Labor and Social Protection

Across the universe of firms in Tanzania

Let's think together: Every Sunday the World Bank in Tanzania in collaboration with The Citizen wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a few questions.
In industrial countries, small and medium firms are the vectors of economic innovation and job creation. In the USA, small-businesses account for almost two-thirds of all net new job creation. They also contribute disproportionately to innovation, generating 13 times as many patents, per employee, as large companies do. Small business owners are also in general more educated and wealthier than the rest of the active population.
The reality is different in Tanzania. The vast majority of firms are very small and predominantly confined to self-employment. They are also highly concentrated in agriculture and trading activities:

- In 2010/11, there were approximately 11 million family-owned businesses operating in Tanzania, including farms. This is equivalent to a rate of entrepreneurship of 40 percent, which is about the rate reported in Uganda and Ghana, but three and 10 times higher, respectively, than in the United States and France.
- Half of the firms operating in Tanzania have only one employee, typically the owner; while an additional 40 percent report less than five employees. Firms with more than 10 workers represent only 0.6 per cent of the firms’ universe (still almost 70,000).

"The youth of today are the leaders of tomorrow", so the old adage goes. All countries, including Tanzania, need to invest in and build a strong, healthy, well educated, dynamic and innovative youth. In Africa, the number of youths (aged 14 to 25 years) have grown significantly over the past decades, contributing to the bulk of the labor force.

From almost every point of view, Rwanda’s performance over the past decade has been an unambiguous success story.

Between 2001 and 2011, Rwanda’s economy grew by 8.2 percent per annum, earning the country a spot on the list of the ten fastest growing countries in the world. Poverty rates fell by 14 percentage points, effectively lifting more than one million Rwandans out of poverty. Social indicators followed the general trend: Net enrolment in primary school increased to almost 100 percent, completion rates tripled, and child mortality decreased more than threefold, hitting the mark oftwo-thirds reduction as targeted by the Millennium Development Goals.

Yet buried under all this good news lays another maybe even more important evolution. After a decade-and-a-half stall, total fertility rates in Rwanda dropped from 6.1 in 2005 to 4.6 in 2010. This means that during a period of five years, the average number of children a woman of childbearing age can expect to have, has declined by 1.5.

The overall tax burden in a country is largely determined by the role that citizens expect the State to play in the economy. People are paying more taxes in France than in the US, not because the French are richer but because they expect more public services from their government. For this reason, no single 'optimal' tax burden can be applied uniformly.Tanzania’s tax revenues by the central government were equivalent to 15.7 per cent of GDP in 2011/12. This was higher than Uganda (12 per cent) but lower than Zambia (16.5 per cent) and Kenya (19.5 per cent).

Let's think together: Every Sunday the World Bank in Tanzania in collaboration with The Citizen wants to stimulate your thinking by sharing data from recent official surveys in Tanzania and ask you a few questions.

Growing old is almost a universal dream. Over the past two centuries, life expectancy in Western Europe increased from 32 (in 1800) to over 80 years in 2011. This unprecedented leap in human history came as the combination of technological advances in medicine, improved living conditions, and better nutrition, among other factors. However, old age is also often accompanied with a general deterioration in physical capacities, proneness to disease and sickness, and the inability to engage in economic activity. This heightens the risk of poverty and insecurity thereby requiring societies to find mechanisms to support their elderly population.

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 the Tanzanian Newspaper The Citizen every Sunday.

Jobs are at the very heart of living. Families escape poverty when their members secure gainful employment, and societies flourish when labor markets offer a wide range of job opportunities to citizens. And there is more to jobs than just monetary benefits. Not having a job or working under unfavorable conditions is often associated with low individual life satisfaction. Youth unemployment, in particular, can undermine the foundations of social cohesion, especially in fragile countries with a legacy of civil unrest and conflict.

Do you sometimes wonder if the average person is benefiting when the economy is doing well? Aren’t the poor left behind, even in the most rapidly growing economies? Concerns around rising inequality exist in many countries, rich and poor, East and West. Kenya is among them.

Over the last 10 years, the economy grew at an average of about 4 percent. With population growth of 2.7 percent, every Kenyan would have benefited by a modest 1.3 percent per year, but that assumes the growth was distributed evenly.

Even though many governments around the world want to avoid rising inequality — at least this is what many say — they often don’t achieve it. One challenge is that the already well off tend to benefit more during periods of economic growth. The poor typically also benefit, but their income rises more slowly. Does this mean rising inequality is here to stay?

Hardly a week goes by without someone pointing out that, despite being enrolled in school, many of Africa’s primary school-age children don’t seem to be learning very much.

Today’s salvo is from the Brookings Institution’s Center for Universal Education, whose Africa Learning Barometer estimates that 61 million children (half of the primary school-age population) “will reach their adolescent years without being able to read, write or perform basic numeracy tasks.”

Last week, my colleagues Elizabeth King and Ritva Reinikka called on Africa’s education system to “put learning first for all students.” We have documented disappointing learning outcomes in Tanzania on this blog. Despite being a middle-income country and having substantially increased public spending on education, South Africa’s performance in standardized tests is below the average for African countries.

Ever wonder how a World Bank flagship report gets written? A team of experts drafts an outline and shares it with stakeholders for their comments, suggestions and inputs. Based on this feedback, the team drafts the report and shares the draft for further comment, before publishing the final draft.

Today, we are proposing to write our flagship report on youth employment in Africa differently. We are launching a wiki platform and inviting the world to participate in the writing of the report. The wiki contains the preliminary outline which you can revise and rewrite. I emphasize that the outline is preliminary; it contains assertions that may not be borne out by further analysis (I know because I wrote some of them). So please add to, subtract from and edit the outline.

Why are we doing this? First, the topic of youth employment in Africa is so important that we need to engage as many people as possible in finding solutions. And second, young people are so tech-savvy that this may be a way of harnessing that talent and energy.

As you can imagine, the idea of writing a report on a wiki platform raised some questions, even from my teammates ("if you needed brain surgery, would you crowd source that too?"). But we decided that the benefits outweigh the risks.

Writing a report on a wiki is the logical extension of the World Bank's open knowledge and open data programs (link to these), not to mention this blog.

And if we succeed in collaborating with a large number of people, we could call it the world's development report.

Over half the countries in Sub-Saharan Africa subsidize fuel to protect consumers from high and volatile prices. But fuel subsidies are neither cheap nor likely to be sustainable (see the full analysis in the new Africa's Pulse).

Data for 2010-11 show that fuel price subsidies consumed, on average, 1.4 percent of GDP in public resources: The fiscal cost in oil exporters was almost two-and-a-half times that in oil importers. In the face of high (and rising) world fuel prices, a number of countries have raised domestic prices to stem fiscal costs.

For example, Ghana raised fuel prices by about 30 percent in January 2011. The Nigerian government removed the subsidy on gasoline this January, although a portion of the subsidy was subsequently reinstated. With oil prices likely to remain elevated, fuel subsidies will continue to weigh on government budgets in Africa.

But who benefits from fuel price subsidies?

Expenditure data for seven African countries show that the distribution of these subsidies is disproportionately concentrated in the hands of the rich. Richer households spend a larger amount on fuel products, and, consequently, benefit more than poorer households from any universal subsidy on these products. On average the richest 20% receive over six times more in subsidy benefits than the poorest 20%.

Labor and Social Protection

Across the universe of firms in Tanzania

Youth in Tanzania: a growing uneducated labor force

Is Rwanda Set to Reap the Demographic Dividend?

Is Tanzania Raising Enough Tax Revenue?

Old and vulnerable: The status of Tanzania’s elders

We want jobs, jobs, jobs

Safety nets and poverty reduction: A hand-up not a hand-out

Africa’s Learning Crisis

A wiki on Africa Youth Employment

Who benefits from fuel price subsidies?

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