Tanzania among world’s ten fastest growing economies

Tanzanian President John Magufuli

Tanzania is amongst the world’s 10 fastest-growing economies at the rate of 6.8 percent, reveals the new 2020 African Economic Outlook report.

Other five African countries are Rwanda at 8.7 percent, Ethiopia 7.4 , Côte d’Ivoire 7.4 , Ghana 7.1, and Benin 6.7.

East Africa maintained its lead as the continent’s fastest growing regions, predicted with an average growth estimated at 5.0 percent in 2019; North Africa was the second fastest, at 4.1 percent while West Africa’s growth rose to 3.7 percent in 2019, up from 3.4 percent the year before.

The report highlights that Tanzania’s growth is projected to be broadly stable at 6.4 percent in 2020 and 6.6 percent in 2021, subject to favorable weather, prudent fiscal management, mitigation of financial sector vulnerabilities, and implementation of reforms to improve the business environment.

Overall, Africa’s economic growth stabilized at 3.4 percent in 2019 and is expected to pick up to 3.9 percent in 2020 and 4.1 percent in 2021 but to remain below historical highs.

A markedly diversified economy, characterized by robust private consumption, substantial public spending, strong investment growth, and an upturn in exports, underpinned the positive outlook.

The report prepared by the African Development Bank (AfDB) further observes that tourism, mining, services, construction, agriculture, and manufacturing are notable sectors in the country.

The growth’s fundamentals are also improving, notes the report, with a gradual shift from private consumption toward investment and exports.

“For the first time in a decade, investment accounted for more than half the continent’s growth, with private consumption accounting for less than one third.”

It further points out that, Tanzania’s inflation fell to an estimated 3.3 percent in 2019 from 3.6 percent in 2018 due to improved food supply.

The Tanzanian shilling was fairly stable in 2019, exchanging at an average of 2,290 to the dollar, compared with 2,263 in 2018.

However, the fiscal deficit, financed mainly by concessional external debt, stood at 2.0 percent of GDP in 2019, up from 1.3 percent in 2018, and is projected to stabilize at 1.9 percent in 2020 and 2.2 percent in 2021.

While the external public debt shows that 63 percent of its concessional – constituted 70.4 percent of total public debt in 2019. The current account deficit slightly widened to 3.4 percent of GDP in 2019 from 3.3 percent in 2018.

According to the outlook, early signs of slow but steady structural transformation in key sectors include the continued shift of labour from agriculture to services, and even to industry.

Employment in agriculture declined from 71.4 percent of total employment in 2008 to 66.3 percent in 2018, while employment in industry increased to 7.1 percent from 5.7 percent and employment in services to 26.6 from 22.9 percent, it illustrates.

The report poses the challenges of poverty, inequality, and youth unemployment as persisting despite the recent robust growth.

“Poverty declined, but at a slower pace of 6.4 percent between 2012 and 2018 than the 18.0 percent between 2007 and 2012,” says the report.

The special theme this year is delivering education and skills for Africa’s workforce of the future. Despite progress in recent decades, Africa still lags behind other developing regions in education and skill development.

It is proposed that policy actions should include measures to improve both the quantity and the quality of education and align education policy with labour market needs.

This requires expanding access to schools in remote areas, increasing incentives to invest in education, developing a demand-driven education system that caters to employers’ needs, investing in nutrition to help poorer children.

Government policy improving the business and investment climate remains a work in progress, states the report, particularly in tax policy and administration, access to affordable finance, and government processes.

Meanwhile, the 2019 Global Competitiveness Report pointed to some key improvements in ICT adoption, macroeconomic stability, financial system, and business dynamism, reports the outlook.

African Press Organization