African Countries: The Role of Competition, Innovation, and the Government,” World Bank Policy Research Working Paper No. 6563, August 2013. PAGE http://www.worldbank.org/tanzania/economicupdate. 50 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Action 12: Encourage small firm small business growth in urban areas associations and incubators. At present, requires coordination between the only one in four small Tanzanian enterprises public sector and various stakeholders claims membership with an industry in the private sector, with support from association.52 This is despite the fact that development partners. At the same time, small firm associations and incubators the development of secondary cities have the potential to improve the business and connective infrastructure is crucial and operating environment for small to reduce congestion and the pressure businesses in several ways. Associations on public services in Dar es Salaam, as have the potential to act as a visible and well as to promote inclusive and shared central representative body for businesses growth, given the large proportion of to facilitate their interactions with local Tanzanians that migrate to secondary government authorities; to advocate cities. for improved working, regulatory, and infrastructure conditions; and to address Institutional strengthening in the specific industry related issues. Being part education, legal, financial, and public of an association may also increase small works sectors will promote the firms’ bargaining power with suppliers development of an environment that and distributors. Last but not least, small enables the growth of small businesses. business associations are important There are tentative but encouraging for the collection and dissemination of signs that Tanzania is beginning to take information amongst members. They can some action towards developing such promote the process of formalization by an environment. For example, the newly providing support for registration and by established Delivery Bureau based in providing access to networks of suppliers the President’s office has produced a While urbanization and traders to establish better market set of proposals to improve the Business creates linkages. Such linkages can support the Environment as part of the BRN initiative. opportunities, the rapid influx hiring and training of workers at lower However, implementing actions to achieve of people into cost and encourage the development of change involves significant challenges urban areas is industry standards without government and timing is a crucial determinant of placing increasing intervention.53 success for improving the business and pressure on institutional environment. existing services Implementation is key to success. and infrastructure. No segment of society can tackle the For Tanzania, time is of the essence, problems of small business growth in as both urbanization and population cities on their own, nor can it be done growth are proceeding at a rapid rate. in an environment of weak institutions. While urbanization creates opportunities, Indeed, implementation of actions for the rapid influx of people into urban areas 52 Source: Ministry of Trade and Industry, MSMEs Survey, 2013. 53 Buys, A.J. “Key success factors for business incubation in South Africa: the Godisa case study,” South African Journal of Science, Vol 103:9-10, October 2007. PAGE http://www.worldbank.org/tanzania/economicupdate. 51 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK is placing increasing pressure on existing will become metropolis slums. While services and infrastructure. With weak Tanzania has made some progress, it institutions and a poorly functioning must also strive harder if it is to achieve its business environment, there is a real aspirations of becoming a middle income risk that rather than Tanzania’s cities country and of fostering equitable growth becoming thriving metropolises, they that benefits all of the country’s citizens. PAGE http://www.worldbank.org/tanzania/economicupdate. 52 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Statistical Annexes PAGE http://www.worldbank.org/tanzania/economicupdate. 53 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 1: Key Macroeconomic indicators 2005-2013 Indicator Unit 2005 2006 2007 2008 2009 2010 2011 2012 2013 Population (Mainland)/2 Millions 37.6 38.7 39.9 41.1 42.3 43.6 44.8 44.9 46.1 Per capita Income/2 US$ 390.7 382.2 441.3 524.1 525.2 538.1 550.1 570.0 625.0 GDP Growth/2 % 7.4 6.7 7.1 7.4 6.0 7.0 6.4 6.9 7.0 Gross Domestic Savings/1 (as a % of GDP) 16.2 15.3 13.6 14.6 16.6 19.3 19.3 18.0 18.8 Gross Investments/1 (as a % of GDP) 23.9 26.4 28.7 29.7 29.4 30.6 34.5 35.5 34.4 Inflation/2 (period average) % 4.4 7.3 7.0 10.3 12.1 7.2 12.7 16.0 7.9 Exchange Rate/2 (period average) TZS/US$ 1,128.9 1,251.9 1,245.0 1,196.8 1,319.9 1,432.3 1,579.5 1,571.7 1,597.6 External Sector Exports - Goods & Services (f.o.b)/1 Mil. US$ 2,843.4 3,148.7 3,565.6 4,526.7 4,660.1 3,805.0 4,896.0 5,562.4 5,440.7 Imports - Goods & Services (f.o.b)/1 Mil. US$ -3,852.7 -4,679.6 -5,684.5 -7,541.9 -7,875.9 -6,596.0 -8,011.6 -10,615.1 -10,482.0 Current Account Balance/1 Mil. US$ -703.9 -1,171.7 -1,575.6 -2,109.7 -2,124.2 -2,046.7 -2,214.7 -4,258.3 -4,105.9 Balance of Payments (Overall balance)/1 Mil. US$ 55.5 346.2 232.6 500.2 18.1 477.6 100.7 199.6 457.4 Foreign Reserves/1 Mil. US$ 1,968.6 2,136.9 2,157.3 2,660.0 2,929.8 3,482.6 3,610.0 3,797.1 4,359.9 External Debt/2 Bil. US$/1 8.1 8.2 4.7 5.8 7.0 8.1 9.6 10.4 12.4 Foreign Direct Investment/1 Mil. US$ 691.5 671.8 495.0 917.4 1,102.7 991.1 1,012.8 1,633.9 1,793.8 Tourism Earnings/2 Mil. US$ 823.6 862.0 1,037.0 1,198.8 1,159.8 1,254.5 1,353.2 1,563.6 1,472.0 Monetary Sector Average Deposit Rate/1 % 4.7 6.7 8.7 8.3 8.0 6.6 6.8 9.5 8.7 Average Lending Rate/1 % 15.2 15.7 16.1 15.0 15.0 14.5 15.0 15.6 15.8 Growth in Money Supply (M3)/1 % 19.6 31.3 20.5 19.8 17.7 25.4 22.0 10.9 14.9 Government Finance Total Domestic Revenue/1 (as a % of GDP) 11.8 12.5 14.1 15.9 16.2 15.9 16.4 17.6 17.5 Tax Revenue/1 (as a % of GDP) 10.8 11.5 13.0 14.7 15.3 14.6 15.2 15.8 16.0 Non-Tax Revenue/1 (as a % of GDP) 1.1 1.1 1.1 1.2 0.9 1.2 1.3 1.8 1.5 Total Expenditure/1 (as a % of GDP) 22.3 22.8 23.0 22.8 26.1 26.9 27.0 26.2 28.0 Recurrent Expenditure/1 (as a % of GDP) 15.4 15.7 16.1 14.9 17.7 18.8 19.2 17.0 19.5 Development Expenditure/1 (as a % of GDP) 6.3 7.1 6.9 7.9 8.4 8.6 7.9 9.2 8.5 Grants/1 (as a % of GDP) 6.8 5.4 4.9 6.9 5.1 4.6 5.2 5.0 3.6 Fiscal Balance (after grants)/1 (as a % of GDP) -3.6 -4.9 -4.0 0.0 -4.6 -6.4 -6.8 -3.7 -6.8 Source: IMF, World Bank and Tanzania Authorities (MoF, BoT, NBS). Note /1 Fiscal year is used, and it ends June 30th of the mentioned year /2 Calendar year is used, and it ends in mentioned year December 31th. PAGE http://www.worldbank.org/tanzania/economicupdate. 54 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Annex 2: Real GDP growth rates 2000-2013, per cent Economic Activity 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Agriculture and Fishing 4.5 4.9 5.0 3.2 5.9 4.4 3.9 4.0 4.6 3.2 4.1 3.4 4.2 4.2 Crops 4.7 5.3 5.6 3.2 6.6 4.4 4.0 4.5 5.1 3.4 4.4 3.5 4.7 4.5 Livestock 3.9 4.0 2.8 2.2 4.1 4.4 2.4 2.4 2.6 2.3 3.4 3.9 3.1 3.8 Forestry and Hunting 4.8 3.6 3.3 3.0 2.7 3.6 4.6 2.9 3.4 3.5 4.1 3.5 2.4 3.3 Fishing 2.9 4.8 6.8 6.0 6.7 6.0 5.0 4.5 5.0 2.7 1.5 1.2 2.9 2.2 Industry and construction 4.5 6.6 9.4 10.9 10.9 10.4 8.5 9.5 8.6 7.0 8.2 6.9 7.8 7.5 Mining and quarrying 14.3 13.9 16.9 17.1 16.0 16.1 15.6 10.7 2.5 1.2 2.7 2.2 7.8 6.9 Manufacturing 4.8 5.0 7.5 9.0 9.4 9.6 8.5 8.7 9.9 8.0 7.9 7.8 8.2 7.7 Electricity and water 5.6 5.5 5.6 6.7 7.1 8.5 -0.5 10.1 5.6 7.9 9.5 1.9 5.9 4.5 Electricity 6.2 5.9 6.2 7.2 7.5 9.4 -1.9 10.9 5.4 8.4 10.2 1.5 6.0 4.4 Water 3.4 3.5 2.8 4.5 5.2 4.3 6.2 6.5 6.6 5.6 6.3 4.0 5.4 4.9 Construction 0.8 7.6 11.9 13.8 13.0 10.1 9.5 9.7 10.5 7.5 10.2 9.0 7.8 8.6 Services 5.4 6.4 7.7 7.8 7.8 8.0 7.8 8.1 8.5 7.2 8.2 7.9 8.0 8.2 Trade, hotels and restaurants 4.3 6.2 8.0 8.6 5.4 6.5 8.7 9.0 9.2 7.1 7.9 7.6 7.3 8.0 Trade and repairs 4.3 6.4 8.3 9.7 5.8 6.7 9.5 9.8 10.0 7.5 8.2 8.1 7.7 8.3 Hotels and restaurants 4.1 4.8 6.4 3.2 3.6 5.6 4.3 4.4 4.5 4.4 6.1 4.6 4.8 6.3 Transport and communication 4.6 5.6 6.8 7.1 10.5 9.4 8.6 10.1 10.8 11.0 12.2 11.3 12.5 13.4 Transport 4.3 4.9 5.9 5.0 8.6 6.7 5.3 6.5 6.9 6.0 7.0 6.7 7.1 6.2 Communications 5.6 8.7 10.4 15.6 17.4 18.8 19.2 20.1 20.5 21.9 22.1 19.0 20.6 22.8 Financial intermediation 3.9 6.9 10.1 10.7 8.3 10.8 11.4 10.2 11.9 9.0 10.1 10.7 13.2 12.2 Real estate and business services 4.9 4.2 7.1 6.5 6.8 7.5 7.3 7.0 7.1 6.8 7.0 6.5 6.7 6.4 Public administration 10.7 10.5 9.2 9.6 13.6 11.4 6.5 6.7 7.0 4.4 6.5 6.8 5.8 5.1 Education 4.0 11.4 7.0 2.8 4.0 4.0 5.0 5.5 6.9 7.1 7.3 7.4 6.5 5.9 Health 5.1 5.6 8.6 8.7 7.8 8.1 8.5 8.8 9.0 6.7 6.9 5.4 5.6 5.6 Other social and personal services 3.1 3.1 2.1 2.0 3.0 2.6 3.7 3.2 3.1 3.2 3.5 3.0 3.8 4.2 FISIM 1.4 2.5 8.7 11.7 10.1 11.8 14.9 15.3 11.0 8.7 9.1 11.2 12.7 10.9 Net taxes 4.9 6.0 7.2 6.9 7.8 7.4 6.8 6.9 7.8 5.8 6.7 6.5 7.3 6.1 Total GDP 4.9 6.0 7.2 6.9 7.8 7.4 6.7 7.1 7.4 6.0 7.0 6.4 6.9 7.0 Source: NBS PAGE http://www.worldbank.org/tanzania/economicupdate. 55 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 3: Shares of economic activities in GDP (current market share) 2000-2013, per cent Economic Activity 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Agriculture and Fishing 31.3 30.7 30.3 30.3 30.9 29.0 27.6 27.2 26.9 26.6 26.4 26.0 26.1 25.9 Agriculture 29.5 29.0 28.6 28.7 29.5 27.6 26.2 25.8 25.7 25.4 24.9 24.6 24.7 24.5 Crops 21.7 21.4 21.4 21.8 22.4 20.5 19.2 19.0 19.0 18.4 17.8 17.4 17.6 17.6 Livestock 5.1 5.0 4.8 4.7 4.8 5.0 4.8 4.7 4.7 4.8 4.7 4.6 4.6 4.4 Forestry and Hunting 2.7 2.5 2.4 2.3 2.3 2.2 2.2 2.1 2.0 2.2 2.4 2.5 2.5 2.6 Fishing 1.8 1.7 1.7 1.6 1.5 1.4 1.3 1.3 1.2 1.3 1.4 1.4 1.4 1.4 Industry and construction 17.9 18.0 19.6 21.0 20.8 20.8 20.8 21.2 21.0 21.2 21.5 21.9 22.1 22.2 Mining and quarrying 1.5 1.8 2.1 2.4 2.6 2.9 3.2 3.5 3.4 3.3 3.3 3.3 3.5 3.3 Manufacturing 8.8 8.4 8.3 8.3 8.1 7.9 7.8 7.8 7.8 7.9 8.1 8.4 8.4 8.5 Electricity and water 2.5 2.6 2.5 2.3 2.2 2.1 2.0 2.0 2.1 2.1 2.1 2.2 2.2 2.2 Electricity 2.1 2.2 2.0 1.9 1.8 1.7 1.5 1.6 1.7 1.7 1.8 1.8 1.9 1.8 Water 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.3 0.3 0.3 Construction 5.2 5.2 6.8 8.0 7.9 7.8 7.8 7.8 7.7 7.9 8.0 8.0 8.1 8.3 Services 45.3 45.5 44.2 42.7 42.0 42.5 43.3 43.3 43.8 43.8 43.9 44.0 43.9 44.3 Trade, hotels and restaurants 15.6 15.8 15.0 14.4 13.7 13.4 14.0 14.2 14.2 14.1 14.4 14.5 14.5 14.6 Trade and repairs 12.8 13.0 12.4 12.0 11.4 11.0 11.4 11.5 11.6 11.6 12.1 12.2 12.3 12.1 Hotels and restaurants 2.8 2.8 2.6 2.4 2.3 2.5 2.6 2.7 2.6 2.5 2.3 2.3 2.3 2.5 Transport and communication 6.7 6.6 6.3 6.1 6.0 6.2 6.4 6.6 6.7 7.0 7.2 7.5 7.6 8.2 Transport 5.5 5.4 5.0 4.8 4.6 4.4 4.3 4.2 4.2 4.6 5.1 5.3 5.3 5.8 Communications 1.2 1.2 1.2 1.3 1.5 1.7 2.1 2.3 2.5 2.4 2.1 2.2 2.3 2.4 Financial intermediation 1.6 1.5 1.7 1.7 1.6 1.7 1.7 1.6 1.6 1.7 1.8 1.8 1.8 1.8 Real estate and business services 10.7 10.3 9.7 9.4 9.1 9.5 9.6 9.5 9.6 9.3 8.8 8.6 8.5 8.4 Public administration 6.6 7.0 7.2 7.2 7.7 8.0 8.0 7.9 8.2 8.1 8.0 8.0 7.8 7.8 Education 2.1 2.1 2.0 1.8 1.7 1.6 1.5 1.4 1.3 1.4 1.4 1.4 1.4 1.4 Health 1.2 1.3 1.5 1.4 1.4 1.5 1.5 1.6 1.5 1.6 1.6 1.7 1.7 1.7 Other social and personal services 0.9 0.9 0.8 0.7 0.7 0.7 0.7 0.6 0.6 0.6 0.6 0.6 0.6 0.6 FISIM -1.0 -0.9 -0.9 -0.9 -0.9 -0.9 -0.9 -1.0 -1.0 -1.2 -1.1 -1.2 -1.1 -1.2 Net taxes 6.5 6.7 6.7 6.9 7.2 8.6 9.3 9.3 9.4 9.6 9.3 9.3 9.0 8.7 Total GDP 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: NBS, IMF and World Bank Source: NBS PAGE http://www.worldbank.org/tanzania/economicupdate. 56 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Annex 4: Quarterly GDP growth rates 2002 - 2013, per cent Hotels Real All Mining Electricity Wholesale and Transport Financial estate and indust. GDP at and Manufac- and Construc- and retail restau- & Com' interme- business Public Other at basic Taxes on mkt Ye a r Quarter Agriculture Fishing quarrying turing Water tion trade rants cation diation services admin Educat'n services FISIM prices products prices 2002 Annual 4.9 6.8 16.9 7.5 5.6 11.9 8.3 6.4 6.8 10.1 7.1 9.2 7.0 6.0 8.7 7.2 7.2 7.2 2003 Annual 3.1 6.0 17.1 9.0 6.7 13.8 9.7 3.2 7.1 10.7 6.5 9.6 2.8 6.0 11.7 6.9 6.9 6.9 2004 Annual 5.9 6.7 16.0 9.4 7.1 13.0 5.8 3.6 10.5 8.3 6.8 13.6 4.0 6.0 10.1 7.8 7.8 7.8 2005 Annual 4.3 6.0 16.1 9.6 8.5 10.1 6.7 5.6 9.4 10.8 7.5 11.4 4.0 6.1 11.8 7.4 7.4 7.4 2006 Annual 3.8 5.0 15.6 8.5 -0.5 9.5 9.5 4.3 8.6 11.4 7.3 6.5 5.0 6.8 14.9 6.7 6.8 6.7 2007 Annual 4.0 4.5 10.7 8.7 10.1 9.7 9.8 4.4 10.1 10.2 7.0 6.7 5.5 6.9 15.3 7.2 6.9 7.1 2008 Annual 4.6 5.0 2.5 9.9 5.6 10.5 10.0 4.5 10.8 11.9 7.1 7.0 6.9 7.0 11.0 7.4 7.8 7.4 2009 Annual 3.2 2.7 1.2 8.0 7.9 7.5 7.5 4.4 11.0 9.0 6.8 4.4 7.1 5.6 8.7 6.0 5.8 6.0 2010 Annual 4.2 1.5 2.7 7.9 9.5 10.2 8.2 6.1 12.2 10.1 7.0 6.5 7.3 5.8 9.1 7.1 6.7 7.0 2011 Annual 3.6 1.2 2.2 7.8 1.9 9.0 8.1 4.6 11.3 10.7 6.5 6.8 7.4 4.7 11.2 6.4 6.5 6.4 2012 Annual 4.3 2.9 7.8 8.2 5.9 7.8 7.7 4.8 12.5 13.2 6.7 5.8 6.5 5.1 12.7 6.9 7.3 6.9 2013 Annual 4.3 2.2 6.9 7.7 4.5 8.6 8.3 6.3 13.4 12.2 6.4 5.1 5.9 5.2 10.9 7.0 6.1 7.0 2002 1 1.0 13.1 16.7 3.5 6.2 11.0 1.9 5.4 5.2 27.5 3.9 7.8 8.9 9.3 25.2 4.7 0.7 4.4 2 4.0 12.2 14.7 -0.6 5.0 9.6 7.1 10.9 5.0 11.0 7.0 9.3 6.6 6.0 4.8 5.8 7.5 5.9 3 9.5 2.9 16.0 12.1 -5.4 19.1 6.3 5.5 5.5 3.9 8.1 9.9 5.7 4.5 -3.0 8.8 7.1 8.7 4 0.3 -1.5 20.7 14.0 15.6 8.3 18.0 4.5 11.8 -3.3 9.5 9.8 6.9 4.4 7.8 9.2 12.8 9.4 Annual 4.9 6.8 16.9 7.5 5.6 11.9 8.3 6.4 6.8 10.1 7.1 9.2 7.0 6.0 8.7 7.2 7.2 7.2 2003 1 2.5 3.2 7.9 13.7 0.1 8.1 2.8 0.2 22.7 23.1 15.4 7.9 6.8 6.3 25.7 9.7 10.9 9.8 2 2.3 -2.3 15.7 9.4 15.6 20.6 21.4 3.3 6.0 0.9 3.5 6.7 5.6 7.1 3.5 8.8 9.5 8.9 3 4.1 11.1 21.6 5.3 20.5 14.2 9.6 4.8 0.5 19.1 8.2 5.9 5.2 7.2 17.3 5.7 4.9 5.7 4 2.4 14.5 25.0 8.6 -4.8 11.5 5.7 8.8 5.6 5.0 2.0 5.5 2.3 6.6 14.7 2.9 3.2 2.9 Annual 3.1 6.0 17.1 9.0 6.7 13.8 16.0 3.8 -14.2 -24.1 3.6 6.2 6.7 6.4 -26.2 4.8 -0.5 4.5 2004 1 4.6 6.8 18.3 7.5 -2.7 30.5 8.9 -0.8 4.5 16.4 6.4 12.2 5.0 5.6 21.2 8.0 4.5 7.8 2 8.8 0.2 18.0 7.7 5.5 4.0 3.2 3.9 2.8 4.8 1.0 13.6 3.0 5.5 6.4 6.4 4.1 6.2 3 5.5 5.5 15.5 14.2 10.6 3.9 2.0 4.4 10.5 3.9 6.0 14.3 3.9 5.9 5.1 6.9 15.0 7.3 4 2.6 15.5 11.8 7.9 15.5 16.6 8.6 7.4 25.9 9.2 13.1 14.2 4.1 6.9 9.3 10.5 7.0 10.2 Annual 5.9 6.7 16.0 9.4 7.1 13.0 5.8 3.6 10.5 8.3 6.8 13.6 4.0 6.0 10.1 7.8 7.8 7.8 2005 1 3.4 16.8 7.5 9.1 11.3 -4.8 3.5 3.6 7.1 1.4 7.6 13.4 3.4 6.7 3.0 5.7 5.6 5.7 2 3.5 12.9 3.1 12.5 5.7 5.1 8.8 5.2 15.7 16.1 7.6 12.0 4.1 6.0 21.5 7.4 12.8 7.7 3 5.8 -7.1 12.3 6.0 6.8 29.8 7.3 2.6 14.2 3.6 14.7 10.8 4.4 5.7 7.5 8.7 3.0 8.3 4 2.9 2.5 44.8 11.3 10.1 12.1 6.9 11.8 1.5 22.2 1.0 9.7 4.2 5.8 15.1 7.3 9.1 7.4 Annual 4.3 6.0 16.1 9.6 8.5 10.1 6.7 5.6 9.4 10.8 7.5 11.4 4.0 6.1 11.8 7.4 7.4 7.4 2006 1 3.3 0.2 17.8 13.5 0.9 25.2 2.8 0.2 22.7 23.1 15.4 7.9 6.8 6.3 25.7 9.7 10.9 9.8 2 6.7 6.5 19.9 10.9 3.3 10.5 21.4 3.3 6.0 0.9 3.5 6.7 5.6 7.1 3.5 8.8 9.5 8.9 3 4.0 20.2 23.7 7.2 2.1 -0.9 9.6 4.8 0.5 19.1 8.2 5.9 5.2 7.2 17.3 5.7 4.9 5.7 4 -2.2 -5.9 3.4 3.6 -7.6 5.9 5.7 8.8 5.6 5.0 2.0 5.5 2.3 6.6 14.7 2.9 3.2 2.9 Annual 3.8 5.0 15.6 8.5 -0.5 9.5 9.5 4.3 8.6 11.4 7.3 6.5 5.0 6.8 14.9 6.7 6.8 6.7 2007 1 3.3 14.4 18.2 4.7 9.7 5.9 16.0 3.8 -14.2 -24.1 3.6 6.2 6.7 6.4 -26.2 4.8 -0.5 4.5 2 3.5 -7.1 8.9 9.8 12.7 -1.5 4.8 4.2 8.0 11.0 15.2 6.8 4.9 6.5 15.8 5.9 4.9 5.8 3 5.3 -4.4 5.2 9.1 7.6 6.2 7.7 6.2 26.0 19.5 2.7 7.0 3.3 6.9 30.2 7.0 10.1 7.2 4 2.0 18.9 11.0 11.0 10.6 28.5 11.5 3.3 25.2 32.7 8.0 6.9 7.2 7.6 38.9 11.2 11.7 11.3 Annual 4.0 4.5 10.7 8.7 10.1 9.7 9.8 4.4 10.1 10.2 7.0 6.7 5.5 6.9 15.3 7.2 6.9 7.1 2008 1 7.0 -21.3 -1.9 7.0 2.7 8.0 10.2 4.5 13.4 18.7 7.3 7.0 2.6 7.8 25.3 6.9 9.1 7.1 2 5.3 13.8 15.3 5.3 -2.1 -1.8 12.2 3.6 9.0 12.7 8.1 7.8 8.0 7.2 11.2 6.9 10.3 7.1 3 4.8 30.8 4.5 10.2 6.3 34.0 12.0 3.5 8.1 11.4 7.7 7.3 8.2 6.8 9.6 9.0 6.4 8.9 4 -1.4 -0.5 -6.9 16.2 15.6 2.6 6.6 6.4 13.1 7.9 5.3 5.9 9.0 6.5 5.1 6.4 6.0 6.3 Annual 4.6 5.0 2.5 9.9 5.6 10.5 10.0 4.5 10.8 11.9 7.1 7.0 6.9 7.0 11.0 7.4 7.8 7.4 2009 1 0.3 11.7 -29.2 8.4 7.0 7.4 11.5 3.0 10.1 9.5 8.7 4.7 7.9 5.9 9.9 5.5 7.3 5.6 2 0.8 7.8 -18.0 8.3 10.7 -0.6 4.7 3.9 13.7 18.3 6.5 3.9 6.8 5.8 20.3 4.0 0.4 3.8 3 6.4 -3.0 29.7 7.3 11.2 -5.4 7.8 4.9 5.7 16.8 3.9 4.0 6.4 5.5 15.8 5.9 2.9 5.7 4 2.8 -3.6 24.5 8.2 3.4 27.6 6.6 5.6 14.4 -6.1 8.1 5.0 7.1 5.1 -7.6 8.9 11.9 9.2 Annual 3.2 2.7 1.2 8.0 7.9 7.5 7.5 4.4 11.0 9.0 6.8 4.4 7.1 5.6 8.7 6.0 5.8 6.0 2010 1 2.0 9.4 28.3 4.5 5.1 8.6 9.0 3.5 11.3 9.8 13.1 6.5 5.9 5.6 10.5 7.6 9.0 7.7 2 2.9 1.9 20.5 7.5 10.0 24.0 9.6 7.3 6.6 14.6 5.6 7.0 7.1 6.3 12.9 7.3 4.3 7.2 3 6.3 -1.5 -12.3 9.0 13.0 13.2 7.4 7.0 12.9 10.1 3.8 6.7 7.9 6.1 7.2 7.0 2.6 6.7 4 3.3 -3.0 -9.1 9.9 9.7 1.0 7.1 6.5 17.2 6.0 5.2 5.8 8.3 5.2 6.5 6.4 10.4 6.7 Annual 4.2 1.5 2.7 7.9 9.5 10.2 8.2 6.1 12.2 10.1 7.0 6.5 7.3 5.8 9.1 7.1 6.7 7.0 2011 1 2.3 2.1 0.8 4.6 6.5 0.4 13.7 3.1 15.1 10.0 8.8 6.0 5.7 5.2 13.5 6.9 5.8 6.8 2 4.6 0.3 5.6 8.5 10.2 4.9 5.3 2.7 16.6 10.0 6.4 6.3 5.2 4.0 15.3 6.4 10.4 6.7 3 1.5 1.5 1.2 12.0 -4.0 -5.4 6.6 5.3 11.7 11.0 5.9 6.9 9.4 4.1 8.8 4.4 8.2 4.6 4 10.4 1.0 1.0 5.8 -3.7 31.8 7.2 6.7 4.2 11.6 4.6 8.0 9.2 5.4 7.9 8.6 2.8 8.1 Annual 3.6 1.2 2.2 7.8 1.9 9.0 8.1 4.6 11.3 10.7 6.5 6.8 7.4 4.7 11.2 6.4 6.5 6.4 2012 1 1.4 2.6 14.3 4.8 9.0 3.7 9.0 3.8 16.4 15.0 8.2 6.4 6.1 5.1 16.0 6.9 9.9 7.2 2 5.2 4.0 1.2 8.2 5.6 4.3 7.7 2.5 15.2 14.1 6.6 5.4 6.7 4.5 14.1 6.8 8.3 6.2 3 4.4 2.3 -2.5 11.6 17.1 6.5 7.0 6.1 10.3 11.4 5.2 5.6 6.8 4.8 9.3 6.5 7.3 7.3 4 1.3 1.9 -0.8 13.6 12.7 13.2 6.5 5.2 10.0 12.1 4.9 5.3 7.0 3.4 10.4 7.5 7.8 7.0 Annual 4.3 2.9 7.8 8.2 5.9 7.8 7.7 4.8 12.5 13.2 6.7 5.8 6.5 5.1 12.7 6.9 7.3 6.9 2013 1 0.3 1.3 3.2 8.7 0.5 5.3 12.6 3.5 22.0 11.8 9.9 4.1 5.5 4.1 16.7 8.0 2.2 7.5 2 5.2 4.9 -2.2 5.8 -2.3 12.3 5.2 3.5 13.2 12.1 7.0 5.9 5.5 4.8 17.7 6.3 1.4 6.7 3 7.4 2.2 14.7 5.7 -4.5 7.3 6.1 4.5 11.9 11.5 5.1 5.0 5.2 5.4 7.8 6.8 14.0 6.5 4 na na na na na na na na na na na na na na na na na na Annual 4.3 2.2 6.9 7.7 4.5 8.6 8.3 6.3 13.4 12.2 6.4 5.1 5.9 5.2 10.9 7.0 6.1 7.0 Source: NBS PAGE http://www.worldbank.org/tanzania/economicupdate. 57 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 5: Fiscal framework as a percentage of GDP 2007/8-2013/14 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Projected Total domestic revenue 15.3 15.9 17.9 16.2 16.9 15.9 17.8 16.4 17.7 17.6 18.8 17.5 20.8 19.9 Total expenditure 26.3 24.5 26.9 25.9 29.8 26.9 31.0 27.0 32.1 26.2 28.1 28.0 30.1 29.1 Overall deficit before grants -10.9 -8.6 -9.0 -9.7 -12.9 -11.0 -13.2 -10.6 -14.4 -8.6 -9.3 -10.5 -9.3 -9.2 Grants 7.4 6.9 5.4 5.1 6.7 4.6 5.8 5.2 6.9 5.0 3.8 3.6 4.3 4.2 Overall balance -3.5 -1.7 -3.6 -4.6 -6.2 -6.4 -7.4 -6.8 -7.6 -3.7 -5.5 -6.8 -5.0 -5.0 Financing 3.5 1.7 3.6 4.6 4.9 6.4 7.4 6.6 7.6 5.0 5.5 6.8 5.0 5.0 Foreign (net) 3.6 3.2 3.5 3.8 3.3 4.6 5.6 3.1 6.1 4.2 7.2 5.3 5.1 6.0 Domestic (net) -0.1 -1.5 0.1 0.8 1.6 1.9 1.8 3.6 1.0 0.8 -1.7 1.5 -0.1 -1.1 Source: MoF Annex 6: Provisional monthly government expenditures 2013/14 TSh mn Budget Actual 2013/14 Actual 2013/14 Item 2013/14 July August September October November December January February March July-March Total Revenue (inc LGAs) /1 11,537,522.6 673,045 715,612 943,483 761,451 717,261 775,260 852,220 737,295 954,449 7,130,076 Total Expenditure /2 16,710,973.1 810,180 808,046 883,757 1,418,715 809,216 1,303,529 837,183 1,490,713 1,239,779 9,601,118 Recurrent expenditure 11,065,984.0 711,723 675,694 601,558 844,550 729,846 855,219 735,560 738,651 950,298 6,843,099 Wages and salaries 4,763,196.0 360,261 367,138 374,696 377,131 368,587 379,300 378,991 374,623 375,857 3,356,584 Interest payments 997,690.8 38,901 98,920 48,560 75,847 100,875 113,135 64,318 81,941 91,651 714,148 Domestic 620,264.8 30,745 95,717 32,946 62,090 76,004 68,025 50,897 70,154 42,596 529,174 Foreign 377,426.0 8,156 3,203 15,614 13,757 24,871 45,110 13,421 11,788 49,055 184,974 Other goods and services 5,305,097.1 312,561 209,636 178,302 391,572 260,384 362,784 292,251 282,087 482,790 2,772,367 Dev. Expenditure and net lending 5,644,989.1 98,457 132,352 282,199 574,165 79,370 448,310 101,623 752,062 289,481 2,758,019 Local 2,952,920.2 0 0 227,679 524,535 0 133,732 79,646 12,625 243,631 1,221,848 Foreign 2,692,068.9 98,457 132,352 54,520 49,630 79,370 314,579 21,977 739,436 45,850 1,536,171 Source: MoF and BoT Note: /1 Includes LGAs /2 Exclude Amortization and Expenditure Float, includes Road fund and Retention expenditures PAGE http://www.worldbank.org/tanzania/economicupdate. 58 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Annex 7: Balance of payments (percentage of GDP unless otherwise indicated) 2005/6 – 2013/14 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14p 1. CA balance (including transfers) -8.2 -10.4 -11.1 -10.1 -9.0 -9.4 -18.4 -14.0 -14.4 Exports of Goods 12.5 13.4 15.3 15.6 16.7 20.7 21.6 17.6 15.9 o/w Gold 4.8 5.4 5.5 4.4 6.5 7.6 8.9 6.2 4.9 Import of Goods -24.0 -28.6 -31.6 -29.7 -28.9 -33.8 -41.1 -34.3 -33.3 Services ( net) 2.1 2.1 2.1 0.8 0.7 0.7 0.3 1.8 2.3 Trade balance -9.4 -13.1 -14.2 -13.3 -12.2 -13.2 -19.6 -16.6 -17.4 Income ( net) -1.2 -1.1 -1.5 -1.3 -1.3 -1.1 -2.7 -1.7 -1.5 Current transfers ( net) 3.4 3.4 4.7 4.5 3.9 4.2 3.6 2.6 2.2 2. Capital and financial account 9.3 9.8 13.9 11.0 12.0 12.0 16.2 16.0 15.2 Capital account 4.1 31.6 3.6 1.8 2.2 2.4 3.0 2.4 2.0 Financial account 5.2 -21.7 10.4 9.2 9.7 9.6 13.2 13.5 13.2 o/w Direct investment 4.7 3.2 4.8 5.2 4.3 4.3 6.1 6.0 6.0 3. Overall balance 2.4 1.5 2.6 0.1 2.1 0.4 1.2 1.5 0.8 Gross international reserves ( Mil USD) 1863 2157 2660 2930 3483 3610 3797 4357 4643 In months of imports (current year) 4.8 4.6 4.2 4.5 5.0 4.3 3.5 4.1 3.9 Source: BoT, IMF and World Bank Key: p = projected Annex 8: Monthly imports of goods and services (US$ million) 2012-13 2012 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Imports of Goods and Services 1112.1 987.7 982.5 955.8 1037.8 1065.0 1062.6 1118.3 1107.2 1139.2 1041.1 1070.9 1052.2 1023.3 1232.3 874.8 897.9 1249.3 1089.5 1255.8 1,401.1 1,142.3 1,305.6 1,081.1 Imports of goods (c.i.f.) 996.8 877.9 869.7 853.2 955.1 965.6 960.9 1012.6 990.6 1012.7 910.5 939.4 928.7 901.7 1123.2 784.4 800.9 1153.1 965.0 1134.8 1,264.9 980.5 1,155.5 927.0 Imports of goods (f.o.b.) 907.1 798.8 791.5 776.4 869.2 878.7 874.4 921.5 901.4 921.6 828.6 854.8 845.1 820.5 1022.1 713.8 728.8 1049.3 878.2 1032.7 1,151.1 892.3 1,051.5 843.6 Capital goods 276.2 283.5 275.9 259.8 338.9 330.9 300.7 319.7 358.5 352.4 303.6 286.6 273.8 241.0 246.7 253.7 273.0 246.3 321.4 334.6 331.1 274.2 381.6 282.8 Transport equipment 68.4 85.6 83.7 76.4 97.9 105.8 91.0 91.3 128.5 98.9 123.9 106.8 89.4 74.2 75.4 86.9 87.1 79.3 89.7 101.7 120 84.1 167.1 105.4 Building and construction 61.4 65.4 60.7 50.2 78.6 69.9 54.8 71.2 84.5 81.6 64.6 62.8 77.3 62.6 66.2 70.0 67.6 62.0 115.2 100.0 98.7 73.9 104.2 62.0 Machinery 146.3 132.5 131.5 133.1 162.4 155.2 154.8 157.2 145.5 171.9 115.1 117.0 107.2 104.3 105.1 96.8 118.4 105.0 116.5 132.9 112.4 116.2 110.3 115.4 Intermediate goods 402.5 333.4 325.0 340.6 336.9 340.3 398.1 406.3 357.5 363.8 337.0 384.4 386.6 400.5 583.5 272.6 266.5 605.2 362.9 508.5 572.2 426.1 441.3 379.3 Oil imports 321.5 249.6 271.3 239.5 264.1 279.4 329.7 315.7 282.5 271.1 257.8 304.2 331.4 342.6 532.2 224.4 211.0 520.3 283.7 400.2 472 337.2 353.5 300.1 Fertilizers 12.1 16.6 2.3 3.1 3.0 1.8 4.1 16.1 11.7 22.4 25.7 15.0 1.8 11.0 3.8 2.4 4.9 21.5 8.1 35.0 29.2 17.6 10.0 14.8 Industrial raw materials 68.9 67.2 51.4 98.0 69.8 59.1 64.4 74.6 63.3 70.3 53.5 65.3 53.5 46.9 47.5 45.8 50.5 63.4 71.1 73.3 71 71.3 77.8 64.4 Consumer goods 228.2 181.9 190.6 176.1 193.4 207.5 175.5 195.2 185.3 205.2 187.7 183.6 184.5 178.8 191.6 187.3 189.1 197.7 193.7 189.4 247.8 192.0 228.6 181.5 Food and foodstuffs 87.0 50.1 55.7 64.3 59.2 55.0 33.4 52.5 62.6 39.5 40.8 56.5 65.1 46.7 76.1 73.8 44.1 64.5 20.5 42.4 57.9 30.5 69.2 55.7 All other consumer goods 141.1 131.8 134.9 111.8 134.3 152.5 142.0 142.8 122.7 165.7 146.9 127.2 119.3 132.1 115.6 113.6 145.0 133.2 173.2 147.0 189.9 161.5 159.4 125.8 Miscelaneous 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.0 0.0 0.0 0.0 Imports of services 205.0 188.8 191.1 179.4 168.6 186.3 188.2 196.8 205.8 217.7 212.6 216.0 207.1 202.8 210.2 160.9 169.1 199.9 211.3 223.1 250.0 250.0 254.1 237.5 Transportation 92.2 79.8 79.3 78.1 87.1 92.4 87.4 91.4 90.7 91.8 83.0 88.5 84.5 84.3 102.8 72.2 75.5 106.5 90.9 105.6 118.2 92.2 107.8 88.0 Passenger 4.8 3.0 2.5 2.6 2.7 2.6 2.7 2.1 3.2 3.0 3.1 3.1 3.4 4.8 4.4 3.7 5.5 5.8 6.3 5.9 6.2 6.5 6.2 6.3 Freight 87.0 76.7 75.9 74.5 83.4 89.0 83.9 88.4 86.5 88.4 79.5 84.8 81.1 78.7 98.1 68.5 69.9 100.7 84.2 99.1 110.4 85.6 100.9 80.9 Other 0.4 0.1 0.8 1.0 0.9 0.7 0.9 0.8 1.0 0.3 0.4 0.6 0.1 0.8 0.3 0.0 0.0 0.0 0.4 0.7 1.6 0.1 0.8 0.8 Travel 91.3 79.6 78.3 63.5 57.9 66.5 72.4 76.7 86.4 98.9 97.3 98.2 97.9 85.4 84.0 68.2 62.1 71.4 77.2 81.8 92.1 105.5 103.7 104.7 Communications services 2.9 3.2 3.6 3.7 3.5 3.7 2.2 2.4 2.3 2.5 2.6 2.6 2.7 3.5 2.9 2.9 1.4 3.1 5.9 3.1 3.2 3.2 3.1 3.2 Construction services 0.0 0.1 0.2 1.1 2.4 0.2 1.5 1.7 1.3 1.4 1.6 1.5 1.7 1.2 1.1 1.3 2.3 1.4 1.0 0.2 0.6 0.3 0.4 0.4 Insurance services 7.0 6.6 6.2 6.6 6.9 7.1 6.8 5.3 6.1 6.4 4.9 5.8 2.5 2.9 2.7 2.5 5.5 5.8 5.3 6.1 6.3 5.3 5.9 5.8 Financial services 0.4 0.3 0.6 0.4 0.4 0.5 0.4 0.6 0.6 0.0 0.4 0.3 0.6 0.7 0.5 0.7 0.6 0.4 0.4 0.4 0.6 0.6 0.5 0.6 Computer and information services 1.1 1.5 1.8 1.3 1.1 1.4 1.3 1.0 0.8 1.6 1.5 1.3 1.3 0.8 0.6 0.5 3.5 0.6 0.9 0.0 0.7 0.6 0.4 0.6 Other business services 9.2 12.1 19.9 21.1 8.3 8.5 12.6 12.4 14.0 11.4 13.7 13.0 13.4 20.9 10.8 6.4 12.2 7.2 23.1 16.5 22.0 27.6 22.0 23.9 Source: BoT, IMF and World Bank ! ! PAGE http://www.worldbank.org/tanzania/economicupdate. 59 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 9: Monthly exports of goods and services (US$ million) 2012-13 2012 2013 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Exports of Goods &Services 588.5 594.7 619.4 557.5 626.9 683.1 648.2 758.8 664.9 637.1 706.2 683.8 632.7 596.4 493.5 536.8 556.9 592.7 693.1 706.2 700.9 760.7 811.8 730.3 Exports of goods 383.9 415.2 442.6 370.3 436.1 467.9 401.8 506.0 425.8 399.3 449.3 438.8 397.2 373.1 299.0 309.0 345.3 359.3 379.0 410.8 373.0 464.4 511.2 420.4 Traditional exports ( values) 92.6 99.0 76.4 74.6 64.4 48.8 19.5 78.0 89.2 100.7 104.7 108.7 99.8 87.6 40.7 52.2 22.4 16.3 23.3 70.7 91.0 120.5 129.6 110.5 Coffee 18.5 18.1 24.4 14.3 7.8 5.5 3.8 7.8 16.9 23.4 25.9 20.2 21.4 33.9 15.1 19.7 9.8 6.8 3.8 4.2 5.8 9.5 20.8 20.2 Cotton 3.9 6.3 6.0 9.9 3.8 2.5 8.0 22.0 28.4 30.4 27.3 16.5 13.5 7.7 3.6 0.7 0.6 0.6 1.0 13.1 20.7 20.3 13.6 16.3 Tea 6.3 4.7 4.6 5.6 7.8 4.3 3.2 2.8 3.2 4.0 4.2 5.3 6.0 8.1 4.8 5.8 6.5 4.1 3.7 5.0 1.6 1.4 4.5 5.3 Tobacco 33.7 47.3 31.1 17.0 8.8 19.6 2.2 39.9 35.8 41.5 43.0 30.0 19.1 7.3 1.8 1.8 1.4 3.7 10.2 45.9 55.9 82.4 50.7 26.7 Cashewnuts 13.8 14.8 6.1 22.3 32.6 14.9 0.0 0.5 0.1 0.2 2.6 34.6 34.2 23.5 13.4 22.9 3.0 0.0 3.5 0.0 0.0 0.0 27.2 34.6 Cloves 14.9 6.4 2.2 4.2 1.6 0.6 0.4 3.3 3.3 0.0 0.3 1.1 4.8 6.1 1.1 0.3 0.0 0.1 0.0 1.5 6.0 5.9 11.8 5.5 Non-traditional exports 291.3 316.1 366.1 295.7 371.7 419.1 382.3 427.9 336.6 298.6 344.6 330.1 297.3 285.6 258.4 256.8 322.8 342.9 355.7 340.0 282.0 343.9 381.6 309.9 Minerals 157.6 181.7 231.4 123.9 165.6 228.2 169.5 212.8 165.4 138.3 201.1 208.2 146.3 158.9 131.2 126.5 181.8 162.5 126.0 163.1 119.9 174.4 176.8 187.9 Gold 153.7 180.3 227.7 115.1 159.0 221.4 160.0 199.6 162.3 127.2 196.3 204.8 138.6 152.6 118.8 115.5 168.6 143.9 121.0 152.6 116.3 161.1 171.6 172.4 Diamond 0.0 0.0 0.0 5.4 0.0 4.6 0.0 8.6 0.0 6.3 0.8 0.4 4.4 0.1 6.2 6.4 7.7 0.1 0.0 0.0 0.0 9.5 0.0 0.0 Other minerals 3.9 1.4 3.7 3.4 6.6 2.2 9.5 4.6 3.1 4.9 4.0 3.0 3.3 6.2 6.3 4.7 5.5 18.6 5.1 10.5 3.6 4.1 5.2 15.5 Manufactured goods 83.7 62.2 69.3 88.0 107.0 98.4 127.9 119.4 79.3 67.1 83.2 61.7 93.9 67.7 67.3 80.6 73.9 83.9 135.0 84.6 86.6 93.7 140.7 64.2 Cotton Yarn 0.6 0.3 0.1 0.5 0.5 0.2 0.2 0.7 1.3 0.6 0.5 0.2 0.8 2.9 0.7 0.7 0.4 0.9 0.4 1.1 1.6 0.7 0.6 0.2 Manufactured Coffee 0.2 0.0 0.0 0.1 0.2 0.0 0.1 0.1 0.0 0.0 0.1 0.1 0.0 0.1 0.0 0.1 0.1 0.1 0.0 0.0 0.2 0.2 0.1 0.1 Manufactured Tobacco 1.7 1.2 2.1 2.0 2.2 1.3 12.3 2.8 2.2 1.9 2.3 2.6 1.4 2.3 3.0 2.1 2.0 2.5 2.8 2.8 3.6 2.9 4.2 2.6 Sisal Products 1.0 0.6 0.5 0.8 1.0 0.5 1.2 0.9 0.8 0.6 0.6 0.6 0.9 0.9 0.9 0.8 1.0 0.6 0.7 0.7 0.9 0.8 0.8 0.6 Other manufactured goods 80.2 60.1 66.6 84.7 103.2 96.4 114.1 114.8 75.0 63.9 79.6 58.3 90.9 61.5 62.6 76.9 70.4 79.9 131.0 79.9 80.3 89.1 135.0 60.7 Fish and Fish Products 13.3 14.6 14.9 17.0 15.9 13.2 11.2 11.8 12.6 14.0 10.7 11.2 11.0 13.8 11.5 10.1 13.1 9.2 11.8 8.1 11.0 11.2 8.6 11.2 Horticultural Products 2.8 2.7 2.6 2.0 2.2 2.0 2.0 1.8 26.6 2.2 2.1 2.2 2.7 3.0 2.5 2.9 2.3 2.1 2.2 1.9 2.0 2.4 2.1 2.2 Other Export Products 21.8 28.8 32.5 56.8 63.2 58.4 44.9 69.7 45.4 55.5 41.4 37.2 29.0 28.1 29.8 30.5 42.5 68.6 54.5 62.0 12.6 12.2 15.1 9.6 Re-Exports 12.1 26.1 15.4 7.9 17.8 18.8 26.7 12.5 7.3 21.4 6.2 9.6 14.4 14.1 16.1 6.2 9.3 16.6 26.2 20.4 49.9 49.7 38.3 34.8 Services receipts 204.6 179.5 176.8 187.2 190.8 215.2 246.4 252.9 239.0 237.9 256.9 244.9 235.5 223.2 194.4 227.8 211.7 233.4 314.0 295.4 327.9 296.3 300.6 309.9 Transportation 49.2 47.8 46.5 47.3 54.2 54.6 51.7 54.3 56.6 55.7 57.4 57.1 60.2 59.1 58.0 64.1 63.2 65.8 65.6 62.9 66.6 68.4 66.0 67.0 Passenger 2.4 2.6 3.7 2.9 3.1 3.2 3.1 3.2 4.1 3.9 4.2 4.6 5.9 6.1 4.2 4.1 4.8 5.4 3.0 4.3 4.5 3.9 4.2 Freight 40.4 39.0 35.2 37.7 45.1 43.0 40.5 42.8 44.4 42.6 43.3 43.4 45.5 43.9 46.7 49.3 47.5 50.2 48.0 49.2 49.2 48.8 49.1 49.0 Other 6.5 6.2 7.6 6.7 6.1 8.4 8.1 8.2 8.1 9.2 9.9 9.1 8.7 9.1 11.3 10.7 11.5 10.8 12.2 10.7 13.2 15.2 13.0 13.8 Travel 128.3 116.5 97.9 102.5 105.5 114.8 156.6 159.9 150.6 142.2 143.4 145.6 136.5 129.0 108.4 113.5 116.8 127.1 205.5 198.6 193.8 179.2 184.6 187.5 Communications services 3.3 3.5 3.7 3.8 3.9 3.7 3.8 2.9 3.0 2.5 2.8 2.2 3.7 3.7 3.8 4.7 4.3 5.7 4.9 5.0 4.8 4.4 4.8 4.7 Insurance services 1.9 2.0 2.8 2.9 3.4 3.9 3.4 3.6 3.4 3.4 4.3 3.5 3.6 4.0 3.1 4.3 3.5 0.8 1.6 2.5 3.4 3.3 3.1 3.3 Financial services 0.9 0.9 1.0 0.9 0.6 0.8 0.8 1.2 1.0 0.6 1.2 0.9 0.7 2.3 1.4 1.7 3.0 3.4 2.4 1.7 2.0 2.5 2.1 2.2 Computer & information services 0.5 0.1 0.9 1.0 0.1 0.5 0.5 0.9 0.8 0.8 0.5 0.7 0.9 0.3 0.2 0.3 0.3 0.2 0.2 0.0 0.4 0.1 0.2 0.2 Other business services 18.7 7.8 20.9 26.5 18.3 34.0 26.3 26.7 20.5 27.2 45.0 30.9 27.6 22.8 15.7 36.6 16.1 28.2 28.1 17.5 49.9 34.9 34.1 39.6 Source: BoT, IMF and World Bank PAGE http://www.worldbank.org/tanzania/economicupdate. 60 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Annex 10: Inflation rates 2011-2014 Furnishing, Food & Non Housing Alcoholic Equipment & Headline Beverages (Exclude Housing, Routine Miscel. Alcoholic Communi- Overall Food consumed at Water,Electricity, Maintenance Clothing & Restaurants Goods and and cation & Recreation & Period Index Restaurants) Transport Gas & Other Fuel of House Footwear and Hotels Services Tobacco Entertainment Education Culture Health Weight (%) 100.0 47.8 9.5 9.2 6.7 6.72 6.4 4.5 3.3 2.1 1.7 1.3 0.9 2011- Jan 6.4 7.1 0.3 17.7 7.2 5.8 2.9 4.0 1.8 -0.2 2.2 3.5 0.6 Feb 7.5 9.2 0.3 11.1 13.9 8.6 3.9 1.1 2.9 -1.3 3.2 3.6 2.1 Mar 8.0 8.6 3.3 13.6 14.5 9.5 5.7 4.0 2.7 -1.8 2.8 3.8 1.4 Apr 8.6 9.7 3.9 13.4 13.6 9.4 5.2 3.4 5.6 -2.0 2.2 3.1 1.4 May 9.7 10.4 8.0 15.7 14.1 9.8 7.4 3.8 6.8 -2.2 3.1 2.4 2.0 Jun 10.9 12.3 8.4 18.8 14.4 9.8 6.7 2.8 5.8 -2.0 3.5 3.6 1.5 Jul 13.0 15.9 9.9 21.3 14.5 9.4 6.8 3.5 5.0 -1.4 4.2 3.1 1.6 Aug 14.1 18.6 8.8 19.7 13.9 9.4 8.0 3.5 5.2 -1.3 4.8 2.7 1.9 Sep 16.8 22.5 14.2 21.7 14.2 9.6 11.5 6.5 5.7 -1.8 5.8 1.1 2.3 Oct 17.9 24.0 11.8 22.0 15.4 10.7 12.8 7.0 5.6 -1.6 5.6 2.3 4.1 Nov 19.2 26.1 12.0 23.5 15.3 11.2 13.2 7.8 5.1 -1.7 5.7 3.3 3.5 Dec 19.8 27.1 11.2 24.8 14.6 10.6 13.6 8.6 5.8 -1.2 5.9 3.2 3.0 2012-Jan 19.7 27.8 10.9 18.8 14.4 12.5 12.8 9.1 6.3 -0.4 2.9 4.5 3.4 Feb 19.4 26.7 10.9 19.5 8.2 13.9 15.8 12.1 8.3 -0.8 4.8 8.7 2.5 Mar 19.0 25.7 9.7 17.4 9.0 15.0 18.2 12.3 9.3 -0.7 4.8 9.1 2.8 Apr 18.7 25.3 8.6 16.2 9.1 15.4 18.8 12.8 9.3 -0.7 4.7 9.1 3.2 May 18.2 25.3 6.7 14.7 9.1 15.5 17.5 13.2 8.7 -0.7 4.7 9.2 3.2 Jun 17.4 23.5 5.9 14.6 9.0 15.1 17.8 13.1 11.7 -0.9 4.7 11.7 3.3 Jul 15.7 20.8 4.7 12.5 8.7 15.0 16.1 10.8 18.0 -1.6 4.7 11.9 3.7 Aug 14.9 18.8 3.8 14.4 8.6 14.4 16.0 11.6 20.4 -1.7 4.7 11.0 3.3 Sep 13.5 15.6 1.7 16.5 8.3 13.4 17.5 8.3 20.3 -1.7 4.7 11.3 3.0 Oct 12.9 14.9 2.7 17.4 7.9 12.4 16.3 8.4 20.3 -1.8 4.7 11.1 2.3 Nov 12.1 13.4 2.3 17.3 8.4 12.0 16.1 8.0 21.3 -1.7 4.7 10.8 2.9 Dec 12.1 13.1 3.2 17.1 8.2 11.6 15.7 9.1 22.8 -1.9 4.7 10.5 3.4 2013-Jan 10.9 11.9 2.7 15.3 7.2 9.8 13.5 8.8 23.0 -1.9 4.2 8.9 2.9 Feb 10.4 12.0 2.5 16.3 6.1 7.9 9.0 6.6 18.9 -0.4 2.1 3.6 3.0 Mar 9.8 11.1 1.3 20.4 5.1 6.4 6.8 5.0 17.4 -0.4 2.2 3.1 3.7 Apr 9.4 10.2 4.2 19.9 4.6 5.8 5.9 5.2 17.7 -0.6 2.2 3.5 3.2 May 8.3 8.0 7.5 19.0 4.4 5.3 5.5 4.9 18.0 -0.7 2.2 3.5 3.0 Jun 7.6 7.6 7.1 15.4 4.0 5.2 5.5 4.8 15.0 -0.6 2.2 0.3 2.9 Jul 7.5 8.0 7.5 14.4 3.8 5.2 5.9 5.9 12.0 -0.1 2.4 0.2 2.7 Aug 6.7 6.5 9.0 14.3 3.5 5.2 4.9 4.9 10.6 0.0 2.4 0.7 2.9 Sept 6.1 6.5 7.8 9.6 3.2 4.9 2.2 6.5 10.4 0.0 2.4 0.4 2.9 Oct 6.3 6.9 9.3 9.0 3.3 4.6 2.9 6.0 10.7 0.2 2.4 0.5 2.8 Nov 6.2 7.2 8.6 8.7 2.5 4.4 2.7 5.6 9.9 0.1 2.4 0.7 2.1 Dec 5.6 6.0 8.2 10.2 2.3 3.9 2.2 4.0 7.8 0.5 2.4 1.0 1.5 2014-Jan 6.0 6.0 8.9 14.9 2.0 3.9 1.7 4.1 7.1 0.5 5.9 0.6 1.8 Feb 6.0 6.2 9.0 13.3 1.8 3.5 1.5 4.6 7.1 0.5 5.3 1.2 2.0 Mar 6.1 7.2 8.7 9.0 1.8 3.3 1.7 5.2 7.1 0.5 5.3 1.3 2.1 Apr 6.3 7.8 5.3 9.2 2.5 3.2 2.2 7.7 6.8 0.7 5.3 0.8 3.6 Source: NBS PAGE http://www.worldbank.org/tanzania/economicupdate. 61 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 11: Monthly food crop prices (Wholesale): Tanzania shillings per 100kg 2012-14 Maize Rice Wheat Beans Sorghum Dar es Dar es Dar es Dar es Dar es Month-Year Arusha Salaam Mbeya Arusha Salaam Mbeya Arusha Salaam Mbeya Arusha Salaam Mbeya Arusha Salaam Mbeya Jan-12 44,500 48,052 40,500 165,962 183,962 183,500 84,038 121,231 100,385 137,308 140,308 160,615 50,731 61,962 - Feb-12 41,654 46,808 40,423 167,115 188,769 202,615 78,654 122,042 108,846 186,154 139,808 164,000 52,654 65,808 - Mar-12 45,286 46,923 40,231 185,714 202,038 206,000 82,679 108,192 125,000 140,000 136,615 139,077 50,500 57,462 70,000 Apr-12 51,727 51,773 39,909 194,091 221,136 216,000 82,045 107,500 125,682 128,273 138,682 110,682 50,909 55,227 - May-12 58,885 63,308 45,654 183,462 179,231 182,308 80,846 108,462 127,692 178,346 130,385 114,077 51,462 63,962 - Jun-12 51,769 56,519 43,500 160,577 160,385 181,308 79,731 109,038 93,077 134,423 136,538 122,654 62,692 69,077 50,000 Jul-12 54,000 60,692 45,000 145,577 170,385 188,808 83,269 105,654 84,308 116,154 137,500 112,692 60,769 69,038 - Aug-12 53,200 60,250 46,750 148,000 143,350 190,250 78,650 95,000 92,050 99,250 148,300 129,500 56,250 71,050 - Sep-12 54,188 60,000 50,417 155,208 152,083 182,500 63,875 99,167 102,292 106,667 145,833 133,333 50,750 76,458 - Oct-12 55,981 65,192 52,750 160,000 173,654 188,500 74,846 98,462 100,000 114,423 141,731 135,417 52,154 77,308 - Nov-12 61,404 72,769 56,115 162,308 183,269 201,231 73,269 102,115 103,846 115,000 153,462 149,808 50,462 85,385 - Dec-12 67,708 80,045 65,583 172,500 188,409 217,500 76,542 115,000 112,500 117,500 156,818 151,458 56,833 87,182 152,500 Jan-13 70,083 84,292 73,792 171,458 201,625 229,375 75,500 130,417 118,333 126,250 160,417 160,792 54,792 81,542 - Feb-13 71,333 90,167 71,000 170,833 190,208 197,250 76,875 125,909 110,000 107,292 168,125 149,292 53,833 93,750 - Mar-13 69,875 83,458 72,708 174,167 181,042 182,875 78,167 127,500 113,333 104,167 162,292 127,500 60,833 85,125 - Apr-13 67,682 78,909 72,136 167,273 156,818 127,364 85,227 127,727 114,091 120,455 154,773 113,864 65,000 85,250 - May-13 55,308 72,962 52,346 156,923 145,385 128,654 84,846 124,583 115,000 117,269 151,923 110,000 68,125 85,962 100,000 Jun-13 47,222 62,111 44,333 133,889 144,444 130,278 83,611 119,444 113,611 114,445 150,833 104,167 75,500 99,722 - Jul-13 50,100 59,133 44,700 130,000 143,833 126,333 85,167 101,833 105,833 110,167 150,000 110,333 68,167 112,500 - Aug-13 51,167 57,900 48,400 125,700 134,833 107,500 118,283 108,333 95,567 106,700 145,167 112,667 69,833 87,833 165,000 Sep-13 51,133 57,667 47,533 130,000 134,000 99,667 76,167 126,000 92,500 114,667 149,333 110,000 64,667 93,833 - Oct-13 51,841 55,727 47,000 130,000 137,500 103,182 75,500 125,000 90,000 121,773 146,591 108,864 136,227 89,545 - Nov-13 50,942 49,923 48,077 130,000 134,808 110,000 76,923 106,923 90,000 126,538 152,500 118,654 55,385 67,538 - Dec-13 51,909 52,818 45,864 128,409 140,000 109,091 78,591 108,636 102,273 135,364 150,682 129,545 57,364 65,318 - Jan-14 50,250 54,792 44,625 130,000 143,958 114,167 80,688 108,750 105,000 132,625 156,458 132,708 62,333 69,167 - Feb-14 50,773 53,864 45,364 127,727 128,182 114,318 79,318 109,091 107,000 139,545 157,727 135,000 60,773 70,364 - Mar-14 49,750 57,750 47,458 130,000 148,042 128,750 78,667 98,542 110,000 146,875 167,708 135,000 56,417 70,364 - Apr-14 50,400 56,000 41,850 130,000 143,625 139,000 77,900 115,625 113,500 136,500 164,250 135,100 57,000 72,375 - Source: Ministry of Industry, Trade, and Marketing (MITM), Government of Tanzania PAGE http://www.worldbank.org/tanzania/economicupdate. 62 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Annex 12: Average wholesale prices: Tanzania shillings per 100kg 2012-14 Round Month-Year Beans Maize Rice Potatoes Sorghum Jan-12 132,641.5 44,259.4 175,178.1 67,193.2 45,585.9 Feb-12 126,981.7 42,449.1 178,627.8 60,939.2 55,956.3 Mar-12 121,523.1 42,919.4 191,719.2 60,079.6 55,387.4 Apr-12 120,567.1 46,934.9 204,025.4 62,383.3 63,629.9 May-12 128,112.8 52,440.3 183,585.5 70,651.3 60,627.3 Jun-12 129,574.6 52,326.0 165,444.2 69,924.5 65,201.0 Jul-12 130,789.9 52,071.6 160,325.4 79,904.4 58,974.9 Aug-12 126,322.8 50,311.1 158,089.2 69,914.6 57,378.6 Sep-12 126,923.2 54,291.1 163,317.9 67,353.8 61,793.2 Oct-12 123,121.1 54,879.9 163,039.9 67,434.9 53,238.6 Nov-12 135,724.2 65,340.6 176,828.6 96,841.5 65,089.4 Dec-12 139,497.6 72,880.4 185,619.9 85,499.2 75,584.3 Jan-13 144,225.0 76,740.0 188,418.0 82,023.3 75,278.5 Feb-13 136,129.4 77,393.4 182,480.2 76,765.4 85,059.5 Mar-13 126,420.9 72,966.3 175,430.1 68,324.3 88,903.2 Apr-13 124,975.2 66,273.4 159,200.1 64,973.3 82,143.4 May-13 123,689.8 55,949.3 139,257.6 65,567.1 93,086.6 Jun-13 127,741.7 49,486.3 131,541.7 65,769.5 85,444.4 Jul-13 125,467.5 50,113.3 128,382.4 67,660.5 105,733.3 Aug-13 123,313.3 52,107.8 123,407.5 68,823.2 86,053.9 Sep-13 121,427.0 53,095.0 120,391.0 66,017.0 73,765.0 Oct-13 131,525.1 53,252.0 117,913.9 65,684.0 74,869.2 Nov-14 135,023.0 53,242.4 120,073.1 66,896.2 76,770.4 Dec-13 136,601.1 54,648.8 121,897.8 69,589.4 74,456.0 Jan-14 137,264.5 56,152.2 124,104.1 72,145.3 75,424.5 Feb-14 137,264.5 56,152.2 124,104.1 72,145.3 75,424.5 Mar-14 141,476.6 50,631.8 128,952.7 69,177.7 70,264.0 Apr-14 138,796.2 49,970.1 135,418.1 67,985.9 68,285.4 Source: Ministry of Industry, Trade, and Marketing (MITM), Government of Tanzania PAGE http://www.worldbank.org/tanzania/economicupdate. 63 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 13: Interest rates structure 2012-14 Item (Percent) 2012 2013 2014 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb A: Domestic Currency 1. Interbank Cash Market Rates Overnight 22.0 7.2 16.3 25.8 16.8 14.6 5.4 5.4 8.7 7.8 4.1 5.1 7.9 4.1 6.2 10.5 8.8 7.3 10.2 6.2 6.9 7.8 6.0 8.3 11.4 6.5 2 to 7 days 17.7 8.1 18.6 24.9 18.7 15.6 9.2 6.0 9.2 9.0 4.8 6.6 8.8 5.5 8.0 12.2 11.0 9.5 11.4 7.1 8.8 8.8 8.3 9.2 12.1 15.7 8 to 14 days 24.0 9.8 18.1 25.2 19.9 19.9 9.7 6.3 11.2 9.0 6.3 6.9 9.2 5.6 9.6 14.1 11.0 10.0 11.8 9.7 10.5 9.8 8.4 10.6 11.5 9.1 15 to 30 days 15.9 13.0 19.2 22.0 21.5 21.5 12.5 12.5 12.5 10.8 7.6 7.0 11.3 9.2 9.5 15.6 11.7 12.0 12.4 10.5 11.8 13.8 10.8 10.8 10.8 11.7 31 to 60 days 23.0 23.0 23.0 22.0 22.0 18.0 18.0 18.0 18.0 11.8 7.7 7.7 7.7 9.5 11.9 13.5 13.5 11.0 11.0 10.0 11.5 9.0 10.2 10.2 14.5 10.0 61 to 90 days 17.0 17.0 17.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 24.0 14.0 14.0 14.0 14.0 14.0 14.1 10.4 10.4 10.4 10.4 13.0 12.0 12.0 12.0 12.0 91 to 180 days 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 7.8 12.4 12.4 12.4 12.4 14.4 14.4 14.4 14.4 14.4 13.0 13.0 13.0 13.0 13.0 13.0 181 and above 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 7.3 14.0 14.0 14.0 15.0 14.5 14.5 14.5 14.5 14.5 Overall Interbank cash market rate 21.4 7.4 16.8 25.7 17.3 14.7 6.2 5.5 8.8 8.4 4.6 5.8 8.1 4.8 6.8 11.1 9.1 7.9 10.4 6.3 7.4 8.1 6.4 9.9 13.7 7.8 2. Lombard Rate 26.4 8.6 19.5 30.9 20.2 17.5 6.5 6.5 10.4 9.4 5.0 6.1 9.4 5.0 7.4 12.5 10.6 8.8 12.2 7.4 8.3 9.3 7.2 9.9 13.7 7.8 3. REPO Rate 10.5 4.0 3.8 3.8 3.8 8.9 6.0 4.8 6.7 5.9 3.6 3.5 5.1 3.6 3.6 3.5 3.5 3.8 2.8 2.6 2.2 2.6 4.0 5.0 5.8 3.9 4.Treasury Bills Rates 35 days 10.4 6.6 5.2 5.2 5.2 6.7 4.4 4.2 4.2 8.3 7.4 7.0 6.9 6.6 6.6 6.6 6.5 6.0 6.2 6.2 6.4 4.7 4.7 4.7 4.7 6.0 91 days 13.2 12.2 12.8 13.8 13.8 13.4 13.2 11.8 12.3 12.3 11.8 11.9 10.3 11.8 11.6 11.7 11.9 11.9 12.4 12.5 13.5 13.7 13.2 13.6 13.8 13.5 182 days 17.5 13.6 13.1 13.9 14.0 13.5 13.5 12.7 12.9 13.2 12.9 13.0 13.0 13.4 13.2 14.0 14.0 14.0 14.4 14.9 15.8 15.5 14.9 15.5 14.8 13.7 364 days 18.6 13.4 13.9 14.9 14.9 14.4 13.8 12.9 13.4 13.4 13.3 13.7 14.2 14.1 13.7 14.2 14.3 14.6 14.9 15.2 15.9 15.6 15.0 15.6 14.8 13.8 Overall Treasury bills rate 17.8 13.0 13.4 14.4 14.4 13.8 13.4 12.5 12.9 12.9 12.4 12.9 13.7 13.4 13.1 14.0 13.6 13.9 14.2 14.5 15.2 15.1 14.8 15.2 14.7 13.7 5.Treasury Bonds Rates 2-years 17.9 17.9 13.7 13.7 14.4 14.8 14.8 13.8 13.8 13.8 13.8 14.3 14.3 14.3 14.3 14.1 14.3 14.3 14.8 14.8 15.4 15.0 15.0 15.0 15.1 15.1 5-years 17.0 17.0 14.8 14.8 14.9 14.9 14.7 14.7 14.5 14.5 14.5 14.9 14.9 14.4 14.4 15.0 15.0 14.9 14.9 14.1 14.1 15.5 15.5 15.4 15.4 14.5 7-years 15.0 13.8 13.8 14.6 15.4 15.4 14.9 14.9 15.1 15.1 15.3 15.3 15.6 15.6 15.0 15.2 15.2 15.8 15.8 15.8 15.8 15.8 15.2 15.9 15.9 15.9 10-years 17.0 14.8 14.8 15.0 15.0 15.2 15.2 15.1 15.1 15.3 15.8 15.8 15.8 15.8 14.3 14.3 15.3 15.3 15.3 15.3 15.8 15.8 16.0 16.0 16.0 16.0 15-years .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 16.6 16.6 16.6 16.9 6. Discount Rate or Bank Rate 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 7. Savings Deposit Rate 2.9 2.9 2.9 2.9 2.9 2.9 2.9 2.9 3.0 2.9 2.9 2.9 3.0 2.9 2.9 3.1 3.1 3.0 3.0 3.0 3.0 3.0 3.0 3.1 3.1 3.1 8. Overall Time Deposits Rate 7.6 7.1 8.4 8.4 8.3 8.8 8.8 8.6 8.5 8.5 8.3 8.7 8.8 8.9 8.8 8.7 8.8 8.6 8.4 8.8 9.1 8.8 8.4 8.8 8.7 8.9 1 month 6.0 6.7 7.9 7.5 6.9 7.5 7.7 8.5 8.0 9.3 8.5 9.1 9.3 9.2 8.9 8.8 8.5 8.7 8.3 1.9 2.7 2.8 2.5 2.4 2.4 2.4 2 months 8.9 8.2 7.9 7.9 8.3 7.6 9.6 8.6 8.8 8.8 9.5 9.8 9.1 10.0 9.4 9.8 9.1 9.4 9.4 9.0 10.1 9.2 9.1 9.4 7.7 8.1 3 months 8.4 8.4 9.4 8.7 8.4 9.5 10.5 9.6 10.0 10.6 10.3 10.4 10.3 9.7 10.3 9.8 9.8 9.2 9.7 10.1 10.2 9.7 9.5 9.0 9.3 10.3 6 months 9.3 9.4 10.1 9.9 10.0 10.9 11.3 11.6 10.9 10.7 10.2 10.3 10.4 10.7 10.7 11.0 11.0 10.8 10.1 9.6 10.3 9.9 8.9 10.0 10.4 10.6 12 months 9.0 9.6 10.5 11.6 11.5 12.2 12.0 11.8 11.3 11.2 10.5 11.1 11.0 11.1 11.4 11.4 11.5 11.2 10.8 11.6 11.8 11.6 11.7 11.2 11.1 11.4 24 months 10.1 6.4 11.6 12.0 11.9 12.4 9.2 8.9 9.1 7.9 7.9 8.7 9.1 9.6 9.6 9.2 10.0 9.4 8.6 8.4 8.8 8.2 7.0 8.4 8.3 8.4 9. Negotiated Deposit Rate 9.6 9.8 10.2 10.4 10.1 9.8 9.6 9.3 10.1 9.2 10.0 10.1 10.3 9.9 10.0 9.7 10.1 10.9 10.0 11.0 11.3 11.2 10.3 10.5 11.3 12.1 10. Overall Lending rate 14.8 15.8 15.2 15.1 15.1 15.3 15.7 15.8 15.8 16.4 15.8 15.7 15.7 15.5 16.0 16.0 16.0 15.5 15.4 15.7 15.8 15.9 16.2 16.0 16.3 16.4 Short-term (up to 1year) 13.9 13.8 14.0 14.3 14.2 13.9 14.5 14.5 14.4 14.4 14.3 14.1 14.1 13.9 14.3 14.5 14.4 14.3 13.8 13.6 13.8 13.7 14.1 13.8 14.3 14.5 Medium-term (1-2 years) 15.5 17.3 15.5 15.5 15.8 16.3 16.5 16.8 16.6 17.3 16.8 16.9 16.6 16.8 17.8 17.3 17.5 16.5 16.8 17.0 17.9 17.7 17.4 16.7 16.8 16.9 Medium-term (2-3 years) 14.9 17.2 15.3 15.3 15.4 15.6 15.8 15.5 16.0 16.7 16.3 16.1 16.0 15.6 16.8 16.8 17.0 16.3 16.2 17.2 16.9 17.0 16.0 16.3 16.3 16.2 Long-term (3-5 years) 14.8 16.7 15.7 15.4 15.4 15.6 15.8 15.9 16.3 17.1 16.8 16.8 16.8 16.6 16.8 16.9 15.1 14.9 14.9 14.7 14.7 14.3 16.5 16.7 16.8 16.7 Term Loans (over 5 years) 15.1 14.0 15.4 15.2 15.0 15.1 15.8 16.2 15.9 16.7 14.9 14.4 15.1 14.7 14.5 14.6 15.9 15.7 15.6 16.2 15.9 16.6 17.3 16.6 17.2 17.7 11. Negotiated Lending Rate 13.8 14.8 14.3 13.9 13.3 14.2 14.0 13.3 14.4 14.4 13.9 14.5 14.8 14.2 15.1 14.1 13.3 13.1 13.7 13.3 13.5 13.8 13.2 13.1 13.1 12.8 B: Foreign Currency Savings Deposits Rate 0.6 0.3 0.6 0.7 0.5 0.4 0.3 0.5 0.4 0.7 0.6 0.3 0.3 0.3 0.6 0.3 0.3 0.4 1.0 1.3 0.5 0.4 0.5 1.1 0.9 1.4 Overall Time Deposits Rate 1.4 1.2 1.3 1.2 1.1 1.4 1.3 1.6 1.6 1.6 1.7 1.6 1.7 1.2 1.8 1.9 2.1 3.6 2.2 2.4 2.1 3.0 3.0 2.9 3.1 4.3 1-months 1.2 1.0 0.7 0.7 1.0 1.2 0.9 1.0 0.9 1.2 1.3 1.1 1.0 1.4 1.7 1.9 2.1 3.4 2.0 3.0 1.9 2.1 1.6 3.2 2.4 2.4 2-months 1.5 1.2 1.6 1.4 1.6 1.7 2.2 2.1 2.4 2.0 2.4 2.1 2.3 2.0 2.2 2.6 2.6 3.6 2.1 2.8 2.5 2.8 3.3 2.2 2.6 4.8 3-months 0.8 0.8 0.8 0.8 0.9 0.8 0.1 1.6 1.5 1.5 1.5 1.8 1.5 0.3 1.5 1.3 1.8 3.5 2.3 2.4 2.1 2.0 2.6 1.7 2.7 4.9 6-months 1.8 1.4 1.6 1.6 1.0 1.9 1.7 1.7 1.7 1.8 1.6 1.7 1.7 0.6 2.1 1.9 2.0 3.6 2.2 2.0 2.0 4.8 4.1 4.0 4.2 4.8 12-months 1.5 1.6 1.9 1.6 1.0 1.5 1.4 1.6 1.6 1.7 1.8 1.5 1.8 1.7 1.5 2.0 1.9 3.9 2.4 2.0 1.8 3.1 3.1 3.5 7.3 3.5 3.6 11.6 4.6 15.8 Overall Lending Rate 8.1 8.4 8.4 9.5 10.1 10.1 7.3 7.2 7.2 6.5 7.2 7.3 7.3 7.2 8.1 8.3 8.0 7.9 8.5 7.6 7.9 7.5 7.3 7.0 6.9 7.0 Short-term (up to 1year) 6.0 6.0 6.0 7.3 6.8 8.5 6.4 6.2 6.3 2.3 6.0 5.8 5.9 6.2 6.5 6.9 6.3 6.5 6.9 6.5 7.1 5.5 4.9 3.6 3.1 3.3 Medium-term (1-2 years) 9.3 9.4 9.4 10.1 11.2 11.1 7.9 7.8 8.1 8.1 8.2 8.3 8.0 7.9 8.2 8.2 7.9 7.5 8.6 7.6 8.7 8.7 8.6 8.6 8.4 8.6 Medium-term (2-3 years) 9.0 9.0 8.9 10.4 10.4 10.4 7.6 7.6 7.1 7.4 7.3 7.2 7.3 7.3 8.7 8.9 8.9 7.5 9.1 8.5 8.5 8.5 8.4 8.4 8.5 8.3 Long-term (3-5 years) 8.1 8.8 8.8 10.3 10.4 10.3 7.5 7.4 7.6 7.5 7.4 7.3 7.3 7.0 8.0 7.8 7.7 8.6 8.7 7.7 7.6 7.6 7.6 7.4 7.5 7.5 Term Loans (over 5 years) 8.2 8.7 8.8 9.4 11.8 10.4 7.0 6.9 7.1 7.1 7.1 7.8 7.7 7.6 9.4 9.4 9.2 9.3 9.0 7.8 7.5 7.4 7.2 6.8 7.1 7.3 Source: BoT PAGE http://www.worldbank.org/tanzania/economicupdate. 64 T h e Wo r l d B a n k Po v e r t y R e d u c t i o n a n d E c o n o m i c M a n a g e m e n t U n i t A f r i c a R e g i o n THE WORLD BANK Annex 14: Monetary aggregates 2005/6-2013/14 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 p Monetary agregates M3 as % of GDP 27.5 28.8 28.9 29.6 30.4 31.9 29.9 31.5 31.4 M2 as % of GDP 18.7 19.7 21.1 21.8 24.1 24.9 23.8 23.3 23.2 M3 growth rate (%) 31.3 20.1 18.1 18.5 25.1 22.0 11.3 14.9 14.5 M2 growth rate (%) 25.8 20.4 26.5 19.5 26.2 19.4 12.7 14.7 14.7 Domestic credit Total Domestic credit (% of GDP) 11.6 14.4 14.8 18.2 20.4 24.3 23.9 24.4 25.0 Total domestic credit growth ( %) 24.8 41.7 21.1 42.5 29.2 37.3 15.9 19.9 18.1 Private Sector credit ( % of GDP) 11.2 13.1 15.5 17.7 18.1 19.6 19.8 19.7 20.0 Private Sector credit growth ( %) 31.3 34.1 38.6 32.8 16.3 25.6 18.7 17.0 16.5 Interest rates structure/1 Overall Tbills rate ( period average, %) 12.4 13.5 11.2 10.6 5.0 5.3 12.8 13.2 14.7 Average lending rate (%) 15.0 16.4 15.4 15.1 14.7 14.8 15.1 15.8 16.0 Average deposit rate( %) 5.5 7.4 7.8 6.6 6.3 5.8 7.2 8.7 8.8 Source: BoT, IMF and World Bank Key: p = projected Annex 15: National debt developments USD mn 2012/13 2013/14 Item Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct r Nov r Dec r Jan r Feb r 1. Overal Total Debt Committed 2 14,074.8 12,446.7 13,498.1 14,792.1 14,859.8 13,790.4 15,422.9 15,630.4 16,146.7 16,249.7 16,340.0 16,694.4 17,102.9 17,010.7 17,333.7 17,449.9 17,480.3 17,655.4 18,027.1 17,806.5 Disbursed outstanding debt 8,862.4 8,921.9 8,958.9 9,000.0 9,108.5 9,141.8 9,197.5 9,412.4 9,966.4 10,057.6 10,134.9 10,693.4 11,002.3 11,065.4 11,425.1 11,490.1 11,526.2 11,699.1 12,058.2 12,090.5 Undisbursed debt 5,212.4 3,524.9 4,539.2 5,792.1 5,751.3 4,648.6 6,225.4 6,218.0 6,180.3 6,192.1 6,205.1 6,001.0 6,100.7 5,945.3 5,908.6 5,959.8 5,954.1 5,956.3 5,968.9 5,716.0 2. Disbursed Debt by Creditor Category2 8,862.4 8,921.9 8,958.9 9,000.0 9,108.5 9,141.8 9,197.5 9,412.4 9,966.4 10,057.6 10,134.9 10,693.4 11,002.3 11,065.4 11,425.1 11,490.1 11,525.2 11,699.1 12,058.2 12,090.5 Bilateral debt 1,021.8 1,017.3 1,004.9 997.4 986.3 970.4 981.7 966.2 959.2 946.8 936.9 940.9 1,007.3 1,009.3 1,034.2 1,036.1 1,020.0 1,030.3 1,043.5 1,044.5 Multilateral debt 5,578.1 5,630.5 5,652.6 5,717.3 5,844.3 5,901.5 5,895.7 5,928.3 5,882.3 5,955.5 5,962.4 6,265.5 6,352.6 6,402.4 6,662.4 6,717.5 6,729.2 6,853.3 6,872.0 7,041.5 Commercial debt 1,611.9 1,623.0 1,633.6 1,652.7 1,645.2 1,649.4 1,647.4 1,837.1 2,444.7 2,474.9 2,538.2 2,813.2 2,943.6 2,945.3 3,015.6 3,025.0 3,048.0 3,050.3 3,373.5 3,281.3 Export credits 650.6 651.0 667.8 632.7 632.8 620.5 672.7 680.8 680.2 680.5 697.3 673.8 698.7 708.3 713.0 711.5 728.0 765.2 769.3 723.1 3. Disbursded Debt by Borrower Category2 8,862.4 8,921.9 8,958.9 9,000.0 9,108.5 9,141.8 9,197.5 9,412.4 9,966.4 10,057.6 10,134.9 10,693.4 11,002.3 11,065.4 11,425.1 11,490.1 11,526.2 11,699.1 12,058.2 12,090.5 Central Government 7,118.3 7,173.1 7,202.3 7,260.7 7,376.6 7,447.5 7,479.2 7,450.0 8,002.8 8,065.1 8,106.5 8,716.7 8,970.1 9,022.4 9,377.3 9,441.5 9,464.0 9,605.9 9,903.8 10,064.8 Parastatal Companies 404.1 407.0 411.9 410.6 410.2 410.9 411.0 503.5 497.8 507.4 511.4 454.8 514.9 517.3 523.6 524.0 524.9 524.1 524.1 527.3 Private Sector 1,340.0 1,341.8 1,344.6 1,328.7 1,321.6 1,283.4 1,307.3 1,458.9 1,465.7 1,485.2 1,517.0 1,521.9 1,517.2 1,525.7 1,524.1 1,524.6 1,537.3 1,569.1 1,630.3 1,498.4 4. Disbursed Debt by Use of Funds2 8,862.4 8,921.9 8,958.9 9,000.0 9,108.5 9,141.8 9,197.5 9,412.4 9,966.4 10,057.6 10,134.9 10,693.4 11,002.3 11,065.4 11,425.1 11,490.1 11,526.2 11,699.1 12,058.2 12,090.5 BOP & Budget Support 1,762.8 1,750.9 1,754.2 1,738.1 1,863.3 1,908.7 1,932.5 1,790.1 2,360.4 2,364.5 2,465.9 2,533.9 2,573.8 2,584.6 2,422.4 2,113.7 2,116.8 2,120.3 2,154.3 2,114.0 Transport & Telecommunication 1,373.3 1,430.8 1,427.4 1,493.5 1,637.4 1,552.1 1,575.2 1,811.6 1,810.9 1,740.8 1,717.2 1,757.1 1,929.8 1,830.9 2,750.5 2,813.0 2,917.6 3,105.9 3,295.9 3,272.2 Agriculture 987.9 962.5 983.8 1,247.0 1,029.1 1,045.1 1,061.7 914.7 901.0 897.5 1,005.9 926.3 942.4 938.6 1,001.9 1,150.0 1,151.0 1,153.3 1,154.3 1,132.1 Energy & Mining 578.5 572.8 591.4 598.4 633.6 617.0 638.2 565.6 564.5 571.0 588.7 878.2 953.6 971.6 1,014.7 1,162.6 1,167.2 1,172.8 1,194.6 1,339.9 Industries 187.7 190.3 192.1 179.5 191.4 179.9 191.7 201.2 210.9 250.2 244.2 216.5 30.6 201.9 231.1 233.3 234.1 235.4 235.7 284.8 Social Welfare & Education 2,080.1 2,072.1 2,076.7 2,076.4 2,225.2 2,309.7 2,245.4 2,096.5 2,071.9 2,260.5 2,207.7 2,157.6 2,204.6 2,208.3 1,978.9 2,061.9 2,056.5 2,059.7 2,089.3 2,036.5 Finance and Insurance 294.8 294.7 295.4 297.6 317.3 296.2 294.4 268.3 310.4 414.7 413.9 344.6 355.7 342.8 346.4 356.3 358.9 361.6 361.6 351.7 Tourism 110.6 110.6 110.9 101.0 107.7 101.4 101.7 98.9 98.1 205.4 117.9 100.6 111.8 105.6 102.3 102.9 103.0 105.4 105.9 100.1 Others 1,486.8 1,537.2 1,527.0 1,268.4 1,103.5 1,131.6 1,156.7 1,665.5 1,638.3 1,353.1 1,373.6 1,778.6 1,899.9 1,881.1 1,576.9 1,496.4 1,421.1 1,384.7 1,466.6 1,459.1 5. Total Amount of Loan Contracted 1 162.6 7.5 38.3 40.7 8.1 29.8 13.7 4.1 622.0 74.6 12.2 60.2 3.4 72.2 0.2 0.3 0.5 67.9 5.0 30.1 Government 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 600.0 74.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 58.3 0.0 0.0 Parastatal Companies 149.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Private 13.4 7.5 38.3 40.7 8.1 29.8 13.7 4.1 22.0 0.1 12.2 60.2 3.4 72.2 0.2 0.3 0.5 9.6 5.0 30.1 6. Disbursements1 30.0 38.5 96.7 55.6 155.0 96.3 93.0 270.7 690.7 15.5 129.5 541.9 25.5 188.3 53.1 87.2 42.5 347.7 6.7 96.4 Government 30.0 38.4 94.0 54.8 153.3 96.3 36.7 34.7 690.7 15.4 129.0 540.8 22.5 187.7 53.1 87.2 42.2 347.4 6.6 96.4 Parastatal Companies 0.0 0.0 0.0 0.0 0.0 0.0 0.0 114.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Private 0.0 0.0 2.6 0.8 1.7 0.1 56.2 121.9 0.0 0.1 0.5 1.1 3.1 0.7 0.0 0.0 0.3 0.3 0.1 0.0 7. Actual Debt Service 1 4.4 8.7 3.1 19.7 8.2 18.9 12.0 3.7 24.9 19.2 7.8 17.6 11.2 10.4 24.0 24.4 21.9 10.1 9.8 21.3 Principal 4.1 2.0 2.7 11.2 2.0 4.4 6.2 1.8 5.5 10.6 1.6 2.4 8.6 2.6 1.6 15.1 6.5 8.2 1.5 14.1 Interest 0.3 4.0 0.5 8.4 6.2 1.7 5.6 1.5 5.0 8.2 6.2 15.2 2.1 4.8 22.4 9.3 15.4 2.0 8.3 7.3 Others 0.0 2.7 0.0 0.1 0.0 12.8 0.1 0.4 14.4 0.5 0.0 0.0 0.5 3.0 0.0 0.0 0.0 0.0 0.0 0.0 8. Net Transfers1 25.6 29.8 93.5 36.0 146.7 77.4 81.0 267.0 653.0 -3.7 121.3 524.3 14.3 178.0 29.1 62.8 20.6 337.5 -3.1 75.1 9.Total Arrears by Creditors Category2 2,769.5 2,801.6 2,806.4 2,774.4 2,729.5 2,772.0 2,797.7 2,795.2 2,808.3 2,812.9 2,847.7 2,770.8 2,929.2 2,695.3 2,747.2 2,932.2 2,924.3 2,943.9 3,097.7 2,997.3 Principal 1,278.1 1,299.0 1,289.2 1,271.1 1,244.9 1,248.9 1,266.4 1,292.6 1,309.8 1,313.4 1,337.5 1,375.0 1,411.2 1,392.2 1,428.0 1,442.0 1,446.0 1,447.3 1,452.1 1,460.0 Bilateral 405.7 406.0 380.9 383.0 372.2 373.1 374.7 364.5 361.7 365.2 349.7 356.5 373.7 362.8 366.3 368.3 368.9 369.9 374.0 299.7 Multilateral 6.4 7.1 7.6 6.8 6.2 9.3 10.7 10.2 14.8 14.7 15.1 19.8 20.5 19.5 24.3 25.2 25.4 25.3 25.3 15.7 Commercial 576.3 592.8 599.8 585.9 592.7 583.9 593.8 630.9 636.7 637.7 656.1 674.6 689.2 679.1 696.4 699.2 700.3 700.5 701.2 695.1 Export Credits 289.7 293.0 300.9 295.4 273.8 282.6 287.2 287.0 296.6 295.8 316.6 324.0 327.9 330.8 340.9 349.3 351.4 351.6 351.6 449.5 Interest 1,491.4 1,502.6 1,517.2 1,503.3 1,484.6 1,523.1 1,531.4 1,502.6 1,498.5 1,499.5 1,510.3 1,395.8 1,517.9 1,303.1 1,319.2 1,490.2 1,478.3 1,496.6 1,645.6 1,537.3 Bilateral 772.4 775.5 777.6 778.7 775.2 792.8 797.4 786.5 782.0 783.1 769.6 767.2 773.2 778.8 783.6 788.1 789.3 801.7 803.8 818.7 Multilateral 7.1 7.3 6.9 6.4 6.5 7.5 6.7 6.6 6.7 6.7 6.9 5.4 8.4 8.4 8.9 8.5 6.6 6.6 8.6 8.6 Commercial 571.6 579.8 591.9 601.1 585.0 597.6 599.3 583.5 582.5 582.4 602.4 516.1 631.9 408.5 418.5 545.8 546.7 548.5 648.1 556.2 Export Credits 140.3 139.9 140.7 116.9 117.9 125.2 127.9 126.1 127.3 127.3 131.4 107.1 104.5 107.3 108.4 147.8 135.7 139.8 185.1 153.8 10. External Debt Stock 10,353.8 10,424.4 10,476.1 10,503.2 10,593.1 10,664.9 10,728.9 10,915.0 11,464.9 11,557.1 11,645.1 12,089.2 12,520.2 12,368.4 12,744.3 12,980.3 13,004.5 13,195.6 13,703.8 13,627.8 11. Domestic Debt Stock 2,857.8 2,918.0 2,947.1 3,268.3 3,481.3 3,277.8 3,246.4 3,310.0 3,424.9 3,447.3 3,554.1 3,519.4 3,712.0 3,791.6 3,829.7 3,756.9 3,713.6 3,831.7 3,861.8 3,814.5 12. Total Debt Stock 13,211.5 13,342.4 13,423.1 13,771.5 14,074.4 13,942.7 13,975.2 14,225.0 14,889.8 15,004.5 15,199.2 15,608.6 16,232.2 16,160.0 16,574.1 16,737.2 16,718.1 17,027.3 17,565.6 17,442.3 End Period Exchange Rate 1,574.8 1,567.2 1,569.3 1,572.0 1,571.4 1,571.6 1,584.2 1,587.5 1,590.5 1,591.0 1,599.4 1,602.7 1,613.4 1,610.9 1,604.9 1,601.5 1,609.4 1,578.6 1,616.8 1,620.4 Source: BoT PAGE http://www.worldbank.org/tanzania/economicupdate. 65 TA N Z A N I A E C O N O M I C U P D AT E • J U N E 2 0 14 , 5 T H E D I T I O N THE WORLD BANK Annex 16: Poverty by geographic regions Poverty Distribution Distribution of Headcount of the Poor the Population HBS 2011/12 HBS 2011/12 HBS 2011/12 Poverty Line/1 = TSh 36,482 Urban 15.5 15.9 28.8 Rural 33.3 84.1 71.2 Regions Urban 21.7 14.4 18.7 Rural 33.3 84.1 71.2 Dar es Salaam 4.1 1.5 10.1 Total 28.2 100.0 100.0 Poverty Line/1 = TSh 36,482 Urban 6.0 17.7 28.8 Rural 11.3 82.3 71.2 Regions Urban 8.7 16.7 18.7 Rural 11.3 82.3 71.2 Dar es Salaam 1.0 1.0 10.1 Total 9.7 100.0 100.0 Source: NBS 1/ Monthly expenditure per adult PAGE http://www.worldbank.org/tanzania/economicupdate. 66 THE WORLD BANK http://www.worldbank.org/tanzania/economicupdate