BERF’s Work in Tanzania

BERF has yet to complete work in Tanzania

Context

Tanzania is one of East Africa’s most politically stable countries, a factor which has proven critical to securing the country’s strong economic performance. In a region with slowing growth, Tanzania enjoyed real GDP growth of close to 7 percent in 2016. According to the World Bank, this has been aided by strong growth in agricultural and services sectors. Low inflation, a narrowing current account deficit, relatively stable currency and a healthy gross international reserves are viewed as further confirmation of the country’s economic achievements.

Despite these gains, Tanzania’s faces challenges that need to be addressed in order to generate broad-based inclusive growth for the majority of the country’s 55 million people. World Bank data shows that while poverty rates have dropped from 60 percent in 2005 to 47 percent in 2016, estimates are that around 22 percent of the population live in extreme poverty, that is, on less than US$0.60 per day. Other challenges include a growing rate of youth unemployment with requires solutions   and skills to meet the needs of around 800,000 young people who enter the job market very year.

Reforms to the tax system has helped to reduce corruption which is a burden for the poor and a waste of scarce resources.

DFID’s Strategy in Tanzania

DFID’s current programme vision for Tanzania is focussed on three core areas: (i) Wealth Creation, (ii) Delivering the Millennium Development Goals, (iii) Getting government to work better and helping Tanzanians hold their government to account.

DFID’s Operational plan 2011-2016 states that progress has recently slowed in reforming the business environment where small and informal businesses are hampered by a lack of finance, poor transport and unreliable electricity.

Strategic objectives includes focus on scaling up programmes to increase access to finance, reduction of the cost of doing business and, in the regional integration programme, reduce trade and transport costs that limit the competitiveness of Tanzanian exports. Direct work with the private sector will be increased including provision of seed capital to encourage private sector investment and innovation including supporting women entrepreneurs with business training and access to finance is also included in the Operational Plan.

World Bank Doing Business

Tanzania initiated a number of reforms in 2016 which have helped to boost business confidence and have contributed to an improvement in its Doing Business ranking for 2017. Tanzania now ranks #132 (out of 190 economies) in the ease of doing business, a 12 point improvement over its ranking for 2016. The Distance to Frontier indicator also rose from 50.59 in 2016 to 54.48 in 2017. Reforms to make it easier to access credit have paid impressive dividends. Tanzania was able to improve its Distance to Frontier score for this indicator from 25 points to 40 points.