Spurring economic growth will require broad-based reforms

BY EDITOR

6th January 2016.

Tanzania has changed from being perceived as a backward country in East Africa, to being seen as a progressive example to the region.

Measures that have made President John Magufuli popular, include fixing tax evasion loopholes and cutting out ‘unnecessary’ expenditure to boost revenue collections. The President’s restrictions on foreign trips could bolster national coffers as well.

It is therefore encouraging that the Tanzanian economy has continued to perform strongly with economic growth at about seven per cent and inflation remaining relatively well contained.

According to NBS, the inflation rate is expected to descend further to below 6.0 per cent when the bureau switches from simple average to geometric means of calculating the consumer price index starting next month.

Already, Kenya and Uganda are using the geometric method of calculating inflation. The lowest headline inflation was last registered in December 2007. 
Records explain that inflation  rose to a peak level of 13.3 last February before declining. Economic analysts say that the rate will go down if we continue to receive good rains.  

Against, all odds, particularly the pressures that came with the global economic meltdown last year, Tanzania had continued to show resilience in its economy and the country is certainly on its way up to the development ladder.

There has been growing evidence for the most part of this year that with the good policies the government has put in place, the prospect of positive results beckons.

Despite  weak global economic growth, Tanzania prospered economically in  2015. However the rate of growth was a bit lower than what had been expected during the year, according to the Bank of Tanzania (BoT).

Six out of the 10 fastest growing economies in the world last year were in  Africa and Tanzania’s was one of them.

In general,the world economy is undergoing an uneven and uncertain recovery without the surge in jobs that people need. We must recover lost ground and step up the pace to overcome poverty. 

Developing countries offer abundant opportunities for investments with healthy returns (including in infrastructure that removes roadblocks to growth) that can create new sources of global demand.

The growth potential is not limited to only a few emerging markets. Better policies have improved growth performance and opportunities in many low-income countries, including in sub-Saharan Africa, which recorded annual growth of six percent in the five years preceding the crisis.

African countries also need to strive for better governance and against the rot of corruption. Governments, working with development partners, need to move quickly to create more opportunity.  This includes expanding opportunities for girls and women as economies will not be successful if they discriminate against half their population.

Speaking as the acting World Bank chief economist in October, Chuhan-Pole said Tanzania, Ethiopia, Rwanda, Cote d'Ivoire and Mozambique would sustain the seven per cent economic growth rate or more in the next two years.

"To withstand new shocks, governments in the region should improve the  efficiency of public expenditures, such as prioritising key investments and strengthen tax administration,'' said Chuhan-Pole from Washington during a teleconference briefing.

That’s exactly what President John Magufuli has been doing since he assumed power in November and is highly expected to consolidate starting this year. 

SOURCE: THE GUARDIAN