The embassy of Sweden PRESENTATION OF THE PRIVATE

SECTOR WITH REGARD TO THE POVERTY REDUCTION BUDGET

SUPPORT TO THE DEVELOPMENT PARTNER’S GROUP FOR PRIVATE

SECTOR DEVELOPMENT

15th august 2007

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IntroductionMeaning of MKUKUTAMKUKUTA stands for a Swahili acronym which means National Strategy for Growth and Reduction of Poverty (NSGRP).

MKUKUTA presents a careful poverty diagnosis building on available evidence from the Household Budget Survey, Labor Force Survey and the Participatory Poverty Analysis

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Introduction cont.

MKUKUTA has three major clusters: 1. Growth and reduction of income poverty; 2. Improvement of quality of life and social well-being; and 3. Governance and accountability.

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Key issues under cluster I.

Ensuring sound economic management; promoting sustainable and broad based growth;

Improving food availability and accessibility; Reducing income poverty of both men and

women in rural and urban areas and; Provisional of reliable and affordable energy

to consumers.

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Cluster-wide Indicators

Cluster-wide indicators for MKUKUTA’s cluster I are;

1.Gross Domestic Product (GDP) growth per annum 2.GDP growth of sectors per annum 3.Gini co-efficient 4.Headcount ratio, basic needs poverty line.

GDP indicators are the mostly used to assess progress for this cluster.

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Conclusion

Generally the issues and indicators under cluster I of MKUKUTA do capture the most important policy issues for Private Sector Development in Tanzania.

However the government faces many challenges in implementing the document since the involvement of private sector in matters related to MKUKUTA is still minimal.

Goal 1: Ensuring sound economic management

Target Performance Measure

Status Remarks

Maintenance of Macro Economic Stability

Monetary/Fiscal measures

Partly implemented, commended is the 1st & 2nd Financial Sector Reform Programme

General Improvement in performance particularly in reducing inflation, increasing GDP growth rate if not for impact of drought. Targets are expected to be achieved when 2nd Financial Sector Reform Programme is implemented

Balance of payment No significant improvement as the gap between imports and export figures is widening with imports ever increasing at a higher rate at high rate than export, exchange rate is increasingly weakening the shilling further

Interest rate Still very high, lending and saving rates are too far apart, not encouraging to borrow nr to save/deposit

External Debt Target of 50% of GDP not yet achieved, total national debt is at $7bn and the GDP is about $10bn. The Debt/GDP ratio

is between 60-70%

Reduce un employment from 12.9% (2001) to 6.9% by 2010 and address underemployment in rural areas

Employment No significant improvement, rural productivity is very low

Government continues with the efforts to create environment for more jobs through increased Investment and skills development and Community projects

Goal 2: Promoting sustainable and broad - based growth

Target Performance Measure

Status Remarks

Accelerated GDP Growth Rate to attain a growth rate of 6-8% per annum by 2010

GDP Growth Big improvement noticed growth rate reached 6.8% (2005) but last year due to drought it fell to 5.7% (2006). This year it is expected to be over 6.2%

The trend show that the target will be achieved or surpassed by 2010

Additional efforts and support required to boost the sector

Affirmative action and support required

Infrastructure Improvement noticed on roads, performance of ports/airports, railway is at the final stage of its privatization

HIV/AIDs Still very high

Scale up the participation of the informal sector and SMEs

Trade and production

No significant improvement mainly due to poor business environment and credit

Programme to enhance SME competitiveness underway through the Private Sector competitiveness Project

Increase growth of the manufacturing sector from 8.6% to 15% by 2010

Manufacturing Slight improvement in new manufacturing investments, the power shortage inhibited production in 2006

Efforts to attract new investments and to improve productivity are under way

Increased Agricultural growth from 5% in 2002/3 to 10% by 2010

Agricultural growth Very little improvement in agriculture

Not been able to attract commercial investors in the agricultural sector and productivity remained very low

Increased Growth Rate for life stock sub-sector from 2.7% in 2001 to 9% by 2010

Livestock development

No significant improvement, rural productivity is very low

Not been able to attract commercial investors in the agricultural sector and productivity remained very low

Target Performance Measure

Status Remarks

Increased technological innovation upgrading and use of technologies

Science and Technology

No significant improvement

Programme to enhance SME competitiveness underway through the Private Sector competitiveness Project

Promoted regional equity and development and capacity for growth and infrastructure that enables investments and livelihoods diversification

Equity No significant improvement

Repaired 15,000 kms of rural roads annually by 2010 from 4,500 kms in 2003

Rural roads Significant improvement noticed on implementation and the budget allocation

Target likely to be achieved

Reduce negative impact on environment and peoples livelihood

Sustainability No environment measures are incorporated in national plans

Environment Big improvement

Reduce land degradation and loss of biodiversity

Land Management No significant improvement

Plans are underway but no implementation yet

Increase Export proportional of value added minerals from the current 0.5% to 3% by 2010

Information No significant improvement

No master plan to add value to the vast gemstone & minerals available in Tanzania

Growth Yes

Mineral Value Addition

No significant improvement

If value addition is planned well can reduce poverty in Tanzania by over 75%

Goal 3: Improved Food availability and accessibility at household level in urban and rural areas

Target Performance Measure

Status Remarks

Increased food crops production from 9 m tons in 2003/04 to 12 m tons in 2010

Food security No significant improvement

Government should encourage food production by promising to buy all excess production from farmers at a predetermined price

Research and Development

No substantial R&D and little budget

Investment in R&D required

Maintain strategic grain reserve of at least 4 months of national food requirements

Slight Improvement this year

The Budget to be increased

Goal 4: Reducing income poverty of both men and women in rural areas

Target Performance Measure

Status Remarks

Reduced proportion of rural population (men and women) below the basic needs poverty line from 38.6% in 2000/01 to 24% in 2010

Rural basic needs Negative results noted, rural people are becoming poorer and more poverty is forcing migration to urban areas

Alternative strategies need to be developed to address the problem

Reduced proportion of rural food poor (men and women) from 27% in 2001/01 to 14% by 2010

Rural Food poverty Same as Above Same as Above

Increased productivity and profitability both within agriculture and outside agriculture sector

Productivity and Agriculture

Productivity has declined by big margins

Increased off farm income generating activities

MicrofinanceProductivity

Very little financial support in rural areas

Secure and facilitated marketing of agricultural products

Marketing Agricultural marketing programmes is in place but no improvement is being witnessed

Rural energy

Water resources Very little achievement

Community development There is improvement particularly the TASAF initiative

Laws and regulation There is improvement in revision of laws that deny women in accessing financial assets and personal property

Transformed subsistence sector into smallholder commercial farming

Child labour Improvements noted

Local tourism/SMEs

Improvements noted

Increased contributions from wildlife, forestry, and fisheries, to incomes of rural communities

Natural resources Taking place though little impact due to mismanagement

Goal 5: Reducing income poverty of both men and women in urban areas

Target Performance Measure

Status Remarks

Reduced proportion of urban population (men and women) below the basic needs poverty line from 25.8% in 2000/01 to 12.9% in 2010Reducing the proportion of urban food poor (men and women) from 13.2% in 2001/01 to 6.6% by 2010

Urban basic needs poverty

Not achieved because of i)increased rate of migration from rural areas ii) employed in industries due to little new investment in the industries

Settlements Some improvements noted

Skills training Some improvements noted

Utility/Energy Some improvements noted Additional

High quality skills and profession

Very little achieved

Goal 6: Provision of reliable and affordable energy to consumers

Target Performance Measure

Status Remarks

Libelization of the power sub-sector effected by 2010

Energy: Electricity Policy in place but little implimenatation particularly in rural electrification

Sustainability & Environment

Environmental conservation underway

Reforms Restructuring of power sector underway

At least three (3) Production Sharing Agreements (PSA) negotiated, concluded and signed by June 2010

Energy resources

Other sources of energy like coal, gas and biogas identified: Plans to attract investment underway

Foreign Investment required and Increased Budget Support

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Thank you for Your attentive listening.

THE END