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UNITED REPUBLIC OF TANZANIA
PRESIDENT’S OFFICE, PLANNING COMMISSION
THE TANZANIA LONG TERM PERSPECTIVE PLAN (LTPP),
2011/12-2025/26
THE ROADMAP TO A MIDDLE INCOME COUNTRY
CONSULTATION DRAFT
March 19th
, 2012
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TABLE OF CONTENTS
TABLE OF CONTENTS ......................................................................................................................................I LIST OF ABBREVIATIONS ............................................................................................................................ IV EXECUTIVE SUMMARY .................................................................................................................................. 1 CHAPTER I: CONTEXT .................................................................................................................................... 4
1.1 Introduction ........................................................................................................................................... 4 1.2 Tanzania’s Development Agenda ......................................................................................................... 4 1.3 Review of the Implementation of Vision 2025 ..................................................................................... 5 1.4 Rationale for Reverting to Long Term Planning ................................................................................... 7 1.5 Path to Achieving TDV 2025 Objectives .............................................................................................. 9 1.6 Institutional Implementation Framework ............................................................................................ 10
CHAPTER II: OVERVIEW OF TANZANIA’S DEVELOPMENT ............................................................. 12 2.1 Introduction ......................................................................................................................................... 12 2.2 Growth and Economic Structure ......................................................................................................... 12 2.3 Macroeconomic Developments ........................................................................................................... 14 2.4 Development Dynamics: Growth and Poverty Reduction Nexus ....................................................... 16 2.5 Productive Sectors ............................................................................................................................... 17
2.5.1 Agriculture ...................................................................................................................................... 17 2.5.1.1 Crops ...................................................................................................................................................... 18 2.5.1.2 Livestock ................................................................................................................................................ 18 2.5.1.3 Forestry and Hunting ............................................................................................................................. 19 2.5.1.4 Fishing ................................................................................................................................................... 20
2.5.2 Industry ........................................................................................................................................... 20 2.5.2.1 Manufacturing ........................................................................................................................................ 21 2.5.2.2 Mining and Quarrying ............................................................................................................................ 21 2.5.2.3 Construction ........................................................................................................................................... 22
2.6 Infrastructure ....................................................................................................................................... 23 2.6.1 Transport ........................................................................................................................................ 23
2.6.1.1 Road sub-sector ...................................................................................................................................... 23 2.6.1.2 Railway sub-sector ................................................................................................................................. 24 2.6.1.3 Air Transport sub-sector ........................................................................................................................ 25 2.6.1.4 Maritime Transport sub-sector ............................................................................................................... 25 2.6.1.5 Pipeline sub-sector ................................................................................................................................. 25 2.6.1.6 Meteorology sub-sector .......................................................................................................................... 26
2.6.2 Energy ............................................................................................................................................. 27 2.7 Land .................................................................................................................................................... 28 2.8 Housing and Human Settlement .......................................................................................................... 29 2.9 Services ............................................................................................................................................... 30
2.9.1 Trade and Commerce...................................................................................................................... 30 2.9.2 Tourism ........................................................................................................................................... 31 2.9.3 Financial Services .......................................................................................................................... 32 2.9.4 Science, Technology and Innovation (STI) and Research & Development (R&D)......................... 33 2.9.5 Information and Communication Technology (ICT) ....................................................................... 35 2.9.6 Postal Services ................................................................................................................................ 35
2.10 Demographic Transition Related Issues .............................................................................................. 36 2.10.1 Population Dynamics ................................................................................................................. 36 2.10.2 Urbanisation ............................................................................................................................... 37 2.10.3 Employment ................................................................................................................................ 38
2.11 Human Capital Development and Social Services .............................................................................. 39 2.11.1 Education and Training .............................................................................................................. 39 2.11.2 Health ......................................................................................................................................... 40 2.11.3 Water Supply and Sanitation ...................................................................................................... 41 2.11.4 Sports .......................................................................................................................................... 41 2.11.5 Entertainment ............................................................................................................................. 42 2.11.6 Media .......................................................................................................................................... 42 2.11.7 Culture ........................................................................................................................................ 42
2.12 Governance ......................................................................................................................................... 43 2.13 Private Sector Development ................................................................................................................ 45 2.14 Cross-cutting issues ............................................................................................................................. 46
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2.14.1 Gender ........................................................................................................................................ 46 2.14.2 HIV and AIDS ............................................................................................................................. 47 2.14.3 Environment and Climate Change ............................................................................................. 47 2.14.4 Social Protection ........................................................................................................................ 48
CHAPTER III:: STRATEGIC DIRECTION ................................................................................................... 50 3.1 Introduction ......................................................................................................................................... 50 3.2 Long Term Objectives and Targets ..................................................................................................... 51 3.3 Pillars .................................................................................................................................................. 51 3.4 Envisaged Structural Transformation of the Economy ....................................................................... 52
3.4.1 Structural Transformation .............................................................................................................. 52 3.4.2 Macroeconomic Stability ................................................................................................................ 54 3.4.3 Productivity and Growth ................................................................................................................ 56
3.5 Productive Sectors ............................................................................................................................... 57 3.5.1 Agriculture ...................................................................................................................................... 57
3.5.1.1 Crops ...................................................................................................................................................... 57 3.5.1.2 Livestock ................................................................................................................................................ 58 3.5.1.3 Forestry and Hunting ............................................................................................................................. 58 3.5.1.4 Fishing ................................................................................................................................................... 58
3.5.2 Industry ........................................................................................................................................... 60 3.5.2.1 Manufacturing ........................................................................................................................................ 60 3.5.2.2 Mining and Quarrying ............................................................................................................................ 61 3.5.2.3 Construction ........................................................................................................................................... 62
3.6 Infrastructure ....................................................................................................................................... 63 3.6.1 Transport ........................................................................................................................................ 63
3.6.1.1 Road sub-sector ...................................................................................................................................... 63 3.6.1.2 Railway sub-sector ................................................................................................................................. 63 3.6.1.3 Air Transport sub-sector ........................................................................................................................ 63 3.6.1.4 Maritime Transport sub-sector ............................................................................................................... 64 3.6.1.5 Pipeline sub-sector ................................................................................................................................. 64 3.6.1.6 Meteorology sub-sector .......................................................................................................................... 64
3.6.2 Energy ............................................................................................................................................. 65 3.7 Land .................................................................................................................................................... 67 3.8 Housing and Human Settlement .......................................................................................................... 69 3.9 Services ............................................................................................................................................... 70
3.9.1 Trade and Commerce...................................................................................................................... 70 3.9.2 Tourism ........................................................................................................................................... 71 3.9.3 Financial Services .......................................................................................................................... 73 3.9.4 Science, Technology and Innovation (STI) and Research & Development (R&D)......................... 74 3.9.5 Information and Communication Technology (ICT) ....................................................................... 75 3.9.6 Postal Services ................................................................................................................................ 76
3.10 Demographic Transition and Related Issues ....................................................................................... 77 3.10.1 Population Dynamics ................................................................................................................. 77 3.10.2 Urbanisation ............................................................................................................................... 79 3.10.3 Employment ................................................................................................................................ 81
3.11 Human Capital Development and Social Services .............................................................................. 83 3.11.1 Education and Training .............................................................................................................. 83 3.11.2 Health ......................................................................................................................................... 84 3.11.3 Water Supply and Sanitation ...................................................................................................... 86 3.11.4 Sports .......................................................................................................................................... 87 3.11.5 Entertainment ............................................................................................................................. 87 3.11.6 Media .......................................................................................................................................... 88 3.11.7 Culture ........................................................................................................................................ 89
3.12 Governance ......................................................................................................................................... 89 3.13 Private Sector Development ................................................................................................................ 90 3.14 Cross Cutting Issues ............................................................................................................................ 91
3.14.1 Gender ........................................................................................................................................ 92 3.14.2 HIV and Aids .............................................................................................................................. 92 3.14.3 Environment and Climate Change ............................................................................................. 93 3.14.4 Social Protection ........................................................................................................................ 94
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CHAPTER IV: FINANCING AND RESOURCE MOBILISATION ............................................................ 95 4.1 Resource Mobilisation ........................................................................................................................ 95 4.2 Traditional Sources of Financing ........................................................................................................ 95 4.3 Innovative Sources of Financing ......................................................................................................... 96 4.4 Dynamic Resource Mobilization Committee ...................................................................................... 97
CHAPTER V: IMPLEMENTATION ARRANGEMENTS ........................................................................... 98 5.1 Planning Framework ........................................................................................................................... 98 5.2 Institutional Framework ...................................................................................................................... 98
5.2.1 Role of the State .............................................................................................................................. 99 5.2.2 Role of POPC ................................................................................................................................. 99 5.2.3 Role of MDAs and LGAs ................................................................................................................. 99 5.2.4 Role of Non-State Actors ............................................................................................................... 100 5.2.5 Role of Development Partners ...................................................................................................... 100
5.3 Monitoring and Evaluation ............................................................................................................... 100 5.3.1 Overview ....................................................................................................................................... 100 5.3.2 M&E Institutional Arrangement and Tools .................................................................................. 100 5.3.3 Plan Implementation Monitoring Unit (PIMU) ............................................................................ 100 5.3.4 Operationalizing the M&E ........................................................................................................... 101 5.3.5 The National Planners Conference ............................................................................................... 101 5.3.6 Performance Indicators, Baselines and Targets ........................................................................... 101 5.3.7 Reporting and Communication Arrangements ............................................................................. 101
5.4 Plan Facilitating Factors .................................................................................................................... 102 ANNEXES ......................................................................................................................................................... 103
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LIST OF ABBREVIATIONS ADP Annual Development Plan
AfDB African Development Bank
AGOA African Growth and Opportunity Act
AIDS Acquired Immuno-Deficiency Syndrome
ASF African Swine Fever
BEST Business Environment Strengthening in Tanzania
BoT Bank of Tanzania
BRELA Business Registration and Licensing Authority
BRIC Brazil, Russia, India and China
CAG Controller and Auditor General
CBFM Community Based Forest Management
CBPP Contagious Bovine Pleuropneumonia
ccTLD country’s code Top Level Domain
CDG Composite Development Goal
CHRAGG Commission for Human Rights and Good Governance
CIA Central Intelligence Agency
COMESA Common Market for Eastern and Southern Africa
COSTECH Tanzania Commission for Science and Technology
CPI Consumer Price Index
D-by-D Decentralisation-by-Devolution
DfID Department for International Development (UK)
DSM Demand Side Management
DTBi Dar Teknohama Business Incubator
DWT Deadweight Tonnes
EAC East African Community
EBA Everything But Arms
ECC Economic Committee of Cabinet
EIA Environmental Impact Assessment
EPA Economic Partnership Agreements
EPOCA Electronic and Postal Communications Act
EPZs Export Processing Zones
ERP Economic Recovery Programme
ES Economic Survey
ESRF Economic and Social Research Foundation
EU European Union
FAO Food and Agriculture Organization
FDI Foreign Direct Investment
FMD Foot and Mouth Disease
FSSR Food Self Sufficiency Ratio
FYDP Five Year Development Plan
GDP Gross Domestic Product
GEF Global Environment Facility
GEPF Government Employees’ Provident Fund
GNI Gross National Income
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GoT Government of Tanzania
GWh Giga watt hours
HBS Household Budget Survey
HIPC Heavily Indebted Poor Countries
HIV Human Immuno-deficiency Virus
ICT Information, Communication Technology
IFMS Integrated Financial Management System
IGC International Growth Centre
ILFS Integrated Labour Force Survey
IMF International Monetary Fund
IXP Internet Exchange Point
kWh Kilowatt hour
LAPF Local Authorities Pensions Fund
LGAs Local Government Authorities
LGRP Local Government Reforms Programme
LITS Livestock Identification and Traceability System
LMIC Lower Middle Income Country
LTPP Long Term Perspective Plan
M&E Monitoring and Evaluation
MACEMP Marine and Coastal Environmental Management Project
MAFC Ministry of Agriculture, Food and Cooperatives
MCDGC Ministry of Community Development Gender and Children
MCT Media Council of Tanzania
MDAs Ministries, Departments and Agencies
MDGs Millennium Development Goals
MHSW Ministry of Health and Social Welfare
MIC Middle-Income Country
MKUKUTA Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania (NSGRP)
MLDF Ministry of Livestock Development and Fisheries
MLEYD Ministry of Labour, Employment, Youth Development
MoF Ministry of Finance
MoVET Ministry of Education and Vocational Training
MSMEs Micro, Small and Medium Enterprises
MTEF Medium Term Expenditure Framework
MW Megawatt
NAPA National Adaptation Programme of Action
NBS National Bureau of Statistics
ND Newcastle Disease
NDPC National Development Planning Council
NEMC National Environment Management Council
NER Net Enrolment Rate
NESP National Economic Survival Programme
NFGG National Framework on Good Governance
NGOs Non-Governmental Organisations
NHC National Housing Corporation
NHIF National Health Insurance Fund
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NICTBB National ICT Broadband Backbone
nos Not Otherwise Specified
NSC National Sports Council
NSGRP National Strategy for Growth and Reduction of Poverty
NSI National System of Innovation
NSPF National Social Protection Framework
NSSF National Social Security Fund
ODA Official Development Assistance
OECD-DAC Organization for Economic Cooperation and Development-Development
Assistance Committee
OVC Orphans and Vulnerable Children
PCCB Prevention of Crime and Corruption Bureau
PHDR Poverty and Human Development Report
PIMU Plan Implementation Monitoring Unit
POPC President’s Office Planning Commission
PO-PSM President’s Office – Public Service Management
PPF Parastatal Pension Fund
PPP Public Private Partnership
PPP$ Purchasing Power Parity (United States Dollar)
PRS Poverty Reduction Strategy
PSPF Public Service Pension Fund
R&D Research and Development
ROSCAs Rotating Savings and Credit Associations
RS Regional Secretariat
RUBADA Rufiji Basin Development Authority
SACCOS Savings and Credit Cooperative Societies
SADC Southern Africa Development Community
SAGCOT Southern Agricultural Growth Corridor of Tanzania
SAP Structural Adjustment Programme
SEZs Special Economic Zones
SIDO Small Industries Development Organization
SMEs Small and Medium Enterprises
SMMRP Sustainable Management of Mineral Resources Project
SSC South-South Cooperation
STAMICO State Mining Corporation
STI Science, Technology and Innovation
TAA Tanzania Airport Authority
TANROADS Tanzania Roads Agency
TASAF Tanzania Social Action Fund
TAZAMA Tanzania Zambia Mafuta Pipeline
TAZARA Tanzania Zambia Railway Authority
TB Tuberculosis
TCRA Tanzania Communications Regulatory Authority
TDV Tanzania Development Vision (2025)
TEU Twenty-foot Equivalent Units
TFP Total Factor Productivity
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TRL Tanzania Railway Line
TShs. Tanzanian Shillings
TVET Technical and Vocational Education and Training
tzNIC Tanzania Network Information Centre
UCAF Universal Communications Access Fund
UNCTADStat United Nations Conference on Trade and Development Statistics
UNESCO United Nations Educational, Scientific and Cultural Organization
UNIDO United Nations Industrial Development Organization
URT United Republic of Tanzania
USAID United States Agency for International Development
USD United States Dollar
WB World Bank
WDI World Development Indicators
WEF World Economic Forum
WGI Worldwide Governance Indicators
WITS World Integrated Trade Solution
WSDP Water Sector Development Programme
WTO World Trade Organisation
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EXECUTIVE SUMMARY
Context
Tanzania’s Long Term Perspective Plan (LTPP) is an important vehicle for implementing the
Tanzania Development Vision 2025, which emphasizes Tanzania’s cherished goal of
becoming a prosperous Nation, through eradicating poverty, ignorance and disease in the
drive to becoming a Middle-Income Country (MIC).
LTPP sets the strategic direction and delineates the long-term objectives, targets, and pillars
for a more focused guidance, coordination and harmonization of the country’s growth
process. Besides, LTPP is a crucial link between the long-term Vision, and the country’s
medium- and short-term perspectives, namely the Five Year Development Plans (FYDPs)
and Annual Development Plans (ADPs).
Since its launching in 1999, TDV 2025 had no formal instrument for its operationalization.
Consequently, efforts to evaluate progress made in achieving the targets of Vision 2025 were
scattered. A renewed implementation framework for the remaining 15 years of TDV 2025,
through this LTPP, was thus imperative. This was further confirmed by recent commissioned
studies and the assessment that the country was not on track to reaching the TDV goals.
The path to realizing TDV 2025 targets will be facilitated by opportunity-based planning
implemented through a series of three five year development plans, building on each other
and making use of Tanzania’s opportunities and addressing the challenges.
The socio-economic transformation will be addressed in depth through three strategic
FYDPs: the First FYDP (2010-2015): Unleashing the Growth Potential; the Second FYDP
(2015-2020): Nurturing an Industrial Economy; and the Third FYDP (2020-2025): Attaining
Export Growth and Competitiveness. The linkages between the three plans are crucial, as the
success of FYDPII will depend on the success of FYDPI, and the achievements to be reached
during FYDP III will depend on the successes of FYDP I and FYDP II.
Overview of the Country’s Recent Development
Tanzania’s development since 2000, the year TDV 2025 was launched, has shown slow
structural transformation, varied sectoral growth rates, changes in the policy management
framework as well as a number of sector specific challenges. Though TDV 2025 targeted an
annual GDP growth rate of 8 percent or more, accompanied by an inflation rate below 5
percent, the economy grew at an average rate of nearly 7 percent and recorded an inflation
rate of 6 percent. The sustained average economic growth rate did not, however, have a
significant impact on poverty reduction.
The agricultural sector’s annual growth rate remained at around 4.3 percent. Manufacturing
recorded slow growth rates mainly due to a slow pace of rural industrialization and agro-
processing, rudimentary state of SMEs, as well as constraints related to the cost of doing
business, bureaucracy and infrastructural impediments.
The service sector, which has been leading in terms of contribution to GDP, overtook
agriculture which had historically been the leading sector, reversing their relative positions
compared to 15 years earlier. Substantial progress was achieved in non-income dimensions,
especially in education and health services.
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The shares of the service and the manufacturing sectors to GDP remained stable, while that of
the industrial sector (excluding manufacturing) increased, following the high growth rates in
the ‘construction’ and ‘electricity and gas’ sub-sectors.
The Government spending consistently exceeded its revenues, leading to widening fiscal
deficits and an increasing debt level. This can be explained by the relatively low capacity to
raise domestic revenue.
Governance improved significantly especially in areas of democracy, and political and social
tolerance. In terms of private sector development, the Government continued to improve the
business environment. A number of social protection schemes evolved, though their full
potential could not be exploited due to low coverage, inadequate coordination, high service
costs, inadequate funding, irregularity in investment, and low transparency and
accountability.
Strategic direction
All sectors of the economy present an opportunity for the country to significantly increase the
growth rate and achieve substantial poverty reduction. LTPP highlights the challenges that
have to be tackled and the opportunities that have to be taken advantage of in order to reach
the MIC status.
LTPP will be guided by the following six pillars: broad-based growth, macroeconomic
stability, competitiveness, national cohesion and cultural heritage, good governance and
accountability, and sustainable development (from an economic, environmental and social
point of view).
One of the goals of TDV 2025 is to transform Tanzania into a “diversified and semi-
industrialised economy with a substantial industrial sector comparable to typical middle-
income countries”. This sectoral transformation, coupled with the 8 percent GDP growth
target, implies a drastic change in the growth path, especially in the agricultural and
manufacturing sectors, in turn requiring raising capital to implement the necessary
investments. In order to facilitate this structural transformation, it is vital that macroeconomic
stability is ensured.
This transformation also demands changing the pace and composition of the overall
productivity growth rate. This will be achieved through enhanced capital investment, skill-
level up-grading of the work force, in addition to strategic interventions (particularly in the
productive sectors).
Financing and resource mobilization
The successful implementation of the LTPP will critically depend on the country’s capacity
to secure resources for financing the envisaged programmes and projects. The thrust of LTPP
is thus to pursue a more reliable development financing framework and to reduce donor
dependency.
The target is to bring the ratio of Official Development Assistance (ODA) to Gross National
Income (GNI) closer to current levels in lower middle-income countries (reducing it by more
than half to about 6 percent). The accompanying increase in the need for financing means is
to be achieved through a mix of resource mobilization strategies, using both traditional and
innovative sources of financing.
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Implementation arrangement
LTPP will be operationalized through three FYDPs, which in turn will be operationalized
through Annual Development Plans (ADPs), implemented in the sequence of Budget
Guidelines; Medium-Term Expenditure Frameworks (MTEFs); Cabinet Approval;
Parliamentary Authorisation; Execution; and Monitoring and Evaluation.
The implementation of LTPP involves transiting from one economic structure to another.
This means all stakeholders involved will have a proactive role to play, but also that the close
monitoring of areas critical to development will be enhanced.
The State will continue playing its traditional roles with greater focus on its developmental
one. The Planning Commission will take the lead role in articulating and influencing the
direction of economic management in the country and guiding national planning (in close
collaboration with the Ministry of Finance). The responsibility of implementing the projects
identified through FYDPs will fall on MDAs/RSs/LGAs. The annual work plans of
MDAs/RSs/LGAs will have to be aligned with respect to FYDPs and the LTPP. LTTP also
recognizes the strengths and capabilities of all development actors, including the private
sector and civil society in achieving the country’s economic development goals.
Development partners are expected to bring their influence in implementing projects and
programmes consistent with the nation’s long-term development agenda.
The monitoring and evaluation procedure will focus on tracking progress. For consistency,
the M&E of LTPP will be done in the context of the FYDP’s implementation milestones. The
LTPP/FYDP M&E function will be carried out at three different levels: Programme/Project
Level, Institutional Level and LTPP/FYDP Level. The M&E functions at the programme
level and institutional level will be conducted through MDAs/RSs/LGAs. Performance
indicators will be selected for monitoring and assessing the progress, trends and
developments, to see whether they are consistent with the objectives of LTPP. A Plan
Implementation Monitoring Unit, PIMU, within POPC will act as the overall coordinator of
FYDP/LTPP implementation monitoring.
The successful implementation of LTPP will depend on several factors, namely; strong
leadership, technical and institutional capacities, well prioritized projects and programmes,
reliable and predictable quantum of resources throughout the implementation process,
institutional framework for development planning, change of mind-set, and an effective
communication strategy.
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CHAPTER I: CONTEXT
1.1 Introduction
Since the attainment of independence from colonial rule in 1961, successive Tanzanian
Governments have been committed to eradicating poverty, ignorance and disease, which are
viewed as the main obstacles to creating a prosperous and well informed society.
Developments in the international arena have also inspired planning towards attaining a
competitive economy, which would allow Tanzania to gain from regional and international
trade. Achieving those targets, along with radically transforming the country’s economy
through enhanced socioeconomic development, is a timely procedure. The country will have
to tackle each of the constraints in each of the sectors one at a time, in a prioritised manner,
during the course of its movement towards a middle-income country. Long-term planning is
therefore imperative, given the country’s objectives and targets for the medium and long
term. The Tanzania Long Term Perspective Plan (LTPP) is aimed at implementing the
Tanzania Development Vision 2025, and is therefore based on the foundations and
orientations of the latter.
This document provides the context of LTPP, and an overview of the economy in terms of
the envisaged structural evolution and the challenges thereof, both internal and external. It
essentially sets the strategic direction delineating the long-term objectives, targets, and pillars
related to (i) the envisaged economic structure, and (ii) the developments in economic, social,
political and cross-cutting issues. Also, the ways of financing the Plan (and the related
resource mobilization propositions), and the institutional framework for the implementation
and the monitoring and evaluation (M&E) will be outlined. The Long Term Perspective Plan
(LTPP) thus provides:
a) An interpretation of the country’s development direction intended in Vision 2025, by
providing a sharper and more focused guidance to the growth and development
process to transform Tanzania into a middle-income country;
b) A better coordination and harmonization of the growth process as well as the
parsimony structure to tap sector synergies, spinning sectoral players to provide a
national perspective;
c) A strategic anchor for other supporting strategies, such as macroeconomic stability,
good governance, industrial development, human resource development,
technological development, etc., which in the past had received inadequate attention;
d) Guidance for sustained long-term socioeconomic development and poverty reduction,
which is important for increased domestic resource mobilization and utilization, and
sustaining the reduction in external dependence;
e) A platform for a development dialogue beyond short- and medium-term perspectives,
by being the link between the country’s long-term Vision and the Five Year
Development Plans (FYDPs) and the Annual Development Plans (ADPs), the
formulation of which will be guided by the LTPP;
1.2 Tanzania’s Development Agenda
Tanzania’s development agenda is elucidated in the Tanzania Development Vision 2025
(abbreviated as TDV 2025 or Vision 2025). The preparation of TDV 2025 started in 1994 and
culminated in the Government launching it in 1999. The gist of Vision 2025 is that by 2025
Tanzania should have gone through an unprecedented socio-economic and political
transformation with the objective of attaining a middle-income country status, characterized
by, among others, high levels of industrialization, competitiveness, quality livelihood, rule of
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law, and having in place a learning society. More specifically, Vision 2025 outlines the
country’s social, economic and political aspirations for the first quarter of the 21st century,
with an underlying drive to becoming a middle-income country (MIC), with a per capita
income of USD 3,000 (in nominal terms), by 2025.
The Vision’s broad objectives and their related targets were elaborated in the Composite
Development Goals (CDGs). The CDGs for TDV 2025 listed five multi-dimensional goals,
namely (i) social and economic progress, (ii) political development, (iii) institutional
development, (iv) technological development, and (v) environmental sustainability. The
centrepiece to the realisation of TDV 2025 is having a solid foundation for a competitive,
dynamic and highly productive economy, manifested in, and accompanied by, five main
attributes, namely: high quality livelihoods; peace, stability and national unity; good
governance; a well-educated and learning society; and a competitive economy capable of
producing sustainable and shared growth. Table 1.1 displays the envisaged achievements
depicted in the country’s Vision:
Table 1.1: TDV 2025 Envisaged Achievements
A: High Quality Livelihood B: Good Governance and the
Rule of Law
C: A Strong and Competitive
Economy
Goal 1: Food self-sufficiency and security,
Goal 2: Universal primary education,
eradication of illiteracy, developing tertiary
education and training in order to
significantly raise human resources,
Goal 3: Gender equality and the
empowerment of women in all socio-
economic and political relations and cultures,
Goal 4: Access to quality primary health care
for all,
Goal 5: Access to quality reproductive
primary health services for all individuals of
appropriate ages,
Goal 6: Reduction in infant and maternal
mortality rates by three quarters of year 2000
levels,
Goal 7: Universal access to safe water,
Goal 8: Life expectancy comparable to the
level attained in typical middle-income
countries,
Goal 9: Absence of abject poverty.
Goal 1: Desirable moral and
cultural uprightness,
Goal 2: Strong adherence and
respect for the rule of law,
Goal 3: Absence of corruption
and other vices,
Goal 4: A learning society which
is confident; learns from its own
development experience and that
of others; and owns and
determines its own development
agenda.
Goal 1: A diversified and semi-
industrialized economy, with a
substantial industrial sector
comparable to typical middle-income
countries,
Goal 2: Macroeconomic stability
manifested by low inflation rates and
basic macroeconomic balances,
Goal 3: A growth rate of 8% or more
per annum,
Goal 4: An adequate level of
physical infrastructure needed to
cope with the requirements of the
Vision in all sectors,
Goal 5: An active and competitive
player in the regional and global
markets, with the capacity to
articulate and promote national
interests and to adjust quickly to
regional and global market shifts.
Source: URT, (1999), Tanzania Development Vision 2025, pp. 12-14.
Initially, Vision 2025 was designed to be operationalized through a series of five year
development plans. However, in the period following the adoption of Vision 2025, the
planning framework was a three year period one. Invariably, Tanzania embarked on short-
and medium-term Poverty Reduction Strategies, before adopting the first five year National
Strategy for Growth and Reduction of Poverty (NSGRP I), which Swahili translation is
Mkakati wa Kukuza Uchumi na Kupunguza Umaskini Tanzania (MKUKUTA I), in 2005, and
the second one (NSGRP II/MKUKUTA II) in 2010.
1.3 Review of the Implementation of Vision 2025
Since its launching in 1999, TDV 2025 had no formal instrument for its operationalization,
despite the statement in the Vision that it was going to be assessed every five years. The
envisaged five year development plans which were to provide the monitoring and evaluation
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(M&E) framework for TDV 2025 were not formulated. Consequently, efforts to evaluate
progress made in achieving the targets of Vision 2025 were scattered, making it difficult to
see the broad picture. In the absence of the five year development plans, MKUKUTA took
precedence as the medium-term plan to implement and evaluate Vision 2025. Even though
the latter was designed as an implementation strategy with broader outcomes, it did not
manage to prioritise specific development issues or to lay out specific strategic interventions
to realize the objectives of Vision 2025. This is why it was necessary to come up with a
renewed implementation framework for the remaining 15 years of TDV 2025, which will be
guided by the LTPP (in order to highlight the long-term nature of the planning process) and
implemented through Five Year Development Plans (where specific programmes and projects
will be outlined according to the set priorities for the given five year period) and Annual
Development Plans.
In view of the missing monitoring framework for TDV 2025, the Government commissioned
two independent studies (one in 2009 and the other in 2010) to critically review the
implementation of TDV 2025. The broad objectives of the reviews were (i) to assess the
progress made in achieving TDV 2025 goals; (ii) to identify new challenges to be considered
in national planning for the remaining 15 years; and (iii) to recommend the best options to
pursue. The review revealed the following:
a. Though relatively high economic growth has been recorded, it is still insufficient to
attain the Vision’s targets over the remaining period;
b. Sources of growth have been narrow and in most cases occurring in sectors where the
poor are less represented (mining, tourism, large scale construction). As a result, not
much headway has been made in poverty reduction;
c. The impact of vagaries of weather on agricultural and energy production, coupled with
persistent rises in global fuel prices, have led to a rise in inflation and hence cost of
production, thus adversely affecting the country’s competitiveness;
d. The country has promising opportunities, given its rich natural resources, strategic
geographical location and its active participation in regional and global economic
integration schemes, which need to be fully harnessed;
e. Efforts taken to unleash this potential are hampered by the existence of a weak
supportive infrastructure, notably power and transport;
f. The low level of infrastructure development (especially rural-rural and rural-urban
connections), coupled with the slow industrialisation (given electricity shortages and
the general business environment), had a negative impact on the country’s
competitiveness.
Notwithstanding those shortcomings, a number of positive developments were also observed
in the three main targeted achievements of TDV 2025, including the following1:
High Quality Livelihood:
Concerning education: Increased enrolment at all levels of education: In pre-primary
education, from less than 0.1 million pupils in 2000 to over 0.9 million in 2010; with
a Net Enrolment Rate (NER) of 42.4 percent. In primary education, the enrolment
increased from 4.3 million pupils in 2000 to 8.4 million in 2010 (with a NER of 95.4
percent). Enrolment in secondary education (Forms I-VI), increased from around 0.3
million students in 2000 to over 1.6 million in 2010. Tertiary education experienced a
1 Unless otherwise specified, the data used in the three main sub-points come from (and from calculations based
on): United Republic of Tanzania (URT), (2011), Economic Survey 2010.
7
more than three-fold increase in the number of universities, to reach 31 in 2010 (11
Government-owned, 20 private), with combined enrolment of 118,951 students (70.5
percent in public universities);
Concerning health: Increased number of facilities in the health system from 173
hospitals and 3,293 health centres and dispensaries in 2000 to 33,280 hospitals and
11,961 health centres and dispensaries in 2010. Increased life expectancy from 40
years to about 55 years in 2010 (females 56, males, 53). Reduced infant and child
mortality (Economic Survey, 2010);
Concerning gender: Implementing affirmative actions for women empowerment in all
areas, and increased enrolment of women at all levels of education: in 2010, they
represented 50.1 percent of the pupils at primary school level, 44.5 percent at
secondary level and 36.8 percent at university level (up from less than half of this
level in 2000 for female enrolment at university level). Increased proportion of
women representation in Parliament (from 55 out of 275 legislators in 2000 (20
percent) to 125 out of 343 legislators in 2010 (36.4 percent), well above the MDG
target of 30 percent by 2015). Increased appointment of women to higher political and
administrative responsibilities, etc.
Governance and Rule of Law:
New institutions and legislations were introduced, aimed at improving good
governance and a culture of rule of law, political tolerance and freedom of speech
under the existing multiparty system.
Strong and Competitive Economy:
Increased per capita income from about USD 250 in 2000 to USD 547 in 2010 (in
nominal terms);
The relatively high growth rate that was enjoyed during the last ten years (averaging
around 7 percent per annum between 2000 and 2010), which was mainly due to
economic and financial reforms and prudent monetary and fiscal policies;
Increased domestic and foreign investment.
1.4 Rationale for Reverting to Long Term Planning
Tanzania has a rich experience with long-term planning. In 1964 a twenty year Long-Term
Perspective Plan was adopted (covering the 1964-1983 period), expected to be executed
through three successive Five Year Development Plans (FYDPs): the First FYDP (1964-
1969); the Second FYDP (1969-1974); and the Third FYDP (1975-1980), though its
implementation was shelved in 1976. In 1981, the Government prepared the second Long-
Term Perspective Plan (1981-2000), to be executed through four medium-term development
plans, each lasting five years. Though the Five Year Development Plans were prepared, they
were not operationalized.
The shelving for one year of the 1975-80 Plan and the non-operationalization of the three
Five Year Plans were explained by the economic crisis of unprecedented depth and intensity
experienced in the mid-1970s and early 1980s. The crisis was caused, among other factors,
by recurring droughts and oil price shocks, the poor weather conditions and by the war with
Iddi Amin’s Uganda in the late 1970s. The planning process was further impaired as
economic shocks continued and the crisis intensified. The planning process gradually became
ad hoc, leading to a loss of focus on investments and growth in the medium- and long-term.
8
Given the gravity of the socio-economic crises and the need to enhance the predictability of
budgetary resources, the Government resorted to focusing on a short-term planning horizon
of three years, starting with the formulation of the National Economic Survival Program
(NESP) (1981-1982), the Structural Adjustment Program (SAP) (1983-1985) and the
Economic Recovery Programmes (ERPs) (1986–1995), before the entry of a generation of
Poverty Reduction Strategies (PRSs) during the early 2000s.
This regained importance of short-term plans in the 1980s and 1990s did not produce the
expected outcome in growth and poverty reduction. Furthermore, the lack of a strong
implementation framework for TDV 2025 (as explained in section 1.3) clearly highlighted
the need to come up with a new long-term planning framework for the country, in order to
effectively fast-track the socioeconomic development and to emphasize the developmental
role of the State. The conclusion of the TDV 2025 reviews highlighted the need for a new
operationalization framework, and the recent short-term plans showed the limitations of not
having a national long-term development framework. The Government, therefore, decided to
come up with a new Long-Term Perspective Plan, in order to solve both issues.
The Long-Term Perspective Plan (LTPP) therefore plays a crucial role, as it is the link
between TDV 2025, as the first step of the implementation framework of the country’s
Vision, and the Five Year Development Plans (and further the Annual Development Plans). It
will also be the guiding document in the formulation of the three Five Year Development
Plans and the fifteen Annual Development Plans between 2011 and 2025.
Furthermore, a number of other factors impelled the country to revert to long-term planning.
These factors include:
a. The fact that development is a process that requires persistence and coherence.
Experiences from successful countries show that a number of issues need a longer
time perspective to register significant achievements, such as the creation of a
conducive business environment necessary for sustaining high levels of investment
flows; gestation period of investments; creation of a critical mass of skilled human
resources to drive growth and the development process; behavioural changes; building
the relevant institutional framework to propel positive changes; building a positive
image for sustained foreign inflows;
b. The unsatisfactory socio-economic performance registered between 2000 and 2010,
which is below the TDV 2025 targets. Economic growth, though being high, still falls
short of meeting the envisaged target. Sources of growth have been narrow and
mostly escaping the poorest. Income disparities are rising, thereby threatening social
tranquillity;
c. Emerging new challenges in growth and social development, specifically: critical
shortage of power and transport infrastructure (which hinders sustained economic
growth and international trade competitiveness) and the immense growth in recurrent
expenditure;
d. Adverse impacts on environmental assets such as water resources, agricultural and
grazing lands, brought about by, among others, global warming, extractive industries,
etc.;
e. The need to maximize opportunities from growing regional integration and
globalization;
f. Useful lessons from growth research which shows the need for the Government to
help fast-track the country’s structural transformation in order to sustain long-term
growth and competitiveness. The structural or sectoral shifts from agriculture and
9
other low productivity primary activities to “modern” sectors (such as manufacturing)
require a longer time horizon, hence the need to include it in the long-term planning.
Finally, the main difference between this LTPP and the former long-term plans is the fact that
the country now has a Vision, and that the implementation of it is crucial in order to become
a middle-income country (MIC), with all its characteristics regarding high education levels
and human resource development, low poverty rates, higher per capita income, and good
governance and rule of law. The implementation of LTPP through FYDPs with the
continuous Government support is now a crucial step in order to achieve the MIC status by
2025.
1.5 Path to Achieving TDV 2025 Objectives
The path to realizing the TDV 2025 targets requires a strategic socio-economic
transformation. This will be facilitated by opportunity based planning implemented through a
series of three five year development Plans. These Plans will build upon each other and chart
out a development path, making use of Tanzania’s opportunities and addressing the
challenges.
The socio-economic transformation will be addressed in depth through the three strategic
Five Year Development Plans (FYDPs), as presented below:
1. First FYDP (2011/12-2015/16): Unleashing the Growth Potential
The first FYDP will address the main constraints to Tanzania’s growth. The
infrastructure bottlenecks, particularly in energy (with a special emphasis on
diversifying the means of production, including renewable energies), ports (with a
special emphasis on the Dar es Salaam port), rural roads (meaning all types of roads in
rural areas), railways, and other constraints related to skilled labour, science,
technology and innovation (STI), information and communication technology (ICT),
the general business environment and the productivity in agriculture will be
addressed. These bottlenecks will be monitored during the entire LTPP period,
meaning that the investments in each of the above will match the future needs,
especially for infrastructure (taking into account the future increase in demand) and
human capital (given the specific skills that will be necessary at each stage of
development, along with nurturing the population’s entrepreneurial skills). These
investments will prepare the economy to efficiently tap into its rich natural resources
(natural gas, iron, coal and minerals), by starting developing the country’s primary
industry. Jobs will be generated through the first-round effects of the decrease in the
country’s bottlenecks (decrease in transportation cost, decrease of general production
costs, increased availability of medium-skilled workers, etc.), especially in the
manufacturing and agriculture-related sectors.
2. Second FYDP (2016/17-2020/21): Nurturing an Industrial Economy
Once the country will have tackled its growth constraints, it will be able to further
develop its industrial sector, mainly based on the value-addition of the increased
primary products following the implementation of FYDP I. Therefore, the second
FYDP will focus on transforming the country’s resources through the development of
the industrial sector. The focus will be on natural gas based/fuelled industries
(following the investments made during FYDP I), agro-processing industries (given
the increase of the sector’s productivity and the improved infrastructure) and medium-
technology industries (given the increased human capital). Jobs will be created
10
through the focus of the country on the industrial subsectors which will generate the
highest employment: the decrease of the bottlenecks and the improvement of the
human capital will facilitate the fast development of the manufacturing sector, which
could be fast-tracked further by foreign investments.
3. Third FYDP (2021/22-2025/26): Realizing Competitiveness -Led Export Growth The rapid development of the country’s industrial sector will lead to a significant
increase in production, which will have to translate into a larger focus on new markets
in order to further ensure the country’s socio-economic development. Therefore, the
third FYDP will focus on improving the competitiveness in all sectors, especially the
manufacturing and services ones. The improvement in competitiveness will facilitate
export oriented growth, and significantly increase Tanzania’s share of international
trade. The target will be to transform Tanzania into the manufacturing hub of East
Africa, whilst making sure all the gains made in terms of social services, business
environment, infrastructure and productivity are promoted further.
The linkages between these three plans are crucial, as the success of each of these plans
depends upon the level of successful implementation of previous plans. For example, the
removal of bottlenecks such as power shortage, lack of high-quality rural roads and limited
skill-training institutions envisaged during the first FYDP is necessary for the manufacturing-
oriented growth during the second FYDP. The broad-based growth that will follow from a
manufacturing-oriented growth during the second FYDP will have positive externalities
across the economy and will in turn help in considerably reducing poverty and inequality.
This broad-based growth will pave way for the economy to focus on enhancing the
competitiveness of all sectors and fuel export growth during the third FYDP.
In addition, during the implementation of these three Plans, efforts will be oriented towards
ensuring sustainability in terms of economic, environmental and social perspectives. This
course of development, if treaded, will ultimately lead to the realization of the development
targets enshrined in TDV 2025. Figure 1.1 below depicts this path to realizing TDV 2025.
1.6 Institutional Implementation Framework
The implementation of the LTPP through the three FYDPs will be made possible through a
broad-based institutional implementation framework (which is further documented in Chapter
5). The broad sectoral participation will involve specific actions taken by the Government,
the private sector, the MDAs, the LGAs, the Non-State actors and the Development Partners,
which will all be coordinated by the POPC.
11
Figure 1.1: Achieving the objectives of TDV 2025:
Source: POPC’s computation
12
CHAPTER II: OVERVIEW OF TANZANIA’S
DEVELOPMENT
2.1 Introduction
The aim of this section is to analyse Tanzania’s development between 2000, the year the
TDV 2025 was launched, and 2010, used in this Plan as the benchmark year. For each of the
main sectors of the economy, their performance during the last ten years and the challenges
they are facing will be highlighted. This will provide the basis on which the national policies,
the guiding principles and the objectives that will have to be put in place for each of these
sectors until 2025 will be defined (described in Chapter 3).
Section 2.2 analyses the country’s GDP and sectoral growth rates during the past 10 years
and the current economic structure. Section 2.3 analyses the macroeconomic developments
during the last 10 years in three major indicators, namely inflation, the fiscal balance (and
public debt) and the balance of payments. Section 2.4 analyses the evolution of poverty and
its linkage with the country’s growth rates. Finally, Section 2.5 to Section 2.15 analyse the
evolution of the main socio-economic sectors and highlight the challenges for each of them.
2.2 Growth and Economic Structure2
Growth: TDV 2025 targeted an annual economic growth rate of 8 percent or more and to
keep inflation below 5 percent between 2000 and 2025. However, the economy managed to
grow at an average rate of nearly 7 percent over the 2000-2010 decade3. Besides, inflation
was contained below 6 percent for most of the period. Figure 2.1 displays the sectoral and
GDP growth rates between
1999 and 2010.
For the past 10 years, the
agricultural sector’s annual
growth rate remained stunted at
around 4.3 percent. Crop
production dominated as source
of rural income, accounting for
about 70 percent of agricultural
GDP. Non-traditional crops
have recently taken a more
prominent role in driving
growth. The main constraints
from the supply-side, which
have negatively affected the
sector’s growth, are related to
poor rural infrastructure for transportation; insufficient water for irrigation and energy
generation; inadequate storage infrastructure; and market imperfections. Demand side
constraints include low disposable income of consumers, stunted growth of the local
2 Unless otherwise specified, in this chapter, the “share of GDP” actually refers to the “share of Gross Value
added before adjustments”. By using this simplification, the sum of the shares of Agriculture, Industry an
Services gives 100%. 3 See United Republic of Tanzania (URT), (2000-2011), Economic Survey 2010.
Figure 2.1: Growth Rates of Total GDP,
Agriculture, Industry and Services
Source: Economic Survey (2010)
13
manufacturing sector, uncompetitive market prices (both locally and internationally), and
poor linkage with potential markets.
Most of the output in the industrial sector for the 2000-2010 period came from increased
investments in manufacturing and construction, which accounted for 46.7 percent and 29.4
percent of total industrial gross capital formation, respectively (2009 Statistical Abstract of
Tanzania). Other sub-sectors were “mining and quarrying”, “electricity and gas”, and
“water”, which accounted for 12.3 percent, 10.2 percent, and 1.4 percent respectively during
the same year.
The contribution of manufacturing to GDP increased from 9.3 percent in 2000 to 9.8 percent
in 2010, an increase of 0.5 percentage points over a 10 year period (Economic Survey,
(2010)). The slow growth of this sector is explained by a slow pace of rural industrialization
and agro-processing as well as constraints related to the cost of doing business, bureaucracy
and infrastructural impediments.
The service sector, which has been leading in terms of its contribution to GDP in 2010, was
constituted mainly of ‘trade and repairs’ (27.6 percent of the sector), ‘real estate and business
services’ (20.1 percent) and ‘public administration’ (18.2 percent) (Economic Survey,
(2010)).
Among the intermediating institutions in economic growth are small and medium-scale
enterprises (SMEs). On average, SMEs have been contributing about 22.6 percent of
Tanzania’s GDP and accounted for more than 80 percent of informal employment. Some of
the problems faced by SMEs in Tanzania include an unfavourable environment for doing
business (high cost of production, delays in movement of goods due to poor infrastructure), a
bureaucratic tax system, poor governance and limited economies of scale. As the East
African Community (EAC) moves towards more economic integration beyond the Common
Market, Tanzania will have to maintain its momentum of increasing its share of regional
trade and scoring trade surplus with regional trading partners. This will mean encouraging
exports of value-added agricultural products instead of exporting unprocessed products.
Economic Structure: A closer look at the GDP composition reveals that the services sector,
with 47.8 percent contribution to GDP in 2010, overtook agriculture which has historically
been the leading sector. The latter’s share of GDP shrank to 27.8 percent in 2010, thus
literally reversing their relative positions compared to 15 years earlier. Figure 2.2 displays the
sectoral transformation that has happened between 2000 and 2010.
As can be seen, the shares of the service and the manufacturing sector remained stable. On
the other hand, the share of the agricultural sector dropped from around 33 percent to 28
percent (given the higher growth in the other sectors and the remaining infrastructural and
productivity issues in the sector), whilst the share of the industrial sector (excluding
manufacturing) increased from around 10 percent to 15 percent (given the high growth rates
in the ‘construction and ‘electricity and gas’ sub-sectors).
14
Figure 2.2: Sector Contribution to Nominal GDP in Percentage, 2000-2010
Source: Economic Survey (2010)
2.3 Macroeconomic Developments
After having analysed the country’s annual growth rate (and the related sectoral growth rates
and shares), this section highlights the past trend and the importance of economic policy in
the three main other macroeconomic indicators, namely inflation, the Fiscal Balance and the
Balance of Payments.
Inflation: During the majority of the 2000 to 2010 period, the inflation was maintained below
6 percent, which is only slightly above the TDV target of keeping inflation below 5 percent
per annum. This was due to the prudent monetary and fiscal policies, coupled with an
accommodating international market situation. But from 2008 onwards, inflation was
consistently above 10 percent (apart from in year 2010), which can be explained by (i) a
sharp rise in food and fuel inflation (both of them having a significant impact on the CPI
calculation and trend), (ii) a nominal depreciation which led to an inflation in imported
goods, and (iii) the long-lasting effects of important bottlenecks and infrastructure shortages
(leading to increased transportation costs). The Bank of Tanzania (BoT) has continued
implementing sound monetary policies, managing the country’s liquidity and interest rates
with the view of generating a growth-prone environment without positively affecting the
inflation, which, until the international factors started playing a larger role on the country’s
CPI, has proven successful.
Fiscal Balance and Public Debt: Tanzania, between 2000 and 2010, has consistently spent
significantly more than its revenues, leading to widening fiscal deficits and an increasing debt
level. This can be explained by the country’s relatively low capacity to raise local revenues
(the average domestic revenue to GDP ratio from 2001/02 to 2009/10 was 12.2 percent), and
the increasing expenditures (in line with the important infrastructure developments made
during the last decade).
On average between 2000 and 2010, Government revenues increased by 20 percent per year,
whilst expenditure increased by more than 21 per cent per year. A closer analysis shows that
on average during the same period, recurrent expenditure (composed of ‘wages and salaries’,
‘interest payments’ and ‘other goods, services and transfers’) represented around 71 percent
of Government expenditure, whilst development expenditure (and net lending) only
represented about 29 percent. The trends of the above mentioned sub-categories are displayed
in the figure below:
15
Figure 2.3: Total Government Expenditure Decomposition
Source: Ministry of Finance (2012)
‘Other goods, services and transfers’ have remained the most important spending category
during the entire period (reaching over 50 percent in 2002/03). As can be seen, development
expenditure as a share of total has been declining ever since 2007/08, and in 2010/11
represented a lower expenditure share than wages and salaries (which have been increasing
ever since 2005/06). This decreasing trend in development expenditure should be reverted in
order to ensure sustained future growth.
Overall, the annual budget deficit increased from 4.6 percent of GDP in 2000 to over 15 of
GDP in 2010 (Economic Survey, (2010)), and, on average during that period, over 95 percent
of the annual deficit was financed by external sources. Even if the increase in public spending
might have positively affected the country’s past economic growth (World Bank Economic
Update (2012)), the trend might be crowding-out private investment (IMF, (2011)) which
could jeopardize future growth rates.
During the 2000/01-2008/09 period, the majority of the public debt indicators decreased:
public debt as a share of GDP declined from 65.2 percent to 33.6 percent, the external debt as
a share of GDP decreased from 55.6 percent to 20.9 percent, and the public debt service as a
share of Government revenue decreased from 18.2 percent to 1.7 percent. Only the domestic
debt as a share of GDP increased from 9.6 percent to 12.7 percent. Nevertheless, the trend
since then has been increasing for all the above mentioned indicators. For instance, according
to the Bank of Tanzania (Quarterly Economic Reviews, 2008-2011), the country’s external
debt and domestic debt have increased by 65 pecent and 36 percent respectively in nominal
US dollar terms between June 2008 and June 2011. According to World Bank estimates,
given the current growth trend in the country’s total debt, Tanzania might return to pre-HIPC
debt levels by 20164.
Therefore, the objective of the Government in the fiscal sphere is to (i) enhance domestic
resource mobilisation (by expanding the tax base by including the informal sector, reducing
tax exemptions, and maximising the rents collected from the exploitation of natural
resources), and (ii) contain, and improve the quality, monitorability and efficiency of
Government spending (by enhancing expenditure control and accountability, ensuring value
4 World Bank, (2012), Tanzania Economic Update.
16
for money, and consolidating the fringe benefits into salaries and wages). Both measures will
contribute towards ensuring that macro-economic stability is maintained, along with close
debt monitoring (which continues to be pursued).
Balance of Payment: The country’s trade balance has been in deficit during the entire 2000-
2010 period, with the deficit increasing from around 8 percent of GDP in 2000 to around 17
percent of GDP in 2010, given the larger annual growth rates of imports compared to exports.
This, in turn, partially explains the nominal depreciation of the Tanzanian Shilling during the
period (with a 76 percent depreciation between the annual averages of 2000 and 2010). On
average, the import cover remained at respectable levels, at around 6.4 months for the 2002-
2010 period.
During the same period, the capital and financial account remained very positive, fuelled by
large capital transfers and large FDI inflows: in nominal US dollar terms, FDI inflows more
than doubled (from below USD 300 million in 2000 to around USD 700 million in 2010), and
representing around 3.3 percent of GDP on average during the same period (UNCTADStat,
(2012)). As a result, the overall Balance of Payments remained in surplus during the majority
of the period.
According to OECD-DAC (2012) figures between 2000 and 2010, Tanzania has been the
second largest receiver of ODA in Africa, receiving on average around 6.2 percent of total
African ODA per year. Furthermore, ODA represented around 11.5 percent of annual GDP
on average during the same period. These large inflows have considerably contributed to the
country’s socioeconomic growth, but given the Government’s will to decrease donor
dependence and the country’s transformation, those ODA inflows are likely to decrease
during the next 15 years.
The LTPP growth and competitiveness related policies will be aimed at improving the
business environment and developing the value-addition chain, which will eventually
increase the country’s exports value (and reduce the trade deficit) and increase the level of
FDI inflows.
2.4 Development Dynamics: Growth and Poverty Reduction Nexus
The sustained average economic growth rate of around 7 percent that was enjoyed over the
2000-2010 period was mainly due to economic and financial reforms and prudent monetary
and fiscal policies, all of which promoted domestic and foreign investments. This growth did
not, however, have a significant impact on poverty reduction.
For example, between 2000/01 and 2007, the proportion of Tanzanian households that were
below the basic needs poverty line only fell from 35.7 percent to 33.6 percent (PHDR,
(2009))5. This shows that growth has not been broad-based and pro-poor, the main reasons
for this being the fact (i) that the main income source remains agricultural produce, where, as
explained in Section 2.2, the growth rate has been relatively low, and (ii) that the growth
happened mainly in sectors generating less employment. However, existing evidence
suggests that the poor have increased their access to publicly provided social services such as
education and health, indicating that some benefits of growth have been re-distributed in
5 The national basic needs poverty line is set at TShs. 13,998 per adult for 28 days, for Tanzania mainland as a
whole. This data is displayed in: United Republic of Tanzania, (2007), Household Budget Survey. This
document will be reffered to as HBS (2007).
17
favour of the poor (issues of quality notwithstanding). The challenge ahead is to ensure that
the economy continues to register sustained high growth and that such growth is pro-poor,
either inherently or through growth and re-distribution.
2.5 Productive Sectors
2.5.1 Agriculture
Despite the sector’s low growth rates over the past decade and its declining share in total
GDP, agriculture remains one of the dominant sectors in employment generation and export
earnings. As shown in Table 2.1, the share of agriculture in total GDP gradually declined
from around 33 percent in 2000 to 28 percent in 2010. The sector has grown at an average
annual rate of 4.3 percent between 2001 and 2010. Furthermore, the sector contributed an
average of 29 percent of GDP (Economic Survey, (2010)) over the 2005-2010 period and
over 24 percent of the country’s export earnings in 2010 (WITS, (2012)) .
While it is still strong, there are indications that the sector’s dominance as a source of
employment is decreasing. Employment in agricultural activities represented 77.0 percent of
national employment in 2006, compared to 84.0 percent in 2000/016. This 8.0 percentage
points decline in the sector’s share of employment during the last five years can be explained
by the structural transformation that tends to accompany economic development7.
Table 2.1: Decomposition of Agricultural Sector (percent share), Nominal GDP
Sub Sectors 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Crops 69.5 69.8 70.7 72.0 72.2 70.6 69.8 70.0 70.5 70.6 69.9
Livestock 16.3 16.5 15.9 15.4 15.5 17.1 17.5 17.4 17.5 15.5 15.0
Forestry and
Hunting 8.6 8.3 7.9 7.5 7.5 7.5 7.8 7.7 7.6 8.5 9.5
Fishing 5.7 5.5 5.5 5.1 4.8 4.9 4.9 4.9 4.4 5.4 5.6
Agricultural
GDP (% of total) 33.1 32.6 32.2 32.2 33.0 31.5 30.1 29.6 29.4 28.4 27.8
Source: URT, (2010), Economic Survey, POPC’s computation
There are also positive indications that labour productivity in the sector is increasing.
Tanzania’s labour productivity growth, measured in value added per agricultural worker, is
reported to have increased from around USD 210 in 1990 to USD 290 in 20092. A brief
overview of the growth rates in each of the agricultural sub-sectors is given below.
Table 2.2: Growth Rates in the Agricultural Sector (At Constant 2001 Prices)
Economic Activity 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Period
Average
Agriculture 4.4 4.9 5.0 3.2 5.9 4.4 3.9 4.0 4.6 3.2 4.1 4.3
Crops 4.7 5.3 5.6 3.2 6.6 4.4 4 4.5 5.1 3.4 4.4 4.7
Livestock 3.9 4 2.8 2.2 4.1 4.4 2.4 2.4 2.6 2.3 3.4 3.1
Hunting and
Forestry 4.8 3.6 3.3 3 2.7 3.6 4.6 2.9 3.4 3.5 4.1 3.6
Fishing 2.9 4.8 6.8 6 6.7 6 5 4.5 5 2.7 1.5 4.7
Source: URT Economic Survey, 2010, POPC’s computation
6 URT (2008). Economic Survey 2007
7 URT and USAID, (2011), Tanzania Growth Diagnostic. This document will be further documented as URT-
USAID (2011).
18
2.5.1.1 Crops
Crops are the most important undertaking in agriculture. Besides accounting for a significant
amount of the agricultural sector’s output (as indicated above), the sub-sectors’ contribution
to food availability and household food security cannot be overemphasized. Crop production,
and in particular the production of grains, is positively linked to the reduction of food-related
poverty and the cost of living for wage earners in general.
Food self-sufficiency, measured by the Food Self-Sufficiency Ratio (FSSR), has been
fluctuating over the 2000-2010 period, as shown in Figure 2.4. Overall, there has been
successful assurance of food
security for Tanzania, which
has been accompanied by a
declining trend in the
proportion of food poverty.
However, there were some
districts which experienced
food insecurity. The sub-sector
has grown at an average rate of
4.7 per year (between 2000 and
2010), but this growth has been
erratic, with high growth
periods following
comparatively low growth
rates. As such, there is a need to
further improve productivity.
Removing the pockets of food insecure population will require deliberate policy actions and
more directed resources, including improving transportation networks from food producing
zones to markets and needy districts.
2.5.1.2 Livestock
Representing around 16 percent of agricultural activities, livestock ranks second within the
agricultural sector in terms of its contribution to GDP. The estimated 2010 official statistics
reveal that there are 19.2 million cattle (out of which 680,000 were for milk), 13.7 million
goats and 3.6 million sheep. Other livestock kept in the country include 1.9 million pigs, and
58 million chickens, out of which 23 million are ‘improved’ chickens and 35 million are
indigenous poultry. Out of the 23 million ‘improved’ chickens, 7 million are layers and 16
million are broilers.
Despite being the third largest producer of livestock in Sub-Saharan Africa (with an average
of 4.3 percent of GDP), the sector’s contribution to the economy is very limited. It also
contributed less than its potential as an important source of nutrition. The nation’s average
annual per capita consumption, estimated at 12 kg of beef, 43 litres of milk and 75 eggs is
below the World Food Organization’s standard of 50 kg of beef, 200 litres of milk and 300
eggs per annum. On the export side, the presence of diseases, such as the Foot and Mouth
Disease (FMD), the Contagious Bovine Pleuropneumonia (CBPP), the African Swine Fever
(ASF), the Newcastle Disease (ND) and other transmittable animal diseases, acts as a barrier
to the export of animals and other related products. The sector is also facing a problem of
non-compliance to new market demands like the Livestock Identification and Traceability
System (LITS) and Animal Welfare.
Figure 2.4: Trends of Food Self Sufficiency Ratio and Poverty
Indicators (%)
Source: MAFC (2010)
19
Livestock Products
Production of pork, lamb/mutton and beef for the last ten years has been increasing at an
average rate of 1 percent per annum, despite outbreaks of diseases. The recent construction of
modern abattoirs by the Ministry of Livestock Development and Fisheries (MLDF) in
Dodoma and Ruvu, and the recruitment of veterinary officers, has positively contributed to
the increased production of meat. A growing urban population, where higher income earners
tend to eat more meat, has also supported the increased production in meat products.
As for milk, production is mainly from cattle. Dairy goats are also gaining popularity as a
source of milk, particularly for the poor, and their milk is normally consumed at household
level. Currently, only a small proportion (about 10 percent) of the marketable surplus of milk
produced annually is filtering through into the urban markets and processing plants, on
account of remoteness and poorly developed infrastructure for the collection and marketing
of milk.
Hides and skins are the main export products in the livestock subsector. Data on collection
and export of hides from the varied sources (cattle, goat and lamb) indicates that the
respective values of collected and exported hides and skins were steadily increasing from
2002 onwards, peaking in 2008 and subsequently declining from then onwards (on account of
the global financial crises). In 2009/2010, a total of 739,315 pieces of cattle hides, 1.9 million
goat skins and 176,400 pieces of sheep skins worth TShs. 8.19 billion were exported,
compared to 982,668 pieces of cattle hides, 2.7 million of goat skins and 769,936 pieces of
sheep skins worth TShs. 12.8 billion exported in 2008/2009. In 2006/2007, a total of 1.7
million pieces of cattle hides, 1.05 million pieces of goat skins and 925,530 pieces of sheep
skins worth TShs. 16.2 billion were exported.
Export and value adding activities in this sector are constrained by a prohibitive business
environment, characterised by: (i) inadequate transportation and communication
infrastructure for collection of the raw material (hides and skins), (ii) high costs of processing
(on account of the need to import raw materials) and the high cost of utility, (iii) limited
awareness of the value of the raw material among herdsmen and farmers, (iv) flaying
practices (and equipment) inconsistent with high levels of quality and recovery, (v)
rudimentary technology at butcher slabs and abattoirs resulting into most of the raw hides/
skins collected being of low grade, and (vi) stiff competition from imported leather products.
2.5.1.3 Forestry and Hunting
Forestry and hunting has accounted for around 2.3 percent of GDP and 8 percent of activities
in the agriculture sector (both figures on average for the 2000-2010 period). Forests and
woodlands are among the most important natural resources the country is endowed with.
They are estimated to cover about 33.5 million hectares, or about 38 percent of total land
area. Part of this, 13.5 million ha, are gazetted as national forest reserves, of which 1.6
million ha are managed as catchments forests and 90,000 ha, 150,000 ha and 120,000 ha are
managed by the Government, private industrial and small-scale woodlots, and medium-sized
plantations owned by smallholders, respectively. Others are managed as local authority forest
reserves. The remainder is unreserved, being managed under villages or left as general land.
There are 600 national forest reserves and 200 local authority forest reserves. A total of 2.1
million ha are currently under community based forest management (CBFM) and 4.2 million
ha are gazetted as village forest reserves.
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In addition, the country has enormous potentials in beekeeping, with an estimated potential
production of about 138,000 tons of honey and 9,200 tons of beeswax per annum.
Nevertheless, only 4,860 tons and 324 tons of honey and beeswax respectively are produced
annually, or roughly 3.5 percent of potential. Moreover, forestry and woodlands are essential
for hosting wildlife, and are hence contributing immensely to tourism development.
2.5.1.4 Fishing
The share of fishing in agricultural activities has remained fairly constant over the last decade
(see Table 2.1), ranging between 4.4 percent and 5.7 percent per annum, and a period average
of 4.6 percent. Its annual growth rate has been less stable. Starting from a low 2.9 percent
annual growth in 2000, the sectors growth rate grew steadily to hover around 6 percent
between 2002 and 2005, and has since then been steadily dropping to reach a low 1.5 percent
in 2010 (Table 2.2). The decrease in growth of fishing activities between 2009 and 2010 has
been attributed to poor fishing gears, destruction of hatcheries and the decline of demand for
fish in external markets.
Sectoral Challenges:
Given the abundant fertile land and water for irrigation, Tanzania is poised to be a food
surplus country and at the same time have the ability to export a myriad of products from the
agriculture sector to the region and the international market. The sector’s successful
development will entail surmounting the following challenges: (i) the sector’s
overdependence on and vulnerability to weather patterns and climate change, (ii) poor and/or
complete lack of physical, financial, human and institutional infrastructure to support
production and distribution, (iii) inadequate and erratic use of science and technology in the
area, (iv) lack of and/or inappropriate agricultural financing and pricing mechanisms, (v) high
cost and erratic supply of inputs, (vi) limited investment in R&D leading to limited or no
improvements in the sector, (vii) minimal participation in the agricultural value addition
chain, (ix) land tenure system that is not responsive to agricultural development investment
promotion needs which ultimately leads to competing use and costly conflicts, rapidly
depleting natural resources, due to unsustainable management, utilization and the
proliferation of illegal activities (e.g. trafficking of these resources) in the respective sub-
sectors, and (x) poor genetic potential of the local stocks for livestock.
2.5.2 Industry
Industry in its broad definition includes manufacturing, mining and quarrying, construction,
energy and water. The table below displays the share of each of these subsectors in the total
industrial GDP, and as can be seen, manufacturing has been the largest industrial activity
throughout8.
Table 2.3: Industrial GDP divided into sub-sectors (share of total industrial GDP)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Manufacturing 48.9% 46.5% 42.2% 39.5% 39.0% 38.3% 37.5% 36.7% 37.3% 39.3% 40.1%
Construction 28.7% 29.0% 34.5% 38.1% 38.1% 37.7% 37.6% 37.1% 36.7% 36.1% 35.6%
Mining and
Quarrying 8.2% 9.8% 10.7% 11.4% 12.3% 13.8% 15.5% 16.8% 16.2% 15.2% 14.9%
Electricity, gas 11.6% 12.0% 10.2% 9.0% 8.5% 8.2% 7.4% 7.6% 8.1% 7.8% 7.9%
Water supply 2.6% 2.7% 2.4% 2.1% 2.1% 2.1% 2.0% 1.9% 1.8% 1.7% 1.6%
Source: Economic Survey (2010)
8 The ‘electricity and gas’ and ‘water supply’ sub-sectors will be dealt with in the ‘energy’ and ‘water supply
and sanitation’ sections of this Plan.
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2.5.2.1 Manufacturing
Manufacturing has a special role to play in the economy, in terms of championing innovation
in science and technology. The sector is also tasked to lead the envisaged competitiveness
drive and economic transformation towards Vision 2025. After a lacklustre performance
during much of the 1980s and early 1990s, the sector picked up modestly thereafter, though it
has not been able to record double digit growth rates on average. Over the 2000-2010 period,
the manufacturing sector has been growing at an average of 8 percent per annum in real terms
(with a peak of 9.6 percent in 2005), and contributing an average of 8.9 percent to GDP in
real terms. The sector accounted on average for 12.7 of total exports (with a peak of 26.1
percent in 2010) and 14.7 percent of non-traditional exports (with a peak of 29.2 percent in
2008) (Economic Survey, (2010)).
The manufacturing sector is currently dominated by food processing. In 2010, for example,
this sub-sector ranked first in terms of gross output, employment and value added, accounting
for 23.6 percent, 40.9 percent and 26.7 percent of total manufacturing, respectively. Large
scale enterprises dominate, with their location skewed to Dar es Salaam, Tanga, Arusha,
Mwanza, Morogoro and Iringa.
The performance of the sector has been constrained by both policy-related and sectoral
factors. At the policy level, the issues relate to the nature and implementation of industrial
policies, the sector’s inward-looking orientation and sustainability issues. At the industry
level, the issues relate to structural constraints, low capacity utilization, high production costs
(mainly caused by infrastructural impediments, eroding the sector’s competitiveness),
competition from cheaper imports, weak forward and backward linkages, low export drive
and economy-wide high costs of doing business.
Manufacturing can enhance its role in the economy given (i) the resource abundance in
primary products, especially the agricultural products (in its broad sense) and the minerals
and non-metallic products (including oil and gas), (ii) the unsatisfied demand for
manufactured products in both the domestic and external markets, and (iii) the human
resource base for employment creation.
2.5.2.2 Mining and Quarrying
Tanzania is endowed with rich mineral resources, though the full potential of the sector is yet
to be realized. Mining is an important employment generating activity, especially in small
scale mining. Since independence, mineral development was done by the State through its
agency, the State Mining Corporation (STAMICO). Liberalization of trade in minerals in the
1990s led to increased local and foreign investments, attracting large global mining
companies, especially in the gold sub-sector.
Mainly as a result of the aforementioned policy change (especially in the economic and legal
spheres), the mining industry experienced a boom in both mineral exploration and mining
activities. Notable developments included the increased production from five large-scale gold
mines (Nzega, Geita, Bulyanhulu, North Mara and Tulawaka).
Nevertheless, gemstone and other precious metals have a low integration in the domestic
economy. On the other hand, minerals for industrial use/intermediate products such as coal,
iron ore, uranium, titanium, kaolin, phosphate, niobium gypsum, limestone, etc. have a
relatively high integration with the domestic industrial production.
22
The sector’s growth in real terms was relatively high in the early 2000s (with a peak of 17.1
percent in 2003), but slumped after 2007 to single digit rates, reaching 2.7 percent in 2010
and a GDP contribution of 2.4 percent, as the initial upsurge in investments faded.
The performance of mineral exports has recently been improving, mainly due to the rising
gold price on international markets, itself caused by an increasing demand to hedge against
depreciating currencies and other financial assets. The future development of minerals will
most probably lead to large increases in Government revenues and might positively affect
GDP levels.
The mineral sector has continued to face challenges, in particular: low integration with other
sectors of the economy, slow development of small-scale mining, low capacity of the
Government to monitor the sector and leverage sufficient returns, low levels of value-
addition, and high environmental degradation. Other challenges have included unsustainable
development and health and safety hazards.
In view of these and other challenges, the Government, in collaboration with key
stakeholders, drew up the “Sustainable Management of Mineral Resources Project”
(SMMRP) 2009/10 to 2013/14, aimed at strengthening the mineral sector.
2.5.2.3 Construction
The construction sub-sector represents a significant industrial activity, which has the potential
to create a large amount of employment opportunities. About 9 percent of Tanzania’s
workforce is employed in this sector (See WB, Enterprise Survey).
Construction activities are primarily overseen by the Ministry of Works. Two other public
institutions are also key, namely (i) the Prime Minister’s Office, Regional Administration and
Local Government, which is responsible for urban, district and feeder roads, and (ii) the
Ministry of Water and Irrigation, which is responsible for the constructions related to water
and irrigation development.
There are a number of Agencies involved. The Tanzania Roads Agency (TANROADS) has
been the main executing organ for development, construction, maintenance and repair of
trunk and regional roads and bridges, facilitated mainly by the Road Board Fund. The
Tanzania Building Agency mainly deals with the construction of public residential properties
(especially for Government officials). The National Housing Corporation (NHC) facilitates
the provision of serviced land, housing and other buildings. The private sector has been active
in the construction of both commercial and residential houses.
The sector’s annual real growth increased from 0.1 percent in 2000 to 10.2 percent in 2010,
with a peak of 15.6 percent in 2003. In terms of relative contribution to GDP, between 2000
and 2010, the sector recorded its highest share of GDP in 2010 (7.0 percent of GDP), which
was mainly attributed to the increase in construction and rehabilitation of roads and bridges,
residential and non-residential buildings, airports and water infrastructures.
The sector faces challenges related to (i) low financing and inadequate funds for
maintenance, rehabilitation and upgrading of roads, (ii) inadequate capacity of local experts
(contractors, engineers, architects and quantity surveyors) in terms of number, skills and
equipment, and (iii) high cost of construction. Others include professional misconduct, timely
procedures, and a slow institutional process.
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2.6 Infrastructure
The provision of quality infrastructure plays a major role in economic development across the
country. In order for rural areas to compete for inward investment and internationally, they
must have access to adequate transport, energy and telecommunications infrastructure. The
main challenge in infrastructure and services provision will be to minimise rural-urban
differences in the supply and quality of facilities. This will facilitate the extension of the
benefits of the national socioeconomic development across and within regions. Rural areas
will therefore benefit from the very substantial levels of investment in infrastructure included
in this Plan.
Tanzania serves the landlocked countries of the region, and it is therefore imperative to
ensure that the potential transit traffic is not diverted to alternative roots due to a lack of
investment in transport infrastructure and services. Currently, it has been observed that the
infrastructure and service development in railway and ports was inadequate. This has resulted
into the diversion of some of the traffic, for example from the Dar es Salaam Port to ports in
neighbouring countries. Tanzania strives to modernize and expand its physical infrastructure
(road, railways, sea ports, airport, and lake ports) to link the domestic economy with the
regional network in order to ensure reliability and safety.
Every sector of Tanzania’s infrastructure faces serious challenges, among the challenges for
the sector is inadequate investment in the sector attributed by budget deficit to rehabilitate
and modernize those infrastructure system which includes; energy, railway system, harbours
and airports, land, ICT, etc.
2.6.1 Transport
The contribution of the transport sector to GDP has been fairly stable, ranging between
5.1percent and 5.4 percent of GDP between 2000 and 20109. It accounted for around 5.6
percent of GDP in 2010 (Economic Survey, (2010)). This is in spite of the rapid increase in
the sector which has been growing at an average rate of 6.1 percent annually over the period.
The sector’s growth and performance have continued to improve due to both Government
and private sector investments in road rehabilitation, modernization of port services, and the
improvement of marine and air services. Overall, the sector’s growth was 7 percent in 2010,
slightly up from the 6 percent growth seen in 2009.
2.6.1.1 Road sub-sector
Road transport is the dominant mode of transport in Tanzania, accounting for over 80 percent
of passenger traffic and over 70 percent of freight traffic. In the long term, the objective is to
change this structure by improving other modes of transportation in order to have an efficient
and integrated transport system. Despite the Government’s efforts to improve its road
network, extending it to rural areas where the majority of Tanzania’s poor are living and
carrying out substantive economic activities has been a challenge. As noted earlier, only 24
percent of Tanzania’s rural population lives within two kilometres of an all-weather road.
This makes the flow of goods and services to and from the rural areas difficult and expensive.
It has also inhibited the country’s ability to effectively utilize its geographical location. Table
2.4 below portrays the current state country’s road infrastructure.
9 URT, (2011), Economic Survey 2010.
24
Table 2.4: State of road infrastructure in Tanzania, 2010 (km)
Road Class Paved Unpaved Total
Trunk Roads 5,478 7,308 12,786
Regional Roads 840 19,386 20,226
District, Urban, Feeder, Roads 774 52,686 53,460
Total 7,092 79,380 86,472
Source: TANROADS (June 2011)
Trunk roads in Tanzania link regions and neighbouring landlocked countries and the rest of
the globe. However, Tanzania has the lowest road density in the East African region, with
only 103m/km² (and only 7.4 m/km² for paved roads).
Table 2.5: Road Density in Some EA Countries Country Particulars
Kenya Total Network (m per sq.km) 261.9
Paved network (m per sq.km) 15.2
Uganda Total Network (m per sq.km) 330.8
Paved network (m per sq.km) Unknown
Tanzania (mainland) Total Network (m per sq.km) 96.5
Paved network (m per sq.km) 5.0
Source:
The main challenges in the road sector include: (i) inadequate funding (as road projects
demand large funds) for periodic maintenance and development projects, which has affected
the performance of the sector (due to deterioration of the roads and the difficulty in executing
new projects), (ii) overloaded vehicles, which cause damage to road pavements and reduce its
lifespan, (iii) inefficiencies of design and supervision, which leads to various issues during
the implementation of projects, and (iv) the low skills and the lack of working
facilities/capacity in local construction industries.
2.6.1.2 Railway sub-sector
Railways provide a relatively cheap and safe transportation service, making the efficient
transportation of passengers and freight within the country, as well as between the country
and the neighbouring land-locked countries, possible. However, the national railway services
have not been satisfactory.
There are currently two public organizations providing railway services. The first one is the
Tanzania Railway Line (TRL) managing a network of 7 lines with a total length of 2,724 km
of single track Meter Gauge railway network, travelling across 12 out of the 21 regions of
Tanzania Mainland. This service is operating below capacity, with the volume of freight and
passengers on a declining trend owing to a lack of maintenance and the subsequent
deterioration of the infrastructure and facilities. The second one is the Tanzania Zambia
Railway Authority (TAZARA), which operates a 1,860 km line between Dar es Salaam and
Kapiri Mposhi in Zambia (975 km of it lies is in Tanzania). While freight tonnage on the line
has been growing at an average rate of 18.1 percent a year for the past 3 years, the shortage of
locomotives and the poor state of the passenger rolling stock has led to a substantial decrease
in the number of passengers originating from both countries being served by the network.
Improvements in the railway performance will, apart from other benefits, relieve roads from
persistent damage due to its excessive use, as bulky traffic will be carried by a more efficient
and durable railway infrastructure, hence lowering roads maintenance and rehabilitation
costs.
25
Generally, the challenges that have severely impacted the effective and efficient provision of
railway services are (i) the dilapidated infrastructure (following inadequate investment in
maintenance and rehabilitation of railway lines), (ii) the outdated locomotives and wagons,
and (iii) the outdated permanent way (leading to high maintenance cost). Therefore, the
development and improvement of railways infrastructure cannot be marginalized. Successful
improvement of the railway sub sector is critical to effectively support economic growth.
2.6.1.3 Air Transport sub-sector
The condition of basic airport infrastructures (runways, aprons, taxiways building and
equipment) for most of the airports in Tanzania mainland is still poor. As a result, safe,
reliable, and comfortable air transport services are assured only during the dry season.
Despite the above mentioned constrains, the air transport sub-sector has registered steady
growth, with the number of passengers growing by 7 percent, the aircraft movement by 13.8
percent and the amount of cargo (in tonnes) by 17 percent in 2010/11. There are a total of 7
licensed air operators (as of March 2011)10
and 368 aerodromes which are owned, managed
and operated by different entities. Tanzania Airport Authority (TAA) owns, manages, and
operates 62 airports. There are three international airports, namely Mwalimu Julius Nyerere
in Dar es Salaam, Kilimanjaro and Zanzibar. The main characteristics of the aviation industry
have been the high cost of air travel (for domestic and regional/continental flights), as well as
inadequate air connections.
The main challenges for aviation are (i) to develop airports and airstrips to handle traffic to
inland destinations, for tourism and business purposes, (ii) to insure the availability of air
travel enables potential investors to complete their transactions in time, (iii) to attract more
international airlines to fly into Tanzania, through liberalization based on Yamoussoukro
decision, and (iv) to develop an aviation industry with the capacity and cost-structure that
will facilitate the transportation of fresh products (including cut flowers, vegetables and
fruits, meat, fish, etc.), given that there are many areas in Tanzania with the potential to
produce these products.
2.6.1.4 Maritime Transport sub-sector
The cargo handled at ports over the past three years (2008/09-2010/11) has, on average, been
growing at 11 percent per annum. Dar es Salaam port continues to be the largest port,
handling about 89 percent of the total cargo traffic. As of 2010, the targeted market for transit
cargo services had not been fully tapped due to the poor performance of the maritime and
inland transport sub-sectors. The aim is to make an optimum use of large available markets,
given the country’s geographical location.
The main challenges for the marine transport sub-sector are (i) the limited capacity to serve
container traffic (as demand has been growing fast), (ii) the infrastructure constraints
(especially at berths) and inefficient working facilities, (iii) the ineffective inland transport
system, and (iv) the inadequate funds to implement development projects.
2.6.1.5 Pipeline sub-sector
As of 2008, Tanzania had 253 km (157 mi) of gas pipeline, 888 km (552 mi) of oil pipeline,
and an 8 km (5.0 mi) pipeline for refined petroleum products in Dar es Salaam. Currently, the
Tanzania and Zambia (TAZAMA) crude oil pipeline accounts for a large portion of the
10
Tanzania Civil Aviation Website: http://www.tcaa.go.tz/.
26
country's crude oil transportation capability. It currently handles 600,000 tonnes of crude oil
per year, although it was designed to handle 1.1 million tons. With the on-going initiatives in
natural gas exploration, there is a need to invest more in pipeline for transportation of gas as
well as crude oil.
There are only two functional long distance pipelines in the country: (i) the TAZAMA
pipeline, referred to above, which transports crude oil from Dar es Salaam to Ndola refinery
terminal in Zambia (a distance of 1,750 km), and (ii) the pipeline which transports gas from
Songo-Songo Island to Dar es Salaam, over a distance of 232 km.
The main challenge in pipeline transport is to expand the services to reach other areas (such
as the Great Lakes region). Hence, the implementation of the long standing pipeline project to
connect Dar es Salaam to Mwanza and Kigoma needs expediting. Similarly, if possible,
TAZAMA should also transport domestic petroleum to regions in Southern Tanzania.
Addressing the constraints inhibiting the growth and development of this sector is important
if the sector is to contribute effectively to the socio-economic transformation of the country,
especially given the target of becoming a transportation hub for the region, given its
geographical location. The main challenge which has to be overcome is shoring-up the
requisite financial, human and institutional capacity to develop the transport infrastructure
and facilities to a level and standard that can enable it to play this role. Furthermore, it is
expected that maintenance remains a priority, accompanied by a mechanism ensuring the
continuous improvement of the sector’s infrastructure.
2.6.1.6 Meteorology sub-sector
The Tanzania Meteorological Agency (TMA) provides weather and climate services, and
thereby contributes to the well-being of Tanzanians. TMA serves many areas, including air
transport, road transport, marine transport, railway transport, construction industry,
agriculture services, tourism and energy. Nevertheless, the sector’s development has been
very limited, and does not match the country’s needs.
The meteorological infrastructure in Tanzania consists of 28 synoptic stations (of which 16
operate 24 hours/day, 6 for 15 hours/day and the remaining 6 for 12 hours/day), 157
climatology stations, 2,056 registered rainfall stations, offshore marine-meteorological
station, 15 agro-meteorological stations (operated by TMA in collaboration with Ministry of
Agriculture, Food Security and Cooperatives (MAFC)), 14 Automatic Weather Stations
(AWS) located at various stations in the country, one upper-air station located at Julius
Nyerere International Airport (JNIA) in Dar es Salaam, one weather radar station in Dar es
Salaam, and 2 Numerical Weather Prediction (NWP) models.
TMA is facing several challenges in providing high quality, reliable and timely
meteorological services to cater the needs of the various socio-economic sectors. The major
challenges include: (i) the state of the current observational station network, which is not
sufficient to capture all climatic regimes and the local climate, (ii) the lack of sufficient data
(due to a low density of station networks), which affects research on climate change
monitoring, attribution, and detection, (iii) the aging telecommunication systems, (iv) the lack
of automatic linkages between the national observing network and the national
communication centre, (v) the lack of automatic linkage between TMA and specific
meteorological information users, including media, disaster management institutions, farmers
and the local communities at large, and (vi) the Climate Computing Project (CLICOM) and
27
the Meteorological Database Management System (DBMS), which both need to be upgraded
to accommodate more information.
2.6.2 Energy
The lack of a reliable energy supply has been identified as a chief binding constraint to
Tanzania’s growth by the recently concluded Growth diagnostic exercise of Tanzania by a
URT-USAID team of experts. According to the ‘Energy Development Index’, developed by
the International Energy Agency, Tanzania is ranked 60th
out of the 64 developing countries.
Looking at the electricity production, increased investment over time has enabled this sector
to increase (i) the installed capacity from 785 MW in 2000 to 1,051 MW in 2010, (ii) the
generation from 2,539 GWh to 3,824 GWh, and (iii) the proportion of population enjoying
electricity from 6 percent in 2000 to 14 percent in 2010.
To approximate the current gap in electricity generation, one could use the elasticity between
GDP growth and electricity demand, which seems to be close to unity in many developing
countries. Given Tanzania’s average annual GDP growth of around 7 percent, electricity
generation should have had to grow at around 7 percent per year during the same period in
order to match increasing demand. This would have implied an increase in generation from
785MW to around 1,550MW. Given the need for a buffer of about 15 percent of total
capacity (as of best country practice (URT-USAID, (2011)), this would have meant an
electricity generation of about 1,800MW in 2010. Nevertheless, the ‘reserve margin’ of the
generation system for the national grid has been virtually zero since 2006 (URT-USAID,
(2011)).
It is no wonder, therefore, that per capita electricity consumption is relatively low, estimated
at 85 kWh per year compared to 432kWh and 2,176 kWh for Sub-Saharan Africa and World
averages, respectively. Besides, the recently added electricity generation capacities have
mostly been either of the intermediate or spike-loads. The base-load generation capacity has
in fact declined, due to increased uncertainties in water flows (given the rain shortages).
Among comparator countries in sub-Saharan Africa, Tanzania ranks first in terms of the
number of power outages per month and Tanzanian firms receive the highest share of their
electricity from generators (according to the Enterprise Survey conducted by the World
Bank). Access to modern sources of energy in both rural and urban areas has remained low.
Only 2.5 percent of rural households as well as 11 percent of urban households are currently
connected to electricity, which has a negative impact on forest depletion (due to over-
deforestation in search of firewood and charcoal).
Improved access to modern energy services is one of the pre-conditions for transforming
rural Tanzania. The country has many potential sources for generation of affordable and
reliable modern energy for domestic and industrial use in rural areas. Despite the immense
potentials, the level of development of these sources is quite low. These sources include
renewable energy development (such as mini-hydropower generation, biomass cogeneration,
and solar energy) and non-renewable sources (natural gas, petroleum and coal). The
recognition of division of energy sources into renewable and non-renewable is pertinent,
particularly due to sustainability and environmental considerations.
28
Renewable sources
Considering the increasing demand for energy, it is pertinent to depend as much as possible
on renewable sources of energy. Though hydro-power constitutes about 56 percent of the
total installed capacity, only 12 percent of the country’s proven hydro-power potential has
been developed. Around 90 percent of the total energy consumption in Tanzania comes from
bio-mass fuel. More than 80 percent of the energy derived from biomass (mainly charcoal
and firewood) is consumed in rural areas. There have been few private sector projects aimed
at biofuel production. Solar energy has been exploited at a very limited scale, due to the lack
of awareness and availability of solar energy equipment. Other renewable sources (like the
wind and geo-thermal) have not yet been utilized on any significant scale due to limited
knowhow of technology and lack of finance. Solar and wind energy account for less than 1
percent of total energy production in Tanzania.
Non-Renewable sources
Of the proven total potential of 13,200 million tonnes of coal, only 0.04 percent is developed
per annum. The substantial natural gas deposits discovered in the southern coastal areas at
Songo-Songo and Mnazi Bay have not yet been utilized due to delays in development of
efficient thermal generating capacity. Tanzania has about 5 trillion cubic feet of proven
natural gas reserves, which represent 24 years of reserves at current levels of production and
more than 100 years of reserve if probable reserves are taken into account11
. The increase in
future gas production will lead to significant increases in Government revenue, and will
positively affect the country’s GDP levels. The electricity generation depends a lot on
petroleum products, due to the unreliable nature of national grid supply. Subsequently, about
46 percent of firms in Tanzania own a generator.
The main challenges faced by the electricity sector are: (i) the lack of large scale investment
since 2000, which has led to numerous small-scale projects, hence translating into a lack of
economies of scale in power production, (ii) the limited participation of the private players in
the energy sector due to the fact that electricity tariffs are not cost reflective, (iii) dependence
on expensive foreign oil, and (iv) the lack of dynamic demand projections which failed to
take into account the huge surge in demand (due to the development of the mining and
industrial sectors).
2.7 Land
The issues of accessing and receiving the right to use land for development purposes are
critical for an effective implementation of any plan. As such, the successful implementation
of LTPP will hinge on generating the requisite land distribution and access management
framework to ensure timely availability of land for planned socioeconomic development
programmes and projects. Having many areas with unutilised land in Tanzania does not
imply that the same is easily accessible and could be availed for development activities.
Although all land is owned by the Government, in trust of the Head of State, the largest
portion is under customary law and controlled by villagers. Investors in Tanzania have
complained about the complications related to the acquisition of rights to use land.
According to the 2012 Doing Business report (World Bank, (2012)), Tanzania’s overall
ranking declined compared to the previous year, for a large extent because of the issues
11
As of end of February 2012, according to Reuters, the proven reserves have been raised to over 10 trillion
cubic feet (given the new Statoil discoveries along Tanzanian coastline).
29
related to land acquisition (especially the number of days and procedures required) and
property rights. Globally, Tanzania ranks 158th
out of the 183 economies on the ease of
registering property, which has a negative impact on its capacity to attract investors. As a
comparison, Tanzania has a lower score than any EAC country (which rank anywhere
between Rwanda (61st) and Kenya (133
rd)).
The problem of unplanned and untitled land is holding back sustainable land utilisation. In
2010, for example, the proportion of land which was surveyed and titled or designated for
particular uses was estimated to be about 10 percent of Tanzania’s total land surface. One of
the consequences of this situation is an increase in the number of land disputes among rural
communities, Government agencies, investors and individuals. Such disputes do not only
threaten peace and harmony, but also increase the cost of doing business, which has the
potential of deterring would-be investors.
The process of surveying, parcelling and titling land is lagging far behind the demand for
acquiring land, for both settlement and commercial purposes. It is difficult for stakeholders,
in the current environment, to acquire land as a commercially viable asset that could be used
as loan-collateral, for instance.
The main challenge that the sector faces is an inadequate land administration system. Most of
the storage and retrieval of information on land titles and transactions is done manually.
Furthermore, some of this information is kept by Local Government Authorities (LGAs) and
is not shared with the relevant institutions. As a result, the processing of land-related
transactions is inefficient, resulting in increased costs to individuals and institutions or
businesses seeking land administration services.
2.8 Housing and Human Settlement
Tanzania is facing a growing urban housing shortage, fuelled by the increasing rural-urban
migration trend. In 1995, it was estimated that about 70 percent of the urban population was
living in temporary shelters of squatter/slum areas. There is no significant improvement to
date. The growing housing shortage is confirmed by overcrowding to around 4 persons per
room and high room rental costs. By 2000, it was estimated that in Tanzania’s urban centres,
about 2,200,000 additional housing units were required. Currently, about 70 percent of the
urban population is living in unplanned settlements, and about 60 percent of the urban
housing stock is to be found in these settlements.
Urban development in Tanzania has been generally heterogeneous, ranging from specially
planned to unplanned dwellings. Studies have indicated that about 32 percent of such
dwellings could be classified as being in bad condition, 51 percent in fair condition and 17
percent in good condition. The Housing and Enterprise Survey (2006) highlighted that the
reason for the poor condition is the fact that a large number of houses are financed by own
means, given the existing lack of credit for private real estate projects.
One of the consequences of the rapid urbanisation is the cost of living. The rent rates differ
between the rural and urban sectors, but also within the cities, according to: (i) the distance
from the commercial districts, (ii) the availability of basic human services, (iii) the size, and
(iv) the nature (planned or unplanned) of the property. A 200m² property in most cities on the
mainland would cost around TShs.1.77 million (USD 1,358) per month, or around TShs.
30
7,000 to TShs. 8,800 (USD 5 – USD 7) per m². In Zanzibar, the same could cost as much as
TShs. 2.36 million (USD 1,811) per month12
.
There is also a lack of city planning and urban land division according to activity. Homes are
increasingly being surrounded and/or co-existing with commercial establishments. Virtually
no separation has been made between residential and recreational areas. A number of
residential houses are increasingly turned into shades for commercial and industrial activities.
Residential buildings in many parts of urban Tanzania tend to be concentrated around sea,
lake and river shorelines. Over 90 percent of urban residential houses are within a 5 km
radius from the commercial districts, yet increasingly spreading out.
In rural areas, a significant number of dwellings are constructed from mud and poles or from
mud bricks and blocks. A smaller percentage of dwellings are made of concrete and stone, or
of baked and burned bricks. Most dwellings lack basic amenities (such as water, sanitation,
electricity, etc.). Piped indoor water is available to about one-fourth of households, and only
about half of them have private toilets.
The challenges of the sector, therefore, include: (i) improving the affordability and ease of
home ownership, (ii) improve the quality of the existing property (in urban and rural areas),
and (iv) improve settlement planning.
2.9 Services
2.9.1 Trade and Commerce
The adoption of economic reforms in 1986 saw, among other developments, a rise in both
exports and imports. However, imports have been increasing at a faster rate than exports,
leading to increasing trade deficits in the country’s trade with other nations. The volume of
trade recorded an increase in 2010 compared to 2009: exports increased by about 30 percent
from USD 3,295 million in 2009 to USD 4, 297 million in 2010, and imports by 22 percent,
from USD 5,834 million in 2009 to USD 7,125 in 2010.
The structure of exports has changed remarkably over time in favour of non-traditional
exports. Traditional exports in this context include coffee, cotton, sisal, tea, tobacco, cashew
nuts and cloves. In 2010, tobacco accounted for about 42 percent of the total value of
traditional exports, followed by coffee (which accounted for about 18 percent). Non-
traditional exports include petroleum products, minerals (especially gold), manufactured
goods, fish and fish products, vegetables and flowers. In the same period, minerals accounted
for about 49 percent of the total value of non-traditional exports, followed by manufactured
goods/industrial goods which accounted for 30.3 percent.
Wholesale and retail trade is one of the key sub-sectors in the economic development agenda
of Tanzania, which is expected to expand substantially as the economy moves towards its 8
percent growth target. Informal and formal trade in Tanzania accounts for approximately 12.1
percent of GDP. Most of the employment in trade is found in the informal sub-sector, which
refers to businesses that are not registered at the Registrar of companies. This sub-sector is
characterized by ease of entry and exit; reliance on indigenous resources; family ownership;
small-scale operations; labour intensive and adaptive technology; skills acquired from and
outside of the formal sector; and unregulated and competitive markets, among others. These
12
See Housing and Entreprise Survey (2006).
31
enterprises are found in every part of the country and have great potential for creating a
variety of jobs while generating widespread economic benefits.
According to World Bank data (2010), Tanzania rates favourably in comparison to Uganda
and Kenya with respect to the cost of exporting, while the national customs procedures are
rated as the least efficient in East Africa according to the Global Competitiveness Survey
(WEF 2010). According to the Trade Freedom Index (Heritage Foundation, (2012)),
Tanzania ranks below its East African counterparts with respect to trade freedom. Tanzania’s
international trade in services are also constrained by several legal and administrative factors.
Hence, there is a need to facilitate trade and commerce further in Tanzania by reducing
customs procedural delay and improve trade-related infrastructure.
Access to affordable trade finance and credit facilities are crucial to the growth and
development of wholesale and retail trade. Furthermore, several factors continue to inhibit the
expansion of the sector, namely: (i) the limited access to affordable credit facilities,
guarantees and credit rating agencies, (ii) limited access to venture capital, (iv) limited
financial services in rural areas, and (vi) the levels of collateral requirements to access credit.
Tanzania has the potential to benefit from an enlarged regional market as the Common
Market for the Eastern and Southern Africa (COMESA), the East African Community (EAC)
and the Southern Africa Development Community (SADC) plan to implement a tripartite free
trade area by 2012. The country’s transport network links Tanzania’s landlocked neighbours
to international markets. Countries like Rwanda, Burundi, Malawi, Zambia, Uganda and
Congo DRC depend on Tanzania’s roads, railways and ports to get their goods overseas.
Transit trade can play a big role in Tanzania’s growth, but in order to realise this potential,
the country must expand and modernise the necessary infrastructure.
2.9.2 Tourism
Tourism is a booming sector in Tanzania. The sector’s growth has been a result of policies
that promote Tanzania as a sustainable and quality tourism destination - culturally and
socially acceptable, ecologically friendly and economically viable.
In 2010, the number of foreign tourist arrivals reached 782,699, up from 714,367 arrivals in
2009, an increase of 9.6 percent; and receipts stood at USD 1.25 billion compared to USD
1.16 billion in 2009, an increase of 7.8 percent. The sector’s growth (hotels and restaurants)
has been increasing in recent years, from 4.1 percent in 2000 to 6.1 percent in 2010, and
accounted for 2.3 percent of GDP in 2010. Travel and tourism directly employs around 3.7
percent of the total workforce.
The sector has been billed as a revenue generator, creating income that can be invested in
other sectors, implying it’s a growth driver in its own right. The sector is among those with
the highest multiplier effects in the economy by virtue of its ability to link with other sectors
and sub-sectors such as agriculture (catering food for tourists), transport (for people and
goods), industry (value addition of agricultural produce, paper and packaging products,
clothes), services (banking, security and entertainment) and utilities (telephone, water and
electricity), all of which creating employment and tax revenue for the Government.
According to the statistics provided by the World Travel and Tourism Council (2010) league
tables, Tanzania performs lower than the world average in terms of all three indicators,
namely: (i) tourism’s contribution to GDP, (ii) investment and (iii) employment. Although
32
Tanzania performs better than many of its neighbours, countries like Namibia and Gambia
consistently outperform Tanzania. Tanzania is ranked 86th
in terms of the absolute size of its
tourism industry (out of a total of 181 countries). This indicates the tremendous scope for
improvement in terms of contribution of this sector to the economy in the future, which needs
to be exploited.
Despite these potentials, the sector is still beset with problems related to poor infrastructure
and infrastructural facilities (to ensure smooth operations and comfortable travel and stay for
tourists), low investment in hotel facilities and trained manpower, and under-developed
international, regional and domestic markets. The main challenges faced by the tourism
sector therefore include: (i) the poor and inadequate infrastructure (in terms of connections to
tourist attractions), (ii) the lack of land use planning geared towards tourism development and
the emergence of uncontrolled tourism development (e.g the difficulties in developing beach
tourism), (iii) the limited budgetary system for conservation activities, (iv) the inadequate
skill level of the tourism-related technical staff, (v) the degradation of local natural resources
and the economic, cultural and social systems originating from mass tourism, and (vi) the
lack of reliable community tourist information centers.
2.9.3 Financial Services
Long-term sustainable economic growth requires the development of a sound and efficient
financial system that accommodates the coordinated development of three complementary
forms of finance, namely: bank finance, budgetary finance and other non-banking financial
services such as stocks and securities, micro-finance and insurance.
Bank finance operates through the intermediation of banks in compliance with relevant
regulations requiring asset security, capital and interest repayment. This type of finance is an
indirect form of financing, which translates into significant multiplier effects for the project’s
realization. Its effectiveness depends on the level of development in credit availability and
financial infrastructure. In order to fast-track the national economic development, bank
finance has to be used as a public policy tool as well as a commercial medium. Non-bank
financial institutions, such as insurance companies, mortgage providers, and pension funds,
are critically important for mobilizing savings and providing market-based safety nets.
In Tanzania, these three forms of finance are not balanced: the economy heavily depends on
government finance. The banking and securities markets are not developed enough to give
the required support to achieve sustained high levels of economic growth and development.
The financial sector as a whole is not very competitive, vibrant, and efficient and does not
reach the majority of the population. As a result, a lot of resources are not mobilized and
pooled together, and hence not efficiently allocated. This also limits the room for expansion
and diversification of investment opportunities, risk sharing, and easier exchange of goods
through effective payment systems. Furthermore, inadequate resource mobilization reduces
lending activity and maintains external financing barriers, and thus limits the expansion of
firm and entrepreneurial activities. Consequently, economic development as a whole is
constrained.
Tanzania’s financial system lags behind many developing countries in terms of domestic
credit and credit to the private sector (as percentage of GDP). According to the World Bank
data (WDI, (2012)), Tanzania’s domestic credit to the private sector (as a share of GDP)
stood at 16 percent of GDP, whilst the average for lower middle-income countries at the same
33
date was around 40 percent13
. According to URT-USAID (2011), due to the high risk nature
of agriculture, the share of credit to the agricultural sector has remained low at an average of
9.9 percent of total lending over 1990-2009. Increasing domestic credit to the private sector
will boost GDP growth and the country’s socioeconomic development.
But this also has to happen through an improved access to the financial services. According
to the 2009 FinScope survey, only 16.7 percent of the adult population was formally
financially included (i.e. using financial products that are supplied by institutions with a legal
precedent), the informally include represented 27.3 percent (i.e. using products from
institutions that operate without a recognised legal governance), and the excluded represented
around 56 percent. For comparison, according to FinScope, the financially formally included
represented 66 percent in South Africa (2008), 48.2 percent in Botswana (2004) and 47
percent in Namibia (2007). In order to deepen the financial sector in Tanzania, it is crucial to
increase the number of financially included people.
The financial market in the country is also relatively small compared to the lower-middle
income countries. For instance, according to the WDI database, the market capitalization of
listed companies (as a share of GDP) in 2010 was about 5.5 percent in Tanzania compared to
66 percent in lower middle-income countries. Besides, the total value of stocks traded (as a
share of GDP) in 2010 was about 0.1 percent in Tanzania, compared to 34 percent on average
in the lower middle-income countries. This highlights that there is a lot of scope for Tanzania
to develop its exchange market.
The rural sector access to credit is facilitated primarily through savings and credit
cooperatives (SACCOS), village savings and loan associations, and micro-finance
institutions. Among private sector businesses, micro and small enterprises reports the
accessing of finance as a major obstacle to their businesses (the World Bank Enterprise
surveys). But the main reason for the limited access to formal financial services remains the
dependence of large sections of population on agriculture and informal sector for their
livelihood.
2.9.4 Science, Technology and Innovation (STI) and Research & Development (R&D)
Science, technology and innovation (STI) constitute critical inputs to the development
processes, especially in an increasingly globalized, knowledge-driven economy. The
development of STI is a crucial component in the country’s socioeconomic development,
especially to increase the value and sophistication of the country’s production (namely
through an improved value-chain). Besides, research and development (R&D) is crucial in
increasing the sectoral productivity and general competitiveness of the country’s goods.
Science, Technology and Innovation (STI)
The STI policy and the needs of the economy should be closely linked, in order to be
efficiently supported by political leaders. According to the UNESCO (2011) report14
,
although policy instruments exist, at the institutional level, there is little recognition of the
importance of research and a marked resistance to change.
13
The average domestic credit to the private sector (as a share of GDP) for the low income countries in 2010
was around 28 percent, nearly twice as much as Tanzania. 14
UNESCO (2011): “The Review and Evaluation of the Performance of Tanzania’s Higher Education
Institutions”, June 2011
34
Also, the report emphasises on the quality of higher education and training, and how both
will be crucial to develop the country’s value chain beyond simple production processes and
products. The existing weak relationship between research and postgraduate studies affects
the credibility of universities in the eyes of external academic bodies and development
agents. Furthermore, there is no institutional or national mechanism for assessing research
performance. The report also highlights the “limited efforts in attracting the private sector,
individuals, business people, trade unions and community organizations into contributing
significantly to the national STI effort by the way of funding or shared sponsorship of
research programmes”. As a consequence, research tends to be lacking in quality and
relevance. This, in turn, discourages policy-makers and the private sector from using local
research outputs and prompts them to seek for research findings abroad.
As explained in the URT-USAID (2011) report, a country’s lack of innovation can be seen in
the diversity, value addition and sophistication of its exports. Whilst Tanzania has
successfully diversified its export base between 2001 and 2010, it has only marginally been
able to export higher value-added products. The report further suggests the country has a
relatively low level of export sophistication, which is further highlighted in the WITS (2012)
data, showing that Tanzania’s share of high-technology and medium-high technology exports
only represented 0.1 percent and 0.7 percent of total exports (on average between 2000 and
2005), and 0.5 percent and 3.3 percent of total exports (on average between 2006 and 2009).
For comparison, Vietnam’s respective shares were 18 percent and 8 percent of total exports
(on average between 2006 and 2009). Furthermore, the URT-USAID (2011) report also
highlights the low number of trademarks and patents issued per year in Tanzania, which
further shows the slow development in this sector in Tanzania.
It is within this context that agencies such as UNIDO and FAO work with the private sector,
especially small and medium enterprises, to improve the performance of value-chains through
enhanced STI. However, skills and readiness to adopt technologies remain the main challenge
for businesses and spin-offs. With the support of funds from Finland managed by the World
Bank, the Tanzania Commission for Science and Technology (COSTECH) has recently
started a Business Incubator for SMEs to try to improve their competitiveness. Other pre-
incubation and/or incubator programmes are managed by the Small Industries Development
Organization (SIDO) and the Dar Teknohama Business Incubator (DTBi). UNESCO’s
expertise in science, technology and innovation (STI) is required to enhance skills for the
development of technology-based SMEs.
Research and Development (R&D)
Tanzania lags behind in R&D. As a result the National Systems of Innovation (NSI) has
remained rather weak. In order to reverse this trend, the Government has committed itself to
annually apportioning at least 1 percent of GDP for R&D purposes. The weak linkages
between the education and research institutions and the private sector, coupled with the
inability of the agencies involved to commercialize their research and development (R&D)
and innovative products, means that Tanzania continues to spend funds for research that does
not provide any immediate valuable outcomes to its citizens.
The challenges facing science and technology in Tanzania are: (i) the inadequate funding of
research works, (ii) the lack of adequate knowledge and skills on modern and new
technologies, and (iii) the lack of coordination between the various research centres and the
stakeholders.
35
2.9.5 Information and Communication Technology (ICT)
The communications sector (telecommunications, broadcasting, internet and postal services)
in Tanzania has experienced a tremendous growth in the last few years, in terms of
deployment of infrastructures, service providers, types of services and products as well as
users. However, the sector is still at a very nascent stage, despite the recently experienced
growth. Tele-density has increased from 15 percent in 2006 to 57 percent in 2011. Mobile
phone subscribers have increased from 5.5 million in 2006 to over 25.7 million in 2011. The
number of tele-centres increased from 6 in 2006 to 22 in 2011. The number of data and
internet service providers rose from 25 in 2006 to 68 in 2011. There have been 29 TV stations
running since 2006, and this number is expected to increase with the development of digital
broadcasting. The number of radio stations has increased from 47 in 2006 to 81 in 2011.
The number of internet users (per 100 people) in Tanzania is lower than the sub-Saharan
average, while the percentage of firms having their own website matches the sub-Saharan
average (World Bank Enterprise Survey 2006). Tanzania is lagging behind countries such as
Botswana, Mauritius, South Africa, Malaysia, and even Kenya. On the other hand, Tanzania
has more radios per person (406) than most sub-Saharan countries (average 198).
Tanzania has the National ICT Broadband Backbone (NICTBB) infrastructure, with cross-
border connectivity to all neighbouring countries, and can thus serve as an ICT Regional Hub
in the future. The ICT backbone will enable high speed connectivity, which will facilitate
data transfer and increase efficiency in agriculture, transport, education, manufacturing,
commerce, health, tourism and indeed all other sectors, but also the Government
management. Other significant achievements alongside the internet exchange point (IXPs), is
the establishment of the Tanzania Network Information Centre (tzNIC) to manage the
country’s code Top Level Domain (ccTLD). The further development ICTs will reduce
transaction costs, time, and space barriers, translating into an increased competitiveness for
national goods.
The most important challenges facing ICT development in Tanzania includes the issue of
capacity building (human resources). This relates to the capacity to: (i) design suitable ICT
policies and regulations to foster ICT development, (ii) to run the regulatory agencies
effectively, (iii) to play out the important role of ICTs in creating an information/knowledge
based society, (iv) to connect with the global markets for trade and information exchange,
(iv) to enhance value-addition in the productive sectors, and (vi) to help improve social
service management.
2.9.6 Postal Services
A developed postal sector creates a sustainable environment for economic development in
any country. A modern postal system can provide logistical solutions to integrate data and
information flows, facilitate the physical movement of mails and facilitate financial
transactions (through financial inclusion). The post can offer ordering and delivery functions
for electronic commerce (e-commerce), and become a reliable centre which provides
payment services for businesses and customers (thus bridging the gap for digital divide). The
postal sector in Tanzania should ideally play a vital role in the development of the country by
providing, among others, efficient inter-sectoral physical communications. It should therefore
act as a catalyst to the socio-economic development of the country and the fulfilment of the
aspirations of the nation.
36
The National Postal Policy and the Electronic and Postal Communications Act (EPOCA,
2010) recognize the need to ensure the provision of basic postal services to the whole
population, whereas the Universal Communications Access Fund (UCAF) has been
established under the Ministry of Communications, Science and Technology to cater for
underserved rural and economically disadvantaged areas of the country.
The main challenges faced by the postal sector include: (i) the lack of operating capital,
which has led to the inefficient performance of the sector, (ii) the limited participation of the
private players in the postal sector, and (iii) the limited use of modern technologies (i.e
electronic and postal communication) so as to satisfy diversified customer needs.
2.10 Demographic Transition Related Issues
2.10.1 Population Dynamics
Demography: Tanzania faces a high demographic pressure which is posing a development
challenge for the country. Tanzania’s population almost tripled between 1967 and 2002 (the
year of last population census), when the estimated total population of Tanzania was around
34.4 million people, almost equally divided between males (49 percent) and females (51
percent). According to the Economic Survey (2010), Tanzania’s population grew at an
average annual rate of around 2.8 percent between 2000 and 2010 (which can be explained by
the high fertility rate among Tanzanian women, at around 5.4 children in 2010). By 2010 the
total population was estimated at 41.9 million (in Tanzania mainland). If the population
growth rate remains around 2.8 percent for the next 15 years, Tanzania’s population is
projected to reach around 63 million people in 2025.
The present population profile and its dynamics have far reaching implications for the
country’s development and especially poverty reduction. Two major factors will determine
Tanzania’s future economic growth prospects: (i) the growth in the working-age share of the
population, and (ii) the institutional quality (including good governance, government
stability, lack of corruption and a stable business environment that encourages the
participation of domestic and foreign investors).
Positive national outcomes and a window of opportunity to save, also known as the
demographic dividend (or bonus), can result from having a large and better educated
workforce with fewer dependent children to support – children who will in turn be more
educated and employable.
This increase in population means that GDP must grow even faster in order for Tanzania to
reach middle-income status (given the ‘per capita’ nature of the threshold). Thus, even
though an increase in the population is a boon with regard to increased labour force and an
increased pressure for innovation, the challenges that such a growth poses with regard to
economic growth and improved social services are daunting. To start with, the dependency
ratio tends to be large, thus imposing a burden on the labour force. Further, public
expenditure on such social services as education and health must increase to cope with the
increased population. The increased labour force will only prove a boon if sufficient
employment opportunities are created to guarantee a productive engagement. The increased
population shall also inflict pressures on the environment in terms of extensive urbanization,
encroachment of marginal land and the general overexploitation of natural resources.
37
Youth: Tanzania, like many other developing countries, has a very young population.
According to the Economic Survey (2010), more than 64 percent of the total population was
younger than 24 years old in 2010. This division brings about a series of challenges (related
to skills development, education and employment), but also represents a formidable
opportunity to boost future growth.
Tanzania’s youth can be the driving force behind economic prosperity in future decades, but
only if policies and programmes are in place to enhance their opportunities. Many youth are
engaged in sectors like agriculture, fishing, mining, animal husbandry and small-scale
industries like carpentry and black smith, and finally other small businesses services
(particularly sales activities).
In 2007 the Government reviewed the 1996 National Youth Development Policy to bridge
the gaps and challenges faced in its implementation. The reviewed policy aimed at providing
direction to youth, partners and other stakeholders on youth development issues. The study
highlighted a series of challenges that the youth are currently facing in Tanzania, and the
most important ones are: (i) a failing education system (where youth leave after primary
school given the lack of absorption in the secondary school system), (ii) a lack of training and
business skills (given the discrepancy between the taught skills and the needs on the job
market), (iii) inadequate credit facilities (reducing the potential for self-employment), (iv)
unattractive agricultural and rural areas (forcing the youth towards urban areas), and (v)
inadequate information (about the training and job possibilities). As can be easily understood,
one of the main consequences of these features is high youth unemployment, and having a
large unemployed youth group could potentially lead to social unrest, as they would start
engaging in illegal and/or potentially dangerous activities.
Rural-Urban Migration: Rural-urban migration in Tanzania is mainly driven by the
probability of securing employment/income in urban areas (given the scarcity of regular
income jobs in the rural areas), the existing real income differences between urban and rural
areas, and the expectation of a higher quality livelihood in urban areas (given the better
access to health services, transport, education and recreational facilities). The paradox is that
this migration continues despite the unemployment and underemployment in urban centres.
The youth have a tendency to migrate the most. The main consequences of this migration are
(i) reduced production in rural areas (especially in the agricultural sector), and (ii) pressures
on housing and settlements in urban areas (which will be dealt with in the following section).
2.10.2 Urbanisation
Like many other developing countries in Africa, Tanzania is currently experiencing a rapid
urbanisation, usually positively related to a country’s growth and socioeconomic
development. According to the WDI (2012) and the NBS (2011) data, between 2000 and
2010, the share of the population living in urban areas increased from around 22 percent to
around 26 percent (meaning a decrease of the share of rural population from around 78
percent to 74 percent). It is likely that the major urban areas, namely Dar es Salaam, Mwanza,
Tanga, Arusha and Mbeya, will continue to experience rapid population growth between
2010 and 2025. According to the UN-HABITAT report (2010) on the state of African cities,
it is likely that much of the urban growth will happen in Dar es Salaam, as it is one of the ten
fastest growing cities in Africa. As explained in the IGC-POPC (2011) paper, if this trend
continues, it is projected that around half of Tanzania’s population will be living in urban
areas by 2030.
38
The skewed population growth towards urban areas has put a strain on the Government’s
capacity to provide the necessary infrastructure and services to maintain a decent living
environment in urban areas. The main consequence is that in 2010, around 70 percent of the
urban dwellers were living in unplanned settlements, with inadequate road, transport,
housing, water, sewerage and sanitation, and electricity services.
But the rapid urbanisation will also, eventually, have an impact on economic growth and
socioeconomic development. This is because the other two main effects of it are (i) the
increase in cost of living and doing business in urban areas (given an excess demand for
majority of goods and services, and an increased transportation and congestion problem,
leading to a general loss of productivity and competitiveness), and (ii) the pressure on the
labour market (and the current incapacity to provide decent employment for the increased
population, especially for youth, which will be dealt with more in detail in the following
section). The challenge for the next 15 years is to efficiently address the growth of urban
areas by making sure the population continues to enjoy high quality public and private
services, whilst enforcing the business environment and overall productivity.
2.10.3 Employment
National employment: The economic reforms that Tanzania has undertaken since the mid-
1980s have translated into an increased size of informal employment. According to the 2006
Integrated Labour Force Survey (ILFS), in 2006 Tanzania had a workforce of about 18.8
million people out of which 16.6 million (equivalent to 88.3 percent) were employed and
about 2.2 million (equivalent to 11.7 percent) were unemployed. However, the percentage of
the unemployed workforce has slightly fallen from 11.7 percent in 2006 to 10.7 percent in
201115
. The ILFS (2007) also highlighted a number of important trends. First, the largest
share of unemployed according to the age group is the youth. Second, unemployment is the
highest in urban areas (partly explained by the increased rural-urban migration). Third,
female unemployment remains higher than male unemployment. Fourth, agriculture remains
the largest employer (employing about 76.5 percent of the population in 2006). Even if the
share has been declining since 2000/01 (when it represented about 84.2 percent of total
employment), its share remains far above any other public or private employer. Finally, there
is an increase in the number of informal workers: according to the ILFS (2007), in 2006
around 40 percent of all households in Tanzania Mainland had informal sector activities,
compared to 35 percent in 2000/01.
The one percentage point drop in the unemployment rate over the five years period does not
suffice to meet the goals set by the national programmes specifically designed for economic
development and poverty reduction. For example, earlier projections under the National
Strategy for Growth and Reduction of Poverty (NSGRP, popularly known by its Kiswahili
acronym MKUKUTA) show that the unemployment rate was targeted to have dropped to
seven percent by 2010.
Youth employment: According to the 2006 Integrated Labour Force Survey (ILFS), the 25-34
years age group represented the largest age group in the labour force. The survey results also
showed that the unemployment rate of youth aged 15-24 years is the highest, at 14.9 percent,
compared to 10 percent for the adult unemployment rate and 11.7 percent for the total
unemployment rate. Also, the ratio of the youth-to-adult unemployment rate was 1.4,
indicating that youth are nearly one-and-a-half times more likely to be unemployed than
15
See: http://www.tradingeconomics.com/tanzania/unemployment-rate
39
adults. According to the 2007 revision of the National Youth Development Policy, around
700,000 youth (from primary, secondary and tertiary education) enter the labour force each
year, but only around 40,000 get employment into formal sector.
An increasing number of school leavers who complete primary school, secondary school and
tertiary education each year, join this pool of unemployed. Therefore, creating adequate and
decent employment, especially for the youth, continues to be one of the main challenges in
Tanzania. This will have to happen through programmes (i) that will develop the youth
human and business skills (through education and training cycles which are in line with the
job market needs), (ii) that improve the business environment (including the access to credit)
in the rural and urban areas, (iii) that will prioritise initiatives which have a high employment
creation potential throughout the FYDPs, and (iv) that will foster youth empowerment.
2.11 Human Capital Development and Social Services
Human capital is a vital resource for achieving the outcomes spelt out in TDV 2025.
Development of this resource calls for specific interventions in education, training and health.
The various other social services analysed below (namely water supply and sanitation, sports,
entertainment, media and culture) will further foster and facilitate this human capital
development.
2.11.1 Education and Training
The drive for higher achievements in education in Tanzania reflects the need to fill the gaps
in skills and address the low levels of literacy and enrolment. From the immediate post-
independence period, the country made deliberate efforts to expand primary education and
adult literacy in order to fill basic skills gaps. The rapid political, social and economic
changes which happened in the country called for further investments in higher levels of
education and training.
The State championed investments in education until the mid-1990s when provision of
education service was liberalized at all levels, leading to rapid expansion in both education
infrastructure and enrolment. This enabled Tanzania to record rapid success in terms of
enrolment, to the extent of being on the right trajectory to achieving the MDG targets before
2015.
Over the 2000-2010 period, there has been a rapid growth in primary and secondary
enrolment, mainly driven by policy interventions. Enrolment in public secondary schools, for
example, increased from 149,762 in 2000 to 1,401,330 in 2010, a more than nine-fold
increase. In 2010, enrolment in both public and private schools stood at 925,465 pupils in
pre-primary school level; about 8,419,305 in primary schools; about 1,638,699 in secondary
level; about 36,648 in teacher education; and 118,951 students in universities and their
constituent colleges. The capacity of technical and vocational training is very small, only
enrolling about 100,000 per year.
The main challenges facing the education sector include: (i) high teacher/student ratios at
lower levels, (ii) ensuring quality education, (iii) low participation at higher levels of
education (especially for females), and (iv) education funding (especially at tertiary level). In
addition, the education system is unable to produce the required skills, in terms of both
number of people and required skill type.
40
In terms of skills, a study conducted by IGC-POPC (2011) showed that low skilled workers
dominate the work force (84 percent), followed by medium skilled (13 percent) and high
skilled (3 percent) workers. The composition of an average lower middle-income country
(LMIC) is 55 percent of low skilled, 33 percent of medium skilled, and 12 percent high
skilled workers. Thus Tanzania is challenged to improve the skill mix in order to attain a
middle-income country skills set by 202516
.
2.11.2 Health
The need to address health sector issues has a long history. High prevalence of diseases and
near absence of local trained health personnel in the immediate post-independence period
explains much of the continuing efforts in this sector. Modest achievements have been
recorded in certain indicators such as life expectancy, child mortality, child immunization,
prevalence of malaria etc., while in others (such as maternal mortality) a lot remains to be
done.
The health system is managed along administrative levels of regions, districts, councils and
villages. In 2010 the levels included 21 administrative regions, 113 districts, 133 councils and
about 10,342 villages. Primary services form the basis of the pyramidal structure of health
care services. Both the public sector and private providers (including charity organizations)
deliver health services. In 2010, the country counted 6,321 health facilities. Of the 230
hospitals in the country, the Government owned 97, parastatals 5, and private and charity
organizations 128 (55.7 percent). There were 684 health centres, with 449 (65.6 percent)
being Government-owned. The Government also had the highest number of dispensaries,
3,773 (73.5 percent) out of a total of 5,132.
The main causes of morbidity and mortality are malaria, tuberculosis (TB) and HIV/AIDS.
Malaria accounts for 30 percent of the national disease burden. In 2010, about 32 million
people (76.4 percent of the population) lived in areas with stable malaria transmission.
Incidence is estimated to be between 14 and 18 million cases per year. In addition, malaria is
responsible for between 100,000 and 125,000 deaths per year, with between 70,000 and
80,000 of these deaths occurring amongst children aged below 5 years. The TB and active TB
infection has rapidly increased, due primarily to the HIV/AIDS pandemic. The incidence of
TB is increasing at a rate of 5-10 percent annually, with most cases occurring in the 15-49
year age-group.
The main challenge facing the health sector is low financing and inadequate human
resources. Improved financing for the health sector is critical, especially in capital investment
to expand health service network and ensuring preventive and care treatment standards.
Concerning the human resources in the sector, the ratio of professional medical staff per
inhabitant in 2010 was at 1:10,000, compared to an average ratio of 1:1,000 in low-income
countries. Other challenges include: (i) low capacity at local Government level, (ii)
insufficient medicines, medical supplies, modern equipment and specialised medical staff
(especially dentists, cardiologists, orthopaedists and neurologists), (iii) low health service
coverage to the poor, (iv) low promotion of healthy habits among the population, and (v) low
coverage of health insurance.
16
The statistics related to the skills gap and number of skilled worker per sub-sector can be found in annexes 1
and 2.
41
2.11.3 Water Supply and Sanitation
Tanzania is well endowed with water resources that can be used for domestic consumption
and commercial ventures such as in industries and agriculture. A range of technologies is
used for harnessing the resource. The supply system is divided mainly into rural and urban
segments. Implementation of the National Water Policy of 2002 changed the landscape of
water provision in terms of both policy and practice.
The water sector is governed by the Water Sector Development Programme (WSDP) with
four main components: (i) Water Resource Management, (ii) Rural Water Supply and
Sanitation, (iii) Urban Water Supply and Sewerage, and (iv) Institutional Strengthening and
Capacity Building.
In 2010, the water sector recorded a growth rate of 7.8 percent in real terms (the highest rate
in the last decade) and contributed 0.4 percent to GDP.
In terms of coverage, in 2010, about 86 percent of residents in regional towns had access to
water, compared to 53 percent in district townships and 55 percent for Dar es Salaam, Kibaha
and Bagamoyo. The situation in Dar es Salaam is explained by the dilapidated water supply
infrastructure and the increased demand for both industrial and domestic use of water.
Coverage of water supply in rural areas was 57.8 percent in 2010.
With regard to sanitation, the proportion of population with access to improved sanitation
facility stood at 21 percent in rural areas and 34 percent in urban areas, while only 18 percent
of the population had access to a sewerage system.
Water supply and sanitation coverage are challenged by dilapidated infrastructure, pollution
of water sources and low coverage in rural areas.
2.11.4 Sports
Sports involve all forms of physical activity which, through casual or organised participation,
maintains or improves physical fitness on the one hand but also provides potential source for
employment generation, poverty alleviation and export of talents commercially. Well-
designed sport-based programmes that are integrated with other community level
interventions can positively promote healthy lives of children and youth, as well as adults.
Sport also inculcates self-esteem, excellence and social cohesion. In its absence, negative
relationships, aggression and violence, racism, gender discrimination, psychological, sexual
and commercial exploitation and abuse have a higher probability to develop.
The National Sports Council (NSC) in the Ministry of Information, Culture and Sports is an
important institution in the development of sports in Tanzania. One of NSC’s core functions
is the coordination of the sports associations, which are arranged at national, regional and
district level. The department of sports development runs short and long training courses.
The sector is guided by the National Sports Development policy (1995) and the National
Sports Council Act (1967) revised in (1971). The Sports Development Policy is a framework
that encompasses both public and private sectors in sports development activities.
42
Promotion of sports in Tanzania is undertaken by both the Government and the private sector.
Sporadic successes characterize the achievements in this sector. The main challenges of
sports include the following: (i) increasing the number of sport centres to attract youth in
sport activities, (ii) create sport academies to provide high-quality training in a range of
sports, and (iii) include youth and children as a future investment.
2.11.5 Entertainment
The entertainment industry cuts across sports and culture, though has distinct activities such
as cinema and film industry, music, etc. There are various organs that oversee activities in
this area. In recent years, the industry has emerged as a source of employment and income
generation, both within and outside Tanzania.
The main challenges facing the industry include: (i) the lack of performance theatres and
high-quality recording studios, (ii) piracy of artistic works (and the related necessity to offer
and incentivise the use of efficient ways to secure intellectual property), and (iii) non-
observance of social norms and values.
2.11.6 Media
In Tanzania, media activities are guided by the Information and Broadcasting Policy (2003),
aimed at bringing Tanzanians in line with international standards and trends. The policy
recognizes the success and importance of the Media Council of Tanzania (MCT), a self-
regulatory mechanism. The MCT is an independent, voluntary, non-statutory self-regulatory
body established by the media fraternity on June 30th
1995 Media activities are also regulated
by the Tanzania Communications Regulatory Authority Act (2003).
The media is a key player in the development of the nation as it reduces transactions cost
such as in linking the Government with the citizens. The media plays a pivotal role in
informing citizens on multidisciplinary issues, using various ways, including broadcasting
(television, radio, video, etc.), print media (newspapers, books, magazines, ect.) and new
media (internet, blogs, etc.). Over the years there has been an increase in the number of media
companies as well as commercialization in Tanzania.
The media industry faces a number of challenges, including limited training of journalists,
with the result that unemployed youths enter the profession without formal training. This
shortfall has been attributed to insufficient allocated resources by both the public and private
sector to support professional and editorial training.
2.11.7 Culture
The policy on culture (1997) defines culture as all aspects of the lives of people that
distinguish them from other people. Culture is a complex fabric of “hard” and “soft”
attributes related to the way people live. The former includes works of art, heritage sites, etc.,
while the latter covers issues such as attitude towards development and work, honesty, moral
values, identity, language, etc., for promoting social cohesion. The “hard” part of culture has
not realized its full potential, mainly due to problems of marketing.
The “soft” part of culture, on the other hand, has been facing a different set of challenges
related to erosion of confidence, developmental mind-set in favour of defeatism and laissez-
faire, degeneration of morals, ethics and values, loss of sense of belonging and nationalism,
consumption instead of saving, loss of zeal of competitiveness and excelling, etc.
43
2.12 Governance
Governance is the manner in which a Government or State controls or rules over its territory
and the people which it judicially controls. It encompasses the State’s institutional and
structural arrangements, decision making processes, implementation capacity and the
relationship between Government officials and the public they serve17
. The prevalence of
good governance is therefore crucial for the fruition of any national development aspirations.
Good governance calls for a system of public management which is transparent, responsive to
popular interests, responsible and accountable, and where officials in the exercise of public
management are capable, efficient, ethical, professional and conduct their duties in the
interest of the served public.
The universally accepted features of good governance are the exercise of legitimate political
power, and formulation and implementation of policies and programmes that are equitable,
transparent, non-discriminatory, socially sensitive, participatory, and above all accountable to
the people at large. By creating the conditions for orderly and equitable wealth creation and
distribution processes to take root and empowering the citizenry enforce accountability of
their leaders, good governance helps secure human well-being and sustained development.
On the other hand, poor governance could well erode the individual capabilities, as well as
institutional and community capacities to meet the needs of sustenance.
In Tanzania, efforts at improving governance in general have aimed at ensuring that (i) the
rule of law prevails, (ii) leaders and public servants are accountable to the people, (iii)
democracy, political and social tolerance is deepened, and (iv) that peace, political stability,
national unity and social cohesion are cultivated and sustained. In order to achieve these, the
focus has been directed at:
Improving Structures and Systems of Governance
From the late nineties, in response to what was perceived to be difficulties in the management
of public sector, a significant number of new institutions and legislations aimed at improving
economic management were created. These include:
The establishment of Tanzania Revenue Authority to administer revenue collection;
The introduction of the Integrated Financial Management System (IFMS) and
regional sub-treasuries with the aim of increasing efficiency of budget management;
The establishment of Parastatal Sector Reform Programme to manage the
privatization process;
Reinforcing the powers of the Controller and Auditor General (CAG),
Strengthening public administration (appointment of a Minister of State responsible
for good governance);
Formation of a ministry responsible for regional administration and local government;
Formation of the Prevention of Crime and Corruption Bureau (PCCB) to lead the
fight against corruption;
Restructuring the government through a Civil Service Reform Commission which
culminated in the formation of the President’s Office – Public Service Management
(PO-PSM)),
Instituting and strengthening rule of law (formation of Commission for Human Rights
and Good Governance (CHRAGG); establishing and implementing a Judiciary
Reform Programme; formation of a commission to review the Union constitution),
17
Paraphrased from: URT, (2000), Composite Development Goal for the Tanzania Development Vision 2025.
44
Creating conditions for a vibrant private sector to thrive (establishment of the
Tanzania Business Council as an organized legitimate forum for public-private
dialogue in an effort to improvement government-business relations) and fostering
political tolerance and freedom of speech (enactment of a law establishing a free trade
union movement;
Establishment of the Office of the Registrar of Political Parties;
Enhancing the participation of opposition Members of Parliament in key
parliamentary committees overseeing governance issues; and
The enactment of new laws governing aspects such as the Election Expenses Act
under a multiparty system.
In 1999, following an attempt to take a holistic approach in improving its governance,
Tanzania adopted a National Framework on Good Governance (NFGG). The framework was
to guide deliberate interventions to improve governance by giving guidance on the priority
areas and timing at which targeted interventions would be undertaken the respective key
players in the country’s governance system.
Public Administration Effectiveness
A public administration system is effective if it is capable of ensuring the economic, social
and political demands of the day, and is adequately and timely responding with policies and
processes that are low in administrative cost, well targeted, fair, transparent, and meet the
tests of national interest18
. Besides the reforms displayed above, Tanzania is implementing its
Local Government Reforms Programme (LGRP) which includes operationalizing a
Decentralisation-by-Devolution (or D-by-D) policy. These reforms were introduced, among
other things, in order to help the administration improve service provision through bringing
the decision making process related to the provision of services closer to the people. It is
envisaged that this will make the Government and its service delivery systems (e.g. systems
for quality and efficient delivery of services like issuance of certificates, property rights, land
ownership, birth registration, vital registration, etc.,) more responsive, efficient and effective.
Gender-balanced inclusion in all socio-economic processes
In realizing that women, who roughly constitute about 50 percent of Tanzania’s population,
when adequately empowered constitute a potent force for economic, social and political
development, the Government has made considerable efforts to make sure gender issues are
integrated in planning and budgeting processes of a number of socio-economic activities.
These efforts have aimed at reducing the existing gender imbalances and inequalities in the
society that could potentially prevent the society from realizing its full development potential.
These efforts have started to bear fruit with gender patterns in employment, with farm and
non-farm activities changing considerably in Tanzania. Over this period, an increasing
number of women have become active in market-oriented activities, and more responsible for
providing cash needs of the household. Women are in the forefront in expanding micro and
small enterprises in what is often referred to as the informal sector. More material on this
item is located in the section specifically dealing with the topic.
18
“Efficiency, Effectiveness and Equity in Public Administration”. Speech by Pru Goward, (2005), Institute of
Public Administration National Conference, Wrest Point Conference Centre, 410 Sandy Bay Road, Sandy Bay,
Tasmania, Friday 4 November 2005.
45
Maintaining Peace and Security
Political stability has characterized the country since its independence in 1961. The country
successfully transited to a multi-party political system in 1992, after more than thirty years of
a one-party system Government. Maintaining political and social cohesion and the resultant
peace and tranquillity despite the existing differences of opinions and diverse political and
religious orientations has been no easy feat. It has been built over a compact social fabric,
which recognises the equality of all men and women, and strives to broaden and increase
equitable access to primary means of production as a critical factor in strengthening and
sustaining the prevailing social tranquillity and political stability. Tanzania has also been
actively engaged in a number of conflict resolution, mediation and peace keeping efforts
initiatives in the region in order to help restore order in and for the benefit of the affected
countries and to minimize the risks of those conflicts spilling over to Tanzania.
These efforts at improving governance notwithstanding, corruption, outdated and
contradicting laws and regulations, delayed judgments in the courts of law, selfishness and
unpatriotic leaders fail to make decisions in the national interests, erosion of the culture of
honesty and decency among the population, and undemocratic decisions are cited as main
impediments to achieving the level of good governance intended by these reforms19
.
According to the Worldwide Governance Indicators (WGI), the Government’s effectiveness
in 2009 had declined compared to the rating in 2000 or 2005. It is noteworthy that within the
EAC region, however, the Transparency International’s ranking shows Tanzania is being
surpassed by Rwanda only as the least corrupt in the region. Therefore, the challenge ahead
for Tanzania is to intensify the depth and pace of interventions aimed at mobilizing public
efforts and opinion towards zero tolerance to corruption, improving and strengthening
leadership and governance systems so that the kind of mind-set and quality of leadership
needed to oversee the intended social re-engineering for improved governance and rule of
law is put in place.
2.13 Private Sector Development
The Government has continued to improve the business environment for private sector
development. As a result, the country has witnessed an upsurge in private sector investments.
The business environment strengthening for Tanzania (BEST) program which began in 2003,
was designed to address the key constraints in the legal and regulatory environment and to
promote private sector development. Subsequent to the culmination of the first phase of
BEST program, Tanzania was ranked the 10th
best country in the world on improving
conditions for doing business according to the Doing Business Survey in 2007. In 2010,
Tanzania was ranked 122nd
in the world, better than Kenya and Uganda in business start-up
costs.
In 2010 the Government approved the creation of the Business Registration and Licensing
Authority (BRELA) in the spirit of implementing the “one stop centre” concept. During
2010, about 509 projects worth TShs. 5.1 billion, with an employment creation of 43,640,
were registered. The manufacturing sector was the main channel of private investments,
totalling 183 projects valued at TShs. 0.71 billion and creating 14,327 employment. In 2010,
Foreign Direct Investment (FDI) inflows amounted to USD 700 million, compared to USD
645 million in 2009, representing an increase of 8.5 percent.
19
ESRF (2010). Review of the Tanzania Development Vision 2025
46
Tanzania has an enormous informal sector, indicating active private sector participation in the
economy. According to IFC, in 2010 about 55 percent of Tanzania’s GDP was generated
within the informal sector and 95 percent of Tanzanian enterprises were estimated to be
informal. Transforming this informal private sector into a formal sector is a huge challenge
facing the Government.
The Tanzanian Government has taken a special interest to bring forth private sector
participation in large infrastructural and industrial investments. Public Private Partnerships
(PPPs) are increasingly been looked upon as an instrument to achieve this end. Government
has formulated a new PPP Act to facilitate this process further.
Along with the development of the private sector there is a need to ensure a strong culture of
corporate governance and corporate social responsibility among the private sector firms.
There should be accountability, transparency and fairness in all operations pertaining to
private businesses. Also, firms should be encouraged in their profit sharing activities through
corporate social responsibility initiatives.
2.14 Cross-cutting issues
2.14.1 Gender
The Government of Tanzania made considerable efforts to minimize gender imbalances and
inequalities in the society that would ultimately prevent the society from realizing its full
economic, social and political development potential. Significant efforts have also been made
to promote women’s participation in political and leadership positions. As a result, the
proportion of women in leadership position has reached 30 percent20
. Women’s participation
in public service has also increased from 20 percent in 2004/05 to 22 percent 2008/09 and 25
percent in year 2011. Gender equity in both private and public schools exhibit a positive trend
and there is a decrease in domestic violence. However there is a challenge of reducing gender
differences in accessing primary and secondary school at regional level. On account of these
developments, a World Bank rating which measures gender equality by the extent to which a
country has installed institutions and programmes to enforce laws and policies that promote
equal access for men and women in education, health, the economy, and their protection
under the law, Tanzania was given a rating of 4 (out of 6) in four consecutive years until
2009. The assessment indicators range from 1 (= low equality) to 6 (= high equality)21
.
The strides made in gender mainstreaming notwithstanding, challenges remain in addressing
imbalances in the rural areas where about 90 percent of women, engaging in agriculture and
livestock keeping for their livelihood, do not have equal rights to assets (including land) and
have limited access to finance and education. Hence they are vulnerable to poverty.
Furthermore, there is unequal representation of women in tertiary education, where only 33
percent of tertiary students are women. Under-representation continues at the Technical and
Vocational Education Training (TVET) level. Girl’s representation in technical training
varies widely by course: for example, 17 percent in engineering and other sciences, but up to
64 percent in health and allied science. Overall women representation in TVET is 43.2
percent. Therefore further resolute actions and concerted efforts are still needed in order to
improve the situation.
20
This is calculated as the number of women in parliament as a share of total. 21
ESRF, (2011), Review of the Tanzania Development Vision.
47
2.14.2 HIV and AIDS
The HIV/AIDS pandemic is a major threat to the workforce needed for production and
creation of wealth. The disease is responsible for increasing the economic burden to the
economy, given the burden on the households and the reduction of productivity across.
According to the PHDR (2009) report, HIV prevalence amongst adults (15-49 years) has
declined for both males and females, and across most age groups. Nevertheless, this data
should be interpreted with cautious optimism, as in 2011 Tanzania was ranked 4th
in the
world in terms of absolute numbers of AIDS-related deaths (CIA Factbook, (2011)).
However, the prevalence rate at regional level varies with wide margins. For instance, Dar es
Salaam recorded a 9 percent prevalence, while it was 15 percent in the Iringa region.
Nevertheless, HIV/AIDS-related care and treatment has increased, and the number of sites
offering voluntary counselling and testing has been multiplied by three during the last ten
years. Mother to child transmission has been fairly low, indicating the good performance of
MCT programmes and the increase in their number. It should be known that the major
problem within the battle against HIV/AIDS is the lack of coordination, and in most cases the
actors do not really understand the roles and mandates of each of the parties involved.
In the longer term, the focus will continue to be on ensuring the minimization and eventual
halting of the virus’s transmission, while forging ways of reducing the impact of the disease
on those already affected.
2.14.3 Environment and Climate Change
Concerns about the state of the natural environment are high in Tanzania, given the
overdependence on primary resources, especially in agriculture. A number of legislations
have been passed, among which was the creation of the National Environment Management
Council (NEMC), and compulsory Environmental Impact Assessment (EIA) for any project
with a potentially significant environmental impact. Another major project is the Marine and
Coastal Environmental Management Project (MACEMP), targeting environmental
conservation is marine ecosystems. Tanzania has also implemented a number of programmes
designed to enhance the capacity to mitigate the adverse impacts of climate change and
disasters, both natural and human-made. In addition to these efforts, the Government is
actively engaged in global initiatives such as the Global Environment Facility (GEF) and has
ratified a number of protocols.
Climate change is a major concern, as a large proportion of GDP is dependent on climate
sensitive sectors (especially agriculture). For instance, the Tanzania’s National Adaptation
Programme of Action (NAPA) (2007) estimates that projected temperature and rainfall
changes could decrease the average annual maize yield by 33 percent. In the future, some
areas of northern Tanzania will get more humid (between 5 and 45 percent), whilst others,
especially in the south, will experience severe reductions in rainfall (up to 10 percent). This
change in rainfall would make the central, western and southern part of the country
unsustainable for agricultural production.
Climate change will also have an impact on biodiversity, as it will affect wildlife, migratory
patterns, pests and diseases, and the strain for resources will become more prominent.
Already, 14 species of dry country birds have responded to a drying climate and have
expanded their range. Climate change brings certain health hazards as well: Malaria is
already being observed in places where its prevalence is traditionally very low.
48
A recent study by DfID and GoT revealed various economic impacts of climate change.
Current climate change variability already costs Tanzania around 1 percent of GDP annually.
This could go up to 2 percent of GDP by 2030. An additional 0.3 million to 1.6 million
people will become vulnerable to sea level rising by 2030. Coastal cities like Dar es Salaam
are extremely vulnerable to sea level rises, as 8 percent of Dar es Salaam’s land area is
potentially vulnerable to sea level rising.
About USD 500 million is required annually to reduce current vulnerability to climate
change, and a further USD 100-150 million per year will be required to build capacity and
enhance resilience to future climate change. The Global Climate Change funds will prove to
be a good source to support the Government initiatives in both adaptation and mitigation
measures.
2.14.4 Social Protection
One of the formidable challenges of human development in Tanzania has been poverty,
manifested in the inability of a significant proportion of the population, namely the poor and
other disadvantaged groups, to maintain a stable consumption pattern (especially in times of
risks and uncertainties).
A key intervention that has been able to address this situation is the Social Framework,
defined to include traditional family and community support structures as well as
interventions by State and non-state actors that support individuals, households and
communities to prevent, manage, and overcome shocks and risks threatening their security
and well-being. The ultimate aim of social protection is to enable the poor and vulnerable to
take advantage of opportunities available to fast-track their socio-economic development.
There are many forms of social protection schemes in Tanzania, covering a wide variety of
public and private measures meant to provide benefits in the event of an individuals’ earning
power permanently ceasing, being interrupted, never developing or being unable to avoid
poverty. The major domains of social security are: poverty prevention, poverty alleviation,
social compensation and income distribution.
The social security system in Tanzania has the following key elements:
Social assistance schemes which are non-contributory and income-tested, and
provided by the State to groups such as people with disabilities, elderly people and
unsupported parents and children who are unable to provide for their own minimum
needs. The Ministry of Health and Social Welfare (MHSW) in particular, provides
services under its Health Sector Strategic Plan III with particular focus on extending
healthcare to the poor and most vulnerable groups, as well as supporting and
providing treatment for those with HIV and AIDS.;
Mandatory schemes, where people contribute through employers to pension or
provident funds. Employers also contribute to these funds;
Private savings, where people voluntarily save for retirement, working capital and
insure themselves against events such as disability and loss of income and meet other
social needs.
By 2010, there were six major contributory Government schemes in Tanzania, namely:
i. National Social Security Fund (NSSF) for employees of the private sector and
Government employees;
49
ii. Public Service Pension Fund (PSPF) for Government employees who are eligible;
iii. Parastatal Pension Fund (PPF) for employees of both private and parastatal
organizations;
iv. Local Authorities Pensions Fund (LAPF) for local Government employees;
v. Government Employees’ Provident Fund (GEPF);
vi. National Health Insurance Fund (NHIF).
Non-contributory services are provided by the Ministry of Health and Social Welfare
(MoHSW) in collaboration with the Ministry of Labour, Employment, Youth Development
(MLEYD), the Ministry of Education and Vocational Training (MoVET), and the Ministry of
Community Development Gender and Children (MCDGC).
A number of challenges face existing social protection schemes, including the inability to
provide stable services to members, low coverage, inadequate coordination, high service
costs, inadequate funding, irregularities in investment, and low transparency and
accountability.
50
CHAPTER III:: STRATEGIC DIRECTION
3.1 Introduction
The previous chapter provided a comprehensive situational analysis of Tanzania across
sectors. It highlighted that the formidable task of economic transformation often triggers a
number of challenges, both internal and external. The most critical internal challenges, which
haunted past planning exercises and are likely to remain obstacles to the realisation of LTPP,
include:
a. Resource mobilisation, to adequately and timely deploy for the implementation of
LTPP;
b. Supportive infrastructure (transport, energy, water and communication), which will
require increased investment in these areas.
c. Implementation capability, which has historically proved to be a challenge;
d. Change of the developmental mind-set within the society at large so that everyone
plays the assigned part with commitment, along with an increased political will;
e. Ensure the country’s industrialisation will generate the maximum employment and
will not lead to increased inequality.
Among the external challenges the country has been facing, and will continue to face in the
foreseeable future, are:
a. Uncertainty in the global economy, where Tanzania has minimal or little control;
b. As the 2008/09 Global Financial Crisis clearly showed, the fate of developing nations
with high dependence on export earnings, aid, etc., remains that of vulnerability;
c. Climate change effects on the economy, with adverse effects on agricultural
productivity.
Besides those challenges, the country also has the chance to capitalize on various
opportunities, such as:
a. Given the country’s strategic geographical location and the booming EAC market, the
country has the chance of becoming a trade and transport hub for the entire region;
b. Large natural resources (mainly hydrocarbons and minerals) which (i) the country can
exploit and use to finance development projects (that will eventually boost growth and
poverty reduction), (ii) will increase the country’s exports and improve the trade
balance, and (iii) help boost the growth in the industrial sector (by providing more
raw materials);
c. The quantity and quality of untapped land in Tanzania, coupled with the relatively
low current productivity in the sector, also gives the country an opportunity to
significantly increase the output in the sector, which will help develop the agro-
processing, generate increased income for the most vulnerable, and help limit the
demographic shift towards urban areas;
d. Tourism and financial services, if developed efficiently, will be able to generate
increased foreign reserves and develop the agricultural and industrial sector.
All sectors of the economy therefore represent an opportunity for the country to significantly
increase the growth rate and poverty reduction trends. The aim of the LTPP is therefore to
highlight, in each of them, the challenges that have to be tackled and the opportunities that
need to be developed in order to reach the MIC status.
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The aim of this chapter is to give the main strategic direction that will be followed in order to
reach all the TDV 2025 targets. Section 3.2 will outline the main objectives of TDV 2025,
whilst section 3.3 will highlight the six pillars of the LTPP. Section 3.4 gives further detail on
the country’s envisaged structural transformation, the related need to foster macroeconomic
stability, and finally the country’s productivity and growth targets. Finally, Section 3.5 to
3.14 will highlight the strategic direction for each of the sectors and sub-sectors of the
economy, by highlighting, for each of them, the national policies, guiding principles and
objectives to be reached by 2025.
3.2 Long Term Objectives and Targets
The main thrust of LTPP is to achieve the objectives of Vision 2025, the main ones being:
Attaining a High Quality Livelihood: The aim is to ensure that the creation of wealth (and its
distribution) is inclusive, in order to achieve equity and to reform all discriminative forms of
wealth creation and sharing processes. The investments that have been made and continue to
be made in education and learning should have created a critical mass of highly qualified and
educated people;
Attaining Good Governance and the Rule of Law: the ultimate goal is to embrace a culture of
accountability, rewarding performance and doing away with all vices in the course of creating
and sharing wealth. The high level of human capital will have become an important source of
growth and will be able (i) to propel Tanzania to self-reliance, and (ii) to generate a positive
mind-set and a culture of hard work, entrepreneurship, creativity, innovativeness and
ingenuity. Finally, peace, stability and unity are the important ingredients in this endeavour.
Building a Strong and Competitive Economy: as technological and market conditions change,
the country must be able to adapt efficiently and effectively. By 2025, Tanzania should have
created a strong, diversified and resilient competitive economy.
3.3 Pillars
The Plan will be guided by the following six pillars:
Broad-based Growth: As the nation strives to attain higher rates of economic growth, it is
imperative that the benefits of such growth are shared broadly across different sections of the
population and across different geographical locations. LTPP recognizes that while
redistributive policies have a role to play, the effective and sustainable way for the country’s
growth to benefit the poor is to ensure that growth is inclusive and occurs in sectors where
the poor are most represented, and enable their direct participation in the country’s
development.
Competitiveness (efficiency and effectiveness): This principle targets production and
distribution. It calls for sound socioeconomic policies (and socioeconomic policy
management) that ensure adequate and reliable infrastructural development, quality
education, effective utilization of domestic resources, higher productivity and the
strengthening of capacity to effectively anticipate and respond to new and emerging
developments.
National Cohesion and Cultural Heritage: LTPP recognizes that a strong national unity,
cohesion, patriotism, peace and security are important ingredients for sustainable
52
development and need to be nurtured. This will ensure that the nation continues to enjoy
peace, political stability, national unity and social cohesion in an environment of democracy
and political and social tolerance. Efforts shall be made in order to preserve and maintain the
country’s rich cultural heritage.
Good governance and accountability: LTPP upholds the aspiration of ensuring that good
governance reinforces the national socioeconomic structure, thereby strengthening a culture
of accountability, transparency, rewarding good performance, penalizing/sanctioning
ineffectiveness and curbing corruption.
Macroeconomic Stability: The preservation of macroeconomic stability to underpin financial
confidence for enhanced investment and growth is an underlying prerequisite for the success
of the Plan. Such stability, along with the high growth that is necessary for reducing poverty,
is possible only under prudent and consistent monetary and fiscal policies.
Sustainable Development: There is a need to ensure that the growth path to be taken in the
future is sustainable from the economic, environmental and social (gender, health)
perspectives. Sustainability shall remain an important criterion in evaluating the projects and
policies during this period.
3.4 Envisaged Structural Transformation of the Economy
3.4.1 Structural Transformation
One of the goals of the TDV 2025 is to transform Tanzania into a “diversified and semi-
industrialised economy with a substantial industrial sector comparable to typical middle-
income countries”. The POPC conducted a study in 2011 (with the support of IGC), in order
to better understand what it would take for Tanzania to become a middle-income country by
2025. The study generated the GNI per capita in Purchasing Power Parity (PPP) terms (in
constant 2009 USD) that would have to be achieved by 2025 in order to reach the lower
middle-income country (LMIC) threshold (namely, USD 2,700).
During the 2000-2010 period, the Gross National Income (GNI) per capita (pc) (constant
2009 USD), in Purchasing Power Parity (PPP$) terms, increased from around USD 960 to
around USD 1,42022
. This, however, fell short of the envisaged growth path if the country has
to attain the MIC status by 2025 (which, in GNI pc PPP$ terms, is set at USD 2,700 in 2009
USD)23
. For the same to be realized, an average annual GNI growth rate of 8 percent in the
next 15 years will have to be sustained (given a population growth of around 3 percent, this
leads to a GNI PPP$ per capita growth of about 5 percent). Figure 2.1 reflects the under-
performance in GNI per capita growth in the ten years of implementing TDV 2025. It also
shows that at an average annual growth of 7 percent, GNI per capita (PPP$) will be below
USD 2,700 in 2025.
22
Own computation using data from the World Bank, (2012), World Development Indicators (WDI) Database. 23
See: President’s Office Planning Commission (POPC) and International Growth Centre (IGC), (2011),
“Attaining Middle Income Status: Tanzania: Growth and Structural Transformation Required to Reach Middle
Income Status by 2025”. This paper will be referred in this Plan as IGC-POPC (2011).
53
Figure 3.1: Tanzania’s Actual and Simulated Growth Paths to LMIC by 2025
Source: IGC-POPC Study 2011
The second step was to understand the sectoral share of GDP displayed by typical middle-
income countries, and to set this sectoral share as a target for 2025. The table below displays
the sectoral share and employment in agriculture for 2000 (when the TDV 2025 was
launched), in 2010 (the latest status), the target for 2025 (the ‘middle-income’ type of GDP
decomposition), and the implied 2015 and 2020 targets.
Table 3.1: Mainland Tanzania: Evolution of Economic Structure, 2000, 2010 and
Projections for 2025 (% of GDP)
Sector/Year Baseline
(2000)
Current
Status (2010)
Targets
for 2015
Targets for
2020
Targets for
2025
Agriculture 33.1 27.8 25.4 23 20.7
Industry 19 24.4 26.5 28.7 30.7
of which Manufacture (% of GDP) 9.3 9.8 12.0 14.6 17.8
Services 47.9 47.8 48.1 48.3 48.6
Employment in agric. (% of total) 82.1 (2001) 74.6 (2006) 61.2 50.2 41.2
Sources: National Bureau of Statistics (2010), TDV 2025, IGC-POPC (2011), Economic Survey (2010), WDI
database (2012).
Thus apart from sustaining growth rates above 8 percent on average (in order to reach the
lower middle-income status as of the World Bank classification), the country will also
transform from a mainly agricultural economy to a semi-industrialised one. This
transformation, or industrialisation, will happen along various lines: first, the increased
productivity in agriculture will increase production and generate an excess labour supply,
both fuelling agro-processing, leading to a sharp increase in the manufacturing sector.
Second, an improvement of the value-addition chain (from agricultural goods and
commodities to a more value-chain approach in the natural resources’ sector), will create
employment and growth in the industrial sector.
This sectoral transformation, coupled with the 8 percent GDP growth target, implies the
target sectoral annual growth rates displayed in the table below.
54
Table 3.2: Baseline, current and targeted annual sectoral growth rates (% per annum)
Target Indicator TZ Baseline TZ Current Status Targets for 2025
1995-2010 2000-2010 2025
Agriculture growth rate (%) 4.0 4.4 6.0
Industry growth rate (%) 7.8 8.8 9.2
Manufacturing growth rate (%) 6.7 8.2 13.0
Service growth rate (%) 5.8 7.5 8.0
Source: Economic Survey (2000-2010), IGC-POPC (2011)
The past average growth rates for the last 10 years show that there will have to be a drastic
change in the growth paths, especially in the agricultural and manufacturing sector, in order
to reach the semi-industrialised economy target.
But the transformation from an agriculture-led to an industrial economy will also involve
changes in the country’s ability to raise (and sources of) capital to implement the necessary
investments. Nationally, the IGC-POPC (2011) paper highlighted the fact that the country’s
gross fixed capital formation and gross savings will have to increase significantly (from 25
percent to 27 percent of GDP, and from 18 percent to 22 percent respectively). This will
happen through the development of a more business-friendly financial intermediation system
and increased investment opportunities inside the country.
Concerning international capital flows, the country’s FDI inflows remain below the level
reached on average by middle-income countries (they represented 3.9 percent of GDP in
2007, about 1 percentage point below the level in the selected middle-income countries).
Also, as the country will develop, it will have to table on lower ODA levels, with an expected
drop from 13 percent of GDP to 5 percent of GDP between 2010 and 2025 (thus the need to
boost national savings and other international capital transfers).
According to the World Bank (2012), Tanzania is experiencing some early signs of structural
transformation on four different grounds. First, the informal non-farm sector is growing
rapidly, showing a regain (and diversification) of the economic activity in rural areas, and the
improvement of the infrastructure which happened around the cities. Second, manufacturing
exports have been growing faster in recent years, showing an internationalisation of the
sector. Third, the value of net credit to the private sector has close to quadrupled between
2005 and 2010, showing the increased options for financing and further boosting the sector’s
growth. Finally, new pilot projects in the agricultural sector have proven very successful,
which is a first step to boosting the productivity in the sector (which remains low in
comparison to the regional averages. The country should take advantage of these initiatives
and trends to fast-track its transformation further.
3.4.2 Macroeconomic Stability
In order to facilitate this structural transformation, it is vital that the macroeconomic stability
is ensured during the course of development. We discuss below the envisaged performance of
few key macroeconomic indicators.
Inflation: Tanzania will strive at keeping inflation close to 5 percent annually, by following a
prudent monetary policy, whilst also solving the national supply constraints (associated with
food and essential raw materials) and minimizing the impact of internationally induced
inflation. The Bank of Tanzania will use its instruments in order to mop up the excess
liquidity in the economy (when and if such cases occur), and will closely monitor the
55
evolution of the value of the Tanzanian Shilling against its made trade partners. By doing so,
the Bank will be able to stabilise the country’s real exchange rate, and thus positively affect
the country’s competitiveness.
Fiscal Balance: As explained in the previous chapter, the main aim of the Government will
be to reinforce its current prudent fiscal policy management, in order to closely monitor the
country’s fiscal deficits. This will happen on two main fronts: on the one hand, the
Government will expand its tax base and find new ways to increase Government revenues in
general (the Government has targeted to be able to raise its revenues to around 21 percent of
GDP by 2025), whilst on the other hand closely monitoring public spending (mainly by
enhancing expenditure control and accountability). Besides, Government expenditure’s
growth will have to be led by development expenditure, which should become the most
important component of Government’s spending, in order to boost future growth.
Another major challenge will result from the projected windfall increase in Government
revenues related to the prospects of the developments in the mining sector and in the
country’s gas production. Countries that have not planned efficiently for natural-resource
based revenue windfalls have exposed themselves to what is widely known as the ‘natural
resource curse’. The main aspect of the curse happens when the large windfalls lead to
excessive increases in public and/or private spending (generating high inflation levels)
accompanied by a nominal appreciation of the currency (given that those resources are traded
in foreign currencies), translating into a loss of competitiveness (given the appreciation of the
real exchange rate), and eventually into a lower growth path than the one the country would
have had, had it not developed its natural resource sector(s). This is why Tanzania will come
up with an effective solution on how best to manage those resources (by creating a natural
resource fund, for instance), to avoid the negative effects of increased public spending and
nominal appreciation and ensure inter-generational equity (by enabling future generations to
enjoy the revenues from those resources).
In addition, the Government will continue monitoring the evolution of the country’s domestic
and foreign debt level (and the related debt services), in order to ensure long-lasting
macroeconomic stability.
Balance of Payments: The focus of the Plan in the initial years will be on reducing the
‘structural deficit’ in the flow of goods and services (through various socioeconomic and
business environment related policies). This situation has unavoidably led to depreciation
pressures on the local currency, which has in turn pushed domestic inflation upward. Export
promotion and diversification, in part through increased domestic processing and
manufacturing, will therefore be emphasized. The target therefore is to sustain a high export
growth rate, over 10 percent as much as possible, and keeping the growth rate of imports at a
lower rate (in order to reduce the trade deficit). In the longer term, the Plan aims at much
improved trade balance, partly through continued export promotion and efficient import
substitution, to support the double-digit growth rates that are envisaged. Finally, the
improved business environment and the sustained economic growth will increase the capital
and FDI inflows, which in turn will improve the balance of the capital and financial accounts,
and further foster economic growth. Particularly, during the third FYDP (2020-25), the focus
will be to foster export oriented growth by improving competitiveness of manufacturing and
service sectors. This transformation into an export oriented competitive economy is expected
to create a significantly favourable trade balance.
56
3.4.3 Productivity and Growth
In addition to the sectoral transformation outlined in the previous section, it is noteworthy to
analyse the growth in productivity which is required to attain the middle-income country
status. The GDP growth rate can be divided into two main parts: the growth rate of the labour
force and the overall productivity growth, the sum of both amounting to the total GDP
growth24
. The overall productivity growth rate of the economy is captured by the growth of
the output-per-worker, and is divided into three main sub-categories: the education per
worker, the physical capital per worker and the total factor productivity.
Between 2000 and 2008, Tanzania’s overall productivity grew by a rate of 4 percent. The
decomposition of Tanzania’s overall productivity during the same period is displayed in the
figure below. As can be seen, about 6 percent of the overall productivity growth could be
attributed to the education per worker, 8 percent to the growth of physical capital per worker,
while the governing factor of overall productivity growth was the improvement of total factor
productivity (TFP), which accounted for 86 percent.
Figure 3.2: Decomposition of Productivity Growth
Source: POPC’s calculations using Collins and Bosworth Data Base.
In order to give a strategic direction, these figures were compared to the overall productivity
growth performance of the set of middle-income countries (in the specific year of their
attainment of middle-income status) used in the IGC-POPC (2011) paper. The results show
that the current overall productivity growth rates, along with the growth rate of education per
worker, physical capital per worker and growth of total factor productivity in Tanzania are all
below the middle-income country level. For example, in 2008, Tanzania’s education per
worker grew by 0.27 percent while the middle-income average was 0.56 percent, and
Tanzania’s physical capital per worker grew by 0.62 percent, compared to 1.69 percent in
middle-income countries. This suggests that Tanzania needs to improve its productivity
growth rates considerably over the next 15 years.
In addition, the middle-income country average composition of the overall productivity
growth rate is quite different from the case described for Tanzania earlier. Around 11 percent
of their overall productivity growth rate was attributed to education per worker, while this
24
This is only one of the many growth accounting principles that could be used to decompose a country’s
growth rate, and has been chosen here as it displays productivity growth in a straightforward way.
57
figure stood at 6 percent for Tanzania (for the 2000-2008 period), which indicates the need
for improving the skill level of the work force over the next 15 years. The share of physical
capital per worker in the overall productivity growth was also significantly higher in middle-
income countries (at 30 percent, compared to 8 percent in Tanzania). This again signifies the
need for large capital investments over the next 15 years, which will improve the productivity
across sectors.
Hence, there is a need to change the pace and composition of the overall productivity growth
rate during the next 15 years to create the globally competitive economy envisaged in the
country’s Vision document. This will be achieved through enhanced capital investment, skill-
level up-gradation of the work force, in addition to strategic interventions (particularly in the
productive sectors) as described in the sections to follow.
3.5 Productive Sectors
Transforming the economy to reflect the envisaged economic structure outlined above
requires deliberate interventions to ensure that these sectors grow at the rate and in a manner
that can facilitate the required transformation. As explained in Chapter 1, these interventions
will be sequenced through three five year development plans with the themes of unleashing
Tanzania’s growth potential, nurturing an industrial based economy and promoting
competitiveness-led export growth, respectively. The sections that follow bring out some of
the requirements that underpin the requisite transformation for each sector, and provide
guidelines and objectives for the projects and programmes that the three five year plans will
have to follow.
3.5.1 Agriculture
According to the CDG for TDV 2025, the main challenge in this sector is to increase the
output and the quality of all products for which the country enjoys a comparative and
competitive advantage. Agriculture in its totality includes crops, animal husbandry, fisheries
and forestry. By 2025, agriculture should be accounting for 20.7 percent of GDP and will
transform, through mechanization and commercialization, into a modern sector capable of
producing high quality output in sufficient amounts to ensure nationwide food security and
food self-sufficiency, and increasing incomes through viable internal and international trade.
Achieving these targets requires strategic, targeted and well sequenced efforts to address the
challenges that are impeding the realisation of the sectors’ development potentials. Below is a
brief outline of what this transformation will entail in the agriculture sub-sectors.
3.5.1.1 Crops
The production of crops will be undertaken such that the various categories of products in
this sub-sector (e.g., food crops, cash crops, high value crops etc.) are well targeted in terms
of quantities and in terms of the geographical regions earmarked for growing them. The aim
is to ensure that, come 2025, the sub-sector is capable of giving the country optimum mileage
in the core objectives of attaining food sufficiency, raise incomes in and promoting of exports
from the sub-sector. To facilitate this, efforts will be made to promote specific crops in
specific regions (fostering a specialisation in each region) and to facilitate enclave
developments of agro-processing industries attached to each crop. A ‘developmental
corridor’ approach, exemplified by the Southern Agricultural Growth Corridor of Tanzania
(SAGCOT), will also be undertaken.
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3.5.1.2 Livestock
The sector will be transformed into a modern and highly productive oone, capable of
supporting a thriving dairy meat and tanning industry in a sustainable manner.
3.5.1.3 Forestry and Hunting
Efforts will be made to increase productivity in the sub-sector, by identifying and targeting
outputs/activities that can foster rapid and inclusive growth in the sub-sector and the
economy as a whole (e.g. timber, honey, beeswax, medicinal plants, and hunting) while
promoting and engaging in modern forestry practices to ensure that forests remain an
abundant resource and, in turn, create an ever-changing sanctuary for all kinds of wildlife for
decades to come.
3.5.1.4 Fishing
Developing and modernising the sector to take advantage of the country’s vast marine and
inland water fisheries potential, by ensuring that the sector optimally performs its role as
source of food, employment, livelihood to the people, recreation, tourism and foreign
exchange. This will be done bearing in mind that fisheries resources are renewable resources,
which are limited, and therefore have to be conserved, managed and developed on a
sustainable basis. As such, efforts will be made to ensure sustainable exploitation, utilization
and marketing of fish resources, to ensure that the intended national socio-economic
objectives are not met at the expense of damaging the aquatic environment. Besides,
investments will be made in order to further develop the country’s aquaculture potential.
The national policies, guiding principles and objectives for the agricultural sector as a whole
are presented below:
a. National Policies
These should facilitate:
Modernization of the Sector through
Comprehensive land-use planning and securitization of agriculture for various
economic activities through rationalizing land property rights;
Intensifying measures to increase output and productivity through:
o Improved quality of inputs (e.g. use of improved seeds, increased use of fertilizer
and appropriate agrochemicals in crop production, improving the local livestock’s
genetic potential, improving livestock feeds);
o Mechanization;
o Raising labour productivity by increasing the area under household production.
This in turn can be done by reducing the number of households involved in
farming through promoting non-farming activities;
o Demand-driven crop production;
o Deploying adequate extension services (by providing adequate staff and funds for
research);
o Instituting strong and effective public veterinary health systems to control and
eradicate animal diseases affecting livestock productivity.
Encouraging out-grower schemes;
Incentivizing local and foreign direct investments in agriculture;
59
Developing a framework to adequately finance the sector;
Application of ICT.
Promotion of irrigation agriculture and water harvesting as well as conservation measures
Enhancing irrigation schemes with capital injection and rapid expansion in areas that
have arable land suitable for irrigation;
Making good use of the sizeable part of the country that receives good rains and the
country’s ample topographic opportunities for building dams to capture rain water in
seasonal rivers to use in crop production and livestock.
Improvement of rural infrastructure
Continuing with construction and maintenance of rural infrastructure (roads, tracks,
paths, footbridges);
Increasing access to water through an increased number of boreholes, spring sources,
and piped network systems;
Ensuring access to rural energy by continually tilting the rural energy balance from
traditional fuels and hydrocarbons to electricity (generated mainly from solar and
other readily available/renewable sources);
Setting up information and data management systems to provide access to
information, knowledge and enhanced communication.
Raising the value of agricultural products through measures for stabilizing agricultural
prices and enhancing competitiveness of the goods
Introduction of crop insurance schemes;
Investment in and promotion of agro-processing and other value adding activities;
Strengthening agricultural marketing information services.
b. Guiding Principles
Underpinning future projects/programmes that will be undertaken in this area are:
Developing the strong forward and backward linkages between this sector and other
sectors in the economy;
The creation of conditions for the private sector, organized in a variety of sizes to
engage profitably in activities in this sector;
Development of effective training and research programs in order to build the
capacity of the sector stakeholders;
Sustainable production;
Good governance (addressing land use conflicts ex ante, promoting inclusiveness;
curbing illegal activities).
c. Objectives
The objectives to be attained by 2025 are as follow:
Increase the sectors annual average growth rate to 6 percent through to 2025;
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Efficiently managed transition which will have employment in the sector declined to
only 43 percent of population by 2025;
Increasing the value and marketability of outputs through improvement of
infrastructure, raising quality and standards of agricultural goods (with good grading,
processing and packaging) and reduction of input and output price distortions;
Significant increase in profitable commercial activities undertaken by the local and
foreign private entities in the sector.
3.5.2 Industry
The model for transforming Tanzania’s economy into an industrial economy, which will
eventually be led by competitiveness-based export growth, is a critical issue for policy. While
it is acknowledged that Total Factor Productivity (TFP) is the main driver of long-run
growth, there are various ways to approach this issue. Experience from Asian countries has
shown two practical models: (i) the “migrating birds and pond”, for attracting FDIs, and (ii)
the “flying-geese” pattern, where a country exploits its late-comer advantage. Tanzania has
recorded some success with the former model, but needs to strategize on the latter in order to
sustain the twin goals of dynamic inclusive growth and structural transformation.
During the initial five years of LTPP (2010-15), Tanzania will follow the ‘flying-geese
framework’ (Lin-Monga, (2011)) to develop its manufacturing sector. This will involve
identifying those goods where Tanzania has a comparative advantage, currently produced in
dynamically growing economies elsewhere, but can be promoted in Tanzania. The obstacles
to starting industries will be identified, and policies will be oriented towards the removal of
the same (including providing incentives to pioneering firms). At the same time, clustered
development of these industries in special incubated zones such as EPZs and SEZs with
possible FDI will be encouraged.
Following this phase, the industrialization will concentrate on large scale natural gas
based/fuelled industries, chemical industries, iron and steel processing, mineral processing
and medium-technology manufacturing, to realize the creation of an industrial based
economy. The last FYDP (2020-25) will focus on improving competitiveness of all these
industries, to enhance Tanzania’s export performance.
Industry in its broad definition covers manufacturing, mining, quarrying and construction.
These are presented separately in this document in order to highlight their uniqueness and
specific interventions required in LTPP. Nevertheless, the ultimate objective is for the sector
to have grown to represent over 30 percent of GDP by 2025, implying an annual growth rate
over 9.4 percent for the entire period, and employing over 20 percent of the country’s
workforce.
3.5.2.1 Manufacturing
The main challenges for this sector in meeting the TDV 2025 objectives are: sustaining the
high growth momentum and development, promoting technological innovation and
adaptation, creating and developing international competitiveness, and developing a strategic
domestic industrial base.
61
A new generation of industries will be required to meet these objectives. This will be
achieved through fostering innovation, new capacity, diversification, promotion of higher
value addition and industrial clusters.
In order to reach MIC status, the manufacturing sector has to grow by 12.1 percent per year
during the next fifteen years and ultimately contribute 18 percent of GDP, generate USD 5.2
billion in export earnings and employ about 20 percent of the total labour force by 2025.
a. National Policies
In order to achieve the long term goals, policy measures will address the weaknesses and
constraints facing the sector, with a special focus on:
Increasing labour productivity through skills and technology development;
Increasing competitiveness;
Promoting exports with an emphasis on products based on comparative and
competitive advantages;
Promoting industrial deepening with a view to creating and strengthening forward and
backward linkages (such as through clustering of manufacturing activities);
Increasing value addition, especially in agricultural and mineral products.
b. Guiding Principles
Principles that will guide future projects/programmes include:
Use of domestically available raw materials;
Promotion of Micro, Small and Medium Enterprises (MSMEs);
Research and Development (R&D) for raising productivity and competitiveness,
taking advantage of technological breakthroughs elsewhere;
Rapid adjustment to regional and global markets;
Development and use of clean technologies;
Improving the business environment (through the promotion of SEZs) and
infrastructure.
c. Objectives
The transformations in this sector aim at:
Manufacture share of GDP to reach around 18 percent, implying an annual growth
rate of over 12 percent per annum until 2025;
Facilitating addition of value to national products;
Modernizing production processes;
Creating job opportunities, especially for the youth;
Ensuring that the country is transformed to a semi-industrialised, middle-income
country by 2025.
3.5.2.2 Mining and Quarrying
In order to attain the aspirations of TDV 2025, the mining sector is tasked to exploit more
efficiently the great potentials in terms of growth, employment creation, income generation,
increased foreign exchange earnings and contribution to GDP (CDG, (2000)).
In 2025 the mineral sector should be a strong, vibrant, well-organized, private sector led,
large and small-scale mining industry, conducted in a safe and environmentally sound
manner. It should also contribute significantly to the country’s industrialisation efforts and to
exports, the former through the strategic exploitation of its energy and industrial mineral
62
resources and the latter being mainly through processed and/or semi-processed mineral
outputs. It is also envisaged that the sector’s considerable potential will contribute
significantly to the Government’s revenues.
a. National Policies
The national policies should focus on
Ensuring that the exploitation of the country’s mineral resources is undertaken in a
manner that is beneficial to the country’s development efforts and ultimately
contributes to increasing the general welfare of its citizens;
Ensuring sustainable mining, including addressing land degradation after
decommissioning of mining activities, good governance such as through protecting
the rights of villagers, small scale miners, gender, etc.;
Establishing a strong link between minerals for industrial use (coal, iron ore, uranium)
and domestic industrial production.
b. Guiding Principles
The principles that will guide future projects/programmes are:
Increasing local participation and ownership in the sector (for instance through zoning
areas for small scale mining, increasing local ownership in foreign companies,
training local experts especially geologists and the like);
Enhancing value addition;
Instituting safety and environmental standards;
Promoting inclusiveness;
Promoting use of ICT in prospecting, processing and marketing.
c. Objectives
The objectives to be reached by 2025 are the following:
Sustain annual growth rates in the sector above 5 percent for the entire period;
Developing gemstone cutting and jewellery industry, making Tanzania successful
enough to be the gemstone centre of Africa;
Providing dependable employment to Tanzanians;
Contributing significantly to Government revenues.
3.5.2.3 Construction
The main thrust of the industry is to build a robust, reliable and competitive local
construction industry capable of delivering the aspirations of Vision 2025.
a. National policies
The national policies that will have to be implemented by 2025 are based on the following:
Financial policies alleviating the credit constraints for the real estate and construction
projects;
Control policies ensuring the construction works are of the highest possible quality,
meeting every security and longevity standards; and
Governance policies ensuring the required increased transparency in the sector.
b. Guiding principles
The programmes and projects in the sector will be guided by the following:
Ensuring the highest quality services;
Enhanced transparency; and
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Choices led by their value for money.
c. Objectives
The main objectives are to:
Improve the capacity and competitiveness of the local construction enterprises;
Develop an efficient and self-sustaining infrastructure base;
Ensure efficient and cost effective performance;
Promote application of cost-effective and innovative technologies and practices;
Enhance participation in regional and international co-operation arrangements.
3.6 Infrastructure
The provision of quality infrastructure plays a major role in the economic development across
the country. In order for rural areas to compete for inward investment and to compete
internationally, they must have access to adequate transport, energy and telecommunications
infrastructure. The main challenge in infrastructure and services provision will be to
minimise rural-urban differences in the supply and quality of facilities. This will extend the
benefits of national economic and social developments across and within regions. Rural areas
will, therefore, benefit from the very substantial levels of investment in infrastructure
included in this Plan.
3.6.1 Transport
Development efforts in this sector will aim at ensuring that by 2025, an efficient, safe
modern, integrated transport infrastructure is in place, capable of providing transportation
services that adequately link production and marketing centres within the country and
position and subsequently maintain country as the regional transportation hub and
international trade gateway. Transformations required in developing various transportation
modes and in meteorology are outlined in the subsections below.
3.6.1.1 Road sub-sector
There will be a focus on constructing a wide network of modern, well maintained, and all-
weather roads through sustainable expansion and rehabilitation initiatives. Efforts will also be
made to introduce new technologies in road construction/upgrading, in order to improve
safety and comfort of road users. It is also envisaged that access controlled bypasses (to
prevent undesired traffic from entering urban areas), expressways and roadside services
facilities will be constructed.
3.6.1.2 Railway sub-sector
Focus will be on modernising and expanding the railway network to enable transport of bulky
natural resources and evacuation of products, especially where long distances are involved.
This will entail extending the current railway network (e.g. construction of railway links to
Mtwara), upgrading all the existing railway lines and investing in new signalling and
communication systems, locomotives and rolling stock.
3.6.1.3 Air Transport sub-sector
Focus will be on improving and expanding the air transport infrastructure and services to
foster both domestic and international trade and tourism.
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3.6.1.4 Maritime Transport sub-sector
Focus will be on upgrading and expanding maritime infrastructure and improving its services
to facilitate the economic use of waterways as a cheaper transportation alternative for areas
which border rivers, lakes and the ocean.
3.6.1.5 Pipeline sub-sector
Focus will be on developing the sub-sector to handle a thriving gas economy.
3.6.1.6 Meteorology sub-sector
Meteorological information is used by many sectors, including agriculture, energy, tourism,
and transport. The future demand for meteorological services will increase, and the
improvements to be made aim at providing safe, efficient, reliable, and easily available world
class meteorological services by 2025 (including enhanced skill-levels, infrastructure,
research, training and management).
Overall, the national policies, guiding principles and objectives for the transport sector as a
whole are as follows:
a. National Policies
These will continue to focus on:
Developing and improving all sub-sectoral policies and regulations;
Investment in all strategic modes of transport an in meteorology;
Investment by private sector in transport and meteorology infrastructure and services;
Local government and community investment in development of feeder roads
transport infrastructure and services within their jurisdiction;
Sustainable financing systems for development of transport and meteorology
infrastructure and its related services;
Creating the requisite human capacity to manage, operate and service the modern
facilities and processes that will be needed to expand and modernise the transport and
meteorology sectors.
b. Guiding Principles
Development for the next 15 years will be guided by the following:
Completing key missing links on transport corridors and ensuring that all sections of
these corridors are rehabilitated/upgraded or constructed to ensure a good flow of
traffic and thereby promoting national integration;
Facilitating the timely delivery of inputs and produce to firms and markets to increase
yield and get better prices;
According high priority to projects which will support agriculture, manufacturing,
mining, and tourism;
Responding adequately to the needs of the productive sectors;
Promoting regional projects (with SADC and EAC member States) in order to
improve and harmonize quality and access regional financing;
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Promoting good governance in infrastructure investments (protecting the natural
environment, and harmonizing the use of land with other demands);
Promoting use of ICT in planning and management;
Managing the growing urban mobility demand.
c. Objectives
The objectives to be met by 2025 are as follows:
Meet all the specific sub-sectoral targets displayed in annex 1;
Ensure uninhibited movement of people and goods in the country, with emphasis on
dynamic strategic economic areas, in the region and globally;
Creating a conducive environment for effective and profitable participation of the
private sector in managing and operating transport infrastructure and providing
attendant services.
3.6.2 Energy
Energy is the engine of development in any country, because it affects nearly all economic
activities. Therefore, the objective of the Long Term Perspective Plan (LTPP) is to ensure
availability of adequate power supply on sustainable basis, power which is reliable and of
good quality to all customers. As such, the main challenge of this sector in meeting the
objectives of TDV 2025 is to develop a reliable, economically accessible and appropriately
priced energy supply (CDG, (2000)). Tanzania has huge untapped potential in both renewable
and non-renewable sources of energy. Immediate exploration and utilization of these sources
in a sustainable and efficient manner is required. There is a need of reducing reliance on
biomass for energy supplies due to its adverse environmental impacts, and at the same time
the alternate renewable sources such as solar, wind and geothermal need to be relied upon. As
explained above, given that the energy supplies must be reliable, adequate, safe and produced
in an environmentally friendly and sound manner, there is a need to review the policies and
produce guiding principles to make sure the sector achieves these objectives.
a. National Policies
The following policies, plans and strategies should be pursued in order to address the
challenges in the energy sector:
Power Sector Strategy: A review of policies and strategies is necessary to encourage
private participation in all segments of the electricity sub-sector (i.e. generation,
transmission and distribution networks). This can be done through conventional and
non-conventional (like Public Private Partnership (PPP) arrangements) financing
mechanisms. Tariff levels have to be reviewed, focusing on a gradual move towards
cost-reflective tariffs and phasing out subsidies;
Master Plan for the development of the power generation sector: In order to meet the
additional demand for electricity and reduce the high level of expenditure on liquid
fuels, the investments will be directed towards projects which improve load base
power and represent a minimal cost and have a minimal impact on the environment.
The Master Plan will focus on a suitable energy mix which combines all the available
energy sources such as coal, gas, hydro, geothermal, wind and bio-fuels. Oil plants
will only be for intermediate and spike loads in case of shortfalls. In order to achieve
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the objectives of the Master Plan, the following strategies will be implemented: (i)
enhance the initiatives to develop coal-fired power generation plants, (ii) enhance the
initiatives to develop renewable sources of energy (the main focus being on wind,
solar and geothermal energy, putting emphasis on the utilization of local resources to
ensure security and continuity of supplies and to reduce dependence on biomass based
fuels), and (iii) fast-track the development of uranium as a sustainable source of load
base power;
Master plan for the development of electricity transmission sector: The Master Plan
development of transmission grid is proposed in a way to meet electricity demand,
based on electricity minimal cost, with quality and sufficient service. The main
objective of this master plan is to reduce electricity outages and to ensure a
continuous electricity supply without outages post 2012;
Refinery and marketing oil sector strategy: Emphasis will be directed towards bulk
procurement and improvement of the refinery sector, currently facing difficulties
related to inefficient technology use and a lack of modern operations, maintenance
and control systems;
National Gas Master Plan: The Master Plan will indicate gas production from gas
wells, transmission and distribution networks to the various customers around the
country. Emphasis will be directed to produce electricity, provide process heat in
industries, fertilizer manufacturing, domestic use and for powering vehicles;
Promoting sub-regional and regional cooperation and collaboration in energy, and
putting in place mechanisms to integrate the national grid with the regional grid to
create and maintain a viable regional power pool.
b. Guiding Principles
For the next 15 years, the development of the energy sector in Tanzania will be guided by the
following principles:
Electricity tariff system development: The plan requires that the future tariff system
should cover the generation, transmission, distribution cost and provide an acceptable
rate of profit, while ultimately removing direct Government subsidies by 2025. The
development of the sector should also ensure the affordability of electricity (given its
impact on the country’s competitiveness and the population’s livelihood);
Demand Side Management (DSM) and Energy Conservation: Create awareness to the
public and other energy users about DSM and Energy Conservation. The strategy
aims to reduce unnecessary use of energy and reduce losses;
Establishing a system of production, procurement, transportation, distribution and
end-use that is efficient, sustainable and environmentally friendly. This will be further
implemented by putting in place incentives and regulations which will ensure an
appropriate balance in the ecosystem, preserving the habitat and other life supporting
systems including the natural water cycle and the safety considerations;
All policies and plans will work at ensuring reliability and the decrease and eventual
cease of power outages and shortages.
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c. Objectives
The main objective is to enhance the energy sector based on market economy principles and
develop a modern energy infrastructure in order to ensure:
Increased security and reliability of the energy supply in general and electricity in
particular, at the national and regional levels to ensure that energy does not remain a
binding constraint to development by 2015. Putting in place strategies to ensure a
continued reduction in technical and transmission system losses aiming at reaching
annual losses of only 15 percent by 2025;
Increased energy efficiency in generation/production and final use of energy sources
aiming at minimizing environmental pollution with planned installed capacity of
6,700 - 12,300MW by 2025;
Establishment of an efficient energy sector from a financial and technical point of
view;
Establishment of an effective institutional and regulatory framework and restructure
energy companies;
Optimization of the supply system based on the least cost principle with minimal
environmental pollution, with per capita consumption reaching 400-700 kWh;
Increased investments in the energy sector through capital enhancement by
International Financial Institutions as well as private capital; and
Establishment of a competitive electricity market according to the national energy
policy.
3.7 Land
Land is a capital asset, offering opportunities for both social and economic empowerment.
Securing rights to land are a basis for shelter, to access services and for civic and political
participation. Those rights can also provide a source of financial security by providing
collateral to raise credit, and by being a transferable asset which can be sold, rented out,
mortgaged, loaned or bequeathed.
Land management is therefore of great concern in Tanzania’s quest to promote
socioeconomic development. Ensuring effective property rights management and their
enforceability are crucial in both protecting investors and enhancing land value. The
institutional framework for land management needs to be realigned to facilitate
socioeconomic policy management.
Land use planning needs to be hastened for prompt management of ever increasing social
conflicts over uses of land. Designating special land for human settlement and urban
development as well as other social and economic uses away from agricultural land needs to
be enhanced. The time cost to complete land transactions and its transferability needs to be
reduced drastically.
a. National Policies
Given the above mentioned challenges, the following policies will have to be deployed in
land use and ownership management:
Projects and programmes that will facilitate land use planning to support the
productive sector, infrastructure and investment, social sectors, resettlement etc.;
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To reverse the effects of environment and climate change that are lessening the ability
of land to produce enough food to feed its population, create surplus for export and to
produce requisite mass of agricultural raw materials for industrial feedstock;
To advance preparation of land use planning to facilitate harmonious socioeconomic
activities for the future;
To ensure readily available land banks for investment promotion;
To strengthen the institutional framework for land use and ownership management
with the view of reducing time and transaction costs; and
To improve human resource skills in tandem with the future requisite for land use and
ownership management.
b. Guiding Principles
The land management will be directed by the following guiding principles:
Ensuring transparent land management processes and facilitated negotiations in land
acquisition (to ensure that access to land does not remain a binding constraint to
growth by 2015), including the need to keep local landholders and civil society
informed and involved;
To protect the rights of indigenous and marginalised groups who are particularly
vulnerable;
To respect existing land rights regardless of whether they are legally documented or
customary;
To avoid alienation of local communities by foreign investors for which contract
farming and leases are preferred over purchase as they provide an on-going revenue
stream and leave smallholders in control of their land; and
To strengthen capacities to undertake thorough environmental impact assessments and
monitoring to ensure investments are undertaken in a sustainable manner.
c. Objectives
The objectives to be reached by 2025 are the following:
Hastening land use planning with a view of ring-fencing agricultural land from
encroachments of other land uses (particularly human settlements and townships
developments);
Identifying and acquiring parcels of land for national land bank to accelerate
commercial agricultural farming investments and industrial development promotion;
Strengthening the institutional capability at the national and local levels to manage
and enforce property rights, and supervising the housing and human settlement
development (both in rural urban areas);
Promoting the development of a pool of skilled and competent human resource skills
on land and human settlement development management;
Strengthening the institutional framework, by enhancing the capacity of RUBADA in
managing national stakes in agricultural business joint ventures with the private
sectors.
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3.8 Housing and Human Settlement
Tanzania is facing a growing shortage of housing and a strong need to improve residential
housing and human settlements (both in rural and urban centres). These issues have to be
dealt with through a proactive land use planning and improved availability of housing
development financing. There is also a need to re-organise the rural construction and training
units (common in the 1960s) to spur availability of skilled manpower for housing
construction. Given the increasing urbanisation, housing plots need to be availed proactively
and restrictions on haphazard housing and human settlement developments in unplanned and
risk prone areas have to be checked to the minimum. Regulations have to be set to observe
land use as appropriately planned and separation of homes from development of commercial,
recreational and industrial activities.
a. National Policies
Consistently with the contemporary challenges, a number of national policies will have to be
reviewed, strengthened and/or developed with the following focus:
To monitor the potential adverse effects of increased human settlement on the
environment and climate change, as well as the associated risks on human livelihood
and economic growth;
To advance preparation of land use planning and human settlement to facilitate
harmonious housing and human settlement development for the future;
Facilitating the access to credit for real estate investments, in order to improve the
quality and decrease the cost of urban and rural housing; and
Redevelop the rural construction units in order to provide decent housing in rural
areas.
b. Guiding Principles
The guiding principles for the housing and human settlement projects will include:
To ease accessibility to priority serviced land for housing and human settlement
development;
To put in place various facilitative institutional frameworks to help develop the real
estate credit facility mechanisms;
To strengthen human skills for the construction and management of human settlement
development.
c. Objectives
The following objectives are to be reached by 2025:
Improved basic services in all human settlements;
Halve the share of urban dwellings in bad condition;
Over 80 percent of residential houses in urban centres developed in accordance with
the planned land use;
Identified parcels of land for national land bank to accelerate real estate and housing
development promotion;
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Strengthened institutional capability at national and local levels to manage and
enforce adherence to housing and human settlement development both in rural and
urban areas.
Strengthened capacity of THC to advance availability of housing and management of
the State’s interests in joint ventures with the private sectors; and
Promoted development of a pool of skilled workers on housing construction and
human settlement development management.
3.9 Services
The services sector will continue to play a central role in the country’s development, with the
general objective of increasing the share of services to GDP to 49 percent, with a sustained
annual growth rate of around 8 percent during the entire period.
3.9.1 Trade and Commerce
The growth and development of trade depends on the existence of a vibrant market for
products and services. However, the market is hampered by low demand, unfair competition
from counterfeit and substandard goods. Moreover, linkages between the informal traders and
the formal sector are either weak or non-existent. The trade and commerce sector, which
comprises of goods and services, is critical for the national development. The significant
importance comes, among others, through the development of the domestic market and the
integration to the regional and international markets, both of which increasing the country’s
ability to face the challenges remaining in the sector. Table 3.3 displays the targets to be
achieved by 2025.
Table 3.3: Targets in the Trade sector for 202525
: S/N Item From 2010 To 2025
1 Share of Tanzania in Total World Trade 0.04% 0.20%
2 Share of Tanzania in Total EAC Trade 32% 48%
3 Share of 'trade and repairs' to GDP 12% 14%
4 Share of Exports to GDP 28% 40%
Source: Economic Survey (2010), WITS (2012), EAC (2010), IGC-POPC (2011), POPC’s computation
The aim is to achieve these targets and improve the export capacity (by establishing trade and
marketing information systems and review and enforce related legal framework, amongst
other things), whilst at the same time reversing the declining trend in the import coverage
rate. Indicators of performance include trade to GDP ratio, efficient logistics, domestic
competition and ability to comply with international health, safety and quality standards and
improved standard of living as envisaged in the national development Vision.
a. National Policies
The policy measures necessary to transform Tanzania into an internationally competitive
economy will focus on:
Increasing market information and access;
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All projections madse in this table are mae using past growth rates and the estimated future growth rates of
trade and exports. Therefore, these projections do not take into account the fact that the country could become a
major international gas exporters (as the current data do not allow us to make sound projections), and can thus
be seen as a lower bound of the situation might be in 2025.
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Investment in Industrial Parks, Export Processing Zones, and in export oriented areas
in which Tanzania has a comparative and competitive advantage;
Promoting market integration and infrastructure development and connectivity with
neighbouring countries, in order to transform Tanzania into a logistical and
transitional hub;
Increase competitiveness, through industrial and mining development, increased
productivity, reduction of transport costs (following infrastructure investments) and
through promoting value addition and joining the global value addition chain;
Establish one-stop border posts so as to facilitate trade;
Addressing supply-side constraints;
Trading with new emerging markets like China, India, Brazil and South Africa.
Taking advantage of international schemes given by various international groups like
EU – EPA, EBA, and AGOA, whilst increasing the country’s integration in the EAC
and SADC regions;
Making full use of bilateral investment agreements.
b. Guiding Principles
The main guiding principle during LTPP will be:
Participating effectively in international trade, at both regional and bilateral levels;
Having an effective participation in the rules-based trading system (WTO);
Having a consistent working arrangement for following up trade matters;
Increasing the value of exports and joining the Global Value Addition chain;
Increasing product diversification and enhancing effective marketing of exports.
c. Objectives
The overall objective of the LTPP in the trade sector is to make trade an important part of a
vibrant competitive economy, contributing significantly to the transformation of the country
into a middle-income one. Specifically, the country will:
Increase the share of trade in the country’s GDP;
Develop a strategy for trade in services;
Improve market linkages by improving both soft and hard infrastructure;
Enhance market knowledge and information, necessary to facilitate market
diversification;
Increase the country’s market share, globally and regionally, by reaching all targets
displayed in table 3.3;
Improve Tanzania’s participation in regional trading blocs by aiming at sustainably
operating with a current account surplus;
Enhance compliance on all multilateral, bilateral and regional trade agreements.
3.9.2 Tourism
The tourism sector plays a crucial role as a growth driver (given the steady growth in the
sector for the last decade) and as an income generator (for the Government, through taxes,
and for the country as a whole for the sector’s role in generating foreign reserves).
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However, the extent to which tourism is going to substantially contribute to economic growth
will depend on efforts to attract more quality tourists (both foreign and local tourists) to the
country’s natural and cultural attractions.
a. National Policies
The policies that will guide Tanzania towards 2025 will have to focus on:
Encourage hotel and tour transport operators to employ and train Tanzanians as a way
of reducing local unemployment and building the capacity of Tanzanians to offer
services in the industry. Special incentives for employing locals will be offered;
Offer agency services to Tanzania Diasporas so that they assist in marketing Tanzania
as a tourist destination but also create employment and income for Tanzanians living
abroad;
Encourage hotels to use locally produced products as a means of generating
employment and income for the local population and industries;
Careful usage of the country’s vast natural resources (with a special emphasis on
curbing illegal harvesting and unsustainable utilization of natural resources);
Modernising the current tourism infrastructure in order to match the new demands
(especially the up-market trend in the tourism sector);
Working closely with the private sector (enabling the continuous development of the
sector without any bottlenecks or crowding out, especially in the training of
competent staff); and
Maximizing foreign exchange and Government revenues. The sector’s growth will
have to continue being the result of policies that promote Tanzania as a sustainable
and quality tourism destination, which is culturally and socially acceptable,
ecologically friendly and economically viable.
b. Guiding Principles
The guiding principles for the next 15 years are as follows:
Ensure the development of the tourism sector is sustainability and environmentally
friendly;
Maximise Government revenues and foreign exchange incomes;
Increase the linkages between the tourism and the agricultural and manufacturing
sectors;
Closely work with the ministries responsible for land and housing, for transport, for
Government finance and for works.
c. Objectives
The main objectives for the next 15 years are:
To foster growth in the sector, with a clear emphasis on sustainability, revenue
generation and poverty reduction, all of which accompanied by a close collaboration
with the private sector (through PPP agreements);
The aim for the country is to triple the amount of foreign visitors (from 0.8 million in
2010 to 2.4 million people by 2025), whilst increasing the revenue collection from
USD 1.3 billion in 2010 to over USD 4 billion (in constant 2010 USD).
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3.9.3 Financial Services
Giving the population access to financial services will foster growth by enabling the financial
sector to use this capital to finance investments and to ultimately bring down the country’s
borrowing interest rates. This will ultimately increase the share of private credit and domestic
deposits to GDP inside the country.
a. National Policies
The potential of the financial sector growth is far from being harnessed, so the LTPP
emphasizes on:
Faster implementation of the ‘second generation’ financial sector reforms in the
earlier years, and envisaged further measures to increase the sophistication and scope
of the sector in the outer years of the 2011-2025 period, in order to achieve the same
best practices and attainments as in the middle-income countries;
Safeguard stability in the banking system while continuing to guide efforts in
expanding the sector. Also, corporate governance issues, including enhancing
transparency and accountability, will be a central concern;
Increasing the outreach to people currently outside the financial system. This will
happen mainly through improving and developing the local and regional development
banks, the quasi-banking institutions (like the Savings and Credit Cooperative
Societies (SACCOs)), the informal financial services providers (like the Rotating
Savings and Credit Associations (ROSCAs)), the microfinance institutions, and the
insurance companies, the capital market, and the pension schemes;
Reducing the cost of borrowing and raising capital to improve rates of investment;
Enable and promote long term financing in the country, to enable the development of
large-scale and long-term projects;
b. Guiding Principles
The guiding principles for the next 15 years are as follows:
Efficient financial intermediation systems;
Policies, laws and regulations that will both increase financial services outreach and
reduce cost of raising capital (be it through borrowing or on the capital and stock
markets);
Effective participation in the financial services system of both people in need for
finance and those who have excess liquidity;
Effective use of infrastructure for financial institutions like banks, insurance
companies, provident and pension funds, micro-finance and institutions including
NGOs, SACCOS and community banks, other non-bank lending institutions.
c. Objectives
The objectives until the completion of TDV 2025 are as follows:
Doubling the share of the population formally or semi-formally included in the
financial sector from 17 percent to 34 percent;
Decreasing the share of the people excluded from the financial sector by 10
percentage points (from 56 percent to 46 percent);
Share of people using informal financial instruments will continue to decline (from 27
percent to 20 percent, following the current trend);
Increase the share of domestic credit to the private sector to GDP from 16 percent to
around 50 percent;
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Increase the market capitalization of listed companies from 5.5 percent to 25 percent
of GDP, and the stock traded from 0.1 percent to 5 percent of GDP;
To have a sound, stable, and market-based financial system that supports efficient
mobilization and allocation of resources, necessary to achieve economic
diversification, sustainable growth, poverty reduction and wealth creation;
To improve the trust in the banking system, by spreading the information to improve
the knowledge and reduce the cost; and
Carry on with the financial deepening process, by for example improving the access
and servicing of rural areas and more particularly developing new finance instrument.
3.9.4 Science, Technology and Innovation (STI) and Research & Development (R&D)
Tanzania needs to harness science, technology and innovation to enable the society to meet
the basic needs of its people and to develop international competitiveness in all areas of trade
and service delivery. The current state of science, technology and innovation in Tanzania,
though improving, remains low to enable the envisaged economic transformation. All
improvements will be based on the increased quality of general education, and science and
technology education in particular.
The improved value-chain and increased country’s competitiveness will happen through the
increased linkages between R&D institutes, the academia and the productive sectors, but also
through the strengthening of the institutional framework for patenting and management as
well as the mechanisms for technology transfer and adaptability. Fostering linkages with
institutions of science, technology and innovation from other relatively advanced countries
would be paramount in this regard.
In a world of rapid technological change which impacts on the supply and demand, if STI is
not mainstreamed, the risk of falling further behind is factual.
a. National Policies
The focus will be to strengthen the national capacity to go hand in hand with technological
changes by accelerating human resource development, investing in research and
development, and ensuring linkages between R&D and the productive sectors. The policies
will be led by the need:
To create and promote a strong foundation for science and technology development,
through an improved teaching environment and delivery capacity at primary,
secondary and tertiary levels (and all activities related to education). The education
system will be revised to instil a science and technology culture from its earliest
levels, with basic sciences and mathematics subjects given adequate importance to
keep up with the requirements of modern technological age;
To earlier identification of young Tanzanians with proven academic credentials in
science and technology to be sent to best scientific and technological institutions
abroad;
To accelerate expansion of domestic enrolment capacities in folks, vocational,
polytechnics and universities with strengthened hand on science and technological
practical experience;
To provide an incentive mechanism for the deployment of science and technology and
R&D in enterprises and other sectors of the economy, and link R&D more effectively
with academia;
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To provide reliable budgetary funding for research and development as well as
science and technology development activities;
Monitor the country’s exports in their diversification and sophistication content, to
monitor the country’s initiatives (along with the number of delivered patents and
trademarks);
To promote cooperation with other developing and developed countries through sub-
regional, regional and international media in scientific and technological development
partnerships;
To create and institutionalise science councils at national, regional and district levels;
and
To promote scientific and technological information sharing, through intensified
publications and libraries.
b. Guiding Principles
The guiding principles behind the sector’s development during the next 15 years will be as
follows:
Focus investments on projects and programmes that are geared towards building-up
technological capabilities in form of education and skills enhancement;
Educating the best science students in technological colleges abroad;
General motivation to a broader and increased use of science and technology in all
spheres of production, trade and services delivery;
Easy access to science and technology education at folks, vocational, tertiary and
universities;
Protection of intellectual properties;
Twinning up R&D as well as increased investments in science and technology
incubation systems; and
General recognition and improved incentives for distinguished R&D, innovation and
renovations.
c. Objectives
The objectives to be reached in the next 15 years are as follows:
To have freed resources and have come up with the requisite policy environment to
the pursuit of creativity and excellence in scientific and technological endeavour, and
incorporate new knowledge into socio-economic processes;
A developed and efficient value chain, with increased sophistication of the country’s
export, by fostering the increased share of high technological intensity on the content
of the country’s tradable goods;
Increased general education, awareness level and use of science, technology and
innovation in production, trade and provision of services;
Increased linkages between R&D and academia and the productive sector.
3.9.5 Information and Communication Technology (ICT)
Taking into account the country’s long-term economic transformation, improving Tanzania’s
ICT broadband (high capacity networked) readiness, its information literacy and the
development of a competitive local human capital will require significant political leadership
commitment, aggressive investment ahead of demand, and deliberate policy efforts. To
provide a national framework that will enable ICT to contribute towards achieving the
country’s national development goals, and Transform Tanzania into a knowledge-based
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society through the application of ICT, the following strategic directions will have to be
followed.
a. National Policies
The national policies include:
Tanzania Communications Regulatory Authority (TCRA) should improve the legal
and competitive frameworks, including pressing private ICT operators to reduce the
cost of services to reflect the market conditions, technological gains as well as the
public resources invested in the sector (including tax remissions);
Building ICT capacity by expanding the training of ICT professionals and technicians,
involving various fields (such as computer engineering, information technology,
electrical and electronic engineering, telecommunications engineering and
information science).
Review the 2003 ICT policy to accommodate the latest technological advancement;
Review the legal and regulatory framework which will enable more participation of
the private sector in ICT infrastructure investment;
b. Guiding Principles For the next 15 years, the development of the ICT sub-sector in Tanzania will be guided by
the following principles:
Make use of the National ICT Broadband Backbone (NICTBB) infrastructure in order
to increase the efficiency in all sectors and fulfill the increasing demand for
information services;
ICT industry to encourage R&D, with the results being utilized to enhance modern
business;
Make use of Mkongo (marine cable) into inland networks so as to reap the benefit of
the lower costs, higher carrying capacity and higher speed which Mkongo provides.
c. Objectives
The objective to be attained by 2025 is as follows:
To strengthen the competitive capacity and abilities of the service providers and
business enterprises as a whole within Tanzania, through an enhanced ICT system;
To enhance access to high quality, affordable and equitable ICT, broadcasting, library
and postal services country wide;
Establish mechanisms that will result in reduced access costs to both abundant local
and international internet bandwidth for institutions and individuals in Tanzania;
Contribute to efforts in making the country a competitive developer and producer of
ICT products and services.
3.9.6 Postal Services
To have an efficient and effective basic postal service (Universal Postal Services) that
reaches all locations and people throughout the country at an affordable price (so as to meet
the growing socio-economic and cultural requirements), will work towards poverty
alleviation and development to a middle-income economy by the year 2025. In view of the
above, the Government has established a special fund, the Universal Communications Access
Fund (UCAF), for the development of the postal and telecommunications services in the rural
and underserved areas.
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a. National policies
The policies for the next 15 years include:
The National Postal Policy, along with The Electronic and Postal Communications
ACT (2010), which both recognizes the need to ensure the provision of basic postal
services and communications access to the whole population (especially the
underserved rural and economically disadvantaged areas of the country).
b. Guiding principles
The investments for the next 15 years will focus on:
Capitalization of the Public postal services operator;
Develop a competitive environment for delivering efficient an high-quality postal
services;
Commercialize the services of the public postal operators;
Involve the private sector participation in the provision of postal services;
Stimulate growth of the market for quality postal services;
Modernize the postal sector by utilizing appropriate state of the art technologies so as
to satisfy diversified customer needs; and
Facilitate effective and efficient utilization of public and private resources in order to
increase the development and sustainability of the postal sector.
c. Objectives
The main objectives for the next 15 years are:
To have an efficient and effective commercially oriented Public Postal Operator so as
to contribute to the national socio-economic development;
To modernize and expand the postal network in order to meet the increasingly
diversified needs of the customers;
To promote partnerships and joint ventures in creation of wealth to fixed assets for the
public postal operator to improve the capital base;
To have a comprehensive address system that includes, among others, street names
and identification of buildings (thus facilitating physical delivery of mail); and
To attain optimum security and safety in the provision of postal services in the
country.
3.10 Demographic Transition and Related Issues
3.10.1 Population Dynamics
As explained in the overview chapter, population dynamics in this Plan are centred on three
main topics, namely the country’s demography, the importance of the youth and the rural-
urban migration trends. The major elements that will be considered in the execution of the
national Plan (based on population dynamics) will include (i) the control/reduction of the
fertility rate from 5.4 percent in 2010 to an expected 3.4 percent at the end of the Plan period,
(ii) fostering youth development through employment generating and skill development
programmes, and (iii) contain the rural-urban migration by creating productive and growth
enhancing sectors in the rural areas.
a. National Policies
Therefore, the national policies that will be set in place during the next 15 years will:
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Take necessary intervention measures to control fertility rates in order to contain the
population growth rates as close as possible to 2.5 percent per annum during the Plan
period;
Ensure an efficient information sharing framework for the youth (by establish youth
information centres starting at village level and by promoting youth programmes
through the media), in order to provide the youth with a better idea of their potential
and possibilities;
To strengthen and expand vocational training in public and private training centres
with a dual purpose of fostering youth industrial and self-employment jobs, by
focusing on the special needs of the labour market;
Ease the access to financial services to the youth;
Provide conducive environment for the creation of economic productive centres in the
rural areas that will lead to rural workforce retention and avoid unnecessary rural-
urban migration;
Provide conducive environment that will encourage unemployed and retired urban
dwellers to shift into rural settlement and engage in economic productive sectors that
will be created or designed in rural settlement so as to reduce social instability;
Establish rural productive and technical support centres that will transform rural areas
into industrial production centres, through a transfer of technology and innovation that
is critical for the prosperity of rural economy;
Take all necessary measures to ensure the creation of planned small to medium urban
areas, that will be facilitated by basic social and economic amenities, like for example
power, water and infrastructure to support agro-processing industries;
Design appropriate interventions that will address welfare issues for disadvantaged
rural groups in getting access to basic social and economic facilities, in line with the
basic human rights depicted in the Constitution;
The ministry responsible for community development, home affairs and health should
develop affirmative action and programmes aiming at improving security, health and
livelihood for the disadvantaged groups;
The ministry responsible for Local Government, industry and agriculture should
determine appropriate industrialization and agricultural production strategies for the
local communities, taking into consideration the natural endowment, skills and the
need to increase value addition in the produced crops;
The ministry responsible for health, education, community development, should
design appropriate training programmes and curriculum that will be introduced to all
reproductive age groups with the aim of controlling fertility rates to manageable
targets as targeted in the Plan;
The ministry responsible for health, with support from key stakeholders, should
champion and execute programmes related to reproductive health and rights covering
all reproductive age groups, with specific emphasis to rural communities where
facilities and knowledge are limited.
b. Guiding Principles
In the next 15 years, the guiding principles will be to ensure that:
The ministry responsible for information, youth, culture and sports should foster
information about the existing job and training possibilities, develop new adapted
training and skill development facilities and programmes (with the help of the
ministry responsible for education and vocational training), and generally ensure that
the needs of the youth are translated into the main social and economic services;
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The ministry responsible for education and vocational training will work on
increasing the absorption of the secondary and tertiary level education;
The ministry responsible for agriculture, livestock, community development, health
and the relevant local authorities should carry out campaigns that will address issues
of malnutrition, and production and storage of food crops so as to ensure availability
of sufficient food for the population;
The ministry responsible for health, education and the relevant local authorities
should carry out nutrition campaigns including preventive health measures against
common communicable and non-communicable diseases;
The Local Authorities should create an enabling environment that will facilitate
access to health facilities and personnel for all categories of people (specifically in the
rural areas);
The ministry responsible for community development should undertake reproductive
health and rights campaigns in all communities, with a target of addressing negative
customs, norms and beliefs on issues of fertility and reproductive health and rights
among social and cultural groups;
The ministry responsible for land, agriculture and industry should establish special
incentive packages that can be used to encourage unemployed urban youth to move to
rural areas and engage in productive agricultural economic ventures, including agro-
processing of food crops;
The ministry responsible for agriculture, industry, science and technology should take
all necessary measure to ensure that the results of research, development and
innovation are availed and utilized for the increased production of agricultural goods
and the industrialization of rural areas;
The ministry responsible for water, energy, local authorities and infrastructure should
take measures to ensure budgeted resources are deployed for improvement of water
facilities, infrastructure development and generation/transmission of power for rural
areas;
Ensure the economic and social services provided in the economy take into account
the needs of the youth (especially related to health and education).
c. Objectives
On the issues of population dynamics, the LTTP intends;
By 2025, through a number of sectoral interventions and initiatives, the population
growth and total fertility rate should be sustained at a target of 2.5 and 3.4 percent
respectively;
Preventive and curative measures will be sustained during the period, leading to lower
mortality at all ages;
To have a better informed and more prepared youth group, which will play an even
more central role in the country’s socioeconomic development;
Through social and economic interventions, the rural community environment and
facilities will be improved to attract young people and unemployed urban population;
Affirmative actions will be developed and implemented for socially disadvantaged
groups, sustained and improved over the Plan period through adequate budget
allocation.
3.10.2 Urbanisation
The overview highlighted the challenges that are related to the country’s rapid urbanisation,
and it is clear that many of the themes displayed will be dealt with in various sections of this
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chapter. For instance, the emphasis was put on the challenge (i) of providing the increasingly
demanded social services (health, education, and water), (ii) of providing new infrastructure
(especially roads transport and electricity), and (iii) of improving housing and human
settlements will be dealt with in the respective sections. Therefore, this section will focus on
the national policies, guiding principles and objectives on the matters that pertain specifically
to urbanization.
a. National Policies
The national policies during the next 15 years will be along the following lines:
To slow down the population growth in the cities, apart from setting up productivity
enhancing and economic centres in the rural areas (to reduce the rural-urban
migration), Tanzania will set up satellite cities around the current urban centres, in
order to generate sub-cities which will have their own dynamic and help reduce the
bottlenecks in the major urban areas;
Create a special urban transport framework, using roads and railways, in order to curb
the bottlenecks and reduce the transportation time (of people and goods) to reduce
costs and increase competitiveness of the urban businesses. Besides, an incentive
structure should be set in place in order to increase the share of population using
public transport (which will, ate the same time, curb pollution and reduce the size of
the traffic jams);
Closely monitor the needs of the urban population in terms of social service provision,
communication, and transport, in order to come up with timely and adequate
solutions.
b. Guiding Principles
The guiding principles until 2025 will be as follows:
The ministry responsible for land and human settlement will come up (and
implement) a complete urban settlement plan, in order to make sure the current (and
future satellite) urban areas develop in a safe, planned, responsible, and
environmentally friendly manner;
The ministry responsible for transport will come up (and implement) a complete
urban transport plan in order to tackle the current and future urban transportation
bottlenecks, in the most efficient and environmentally friendly way;
The various ministries dealing with the main social services (especially health,
education and water and sanitation) and the ones dealing with the remaining main
urban infrastructure (namely electricity and ICT) will each come up with (and
implement) specific urban development plans, to ensure the quality of the urban
livelihood (as well as the business environment) is maintained and improved.
c. Objectives
The main objectives to be reached by 2025 are:
Improving the living standards in the urban areas, by implementing cross-sector
urban-related policies and creating new satellite cities around the major Tanzanian
cities;
Creation and implementation of an urban-specific transport programme (including
roads and rail infrastructure investments) in order to efficiently tackle the current and
future bottle-necks;
Creation of satellite towns around each of the main urban areas, provided with all
necessary infrastructure and services to fast-track growth and alleviate the pressures
on the current urban areas;
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Maintaining and improving the productivity and competitiveness of the urban-related
productive activities (in the existing and future urban areas), in order to foster
socioeconomic development across all regions.
3.10.3 Employment
Human capital has been recognized as an important component for achieving economic
growth since the initial design of the country’s first development plans in the 1960s. The
critical nature of this component in the achievement of the national goals (including the
realization of Vision 2025) cannot be underemphasized. Therefore, the policies underlining
the Long Term Perspective Plan and the attainment of Vision 2025 need to be articulated
with an emphasis on harnessing the human capital.
a. National Policies
During the implementation of LTPP, the following policies on human capital and its
utilization will guide the implementation framework:
Human capital will have to be developed, nurtured and directed to propel growth in
critical and essential high impact sectors of the economy, based on the national
priorities, the comparative advantage over other key players and the need to sustain
positive growth drivers (designed or achieved in the past programmes). Those human
capital skills will be developed and harnessed through the adoption of relevant and
appropriate financial and non-financial incentive regimes directed to individuals with
the appropriate capacity to develop and use such skills in appropriate sectors of the
economy. Finally, national institutions should set appropriate standards in the training
programmes so as to ensure Tanzanians are competitive in the East African and global
labour markets;
Based on the comparative advantages that the country has over others, the
institutional framework for skills development that will support the high-growth/high-
employment sectors needs to be put in place, and where appropriate introduce some
incentive regimes to encourage private investments;
Given Tanzania’s strategic geographical location, develop a workforce with the
appropriate skills to handle and harness information technology, transportation and
logistics infrastructure, as well as a financial support hub to facilitate growth and
stability of such sectors;
Develop human resource skills with the capability for enhancing research and
development (R&D), including the adoption of new technologies for advanced growth
in the relevant sectors. Also, the country should give incentives for the utilization of
these improved technologies in the production of goods and services, in order to
improve efficiency and reduce costs of production;
Support the sectors and sub-sectors in seeking the appropriate markets for their
products, even if such markets are outside the country, for the purpose of creating
incentive and employment in all sectors;
For the purpose of absorbing young workforce in the economy, the Government will
develop an appropriate institutional framework that will: (i) create skills which are
necessary in order to significantly reduce youth unemployment, (ii) incentivise the
hiring of young individuals, (iii) prioritise the high-employment projects and
programmes in the FYDPs, and (iv) ensure the shift towards the development of the
formal sector, from the existing informal sector, which has a significant growth
potential;
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In all sectors of the economy, institute a mechanism whereby salaries and rewards are
based on performance;
Closely monitor and work on the development and improvement of the rural and
urban business environment, in order to foster the creation of new enterprises and thus
increased employment in both regions.
b. Guiding Principles
The guiding principles for the next 15 years in order to boost employment will involve
actions in the following areas:
Sector ministries will have to link with all academic/training institutions as well as
employers to determine the long-term employment market profile, skill demand,
competencies and other attributes that are necessary to get young people employed in
the relevant sectors. On the basis of the skill demand and competencies and other
attributes, training institutions should develop relevant curriculums geared towards
developing the ones relevant to the labour market;
Sector ministries should determine priority sectors where skills need to be developed
and, through annual budget allocation by the Government, commit enough funds to
support development of such skills in the manner that will support the job requirement
in terms of quantity and quality;
The ministry responsible for science and technology should develop and sustain
education and skill development foundations to support talented young men and
women needed to undertake research in sectors with important growth potentials and
a multiplier effect to the economy. Funds for such foundations should come from
donations, fund raising campaigns, sponsors and Government budget;
The ministries responsible for science and technology, infrastructure and
communication should design special incentives for private sector members who want
to invest in the sectors for the purpose of making Tanzania a communication,
technology and financial hub for its land-locked neighbours;
The Government, through the ministry responsible for agriculture, should set aside
funds to support the insurance schemes for farmers involved in the Kilimo Kwanza
strategic crops to guard them against losses due to natural calamities and other
unforeseen factors;
Through the ministry responsible for agriculture, the Government needs to reinforce
the budget funds that will be solely responsible for creating irrigation schemes for the
high value crops that have a high potential of creating employment for young people
in the rural area;
Strengthen the ministry responsible for cooperatives to ensure there is a robust
institutional support for creating marketing cooperative societies that will facilitate
information and trade on behalf of their members. Besides, the regulations governing
the management of Cooperatives should be reviewed to support integrity and liability
for those entrusted with managing cooperative societies;
The SMEs should receive special attention, as should the entire manufacturing sector
(and especially agro-processing), given their capacity to generate employment and
economic growth;
Mechanisms need to be established for all potential employers (both public and
private) to avail to all students throughout their training career, of the opportunities
available in the job market and skills required and competencies to enable them to
determine areas of concentration during their career development. Such roles should
be managed by the ministry responsible for labour, through labour exchange centres,
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and sector ministries which will have to be funded to support and coordinate the
information provision;
Review rules and regulations governing employment in the public and private sector
to allow the introduction and execution of performance contracts beyond employment
contracts.
c. Objectives
The main objectives in the employment sector are that by 2025:
Keeping unemployment below 5 percent for the entire period;
About 90 percent of all graduates coming from various training institutions will have
been equipped with relevant skills, competencies and other attributes relevant to the
profession they intend to join in the labour market;
About 90 percent of all training institutions will have reviewed their curriculum to
develop relevant skills that are critical to sustain national growth;
About 90 percent of scientific and technological innovation researchers will be
supported by grants set aside to develop skills in scientific research and innovation;
About 50 percent of the industries will use appropriate modern technology in their
production processes and their products will be competitive in the East African
market;
A significantly reduced unemployment for the youth, coupled with their increased
economic empowerment;
Around 80 percent of the Kilimo Kwanza initiative will be driven by technology and
research and development (R&D), managed by the formal sector, and will be
supported by financial institutions for national prosperity growth. Besides, all Kilimo
Kwanza initiative production processes will be based on predetermined quality
standards and their products will be marketed through well managed cooperative
societies;
Remuneration, wages or incentive packages for employees will be articulated in the
legal framework based on performance contracts and part on industrial relations and
enhanced productivity at the work places.
3.11 Human Capital Development and Social Services
3.11.1 Education and Training
Education is a crucial ingredient for national development. It continues to be instrumental in
creating the high quality human capital necessary for improving productivity and hence
propel economic growth. Increasing educational participation by all social groups as well as
improving quality of education at all levels is essential for Tanzania to become a competitive
middle-income country.
a. National Policies
The broad policies of education and training are:
Enhancement of partnership in the provision of education and training;
Identification of critical priority areas to concentrate on;
Broadening the financial base for education and training;
Streamlining the management structure of education by placing more authority and
responsibility on schools, local communities, districts and regions;
Emphasizing the provision of quality education;
Strengthening the integration of formal and informal education relationships;
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Increasing access to education by focusing on the equity issue with respect to women
and disadvantaged groups/areas;
Fostering the culture of education-for-job creation and self–employment;
Improving quality control and assurance measures, including curriculum review,
examination reforms, teacher management and inspection;
Creating technical training institutes to cater for the demand (particularly from the
industrial and services sectors), along with developing sector/discipline-specific high-
standard teacher training colleges.
b. Guiding Principles
The guiding principles of education and training in the next 15 years shall be:
Ensure quality teaching and learning at all levels;
Ensure gender equity;
Ensure universal primary and secondary education;
Enhance technical training;
Focus on science, engineering, education, health, ICT and agricultural profession;
c. Objectives
The national policies and the guiding principles are guided by a series of objectives:
To increase access and promote equity at all levels of education and training: the
pupil-teacher ratio at primary education should reach around 30-1, and 20-1 at
secondary level. Literacy rate of youths aged between 15 and 24 years should reach
94 percent. Completion rate of primary education for age cohort should remain above
95 percent. Secondary education enrolment rate for the age cohort should rise from
the current 34 percent to 48 percent. Also, the enrolment into tertiary education should
rise from the current 1.5 percent to at least 10 percent;
To bridge the skills gap to ensure that the lack of skilled labour does not remain a
binding constraint to economic growth (particularly for the industrial sector growth
during the 2015-2020 period) after 2015. The aim is to increase the proportion of the
population with high qualifications to 12 percent, and to 34 percent for the population
with medium qualifications, by 2025;
Creating a learning-friendly educational environment;
Train and deploy the adequate number of teachers;
To raise retention rates at all levels of education.
3.11.2 Health
The Tanzania Development Vision 2025 identified health as one of the priority sectors,
aiming at achieving high quality livelihood for all Tanzanians.
The main focus in the health sector for the next 15 years will be on increasing the access to
primary health care for all, universal access to safe water, and attaining the life expectancy of
typical middle-income countries.
a. National Policies
According to the national policy of 2003, the priority area for intervention revolves around
human resource development, improving district health services, curbing malaria, maternal,
new-born and child health, controlling the spread of HIV/AIDS, controlling tuberculosis and
diprosy, as well as preventing non-communicable diseases.
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In order to attain the goals set in LTPP, the following will be areas of the policy focus:
Access to quality primary health care for all;
Access to quality reproductive health service for all individuals of appropriate ages;
Reduction in infant and maternal mortality rates;
Universal access to clean and safe water;
Life expectancy comparable to the level attained by typical middle-income countries;
Food self-sufficiency and food security;
Gender equality and empowerment of women in all health parameters;
Partnerships between industry, the private sector and communities in the provision of
health services;
Access of the poor to basic health services;
Improve preventive services/measures (improvement of water and sanitation,
mosquito nets, etc.) and primary health care;
Awareness on the causes of health problems;
Capacity of LGAs and other main stakeholders to deliver basic health services (by
having the appropriate level of infrastructure and the properly trained staff);
Increased private sector investments and PPPs in health services;
Family planning programmes;
Health insurance coverage, with a target of universal coverage;
Research and development (R&D) to promote inventions, patenting and industrial
production of medicines in the country.
b. Guiding Principles
The guiding principles for the health sector for the next 15 years include:
Increase accessibility and quality of health services;
Strengthen the management of health system;
Develop policies and regulations on human resource for health and social welfare;
Promotion of people’s health in an efficient and equitable way to attain the targets of
Vision 2025;
Put in place an efficient and equitable health financing schemes;
Investment in the health of children in order to reduce child mortality and ensure that
children are healthy and therefore can focus on human capital development.
c. Objectives
Both the national policies and the guiding principles aim at achieving the following set of
objectives:
Reduce the burden of disease, maternal and infant mortality: both infant and under
five mortality should be reduced to 40 per 1,000 births, and maternal mortality be
reduced to 220 per 100,000 live births;
Ensure availability of drugs, reagents and medical supplies and infrastructures;
Ensure that health services are available and accessible to all people in both rural and
urban areas;
Increase the share of health sector in the national budget to about 15 percent;
Reach national HIV prevalence rate of about 1.5 percent;
The population should attain a life expectancy of about 70 years;
Train and make available an adequate number of competent health staff, to manage
health services, with gender perspective at all levels;
Sensitize communities on common preventable health problems;
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Promote and sustain PPPs in the delivery of health services.
3.11.3 Water Supply and Sanitation
The development of the water sector in Tanzania is guided by the National Water Policy of
2002. For the next 15 years, the development of the water sector for domestic and industrial
use in Tanzania shall be guided by the Water Sector Development Programme (2005-2025).
a. National Policies
In order to enhance the country’s ability towards a more integrated management and
development of the country’s water resources, the policy focus will include the following
areas:
The development of water facilities will continue to be guided by the Water Sector
Development Programme (WSDP), which aims at improving the provision of water
supply and sanitation services nation-wide;
Develop and implement water sector and sanitation projects at the village level in
each district;
Implement participatory water resource management plans at sub-basin levels;
Ensure the installed water capacity functions well and is properly maintained;
Encourage public-private partnership in provision of water services;
Increase the information distribution and awareness campaigns on the importance of
prudent use of water, and use this long-term vision in order to write sustainable
development policies;
Promote an equitable access to water;
Strengthen regional water boards;
Secure adequate funding for water services;
Increase utilisation of water resources for irrigation, whilst securing electricity
generation through the country’s multiple dams.
b. Guiding Principles
The guiding principles for the health sector for the next 15 years include:
Supply of water (adequate, safe and clean) to everybody within 400m radius;
Closely monitor water pollution and the general quality of water;
Adequate supply of water for irrigation and livestock development;
Adequate supply of water for hydropower generation and industrial production;
Proper maintenance of water and sanitation systems;
Sustainably manage the country’s sources of water.
c. Objectives
Both the national policies and the guiding principles aim at achieving the following set of
objectives:
By 2025, 90 percent of the national population should have access to safe water;
Increase rural and urban access to improved sanitation services from 21 percent to 60
percent and from 34 percent to 97 percent by 2025;
Strengthening management of water resources at all levels;
Improving the provision of water supply, sanitation and waste disposal services
nation-wide;
Providing full coverage in supplying water to urban centres;
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Ensure supply of reliable water for domestic use, both for human beings and
livestock;
Ensure supply of adequate water for irrigation purposes;
Ensure supply of adequate water for industrial and production uses;
Ensure supply of adequate water for hydro-power generation;
Equity of access to water among all users.
3.11.4 Sports
Sports activities have proven to be a profitable venture in a number of countries. In addition,
the benefits of sports spread across many sectors of the economy. The development of sports
calls for appropriate investments in both sports infrastructure and youth development.
a. National policies
Sports in Tanzania will be guided by the following policies:
Policies aimed at increasing the participation level of all age groups in all disciplines;
Significantly increasing the professionalism and training at the managerial level in all
disciplines, in order to foster excellence and have internationally competitive teams in
as many sports as possible;
Large infrastructure projects that will provide the base for the high-level
development;
Increased international training experiences (for athletes and trainers) to use
international best-practice.
b. Guiding principles
The guiding principles include:
Partnerships between the public and private sectors;
Maintaining high standards of sports infrastructure;
Promote excellence in all disciplines.
c. Objectives
The main objectives to be reached by 2025 are:
Development of sports infrastructure;
To promote sports in educational institutions, workplaces and community level;
To undertake research for the promotion of sports services;
To train individuals so as to enhance their skills in sports, including coaching,
administration and management.
3.11.5 Entertainment
The Culture Policy of 1997 defines culture as activities performed voluntarily in order to
recover energy, mental state or zeal lost out of performing certain tasks. The activities include
non-competitive sports such as conversations, strolls, tours, reading newspapers and books,
participation in games, listening to TV and radio broadcasts, etc. Culture is an important link
between an individual and his/her surroundings.
Entertainment can also be used to educate people, strengthen solidarity and partnerships
nationally and internationally as well as promote culture of work and morale.
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Both the national economy and global economy offer immense opportunities for the
entertainment industry. Tanzanians, especially youth, will be encouraged to be innovative in
order to maximize on these opportunities.
a. National policies The main thrust of policies will be on ensuring that entertainment is compatible with national
norms and values and that it can be used to foster development. Specific policies include:
Promoting entertainment for developmental objective such as employment creation
and income generation;
Promotion of domestic production of entertainment paraphernalia;
Promotion of designated areas for entertainment;
Promotion of moral values.
b. Guiding principles
The guiding principles will be:
Propelling Tanzanian’s identity;
Ensuring moral uprightness in expression and language used;
Adhering to ethical values.
c. Objectives
The main objectives are:
To motivate talents;
To promote the entertainment industry;
To sensitize and empower entertainment artists to recognize their obligations, rights
(such as Intellectual Property Rights) and benefits.
3.11.6 Media
The national policies, guiding principles and objectives for the media industry will be aimed
at tackling the challenges faced by the sector, namely the limited training of journalists,
whilst safeguarding the steps that have been made towards ensuring the sectors independence
and the investments made to spread the information across the country.
a. National policies
The national policies will be guided by:
Set up training facilities for journalists;
Enhance and facilitate international collaborations in order to raise the standards and
quality of the national media industry;
Develop and incentivise new means of media and media supports.
b. Guiding principles
The main guiding principles will be:
Ensuring impartiality and independence in the sector, and foster responsibility;
Having high moral ethics;
Promote evidence-based reporting.
c. Objectives
The objectives of the media policy include:
Maintained pluralistic, free and independent media;
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Improved skills for all media professionals, through expanded existing training
institutions (and/or new institutions) and through the improvement of the training
programme.
3.11.7 Culture
As explained in the preceding chapter, the Plan will focus on both hard and soft aspects of the
sector. The “hard” aspects of culture provide an opportunity for employment creation and
sources of income, both within and outside Tanzania. Promotional activities beyond national
borders will ensure achievement of these two goals. The “soft” aspects of culture need to be
moulded in a positive way for them to play the required role of contributing to the country’s
socio-economic development. Education, sensitization and sanctions have a great role to play
in reversing the current status.
a. National policies
The national policies that will be followed will aim at the following:
Preserving and maintaining the country’s rich cultural heritage;
Foster employment creation by increasing information on the sector’s opportunities,
by providing the related necessary training, and incentivising cultural projects around
the country (through Government investments and/or PPPs).
b. Guiding principles
The guiding principles will be divided into the hard and the soft aspects:
“Hard” aspects
Maximizing on opportunities;
Promoting the expression of culture.
“Soft” aspects
Positivism;
Developmental mind-set;
Moral uprightness.
c. Objectives
The main objectives to be reached by 2025 are the following:
Promoted national identity (through language, works of art, etc.)
Protected national ethos and cultural heritage;
Education and training mainstreamed, to inculcate in youth positive beliefs, ethics,
morals, values and attitudes;
The values of a high developmental mind-set, hard work, responsibility and honesty
mainstreamed and fostered in the public and private sector.
3.12 Governance
Good governance is an important pre-requisite to ensure the socio-economic transformation
envisaged in TDV 2025. As explained in Chapter 2, it involves diverse components such as
ensuring peace and stability, improving structures and systems of Government and creating
an effective public administration. The following section outlines the national policies,
guiding principles and objectives for the next 15 years.
a. National Policies
The following policies will be pursued:
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Deepening democracy, pluralism and broad-based participation;
Cooperation with other States, especially the neighbouring ones;
Securing national borders from fall outs of instability in neighbouring countries;
Promote more transparency (information openness) in public sector activities, for
example by disclosing information and creating and maintaining updated institutional
websites;
Improve systems of accountability and transparency in procurement and resources
management;
Improve systems of investigation and legal redressal mechanism, particularly in the
use of public funds;
Establish effective processes to ensure that national overarching policies and planning
mechanisms are designed and endorsed with the adequate participation of the relevant
stakeholders;
Fast-track the finalization and implementation of the new constitution by 2015;
Enhance the operational capacity of all Government institutions;
Operationalize a national ID system by 2015.
b. Guiding Principles
Governance issues will be guided by:
The need to have lasting peace and security, free from cross-border threats or cross-
border military incursions;
Having a lean, modern, well equipped, well structured, efficient, well qualified,
professionally trained, highly disciplined and adequately rewarded military and
security forces;
Improving efficiency and transparency of all Government institutions;
Ensuring value-for-money in all government projects;
Efficient provision of public goods and services.
c. Objectives
The main objectives during LTPP implementation will be:
To secure national borders and promote good neighbourliness and warm inter-State
relations;
To ensure maximum efficiency and transparency in public service in all aspects;
To ensure wider participation in national decision making;
To reduce levels of corruption across all sectors.
3.13 Private Sector Development
The role of the private sector in national development has been emphasized in all policy
documents. Considerable progress has been made towards ensuring that the private sector
becomes the engine of growth. That notwithstanding, efforts need to be directed at improving
the investment climate for a pro-active private sector participation, including development of
new PPP in large scale infrastructure and industrial projects.
a. National Policies
The Government has created an enabling business environment policy for the private sector
to operate. Creating the right conditions for business to grow is a key feature for job creation
and enabling the poor to earn a decent living.
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The national policies will include:
An increased dialogue, information flow and partnership between the private and the
public sector (through, for instance, increased usage and implementation of the PPP
agreements);
Closely monitoring the country’s competitiveness and business climate, in order for
the Government to be able to generate the best possible environment for the private
sector;
Nurture a culture of strong corporate governance and corporate social responsibility
across private sector businesses;
Attract more FDI in job generating industries.
b. Guiding Principles
The guiding principles for the private sector development for the next 15 years include:
Creating an attractive investment climate that supports the growth of businesses.
Specifically, conduct reforms that allow markets to work with greater efficiency and
fairness, and improve the legal, institutional and regulatory frameworks;
Leveraging maximum input from the private sector, by developing hard and soft
infrastructure;
Facilitating access to regional, national and international markets for the nationally
produced goods and services;
Develop human capital resources, by investing in research and knowledge
management that support the private sector development, in order to have a highly
educated and healthy working population;
The development of the PPP agreements, in order to improve the public-private
business environment.
c. Objectives
In order to attain the goals set in LTPP, the following will be areas of the policy focus:
To empower entrepreneurs to produce, trade and become economically self-sufficient;
To enable the private sector to become a vibrant engine of growth and hence create
job and income;
To enhance the competition by helping the private sector to tackle constraints related
to regulation, non-tariff barriers, market availability and other policy related
constraints;
To expand markets access both domestically and globally;
To foster PPPs in large scale infrastructural and industrial projects.
3.14 Cross Cutting Issues
The development strides that Tanzania wishes to take will not be those that are blind to the
varying needs and opportunities facing different gender groups in the country, the inherent
trade-off between consumption of natural resources for development and the need to preserve
the same for the future generations, and vulnerable groups that inevitably are impacted
differently by different events and undertakings in the society. In the following section we
outline the ideal scenario that needs to be realized and attendant efforts that need to be taken
to guarantee this realization for each of these items.
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3.14.1 Gender
It is envisaged that in the next 15 years, gender imbalances will have been addressed and
women will have been empowered enough to access opportunities to participate in and
benefit from economic, social and political activities at a level that is at par with men in the
society. The following will be the national policies, objectives and targets in this sector.
a. National Policies
The national policies will be as follows:
Encourage women’s participation in leadership in the economic, social and political
arena;
Identify women as special vulnerable group in all economic policies;
Improve the working environment for women in all economic sub-sectors;
Special emphasize on women’s education at all levels;
Efficient community level and national level initiatives to curb domestic violence;
Promote access of women to economic assets and finance.
b. Guiding Principles
The following are the objectives of intervention in this sector:
Empowerment of women is an effective method of bringing forth development in the
society on various fronts;
Women are especially more vulnerable to many development challenges such as
poverty, climate change impacts, HIV/AIDS and other diseases.
c. Objectives
The following will be the targets for the next 15 years:
To attain a 50/50 percent ratio (of women to men) in political and leadership positions
by 2025;
To improve performance of Tanzania with respect to the gender inequality index;
To considerably improve women’s enrolment and retention rates across all levels of
education;
To increase women’s participation in public services from current level of 22 %
(2010) to over 40% by 2025.
3.14.2 HIV and Aids
The HIV/AIDS pandemic has become a major challenge in recent years because of its impact
on the population’s structure and resources. Combatting HIV/AIDS asks for multi-sectoral
interventions, because it is covering cultural, social, economic, political and technological
processes. This requires the involvement and participation of all public and private
stakeholders in developing a strategic framework and in the implementation of the strategy.
a. National Policies
The national policies to be followed are as follows:
Establish a framework to coordinate HIVAIDS activities in the country to ensure
resources are efficiently employed;
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Develop of a national research agenda to be followed with Government and non-State
actors in the country;
Synchronize the frameworks for all the programmes by category to avoid uneven
spatial distribution in working sites. Examples of categories are awareness, HIV
testing, most vulnerable children, etc.;
To develop a strategic planning framework of all HIV/AIDS control programmes and
activities within the overall national strategy;
To foster national and international linkages among all stakeholders through proper
co-ordination of all HIV/AIDS control programmes and activities within the overall
national strategy.
b. Guiding Principles The guiding principles are as follows:
Create a framework for the working relations with international organizations and
donors in supporting HIV/AIDS activities in the country;
Create a framework to guide interventions to fight HIV and AIDS;
Handling of social, economic, cultural and legal issues related to the epidemic.
c. Objectives
The main objectives are as follows:
Reach a national HIV prevalence rate of about 1.5 percent;
To have a society in which our children can grow up free from the threat of
HIV/AIDS and which cares for and supports all those who are still infected and
affected by HIV/AIDS;
To provide the strategic leadership, coordination and implementation of a national
multi-sectoral response to HIV/AIDS, leading to the reduction of further infections
associated diseases;
To minimize the adverse socio-economic effects of the epidemic.
3.14.3 Environment and Climate Change
Environment and climate change issues deem attention of stakeholders across all sectors
owing to their widespread impacts. Mitigation and adaptation mechanisms need to be put in
place to minimize the negative impacts of climate change on the economy. Effective
institutional mechanisms to tap the global climate change funds need to be fostered to finance
the huge financial demand of adaptive and mitigation strategies. Policies should be put in
place to minimize the adverse environmental impacts of development. This section outlines
the national policies, guiding principles and objectives over the next fifteen years.
a. National Policies
The following policies will guide the strategic intervention in this section:
The National Environment Management Council (NEMC) will need to be further
strengthened to conduct comprehensive environment impact assessments of all major
national projects and programmes;
Policy measures to realize proposed actions under Tanzania National Adaptation
Programme of Action (NAPA);
A national climate change strategy will be drafted;
Climate change and environmental impact assessment training will be offered to
selected staff across ministries;
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An institutional framework will be developed to efficiently access global climate
change finance.
b. Guiding Principles
The guiding principles for the next 15 years will be the following:
Environment and ecology protection, promoting a sustainable development;
The climate change threats need immediate steps for adaptation and mitigation;
The global climate change fund will provide opportunities for climate change finance,
which need to be accessed;
Environmental impacts of all national projects need to be evaluated.
c. Objectives
The objectives to be achieved by 2025 are the following:
Ensure environmental sustainability while attaining economic development;
To make the most vulnerable sections of the society and sectors resilient to climate
change impacts;
Effectively access climate change finance to develop adaptive capability;
Mainstream issues related to climate change and environment in all national programs
and policies;
To minimize the economic costs of climate change.
3.14.4 Social Protection
The main thrust is to contain causes of generalized insecurity and strengthen systems and
institutions that deal with social protection in order to protect vulnerable groups (such as
orphans and vulnerable children (OVC), persons with disabilities (PWDs), the aged, and ex-
prisoners, widows and widowers, externally and internally displaced persons, marginalized
persons), whilst also expanding their choices and enhancing their participation in decent
productive activities. Finally, an integrated and comprehensive system of social protection,
formal and informal, and involving all stakeholders, is required.
a. National Policies
Special policy focus will be on:
Reinforcing and improving existing initiatives, both formal (such as National Social
Protection Framework, NSPF, Tanzania Social Action Fund, TASAF, Community-
based, etc.) and informal (such as family structures, traditional coping strategies);
b. Guiding Principles
The following principles will be adhered to:
Ensuring sustainability, good governance, and universality;
Ensuring cost effectiveness in delivery ;
Dealing with the matter with an integrated approach;
Closely monitoring inequality.
c. Objectives
The main objectives to be achieved by 2025 will be:
To reduce the proportion of Tanzanians facing various forms of insecurity;
To enhance access to social protection interventions;
To promote social protection as a productive strategy.
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CHAPTER IV: FINANCING AND RESOURCE
MOBILISATION
4.1 Resource Mobilisation
The successful implementation of the LTPP will critically depend on the country’s capacity
to secure resources for financing the envisaged programmes and projects. Historically, public
investment, notably the Government’s development budget, has relied heavily on external
resources (grants and concessional loans), which have been unreliable and unpredictable.
Apart from this, donor overdependence is clearly inconsistent over time with national
autonomy and sovereignty.
The LTPP thus seeks to pursue a more reliable development financing framework and to
reduce donor dependency. The country’s socioeconomic development will eventually lead to
a decrease of Official Development Assistance (ODA), and the Plan’s target is to bring the
ratio of Official Development Assistance (ODA) to Gross National Income (GNI) closer to
current levels in lower middle-income countries by the end of the period (reducing it by more
than half to about 6 percent). The accompanying increase in the need for financing means is
to be achieved through a mix of resource mobilization strategies, which have been separated
here into traditional and innovative sources of financing.
4.2 Traditional Sources of Financing
All conventional means of development financing will be explored in a more efficient
manner to meet the huge demand for finance during the implementation of LTPP. The system
of mobilizing these conventional sources will be streamlined and made more efficient to
increase their contributions. The following conventional sources will be given special focus:
Tax Revenue: There will be concerted effort to improve tax collection. Tax exemptions will
be limited, the informal sector of the economy will be identified and will be encouraged to
transform into formal sector, thereby increasing the taxation base. The tax collection system
will be made more efficient, transparent and corruption free. Tax collection through LGAs
will be expanded in both scale and depth, in order to substantially increase its contribution to
total tax revenue. The tax to GDP ratio will be brought at par with middle-income countries
by 2025.
Non-tax Revenue: Other state charges such as road license fees, tourism charges, natural
resource usage charges will all be constantly updated and the collection system of these
charges will be made more efficient and accountable. The Government will review the rates
of - and streamline the collection of - charges for all public services. Royalty payments from
mineral resources will be periodically reviewed to partially reflect the profit increase due to
higher commodity prices.
Privatisation of non-core public assets: Government will privatize all non-core public
establishments and encourage more privatization. The sale of public assets will be at a
competitive market price and if required part ownership of the firms will be retained with the
government.
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Foreign grants and concessional loans: Government will seek more access to foreign grants
and concessional loans, from foreign governments and other international institutions such as
AfDB.
4.3 Innovative Sources of Financing
The country will also have to finance the implementation of the LTPP (through the respective
FYDPs and ADPs) by using innovative financing instruments. The most important ones are
developed below:
Annual Expenditure Quota: Over the last decade, total development expenditure has varied
between 28% and 69% of domestic revenue, averaging 48% for the whole period. The
Government shall henceforth allocate at least 35 percent of the projected annual domestic
revenue to development. While this does not generate new resources, it ensures a budgetary
recurrent saving to be reserved for development financing.
Domestic Borrowing: The country will start financing part of its projects and programmes
through two new domestic instruments, namely infrastructure bonds and sub-sovereign
bonds. Infrastructure bonds will help finance large infrastructure projects for which the
potential revenue could reimburse the interests and capital. On the other hand, sub-sovereign
bonds (issued by governmental bodies and/or local government institutions) can generate
significant means for financing projects and programmes managed by those entities
(especially for infrastructure). Government (and/or international guaranties) will be required
in order for this initiative to raise funds.
Pension and Social Security Funds: Being one of the most important players on the
country’s capital market, and with large reserve funds, they represent a formidable potential
to finance large national projects. Therefore, the Government will come up with a framework
in which these institutions will play a larger role as a source of investment capital.
Minerals: Considering the increasing importance of the sector in the economy and its
increased capacity to generate large profits (given the upward price trend on international
markets), the country will further analyse how to tap some of those extra revenues, by setting
up a super-profit tax on the windfall earnings of the sector for instance.
National Climate Fund: This fund will be set up in order to access the global climate change
funds more efficiently, to then finance programmes and projects where these issues play a
major role (and/or represent a major challenge). Besides, the country will use the fun to deal
with its future international carbon trading operations.
Public Private Partnerships (PPPs): The Government will further enhance the role of the
private sector, by financing an ever larger share of its projects through those PPPs, as they
provide an efficient way of sharing the risks and benefits of given projects, whilst alleviating
the financial burden for the State.
Diaspora Bonds: These will be utilised in order to tap from the financial resources of the
Tanzanians living abroad and that wish to invest in the development of their country. The
Government will work on improving financial intermediation and creating a beneficial
incentive structure in order to render those products attractive.
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Foreign Market Bonds: Further financing means will come from issuing medium and long
term sovereign bonds on the international markets (denominated in foreign currency). These
bonds will be used to finance the projects that have the highest capacity of generating foreign
exchange.
Regional Economic Arrangements and South-South Cooperation (SSC): Tanzania will use
and help develop the existing regional frameworks to jointly finance infrastructure projects
(such as the ones provided by the East African Community and the Southern African
Development Community (SADC)), as well as attract new strategic partners (especially the
BRIC countries).
4.4 Dynamic Resource Mobilization Committee
The mobilisation and management of resources for LTPP will require a dynamic operational
mechanism to ensure availability and efficient utilisation. Through the existing institutional
framework, a Resource Mobilisation Committee will be established. Key functions of the
same will include:
(a) Setting realistic contribution benchmarks from each financing source;
(b) Making follow-ups to ensure actual resource inflows;
(c) Spearheading M&E of financing aspect of LTPP implementation.
Accurate estimations of the contributions from both traditional and innovative instruments
mentioned above will be conducted by this committee. The specific operating procedures,
including governance, consultations, authorisation and disbursements, will be finalised jointly
by the POPC and the MoF. Since the implementation of LTPP is spread over 15 years, it is
imperative to make efficient use of long-term financing instruments. The role of a resource
mobilization committee, which will be mindful of these long term and short term financing
issues, is crucial in coordinating the financing aspects.
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CHAPTER V: IMPLEMENTATION
ARRANGEMENTS
5.1 Planning Framework
The Long Term Perspective Plan (LTPP) 2011/12- 2024/25 has been prepared to implement
Tanzania’s development agenda as articulated in Vision 2025. While providing broad, long-
term directions, it has been broken down into three successive Five Year Development Plans
(or FYDPs): FYDP I (2011/12- 2015/16) has the theme of unleashing Tanzania’s latent
growth potential; FYDP II (2016/17- 2020/21), with the theme of nurturing an industrial
economy; and FYDP III (2021/22- 2024/25), anchored on the theme of attaining export
growth and competitiveness. In turn, FYDPs will be operationalized through Annual
Development Plans (ADPs), implemented in the sequence of Budget Guidelines; Medium-
Term Expenditure Frameworks, MTEFs; Cabinet Approval; Parliamentary Authorisation;
Execution; and Monitoring and Evaluation.
Figure 5.1: Tanzania’s Plan Implementation Framework
Source: POPC’s computation
5.2 Institutional Framework
The implementation of LTPP involves transiting from one economic structure to another.
This means a proactive role of all stakeholders involved. The Plan recognizes that it is vital to
closely monitor areas critical to development, like for example infrastructure, where
investments are large, and therefore prone to special interests and corrupt practices.
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5.2.1 Role of the State
The role of the State will continue to be:
Maintaining macroeconomic stability to provide the private sector with a reasonable
degree of predictability in the economy in order to make informed decisions on
investments;
Defining the strategic direction for achieving Vision 2025 by providing policy and
strategic direction for the country through strengthening the Planning role;
Formulating medium term strategies (FYDPs) to implement LTTP to achieve Vision
2025 objectives;
Strengthening the institutional framework – Government institutions, PPPs, markets
etc. through creating an enabling environment for doing business, strengthening and
instilling a strong institutional oversight, establishing and enforcing property rights
and contracts, ensuring competition and consumer protection;
Ensuring good governance (at the political, economic, and social level);
Addressing infrastructural bottlenecks (facilitating infrastructure development through
direct financing, or indirectly through guaranteeing private sector investment);
Addressing blockages to economic growth, which will be done through implementing
cautious and selective industrial and trade policies/proactive measures to develop and
nurture the formation of strong national players in the private sector, so that they may
compete effectively with international players;
Developing human resources/skills and knowledge creation;
Promoting social protection;
Pursuing sustainable development in all its essential elements (economic system,
environmental system, social system and institutional system); and
Strengthening the institutional and regulatory framework and its enforcement to
ensure a level playing field for all private businesses, and encourage fair competition;
supporting the merger of small companies, including banks, to form larger entities
which can withstand regional and global competition.
5.2.2 Role of POPC
The Planning Commission, the national think tank on socio-economic management, will take
the lead role in articulating and influencing the direction of economic management in the
country and guiding national planning, working in close collaboration with the Ministry of
Finance. The M&E of the LTPP and the FYDPs will be spearheaded by POPC, through
appropriate M&E plans. The POPC, through its active participation in the Resource
Mobilization Committee, will advise on the mobilization of financial resources through
innovative long- and short-term instruments. The implementation capacity at the MDAs, RSs
and LGAs level will be constantly monitored by POPC, and methods to meet the capacity
gaps will be identified. A specialised ‘LTPP Delivery Team’ will be constituted at the POPC,
particularly to oversee the implementation of LTPP through FYDPs, and will advise the
Government on the necessary policy actions to meet the targets outlined in FYDPs and LTPP.
5.2.3 Role of MDAs and LGAs
The responsibility of implementing the projects identified through FYDPs will fall on
MDAs/RSs/LGAs. The annual work plans of MDAs/RSs/LGAs will have to be aligned with
respect to FYDPs and the LTPP. The M&E functions at the programme level and institutional
level will be conducted through MDAs/RSs/LGAs. It will be the responsibility of local
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governments and sectoral ministries to ensure that the priorities identified by communities
and sectors respectively are in line with national priorities.
5.2.4 Role of Non-State Actors
LTTP also recognizes the strengths and capabilities of all development actors, including the
private sector and civil society in achieving economic development goals. In this vein, the
Government will promote public-private partnerships, especially in activities that are
characterized by large and lumpy investments.
5.2.5 Role of Development Partners
Successful implementation of LTPP is contingent on securing the financing of FYDPs. While
strenuous efforts will be made to improve and diversify the resource base (to take emerging
opportunities into account), development partners are expected to bring their influence to
bear in implementing projects and programmes consistent with the nation’s long-term
development agenda.
5.3 Monitoring and Evaluation
5.3.1 Overview
To track implementation of the LTPP more systematically, an exclusive procedure, anchored
within the FYDP M&E system, will be adopted. The monitoring and evaluation procedure,
however, should focus on tracking progress. For consistency, it is important that the M&E of
LTPP is done in the context of the FYDP’s implementation milestones, taken as key steps
towards the achievement of the long term targets. As it is for the FYDPs, it will draw
information from the national statistical system, analysing and reporting information on
specific indicators to provide critical decision makers, development stakeholders, and the
citizens with indications of the extent of progress and the achievement of long term targets.
5.3.2 M&E Institutional Arrangement and Tools
A strong monitoring framework will be needed to assess the implementation of LTPP,
consistent with agreed policies, goals, targets and milestones.
As the instrument geared towards implementing the national development agenda with
interests cutting across the spectrum of all stakeholders, their participation in monitoring the
implementation of LTPP to ensure its success is vital. Thus, there is a need to create an
independent National Development Planning Council/Committee (NDPC), which will
oversee the implementation of LTPP, taking into consideration the interests of these
stakeholders, and ensuring that the goals and benchmarks of the Plan are successfully
achieved.
There is already a framework in place for administration, management and execution of the
LTPP, namely the POPC, the Economic Committee of Cabinet (ECC), the MDAs, LGAs and
other public and private sector actors. The fundamental role of POPC is to monitor LTPP’s
implementation. Nevertheless, monitoring of LTPP needs to be strengthened further.
5.3.3 Plan Implementation Monitoring Unit (PIMU)
A Plan Implementation Monitoring Unit, PIMU, will be established within POPC as an
overall coordinator of FYDP/LTPP implementation monitoring. The PIMU will regularly
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report to NDPC. To access necessary information, PIMU will use existing reporting systems
of the planning and budgeting processes at central, MDAs and LGAs levels; as well as from
civil society, the private sector and development partners. Key functions of PIMU will
include preparing annual, biannual and five year reports on the progress made in the
implementation of LTPP; and undertaking periodic surveys, such as poverty and integrated
household surveys, to inform the implementation of LTPP.
5.3.4 Operationalizing the M&E
The LTPP/FYDP M&E function will be carried out at three different levels:
1. Programme/Project Level: The M&E of each project/programme outlined in the
FYDPs will be conducted by the respective implementing agency such as
MDAs/RSs/LGAs. The M&E reports of the same should be forwarded to the central
M&E committee housed at the POPC.
2. Institutional Level: The M&E of institutional performance of all implementing
agencies will be conducted on an annual basis. The challenges to implement FYDPs’
projects will be analysed and the impediments and progress will be identified in this
process. The institutional M&E reports will be reviewed by POPC and this will help
POPC in advising the Government on improving the implementation capacity of the
institutions.
3. LTPP/FYDP Level: The overall M&E of the FYDPs and LTPP implementation will
be the responsibility of POPC. The M&E reports at the project and institutional level
will be used effectively together with consistent monitoring of implementation
progress of FYDP and evaluation in terms of meeting the performance targets
outlined in FYDP and LTPP.
5.3.5 The National Planners Conference
The National Planners Conference will be strengthened under the lead role of POPC, to
incorporate all major stakeholders participating in the LTPP/FYDPs implementation process.
The annual FYDP/LTPP M&E reports will be discussed at the Planners Conference, and
ways to ensure meeting of FYDPs’ targets will be explored. This will be a national forum for
all stakeholders to express their concerns and suggestions on any stages of FYDP
implementation, and will be held once a year.
5.3.6 Performance Indicators, Baselines and Targets
Performance indicators will be selected for monitoring and assessing the progress, trends and
developments, to see whether they are consistent with the objectives of LTPP. Two types of
indicators will be developed: (i) outcome indicators, to assess the achievements in line with
the aspirations and objectives of Vision 2025, and (ii) output indicators, to assess the outputs
at project level. Baselines set for FYDPs will apply for LTPP. However, targets will also be
set for the end of the period and for the end of each of the three FYDPs (2015, 2020 and
2025). A list of socio-economic indicators and targets are included as Appendix 1 of this
document.
5.3.7 Reporting and Communication Arrangements
To the largest extent possible, the FYDP reporting arrangement (including annual
implementation report), will be utilized in reporting LTPP. Two types of reports will be
produced: five year performance reports, and the LTPP outcome report.
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The five year performance reports will be gauged against the five year targets and interpreted
in light of the final targets. PIMU, with the support of the secretariat, will coordinate these
reports. A communications strategy will be developed to guide dissemination of information
emerging from these assessment reports.
In addition to the performance reporting, budgeting reporting of all MDAs/LGAs/RSs and all
relevant stakeholders will also be crucial. The budget reports of all FYDPs/LTPP-related
projects will be forwarded to the resource mobilization committee at POPC. The budget
reports, in addition to the regular revenue and expenditure, should specifically discuss all
pertinent issues associated with any problem related to flow of funds and challenges.
5.4 Plan Facilitating Factors
Successful implementation of LTPP will depend on several factors, namely:
(a) Leadership, technical and institutional capacities: these will be strengthened to
effectively follow up and manage the LTPP implementation process;
(b) Priority projects and programmes: these will be designed to maximize on the rich
resource potentials and investment opportunities obtainable in the country;
(c) Development projects and programmes requiring critical mass financing: they will be
allocated as an adequate, reliable and predictable quantum of resources throughout the
implementation process;
(d) Institutional framework for development planning: this will be sustained in order to
build capacity and programming; and strengthen institutional succession and
management;
(e) One of the issues with regard to the people’s mind-set has been inadequate leadership
to systematically implement agreed policies, strategies and plans, and emphasize
results. A paradigm shift in the people’s mind-set is needed towards promoting a
dedicated and patriotic population, led by dedicated and committed leaders who
ensure that plans are implemented without fail. It will be critical to entrench the
culture of dedication to work, excellence, and zero tolerance towards under-
performance, poor quality results and loitering;
(f) Effective communication: all possible means of communication will be employed in
order to foster awareness, ownership and legitimacy.
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ANNEXES
Annex 1: M&E framework: Indicative Socio-Economic Targets
Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
Economic growth GDP Per capita growth, percent 2.5 3.6 5.5 5.5 5.5
GDP growth rate, percent 5.1 6.5 8 8 8
GNI pc (Atlas Method) at constant 2009
USD 270 500 670 855 1100
GNI pc PPP at constant 2009 USD 770 1,350 1,809 2,308 2,950
GNP per capita (pc), nominal (USD) 300 500 640 814 1,040
Gross Domestic Saving as % of GDP 13.2 10.6 14 15 22
Net ODA (percent of GNI) 10.6 13.7 10 7 5
Revenue (percent of GDP) 10.2 17.5 19 20 21
Inflation rate, percent 5.9 6.8 4-5 < 5 < 5
Food self-sufficiency ratio (average) 92 100 120 130 140
3.5 Productivity and Growth
3.5.1 Agriculture Agriculture growth rate, percent 3.4 4.6 6 6 6
Agriculture (% of GDP) 33.1 27.8 25.4 23 21
Employment in agriculture (% of total) 74.6 74.6 61 50 41
3.5.1.1 Crops Proportion of irrigated cropland (%) 3.3 3.5 10 18.8 18.3
3.5.1.2 Livestock
3.5.1.3 Forestry and Hunting
3.5.1.4 Fishing
3.5.2 Industry Industry growth rate, percent 9 7 8.2 8.2 8.2
Industry (percent of GDP) 19 24.4 26.5 28 31
Employment in industry (percent of total) 5 6 8 12.5 20
3.5.2.1 Manufacturing Manufacturing growth rate, percent 8 10 12 12 12
Manufacture (percent of GDP) 9.3 9.8 12 14.6 18
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Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
3.5.2.2 Mining and Quarrying Growth rate of mining, sector, percent 13 1.2 5 5 5
3.5.2.3 Construction
3.6 Infrastructure
3.6.1 Transport
3.6.1.1 Road sub-sector Road Density (Km/1000Km²)
98.7 99.3 102 105
Proportion of paved roads (%) 4.2 7.7 13.8 20 30
Percentage coverage of total maintenance
needs (%)
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(2008) 58 64 70 76
3.6.1.2 Railway sub-sector Freight (tonnes) 1,350,625 256,190 1,456,000 2,456,000 4,556,000
Average Speed freight train (km/h) 15.6 10.4 (2006) 30 100-120 100-120
Wagon Availability (%) 71 48 60 75 90
3.6.1.3 Air Transport sub-sector Passenger traffic (nos.) 1,200,000 988,637 (2009) 3,430,000 4,000,000 4,500,000
Total Cargo (tonnes) 40,000 26,741 35,500 45,000 55,000
Aircraft Movement 112,820 160,820 (2006) 169,500 216,000 276,000
3.6.1.4 Maritime Transport sub-
sector Transit freight (DWT) 4,684,929 5,540,000 6,395,071 7,250,142 8,105,213
Passengers (Nos) 565,704 682,134 (2006) 953,000 1,095,950 1,260,345
Containerized cargo (TEUs) 98,691 255,880 (2006) 795,000 1,200,450 1,812,675
Freight (tonnes) inland waterways 62,263* 87,889* (2006) 126,328 147,683 169,038
Passenger (Nos.) inland waterways 274,701* 515,925* (2009) 677,781 812,141 946,501
3.6.1.5 Pipeline sub-sector Crude Oil Transported in million tonnes
(TAZAMA Pipeline) 1.1
0.6*
(2008)
Volume of gas transported (in million cubic
feet) N/A 25,550 40,000 60,000 80,300
3.6.1.6 Meteorology sub-sector Number of people using TMA services 10,897 16,000 19,134 21,402 23,670
105
Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
Total expenditure on Meteorological
equipments and instruments (Million
TShs.)26
2,354 6,320 8,960 11,600
3.6.2 Energy Electric power (kWh per capita) 58.2 81.7 200 377 490
Electric Power Transmission losses (percent) 2327
24 20 18 15
Installed capacity(MW) 785 1,051 2,780 6,700 12,300
Access to electricity (% of population with
access ) 10 14 24.9 49.7 55
Electricity Consumption(GWh) 2,134 3,430 11,689 28,887 54,951
3.7 Land
Time taken by registrar of Titles to approve a
transfer of certificate of right of occupancy
(days)
21 10 4
3.8 Housing and Human
Settlement
Residential houses in urban centres
developed in accordance with the planned
land use
30
>80
% of Population with decent houses
3.9 Services Services growth rate, percent 3.6 7.2 8 8 8
Services (percent of GDP) 47.9 47.80 48.1 47.5 49
3.9.1 Trade and Commerce Export growth rate, percent -5 8.4 10 10 10
Share of Tanzania in Total World Trade 0.02% 0.04% 0.07% 0.12% 0.20%
Share of Tanzania in Total EAC Trade 25% 32% 37% 42% 48%
Share of 'trade and repairs' to GDP (current) 13% 12% 13% 13% 14%
Share of Exports to GDP (current) 16% 28% 32% 36% 40%
3.9.2 Tourism Growth of tourism sector, percent 4.3 4.2 6 6 6
Amount of visitors (Millions) 0.50 0.80 0.94 2.0 2.40
Average length of stay (days) 8 11 18
Revenues (Constant 2010 Billion USD) 0.74 1.30 2.69 3.34 > 4
26
Computations based on average over years (2010 being the reference). 27
This data point is for year 2005, as no comparable data could be found for previous years.
106
Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
3.9.3 Financial Services Share of adult population formally or semi-
formally included in the financial sector NA
28 17% 21% 27% 34%
Share of adult population excluded from the
financial sector NA 56% 54% 51% 46%
Share of people using informal financial
instruments NA 27% 24% 22% 20%
Share of domestic credit to the private sector
to GDP 4.1% 16% 23% 34% 50%
Market capitalization of listed companies (%
of GDP) 2.3% 5.5% 9.1% 15.1% 25%
Total value of stock traded (% of GDP) 0.1% 0.1% 0.4% 1.4% 5%
3.9.4 Science, Technology and
Innovation and R&D R&D expenditure (% of GDP) >0.2 (2003) N/A 0.23 0.5 1
Trademark application (no.) 500 556 780 1,099 1,399
High technology export (% of manufactured
export) N/A 3 4.33 5.67 7
3.9.5
Information and
Communication
Technology
Internet density-penetration (% of
population) 0.12 11 21.33 31.67 42
Broadband Internet Subscription NA 0.01 1.2 2.5 3.7
Telephone penetration / Teledensity (% of
population) 0.85 47.93 54.95 61.98 69
Fixed telephone subscription (% of
population) 0.52 0.40 2.6 4.8 7
Mobile phone subscription (% of population) 0.33 47.53 54.69 61.84 73
3.9.6 Postal Services Population per post office (Number of people
served by one post office) 110,646.98 83,764.65 56,882.33 30,000 7,271
Average number of Inhabitants per post-
office box 271 250 191 132 73
3.10 Demographic Transition
and Related Issues
28
There is no comparable data for 2000 produced by FinScope.
107
Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
3.10.1 Population Dynamics Population growth rate 3.1 2.9 2.7 2.7 2.5
Rural population, percent of total29
74 73.7 70 66.3 62
Total population (Millions) 34.4 43.2 49.8 57 65
Fertility Rate 5.7 5.4 4.5 3.9 3.4
3.10.2 Urbanisation Urban Population (% of total) 26 26.3 30 33.7 38
3.10.3 Employment Unemployment, total (% of total labour
force) 12.9 4.7 4 below 5% below 5%
3.11
Human Capital
Development and Social
Services
3.11.1 Education and Training Pupil-teacher ratio at primary 40:1 51:1 45:1 37:1 30:1
Gross completion rate primary 55% 95% 95% 95% >95%
Pupil-teacher ratio at Secondary 20:1 40:1 33:1 26:1 20:1
Secondary gross enrolment rate 6.3% 34% 38% 43% 48%
Tertiary enrolment rate 0.7% 1.5% 3.9% 6.9% 10%
Literacy rate (15-24) 78% 77% 82% 88% 94%
High30
Legislators, Senior Officials, Managers NA31
0.2% 0.5% 1.2% 2.7%
High Professionals NA 0.7% 1.4% 2.7% 4.7%
High Technicians and associate professionals NA 1.8% 2.6% 3.7% 4.7%
Medium Clerks NA 0.4% 1.0% 2.2% 4.6%
Medium Service workers and shop and market sale
workers NA 9.1% 10.5% 11.6% 11.8%
Medium Craft and related trade workers NA 4.1% 7.0% 11.5% 17.4%
Medium Skilled agricultural and fishery workers NA NA 0.2% 0.3% 0.4%
Low Plant and machine operators and assemblers NA 1.3% 2.3% 3.7% 5.7%
29
This is based on the IGC-POPC (2011) calculations, and might thus differ from the NBS (2006) projections. 30
Data in percentage of working population. 31
Given the change in calculation between the 2001 and 2006 ILFSs, this data can not be gathered. The data for 2010 are actually for 2006, as no later data is available.
108
Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
Low Agriculture and elementary occupations NA 83.7% 74.5% 63.1% 48.8%
3.11.2 Health Health expenditure, public (% of government
expenditure) 11.3 (2003) 10 15 15 15
National HIV Prevalence rate (Percentage) 7.1 5.7 (2007) 5 3 1.5
Access of safe water in rural and urban (% of
total) 54 54 57 70 90
Access of safe water and sanitation in rural
areas (% of total) 53(2003) 75 75 80 90
Life expectancy (Years) 50 59 62 66 70
Infant Mortality rate percent of 1000 life
birth 99 51 45 42 40
Maternal Mortality rate per 100,000 596 (1996) 454 300 250 220
Under five years mortality rates per 1,000
life births 153 81 50 45 40
3.11.3 Water Supply and
Sanitation
Coverage/Access to safe and clean water in
regional Urban centres32
68% 86.1% 90.1% 95% 100%
Coverage/Access to safe and clean water in
Rural Areas 48.5% 57.8% 67% 78.5% 90%
Access to water supply services33
(Urban) 86% 84% 95% 96% 100%
Access to water supply services (Rural) 45% 58.7% 65% 75% 90%
Proportion of population with access to
improved sanitation facility (Rural) 22% 21% 35% 58% 97%
Proportion of population with access to
improved sanitation facility (Urban) 29% 34% 41% 49% 60%
3.11.4 Sports
3.11.5 Entertainment
3.11.6 Media
3.11.7 Culture
32
Both coverage data follow ES classification. 33
For both Rural and Urban access to water and use of sanitation facility, the 2015 target is set in the MKUKUTA II document.
109
Section
Target
Target Indicator
TZ Base line TZ Current
Status
Targets for
FYDPI
Targets for
FYDPII
Targets for
FYDP III
2000 2010 2015 2020 2025
3.12 Governance
3.13 Private Sector
Development
3.14 Cross Cutting Issues
3.14.1 Gender Seats of Women in Parliament (% of total) 21.5% 30%/36%34
38% 44% 50%
Women’s participation in public services
22% 27% 34% 40%
Ratio of girls to boys in primary school (%) 98.1% 99.7% 99.7% 99.7% 99.7%
Ratio of girls to boys in secondary school
(%) 84.9% 80.0% 85% 91.3% 98.6%
Ratio of females to males in tertiary
education (%) 33.5% 33.3% 35% 40% 48%
3.14.2 HIV and Aids National HIV Prevalence rate (Percentage) 7.1 5.7 (2007) 5 3 1.5
3.14.3 Environment and Climate
Change
3.14.4 Social Protection
34
Given 2010 was an election year, it is important to separate between the first and second part of the year.
110
Annex 2: Targets for Skill Development for Implementation of TDV 2025
High Skilled Labour Force Targets35
Occupation Categories 2025 TARGET
(% of working
population)
2025 Target for
Number (’000)
Physical scientists and related technicians 0.32 87.7
Architects, engineers and related technicians 1.07 290.8
Life scientists and related technicians 0.27 73.1
Medical, dental, veterinary and related workers 0.78 212.2
Health assistants/workers 0.97 263.8
Statisticians, mathematicians, systems analysts
and related technicians
0.05 13.4
Economists & Economics related professionals 0.37 100.0
Accountants & Financial sector professionals 0.77 208.9
Jurists & legal professionals 0.20 54.4
Teachers 3.90 1,061
Authors, journalists and related writers 0.06 17.5
Administrative and managerial workers 1.58 430.6
Government executive officials 1.02 278.0
Source: IGC-POPC Study 2011
35
The baseline data for 2010 under this employment classification is unavailable for Tanzania.