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Meeting International Poverty Targets in Tanzania

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Meeting International Poverty Targets in Tanzania Meeting International Poverty Targets in Tanzania Graham Eele, Joseph Semboja, Servacious Likwelile and Stephen Ackroyd* This article considers the prospects for Tanzania in achieving the international development targets, especially those relating to reductions in absolute poverty. A key conclusion is that the analysis depends on how poverty is defined, in particular what poverty line is used and which data sets define the base line. There is no officially recognised Tanzanian poverty line and even the use of the international poverty line, of US$1 per person per day measured at purchasing power parities, presents difficulties because of the lack of recent reliable data on purchasing power parity. Despite substantial efforts in Tanzania in recent years to collect poverty-related data, the data sets are not directly comparable and there seem to be substantial inconsistencies in the methods used. Different surveys result in very different estimates of poverty levels and poverty growth elasticities. Considerable care is therefore required in interpreting the results of these surveys and further work is needed to improve the database before more precise statements can be made. Current best estimates suggest that sustained economic growth in the order of between 5 and 7% per year will be needed over the next 15 years if a 50% reduction in the numbers of people below the $1 per day poverty line is to be achieved. The key requirement is to reduce rural poverty and this will require sustained investment in rural infrastructure and both intensification and diversification in agriculture. In terms of the other international development targets, the picture in Tanzania is mixed. There are reasonable prospects of reaching the education targets, although there is concern about the quality of education. Gender disparities at the primary level have largely been eliminated already and progress is being made at higher levels. It is unlikely, however, that Tanzania will be able to achieve the targets for reductions in infant and child mortality. While there has been a reduction in mortality levels in the past twenty years, the rate of decline achieved so far is insufficient to reach the targets by 2015. Any increase in this rate of decline over the next 15 years will be difficult to achieve *Graham Eele and Stephen Ackroyd are Senior Consultant and Economist, respectively, at Oxford Policy Management Ltd, Oxford, and Joseph Semboja and Servacius Likwelile are Director and Research and Training Coordinator, respectively, at Research on Poverty Alleviation (REPOA), Tanzania. Development Policy Review Vol. 18 (2000), 63–83 © Overseas Development Institute 2000. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK, and 350 Main Street, Malden, MA 02148, USA. 64 Development Policy Review especially in the light of the HIV/AIDS pandemic. While the detailed effect on mortality rates has still to be assessed, at the very least it will result in a slow- down in the rate of improvement. Recent socio-economic record By most indicators Tanzania is one of the poorest countries in the world. In 1999, it ranked 156 out of 174 countries in terms of overall human development (UNDP, 1999) and 172 in terms of real GDP per capita (1997 data, measured in purchasing power parity). Relatively, welfare in Tanzania appears to be declining; for example, the human development index ranking had dropped from 126 in 1992 to 144 by 1996 (see Table 1 for recent indicators). Table 1 Recent indicators of human development in Tanzania Indicators Overall Gender gaps Male Female Life expectancy at birth (1997) (years) 48 47 49 Adult literacy rate (1997) (%) 72 82 62 Gross enrolment ratio for all levels (1997) (%) 33 33 32 Net primary school enrolment rate (1997) (%) 47 46 48 Infant mortality rate (1996) (per 1,000 live 88 - - births) Under-five mortality (1996) (per 1,000 live 144 - - births) Maternal mortality rate (1996) (per 100,000) 592 - - Rural–urban gaps Rural Urban Population with access to safe water (1996) % 50 46 68 Population with access to health services 38 22 98 (1996) % Sources: UNDP (1999); Macro International (1996). The period since independence can be conveniently divided into three phases: from independence in 1961 to 1979; an initial period of economic reforms from 1979 to 1986; and since 1986. These are discussed briefly below. Policy environment and poverty post-Independence Much of what came to characterise Tanzania’s policy environment in the immediate post-independence period stemmed from the Arusha Declaration Eele, Semboja, Likwelile and Ackroyd, Meeting Poverty Targets in Tanzania 65 announced in 1967. The Declaration ushered in a new policy direction for the country, a break from the fairly orthodox economic policies followed during the first years of independence, with the emphasis being placed on the role of Ujamaa villages in rural development. The new policy also emphasised public ownership of the means of production. This meant that, in effect, individual initiatives and the role of the private sector were sidelined, placing responsibility for the country’s development in the hands of the public sector. Tanzania was thus to be guided by a socialist ideology, the main objective of which was to build an egalitarian society with the economy being driven by a strong public sector. Major initiatives were instituted, including widespread nationalisation of key economic sectors, relocation of the rural population through a villagisation programme launched in 1973, and administrative control of markets, including setting of pan-territorial prices at the producer level. These policies had important implications. Producer prices and the exchange rate were set at levels that involved high and rising implicit taxation of rural cash incomes. The suppression of private business both reduced the opportunities for peasants to diversify as producers and increased the prices they faced as consumers. The combination of price controls, import controls, and investment in industry led to increasingly severe shortages of non-agricultural consumer goods in the rural areas. Also notable was the fact that increases in crop prices on world markets were not passed on to farmers (Bevan et al., 1988). The policy environment also had an effect on the urban self-employed, although less directly than on the peasants. Government attempts to protect the living standards of urban wage earners led to the maintenance of real wages that were well above peasant incomes. As a result considerable rural-urban migration ensued, with a rapid growth of the informal sector and a corresponding fall in the incomes of the self-employed (Bevan et al., 1988). The expanded role of the state also led to higher government expenditure and attendant fiscal deficits. All these policy measures had implications for poverty. For one thing, the participation of peasants and the urban self-employed in income-generating activities was inhibited, with a consequent narrowing of the range of income sources having a negative impact on rural and urban agents’ scope for getting out of poverty. The current policy stance, following the reforms, acknowledges this weakness. The internal causes of poverty cited in the National Poverty Eradication Strategy (NPES) include mistakes in domestic policy (URT, 1998). The implementation of policies that failed to promote economic growth, gave insufficient support to the agricultural sector and rural industries and disrupted local institutions is acknowledged in the NPES as being one of the major factors behind the persistence of poverty in the country. The present stance is geared towards the enhancement of people’s participation in the management of the economy. 66 Development Policy Review The initial period of reform and the reforms since 1986 Starting in the early 1970s Tanzania experienced a series of economic shocks, culminating in a crisis towards the end of the decade.1 Macroeconomic performance faltered, the social and physical infrastructure deteriorated rapidly and the delivery of social services was endangered. Between 1979 and 1985, therefore, a number of major policy initiatives were taken to address the economic decline, but in general these failed to deal with the deep-seated structural problems. The lack of policy agreement with the international financial institutions resulted in a substantial reduction in the flow of both investment and aid funds (Collier, 1991). The period since the mid-1980s has seen gradual, but fundamental, macroeconomic reforms, focusing on trade and exchange-rate liberalisation, the removal of restrictions on the activities of the private sector, reduction in the role of the state and price liberalisation. Subsequent stages of the reform process have given more attention to the impact on the poor and have laid particular emphasis on the delivery of basic social services (Semboja, 1995). This process has been accompanied by political changes, in particular the move to a multi- party democracy in 1995. The reform programme has registered positive results in the areas of growth, price stability and availability of consumption goods and services. In spite of these achievements, however, there are concerns that poverty is worsening (Ndulu and Wangwe, 1997). The poverty situation One of the features of the post-reform period has been the concern that poverty, in both urban and rural sectors, has increased. The debate within Tanzania is not conclusive, however. Analysis of some surveys suggests that there has been growth of average household income and expenditure over the last decade and that the incidence of poverty has declined. There is, however, some conflicting evidence on the ultra-poor (Semboja and Bol, 1997; Wangwe, 1996). Structural problems and policy biases against the agricultural sector have had an effect on the rural poor, the rural population being estimated to constitute the majority (about 92%) of the poor (Globevnik, 1997). Most recent data seem to suggest a slight increase in urban poverty (from 1993 to 1995), both proportionally and with regard to absolute numbers; the figures are below those 1.
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