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PRESS RELEASE November 6, 2017

Water Stress Could Hurt Tanzania’s Growth and Poverty Reduction Efforts – New World Bank Report

DAR ES SALAAM, November 6, 2017 – Tanzania needs to urgently improve the management of its water resources if it is to avoid them becoming a brake on the country’s development progress, according to a new World Bank report.

The 10th Tanzania Economic Update launched today reports that against the rapidly expanding economy and population, renewable per capita freshwater resources dropped over the past 25 years from more than 3,000 cubic meters per person to around 1,600 today. The decline, which is driven by increasing demand for a finite resource, will likely continue and reach around 1,400 cubic meters per person by 2025, well below the 1,700-cubic meter per person threshold that defines water stressed countries.

There is now a compelling need for the Government and all stakeholders to manage this finite resource better,” said Bella Bird, the World Bank Country Director for Tanzania, Malawi, Somalia and Burundi. Tanzania’s development ambitions are dependent on water, just as much as on other factors like education, health, transportation, energy, and finance.”

At present, the agriculture sector is using the vast majority of utilized water resources, accounting for around 89 percent of total use in Tanzania (against a global average of 70 percent). In addition, the country’s manufacturing is dominated by agro-processing, which is also highly dependent on water, as is mining, tourism and energy generation. Tanzania is making progress toward increasing household access to water supplies, with 63 percent of the population having access to basic and improved water supply services.

Droughts and floods have a major impact on Tanzania’s economy, with the extent of damage likely to increase with ongoing climate change. The agricultural sector suffers an estimated $ 200 million in average annual losses because of weather-related incidents, particularly drought. Earlier this year, aggregate food prices increased by 12 percent due to drought-related food shortages. While a significant drought in 2009 resulted in the mortality of 80 percent of livestock in northern Tanzania, undermining the achievement of local and national food security and longer-term development.

The report recommends four key measures towards ensuring that this finite resource is well managed: stronger coordination across sectors and prioritization of water-related investments; valuing and pricing water appropriately; investing in data collection and analysis to better equip water management bodies to make decisions; and clarifying and strengthening the roles of institutions responsible for water-resource management and ensuring they are properly resourced.

The Tanzania Economic Update is the World Bank’s flagship in-country report and is published twice a year. The report comes in two parts, with an analysis of the state of the economy and outlook constituting the first part, while the second part discusses a topic of strategic significance to the country – in this case Water.

On the economic front, the report shows that while the economy remains one of the highest performers in the region, exceeded in 2016 only by Cote D’Ivoire and Ethiopia, real GDP expanded at a slower rate of 6.8 percent in the first half of 2017 compared to 7.7 percent over the same period in 2016. The inflation rate has remained low and stable, and reserves are at a healthy level. The outlook remains favorable with the main downside risks of a domestic nature and largely under Government control. These include fiscal policy challenges, such as addressing persistently high arrears and under-execution of the development budget, and the need for supportive policies to encourage the private sector to play a more significant role in Tanzania’s development.

“Tanzania will remain one of the fastest growing economies in sub-Saharan Africa in 2017. The real challenge is sustaining high growth rates long enough to make a significant dent on poverty. For that to happen, the country needs to strengthen institutions, invest more efficiently in infrastructure to unlock its economic diversification and job creation potential, promote private sector development, reduce policy uncertainty, and continue tackling corruption,” said Albert Zeufack, the World Bank’s Chief Economist for Africa, who is on an official visit to Tanzania and was also present at the report’s launch.

To boost Tanzania’s economic growth in the near term, the World Bank recommends promoting credible budget implementation, policy predictability to crowd in private investment, and policies to support more affordable credit and reduce the costs of regulatory compliance for businesses. Specific near term actions for Government consideration include clearing verified payment arrears to private sector contractors and suppliers; speeding up delinquent VAT refunds; and securing financing to fully fund and complete on-going and planned capital expenditures including external concessional financing in support of debt management objectives.


PRESS RELEASE NO: 2018/043/AFR

Contacts

Dar es Salaam
Loy Nabeta
(255) 22 216-3246
lnabeta@worldbank.org
Washington
Ekaterina Svirina
+1 (202) 458 1042
esvirina@worldbank.org
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