Introduction

161.            For more than two decades, Tanzania has been undertaking extensive changes in management of the economy and improving social service sectors.  The changes are the result of adverse social and economic situation experienced by the country during the late 1970s and early 1980s.  The reasons for adverse social and economic situation during early 1980s was a result of weakness in policies and management of the economy, and external factors.

 

162.            However, the socio–economic reforms undertaken to date, have enabled Tanzania to make significant progress in macro economic development as revealed by trends of macroe-conomic indicators.  The Gross Domestic Product (GDP) on average grew by 4.8 percent per year from 1990 to 2002.  In 2002, Gross Domestic Product grew by 6.2 percent.  Inflation rate has been declining from 30 percent in 1990s to below 4.5 percent at the end of 2002.  As a result of economic reforms, markets have been operating efficiently and the government revenue increased by more than four times in seven years, from shs. 25 billion per month in 1995 to more than shs. 100 billion per month in 2002.  The ratio of investment to GDP increased from 14.8 percent in 1997 to 17.4 percent in 2001 and Foreign Direct Investment increased from US $ 20 million in 1994 to US $ 327.2 million in 2001.  Foreign exchange reserves increased from a capacity of 1.5 months of imports in 1995 to around 9 months of imports in 2002.  As a result of these achievements, the co-operation between Tanzania and donors has increased, leading to increased assistance and relief in debts burden.

 

163.            While various macroeconomic indicators reveal stable growth and significant macroeconomic achievements following economic and social reforms, some people in the country contend that the life of ordinary Tanzanian has continued to deteriorate and the level of poverty has increased.  The aim of this chapter is to try to provide the link between achievement in macroeconomic indicators and poverty situation in the country.

 REVIEW OF ECONOMIC TRENDS AND REFORMS

 

The Period 1961 - early 1970s

164.            Since independence in 1961, the economy of Tanzania has passed through two main socio-economic policies.  From early 1960s till the announcement of the Arusha Declaration in 1967, the economic system was that inherited from colonial period which promoted the market economy and private sector.  After the Arusha Declaration, socialism and self reliance were adopted as the guiding principles and putting all major means of production under the state.  Public sector took a leading role in economic operations, and the provision of free basic social service to all become the means to combat poverty, ignorance and disease.  The economy depended on agriculture, which contributed an average of 50 percent of GDP.  The country witnessed a stable economic growth and on the average the  economy grew at around 5 percent, from mid 1960s to early 1970s.  In this period, Tanzania succeeded to strengthen and improve the social and economic welfare of its people.

 

The Period 1974 - 1985

165.            Despite the achievements stated above, the later part of the 1970s started showing signs of an economy in difficulties, as a result of the rise of oil prices which started in 1973, adverse  weather condition that affected crop output in 1974, collapse of East African Community in 1977 falling primary commodity prices in the world market, and war against Uganda’s Iddi Amin in 1978/79.  The socio–economic crisis reached a crimax in the early 1980s due to shortage of foreign exchange caused by the above listed factors and the world wide economic recession underway during the time. In order to reverse the economic situation the country initiated the National Economic Survival Programmes (NESP) and the Structural Adjustment Programme (SAP).  However, NESP was one year programme and was replaced by the three year SAP in 1982/83 which could not be implemented fully because of the extended negotiations between the Government and the Bretton Woods institutions.

 

The Period 1986 - 2002

166.            In 1986, Tanzania undertook a major review of the country’s development strategy and started the pursuit of building a liberalized economy based on the market and private sector.  This change in government’s economic management and development strategy facilitated the country’s negotiations with the Bretton Woods institutions and the Economic Recovery Programmes (ERP) were established and implemented up to 1992.  ERPs were replaced by the medium-term three year Rolling Plan and Forward Budget Framework (RPFB), now in operation as Medium-Term Expenditure Framework (MTEF).  Though the implementation of ERP helped the economy emerge from deep under utilization of production capacity due to availability of foreign exchange through import-support and other donor assistance, it did not stabilize until 1995.  Between 1986 and 1990 the growth of the economy ranged from 1.8 percent per year in 1986 to 7 percent in 1987, with an average growth rate of 4.4 percent per year over the period.  The period 1991 to 1995, the economy experienced a much slowed growth with growth rates ranging from 0.4 percent in 1993 to 3.6 percent in 1995 with an average of 2.0 percent over the period.  The impact of the slow trend in the growth of the economy manifested itself in very low collection in government revenue and decline in the quality of social services including health and education.  The period after 1995, except 1997, has seen a sustained increase in the annual growth rate of the economy from 3.3 percent in 1997 to 6.2 percent in 2002.  This performance of the economy is attributable to the intensified and sustained implementation of economic reforms, especially the increase in the pace of divesting publicly owned enterprises, increasing investment and the encouraging performance of the agriculture sector. 

 

 

Table no. 10.1: TRENDS OF  SELECTED MACRO ECONOMIC INDICATORS

1995 – 2002

 

Source: President’s Office, Planning and Privatization

Achievements of Macroeconomic Indicators

Growth of GDP

167.            Soon after starting implementation of various recovery programmes, economic growth began to recover in the period of 1986 to 1996.  In this period, the economy grew by an average of 3.0 percent.  In the period 1997 to 2002, GDP continued to grow from 3.3 percent to 6.2 percent.  This growth was attributed to increased production in the sectors of agriculture, industry, trade, hotels and restaurants (including tourism), and mining.  The per capita income increased from shs. 147,134 in 1997 to shs. 256,490 in 2002. 

 

Inflation trends

168.            The inflation rate as an indicator of stable economic growth, has consistently continued to decline from an average of 21.0 percent in 1996 to 4.5 percent in 2002.  The decline in inflation is attributed mainly to deliberate implementation of fiscal and monetary policies aimed at controlling government expenditure as well as reducing the increase in money supply in the country coupled with improvement in food supply and its availability.

 

Government Revenue and Expenditure

169.            The government efforts in collecting revenue continued to improve, whereby more than shs. 100 billion is being collected per month compared to shs. 25 billion per month in 1995.  An increase in revenue collection is due to improved tax collection and reduction of tax evasion.  As regards the expenditure, the Government continued to improve its expenditure system through Integrated Financial Management System (IFMS) and establishment of Medium Term Expenditure Framework (MTEF) as well as cash budget system.  The MTEF system gives priority to sectors identified in the Poverty Reduction Strategy  (PRS). 

 

Money Supply, Credit and Foreign Reserves

170.            During 1995/996 to 2001/2002, the growth in broad money supply (M₂) continued to decrease from 26.1 percent to 12.3 percent.  The aim is to have growth of money supply that is consistent with economic growth.  The average deposit interest rates provided by commercial banks declined from 12 percent in 1995/96 to 3.1 percent in 2002/03. Furthermore, the average lending rate declined from 28.0 percent in 1995/96 to 15.7 percent in 2002/03.  Foreign exchange reserves, the reserve continued to increase from 3.8 months of imports in 1997 to about 9 months of imports in 2002.

 

National Debt Stock

171.            Management of national debt stock has been contributing to strong and stable economic growth. The national debt stock stood at $ 7,464.0 million at the end of 2001/02, from $ 7,754.1 million in 1995/96.  The situation reveals that the national debt stock declined by 3.5 percent in the period between 1995/96 to 2001/02.  The decline of national debt stock provides more opportunities for the government to allocate resources to priority areas and provision of quality social services. It may be recalled that Tanzania reached the HIPC Completion Point in November 2001, and qualified for external debt relief amounting to about $ 3 billion over the next 20 years. This relief will reduce the debt service burden on the Government’s budget in the future. Debts that have been cancelled include multilateral debts and Paris Club debts. To a large extent, the debt service burden has been reduced.

 

172.            As indicated by macro economic indicators, Tanzania has significantly achieved socio-economic reforms adopted about two decades.  The government and donors community feel that, these reforms and achievements have brought significant net gains for all citizens and they will still continue to bring up great and more benefits in the future, thus must be sustained.  Although that achievement is acknowledged generally,  there are observations that, the macro economic reforms and achievements attained so far have not helped ordinary citizen, and poverty is increasing among the majority of the citizens.  Before linking the macro-economic achievements and poverty status in the country, it will be worthwhile to review briefly on evolution of the various national strategies for poverty reduction and emergent bearings on combating poverty in Tanzania.

 

Poverty Reduction Initiatives

173.          Since independence in 1961, the Government of Tanzania has been formulating various strategies aimed at alleviating poverty. The policy regime between 1967 and 1985 was based on socialism and self-reliance with the state assuming the role of facilitator of social and economic growth, a standard setter and provider of essential public services. The national efforts to combat poverty though centrally directed, resulted in a significant improvement in per capita income and access to education, health and other social services until the 1970s. Thereafter, these gains could not be sustained because of various domestic and external problems as well as policy weaknesses. In response to the stagnation and reversal in poverty indicators as well as declining quantity, quality of and access to basic social services, the government designed comprehensive strategies and articulated a number of targets in order to arrest the situation. Some of the targets are derived from international goals while others are national targets set in a more ambitious implementation timeframe. The key documents that articulated strategies and targets include Development Vision 2025, which set the broad development agenda for poverty reduction; the National Poverty Eradication Strategy (NPES), focusing on poverty targets; the Tanzania Assistance Strategy (TAS), a framework for directing external support into priority areas; and the Poverty Reduction Paper (PRSP) developed in the context of the HIPC initiative, linking targets with resources allocation and monitoring process as well as strategies for implementing NPES in the medium term.

 

174.          However, there are other interventions to combat abject poverty, which include among others, the Rural Development Strategy (RDS) and Agricultural Sector Development Strategy (ASDS), establishment of development funds which are used to facilitate availability of machinery and inputs, crops procurement, processing, storage, packaging and modern technology. Some of these funds are Agricultural Input Trust Fund (AITF), Private Agricultural Sector Support (PASS), and National Entrepreneur Development Fund as well as Community Trust Fund.

 

175.          The emphasis of the Small and Medium Enterprises (SMEs) Policy is on industries that could be manned and operated by Tanzanians without relying on foreign technical and financial support, specifically processing of agricultural and livestock products in order to improve the quality which would enhance competitiveness both in the regional and international markets, increase value added, create employment opportunities, and contribute towards poverty reduction. Furthermore, Micro Finance Policy has provided basis for establishment of co-operative and community banks, saving and credit co-operatives as well as civil societies and Non-Governmental Organisations (NGO’s). These policies have provided favourable and conducive environment for the private sector participation in productive activities.

 

176.          As a way of ensuring availability of technology, capital, and markets for local investors, the Tanzania Investment Centre (TIC) in collaboration with the United Nations Industrial Development Organisation (UNIDO) is implementing identification and promotion exercise for both small and large local investors. In this exercise a total of 600 small investors has been identified and assisted in preparing of the project profiles.

 

177.          The Government established the Tanzania National Business Council in 2001 chaired by the President of the United Republic of Tanzania. The outcomes of the dialogues are tax reforms and creation of good governance and identifying and suggesting remedial measures on investment and trade bottlenecks.  The strategies in place and the starting of the implementation process has provided signals towards poverty reduction and improved livelihoods.

 

Current Poverty Status

178.          With all these interventions, poverty still remains a major hurdle to the Tanzania population especially the rural dwellers. The Household Budget Survey conducted in 2000/01 revealed that 18.7 per cent of the population are unable to get adequate food (food poverty line) and 35.7 per cent could not afford basic needs (basic needs poverty line). However, poverty is more pronounced in the rural areas than the urban centres. Proportion of poor people in urban centres is 13 per cent compared with 87 per cent in the rural areas.

 

Income Poverty

179.          The poverty indicators in the country show that, poverty is still a major problem facing many people particularly those living in rural areas.  As for the food poverty, the national rate has declined from 21.6 percent in 1991/92 down to 18.7 percent in 2000/01.  Whereas, for the basic needs poverty, the rate also declined from 38.6 percent in 1991/92 to 35.7 percent in 2000/01.  Both two indicators revealed that, it is only in urban areas that have statistically significant decline rates of poverty, particularly in Dar es Salaam.

 

Table No.10.2: POVERTY INDICES IN TANZANIA (PERCENTAGE)

 

Source: Household Budget Survey 2000/01

 

Income inequality

180.          The national income inequality index increased by 0.1 percent point from 0.34 percent in 1991/92 to 0.35 percent in 2000/01.  Income inequality has increased at high rate in Dar es Salaam city while the inequality in other areas in the country was slightly low.

 

Table No. 10.3:     INCOME INEQUALITY MEASURE (GINI COEFFICIENT)

      

  Source: Household Budget Survey 2000/01

 

Employment

181.          Unemployment rate is highest in Dar es Salaam where has increased from 22 percent in 1990/91 to 26 percent in 2000/01, while in the rural areas, unemployment rate has remained constantly.  In other urban areas, the rate of unemployment increased from 6 percent in 1990/91 to 10 percent in 2000/01.  This revealed that unemployment problem is great in urban areas.  Age group affected more are youth aged between 15 and 34, especially those living in urban areas.

 

TABLE NO. 10.4:  UNEMPLOYMENT RATES BY AGE AND BY

      GEOGRAPHICAL LOCATION

 

 

Source: Integrated Labour Force Survey  survey 2000/01

 

 

Non-income poverty

182.          Non-income poverty indicators show slight achievement in the period between 1991/92 to 2000/01.  As for education, the results of HBS 2000/01 show that, the proportion of women with education has remained constant at 68 percent from 1991/92.  The proportional distance of children with 2 kilometres from school has decreased from 66 percent in 1991/92 to 63 percent in 2000/01.  As for the illiteracy rate, national statistics show that 28.6 percent of the total population cannot read and write in any language.  The problem was found more on women (36 percent) compared to men (20.4 percent), while for the rural areas the rates is higher compared to urban areas.  Enrolment rate in primary schools increased from 54.2 percent in 1990 to 65.5 percent in 2001.

 

183.          For the health services, the number of people accessing health services in different health centres increased to 66.6 percent in 2000/01 while the proportion of household within 6 kilometres from health facility has remained the same at 75 percent over the past ten years.

 

 

Table No. 10.5:           ILLITERACY RATES BY SEX AND URBAN-RURAL

 

         

Source: Household Budget Survey 2000/01

 

184.          The HBS 2000/01 results show that, water services improved in the urban areas than in rural areas.  Whereas 86 percent and 76 percent households in Dar es Salaam and other urban areas, respectively, have access to tap water, its only 28 percent in rural households have access to safe and clean water.  However, the percentage of people accessing water from unsafe water sources has decreased from 64 percent in 1991/92 down to 53 percent in 2000/01.

 

185.          As for the housing, there has been significant increase in quality housing.  Houses with non-earth floor increased from 21 percent in 1991/92 to 26 percent in 2000/01.  The percentage of households with durable walls increased from 16 percent in 1991/92 to 25 percent in 2000/01.  Houses with concrete and corrugated iron sheet roofs increased from 36 percent in 1991/92 to 43 percent in 2000/01.

 

186.          The macroeconomic indicators show the recovery trend in economic growth.  Despite these achievements, the emerging critical challenge is the low magnitude achieved on poverty reduction efforts in the country, particularly in most rural areas.  It is obvious that, economic growth is still at lower level to reduce poverty in the country.  More efforts are needed to increase production in all sectors which would provide employment opportunities for majority of the poor and those sectors which show sustainable growth such as mining and tourism.  Private sector has become fundamental economic pillar.  The critical concern is to create conducive environment for the growth of this sector.

 

LINKAGE BETWEEN MACROECONOMIC PERFORMANCE AND POVERTY SITUATION

 

Macroeconomic Achievements

187.          Macroeconomic growth is very important for socio-economic development of any nation. It is very crucial particularly for the poor nations like Tanzania, for attracting investment, promoting domestic and foreign trade, creating employment opportunities, improving social welfare and reducing poverty.  Inline with those, macroeconomic growth is not expected to bring about direct socio-economic development but lays down a conducive environment for socio-economic development and eventually reducing poverty. Sustainable and strong macroeconomic growth is expected to provide opportunities to communities to be able to participate in production and improve their living standards through: increasing employment; expanding the level of entrepreneurship, and increasing income hence reducing poverty. As a result of continued socio-economic reforms being implemented, the living standards of a Tanzanian in some aspect has started to improve though marginally. This is only a beginning of enjoying the fruits of the socio-economic reforms. The status of poverty today is different with that of 1980’s.

 

Stability of Price Movements

188.          A decline in inflation rate is a good indicator for macroeconomic stability in attracting investors as well as increasing the purchasing power of the majority of people to acquire goods and services. The growth of Gross Domestic Product leads to an increase in average per capita income.  An increase in per capita income enables people acquire basic needs, sending children to school, access to health service and improve their health status, building quality houses and living in better settlements. As a result of economic reforms, price movements of goods have continued to decline from 30 percent in 1990 to 4.5 percent in 2002. The decrease has backed up the purchasing power of the Tanzanian population, whose majority are poor. Price stability is also an important element towards poverty reduction resulting from increased production hence increased Gross Domestic Product and per capita income. Price stability has been an incentive to local and foreign investors as cost of production and interest rates are held down. This situation has increased the volume of trade and hence government tax revenues, which is important in expenditure directed towards the poor.

 

Increase in Gross Domestic Product

189.          An increase in Gross Domestic Product is an outcome of economic growth emanating from upturns in investments and trade, and stability of prices of goods and services thus augmenting per capita income. Average per capita income growth was –1.5 percent between 1979 – 1985 and increased to 2 percent between 1986 – 1998. Despite these, the marginal achievements are good signal to the Tanzanian. Increased income has enabled the people to acquire socio-economic basic needs and hence reducing poverty. The increase in Gross Domestic Product has to go hand in hand with equitable distribution of resources to all Tanzanians.

 

Money Supply Stability

190.          Improved bank efficiency following the financial sector reforms has provided opportunities for Tanzanians to increase owning of securities and capital which enhances production of goods and services.

 

Improved bank rates

191.          An interest rate provided by banks is an indicator of economic growth and social development.  An increase in savings deposits rates would stimulate savings, which is an essential component in capital accumulation.  Availability of loans from the banks as well as reasonable lending rates, will speed up investment which would accelerate economic growth, and thus reducing poverty.

 

Improved Exports and Foreign Exchange Earnings

192.          Economic reforms and their achievements have facilitated the growth of external trade and thus the increase in foreign reserves. Though not much has been achieved in this aspect, but what has been done to-date is stabilization of incomes of Tanzanians and the government in general, thus having an opportunities to eradicate poverty in the long run. Also, the availability of foreign currency enables the government and investors to import essential goods and services for socio–economic development.  Thus, contributing directly to poverty reduction.

 

Increased Foreign Assistance and Debt Relief

193.          Government achievements in implementing the reform programmes and achievements in economic growth attained in Tanzania have been able to convince donor community that it is serious in developing its people. As a result, the donor community has increased foreign assistance and debt reduction to the government. Furthermore, reaching HIPC completion point opens doors for increased bilateral, usually grants, assistance as well as new soft loans from international financial institutions, such as the World Bank, which are directed towards priority areas for poverty reduction as enshrined in the Poverty Reduction Strategy.

 

Improved Marketing

194.          As a result of economic reform undertaken in Tanzania, consumer goods markets, services and the availability of goods continue to improve in both rural and urban areas. In 1980s, before the structural adjustment programmes there were acute shortages of goods such foodstuffs, soaps, medicines, classrooms etc. This was not due to financial problems rather it was due to supply rigidities. Currently, basic social needs are easily available on competitive prices. The problem now is financial ability. These economic reforms have created opportunities for individuals to generate income from formal and informal sectors.

 

Improved revenue collection and public expenditure

195.          With regard to the various macroeconomic achievements including, economic growth and stability, improved domestic revenue collection, increased foreign exchange reserves, declined inflation rate, and strengthened public financial management, large part of the government budget has been directed to priority sectors and has been steadily increasing over the years. The increased budgetary allocations to the priority areas identified in the Poverty Reduction Strategy has accelerated economic growth and social services delivery (education, health, water, judiciary), economic infrastructure services (roads particularly rural roads) and agriculture.

 

196.          The Poverty Reduction Strategy identified six priority sectors for poverty eradication, which, are: education, water judiciary, health, roads and agriculture. The government has been implementing poverty eradication initiatives by increasing budgetary expenditure in those priority sectors using her annual budget through the Medium Term Expenditure Framework (MTEF) and Public Expenditure Review (PER) process.

 

Education Sector

197.          The government has given priority to the education sector and the budgetary allocation to the sector has increased to shs. 414.8 billion in 2002/03 from shs. 164.9 billion in 1998/99, equivalent to an increase of 151.6 percent. The notable progress in the sector are due to the increased budgetary allocation to that sector, together with the formulation and implementation of Education Sector Development Programme (ESDP) and Primary Education Development Programme (PEDP). The increased primary school enrolment rate of eligible school age children and abolition of primary school fees; completion of primary school mapping exercise in 82 districts in the country; increased progression rate of primary to secondary schools from 19.5 percent in 2000 to 21.7 percent in 2002; and the government recruitment of 7,277 primary teachers with qualification of grade A, are the results of the implementation of these programmes. Also, the government continued to provide training to the teachers in order to impart more skills, and a total of 2,228 teachers’ houses were constructed and a total of 12,868 new classrooms were constructed in the period 2000 – 2002.

 

Road sector

198.          Since 2000/01, when the Poverty Reduction Strategy started to be implemented, the budgetary allocations in the road sub-sector have been steadily increasing over years. Rural roads construction and rehabilitation have been conducted under the President’s Office, Regional administration and Local Government (PORALG). For instance, normal and periodic maintenance of 6,599 kilometres of rural roads was made in 2001/02, and Special Funds for special road projects was established in order to improve transportation between north-western and southern regions.

 

Water Sector

199.          As a result of increased government budgetary allocation to water sector, urban water supply services have increased from 68 percent in December 2000 to 73 percent in 2002. The rehabilitation and expansion of water service supplies was done in Morogoro, Tabora, Dodoma, Tanga, Arusha and Kilimanjaro regions. Also, development and expansion of new water sources, including deep wells have been taking place in different parts of the country. The provision of water services in villages has increased from 48.5 percent in December 2000 to 50 percent in June 2002, including Mwanyiha and Maswa dams construction in Shinyanga, rehabilitation and expansion of 12 rural water projects.

 

Legal and Judicial Sector

200.          The budget of this sector increased from shs. 5.5 billion in 1998/99 to shs. 23.8 billion 2002/03, an increase of 332.7 percent. In 2001/02, 22 resident magistrates, 26 primary court magistrates and 16 state attorneys were recruited. The Institute of Judicial Administration for the training of court administrators was established at Lushoto. Until 2002, a total of 30 court civil servants were trained. Moreover, the government established the commercial court in August 1999 and the procedures for cases dispute and commercial crisis have strengthened and hearing of cases has been ending between 3 to 6 months. In 2002, the Commission for Human Rights and Good Governance was established.

 

Agriculture Sector

201.          As a result of increased domestic revenue collections, budgetary allocation to the agriculture sector through the Medium Term Expenditure Framework (MTEF) has increased from shs.14.9 billion in 1988/99 to shs. 62.6 billion in 2002/03, equivalent to an increase of 320.1 percent. In 2001, the Agricultural Sector Development Strategy (ASDS) was approved. Research on agricultural crops continued to be undertaken in agricultural research institutions. Various measures for strengthening production and enhancement of agricultural sector have been undertaken by the government. The measures include distribution of pesticides to destroy destructive birds and pests, rehabilitation of irrigation infrastructures in order to enhance sustainable production of agricultural crops. Some of irrigation projects are River Basin Management and Smallholder Irrigation Improvement Project (RBMNSIIP) – 1,169 hectares, Participatory Irrigation Development Programme (PIDP) – 18 schemes were developed during 2002/03, Agricultural Sector Programme Support (ASPS) – 5 schemes with a coverage of 3,830 hectares were rehabilitated in collaboration with respective district councils and small scale irrigation with a total of 560 hectares were rehabilitated.

 

Health Sector

202.          The budgetary allocation to the health sector has increased from 7.5 percent of the total government budget in 2000/01 to 8.7 percent in 2002/03. The increased health budgetary allocation has enhanced and improved health services delivery. The analysis of health sector performance based on government spending showed that the absolute level of spending on primary health has increased by 184 percent between 1999/2000 and 2002/03. The disbursed funds to health sector, particularly primary health is targeted to address health problems in five priority areas of reproductive and child health, the control of communicable diseases and strengthening organisational structure and administration. Various programmes to improve and strengthen health services delivery have been established and implemented, including National Project on Malaria Control, Drug Revolving Funds in all district hospitals, TV and Radio programmes were prepared and disseminated information for advertising the Health Sector Reform Programme in 2001/02.

 

HIV/AIDS

203.          The economic impact of HIV/AIDS includes loss of labour force and productivity, increasing dependence ratio and the ever-escalated cost to the government for caring and treatment of infected individuals. In order to control the spread of HIV/AIDS, the National Multi-sectoral Strategic Framework (NMSF) has been in place to combat HIV/AIDS. However, the Tanzania Commission for HIV/AIDS (TACAIDS), was created by the Act of the Parliament in 2001. Notable achievements of these Strategies to date have been registered. The HIV/AIDS prevalence rate has decreased from 24 percent in 1994 to 11 percent in 2001. Due to increased budgetary allocation to the awareness campaign, all sectors at different levels have had prepared various programmes to contain the spread of HIV/AIDS. The Ministry of Health in collaboration with other stakeholders has established a programme to supply and disseminate relief HIV/AIDS drugs to the affected individuals.

 

Table 1:  CENTRAL GOVERNMENT EXPENDITURE, 1998/999 – 2002/03

 (IN BILLIONS OF TANZANIA SHILLINGS, UNLESS OTHERWISE INDICATED)

 

 

Source: Ministry of Finance

 

204.          Those are only few examples, which show how the achievements in macro-economy are critically important for socio-economic development, which directly contribute to poverty reduction in any country.  The South East Asian Tigers countries during the 1980’s  are classic examples of success story in the linkage between macroeconomic achievement and poverty reduction.  Indeed, the pending great challenge for Tanzania is to translate her achievement in macroeconomic indicators into realizable poverty reduction among the majority of the population.

 

CONCLUSION AND THE WAY FORWARD

205.          Tanzania has registered significant and satisfactory progress in the implementation of its socio-economic reforms.  The success is witnessed in macroeconomic achievement.  As various reports and statistics reveal, these achievements to large extent, have not reflected themselves into a significant decline of poverty in the country.  But three issues are outstanding: first, improved and stabilised macroeconomic performance does not directly lead to social and economic improvement of the people and thus completely eradicate poverty, but it is very important for creating conducive environment and opportunities which if utilised effectively will stimulate and speed up socio-economic development and ultimately eradicate poverty.  Secondly, the view from some quarters that the achievements of socio-economic reforms and macroeconomic growth did not reduce poverty but increased it, is not correct.  It is obvious that these successes have started to bring benefits, they create more opportunities for combating poverty, and it is too early to measure the impact of these reforms.  Thirdly, as far as Tanzania is concerned, these little achievements in eradicating poverty are caused by many factors such as: weak social and economic infrastructure, infancy in the operation of liberalised market economy, lack of savings culture, peoples’ weak motivation to working hard, improper use of private and even government resources for non-essential expenditure, low productivity in productive sector, low quality education and training, the unsatisfactory health service delivery systems, HIV/AIDS pandemic, problem of lack of affordable credit, lack of business skills, and other disasters outside the country’s ability (i.e. unfavourable weather conditions).

 

206.          Achievements attained as a result of economic reforms in the country have caused a stable economy and sustainable growth.  However, the achievements have not fully enabled to significantly improve the living conditions especially for the people in rural areas and those with low incomes.  In order for these achievements to reach the majority of people and improve their living standards, efforts must be continued and directed at the following important areas:

 

·         Reform in agriculture sector that will provide employment for majority of people particularly those living in rural areas, especially through application of modern technology and irrigation in small scale and large scale farms as major avenue of agriculture transformation from rain-fed agriculture. Furthermore, modern technology is required in developing agriculture sector.

 

·         Promote and develop small and micro enterprises which would to include; processing of traditional commodities; small-scale industries; and provision of various services.  complementary efforts are required in provision of credits (micro-finance) and to develop entrepreneurship skills for various groups of production enterprises and service delivery.

 

·         Further tax reform to lighten the tax burden for farmers particularly small scale farmers, and to improve tax administration.

 

·         Strengthening of economic infrastructure such as roads, particularly rural roads to support the development of agricultural sector and consolidate the domestic market, and for exports.

 

·         Further review of Land Act and the underlying policy and regulations, in order to address concerns relating to the use of land as collateral for bank lending.

 

·         Create a mindset for development and working hard in the society in order to move away from dependency mindset.