54 AFRICAN COUNTRIES

Tanzania's economy has shown a steady growth in the recent years. In 2009 the GDP grew by 6% and in 2008 by 7.4%. This performance is reflected strongly in services and construction and the recovery of the agricultural and industrial sectors. The sharp fall in global oil prices, combined with corrective domestic policies helped Tanzania avert a sharper reduction in growth. However, Tanzania finds a place in the bottom ten percent of the world's economies in the basis of per capita income. Agriculture is the mainstay of the economy accounting for more than 40% of GDP. It provides 85% of exports and employs 80% of the work force. Cultivated crops are however limited to only 4% of the land area owing to topography and climatic conditions. Industry is dominated by the processing of agricultural products and light consumer goods. The World Bank, the IMF and bilateral donors have provided funds in order to rehabilitate Tanzania's out-of-date economic infrastructure and for poverty alleviation. Long-term growth through 2005 saw a pickup in industrial production and a considerable increase in output of minerals led by gold. Owing to recent banking reforms, private-sector growth and investment have increased significantly. A positive growth rate was sustained inspite of the world recession with the help of continued donor assistance and solid macroeconomic policies. However, inflation has been accelerating since 2006 and averaged 10.3 per cent in 2008.

The main immediate challenge is to bring inflation down. Tanzanian economy confronts the challenges of overcoming critical infrastructure constraints in transport, communications and energy, measures to mitigate the impact of the global economic downturn and finding ways to turn growth into broad-based poverty reduction are crucial. Also crucial are restoring the credibility of the government in fighting corruption after several high-level scandals and turning continued growth into gains at the grass root level for ordinary Tanzanians in the population of about 40 million people.

Sector % age Contribution to GDP(2007) Agriculture,hunting,forestry and fishing 21.40% Mining and quarrying 4.60% Manufacturing  10.2% Electricity and Water  2.5% Construction 8.80% Trade,hotels restaurant 18.60% Transport and communication 8.60% Real Estate,Financial and Business services 10.4% Public Adminstration 10.30% Education,health and public adminstration 4.70%

Agriculture

In 2007 agriculture’s share of GDP was 28.2 per cent after 26.5 per cent in 2006. Owing to good weather conditions agricultural output increased by 4 per cent in 2007, slightly above the 3.8 per cent increase in 2006. Some two-fifths of the country’s population is engaged in agricultural production. The major food crops are corn (maize), rice, sorghum, millet, bananas, cassava (manioc), sweet potatoes, barley, potatoes, and wheat. Corn and rice are the preferred cereals. Cassava and sweet potatoes are famine-prevention crops owing to their drought-resistant qualities. Food crops are sold as cash crops in some areas. Agriculturalists in the Ruvuma and Rukwa regionshave specialized in commercial corn production, and rice is sold in riverine areas, especially along the Rufiji.

Export of cash crops such as coffee, cotton cashew nuts, tea, tobacco, and sisal are a source of foreign exchange for the country. Zanzibar which now produces only about one-tenth of the international supply was once the source of more than nine-tenths of the world’s cloves.

The government put 5,745 hectares under irrigation in 2007 to reduce the dependence on rain-fed farming, adding to the 300 000 hectares already under irrigation. The aim is to irrigate up to 1 million hectares by 2012.

Crop output which is the largest contributor to agricultural-sector GDP grew by 4.5 per cent in 2007 compared to 4 per cent in 2006. Livestock production grew by only 2.4 per cent in 2007, struggling to recover from an outbreak of Rift Valley Fever in 2006. Forestry and hunting experienced a sharp reduction in growth from 4.6 per cent in 2006 to 2.9 per cent in 2007 mainly due to new fiscal measures introduced in 2007/08 to raise extra revenues.

Poor transport and storage have been a strong deterrent contributing to recurrent food shortages in parts of Tanzania, despite surplus production in other regions and nationwide food production that exceeds total domestic requirements. Other contributing factors have been inconsistent policy responses to food shortages in neighbouring countries and insufficient funds to buy from farmers. Stocks held by the National Food Reserve Agency (NFRA) fell by 40.5 per cent to 76 650 tons in June 2008 from 130 000 tons a year earlier. A ban on cereal exports was imposed in May 2008 and import duties on cereal were waived. Increased yields, attributed to the use of chemical fertilizers, have been achieved in corn production in the southern and southwestern regions.

Manufacturing Sector

The manufacturing sector grew by 8.7 per cent in 2007 compared to 8.5 per cent in 2006. This was largely due to the availability of adequate and predictable power supplies as well as the technology changes for agro-processing and the processing of forestry products such as honey and timber. The major industries are food processing, textiles, brewing, and cigarette production, cement, clothing, footwear, tires, batteries, bottles, steel, pulp, paper and bicycles. Tanzania’s industry is based on the processing of its agricultural goods and on import substitution—that is, the manufacture (often from imported materials and parts) of products that were once purchased from abroad. The large amounts of imported materials, parts, and capital equipment necessary to implement such a policy could not be paid for due to the country’s lack of foreign exchange. Standby credit facilities from the IMF provided the capital investment necessary to initiate the renovation and rehabilitation of industry. There was a marked increase in investment in export processing zones in 2007 and 2008. Measures to increase capacity for gas-powered generation helped the electricity and gas sector bounce back from a 1.9 per cent contraction in 2006 to 10.9 per cent growth in 2007. The water sub-sector recorded a 6.5 per cent increase in 2007 owing to major infrastructure projects. Buoyed by real estate development and infrastructure projects, the construction sub-sector grew by 9.7 per cent compared to 9.5 per cent in 2006. Difficulty in obtaining adequate power supply (a large proportion of the country is not linked to the main electricity grid) still remains a major obstacle to the development of manufacturing capabilities.

Tourism

Tanzania’s tourism sector is rapidly expanding which continues to be a source of great economic potential. Mount Kilimanjaro, the highest peak in Africa, serves as a major tourist attraction, as does the country’s network of national parks, reserves, and conservation areas, which together cover one-fourth of the area of the country. Tanzania’s beaches and coral reefs are also great tourist attractions, citing which the government has intelligently marketed its coastline and encouraged diving and snorkeling.

Mining and Quarrying Sector

There was a considerable reduction in growth in the mining and quarrying sector from 15.6 per cent in 2006 to 10.7 per cent in 2007. High global gold prices stimulated production and helped maintain the share of the mining sector in GDP and exports, despite a mine closure. It is expected that mineral output will continue to play a major role in export earnings over the medium term.

For Further Reference

African Economic Outlook

Tanzania Country Profile - BBC News

World Bank

Budget