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Is Tanzania’s economic growth an urban phenomenon?

Jacques Morisset's picture

Tanzania has been growing steadily over the past ten years and 2012 was no different. The economy expanded by 6.9 percent, which is close to the historical average. A look at national accounts reveals that five sectors contributed to almost 60 per cent of Tanzania’s economic growth between 2008 and 2012:

- Communication GDP almost doubled in less than four years, growing on average by over 20 per cent per year.
- Banking and financial services have expanded by 11 per cent per year since 2008.
- Retail trade increased by almost 40 percent between 2008 and 2012.
- Construction surged by an average of 9 percent per year over the same period.
- Manufacturing grew annually by 8.4 percent during the last four years.

Big data and development: “The second half of the chess board”

Wolfgang Fengler's picture

Do you think Fortune 500 CEOs care about Africa? In the past, frankly, with the exception of oil and gas giants, they didn’t. But this is changing… and fast.

This week, IBM is opening its Africa innovation hub in Nairobi. To demonstrate the significance of the occasion, IBM has brought along all its senior team, led by CEO Ginni Rometty (named #1 most powerful woman in business by Forbes in 2012). Like other ICT companies, IBM wants to ride the wave of Africa’s ICT revolution. In this area, Africa has not only been catching up with the West, but is in fact overtaking it in areas such as mobile money.

Mountains of gold: A blessing or a curse for Tanzania?

Jacques Morisset's picture

Let's think together: Every week the World Bank team in Tanzania wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a couple of questions. This post is also published in theTanzanian Newspaper The Citizen every Sunday.

Gold, gems, uranium, coal, iron, copper and nickel…Tanzania is rich in mineral resources. These 'treasures' have attracted considerable attention within the country and abroad. It is estimated that over 500,000 Tanzanians are employed in this sector, principally in traditional small scale activities.

The sector has also attracted enormous foreign direct investment. As a result, the mining sector has been one of the driving forces of the Tanzanian economy over several years as illustrated by the following statistics:

The politics of service delivery

Shanta Devarajan's picture

Teachers in Tanzania are absent 23 percent of the time; doctors in Senegal spend an average of 39 minutes a day seeing patients; in Chad, 99 percent of non-wage public spending in health disappears before reaching the clinics.

These and other service delivery failures have been widely documented since the 2004 World Development Report, Making Services Work for Poor People.

But why do these failures persist?  Because they represent a political equilibrium where politicians and service providers (teachers, doctors, bureaucrats) benefit from the status quo and will therefore resist attempts at improving services.  For instance, teachers are often the campaign managers for local politicians.  They work to get the politician elected, in return for which they get a job from which they can be absent. Powerful medical unions ensure that their members can work in the private sector and neglect their salaried government jobs.  The losers are the poor, whose children don't learn to read and write, or get sick and die because the public clinic is empty.

Zambia: Decisions with unintended consequences?

Asumani Guloba's picture

Since the start of 2012, expectations in Zambia have been running high: stable economy; a newly elected government; recently crowned African football champions.  Everything seems possible.  For the new government, fulfilling election promises will require well thought through development decisions. Are the decisions taken so far having the intended consequences?

The Zambian economy has been remarkably resilient, with growth averaging 6.6% in the past five years, supported by strong macroeconomic policies, high copper production and favorable prices. End-year inflation has been in single digits for four of the last five years, the debt and fiscal positions well within sustainable levels. In addition, since independence, the country has witnessed five peaceful elections leading to four changes in government. These factors auger well for the future economic prospects of the country. Or do they?

Tanzania: Building bridges through education and small businesses

Jacques Morisset's picture

Attracted by the prospects of large unexploited natural gas reserves in the south of Tanzania, big players are in town. The British Gas Group has publicly announced that it may invest over US$35 billion in the next 25 years – 1.5 times Tanzania’s current GDP. Policymakers and donors are jockeying to position themselves and understand what is at stake.

The excitement is well founded but perhaps a little bit premature. According to the most optimistic projections, revenues from natural gas will not materialize for 5-7 years. Moreover, international experience shows that commodity-driven growth does not guarantee success. The Tanzanian authorities are therefore right to prepare for the future by setting up the fiscal and financial rules required for future transparent and rational use of these funds now. They should not forget also to focus on the coming 5-7 years because the economy is facing a number of challenges.

Recent reforms in Sierra Leone: Beating the effects of global economic downturn

Vijay Pillai's picture

Pay phone operator in FreetownThe year 2011 ended on a high note for the reformers in Sierra Leone.  There were two significant reforms which the government saw through – reforms that had been long overdue, but which now hold the potential of unleashing new investments and economic growth in the country.  Can Sierra Leone’s use these reforms to beat the potential effects of a global economic downturn?  One hopes so.

The energy sector in Sierra Leone has long faced under-investments. Not very long ago Freetown had the dubious distinction of being the darkest capital in the world and the Bumbuna dam remained elusive.

In defense of industrial policy

Shanta Devarajan's picture

Like others, I have been skeptical about industrial policy in Africa, where the government selects certain industries for support in order to trigger a process of structural transformation. It’s been tried before—with disastrous results. 

The selected industries were captured by political elites who continued to receive subsidies without generating anything close to labor-intensive growth (the Morogoro shoe factory in Tanzania never exported a single pair of shoes). Furthermore, most of the constraints to industrial growth in Africa are man-made: policies or regulations that stand in the way of poor workers’ employment prospects.

Transfer mineral revenues directly to citizens—and avoid the resource curse

Shanta Devarajan's picture

My colleague Marcelo Giugale and I have an Op-Ed in today’s Guardian online advocating the direct transfer of mineral revenues to citizens. 

Mineral revenues typically go from the extracting company to the government without passing through the hands of citizens.  As a result, citizens do not scrutinize the expenditure out of these revenues as much as they would if it were financed by tax revenues.  The net result is misallocation of public spending, slower growth and even slower poverty reduction in many of these mineral-rich countries, such as Cameroon or Nigeria. 

After the World Cup: Policy Dilemmas Tackle South African Government

Sandeep Mahajan's picture

The 2010 FIFA World Cup drew to a close on July 11, 2010, with a Spanish victory and a thunderous ceremony. South Africa took a bow as the world applauded its wonderful organization of the high profile tournament.

A record number of people across the globe viewed the tournament, and the crime rate was the lowest of any World Cup. The direct economic impact of the event is estimated at around 0.5% of GDP in 2011, and the tournament did much to burnish South Africa’s image across the world as an attractive tourist destination.

Sadly, the real drama started after the curtains came down on the World Cup.

In particular, a coalition of unions, representing over one million-public servants -- including teachers, doctors, nurses, police, and court and government officials -- has launched an indefinite strike after the unions’ demand for an 8.6% salary increase (plus 1,000 rand monthly housing allowance) was rejected by the Government.

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