Poverty rate in Tanzania climbed to 27.2% in 2020 - Report

By Osoro Nyawangah, Dar es Salaam

The global COVID-19 pandemic has significantly slowed Tanzania’s economic growth, adversely affecting lives and livelihoods of the citizens, and requiring bold policy actions to ensure its Lower-Middle Income Country (LMIC) status is maintained.

Following two decades of sustained growth, Tanzania reached an important milestone in July 2020, when it formally graduated to lower-middle-income country status.

The 15th Tanzania Economic Update, Raising the Bar: Achieving Tanzania's Development Vision report issued by the World Bank Wednesday, March 3 in Dar es Salaam, notes that while Tanzania avoided a recession in 2020, economic growth decelerated to an estimated 2.0 percent.

The report maintains that the country’s poverty rate is estimated to have risen to 27.2 percent, and warns that the loss of income could have pushed an additional 600,000 Tanzanians below the national poverty line, most of them households that rely on self-employment and informal micro-enterprises in urban areas.

The shock of the pandemic is expected to slow poverty reduction. The national poverty rate is projected to fall to 27.0 percent in 2021, down slightly from 2020 but still above its 2019 level.

Due to rapid population growth, the number of people living below the national poverty line is projected to increase by 320,000 in 2021. The quality of the post-crisis recovery will shape poverty dynamics in 2021 and beyond.

“To sustainably reduce poverty, the recovery must create high-paying jobs, enable the growth of micro, small and medium enterprises (MSMEs), and support gains in the productivity of the agricultural sector, on which three-quarters of poor households depend.” Report says.

World Bank’s Country Director for Tanzania, Malawi, Zambia and Zimbabwe, Mara Warwick, said that the country’s sustained economic expansion in recent years has supported improvements in overall living standards.recent years has supported improvements in overall living standards.recent years has supported improvements in overall living recent years has supported improvements in overall living standards.recent years has supported improvements in overall living standards.

"However, there is an important opportunity for the country to raise its own bar, providing greater opportunities and economic security for the large proportion of Tanzanians still living in poverty amidst  serious impacts from the global COVID-19 pandemic." She advised adding that realizing the goals of the 'Tanzania Development Vision-2025' will require a concerted effort to restore economy's growth momentum while expanding access to economic opportunities.

The report highlights high uncertainty of the country’s economic outlook.

Real gross domestic product is projected to grow in 2021 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,” Warwick said.

Tanzania has not released any numbers on Covid-19 since April 29, 2020, and shortly thereafter declared the country free of the disease.

As the Covax scheme rolls out millions of free Covid-19 vaccines in 142 countries worldwide, Tanzania is not among the recipients and has not ordered its own vaccines.

The government is urged to proactively engage with technical partners to prepare a plan for deploying a COVID-19 vaccine. Establishing an internal process for planning a COVID-19 inoculation campaign would position the authorities to move swiftly as new vaccines become available.

The economic update argues that the 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 the Vision 2025.

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, and 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 the Vision 2025.

“This strategic framing is also timely as the country prepares its next Five-Year Development Plan.” The report says.

Bill Battaile, World Bank Lead Economist for Tanzania has said that human capital investments enable households at all income levels to access economic opportunities and benefit from growth. 

“This is critical to ensure that all Tanzanians have opportunities throughout their lives to move to more productive economic sectors and improve their lives and those of their families.” He said. 

High population growth, slow and uneven job creation, low levels of education and limited access to educational and employment opportunities, especially among women and girls, have hindered the inclusiveness of economic growth, blunting its effect on poverty reduction and the expansion of the middle class. 

To raise the bar and become a successful middle-income country, the World Bank says that Tanzania needs to focus on sustaining its track record of economic growth, translating high growth into a more broadly shared set of opportunities and creating an economically secure middle class.

Based on the country’s recent history and the experience of successful LMICs worldwide, the report emphasizes five priority areas for policy action that have the potential to contribute to meeting Tanzania’s Vision 2025: accelerating productive investment, prioritizing human capital development, enabling agricultural transformation, leveraging digital technologies, and building public sector institutions and capabilities. - Africa