By Jaston Binala in Dar es Salaam.
Tanzania has made tremendous economic gains by standards being made public by the Tanzania government. But independent observers have identified a flawed foreign investment climate in agriculture and a 14% ‘drop’ in the fairness measure of national income distribution.
The World Bank income distribution fairness index, also called the GINI index for Tanzania, shows a measurement jump from 33 points in 1985 to 37.6 in 2013. The GINI Index is a scientific measure of fairness in the economy where a higher GINI index figure denotes increased unfairness on income distribution.
Tanzania has therefore become more unfair to the have-nots than it was the case in 1985 when the nation started its shift from a command economy to a free market economy under former President Ali Hassan Mwinyi.
Two researchers funded by the Norwegian Agency for Development (NORAD), Hans Theting and Brita Brekke have in the meantime made an assessment of the agricultural Foreign Direct Investment (FDI) in Mozambique and Tanzania and identified serious flaws. Their findings are published in a report titled “Land Investment or Land Grab? A Critical View From Tanzania and Mozambique”. Their report discusses the potential benefits of, and the current challenges for, agricultural land investment in the two countries.
“There is little, if any, development potential in these investments,” the researchers say. “The economic growth potential of investments in agricultural land is questionable due to an inadequate regulatory framework governing foreign direct investments (FDI) in the sector.”
The research document shows that FDI in agricultural sector in Tanzania and Mozambique can even jeopardise local resource users land rights. In this respect, the report highlights that farmers are giving away their most valuable assets to profit-seeking entities, based on information asymmetries and persuasion. The paper argues that this is not development, but it is land grabbing. In addition, the authors doubt whether the FDI projects analysed in the paper will spur significant developmental effects at the local level.
The Tanzania Government, now under President Jakaya Mrisho Kikwete, does not tell the people the whole truth about the economy, constantly focussing on the future and burying the past as if there is nothing to learn from it
In June of this year (2014), the Tanzania Minister of Finance, Saada Salum Mkuya, told Parliament in Dodoma, central Tanzania, the 2014/15 budget will take into account priorities set in the ruling CCM party Election Manifesto 2010, the Annual Development Plan for 2014/15 and the Big Results Now initiative, the National Strategy for Growth and Poverty Reduction phase II (NSGPR II), the Millennium Development Goals (MDGs) 2015, the goal being to realize the objectives of the Tanzania Development Vision 2025.
Real GDP is projected to grow by 7.2 percent in 2014 and to continue growing at an annual average of 7.7 percent in the medium term; Maintaining a single digit annual inflation rate whereby annual inflation rate for the period ending June 2014 is projected at 6.0 percent and 5.0 percent in June 2015.
She also said they plan to Increase domestic revenue to 18.9 percent of GDP in 2014/15, maintain budget deficit after grants not exceeding 4.9 percent of GDP in 2014/15, contain the growth of extended broad money supply (M3) at 15.5 percent in June 2015, consistent with real GDP growth and inflation targets, accumulate gross official reserves adequate to cover at least 4.0 months of imports of goods and services by June 2015; and to Strengthen the shilling and maintain a stable and market determined exchange rate.
The Minister said the country’s foreign financial reserves continued to be satisfactory during the period ending April 2014. In the same period, foreign reserves amounted to US Dollar 4,647.5 million compared to US Dollar 4,380.3 million in April 2013. The April 2014 reserve is enough for the importation of goods and services covering 4.6 months as compared to the target of 4.0 months of imports by end June, 2013, she said.
From her speech, the economy is stable. Up to April 2014, a total of 630,616 new jobs were created in the public and private sector. The annual inflation rate continued to decline from 9.4 per cent in April, 2013 to 6.3 per cent in April, 2014, she said.
She attributed achievements to Government efforts in strengthening macroeconomic stability and good governance which are important pillars in attracting investments in the Country. The decline in inflation was mainly due to strong macroeconomic policy, good climate conditions, which led to increase in food production, provision of farm inputs, subsidies, and availability of electricity.
Mkuya said according to the International Monetary Fund (IMF) report for the Month of April, 2014, Tanzania was ranked 8th in economic growth in Sub Saharan Africa, and was ranked first in the East African countries. But she skipped an important development index—the GINI index which measures how, using statistical data collected from across a country, and to which extent the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution.
A Gini index of 0 represents perfect equality, while an index of 100 implies perfect inequality. In a country with a per capita GDP of less than $1,000 such as Tanzania, a higher GINI index represents increased inequality among the masses–which is the same thing as increasing poverty; and poverty has a direct link to crime and political instability.
A recent report called the Afrobarometer says crime is on the increase in Tanzania, where 40 percent of its people have experienced crime and face anxiety over possible crime, and this rise has risen at the same time as the GINI index. Crime in Tanzania has increased considerably in the 2000s with the number of Tanzanians whose homes have been broken into and those who have experienced physical attacks having grown considerably.
Economic reforms away from the socialist command economy took off beginning in 1985. The GINI index stood at 33 in 1985, a modest level which is the level currently found in India, Ethiopia and Canada. A small upward movement was experienced by 1995 when the GINI moved to 33.83. Huge leaps to concentrate wealth into a small group of people in the country begun to peak steam during the third phase government between 1995 and the year 2000 when the measure jumped to 34.65 with the biggest leap taking place between the year 2000 and 2005 when the GINI index jumped to 37.58 which still holds today.
The Afrobarometer survey released in Dar es Salaam by Tanzania’s Research on Poverty Alleviation (REPOA) some 12 months ago was conducted between May and June of last year with 2400 adult Tanzanians participating. Releasing the findings, Senior Researcher at REPOA Dr. Abel Kinyondo said 43 percent of Tanzanians feared crime in homes while 37 percent feared crime in the neighborhood. He said findings also showed that 44 percent of Tanzanians have been physically attacked between 2011 and 2012.
The GINI index figures suggest the unfairness on income distribution was made worse during the third phase government under retired president Benjamin William Mkapa, a leadership characterized by massive embezzlement of public funds.
Another measure of development, the 2014 Human Development Report (HDI) released recently, supports the negative truth about Tanzania’s performance. The annual report, which compared the country’s performance between 2012 and 2013 says Tanzania, like other East African countries, remains in the low human development category.
The report published earlier this 2014 says Tanzania has risen one point higher in the human development index due to achievements in income, health and education, a change from position 158 in 2012 to 159 in 2013 among 187 countries surveyed globally. But the insignificant movement does not remove the country out of the low human development category.
Sub-Saharan Africa is the most unequal region in the world, according to UNDP’s Coefficient on Human Inequality. Around 585 million people, the equivalent of 72 per cent of the region’s population, are either living in multidimensional poverty, with overlapping deprivations in education, health and living standards, or at risk of falling back into poverty, the UNDP report says.