AfricaPress-Tanzania: TANZANIA needs to create more economic opportunities and shield vulnerable groups and the poor from adverse impact of the global economic downturn if the country is to maintain its lower-middle-income (LMIC) status.
Mara Warwick, the World Bank Country Director for Tanzania, Malawi, Zambia and Zimbabwe, says in the 15th Tanzania Economic Update titled ‘Raising the Bar: Achieving Tanzania’s Development Vision’ which takes Tanzania’s recent achievement of LMIC status as the point of departure.
It looks forward to what it will take to achieve the goals of the Tanzania Development Vision 2025, following two decades of sustained growth, where Tanzania reached an important milestone in July 2020 as it formally graduated to LMIC status.
However, the global COVID-19 pandemic has significantly slowed down economic growth, adversely affecting livelihoods of Tanzanians, and requiring bold policy actions to ensure that Tanzania’s LMIC status is maintained, she said.
“Tanzania’s sustained economic expansion in recent years has supported improvements in overall living standards,” the director noted, elaborating that there is an important opportunity for the country to raise its own bar, providing greater opportunities and economic security for the large proportion of the population still living in poverty.
This requirement is intensified by the serious impacts of the global COVID-19 pandemic, as realizing the goals of Vision 2025 will require a concerted effort to restore the economy’s growth momentum while expanding access to economic opportunities.
The economic update notes that while Tanzania avoided a recession in 2020, economic growth decelerated to around 2.0 percent. The poverty rate is estimated to have risen to 27.2 percent, with the report warning that the loss of income could have pushed an additional 600,000 Tanzanians below the national poverty line.
Most of them are members of households that rely on self-employment and informal microenterprises in urban areas, it said.
The report highlights considerable uncertainty of the country’s economic outlook, with gross domestic product growth in 2021 projected in the range of 3.0 to 5.3 percent, “with realization on the upper side of this range hinging on a strong recovery in global economic activity supported by the world-wide rollout of COVID-19 vaccines, and sound domestic policies to foster a sustainable recovery.”
“Increasing the availability and quality of information on both the domestic spread of COVID-19 and the evolution of macroeconomic indicators would strengthen the government’s ability to plan and implement effective policies to foster economic recovery and support all Tanzanians,” the report underlined.
Attainment of LMIC status offers an opportunity for the country to assess the quality of past growth in delivering broad welfare gains and to develop a roadmap to guide its further transition to a successful middle-income economy with a high level of human capital development, high-quality livelihood opportunities, and broad gains in living standards, as outlined in Vision 2025, it further stated.
The report frames Tanzania’s ‘next leap’ of development around three strategic pillars: sustaining robust medium-term growth in a challenging external environment, improving the inclusiveness of growth and its impact on poverty reduction, fostering upward economic mobility and strengthening economic security.
These three pillars reflect both the lessons of international experience and Tanzania’s unique circumstances and form the basis for an actionable policy agenda to achieve the goals of Vision 2025, it stated
Bill Battaile, World Bank Lead Economist for Tanzania said that this strategic framing is also timely as the country prepares its next Five-Year Development Plan. Human capital investments enable households at all income levels to access economic opportunities and benefit from growth, he said.