Economy in Tanzania

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  1. Economic Survey For a long time the Tanzania economy has suffered several shocks with severe destabilizing effects. They include the oil shocks. collapse of commodity prices, drought, breakup of the East African Community and the Uganda war. These shocks coupled with a poor policy regime culminated in severe economic crisis in the early 1930s. Several adjustment measures were implemented since 1981 but by mid 1990 fiscal instability was still severe.

The privatisation programme is now concentrating on the large and monopolistic enterprises whose privatisation has to be preceded by formulation of a legal and regulatory framework.

In early 1996, the Government committed itself to a shadow programme monitored by the IMF and from September 1996 a three-year Enhanced Structural Adjustment Facility (ESAF) underpinned by a Policy Framework Paper (PFP). To-date, Tanzania has made significant progress in restoring macro economic stability. Overall fiscal balance (including grant) has been a surplus of around 0.8 to I.2 percent of GDP during the past three years. Inflation has been controlled from more than 30 percent in 1995 to 6.6 percent in early 2000. Foreign reserves have increased from 1.5 months of merchandise imports in 1995 to 4.5 months currently. 

The Government recognises the need for a robust high growth to fight the nation-wide poverty. Higher (6-8 percent) and sustained growth is necessary. While growth is necessary it is important that it is broad-based and centred on improving the livelihoods of the poor.

The Government is committed to consolidating and intensifying the macroeconomic progress achieved to-date

  • Policy Framework Since the mid— 1980’s, Tanzania has implemented far—reaching reforms in the political system, economic management and Government administration. In 1992, a multiparty’ democracy system was introduced and successful multiparty elections were held in 1995. The second multiparty elections are due in October 2000. The economic reform programmes that commenced in 1986 have converted the command-based economy into a market one. Trade, exchange rates and interest rates are now fully liberalised. The reform of parastatals has privatised/divested about half of the more that 4001 parastatals. The public service reform has cut down the workforce in Government from 355.000 (1992) to 270,000 (1997), rationalised and streamlined functions and structures and salaries, introduced new management systems (performance! output based) and strengthened local Government through the formulation and implementation of the Local Government Reform Programme

  • Economic Indicators

Table 3A: Gross Domestic Products (Monetary & non-Monetary GDPfc) By Kind of Economic Activity (At Constant 1992 Prices) Table 4A: Gross Domestic Products (Monetary & non-Monetary GDPfc) By Kind of Economic Activity-Percentage Growth Rates (At Constant 1992 Prices)

  • Economic Performance
  • Output

Tanzania Gross Domestic Product (GDP) at constant 1992 prices recorded an average of real growth rate of 4.0 percent per annum during 1996-1999. Given the annual population growth rate of 2.8 percent, per capita real growth rate was around 1.2 percent.  The composition of GDP is such that, agricultural sector accounts for around 50.0 percent, followed by trade sector which accounts for around 16.0 percent. Financial and business services rank third at the tune of 10 percent, followed by the industrial sector by around 8.0 percent. The mining sector has been contributing around 2.0 percent, but there is a bright future for the sector as foreign investments  continue to flowing in.  It is apparent that in the near future the sector will record a significant proportion of GDP.

  •  Exports

Major exports from Tanzania are agricultural commodities. During 1996-99 agricultural exports accounted for around 56 percent of total merchandise exports. Major agricultural exports are coffee, cotton, tea, tobacco, cashewnuts, and sisal. Industrial exports have been on the rise following adoption of trade liberalization, and privatization of public enterprises. Tourism is a booming sector recording earnings of over US $ 500 million annually. Exports of minerals account earnings of  around US $ 50 million, but given heavy foreign investments flowing it this sector, it is expected that the value of such exports will increase significantly in the near future.  The value of total merchandise exports has been  declining since 1996 as a result of declining agricultural exports caused by unfavorable weather conditions.

  • Economic Performance Indicators:

Please refer to the Economic Survey

 

Contributors
December 24, 2004 change by yonamaro

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