Virtual Launch of the 15th Tanzania Economic Update: Raising the Bar

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01:22 Hello and welcome to the World Bank 15th Tanzania economic update.

01:27 This edition comes to you from Sunny Dar es Salaam and is entitled Raising the Bar.

01:32 Today we have come together to delve deeper into the report

01:35 to glean key insights into achieving Tanzania's development agenda.

01:40 We have a panel of three distinguished leaders and

01:43 thinkers who will help us to deepen our understanding

01:46 of Tanzania's economy in the global context,

01:49 and with Tanzania's recent attainment of lower middle income status,

01:53 we will ask pertinent questions around where we go next as a nation

01:57 as we strive towards Tanzania's development vision,

02:00 which includes attaining middle income status by 2025.

02:04 Now without further ado,

02:06 let's set the stage with opening remarks from

02:08 the World Bank's country director Mara Warwick.

02:10 Karibusana,

02:12 distinguished panelists,

02:13 ladies and gentlemen,

02:15 members of the press.

02:17 As we were finalizing the preparation of this

02:20 15th edition of the Tanzania Economic Update,

02:24 the news came to us that we had lost Professor Benno Ndolo,

02:28 a very dear friend and colleague of many World Bank Group staff.

02:33 We are still mourning his passing,

02:35 and I would like to dedicate a few minutes to honor his memory.

02:40 Many World Bank Group staff had the

02:42 special privilege to interact with Professor Ndulu,

02:45 or Beno,

02:46 as he was known to many of us,

02:48 either while he was working at the World Bank or the Bank of Tanzania

02:52 or in the many international development activities

02:55 to which he was so highly devoted.

02:58 A powerhouse in development economics and a remarkable leader

03:03 with unwavering commitment

03:05 to the socioeconomic transformation of Tanzania,

03:09 Beno was always at the heart of our work in Africa.

03:13 This was all thanks to his affability,

03:15 humility,

03:17 and immense generosity

03:19 to share his time and knowledge with others.

03:22 Professor Ndulu made important contributions to

03:25 the development of Tanzania and beyond,

03:28 from the 1980s,

03:29 where he led crucial initiatives that helped to shape the country's reform agenda,

03:34 to his move to the World Bank in Tanzania and then Washington DC

03:39 through his return to Tanzania in 2008 as the governor of the Bank of Tanzania.

03:44 He collaborated with local and international stakeholders,

03:48 including the private sector,

03:50 to champion significant reforms

03:52 in key areas such as financial inclusion,

03:55 human development,

03:57 business environment,

03:58 and infrastructure.

04:00 Indeed,

04:00 Tanzania's leading position in the global financial inclusion agenda

04:05 cannot be delinked from Professor Ndulo's personal dedication to this cause.

04:11 His retirement in 2018 did not faze Professor

04:14 Ndulu's passion for the causes he championed.

04:18 He joined Oxford University and continued to collaborate

04:21 on important initiatives with many partners,

04:24 including the World Bank.

04:27 All of us at the World Bank

04:28 Group will truly miss Professor Ndulo's intellectual leadership

04:33 and championing of critical development issues,

04:37 but most of all,

04:38 we will miss his passion for research

04:40 and for mentoring the next generation of African economists.

04:45 He touched the lives and careers of so many,

04:48 and he will be truly missed.

04:51 We send our deep condolences

04:53 to Mama Maria Ndulu

04:55 and their children,

04:56 Ndulika,

04:57 Lindo,

04:57 and Sarah

04:58 and all members of his family for their loss.

05:02 May Professor Ndulu rest in eternal peace.

05:13 Ladies and gentlemen,

05:14 the World Bank produces economic updates in many of our member countries,

05:19 including Tanzania.

05:20 Produced twice a year,

05:22 each edition of the Tanzania Economic Update

05:25 presents the World Bank's independent assessment

05:28 of the current economic performance and outlook,

05:31 accompanied by a special topic chapter

05:34 which focuses on a development challenge

05:36 relevant for realizing Tanzania's aspirations.

05:40 As its special topic,

05:41 the 15th edition of the Tanzania Economic Update

05:44 entitled Raising the Bar Achieving Tanzania's Development Vision.

05:49 Takes Tanzania's recent achievement of becoming a lower middle

05:53 income country in July 2020 as the point of departure

05:57 and takes a forward look on what

05:58 it will take to achieve Tanzania's development aspirations

06:02 as stated in the Tanzania Development Vision 2025.

06:07 The discussion is framed around 3 fundamental pillars,

06:11 sustaining growth over the medium term,

06:14 strengthening the inclusiveness of growth

06:16 to reduce poverty,

06:18 and fostering economic mobility

06:21 and economic security.

06:23 Tanzania's graduation to LLMIC status presents an

06:27 opportunity to assess the quality of past growth

06:30 and to develop a roadmap

06:32 to guide its successful transition

06:34 to middle income status

06:35 in order to achieve qualitative development goals

06:39 that extend beyond income per capita.

06:42 A key purpose of our Tanzania economic updates

06:45 is to stimulate public debate on development issues.

06:48 As on previous occasions,

06:50 we are honored today

06:51 to have a panel of eminent practitioners

06:54 and thought leaders to participate in the discussion,

06:57 and I would personally like to thank the panel for their presence here today.

07:03 My colleagues Miguel and Bill will present the report findings in detail,

07:08 but let me take a few minutes to highlight some of the World Bank's perspectives

07:12 on the following two questions

07:14 that are addressed in this economic update.

07:17 What are Tanzania's growth and poverty

07:19 prospects in a challenging global environment?

07:23 And what are policy priorities for Tanzania

07:26 to successfully make the transition

07:28 to a middle income country?

07:31 Firstly,

07:32 the growth and poverty outlook.

07:34 The COVID-19 pandemic continues to exact an

07:37 enormous humanitarian and economic toll worldwide.

07:42 The impact of the pandemic on human lives has been enormous.

07:46 The global economy contracted by an estimated 4.3% in 2020,

07:52 and while a 3.8% rebound is projected in 2021.

07:57 Worldwide economic output is expected to remain well below pre-pandemic levels

08:03 over the medium term.

08:06 Tanzania has fared relatively well compared to its regional peers,

08:10 but economic growth has slowed,

08:12 and poverty is expected to have increased.

08:16 The real GDP growth rate fell from 5.8% in 2019

08:21 to an estimated 2% in 2020,

08:24 and per capita growth turned negative for the first time in over 25 years.

08:30 The government took early measures to alleviate the

08:33 adverse health and economic impacts of COVID-19.

08:37 However,

08:38 these measures were moderate and shorter lived relative to

08:41 those implemented in many other countries in the region.

08:45 While a recession was avoided in 2020,

08:48 the absence of official information

08:51 on COVID-19 infection and mortality rates

08:55 complicates efforts to assess the effectiveness of the public health response.

08:59 Moreover,

09:00 Tanzania's economic outlook remains highly uncertain,

09:04 while the shock of the pandemic is expected to slow poverty reduction.

09:09 Given this uncertainty,

09:11 we expect real GDP for 2021

09:15 to fall in the range 3 to 5.3%,

09:19 with realization on the upper side of this range

09:22 hinging on a strong recovery in global economic activity

09:26 supported by the rollout of a vaccine globally

09:29 and hard work on domestic policy side to support the recovery.

09:35 But every cloud has a silver lining.

09:37 Tanzania has several macroeconomic advantages that favor a swift recovery.

09:42 It is one of the few economies in the region that avoided recession in 2020.

09:48 The country's low risk of debt distress and the low

09:51 fiscal deficits offer some space to prudently utilize debt financing.

09:56 International reserves are relatively high

09:59 while a combination of high gold prices and low

10:01 oil prices is bolstering the terms of trade.

10:05 I would like to highlight here the

10:07 importance of bold and credible implementation of policies

10:11 to save lives and livelihoods

10:14 and to support Tanzania's economic recovery and growth beyond 2021.

10:21 First,

10:21 saving lives requires a continued focus on the prevention,

10:26 detection

10:27 and treatment of COVID-19,

10:29 supported by data transparency and timely reporting.

10:33 Greater transparency and enhanced surveillance

10:35 of COVID-19 and other communicable diseases

10:39 could improve early detection,

10:41 containment,

10:41 and public outreach.

10:43 Establishing an internal process for planning a COVID-19 inoculation campaign

10:50 would position the government to move swiftly as new vaccines become available.

10:55 We would strongly advise the government

10:57 to proactively engage with technical partners

11:00 to prepare a plan for deploying a COVID-19 vaccine

11:04 in Tanzania.

11:07 Second,

11:07 protecting livelihoods requires a thorough assessment

11:10 of existing support programs and their adjustment

11:13 to maximize the impact on vulnerable households and firms.

11:17 Tanzania has a very well established

11:19 and well-run productive social safety nets program

11:23 which has been featured strongly in the recent World

11:26 Bank report The State of Economic Inclusion in 2021,

11:30 but its coverage remains limited.

11:33 The government should consider scaling up this and other social

11:37 protection programs to reduce the vulnerability of poor households.

11:42 In the short term,

11:43 the government could strengthen measures to protect jobs

11:46 and support micro,

11:48 small and medium sized enterprises.

11:52 Third,

11:53 a robust recovery in 2021 and beyond will

11:56 require reforms that improve the business environment.

12:00 Key areas include facilitating the adoption of digital solutions

12:04 for business resilience and growth,

12:07 expanding access to finance amongst micro,

12:10 small and medium enterprises,

12:12 and addressing the challenges of the informal sector.

12:16 The blueprint for regulatory reforms to improve the business environment

12:20 identifies numerous permits,

12:22 licenses,

12:23 and procedures to eliminate,

12:25 but its implementation has been incomplete.

12:29 The renewed emphasis on private sector as engine of growth and jobs is welcomed.

12:34 This would require major policy reforms implemented decisively and credibly.

12:41 Which brings me to the issue of the medium

12:43 term development agenda and achieving Tanzania's development vision.

12:48 In July 2020,

12:49 Tanzania made a remarkable milestone by

12:51 achieving lower middle income country status

12:54 after two decades of sustained growth and investment

12:58 supported by stable macroeconomic conditions,

13:01 rich natural endowments,

13:03 and its strategic geographical position.

13:06 While reaching ELMIC status is a laudable achievement,

13:09 Tanzania's larger development agenda remains unfinished.

13:14 The Tanzania Development Vision TDV 2025

13:18 envisages Tanzania as a middle income country with well-developed human capital,

13:23 an ample supply of high quality livelihood opportunities,

13:27 and broad-based gains in living standards.

13:31 To realize this vision,

13:33 Tanzania's progress in boosting income levels,

13:36 narrowing the infrastructure gap,

13:38 and improving social indicators

13:40 must be complemented by widespread improvements in poverty reduction,

13:44 shared prosperity,

13:46 and other qualitative development indicators.

13:51 Rapid population growth,

13:52 slow and uneven job creation,

13:55 low levels of education,

13:57 and limited access to educational and employment opportunities,

14:01 especially amongst women and girls,

14:03 have reduced the inclusiveness of Tanzania's economic expansion,

14:07 blunting its effect on poverty reduction.

14:11 In this context,

14:12 sustaining a robust expansion while ensuring that economic growth

14:16 generates inclusive opportunities and broad gains in living standards

14:21 will be critical to realize the ambitious objectives of the TDV 2025.

14:27 It is indeed a cruel irony that

14:29 Tanzania has crossed this important economic threshold

14:33 in the year of the worst global crisis in post-war history.

14:38 It makes the road ahead even harder.

14:41 Realising the goals of the TDV 2025 will require a concerted effort

14:46 to restore the economy's growth momentum,

14:49 while expanding access to economic opportunities.

14:53 The COVID-19 crisis has highlighted the

14:55 unpredictability of global economic trends,

14:59 and Tanzania's ability to maintain its ELMIC status

15:02 will depend on strengthening its resilience to

15:05 shocks while investing in human capital.

15:09 My colleagues Miguel and Bill will elaborate on

15:11 the major findings and messages during their presentations.

15:15 I also look forward to fruitful discussion on Tanzania's

15:18 priorities and challenges in becoming a thriving middle income country

15:22 from our esteemed panelists.

15:24 Asante,

15:25 thank you very much.

15:26 Thank you very much,

15:27 Mara Warwick,

15:28 for your insightful opening remarks that have

15:29 truly set the stage for today's event.

15:33 Now,

15:33 as you know,

15:33 listeners,

15:34 the economic update is usually presented in two parts.

15:37 The first part,

15:38 economic performance of the preceding period,

15:41 and the second part is usually a topic of strategic significance to the country.

15:45 In this case,

15:46 achieving Tanzania's development vision 2025.

15:50 Now we encourage you to get online,

15:52 follow us,

15:53 to join the discussion using hashtag #Tanzania Economic Update

15:57 on all our social media channels.

16:00 Now

16:01 let's move on to a short video that illustrates the

16:03 key messages of the first part of the report.

16:10 The emergence of the COVID-19 pandemic plunged the

16:14 global economy into a recession in 2020.

16:17 While Tanzania avoided a recession in 2020,

16:20 the pandemic has significantly impacted lives

16:23 and livelihoods across the country,

16:25 with economic growth estimated to have slowed to 2.0%

16:29 in 2020.

16:32 The economic outlook remains highly uncertain

16:35 and the risks are tilted on the downside.

16:38 GDP is expected to grow by between 3.0 and 5.3% in 2021,

16:44 below its long-run potential growth rate of about 6%.

16:48 There's cause for cautious optimism.

16:51 Tanzania has several macroeconomic advantages

16:54 that would support a robust policy response

16:57 to counter the negative economic effects of the pandemic.

17:00 Tanzania's growth prospects depend on both the

17:03 successful worldwide rollout of a COVID-19 vaccine

17:06 and the implementation of sound domestic policies

17:09 to accelerate the recovery of economic activity.

17:12 In the short term,

17:14 the government should strengthen its public health response,

17:16 including vaccination,

17:18 and strengthen measures to protect jobs and support micro,

17:22 small and medium enterprises

17:23 and expand social safety nets.

17:26 Improving the investment climate and fiscal management are needed

17:29 to underpin and sustain a robust growth beyond 2021.

17:39 The video that you just watched and all other Tanzania

17:42 economic update resources are available

17:44 on our landing page worldbank.org/Tanzaniaeconomicupdate.

17:51 We shall now follow this video with a presentation from Miguel Saldaraga,

17:55 an economist with the World Bank,

17:56 who will delve a little bit deeper

17:58 into the economic outlook.

18:00 Welcome,

18:00 Miguel.

18:01 Good morning,

18:02 everyone.

18:03 Good evening.

18:03 The first part of the 15th edition of the Tanzania Economic update

18:08 presents recent economic

18:10 developments

18:10 and the medium term outlook

18:13 for the Tanzanian economy.

18:16 And I will share with you

18:18 the key messages and findings of this part of the report first.

18:23 What has been the impact of the COVID-19 pandemic on growth

18:28 and poverty

18:29 in Tanzania?

18:30 The COVID-19 pandemic

18:33 has plunged the global

18:35 economy into recession in 202,020,

18:38 and the pace of recovery remains uncertain

18:41 both among

18:43 advanced and emerging economies.

18:45 The disease continues to exact

18:48 an enormous and mounting toll in human lives.

18:52 And the disruption of education systems has a slow human capital accumulation

18:58 which could negatively impact the productivity of an entire generation.

19:04 The global economy contracted by an estimated 4.3% in 2020

19:10 and while a 4% rebound is projected for 2021,

19:14 worldwide economic output is expected to remain well

19:17 below pre-pandemic trends over the near term.

19:21 Tanzania has fared relatively well

19:24 compared to its regional peers,

19:27 and the country avoided a recession

19:29 in 2020.

19:31 But economic growth

19:33 growth has slowed significantly.

19:36 Real GDP growth fell from 5.8% in 2019

19:42 to an estimated 2% in 2020.

19:45 Um,

19:46 per capita growth turned negative for the first time in over 25 years.

19:51 The global economic slowdown has

19:54 adversely affected export-oriented industries,

19:57 especially tourism and traditional exports,

20:00 and caused a drop in foreign investment.

20:03 Gold has been the sole export to benefit from the crisis

20:08 as international gold prices

20:11 rose sharply between 2019 and 2020.

20:15 Although

20:16 the government did not impose stringent mobility restrictions,

20:20 the pandemic prompted prompted firms and consumers to adopt

20:25 precautionary behaviors

20:27 hindering domestic demand.

20:31 Meanwhile,

20:32 steep declines in production consumption

20:36 and imports have reduced

20:38 fiscal revenue.

20:40 The pandemic has also

20:42 compound preexisting

20:44 challenges in the financial sector

20:47 and the share of non-performing loans on bank balance sheets

20:53 continues to be high

20:55 while the growth of credit to the private sector has a slow.

21:00 Significantly.

21:04 The COVID-19 pandemic has

21:07 impacted lives and livelihoods across the country.

21:11 Available high frequency official data

21:15 combined with World Bank-led household

21:18 and business surveys

21:20 reveal

21:21 the severe toll

21:22 on firms and livelihoods.

21:25 During June and July 2020,

21:29 the World Bank conducted a COVID-19 business polls survey

21:33 covering 1000 small

21:36 and medium enterprises in Tanzania.

21:39 The survey data indicate that about 100,000 formal jobs

21:45 were lost in June 2020

21:47 and another 2.2 million non-farm informal workers suffered income losses.

21:54 Tanzania's employ an informal non-farm micro enterprises

21:59 tend to be specially exposed to economic shocks

22:02 as they often have limited savings to draw on.

22:06 In a crisis,

22:08 firms reported

22:10 an average decline in sales of 36%.

22:14 Which has jeopardized the solvency of more than 3/4 of the small and medium

22:20 enterprises.

22:22 Moreover,

22:23 the most affected firms reported not

22:26 benefiting from any type of government support

22:29 in particular,

22:30 the pandemic has taken a heavy toll on the tourism sector,

22:34 a major drivers driver of exports and economic growth

22:39 in Tanzania.

22:41 According to a survey of private sector

22:43 operators conducted by IFC and Dahlberg advisory

22:47 in October 2020.

22:50 The tourism industry is projected to 77% of its revenue in 2020 and 2150%

23:00 of direct jobs.

23:03 Before the pandemic,

23:05 almost all businesses reported that their operations were stable or growing,

23:10 whereas now 80% report being suspended or partially open.

23:16 Utilization rates have fallen across all tourism subsectors

23:22 from 1949 to 60% in late 2019

23:26 to just to just

23:28 9% in mid 2020

23:31 and sales have plunged by as much as 85% among small firms.

23:37 Which represent 80% of Tanzanian tourist firms,

23:41 the loss of income among workers and tourism

23:44 and related sectors is weakening domestic demand,

23:48 and informal workers with little savings and limited credit access

23:52 are facing the prospect of a sharply reduced consumption.

23:58 The crisis could push an additional 600,000

24:02 people below the national poverty line.

24:05 Well,

24:06 the poverty poverty headcount ratio,

24:08 national poverty line has declined

24:11 modestly over time,

24:13 falling from 28.2% of population in 2012 to 26.1% in 2019.

24:20 Tanzania's rapid population growth rate

24:24 has caused the number of people living below the national poverty line

24:28 to steadily increase.

24:30 In 2020,

24:31 the pandemic induced economic slowdown caused the

24:34 poverty rate to rise to an estimated

24:37 27.2%,

24:39 compounding the effect of population growth

24:42 on the absolute number of people living in poverty.

24:46 Because a large share of Tanzania's population is close to the poverty line,

24:51 even a mild economic shock can

24:55 push numerous households into poverty.

24:58 The impact of the crisis

25:00 has been specially acute

25:02 among households that rely on self-employment

25:06 and informal micro enterprises in urban areas

25:10 second.

25:11 What is the economic outlook

25:13 for Tanzania?

25:15 Tanzania's economic outlook remains highly

25:19 uncertain,

25:20 and growth

25:21 prospects hinge on the successful global rollout

25:25 of a COVID-19 vaccine

25:27 combined with sound

25:29 domestic policies to foster

25:32 a swift recovery.

25:34 Tanzania's real GDP growth

25:37 is projected to grow by

25:40 between 3.0 and 5.3% in 2021

25:45 below its long run potential growth rate of about 6%.

25:50 However,

25:52 this baseline projection reflects the available data

25:55 as of February 15,

25:57 2021,

25:59 and in the context of the pandemic,

26:01 it is subject to considerable uncertainty.

26:05 The trajectory of COVID-19 continues to evolve,

26:09 and a resurgence in infection rates is being reported across much of the world.

26:15 Even if Tanzania contains its domestic outbreak,

26:20 a worldwide health crisis

26:22 that continues well into 2021

26:25 could continue to suppress economic activity.

26:29 Tanzania's tourism sector is especially vulnerable to a downside scenario

26:34 in which the pandemic persists.

26:37 Moreover,

26:38 poverty reduction is expected to slow,

26:41 and the national poverty rate is projected to fall to 27% in 2021,

26:48 down slightly from 2020,

26:51 but still above its 2019 level.

26:55 Due to rapid population growth,

26:57 the number of people living below the national poverty

27:00 line is projected to increase by 320,000 in 2021.

27:05 The quality of the post-crisis recovery will

27:09 shape poverty dynamics in 2021 and beyond.

27:12 Third and finally.

27:14 How to accelerate and sustain the pace of recovery in Tanzania

27:19 government actions to protect lives,

27:21 livelihoods,

27:22 and the future

27:23 will

27:24 influence the pace of the recovery.

27:27 The World

27:28 Bank recommends a framework

27:30 for responding to the

27:32 COVID-19 pandemic

27:34 and associated economic crisis

27:37 based on three pillars.

27:39 This framework focuses on protecting lives,

27:43 livelihoods,

27:43 and the future.

27:45 Measures to protect lives include

27:48 preventing,

27:49 detecting and treating COVID-19.

27:52 Measures to protect livelihoods as economic

27:56 activity laws include support to households

28:00 and firms,

28:01 especially in vital economic sectors.

28:05 And efforts to sustain

28:07 key government functions.

28:10 Measures to protect the future include investments to accelerate their recovery

28:15 and strengthen resilience

28:17 to future shocks.

28:19 Tanzania has several macroeconomic.

28:23 Advantages that favor a swift recovery,

28:27 it is one of the few economies in the region.

28:31 Not to experience a contraction in 2020.

28:35 Country's low risk of debt distress offers some space to properly utilize debt

28:41 financing.

28:42 And the government fiscal position

28:45 has improved over the last 4 years.

28:49 With the fiscal deficit.

28:51 Around 2% of GDP.

28:54 International reserves are relatively high

28:58 at about 5 months of import

29:01 coverage

29:02 while a combination of high gold prices and low oil prices

29:07 is bolstering the terms of trade.

29:10 Inflation

29:11 is among the lowest in East Africa.

29:14 To capitalize on these advantages and lay the foundation

29:19 for robust

29:20 and sustainable long term growth,

29:23 the government should seize the opportunity

29:27 to advance

29:28 its structural reform agenda.

29:31 The government has

29:33 already approved

29:35 several important measures,

29:38 including the blueprint

29:39 for regulatory reform.

29:41 And arrears management

29:44 strategy

29:45 accelerating the implementation of these

29:48 initiatives while taking additional steps

29:52 to improve the business climate climate

29:55 for domestic and foreign investors will position

29:59 Tanzanian economy

30:01 to capitalize on the anticipated global recovery.

30:06 Increasing

30:07 the availability

30:08 and quality of information on both

30:11 the domestic spread of COVID-19

30:14 and the evolution

30:16 of

30:17 macroeconomic indicators will strengthen the.

30:21 Government's ability to plan and implement effective

30:25 policies,

30:27 reporting the number of new COVID-19 cases,

30:30 including

30:31 deaths and recoveries,

30:33 and releasing timely national accounts data

30:37 could help ensure the success of the public health response

30:42 while also bolstering market sentiment

30:45 by signaling

30:46 the government's determination

30:49 to counter the external.

30:51 Shock

30:52 induced by the pandemic.

30:53 Thank you very much for joining this presentation,

30:57 Asanti.

30:58 Thank you very much,

30:58 Miguel,

30:59 for your presentation.

31:00 We have another short video now to ease you into the second

31:03 part of the report which discusses achieving the Tanzania Development Vision 2025

31:08 and which will also be the focus of our panel discussion shortly.

31:12 What are the opportunities and challenges for Tanzania,

31:15 and what are the priority policy areas?

31:17 Here we go.

31:20 Tanzania attained a gross national income per capita of $1080 in 2019

31:27 and graduated to lower middle income country

31:31 status in July 2020

31:34 thanks to a solid income growth over the last two decades,

31:38 sustained macroeconomic stability,

31:41 and rich natural endowments

31:43 together with a strategic geographic position.

31:47 Economic growth has not been inclusive enough,

31:50 with almost 50% of the country's citizens still

31:54 living below the international poverty line of $1.90

31:58 per day.

32:00 High population growth,

32:01 slow and uneven job creation,

32:04 low levels of education,

32:06 and limited access opportunities have

32:08 hindered the inclusiveness of economic growth

32:11 and its impact on poverty reduction.

32:14 Based on Tanzania's unique opportunities and challenges,

32:19 and incorporating lessons from the experience of successful LMI,

32:24 Tanzania's next level of development goals

32:27 can be framed around three strategic pillars

32:30 sustaining growth over the medium term,

32:33 improving the inclusiveness of growth to reduce poverty,

32:37 and

32:37 fostering upward economic mobility

32:40 and economic security.

32:42 Within these pillars,

32:44 the 15th Tanzania Economic Update proposes prioritizing 5 policy areas

32:51 accelerating productive investment,

32:54 prioritizing human capital development,

32:57 enabling agricultural transformation,

33:00 leveraging digital technology,

33:02 and

33:03 building public sector institutions and capacities,

33:07 including the capacity to leverage partnerships with the private sector.

33:12 Bold actions in these areas will be

33:15 essential to engender inclusive and sustainable growth

33:18 and to fully transition to a middle income economy.

33:24 We're now firmly into the second part of the report,

33:27 and it is my pleasure to welcome Bill Battle,

33:30 lead country economist for the World Bank,

33:31 who will present on achieving Tanzania's Development Vision

33:35 2025.

33:36 Welcome,

33:36 Bill.

33:37 Thanks,

33:37 Miranda.

33:39 Let's turn now for more detail on the TEU special topic,

33:42 raising the bar,

33:44 which is a forward look at the development vision

33:46 and goals that Tanzania has set for itself

33:49 and what it will take to get there.

33:51 As mentioned,

33:52 Tanzania reached lower middle income status in 2020

33:56 following years of consistent income growth

33:59 and putting Tanzania in a group of roughly 50 other lower middle income countries.

34:04 Reaching this milestone is an important achievement for the country.

34:07 It's also a great opportunity to look forward

34:10 to consider the development vision

34:12 that Tanzanian policymakers set for the country

34:15 in the Vision 2025 document

34:17 and ask

34:18 what should be the priorities for government policies and spending

34:22 to best manage the transition to middle income status.

34:25 The goals the country has set for itself

34:28 are much more holistic than simply a certain level of average income.

34:32 They include well developed human capital,

34:35 an ample supply of high quality livelihood opportunities,

34:38 and broad-based gains in living standards.

34:41 Against this backdrop,

34:42 the TEU special topic chapter

34:45 offers our view on framing a discussion around raising the bar,

34:49 going beyond a focus on growth rates and average income levels,

34:52 and recognizing

34:54 that what got Tanzania to this important GNI per capita achievement

34:57 won't necessarily get it to the higher bar

35:00 of a successful middle income country.

35:03 More will clearly be needed,

35:04 and we think this special topic is especially timely

35:07 given the ongoing focus on preparing a new five-year development plan.

35:13 Now considering the Tanzanian context

35:15 and looking at experiences of countries that have successfully transitioned

35:18 to middle income status

35:20 like Vietnam,

35:21 Ghana,

35:22 and Kenya.

35:23 We think it's useful for the authorities to

35:25 frame the next leap of development for the country

35:28 around the three broad pillars that Mara described at the opening.

35:32 Let's look briefly at each of these three pillars.

35:35 Pillar one recognizes the importance of economic growth for poverty reduction,

35:40 so the first big message of this special topic

35:42 is that to reach its development goals,

35:45 Tanzania needs to recover from the recurrent slowdown

35:48 described in part one of the report by Miguel

35:51 and then continue its impressive track record of economic growth.

35:55 Since 2000,

35:56 the annual GDP growth rate has averaged above 6%,

36:00 with an annual per capita GDP growth rate above 3%.

36:04 Macroeconomic stability has been an important

36:06 ingredient to this strong track record.

36:08 And with it,

36:10 Tanzania was able to attract a high level of investment

36:13 which we know from growth accounting analysis was a top contributor to growth.

36:17 Importantly,

36:18 3/4 of this total investment

36:21 was from private sources,

36:22 including foreign direct investment.

36:25 So one of the key messages from looking at Tanzania's past success in driving growth

36:30 is a strong partnership with the private sector.

36:33 The report notes two particular challenges here.

36:36 The first challenge is maintaining a healthy mix of both public

36:39 and private investment.

36:41 The report notes that public investment growth

36:43 has substantially accelerated in recent years.

36:47 And the growth of private investment has slowed.

36:49 While public investment is necessary to provide public goods

36:53 like roads,

36:54 ports,

36:55 and sources of energy,

36:57 It's limited by public finances and debt sustainability considerations

37:01 and can be quite expensive if it involves commercial borrowing from the market.

37:06 So the majority of investment to drive growth

37:08 needs to come from the private sector,

37:10 both domestic and foreign sources.

37:14 The second challenge

37:15 is to try and emulate countries that

37:17 have successfully transitioned to middle income status,

37:20 which show that it's important to become

37:21 more efficient in using factors of production

37:24 like capital

37:25 and labor,

37:26 or in other words,

37:27 to improve total factor productivity or TFP.

37:31 This chart shows that Tanzania's labor productivity growth

37:35 has come largely from the addition of capital,

37:37 as shown in dark blue,

37:39 and which is very consistent with the growth patterns in low income countries.

37:43 To raise the bar,

37:44 Tanzania needs to both attract investment

37:47 and increase TFP,

37:49 which is shown in red,

37:50 and for Tanzania has actually been declining.

37:53 Higher productivity can promote diversification

37:57 and increase the complexity of the country's economic activity.

38:00 Thus creating more and better jobs.

38:03 We can see from the chart that successful middle income countries on average

38:07 have more balanced productivity growth

38:10 from labor,

38:11 more capital,

38:12 and improved TFP.

38:14 And accelerating the uptake of digital technologies in Tanzania

38:18 can play an especially important role in bridging this gap

38:21 and creating the new and better jobs that we've been talking about.

38:25 Pillar 2 is perhaps the most pressing for Tanzania.

38:28 Here we draw on recent work of our poverty group

38:31 that shows

38:32 using the most recent household budget survey

38:34 conducted by the National Bureau of Statistics

38:37 that while the economic growth that has helped the

38:39 country achieve middle income status has been impressive.

38:43 This growth has become less inclusive over time.

38:46 So the second big message of the special topic discussion

38:49 is that Tanzania really needs to focus on improving the quality of growth

38:53 and translating high growth into more broadly shared welfare gains.

38:58 Since 2012,

38:59 income and consumption growth among the wealthiest

39:01 households has outpaced growth among the poorest.

39:04 And Tanzania's growth elasticity of poverty

39:07 is among the lowest in the world.

39:09 What explains this?

39:11 Recent economic growth has been driven by

39:13 sectors that employ relatively few workers,

39:16 especially from poor households.

39:18 Wealthier Tanzanians,

39:20 particularly those in urban households

39:22 with greater human capital and productive assets,

39:25 were better positioned to seize

39:26 opportunities generated by rapidly growing sectors

39:29 such as information and communications technology and real estate.

39:33 This imbalance in economic opportunity has widened the income gap

39:38 between rich and poor households.

39:40 In its first year as a lower middle income country,

39:43 about half of Tanzania's population was

39:45 below the international extreme poverty line

39:48 of $1.09

39:49 per day.

39:50 Which is the poverty measure we use to compare across countries,

39:53 and it's different from the national poverty line measure.

39:56 We look back at countries in their first year entering lower middle income status

40:01 like Tanzania has just done.

40:03 And find that Tanzania's poverty is well above

40:05 the 30% average for other first-year LICs.

40:08 Hence the challenge is particularly acute for Tanzania

40:11 as it becomes a middle income country,

40:14 and a key message of the report is the urgency of Tanzanian policymakers

40:18 to focus on the quality of growth issue.

40:21 We find that high dependency rates,

40:24 low levels of education,

40:26 and inadequate workforce skills limit the ability of lower income workers

40:30 to access productive employment opportunities,

40:33 and these constraints are especially acute for women and youth.

40:37 Poverty rates among female-headed households are 50% higher than they are

40:41 among male-headed households.

40:43 And poverty rates are about 11% points higher

40:47 among single women

40:48 than they are among men.

40:50 Asset ownership seems to be a particularly relevant issue here.

40:54 It is significantly lower among female-headed households,

40:57 especially in terms of transportation and communication.

41:01 The report points to a number of directions for a path forward here.

41:05 For example,

41:06 cross-country experience tells us

41:08 that growth reduces poverty faster

41:11 when governments

41:12 focus on agriculture and in particular lifting agricultural productivity

41:16 in the sector by improving agribusiness value chains.

41:20 When they attract robust private investment

41:23 in labor intensive non-farm activities including agribusiness,

41:26 manufacturing,

41:27 and services.

41:28 And when they pay particular attention

41:30 to making newly created jobs accessible

41:33 to relatively low skilled youth and women.

41:37 Now turning to the last pillar 3.

41:39 This pillar underscores the importance of

41:41 economic security and upward mobility for Tanzania

41:44 to successfully transition to a middle income country.

41:47 So the 3rd big message of the special topic

41:50 is one of emphasizing the need for resilience.

41:53 And for durability of welfare gains.

41:56 The bottom line for this pillar is straightforward.

41:59 Human capital is vital to economic security.

42:03 It increases household resilience

42:05 and it lowers the risk of falling back into poverty.

42:08 So we see the pattern forward for Tanzania

42:11 on this is to further invest in human capital

42:14 and expand access to opportunities

42:17 so it can reach its goal of building a secure middle class,

42:20 which we know is a key feature of successful middle income economies.

42:25 The report recognizes that the middle class in

42:27 Tanzania has expanded from years of economic growth,

42:30 but it is still small.

42:32 It's below the level of comparable first year EMICS,

42:35 and it's highly vulnerable.

42:37 The share of economically secure population in Tanzania,

42:41 as estimated by those with formal wage labor using I

42:45 ILO data,

42:47 increased slightly over the past two decades,

42:50 but the gap with where the country's own development vision is aiming

42:54 and with aspirational comparators among other EMICs remains large.

43:00 In the last decade,

43:01 Tanzania has made significant progress in reducing its

43:04 human capital gap with other low income countries.

43:08 But the gap with new aspirational peers

43:11 in the lower middle income group are large.

43:14 Policy makers are recognizing that human capital

43:17 investments enable households at all income levels

43:20 to access economic opportunities and benefit from growth.

43:24 And that that is critical for breaking the lack of intergenerational mobility.

43:29 To increase the likelihood of a child of a

43:31 poor farmer to get a chance for more employment opportunities

43:35 and moving to more productive economic sectors.

43:38 So we call on them to redouble their efforts to make the investments

43:42 in human capital now that can pay large dividends in the future.

43:47 Looking forward,

43:48 the report makes a strong argument for expanding

43:50 access to basic services like education and health,

43:53 and in particular overcoming Tanzania's low secondary school enrollment rate.

43:59 We also note that financial inclusion plays a key role

44:01 in fostering economic security

44:03 and that Tanzania has made tremendous gains in this area,

44:07 due in no small part to Professor Ndulu's stewardship of the Bank of Tanzania

44:11 and to whom we dedicate this TEU.

44:14 He was a strong proponent

44:16 of addressing the last mile of

44:17 remaining challenges in accessing financial services,

44:20 especially for women,

44:21 youth,

44:22 and rural households.

44:25 As I mentioned at the opening of this presentation,

44:27 we see the main contribution of the special topic chapter of this TEU

44:31 is to frame the dialogue around 3 strategic pillars of how Tanzania can raise the bar

44:36 to reach its development goals

44:38 and move beyond the focus on aggregate growth

44:41 and toward the quality and durability of welfare gains for the population.

44:46 We've also tried to go beyond the framing objective

44:49 of the special topic chapter

44:50 and use Tanzania's recent history and

44:52 the experience of successful EMICs worldwide

44:55 to suggest some priority areas for policy action

44:59 that we think have a high potential

45:00 to contribute to meeting Tanzania's vision 2025.

45:04 Each of these areas can be the focus of a TEU special topic on its own.

45:09 And the report doesn't aim to fully cover these areas.

45:12 Indeed,

45:12 some have been the focus of past TEUs

45:15 like agricultural transformation and TEU 13,

45:18 but let me briefly mention a few points on each.

45:21 The first policy area is accelerating productive investment.

45:25 This area is all about fostering private

45:27 sector investment and growth as the main engine

45:30 of job creation and economic opportunity.

45:33 This will require better public-private dialogue

45:36 and better policies to reduce the cost of regulatory compliance.

45:40 And we've recently been invited by the government

45:43 to conduct a joint assessment in this area.

45:46 Secondly,

45:47 prioritizing human capital development.

45:50 Using today's resources to make investments that

45:52 yield results over a much longer time frame

45:55 is often difficult.

45:57 But the gains from human capital development

45:59 are the most fundamental for improving the inclusiveness of growth

46:03 and of broadening the security of welfare gains,

46:06 and it's the highest paying for successful transition to middle income

46:09 and beyond.

46:11 And a large part of this agenda,

46:12 as we note in the report,

46:13 is addressing gender inequalities in access to basic services.

46:18 The third area is enabling agricultural transformation.

46:22 If you have to pick one sector with the highest immediate payoff for job creation

46:27 and as an enabler for promoting higher value addition,

46:30 it's agriculture.

46:32 The report points to several urgent policy challenges in agriculture

46:36 related to input and output markets

46:38 and also the quality of public spending.

46:41 The 4th area

46:42 that the report discusses is around leveraging digital technologies.

46:47 The COVID pandemic has forced renewed attention across the world

46:50 on how best to leverage digital technologies.

46:54 We have ongoing work in this area with government,

46:57 recognizing the gap in access to affordable broadband,

47:00 especially in more rural areas,

47:02 and the tremendous potential for growth,

47:04 including on digital trade.

47:06 Now the last but not least policy area is building public sector capacity.

47:11 While the report has a very loud message on the

47:13 importance of the private sector to be the engine of growth

47:16 and to drive the creation of new and quality employment opportunities,

47:19 the public sector has a tremendously critical role to play.

47:23 It's central to the success of all the policy areas.

47:27 The report makes points on this front

47:29 ranging from boosting efficiency of public expenditure

47:32 to improving evidence-based decision making.

47:36 In conclusion,

47:37 as a framing piece,

47:38 the goal of this TEU special topic

47:40 is to lay out what we see as priorities for what it

47:43 will take to get to the next level of Tanzania's development vision.

47:47 We recognize the important achievement the country has

47:50 made by becoming a middle income country.

47:52 We also recognize that what it took to get Tanzania to this milestone

47:56 won't be enough to reach the broader goals it has set for itself in its vision 2025

48:01 of successfully transitioning

48:03 to a middle income country in all its dimensions.

48:06 Thanks for listening to this overview of the TEUs special topic raising the bar,

48:11 and I highly encourage you to take a look at the full report.

48:14 Asanteana.

48:14 We will now proceed to the discussion portion of the 15th Tanzania economic update,

48:19 and it's my pleasure to introduce our leaders and thinkers,

48:22 our esteemed panelists that have joined us here today.

48:25 And they're going to share their knowledge and insights.

48:27 So with us today we have Professor Honest Prosper Ngoi.

48:31 He's a professor of economics.

48:32 He's a researcher and consultant in economics and business at Mzumbe University.

48:38 He's also the principal of Mzumba University's Dar es Salaam College campus,

48:42 and he's an expert in development economics

48:44 with interest in macroeconomics,

48:46 international trade,

48:47 foreign direct investments,

48:49 entrepreneurship,

48:49 private sector development,

48:51 amongst others.

48:51 I think this will be very useful,

48:53 uh,

48:53 experience you'll have to share with us,

48:55 Haribusana,

48:56 Professor Ngoi.

48:57 In the center here we have with us Doctor Blandina Kilama.

49:00 She's the chairperson of the Economic Society of Tanzania,

49:03 which is a nonprofit organization for economic enthusiasts

49:07 that promotes economic research and economic policy advocacy.

49:11 She's also a senior research.

49:13 At a policy research think tank REOA

49:16 based in Dar es Salaam,

49:18 where she's covered various work on economic transformation,

49:21 financial inclusion,

49:23 the SDGs,

49:24 women empowerment,

49:25 and poverty mapping,

49:26 amongst others,

49:27 you're very welcome,

49:28 Doctor Kilama,

49:29 and with us as well is Mr.

49:31 Paul Makanza.

49:32 He is the vice chairperson of the Tanzania Private Sector Foundation.

49:36 And the Confederation of Tanzania Industries.

49:39 He also chairs the Tanzania Startup Association Board,

49:43 which is an organization that mobilizes stakeholders

49:46 in the startup ecosystem to drive the development agenda.

49:49 It's great to have you with us,

49:50 Paul.

49:51 Thank you.

49:52 So I think we should dive straight in,

49:54 um,

49:55 and you know,

49:56 lean on your experience here.

49:58 So as we all know,

49:59 the COVID-19,

50:00 uh,

50:00 pandemic has plunged the global economy

50:03 into a recession in 2020

50:05 and it slowed GDP growth in Tanzania as well.

50:09 What are your views on foundations for solid economic recovery in 2021 and beyond?

50:15 What sectors do you think might need special attention?

50:18 And what are the risks for this projected

50:21 recovery?

50:22 Um,

50:22 I think I'll start with you,

50:23 Doctor Kilama,

50:25 uh,

50:25 if you could share your views on this economic recovery.

50:28 Uh,

50:28 thank you so much,

50:29 uh,

50:29 Miranda.

50:32 The fortunate bit before even I start sharing about the COVID-19,

50:36 it's still hitting us in 2021,

50:39 and we're losing people,

50:40 and it's not just people,

50:42 but we're really using the human resource that we need most in producing.

50:47 So when we think about

50:49 uh COVID-19 recovery.

50:51 One thing

50:53 that we really have to plan for strategically

50:56 is how are we really going to align our human resources

51:00 to ensure that we continue to produce productively,

51:04 we continue to engage people in as much as unfortunately we are losing people.

51:10 The second bit I think will also have to be

51:14 along the same lines,

51:16 become more innovative,

51:17 just like the report

51:19 that is highlighting.

51:20 On issues about utilizing technology that is there and I'm happy to see Paul here

51:27 um because innovation will be

51:29 the way out.

51:30 And for innovation to flourish,

51:32 we do have to have an ecosystem

51:36 that will allow

51:37 for

51:39 production at all levels and not excluding other members of the grouping.

51:44 And lastly but not least,

51:46 I think.

51:47 We also have to undertake a lot of strategic investment when it comes to

51:54 social services.

51:55 And here I'm not just limiting it on the side of the health side

51:59 but also education side,

52:02 but also importantly when it comes to

52:05 making sure we're really utilizing the water that we have.

52:09 I know Professor Ngoi may touch on that,

52:12 but people know I always touch on agriculture.

52:15 We would really,

52:16 really,

52:17 really need to think

52:18 as to how we can actually spearhead

52:21 production that is inclusive.

52:23 What I,

52:23 um,

52:24 I think is

52:26 uh the figures that were shared here about uh what has transpired in 2020.

52:31 You will see we were lucky

52:33 because it's the gold that has lifted us,

52:35 but for us to recover,

52:37 we have to touch the people,

52:39 and in Tanzaniia we have more than 65% of people who are engaged in agriculture,

52:43 so the recovery has to focus there

52:46 to really,

52:46 really,

52:47 uh,

52:47 lift people out.

52:48 I will stop there for now.

52:50 Thank you.

52:50 I will ask Professor Ngoi to chip in here.

52:53 We've touched on agriculture there.

52:55 Um,

52:56 Is this a special area that needs attention?

52:58 Yes,

52:59 I would say so.

52:59 I,

53:00 I would say so that agriculture

53:02 is the sector that really carries a lot of people.

53:04 Majority of Tanzanians are there.

53:06 And of course,

53:07 it has been highly touched by COVID-19,

53:09 both the first and the second wave actually.

53:11 Through what I call intersectoral linkages.

53:14 People might see COVID-19 touching tourism,

53:18 hotel industry,

53:19 but really,

53:20 when you take what I call,

53:22 you know,

53:22 the value chain approach,

53:24 ecosystem approach,

53:25 you find that agriculture is also being touched a lot,

53:28 especially.

53:29 Uh,

53:29 like the horticulture bit of it,

53:31 I understand Doctor Kilama and others in the

53:33 Saggo Center and the Agricultural Council of Tanzania

53:36 in the in the,

53:37 in the first wave.

53:38 We did some studies to see how agriculture,

53:40 but specifically horticulture,

53:42 was hit by,

53:44 you know,

53:44 COVID-1 in the first wave.

53:45 But,

53:46 uh,

53:47 to come with the responses,

53:48 broadly speaking,

53:49 uh I think uh uh policy responses are very important

53:52 this time around as it was in the first wave.

53:55 And to me,

53:56 I will come with two major policies that are extremely important for recovery.

54:01 First fiscal policy and monetary policy,

54:03 and I would wish to see more expansionary fiscal policy

54:08 and expansionary monetary policy

54:11 kind of

54:13 driving the recovery because

54:15 When you look at the impact of the COVID-19,

54:18 and I've,

54:18 I've documented a lot of cases,

54:20 actually almost 150,

54:21 and that will be my next book coming out,

54:24 uh,

54:24 I'm seeing a lot of,

54:26 uh,

54:26 a need for,

54:27 uh,

54:27 uh,

54:27 uh,

54:28 fiscal policy responses

54:29 in terms of lower tax rates,

54:31 in terms of tax incentives,

54:33 in,

54:34 in terms of,

54:34 uh,

54:35 you know,

54:35 tax exemptions,

54:36 etc.

54:36 etc.

54:37 In the first wave.

54:38 We saw like East African,

54:40 uh,

54:40 within East Africa,

54:41 uh,

54:41 East African Business Council requested the governments to lower

54:44 a value-added tax,

54:45 for example.

54:46 Actually,

54:46 the request was to lower it to around 12%.

54:49 And,

54:49 uh,

54:49 the request was not really accepted.

54:51 So I'd say Kenya

54:53 lowered it to around 14% from 16%,

54:55 Tanzania kept it to 18%,

54:57 nothing was done.

54:59 And going back to 2008 when we had a global financial and economic crisis,

55:03 value-added tax in Tanzania was 20%.

55:05 It was lowered to 18%.

55:07 And I think it helped with the recovery.

55:10 So this time around,

55:10 I believe,

55:11 uh,

55:12 if it was lowered,

55:13 it could help really pump life into

55:16 these companies that are struggling.

55:18 On the monetary policy part of it,

55:21 the key issue has been around interest rates,

55:23 actually,

55:23 the borrowing interest rates.

55:24 thanked the Bank of Tanzania

55:26 sometimes in May 2020.

55:28 They came out with the policy responses to kind of support the recovery

55:32 from the first wave

55:33 in terms of lowering,

55:34 uh,

55:35 you know,

55:36 borrowing rates and a lot of other

55:38 factors.

55:39 To me it was important,

55:40 although it came a little bit late actually.

55:42 I wish it would have come as well as it did in Kenya,

55:45 as well as it did in Ghana.

55:46 These countries responded with expressionary fiscal

55:49 policy and monetary policy much,

55:51 much earlier

55:52 than Tanzania,

55:53 and I think it helped kind of

55:56 Deliver recovery.

55:57 So this time around,

55:58 I think these two policy responses,

56:00 if fairly structured,

56:01 they will help a lot in delivering recovery.

56:04 Thank you,

56:05 Professor Ngoi.

56:05 Paul Makanza,

56:06 as a strong representative of the private sector who have been hit quite hard,

56:11 um,

56:11 I'd be curious to hear from you on what your views are on economic recovery.

56:15 All right,

56:15 thank you very much,

56:16 Miranda.

56:17 I mean,

56:18 uh,

56:18 is.

56:20 The country director mentioned,

56:21 uh,

56:22 the global economy was uh hard hit.

56:24 Uh,

56:24 we were very fortunate in Tanzania.

56:26 Uh,

56:26 I mean,

56:27 um,

56:28 we avoided a recession as,

56:30 uh,

56:30 as,

56:30 um,

56:31 um,

56:32 everybody has,

56:32 um,

56:33 seen.

56:33 Um.

56:35 But,

56:36 um,

56:37 we did not achieve the sort of growth rates we had anticipated uh pre-COVID,

56:41 yeah.

56:42 Uh,

56:42 and therefore recovery has to be a priority.

56:44 Now,

56:45 uh,

56:46 there are a couple of priority areas we need to focus on.

56:49 One,

56:49 I think the safety of people is very key,

56:52 yeah.

56:53 Two,

56:54 we need to ensure business continuity,

56:56 yeah,

56:56 uh,

56:56 whilst ensuring the safety of our employees.

56:59 Um.

57:01 But more importantly,

57:02 we will need to get consumption,

57:04 investment,

57:05 and exports going again.

57:07 And as Professor said,

57:09 that requires a sound domestic policy measures

57:13 and from a private sector perspective,

57:16 that would also include addressing what we call our pain points,

57:21 issues like the availability of land for investment,

57:23 issues like raw materials in terms of quality and quantity.

57:27 Issues like labor in terms of skills and productivity,

57:31 issues like finance,

57:33 in terms of access and affordability,

57:35 and so on.

57:37 And there are so many,

57:38 obviously

57:40 the the the the business environment needs to improve.

57:43 Currently we are

57:45 We are ranked at 144 out of a number of countries.

57:48 I think it's about time we push towards a double-digit figure.

57:52 OK.

57:53 Um,

57:55 that will be very,

57:56 very key.

57:56 Now,

57:57 what sectors need special attention?

57:59 Obviously,

58:00 tourism was,

58:01 you know,

58:01 was badly hit.

58:03 I've seen some numbers.

58:05 Revenues actually fell by 77% versus prior year.

58:09 And uh uh the industry lost about,

58:11 uh,

58:12 you know,

58:12 50% of uh uh uh the jobs in the industry,

58:15 which is very,

58:16 very worrying.

58:18 So,

58:18 tourism and uh manufacturing,

58:21 uh,

58:21 those require special attention.

58:22 In particular,

58:23 SMEs.

58:24 I think uh the measures put in place,

58:27 um,

58:27 um,

58:28 last year to deal with uh COVID.

58:31 Did not go far enough to help SMEs and I think this is something we need to look into

58:36 in terms of risk for the projected recovery.

58:40 Again,

58:40 the pandemic remains a huge risk,

58:42 and if we do not address it appropriately,

58:46 then we may erode the gains we've made on the fight against poverty reduction

58:50 and even a potential slippage back into.

58:54 Thank you very much Paul.

58:55 I think ami amidst this recession we had some good

58:59 news which was Tanzania attaining lower middle income status,

59:02 something that was celebrated here.

59:04 Um,

59:05 and I'm just curious to know what you think the

59:06 main drivers were for us to achieve this status.

59:09 And secondly,

59:10 do you feel that the development objectives

59:13 as stated in the Tanzania Development Vision 2025

59:17 have been achieved?

59:18 I think Doctor Kilama,

59:19 I'll come back to you on that.

59:21 Um,

59:21 so the main drivers of us attaining

59:24 lower middle income status.

59:26 When you put a target,

59:27 you may reach it when you least expect it,

59:30 um.

59:31 And you always celebrate when you

59:33 reach it.

59:37 The best thing you can do is always to analyze what does it really entail.

59:43 My two colleagues have spoken very well.

59:48 On issues that we need to think about when we're thinking about recovery.

59:52 The advantage that Tanzania has,

59:54 has had for quite a while,

59:57 is we've had a diversified economy.

1:00:01 And some of the parts of the economy that have been hit hard,

1:00:05 you hurt them.

1:00:07 And I think this was the advantage we had as to why we managed to reach

1:00:13 the LMIC status.

1:00:19 Reaching there is one thing.

1:00:21 Staying there.

1:00:23 Is something else

1:00:25 and

1:00:26 understanding how you operate once you're you're there,

1:00:29 I think it's also very important.

1:00:32 So for me,

1:00:32 I think it's the macro,

1:00:33 as we heard from the country director,

1:00:38 um,

1:00:38 the stabilities that we had through that.

1:00:41 There's been a lot,

1:00:42 a lot of policies that are supportive,

1:00:45 that has enhanced

1:00:48 our seeing the macro picture.

1:00:51 But then I'll flip,

1:00:52 I'll bring in my card as a researcher.

1:00:55 It's one thing to grow.

1:00:56 The question is where are you really growing?

1:01:00 So

1:01:01 we have the agriculture bits,

1:01:02 we have the industry bits and the services bits,

1:01:05 and our data

1:01:07 currently is showing the growth is coming

1:01:10 pretty much in the industry side

1:01:13 and in the services.

1:01:14 And these are the less um kind of like areas where you have

1:01:19 less people engaged.

1:01:21 But then importantly on the services side.

1:01:25 This is where Paul comes in with the innovation bits

1:01:28 that is required.

1:01:30 You have a lot of informality.

1:01:33 But still we were growing with informality.

1:01:36 But once COVID hit us,

1:01:38 it's very difficult to reorganize within the informality.

1:01:42 The biggest challenge that we are facing now will be how do we go about

1:01:48 um to ensure that

1:01:50 we have more inclusion

1:01:52 of young people,

1:01:53 of women,

1:01:54 of people who are different.

1:01:56 Because that has worked for us

1:01:58 before.

1:01:59 But the question is now with COVID-19,

1:02:02 it looks like it's hitting

1:02:04 um

1:02:06 Everybody,

1:02:06 and importantly the cream.

1:02:09 Um,

1:02:10 now back to your question.

1:02:11 So I'll say just three things that have led to um um uh the growth that we've seen.

1:02:17 So yes,

1:02:18 we've had the

1:02:20 macroeconomic stability brought in by the discipline.

1:02:24 To guarantee us the quality that we needed,

1:02:27 but then second,

1:02:28 we've had

1:02:29 a lot of infrastructural investment

1:02:32 helping to link up different sectors.

1:02:35 And thirdly,

1:02:37 lastly but not least,

1:02:39 we've been more accountable in following

1:02:41 up different interventions that are ongoing.

1:02:45 It's something that

1:02:47 has been going on for a while.

1:02:49 It was good that it happened,

1:02:50 but we really need to protect all that for it to continue.

1:02:54 Thank you,

1:02:54 Doctor Kilama.

1:02:55 Now Professor,

1:02:56 I saw you nodding in agreement when Doctor Kilama said it's one thing to attain the.

1:03:00 Status,

1:03:00 but it's another thing to maintain it.

1:03:03 What are your views on this?

1:03:04 Yeah,

1:03:04 you know,

1:03:06 essentially when it comes to attaining this level,

1:03:09 I take it mainly to be really

1:03:11 mainly statistics issues.

1:03:14 The reality on the ground is another thing,

1:03:16 you know,

1:03:17 it's this gross national income divided by the population,

1:03:20 and then

1:03:20 we should understand as an average,

1:03:22 really.

1:03:22 And when this news was announced,

1:03:24 I received a lot of questions

1:03:26 to common people saying,

1:03:27 am I really a middle income

1:03:29 person?

1:03:31 So really,

1:03:31 when you average,

1:03:32 you'll find that there is a lot of outliers,

1:03:34 you know,

1:03:34 there are a lot of you know,

1:03:36 the low income people who have nothing to do with this,

1:03:38 you know,

1:03:38 who will never be touched by

1:03:40 this status.

1:03:41 But broadly speaking,

1:03:42 I think we achieved the status

1:03:45 through,

1:03:45 as Blandina said,

1:03:48 decades of investment,

1:03:49 decades of reforms.

1:03:50 The reforms of the mid 1980s.

1:03:53 And early 1990s

1:03:56 that

1:03:57 changed the business environment that invited the private sector,

1:04:00 both local and foreign.

1:04:02 That investment that we have seen in business environment broadly speaking,

1:04:07 both legal,

1:04:08 regulatory and policy framework on infrastructure,

1:04:12 roads,

1:04:12 sports,

1:04:12 airports,

1:04:13 all those,

1:04:14 those have enabled production of goods and services across all sectors

1:04:18 in mining,

1:04:19 in industry,

1:04:20 in the services sector,

1:04:21 all those I think have been major,

1:04:22 major drivers

1:04:24 of

1:04:25 us achieving this status and remember we are

1:04:29 5 years

1:04:29 too early,

1:04:30 to put it that way.

1:04:31 2 years too,

1:04:32 I mean 5 years too early.

1:04:33 That's good.

1:04:34 That's good news,

1:04:35 but really the question is sustainability remaining there.

1:04:39 Across history we have over 20 countries that have never remained in the same status

1:04:44 that have slipped back,

1:04:45 you know,

1:04:46 to either

1:04:48 low middle income,

1:04:49 etc.

1:04:49 etc.

1:04:50 So the challenge really is remaining there

1:04:52 and COVID-19 poses that challenge now.

1:04:55 Because it's likely to erode

1:04:58 incomes,

1:04:59 jobs,

1:05:00 and really

1:05:02 people are still on precariously balanced

1:05:05 in the poverty line.

1:05:07 So there is this danger really of remain here.

1:05:09 We are not sure 5 years down the line

1:05:11 whether we will still be here or we'll have gone down

1:05:15 to lower middle income and God forbid,

1:05:17 because we want of course to go up.

1:05:20 And of course the other thing that was related to this.

1:05:24 Is you know on whether Tanzania has achieved what we wanted by 2025 for sure

1:05:30 in a number of issues,

1:05:31 yes,

1:05:31 but then among other things we wanted to have a robust economy,

1:05:36 a strong economy,

1:05:37 competitive economy,

1:05:38 well skilled economy.

1:05:41 But really we are not there yet

1:05:44 and it's not an issue because this is a journey.

1:05:46 We are building Rome

1:05:47 and Rome is not built in a day.

1:05:49 It's a work in progress.

1:05:51 Thank you very much,

1:05:52 Professor Paul Makanza.

1:05:53 How do we prevent ourselves from slipping backwards?

1:05:56 OK,

1:05:57 I think my colleagues have actually touched on this on a number of interventions,

1:06:02 but I just wanted to emphasize on.

1:06:04 The first question,

1:06:05 the key driver over the,

1:06:07 over the last two decades was actually,

1:06:09 you know,

1:06:09 massive investment into the economy,

1:06:12 uh,

1:06:12 both private and the FDI,

1:06:16 um,

1:06:17 and,

1:06:17 and,

1:06:17 as well as of recent times,

1:06:20 uh,

1:06:21 uh,

1:06:21 public investment.

1:06:22 So the big infrastructure projects,

1:06:23 uh,

1:06:23 Doctor Blandin.

1:06:25 Blandino was talking about.

1:06:27 Uh,

1:06:28 exports used to be an important driver,

1:06:30 but,

1:06:30 uh,

1:06:31 you know,

1:06:31 it's declined,

1:06:32 uh,

1:06:32 over,

1:06:33 over the last couple of years,

1:06:34 2013,

1:06:35 2019,

1:06:35 it's been actually

1:06:36 declining on average 5%,

1:06:38 which is uh

1:06:40 also worrying.

1:06:40 So,

1:06:41 so,

1:06:41 so

1:06:42 to sustain our,

1:06:44 our maker status,

1:06:45 we really need to uh drive GNI,

1:06:48 uh,

1:06:49 the gross national income,

1:06:50 um.

1:06:52 Faster than the population growth because

1:06:54 those two are inversely related,

1:06:57 yeah.

1:06:58 If,

1:06:58 if,

1:06:58 if you don't

1:07:00 sort of manage your population well and you have a population explosion,

1:07:04 then gains tend to be eroded,

1:07:07 OK?

1:07:08 But let me just focus on,

1:07:10 um,

1:07:11 have we achieved our development visions?

1:07:13 And I,

1:07:13 I'd like to particularly focus on industry

1:07:16 because that's an area I'm familiar with.

1:07:18 Uh,

1:07:19 so,

1:07:19 so basically,

1:07:20 when we set out this vision,

1:07:21 uh,

1:07:22 TDV 2025,

1:07:24 we set ourselves,

1:07:25 um,

1:07:26 you know,

1:07:26 particular targets for,

1:07:27 for industry.

1:07:29 Specifically,

1:07:29 I'm talking manufacturing.

1:07:30 So we said,

1:07:31 um,

1:07:32 we want,

1:07:32 you know,

1:07:33 the manufacturing sector to grow by 12% come 2025,

1:07:37 OK?

1:07:38 And we said by 2020,

1:07:40 we should have achieved an 11% growth.

1:07:43 But when you look at the actual numbers 2019,

1:07:45 where we have official figures,

1:07:46 it's only 6%,

1:07:48 so we are way behind.

1:07:49 We would need to double

1:07:51 our pace in order to get to that target.

1:07:53 If you,

1:07:54 if you look at it in terms of

1:07:57 share of GDP at current prices

1:08:00 again,

1:08:00 we set out a target of 18%.

1:08:03 We needed to be at 13% by 2020.

1:08:05 We are only at 9%.

1:08:06 OK.

1:08:06 Again,

1:08:07 we need to double our effort.

1:08:09 Number of exporting firms,

1:08:10 you know,

1:08:11 we had set a target of over 2000 plus,

1:08:14 but you know,

1:08:15 the report has highlighted that the number of exporting firms has actually fallen

1:08:20 due to a number of issues.

1:08:21 So essentially we are not there.

1:08:23 But as Professor said,

1:08:24 you know,

1:08:24 this is a journey,

1:08:25 yeah,

1:08:26 but it's easing.

1:08:28 The government is actually revising.

1:08:31 Uh,

1:08:31 it's industrialization,

1:08:33 um,

1:08:33 integrated,

1:08:34 uh,

1:08:34 industrialization strategy,

1:08:36 uh,

1:08:36 and,

1:08:37 um,

1:08:37 I,

1:08:37 I'm sure,

1:08:39 uh,

1:08:40 They will address some of the issues that has impeded,

1:08:43 you know,

1:08:45 the pace of implementation.

1:08:47 And one of the critical issues was the fact that

1:08:50 when we had this integrated industrialization strategy,

1:08:54 there was a lack of ownership.

1:08:55 Was it Ministry of Industries?

1:08:57 Was it agriculture?

1:08:59 Now

1:09:00 industry cuts across.

1:09:01 Agriculture,

1:09:02 you know,

1:09:02 services are supporting,

1:09:04 you know.

1:09:05 Uh,

1:09:05 enablers and so on.

1:09:06 So there are a number of issues we would still need to,

1:09:09 uh,

1:09:10 implement,

1:09:10 but we,

1:09:11 we,

1:09:11 we are very,

1:09:11 very hopeful.

1:09:13 Thank you,

1:09:13 Paul,

1:09:13 for that.

1:09:14 Uh,

1:09:14 Professor Ngoi,

1:09:15 I'm gonna come back to you for a moment.

1:09:17 I want to switch gears and talk about poverty reduction,

1:09:19 and you touched on it a moment ago.

1:09:21 Even though Tanzania has been one of the top performers in the region,

1:09:25 has recorded relatively high economic growth rates,

1:09:28 why has this not

1:09:29 translated,

1:09:31 um,

1:09:31 to poverty reduction in the country?

1:09:34 Yeah,

1:09:34 thank you.

1:09:35 It's true.

1:09:35 Uh,

1:09:35 Tanzania has been one of those,

1:09:36 the fastest growing economy

1:09:38 within sub-Saharan Africa,

1:09:39 it has been one of the leading,

1:09:41 actually above the average.

1:09:42 And even now with COVID-19,

1:09:44 it has been above,

1:09:45 you know,

1:09:46 it has been almost one of the very few economies that have still been growing.

1:09:48 But as you have said really,

1:09:50 it has not reduced poverty.

1:09:51 So,

1:09:52 we have what we call a non-poverty reducing growth and there are a lot of,

1:09:55 a number of reasons here.

1:09:56 In the first place,

1:09:57 of course,

1:09:58 you look at the sectors that are growing.

1:10:00 The sectors that have been growing are mainly

1:10:02 what we call the capital intensive sectors,

1:10:03 sectors that are driven by

1:10:05 machines,

1:10:06 automation and stuff that really do not employ so much people.

1:10:10 They are mainly mechanized.

1:10:12 So,

1:10:12 uh,

1:10:13 like mining,

1:10:14 transport,

1:10:15 uh,

1:10:15 social services,

1:10:16 all those,

1:10:17 you know,

1:10:17 as opposed to agriculture.

1:10:19 Agriculture meaning,

1:10:20 you know,

1:10:20 crops,

1:10:21 production,

1:10:21 livestock and um

1:10:23 and fishing,

1:10:24 which has been going around 3%,

1:10:25 4%,

1:10:26 and these are mainly labor intensive.

1:10:28 So those sectors that are growing,

1:10:30 uh,

1:10:30 you know,

1:10:31 from the theory of factor productivity,

1:10:32 you know,

1:10:33 the factor production that is used

1:10:35 in the sectors that are growing is the one that gets paid,

1:10:37 so to say.

1:10:38 So it is capital

1:10:40 that has been receiving a lot of

1:10:42 uh payment

1:10:43 than labor in that context.

1:10:45 But also we have seen um

1:10:48 Poor intersectoral linkages,

1:10:49 sectors that have been growing very fast like mining,

1:10:53 transportation,

1:10:55 financial services,

1:10:57 etc.

1:10:57 are not so much linked with

1:10:59 the sectors that are growing very slowly.

1:11:01 You'll find mining in Mwanza,

1:11:03 mining in Shinyanga growing very fast,

1:11:05 but then consuming.

1:11:07 Beef,

1:11:08 you name it,

1:11:08 from Australia,

1:11:09 beef from South Africa,

1:11:10 you know,

1:11:10 not

1:11:11 from Mwanza,

1:11:11 not from Shinyanga.

1:11:13 So the moment there is no this intersectoral linkages,

1:11:15 you miss a trickle down effect.

1:11:18 So as a result,

1:11:18 really,

1:11:20 people who are poor are not really participating

1:11:22 so much and enjoying,

1:11:24 you know,

1:11:24 the fruit of.

1:11:26 You know,

1:11:27 the fruit of the growth itself.

1:11:28 But the other thing is the question of distribution

1:11:31 and the redistribution,

1:11:32 because what is supposed is,

1:11:34 although there are some sectors that are growing faster than others,

1:11:37 really proper distribution and redistribution,

1:11:39 mainly through taxation,

1:11:40 through fiscal policy,

1:11:42 through

1:11:44 subsidies,

1:11:44 for example,

1:11:45 they will uplift the people who are poor.

1:11:47 I'm not saying that this has not been done in Tanzania.

1:11:49 It has been done,

1:11:50 but a lot more needs to be done.

1:11:53 Maybe the last one is

1:11:55 In this context now,

1:11:57 it's the question of,

1:11:57 you know,

1:11:58 is this growth inclusive?

1:12:00 You know,

1:12:00 who participate in this

1:12:02 growth?

1:12:03 Normally,

1:12:04 for example,

1:12:04 the sectors that are growing.

1:12:06 They are mainly knowledge-intensive.

1:12:08 So people who,

1:12:09 who are not highly skilled,

1:12:10 not so much linked,

1:12:12 uh,

1:12:13 you know,

1:12:14 really,

1:12:14 they do not participate into this growth part.

1:12:17 So the moment you're not participating in the growth,

1:12:20 you do not also enjoy the part of the cake that has grown.

1:12:24 So those are part of really factors that have explained this um.

1:12:27 Uh non-poverty reducing growth.

1:12:29 And that's why the debate actually has been now,

1:12:32 it's not the question of just celebrating,

1:12:33 posting

1:12:34 impressive growth figures.

1:12:36 The question is,

1:12:37 is this the,

1:12:38 the,

1:12:38 the desired growth,

1:12:40 growth that is reducing poverty reducing,

1:12:42 that is inclusive,

1:12:43 uh,

1:12:44 but also that is green in terms of,

1:12:45 uh,

1:12:45 you know,

1:12:46 environment.

1:12:47 Yes,

1:12:47 thank you,

1:12:48 Professor.

1:12:49 I will come to Doctor Kilama now just to

1:12:51 hear your views as well on the correlation between

1:12:54 our economic growth and poverty reduction.

1:12:57 What Prof was saying in summary is pretty much we're saying

1:13:02 there is a lot of room

1:13:03 for improvement in the way

1:13:05 the structural transformation is happening in Tanzania.

1:13:09 When you think about growth,

1:13:10 as is likely pointed out,

1:13:12 the productivity of any growth is going to come either from capital or from labor.

1:13:17 In Asia,

1:13:17 we are seeing lots of transformation is coming from the labor bits,

1:13:21 and for us we do have a lot of room

1:13:24 that would allow to see.

1:13:27 Uh,

1:13:28 Improvement that are benefiting the labor,

1:13:31 um,

1:13:32 for instance,

1:13:33 the big,

1:13:33 I think I said this at the beginning,

1:13:35 um,

1:13:36 our biggest,

1:13:36 um,

1:13:38 contributor

1:13:39 is mining,

1:13:41 but then again,

1:13:41 the productivity is coming from,

1:13:43 uh,

1:13:44 capital

1:13:45 and one additional thing because I think uh when the

1:13:48 the country director was presenting also touched on informality.

1:13:52 Unfortunately,

1:13:53 again,

1:13:54 if you look into mining,

1:13:55 you see a lot of people,

1:13:57 including women,

1:13:58 engaged in mining informally.

1:14:00 And these are some of the areas that we uh we can actually um improve a lot

1:14:05 uh in the same stuff when you look into construction,

1:14:08 it's the same thing.

1:14:09 You see

1:14:10 the figures are showing there is a lot of growth,

1:14:12 but once you look into the integrated labor force survey data coming from Tanzania,

1:14:17 it's already showing you have a lot of people who are engaged in this sector

1:14:21 informally.

1:14:22 So for us to really um um benefit um

1:14:26 and see

1:14:28 Uh,

1:14:28 poverty reduction,

1:14:29 um,

1:14:30 and not necessarily just poverty reduction

1:14:32 but improvement in livelihoods of people,

1:14:34 we will really have to have

1:14:37 policies that are touching people at the at the lowest level.

1:14:41 And um just to add a little bit um

1:14:44 of a complete picture here,

1:14:47 we're not saying when you use machines it's bad,

1:14:50 but we say you need to build the capacity of people

1:14:54 to also produce and earn.

1:14:57 Reasonably well.

1:14:58 If what we are earning or what we are recording is being earned is by a machine.

1:15:04 It means there is room where we can improve and have more and more

1:15:08 people and in particular when I say young people always start to pot,

1:15:11 it doesn't mean he's young,

1:15:12 but like,

1:15:12 because he works a lot with young people,

1:15:15 uh he works a lot with young people,

1:15:16 like we need a lot of young people

1:15:18 and in particular for my case then also women

1:15:21 to get rewards.

1:15:23 And at this particular point,

1:15:24 I'll bring in the point about when we talk about having women

1:15:28 uh working and getting rewards.

1:15:31 Uh,

1:15:31 very quickly in this discussion we've had it before with Professor Ngowi,

1:15:35 when you're thinking about engaging women,

1:15:37 most of the formal work

1:15:39 that is done globally

1:15:41 only recognize people who work for 8 hours.

1:15:45 Women work in the informal sector,

1:15:47 not by choice.

1:15:49 But it's because they also have this burden of care that they have to undertake

1:15:54 to care for their families,

1:15:56 to make sure everybody

1:15:58 has had a meal.

1:16:00 If there is a sick person,

1:16:01 we all look into a woman,

1:16:02 they're looking at me,

1:16:03 yes,

1:16:04 and if you

1:16:05 want.

1:16:07 Anything

1:16:08 that has to be sorted out in the household,

1:16:10 we look at this woman.

1:16:12 So at the end of the day,

1:16:13 the woman will never have

1:16:15 8 hours

1:16:17 to be recognized and work in the formal sector,

1:16:19 so she ends up in the informal sector.

1:16:22 And I think one of the debates that is going on now,

1:16:25 it's very important

1:16:27 to have

1:16:28 a universal

1:16:29 social safety net,

1:16:31 also including women,

1:16:33 because we care for everybody else,

1:16:34 but our time is never recognized.

1:16:37 So I think when you're talking about the poverty and growth,

1:16:41 in as much as we look into the numbers and people are being excluded,

1:16:44 but if you look at the lens of the women,

1:16:46 Then that is different,

1:16:47 and I'm sure Paul,

1:16:48 if he starts looking at the young people,

1:16:50 he will also say they get punished for not having

1:16:53 the recognizable

1:16:55 experience that is needed

1:16:57 for them to really be included

1:16:59 and then at the end of the day

1:17:01 have this upward mobility where at the end of the day we'll say yes,

1:17:05 now we are rising and we should be.

1:17:08 Rising better,

1:17:09 I think I'll stop there for now.

1:17:11 Thank you for sharing your thoughts.

1:17:12 We've actually segued nicely now,

1:17:14 Paul,

1:17:15 for you to share with us

1:17:17 how you think Tanzania can sustain

1:17:19 and accelerate its economic growth in the medium term,

1:17:22 but specifically what do you think the role of the private sector is,

1:17:25 the quality of business environment,

1:17:27 human capital investment in Tanzania's growth strategy.

1:17:32 I think there are 5 things we,

1:17:33 uh,

1:17:34 there are 5 things we can do to accelerate economic growth in the medium,

1:17:38 medium to long term.

1:17:39 But,

1:17:39 but let me just focus on 3,

1:17:41 and I will mention this briefly.

1:17:43 One,

1:17:43 again,

1:17:43 I go back,

1:17:44 we need to drive investment,

1:17:45 OK?

1:17:47 Uh,

1:17:47 2,

1:17:47 we need to create access to opportunities for

1:17:51 the women,

1:17:51 for the young people,

1:17:52 for the regions that have been left behind,

1:17:54 and so on.

1:17:55 Yeah.

1:17:56 But again,

1:17:57 agree.

1:17:58 Cultural transformation is very key

1:18:01 because this is,

1:18:02 this is where you have uh a lot of people

1:18:04 working,

1:18:05 OK.

1:18:06 But uh poverty is also very,

1:18:08 very rampant within um um

1:18:10 uh this particular sector and upward mobility is important as Doctor uh um

1:18:16 um

1:18:17 Blandina has said,

1:18:18 OK.

1:18:19 And that requires investment in,

1:18:21 um,

1:18:21 you know,

1:18:21 um

1:18:22 Human capital,

1:18:24 that's very,

1:18:24 very key.

1:18:26 But you know it's a catch-22.

1:18:27 You need the money

1:18:28 to invest in,

1:18:29 you know,

1:18:30 all these other

1:18:31 initiatives so you can get your human capital index up.

1:18:35 But

1:18:36 critically important,

1:18:36 upward mobility

1:18:38 to,

1:18:39 you know.

1:18:40 Uh,

1:18:41 get away from this,

1:18:42 uh,

1:18:42 circle of poverty within the agricultural sector.

1:18:45 Uh,

1:18:45 but again,

1:18:46 investment into,

1:18:47 uh,

1:18:47 uh,

1:18:47 a number of areas.

1:18:48 Now,

1:18:49 what is the role of the private sector?

1:18:51 Undoubtedly,

1:18:52 I mean,

1:18:52 uh,

1:18:53 investment,

1:18:54 uh,

1:18:54 as I said before,

1:18:56 uh,

1:18:56 it is investment that drove a lot of the,

1:18:58 uh,

1:18:58 uh,

1:18:58 economic growth in,

1:18:59 in the last two decades,

1:19:00 and,

1:19:01 um,

1:19:01 2/3 of that was actually,

1:19:03 uh,

1:19:04 uh,

1:19:04 private investment,

1:19:05 OK?

1:19:06 Private,

1:19:06 so,

1:19:06 so you can see,

1:19:07 you know,

1:19:08 uh,

1:19:08 75%.

1:19:09 Of

1:19:11 a big chunk of our growth

1:19:13 came from investment,

1:19:15 private sector investment,

1:19:17 especially into mining,

1:19:19 and again now we're having huge

1:19:21 public sector investment,

1:19:22 but that's not sustainable in the long

1:19:25 run because then you know

1:19:28 you may be putting pressure on the fiscus.

1:19:31 So the role is a driver,

1:19:33 the key driver of the engine of growth

1:19:37 for the economy.

1:19:39 Through investment

1:19:41 we do need,

1:19:43 if I got your second question correctly,

1:19:45 you asked about the quality of the business environment.

1:19:48 Now

1:19:49 there's room for improvement.

1:19:50 I mean,

1:19:51 there is room for improvement.

1:19:53 Ah,

1:19:55 fortunately,

1:19:56 uh,

1:19:56 we are engaging the government as a private sector on a number of occasions.

1:20:00 In fact,

1:20:00 the level of,

1:20:01 uh,

1:20:02 you know,

1:20:02 interaction has

1:20:04 actually increased.

1:20:05 Unfortunately,

1:20:06 because of the pandemic,

1:20:07 you know,

1:20:07 we can no longer do face to face.

1:20:10 But,

1:20:10 but you do see a real commitment to address a number of the issues that we face.

1:20:13 And those issues,

1:20:14 as I talked about

1:20:16 before were

1:20:17 the hard sort of pain points,

1:20:18 land,

1:20:19 you know,

1:20:19 availability.

1:20:21 Quality of raw material.

1:20:23 You may have

1:20:25 a factory like Bressa producing,

1:20:28 you know,

1:20:28 juices,

1:20:29 but then again,

1:20:30 you know,

1:20:31 the fruit farmers can cannot supply the quality or the quantity.

1:20:34 So sometimes he has to import,

1:20:37 you know,

1:20:39 the fine powder.

1:20:40 I don't know what you call it.

1:20:41 Yeah,

1:20:41 concentrate,

1:20:42 yeah.

1:20:43 So,

1:20:43 so basically we have an issue of quality and quantity.

1:20:47 Power.

1:20:48 We are investing a lot into power generation,

1:20:52 but again,

1:20:52 we still have an issue of access and reliability.

1:20:55 Yeah.

1:20:56 We still have ups and downs.

1:20:59 And then,

1:21:00 most importantly,

1:21:01 you need the skills,

1:21:02 labor.

1:21:03 Yeah.

1:21:04 Unfortunately,

1:21:04 in Tanzania,

1:21:06 we seem to have a dichotomy between

1:21:09 what we demand and what we produce.

1:21:11 So,

1:21:11 so if you look at the numbers,

1:21:13 we,

1:21:13 we are training,

1:21:14 we are training 3 managers for one.

1:21:17 You know,

1:21:18 um,

1:21:19 technician.

1:21:19 It should be the other way around.

1:21:21 Yeah,

1:21:21 yeah.

1:21:22 You should have many technicians under one manager,

1:21:24 but not the other way,

1:21:25 you know,

1:21:26 a flip pyramid.

1:21:28 And then the regulatory environment,

1:21:30 changing the goalpost

1:21:32 is something the private sector does not like,

1:21:34 you know,

1:21:34 in the middle of the game.

1:21:37 Finance again,

1:21:38 access and cost and

1:21:40 this is really hampering.

1:21:43 The very creative young people,

1:21:44 you know,

1:21:45 I work with them.

1:21:46 I see what they can do,

1:21:48 but they have a constraint in terms of they are never short of ideas,

1:21:52 yeah,

1:21:52 brilliant ideas,

1:21:53 but when it comes to finance,

1:21:54 it's a huge struggle,

1:21:56 and this is something we really need to look into to unlock

1:21:59 the creativity of this young generation.

1:22:01 Thank you.

1:22:02 So creating a more conducive ecosystem for young people as well.

1:22:06 I'm curious to know what policies you think should be implemented,

1:22:09 Professor Ngoi,

1:22:10 in order to accelerate job creation and poverty reduction.

1:22:13 What do we need?

1:22:15 I've always believed on the two major policies that I've started with again,

1:22:20 both the fiscal and monetary policy really are very important.

1:22:23 On the,

1:22:24 you know,

1:22:24 what Paul is telling us on the youth

1:22:26 and the inability of youth accessing capital.

1:22:30 You know,

1:22:30 I also deal a lot with the youth in terms of entrepreneurship.

1:22:33 Really they are full of ideas,

1:22:35 but now when it comes to accessing funds,

1:22:38 really

1:22:38 it's an issue,

1:22:40 and it's an issue in various areas now,

1:22:42 including on the interest rate,

1:22:43 for example.

1:22:44 Interest rate that has been charged

1:22:46 is relatively high,

1:22:48 really,

1:22:48 and I understand partly because I sit as a board of directors in one of the banks.

1:22:53 I understand why the rates are the way they are,

1:22:55 you know,

1:22:55 there are issues of cost and stuff,

1:22:57 but really.

1:22:58 If we have a proper monetary policy that focuses

1:23:01 on interest rates that are friendly to youth,

1:23:05 or interest rates that can be waived on youth enterprises,

1:23:08 for example,

1:23:09 this could help a lot of young men and women

1:23:12 to establish their own enterprises,

1:23:14 to employ themselves,

1:23:15 you know,

1:23:16 those kind of stuff,

1:23:17 because really that's mainly the stumbling block,

1:23:19 although at the end of the day.

1:23:21 When there is a good business idea,

1:23:23 good entrepreneurial idea,

1:23:24 money will always be there.

1:23:25 But of course,

1:23:26 interest rates has been one of those major issues

1:23:29 to quite a lot of people.

1:23:30 Uh,

1:23:30 now the other thing when it comes to,

1:23:33 as a,

1:23:34 as the question of fiscal policy,

1:23:36 issues of taxation,

1:23:37 uh,

1:23:38 is a lot of people would like to start their enterprises,

1:23:41 but really,

1:23:42 Uh,

1:23:43 when they think of,

1:23:44 uh,

1:23:45 tax amnesty,

1:23:46 normally it is mainly linked to large investors,

1:23:48 you know.

1:23:49 So this,

1:23:50 this become again one of those,

1:23:51 uh,

1:23:52 uh,

1:23:52 stum stumbling blocks,

1:23:54 especially for youth.

1:23:55 But now,

1:23:56 a little,

1:23:56 to go a little bit back to what Paul was telling us on the public investment,

1:23:59 this is something that I wanted to add my voice on.

1:24:01 Uh,

1:24:02 yes,

1:24:02 there is a lot of public investment that has been going around,

1:24:05 building roads,

1:24:06 ports,

1:24:07 airports,

1:24:07 you name it.

1:24:08 What I've been missing,

1:24:10 or rather that,

1:24:11 that could,

1:24:11 we could add in order to sustain growth

1:24:14 is really local content,

1:24:16 local content.

1:24:16 You know,

1:24:17 all these big infrastructure,

1:24:18 quite good,

1:24:19 no problem at all.

1:24:20 But then

1:24:21 when I'm looking the local content in terms of local firms,

1:24:24 local companies

1:24:25 that are part and parcel

1:24:27 of these equations,

1:24:28 that actually would retain a lot of money back home.

1:24:32 And reinvest the money in the local economy in this way,

1:24:36 expanding the growth.

1:24:37 I really miss it.

1:24:38 But I understand sometimes

1:24:39 it's the question of quantity,

1:24:41 it's the question of quality,

1:24:42 because what I want

1:24:43 is the best rail.

1:24:45 Whether it's made from Turkey or Tanzania,

1:24:47 I want the best rail.

1:24:49 If the Turkish are the ones who are making it

1:24:50 best,

1:24:51 I want it best.

1:24:52 So there are now question of capacity building

1:24:54 to,

1:24:54 to the,

1:24:55 to the local firms.

1:24:56 And then he,

1:24:57 he talked also about investment climate.

1:25:00 Our focus has always been attracting investment,

1:25:03 and I've written a lot really on that FBI for over 20 years now.

1:25:07 But I think now the focus has to be not only attracting but also retaining.

1:25:12 You know,

1:25:12 there is a danger of what I call flagging out.

1:25:15 Investors would come.

1:25:17 Because

1:25:17 they've attracted them.

1:25:18 If the investment does not continue to be good

1:25:21 in terms of legal policy,

1:25:23 regulatory framework,

1:25:23 as he has correctly said,

1:25:25 in terms of skills and talent in the labor market,

1:25:27 and when it comes to skills,

1:25:28 not only hard skills,

1:25:29 but also soft skills,

1:25:31 infrastructure,

1:25:32 not only hard hard infrastructure,

1:25:34 but also soft

1:25:35 internet,

1:25:35 you know,

1:25:36 the speed of internet,

1:25:37 the safety of internet and all those,

1:25:38 they will flag out.

1:25:39 So I think there is a need of having

1:25:41 Dedicated the effort of retaining investors who are already

1:25:45 in this country.

1:25:46 Thank you,

1:25:46 Professor Doctor Kilama.

1:25:48 I will come to you,

1:25:48 and I'm just curious to know,

1:25:50 to go back to this idea of accelerating job creation and poverty reduction,

1:25:54 what role can agriculture,

1:25:55 productivity,

1:25:56 human capital,

1:25:57 or social protection play in this?

1:25:59 That's a good question.

1:26:02 And I'll just start where they ended.

1:26:05 Unfortunately,

1:26:05 a lot of times when we speak about agriculture,

1:26:08 we tend to look at one actor and in most cases the farmer,

1:26:12 and I think in both the uh some of the points that both Profgoi and Paul have raised,

1:26:21 I think it's now a high time

1:26:23 that whenever we want to look

1:26:25 into agriculture,

1:26:26 we have to start.

1:26:29 are the markets.

1:26:30 If we start there,

1:26:31 then we're going to be assured

1:26:33 the quality is going to be met,

1:26:35 the quality that is needed by the market

1:26:38 and also the quantity will follow

1:26:40 because it's one thing to say

1:26:43 farmers are not producing while we know several months when we go to Iringa,

1:26:47 suddenly the roads are red because we have all these,

1:26:50 you know,

1:26:51 tomatoes that are being rotten.

1:26:54 So when you think about um really creating jobs and really uh spearheading um um um

1:27:02 development of the people in Tanzania,

1:27:04 it's very important to start in the middle.

1:27:07 And then think about the farmer,

1:27:09 but then unfortunately our farmers have been used as a token.

1:27:13 I'm going to call it a political token,

1:27:15 you know,

1:27:15 good for the votes,

1:27:16 and then we'll be like,

1:27:17 we give you subsidy,

1:27:18 but then we don't give subsidies to the manufacturers.

1:27:21 They should be the guys who are given

1:27:23 the subsidies

1:27:24 because they're the ones who are processing.

1:27:26 And then with that then integrated into that,

1:27:29 then it's very important when we say we want to,

1:27:32 we want to provide.

1:27:35 Um,

1:27:36 Umani,

1:27:37 now I need to know this in Kiswahili.

1:27:39 We need to extension services.

1:27:40 I was having services extension was running away

1:27:43 extension services.

1:27:45 These extension services should be determined by the manufacturers,

1:27:49 not the guys who came from school.

1:27:51 Sorry,

1:27:52 I love the youth,

1:27:52 but when they're like,

1:27:53 I want employment,

1:27:54 you're like,

1:27:54 OK,

1:27:54 you can be an extension.

1:27:56 No,

1:27:56 no,

1:27:56 no,

1:27:56 no,

1:27:56 no.

1:27:57 These people have to be experienced.

1:27:58 They have to

1:27:59 have worked

1:28:00 with manufacturers

1:28:01 to be given these jobs,

1:28:03 and then once they go and tell the farmers,

1:28:06 we want um

1:28:08 Um,

1:28:09 avocado

1:28:10 the size of a hand,

1:28:11 they should not go like,

1:28:13 when I was growing up,

1:28:14 I was eating avocado the size of my head.

1:28:16 No,

1:28:16 that's what the company wants

1:28:18 and that's what we produce.

1:28:20 That linkage is very important and all the other soft skills that we had

1:28:24 and the other skills,

1:28:26 the hard skills that are needed

1:28:27 to ensure that then agriculture become

1:28:30 more meaningful

1:28:31 because

1:28:32 as long as we continue to say

1:28:34 the market is going to be determined by

1:28:37 Let's say.

1:28:40 The the

1:28:40 the the society,

1:28:42 um,

1:28:42 the primary society or the uh even the corporate society.

1:28:46 At the end of the day,

1:28:48 we're not giving any economic freedom to the,

1:28:51 to the,

1:28:52 to the farmer.

1:28:54 Once the farmers have an economic freedom,

1:28:56 we will never ever ever again hear.

1:29:00 You're not allowed to cut off your cashew.

1:29:02 You're not allowed to.

1:29:04 No,

1:29:04 if it's not paying,

1:29:05 I'm cutting it off.

1:29:07 If it's paying,

1:29:08 I'll do it.

1:29:09 If I've linked up with the private sector,

1:29:10 I'll do it,

1:29:11 but if I'm not,

1:29:13 it won't happen.

1:29:14 I think

1:29:15 our farmers are the best.

1:29:16 They know everything.

1:29:19 If you force them,

1:29:20 they stop.

1:29:21 It's not,

1:29:22 they don't want to do it,

1:29:23 they know it doesn't pay.

1:29:25 If it pays them,

1:29:26 they'll go ahead and do it

1:29:28 in the cashew area where I've worked,

1:29:30 the years whereby they get a lot of earnings,

1:29:33 the next year they attend their farms.

1:29:35 The year they don't get enough earnings,

1:29:37 the next year they slice up their farm.

1:29:39 They just

1:29:41 maintain a few,

1:29:42 then they can get the earnings.

1:29:43 So I think this holistic approach in this.

1:29:45 What I'm also hearing from

1:29:47 from my colleagues,

1:29:48 it's very important.

1:29:50 We need to be very predictable with what we are saying,

1:29:53 not just to the farmers,

1:29:54 but to the facilitators,

1:29:56 to the company,

1:29:58 to the companies that want to add value.

1:30:01 We provide what they want,

1:30:04 and then at the end of the day,

1:30:06 the government then should simply be the

1:30:08 facilitator of ensuring the ecosystem is operating.

1:30:11 But not become like also

1:30:14 in the middle of that kind of like uh

1:30:17 of a,

1:30:17 of a,

1:30:17 of a,

1:30:18 of a,

1:30:18 of a,

1:30:19 Investing

1:30:21 because we understand if you allow more players

1:30:23 that innovation is going to come out.

1:30:26 If you restrict and you only have one player who is also a regulator,

1:30:30 who is going to regulate the regulator.

1:30:32 That's very difficult.

1:30:33 That's why we want the private sector

1:30:35 and we want to enhance

1:30:37 the quality of the regulators so that they can follow

1:30:40 and make sure whatever is produced

1:30:42 is produced

1:30:43 at the safety level

1:30:44 that not only is safe to us.

1:30:46 But also safe to everybody else.

1:30:49 It shouldn't be like we're producing

1:30:51 for export or the quality that is needed for export,

1:30:54 but the safety in Tanzania,

1:30:56 hm,

1:30:56 who cares?

1:30:57 No,

1:30:57 no,

1:30:57 no.

1:30:57 It should be,

1:30:58 first,

1:30:59 we care about the safety of Tanzanians,

1:31:01 then second,

1:31:02 we care

1:31:03 about when we export,

1:31:04 we also meet uh

1:31:06 all these other uh qualities.

1:31:08 And then the last bit I think I can touch on is the

1:31:11 on development funds.

1:31:14 They've implied,

1:31:14 but I think it's very important,

1:31:16 and I think

1:31:17 in Tanzania we've tried now,

1:31:19 and I think we can continue learning on how to utilize them.

1:31:23 This is a fund that can be used

1:31:26 when it's leveraged with what is coming out from the private sector.

1:31:29 It can do a lot.

1:31:31 What's my worry now,

1:31:32 what I see a lot is like.

1:31:34 When this fund is there,

1:31:35 it's like the people who are overseeing it,

1:31:37 they also want to be engaged.

1:31:38 They'll be like,

1:31:39 hey,

1:31:39 hands off.

1:31:41 Just oversee who is uh who is going to implement this project

1:31:45 that are going to touch all these people who are engaged

1:31:47 in agriculture through the entire value chain.

1:31:50 And I think with that we should be uh in good hands.

1:31:54 Thank you Doctor Kilama.

1:31:55 You've touched on many things there.

1:31:57 I want to move to Paul Makanza now and to basically question you here on,

1:32:00 you know,

1:32:01 one of the key features of a middle income country is a solid middle class,

1:32:07 and I think we also know that the majority of Tanzanians,

1:32:09 even though they may have escaped poverty to some degree,

1:32:12 are still hovering around.

1:32:14 The poverty line and are vulnerable to falling back as well.

1:32:18 So from your perspective,

1:32:19 what policies do you think can boost

1:32:21 and secure the middle class in Tanzania?

1:32:26 It's been touched on in the report and I'm sure

1:32:28 my colleagues will have a number of interventions as well.

1:32:36 You see,

1:32:36 uh,

1:32:37 the middle class in Tanzania is very small.

1:32:39 Yeah.

1:32:40 Uh,

1:32:40 if,

1:32:40 if,

1:32:40 if,

1:32:41 if,

1:32:41 if some of the numbers I've seen,

1:32:43 uh,

1:32:43 it's less than 10%,

1:32:45 you know,

1:32:46 in between.

1:32:47 Yeah.

1:32:48 Um,

1:32:49 so,

1:32:51 Should we worry about the middle class or should we be worrying about

1:32:55 the less fortunate?

1:32:56 Yeah,

1:32:57 I would actually worry about the less fortunate because

1:33:00 they are big in numbers.

1:33:01 Yeah.

1:33:02 What policies would I put in place?

1:33:05 Basically,

1:33:06 um,

1:33:08 And I'll just focus on our industrialization again.

1:33:13 Our government,

1:33:13 you know,

1:33:14 had a beautiful,

1:33:15 uh,

1:33:15 you know,

1:33:16 uh,

1:33:16 strategy for industrialization.

1:33:18 Yeah.

1:33:19 Um,

1:33:19 you had,

1:33:20 uh,

1:33:20 interesting ideas like um

1:33:22 EPZ industrial parks,

1:33:24 and so on.

1:33:25 What,

1:33:25 what,

1:33:25 what,

1:33:26 what,

1:33:26 what sort of products to,

1:33:27 um,

1:33:29 to focus on,

1:33:29 OK?

1:33:30 Uh,

1:33:31 I,

1:33:31 I,

1:33:31 I,

1:33:32 I love the idea of uh industrial parks,

1:33:35 OK,

1:33:35 because uh this is where you can actually get

1:33:38 A lot of people well organized in order to be able to service them,

1:33:42 whether it's to provide the infrastructure

1:33:45 or the financing and so on,

1:33:47 in particular women.

1:33:49 Women,

1:33:50 women actually,

1:33:51 if you go to a number of these

1:33:53 SMEs,

1:33:54 exhibitions,

1:33:55 it's

1:33:56 90%,

1:33:57 99% are,

1:33:58 are,

1:33:58 are women.

1:33:59 Yeah.

1:34:00 Uh,

1:34:00 we need to promote,

1:34:00 on a practical level,

1:34:01 we do need to promote these industrial parks,

1:34:04 OK,

1:34:04 and provide the infrastructure,

1:34:06 provide the access to financing and uh and so on.

1:34:10 Uh,

1:34:10 so I will just end there,

1:34:12 but I,

1:34:12 I would love more to focus the middle,

1:34:15 the middle class like

1:34:16 Uh,

1:34:16 Doctor,

1:34:17 professor,

1:34:17 doctor,

1:34:18 and I,

1:34:18 we are fine for now.

1:34:19 It's,

1:34:19 it's,

1:34:20 it's,

1:34:20 it's the little ones who are,

1:34:21 you know,

1:34:22 thank you very much.

1:34:23 Thank you,

1:34:23 Paul.

1:34:24 Um,

1:34:25 we've all read the report,

1:34:26 obviously,

1:34:27 uh,

1:34:27 part one and part two,

1:34:28 looking at the economic outlook,

1:34:29 but also at our development agenda,

1:34:32 sustaining this growth,

1:34:33 maintaining lower middle income status,

1:34:35 aspiring to be a middle income country in the future.

1:34:39 I now turn to you for your final takeaway,

1:34:41 uh,

1:34:41 and commentary

1:34:43 on what you'd like our listeners to take away from the report,

1:34:46 from your perspective.

1:34:46 I'll start with you,

1:34:47 Professor Ngoi.

1:34:49 Uh,

1:34:49 thank you.

1:34:49 You know,

1:34:50 uh,

1:34:50 launching this report,

1:34:51 uh,

1:34:51 with the environment that we are in,

1:34:53 uh,

1:34:53 with COVID-19,

1:34:55 uh,

1:34:55 I think,

1:34:56 uh,

1:34:56 my focus would be,

1:34:57 uh,

1:34:58 making sure that,

1:34:58 um.

1:35:00 We address all the economic impacts that we have seen

1:35:05 being brought by COVID-19,

1:35:06 both the first wave and the second wave,

1:35:08 but really learning from the past because it's not

1:35:11 the first time that we are coming with an

1:35:14 economic crisis like this one.

1:35:15 In 2008,

1:35:16 we had a global financial economic crisis

1:35:18 with issues more or less like this one.

1:35:21 So if we are to sustain and remain a Income country we have to address

1:35:26 the economic impacts of COVID-19 which are likely to be long term really if not well

1:35:31 addressed.

1:35:32 So really policy responses to

1:35:34 COVID-19 now,

1:35:35 but also

1:35:36 all other responses health responses,

1:35:39 etc.

1:35:40 have to be really focused

1:35:42 so that we do not

1:35:44 fall back into

1:35:46 the lower class that we.

1:35:47 Just graduated from

1:35:48 just last year,

1:35:49 you know,

1:35:50 so really addressing the economic impact of

1:35:53 COVID-19 with the proper

1:35:55 policy responses,

1:35:56 learning lessons from

1:35:58 similar contexts.

1:36:00 We had,

1:36:02 we had cases like Ebola,

1:36:03 it might have been a little bit minor,

1:36:05 but learning how it was addressed,

1:36:07 learning how other economic crises have been addressed across the world,

1:36:09 even going back into history.

1:36:12 We had the Great Depression in the 1930s.

1:36:13 We know how countries really escaped this.

1:36:16 So let's use the knowledge that is around.

1:36:19 Thank you,

1:36:19 Professor.

1:36:21 A message of positivity there and learning from past

1:36:25 past experience.

1:36:25 Dr.

1:36:26 Kilama,

1:36:26 your final thoughts.

1:36:27 I think

1:36:29 just in addition to what said,

1:36:30 I think for me

1:36:32 the biggest message.

1:36:35 Is not to forget the big picture,

1:36:38 the interventions that we try to undertake now

1:36:42 in as much as they are needed,

1:36:44 they should not interfere in the long term perspective that we have.

1:36:48 I think that will be very important

1:36:51 in ensuring that we are including as many people as possible.

1:36:56 The one thing that I touched,

1:36:57 and I'm going to say like I know Paul will also touch on it,

1:37:01 is this embracing technology in improving efficiency

1:37:04 of both capital and labor in particular.

1:37:07 I think

1:37:08 it's providing us with a great room to see a lot of

1:37:14 upward mobility and also including the people who have been excluded.

1:37:19 And with that at the end of the day.

1:37:22 Improving livelihoods of people,

1:37:23 and I think that would be the only word I say.

1:37:27 Cod all this is having

1:37:30 predictable policies.

1:37:33 It's going to be very,

1:37:34 very

1:37:35 important,

1:37:36 as we've heard,

1:37:37 the business community,

1:37:38 they prefer that

1:37:40 when you're not predictable,

1:37:41 then they're not sure what to do,

1:37:43 and I think

1:37:44 those are the two things.

1:37:44 Thank you very much,

1:37:45 Dr.

1:37:45 Kilama Mpumakanza.

1:37:47 Final thoughts.

1:37:47 My colleagues have covered the issues pretty well,

1:37:50 but let me just mention

1:37:52 three.

1:37:54 I think

1:37:55 very critically important is we need to sustain our LIC,

1:37:59 you know,

1:38:00 status,

1:38:00 yeah.

1:38:01 So recovery in the short term will be important,

1:38:05 OK,

1:38:06 and,

1:38:07 and,

1:38:07 and,

1:38:08 and the fiscal monetary

1:38:10 policies

1:38:12 need to be sound

1:38:13 to ensure that recovery.

1:38:15 But again,

1:38:16 equally important.

1:38:19 Quality growth rather than quantity alone,

1:38:22 as my colleagues have mentioned before,

1:38:24 because we need to include a bigger chunk of our population into this growing pie

1:38:31 and

1:38:32 as we stabilize,

1:38:33 recover,

1:38:34 we need to move upward mobility

1:38:37 and this is where it gets interesting.

1:38:39 We can become very creative,

1:38:41 you know,

1:38:41 tap into technologies

1:38:43 and basically.

1:38:45 Uh,

1:38:47 again,

1:38:47 I go back,

1:38:47 we have a number of very creative young people,

1:38:51 yeah,

1:38:52 and this creativity,

1:38:53 what amazes the most is the fact that we can actually

1:38:56 Sort of create technologies that actually fit our

1:39:00 environment and address some of the constraints we have

1:39:04 in some of the big sectors like agriculture and so on.

1:39:07 So those are my three points.

1:39:08 Thank you very much.

1:39:09 Thank you very much to our three

1:39:10 esteemed panelists today for sharing your thoughts,

1:39:13 your insights on the 15th Tanzania economic update.

1:39:16 We do appreciate having you here,

1:39:18 Paul Makanza,

1:39:19 Dr.

1:39:19 Blandina Kilama,

1:39:20 Professor Ngoi.

1:39:22 Thank you for being here today.

1:39:24 Um,

1:39:24 I would now like to welcome the World Bank country director to give

1:39:27 us her key takeaways and closing remarks on the report as it stands.

1:39:32 Welcome back,

1:39:33 Mara.

1:39:33 On behalf of the World Bank team,

1:39:35 I would first of all like to thank Professor Ngoi,

1:39:39 Doctor Blandina,

1:39:40 and Mr.

1:39:41 Makanza

1:39:42 for their insightful comments and the vibrant discussion that we have heard today.

1:39:47 I'd also like to very much thank

1:39:50 our moderator Miranda

1:39:52 for leading that discussion so skilfully.

1:39:56 As I was listening to the discussion today,

1:39:59 there were several things that really came to the

1:40:02 fore for me that I would like to highlight.

1:40:05 The first of these is that undoubtedly these are challenging

1:40:09 times for the world as well as for Tanzania.

1:40:13 And while the short term recovery is extremely important,

1:40:17 as we have heard today,

1:40:18 it's also very important for us to continue

1:40:22 to keep the long-term perspective in mind.

1:40:25 The quality of growth of Tanzania is going to be particularly important

1:40:30 during this recovery period.

1:40:34 We've also heard a lot about the importance of focusing on inclusivity

1:40:39 and in particular

1:40:40 the importance of women and youth,

1:40:43 and making sure that as the country moves forward in its economic development,

1:40:47 that these groups and other vulnerable groups

1:40:50 are fully included in economic activity and able

1:40:54 to take full advantage of the economy.

1:40:58 We've heard about the important role of the private sector to

1:41:00 generate jobs and how crucial that is going to be,

1:41:04 especially

1:41:05 in the agricultural sector going forward

1:41:08 to ensure that Tanzania can have a vibrant

1:41:12 economy that will lead it sustainably

1:41:14 into a middle income country status.

1:41:18 We also talked about embracing technology

1:41:20 and the importance that technology can bring

1:41:23 in supporting all of these other reforms and economic development.

1:41:28 And finally,

1:41:29 as we look to the future,

1:41:32 we heard the importance of focusing on greater economic security

1:41:37 for all Tanzanians,

1:41:38 so those who are brought out of poverty

1:41:41 do not run the risk

1:41:43 of falling back in again if there is another shock.

1:41:47 So on that basis,

1:41:49 I would like to again thank you all

1:41:51 for joining us today and for the vibrant discussion

1:41:54 and to all those who have watched and listened to this.

1:41:57 Thank you very much.

showAllTimestamps

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transcript

Hello and welcome to the World Bank 15th Tanzania economic update. This edition comes to you from Sunny Dar es Salaam and is entitled Raising the Bar. Today we have come together to delve deeper into the report to glean key insights into achieving Tanzania's development agenda. We have a panel of three distinguished leaders and thinkers who will help us to deepen our understanding of Tanzania's economy in the global context, and with Tanzania's recent attainment of lower middle income status, we will ask pertinent questions around where we go next as a nation as we strive towards Tanzania's development vision, which includes attaining middle income status by 2025. Now without further ado, let's set the stage with opening remarks from the World Bank's country director Mara Warwick. Karibusana, distinguished panelists, ladies and gentlemen, members of the press. As we were finalizing the preparation of this 15th edition of the Tanzania Economic Update, the news came to us that we had lost Professor Benno Ndolo, a very dear friend and colleague of many World Bank Group staff. We are still mourning his passing, and I would like to dedicate a few minutes to honor his memory. Many World Bank Group staff had the special privilege to interact with Professor Ndulu, or Beno, as he was known to many of us, either while he was working at the World Bank or the Bank of Tanzania or in the many international development activities to which he was so highly devoted. A powerhouse in development economics and a remarkable leader with unwavering commitment to the socioeconomic transformation of Tanzania, Beno was always at the heart of our work in Africa. This was all thanks to his affability, humility, and immense generosity to share his time and knowledge with others. Professor Ndulu made important contributions to the development of Tanzania and beyond, from the 1980s, where he led crucial initiatives that helped to shape the country's reform agenda, to his move to the World Bank in Tanzania and then Washington DC through his return to Tanzania in 2008 as the governor of the Bank of Tanzania. He collaborated with local and international stakeholders, including the private sector, to champion significant reforms in key areas such as financial inclusion, human development, business environment, and infrastructure. Indeed, Tanzania's leading position in the global financial inclusion agenda cannot be delinked from Professor Ndulo's personal dedication to this cause. His retirement in 2018 did not faze Professor Ndulu's passion for the causes he championed. He joined Oxford University and continued to collaborate on important initiatives with many partners, including the World Bank. All of us at the World Bank Group will truly miss Professor Ndulo's intellectual leadership and championing of critical development issues, but most of all, we will miss his passion for research and for mentoring the next generation of African economists. He touched the lives and careers of so many, and he will be truly missed. We send our deep condolences to Mama Maria Ndulu and their children, Ndulika, Lindo, and Sarah and all members of his family for their loss. May Professor Ndulu rest in eternal peace. Ladies and gentlemen, the World Bank produces economic updates in many of our member countries, including Tanzania. Produced twice a year, each edition of the Tanzania Economic Update presents the World Bank's independent assessment of the current economic performance and outlook, accompanied by a special topic chapter which focuses on a development challenge relevant for realizing Tanzania's aspirations. As its special topic, the 15th edition of the Tanzania Economic Update entitled Raising the Bar Achieving Tanzania's Development Vision. Takes Tanzania's recent achievement of becoming a lower middle income country in July 2020 as the point of departure and takes a forward look on what it will take to achieve Tanzania's development aspirations as stated in the Tanzania Development Vision 2025. The discussion is framed around 3 fundamental pillars, sustaining growth over the medium term, strengthening the inclusiveness of growth to reduce poverty, and fostering economic mobility and economic security. Tanzania's graduation to LLMIC status presents an opportunity to assess the quality of past growth and to develop a roadmap to guide its successful transition to middle income status in order to achieve qualitative development goals that extend beyond income per capita. A key purpose of our Tanzania economic updates is to stimulate public debate on development issues. As on previous occasions, we are honored today to have a panel of eminent practitioners and thought leaders to participate in the discussion, and I would personally like to thank the panel for their presence here today. My colleagues Miguel and Bill will present the report findings in detail, but let me take a few minutes to highlight some of the World Bank's perspectives on the following two questions that are addressed in this economic update. What are Tanzania's growth and poverty prospects in a challenging global environment? And what are policy priorities for Tanzania to successfully make the transition to a middle income country? Firstly, the growth and poverty outlook. The COVID-19 pandemic continues to exact an enormous humanitarian and economic toll worldwide. The impact of the pandemic on human lives has been enormous. The global economy contracted by an estimated 4.3% in 2020, and while a 3.8% rebound is projected in 2021. Worldwide economic output is expected to remain well below pre-pandemic levels over the medium term. Tanzania has fared relatively well compared to its regional peers, but economic growth has slowed, and poverty is expected to have increased. The real GDP growth rate fell from 5.8% in 2019 to an estimated 2% in 2020, and per capita growth turned negative for the first time in over 25 years. The government took early measures to alleviate the adverse health and economic impacts of COVID-19. However, these measures were moderate and shorter lived relative to those implemented in many other countries in the region. While a recession was avoided in 2020, the absence of official information on COVID-19 infection and mortality rates complicates efforts to assess the effectiveness of the public health response. Moreover, Tanzania's economic outlook remains highly uncertain, while the shock of the pandemic is expected to slow poverty reduction. Given this uncertainty, we expect real GDP for 2021 to fall in the range 3 to 5.3%, with realization on the upper side of this range hinging on a strong recovery in global economic activity supported by the rollout of a vaccine globally and hard work on domestic policy side to support the recovery. But every cloud has a silver lining. Tanzania has several macroeconomic advantages that favor a swift recovery. It is one of the few economies in the region that avoided recession in 2020. The country's low risk of debt distress and the low fiscal deficits offer some space to prudently utilize debt financing. International reserves are relatively high while a combination of high gold prices and low oil prices is bolstering the terms of trade. I would like to highlight here the importance of bold and credible implementation of policies to save lives and livelihoods and to support Tanzania's economic recovery and growth beyond 2021. First, saving lives requires a continued focus on the prevention, detection and treatment of COVID-19, supported by data transparency and timely reporting. Greater transparency and enhanced surveillance of COVID-19 and other communicable diseases could improve early detection, containment, and public outreach. Establishing an internal process for planning a COVID-19 inoculation campaign would position the government to move swiftly as new vaccines become available. We would strongly advise the government to proactively engage with technical partners to prepare a plan for deploying a COVID-19 vaccine in Tanzania. Second, protecting livelihoods requires a thorough assessment of existing support programs and their adjustment to maximize the impact on vulnerable households and firms. Tanzania has a very well established and well-run productive social safety nets program which has been featured strongly in the recent World Bank report The State of Economic Inclusion in 2021, but its coverage remains limited. The government should consider scaling up this and other social protection programs to reduce the vulnerability of poor households. In the short term, the government could strengthen measures to protect jobs and support micro, small and medium sized enterprises. Third, a robust recovery in 2021 and beyond will require reforms that improve the business environment. Key areas include facilitating the adoption of digital solutions for business resilience and growth, expanding access to finance amongst micro, small and medium enterprises, and addressing the challenges of the informal sector. The blueprint for regulatory reforms to improve the business environment identifies numerous permits, licenses, and procedures to eliminate, but its implementation has been incomplete. The renewed emphasis on private sector as engine of growth and jobs is welcomed. This would require major policy reforms implemented decisively and credibly. Which brings me to the issue of the medium term development agenda and achieving Tanzania's development vision. In July 2020, Tanzania made a remarkable milestone by achieving lower middle income country status after two decades of sustained growth and investment supported by stable macroeconomic conditions, rich natural endowments, and its strategic geographical position. While reaching ELMIC status is a laudable achievement, Tanzania's larger development agenda remains unfinished. The Tanzania Development Vision TDV 2025 envisages Tanzania as a middle income country with well-developed human capital, an ample supply of high quality livelihood opportunities, and broad-based gains in living standards. To realize this vision, Tanzania's progress in boosting income levels, narrowing the infrastructure gap, and improving social indicators must be complemented by widespread improvements in poverty reduction, shared prosperity, and other qualitative development indicators. Rapid population growth, slow and uneven job creation, low levels of education, and limited access to educational and employment opportunities, especially amongst women and girls, have reduced the inclusiveness of Tanzania's economic expansion, blunting its effect on poverty reduction. In this context, sustaining a robust expansion while ensuring that economic growth generates inclusive opportunities and broad gains in living standards will be critical to realize the ambitious objectives of the TDV 2025. It is indeed a cruel irony that Tanzania has crossed this important economic threshold in the year of the worst global crisis in post-war history. It makes the road ahead even harder. Realising the goals of the TDV 2025 will require a concerted effort to restore the economy's growth momentum, while expanding access to economic opportunities. The COVID-19 crisis has highlighted the unpredictability of global economic trends, and Tanzania's ability to maintain its ELMIC status will depend on strengthening its resilience to shocks while investing in human capital. My colleagues Miguel and Bill will elaborate on the major findings and messages during their presentations. I also look forward to fruitful discussion on Tanzania's priorities and challenges in becoming a thriving middle income country from our esteemed panelists. Asante, thank you very much. Thank you very much, Mara Warwick, for your insightful opening remarks that have truly set the stage for today's event. Now, as you know, listeners, the economic update is usually presented in two parts. The first part, economic performance of the preceding period, and the second part is usually a topic of strategic significance to the country. In this case, achieving Tanzania's development vision 2025. Now we encourage you to get online, follow us, to join the discussion using hashtag #Tanzania Economic Update on all our social media channels. Now let's move on to a short video that illustrates the key messages of the first part of the report. The emergence of the COVID-19 pandemic plunged the global economy into a recession in 2020. While Tanzania avoided a recession in 2020, the pandemic has significantly impacted lives and livelihoods across the country, with economic growth estimated to have slowed to 2.0% in 2020. The economic outlook remains highly uncertain and the risks are tilted on the downside. GDP is expected to grow by between 3.0 and 5.3% in 2021, below its long-run potential growth rate of about 6%. There's cause for cautious optimism. Tanzania has several macroeconomic advantages that would support a robust policy response to counter the negative economic effects of the pandemic. Tanzania's growth prospects depend on both the successful worldwide rollout of a COVID-19 vaccine and the implementation of sound domestic policies to accelerate the recovery of economic activity. In the short term, the government should strengthen its public health response, including vaccination, and strengthen measures to protect jobs and support micro, small and medium enterprises and expand social safety nets. Improving the investment climate and fiscal management are needed to underpin and sustain a robust growth beyond 2021. The video that you just watched and all other Tanzania economic update resources are available on our landing page worldbank.org/Tanzaniaeconomicupdate. We shall now follow this video with a presentation from Miguel Saldaraga, an economist with the World Bank, who will delve a little bit deeper into the economic outlook. Welcome, Miguel. Good morning, everyone. Good evening. The first part of the 15th edition of the Tanzania Economic update presents recent economic developments and the medium term outlook for the Tanzanian economy. And I will share with you the key messages and findings of this part of the report first. What has been the impact of the COVID-19 pandemic on growth and poverty in Tanzania? The COVID-19 pandemic has plunged the global economy into recession in 202,020, and the pace of recovery remains uncertain both among advanced and emerging economies. The disease continues to exact an enormous and mounting toll in human lives. And the disruption of education systems has a slow human capital accumulation which could negatively impact the productivity of an entire generation. The global economy contracted by an estimated 4.3% in 2020 and while a 4% rebound is projected for 2021, worldwide economic output is expected to remain well below pre-pandemic trends over the near term. Tanzania has fared relatively well compared to its regional peers, and the country avoided a recession in 2020. But economic growth growth has slowed significantly. Real GDP growth fell from 5.8% in 2019 to an estimated 2% in 2020. Um, per capita growth turned negative for the first time in over 25 years. The global economic slowdown has adversely affected export-oriented industries, especially tourism and traditional exports, and caused a drop in foreign investment. Gold has been the sole export to benefit from the crisis as international gold prices rose sharply between 2019 and 2020. Although the government did not impose stringent mobility restrictions, the pandemic prompted prompted firms and consumers to adopt precautionary behaviors hindering domestic demand. Meanwhile, steep declines in production consumption and imports have reduced fiscal revenue. The pandemic has also compound preexisting challenges in the financial sector and the share of non-performing loans on bank balance sheets continues to be high while the growth of credit to the private sector has a slow. Significantly. The COVID-19 pandemic has impacted lives and livelihoods across the country. Available high frequency official data combined with World Bank-led household and business surveys reveal the severe toll on firms and livelihoods. During June and July 2020, the World Bank conducted a COVID-19 business polls survey covering 1000 small and medium enterprises in Tanzania. The survey data indicate that about 100,000 formal jobs were lost in June 2020 and another 2.2 million non-farm informal workers suffered income losses. Tanzania's employ an informal non-farm micro enterprises tend to be specially exposed to economic shocks as they often have limited savings to draw on. In a crisis, firms reported an average decline in sales of 36%. Which has jeopardized the solvency of more than 3/4 of the small and medium enterprises. Moreover, the most affected firms reported not benefiting from any type of government support in particular, the pandemic has taken a heavy toll on the tourism sector, a major drivers driver of exports and economic growth in Tanzania. According to a survey of private sector operators conducted by IFC and Dahlberg advisory in October 2020. The tourism industry is projected to 77% of its revenue in 2020 and 2150% of direct jobs. Before the pandemic, almost all businesses reported that their operations were stable or growing, whereas now 80% report being suspended or partially open. Utilization rates have fallen across all tourism subsectors from 1949 to 60% in late 2019 to just to just 9% in mid 2020 and sales have plunged by as much as 85% among small firms. Which represent 80% of Tanzanian tourist firms, the loss of income among workers and tourism and related sectors is weakening domestic demand, and informal workers with little savings and limited credit access are facing the prospect of a sharply reduced consumption. The crisis could push an additional 600,000 people below the national poverty line. Well, the poverty poverty headcount ratio, national poverty line has declined modestly over time, falling from 28.2% of population in 2012 to 26.1% in 2019. Tanzania's rapid population growth rate has caused the number of people living below the national poverty line to steadily increase. In 2020, the pandemic induced economic slowdown caused the poverty rate to rise to an estimated 27.2%, compounding the effect of population growth on the absolute number of people living in poverty. Because a large share of Tanzania's population is close to the poverty line, even a mild economic shock can push numerous households into poverty. The impact of the crisis has been specially acute among households that rely on self-employment and informal micro enterprises in urban areas second. What is the economic outlook for Tanzania? Tanzania's economic outlook remains highly uncertain, and growth prospects hinge on the successful global rollout of a COVID-19 vaccine combined with sound domestic policies to foster a swift recovery. Tanzania's real GDP growth is projected to grow by between 3.0 and 5.3% in 2021 below its long run potential growth rate of about 6%. However, this baseline projection reflects the available data as of February 15, 2021, and in the context of the pandemic, it is subject to considerable uncertainty. The trajectory of COVID-19 continues to evolve, and a resurgence in infection rates is being reported across much of the world. Even if Tanzania contains its domestic outbreak, a worldwide health crisis that continues well into 2021 could continue to suppress economic activity. Tanzania's tourism sector is especially vulnerable to a downside scenario in which the pandemic persists. Moreover, poverty reduction is expected to slow, and the national poverty rate is projected to fall to 27% in 2021, down slightly from 2020, but still above its 2019 level. Due to rapid population growth, the number of people living below the national poverty line is projected to increase by 320,000 in 2021. The quality of the post-crisis recovery will shape poverty dynamics in 2021 and beyond. Third and finally. How to accelerate and sustain the pace of recovery in Tanzania government actions to protect lives, livelihoods, and the future will influence the pace of the recovery. The World Bank recommends a framework for responding to the COVID-19 pandemic and associated economic crisis based on three pillars. This framework focuses on protecting lives, livelihoods, and the future. Measures to protect lives include preventing, detecting and treating COVID-19. Measures to protect livelihoods as economic activity laws include support to households and firms, especially in vital economic sectors. And efforts to sustain key government functions. Measures to protect the future include investments to accelerate their recovery and strengthen resilience to future shocks. Tanzania has several macroeconomic. Advantages that favor a swift recovery, it is one of the few economies in the region. Not to experience a contraction in 2020. Country's low risk of debt distress offers some space to properly utilize debt financing. And the government fiscal position has improved over the last 4 years. With the fiscal deficit. Around 2% of GDP. International reserves are relatively high at about 5 months of import coverage while a combination of high gold prices and low oil prices is bolstering the terms of trade. Inflation is among the lowest in East Africa. To capitalize on these advantages and lay the foundation for robust and sustainable long term growth, the government should seize the opportunity to advance its structural reform agenda. The government has already approved several important measures, including the blueprint for regulatory reform. And arrears management strategy accelerating the implementation of these initiatives while taking additional steps to improve the business climate climate for domestic and foreign investors will position Tanzanian economy to capitalize on the anticipated global recovery. Increasing the availability and quality of information on both the domestic spread of COVID-19 and the evolution of macroeconomic indicators will strengthen the. Government's ability to plan and implement effective policies, reporting the number of new COVID-19 cases, including deaths and recoveries, and releasing timely national accounts data could help ensure the success of the public health response while also bolstering market sentiment by signaling the government's determination to counter the external. Shock induced by the pandemic. Thank you very much for joining this presentation, Asanti. Thank you very much, Miguel, for your presentation. We have another short video now to ease you into the second part of the report which discusses achieving the Tanzania Development Vision 2025 and which will also be the focus of our panel discussion shortly. What are the opportunities and challenges for Tanzania, and what are the priority policy areas? Here we go. Tanzania attained a gross national income per capita of $1080 in 2019 and graduated to lower middle income country status in July 2020 thanks to a solid income growth over the last two decades, sustained macroeconomic stability, and rich natural endowments together with a strategic geographic position. Economic growth has not been inclusive enough, with almost 50% of the country's citizens still living below the international poverty line of $1.90 per day. High population growth, slow and uneven job creation, low levels of education, and limited access opportunities have hindered the inclusiveness of economic growth and its impact on poverty reduction. Based on Tanzania's unique opportunities and challenges, and incorporating lessons from the experience of successful LMI, Tanzania's next level of development goals can be framed around three strategic pillars sustaining growth over the medium term, improving the inclusiveness of growth to reduce poverty, and fostering upward economic mobility and economic security. Within these pillars, the 15th Tanzania Economic Update proposes prioritizing 5 policy areas accelerating productive investment, prioritizing human capital development, enabling agricultural transformation, leveraging digital technology, and building public sector institutions and capacities, including the capacity to leverage partnerships with the private sector. Bold actions in these areas will be essential to engender inclusive and sustainable growth and to fully transition to a middle income economy. We're now firmly into the second part of the report, and it is my pleasure to welcome Bill Battle, lead country economist for the World Bank, who will present on achieving Tanzania's Development Vision 2025. Welcome, Bill. Thanks, Miranda. Let's turn now for more detail on the TEU special topic, raising the bar, which is a forward look at the development vision and goals that Tanzania has set for itself and what it will take to get there. As mentioned, Tanzania reached lower middle income status in 2020 following years of consistent income growth and putting Tanzania in a group of roughly 50 other lower middle income countries. Reaching this milestone is an important achievement for the country. It's also a great opportunity to look forward to consider the development vision that Tanzanian policymakers set for the country in the Vision 2025 document and ask what should be the priorities for government policies and spending to best manage the transition to middle income status. The goals the country has set for itself are much more holistic than simply a certain level of average income. They include well developed human capital, an ample supply of high quality livelihood opportunities, and broad-based gains in living standards. Against this backdrop, the TEU special topic chapter offers our view on framing a discussion around raising the bar, going beyond a focus on growth rates and average income levels, and recognizing that what got Tanzania to this important GNI per capita achievement won't necessarily get it to the higher bar of a successful middle income country. More will clearly be needed, and we think this special topic is especially timely given the ongoing focus on preparing a new five-year development plan. Now considering the Tanzanian context and looking at experiences of countries that have successfully transitioned to middle income status like Vietnam, Ghana, and Kenya. We think it's useful for the authorities to frame the next leap of development for the country around the three broad pillars that Mara described at the opening. Let's look briefly at each of these three pillars. Pillar one recognizes the importance of economic growth for poverty reduction, so the first big message of this special topic is that to reach its development goals, Tanzania needs to recover from the recurrent slowdown described in part one of the report by Miguel and then continue its impressive track record of economic growth. Since 2000, the annual GDP growth rate has averaged above 6%, with an annual per capita GDP growth rate above 3%. Macroeconomic stability has been an important ingredient to this strong track record. And with it, Tanzania was able to attract a high level of investment which we know from growth accounting analysis was a top contributor to growth. Importantly, 3/4 of this total investment was from private sources, including foreign direct investment. So one of the key messages from looking at Tanzania's past success in driving growth is a strong partnership with the private sector. The report notes two particular challenges here. The first challenge is maintaining a healthy mix of both public and private investment. The report notes that public investment growth has substantially accelerated in recent years. And the growth of private investment has slowed. While public investment is necessary to provide public goods like roads, ports, and sources of energy, It's limited by public finances and debt sustainability considerations and can be quite expensive if it involves commercial borrowing from the market. So the majority of investment to drive growth needs to come from the private sector, both domestic and foreign sources. The second challenge is to try and emulate countries that have successfully transitioned to middle income status, which show that it's important to become more efficient in using factors of production like capital and labor, or in other words, to improve total factor productivity or TFP. This chart shows that Tanzania's labor productivity growth has come largely from the addition of capital, as shown in dark blue, and which is very consistent with the growth patterns in low income countries. To raise the bar, Tanzania needs to both attract investment and increase TFP, which is shown in red, and for Tanzania has actually been declining. Higher productivity can promote diversification and increase the complexity of the country's economic activity. Thus creating more and better jobs. We can see from the chart that successful middle income countries on average have more balanced productivity growth from labor, more capital, and improved TFP. And accelerating the uptake of digital technologies in Tanzania can play an especially important role in bridging this gap and creating the new and better jobs that we've been talking about. Pillar 2 is perhaps the most pressing for Tanzania. Here we draw on recent work of our poverty group that shows using the most recent household budget survey conducted by the National Bureau of Statistics that while the economic growth that has helped the country achieve middle income status has been impressive. This growth has become less inclusive over time. So the second big message of the special topic discussion is that Tanzania really needs to focus on improving the quality of growth and translating high growth into more broadly shared welfare gains. Since 2012, income and consumption growth among the wealthiest households has outpaced growth among the poorest. And Tanzania's growth elasticity of poverty is among the lowest in the world. What explains this? Recent economic growth has been driven by sectors that employ relatively few workers, especially from poor households. Wealthier Tanzanians, particularly those in urban households with greater human capital and productive assets, were better positioned to seize opportunities generated by rapidly growing sectors such as information and communications technology and real estate. This imbalance in economic opportunity has widened the income gap between rich and poor households. In its first year as a lower middle income country, about half of Tanzania's population was below the international extreme poverty line of $1.09 per day. Which is the poverty measure we use to compare across countries, and it's different from the national poverty line measure. We look back at countries in their first year entering lower middle income status like Tanzania has just done. And find that Tanzania's poverty is well above the 30% average for other first-year LICs. Hence the challenge is particularly acute for Tanzania as it becomes a middle income country, and a key message of the report is the urgency of Tanzanian policymakers to focus on the quality of growth issue. We find that high dependency rates, low levels of education, and inadequate workforce skills limit the ability of lower income workers to access productive employment opportunities, and these constraints are especially acute for women and youth. Poverty rates among female-headed households are 50% higher than they are among male-headed households. And poverty rates are about 11% points higher among single women than they are among men. Asset ownership seems to be a particularly relevant issue here. It is significantly lower among female-headed households, especially in terms of transportation and communication. The report points to a number of directions for a path forward here. For example, cross-country experience tells us that growth reduces poverty faster when governments focus on agriculture and in particular lifting agricultural productivity in the sector by improving agribusiness value chains. When they attract robust private investment in labor intensive non-farm activities including agribusiness, manufacturing, and services. And when they pay particular attention to making newly created jobs accessible to relatively low skilled youth and women. Now turning to the last pillar 3. This pillar underscores the importance of economic security and upward mobility for Tanzania to successfully transition to a middle income country. So the 3rd big message of the special topic is one of emphasizing the need for resilience. And for durability of welfare gains. The bottom line for this pillar is straightforward. Human capital is vital to economic security. It increases household resilience and it lowers the risk of falling back into poverty. So we see the pattern forward for Tanzania on this is to further invest in human capital and expand access to opportunities so it can reach its goal of building a secure middle class, which we know is a key feature of successful middle income economies. The report recognizes that the middle class in Tanzania has expanded from years of economic growth, but it is still small. It's below the level of comparable first year EMICS, and it's highly vulnerable. The share of economically secure population in Tanzania, as estimated by those with formal wage labor using I ILO data, increased slightly over the past two decades, but the gap with where the country's own development vision is aiming and with aspirational comparators among other EMICs remains large. In the last decade, Tanzania has made significant progress in reducing its human capital gap with other low income countries. But the gap with new aspirational peers in the lower middle income group are large. Policy makers are recognizing that human capital investments enable households at all income levels to access economic opportunities and benefit from growth. And that that is critical for breaking the lack of intergenerational mobility. To increase the likelihood of a child of a poor farmer to get a chance for more employment opportunities and moving to more productive economic sectors. So we call on them to redouble their efforts to make the investments in human capital now that can pay large dividends in the future. Looking forward, the report makes a strong argument for expanding access to basic services like education and health, and in particular overcoming Tanzania's low secondary school enrollment rate. We also note that financial inclusion plays a key role in fostering economic security and that Tanzania has made tremendous gains in this area, due in no small part to Professor Ndulu's stewardship of the Bank of Tanzania and to whom we dedicate this TEU. He was a strong proponent of addressing the last mile of remaining challenges in accessing financial services, especially for women, youth, and rural households. As I mentioned at the opening of this presentation, we see the main contribution of the special topic chapter of this TEU is to frame the dialogue around 3 strategic pillars of how Tanzania can raise the bar to reach its development goals and move beyond the focus on aggregate growth and toward the quality and durability of welfare gains for the population. We've also tried to go beyond the framing objective of the special topic chapter and use Tanzania's recent history and the experience of successful EMICs worldwide to suggest some priority areas for policy action that we think have a high potential to contribute to meeting Tanzania's vision 2025. Each of these areas can be the focus of a TEU special topic on its own. And the report doesn't aim to fully cover these areas. Indeed, some have been the focus of past TEUs like agricultural transformation and TEU 13, but let me briefly mention a few points on each. The first policy area is accelerating productive investment. This area is all about fostering private sector investment and growth as the main engine of job creation and economic opportunity. This will require better public-private dialogue and better policies to reduce the cost of regulatory compliance. And we've recently been invited by the government to conduct a joint assessment in this area. Secondly, prioritizing human capital development. Using today's resources to make investments that yield results over a much longer time frame is often difficult. But the gains from human capital development are the most fundamental for improving the inclusiveness of growth and of broadening the security of welfare gains, and it's the highest paying for successful transition to middle income and beyond. And a large part of this agenda, as we note in the report, is addressing gender inequalities in access to basic services. The third area is enabling agricultural transformation. If you have to pick one sector with the highest immediate payoff for job creation and as an enabler for promoting higher value addition, it's agriculture. The report points to several urgent policy challenges in agriculture related to input and output markets and also the quality of public spending. The 4th area that the report discusses is around leveraging digital technologies. The COVID pandemic has forced renewed attention across the world on how best to leverage digital technologies. We have ongoing work in this area with government, recognizing the gap in access to affordable broadband, especially in more rural areas, and the tremendous potential for growth, including on digital trade. Now the last but not least policy area is building public sector capacity. While the report has a very loud message on the importance of the private sector to be the engine of growth and to drive the creation of new and quality employment opportunities, the public sector has a tremendously critical role to play. It's central to the success of all the policy areas. The report makes points on this front ranging from boosting efficiency of public expenditure to improving evidence-based decision making. In conclusion, as a framing piece, the goal of this TEU special topic is to lay out what we see as priorities for what it will take to get to the next level of Tanzania's development vision. We recognize the important achievement the country has made by becoming a middle income country. We also recognize that what it took to get Tanzania to this milestone won't be enough to reach the broader goals it has set for itself in its vision 2025 of successfully transitioning to a middle income country in all its dimensions. Thanks for listening to this overview of the TEUs special topic raising the bar, and I highly encourage you to take a look at the full report. Asanteana. We will now proceed to the discussion portion of the 15th Tanzania economic update, and it's my pleasure to introduce our leaders and thinkers, our esteemed panelists that have joined us here today. And they're going to share their knowledge and insights. So with us today we have Professor Honest Prosper Ngoi. He's a professor of economics. He's a researcher and consultant in economics and business at Mzumbe University. He's also the principal of Mzumba University's Dar es Salaam College campus, and he's an expert in development economics with interest in macroeconomics, international trade, foreign direct investments, entrepreneurship, private sector development, amongst others. I think this will be very useful, uh, experience you'll have to share with us, Haribusana, Professor Ngoi. In the center here we have with us Doctor Blandina Kilama. She's the chairperson of the Economic Society of Tanzania, which is a nonprofit organization for economic enthusiasts that promotes economic research and economic policy advocacy. She's also a senior research. At a policy research think tank REOA based in Dar es Salaam, where she's covered various work on economic transformation, financial inclusion, the SDGs, women empowerment, and poverty mapping, amongst others, you're very welcome, Doctor Kilama, and with us as well is Mr. Paul Makanza. He is the vice chairperson of the Tanzania Private Sector Foundation. And the Confederation of Tanzania Industries. He also chairs the Tanzania Startup Association Board, which is an organization that mobilizes stakeholders in the startup ecosystem to drive the development agenda. It's great to have you with us, Paul. Thank you. So I think we should dive straight in, um, and you know, lean on your experience here. So as we all know, the COVID-19, uh, pandemic has plunged the global economy into a recession in 2020 and it slowed GDP growth in Tanzania as well. What are your views on foundations for solid economic recovery in 2021 and beyond? What sectors do you think might need special attention? And what are the risks for this projected recovery? Um, I think I'll start with you, Doctor Kilama, uh, if you could share your views on this economic recovery. Uh, thank you so much, uh, Miranda. The fortunate bit before even I start sharing about the COVID-19, it's still hitting us in 2021, and we're losing people, and it's not just people, but we're really using the human resource that we need most in producing. So when we think about uh COVID-19 recovery. One thing that we really have to plan for strategically is how are we really going to align our human resources to ensure that we continue to produce productively, we continue to engage people in as much as unfortunately we are losing people. The second bit I think will also have to be along the same lines, become more innovative, just like the report that is highlighting. On issues about utilizing technology that is there and I'm happy to see Paul here um because innovation will be the way out. And for innovation to flourish, we do have to have an ecosystem that will allow for production at all levels and not excluding other members of the grouping. And lastly but not least, I think. We also have to undertake a lot of strategic investment when it comes to social services. And here I'm not just limiting it on the side of the health side but also education side, but also importantly when it comes to making sure we're really utilizing the water that we have. I know Professor Ngoi may touch on that, but people know I always touch on agriculture. We would really, really, really need to think as to how we can actually spearhead production that is inclusive. What I, um, I think is uh the figures that were shared here about uh what has transpired in 2020. You will see we were lucky because it's the gold that has lifted us, but for us to recover, we have to touch the people, and in Tanzaniia we have more than 65% of people who are engaged in agriculture, so the recovery has to focus there to really, really, uh, lift people out. I will stop there for now. Thank you. I will ask Professor Ngoi to chip in here. We've touched on agriculture there. Um, Is this a special area that needs attention? Yes, I would say so. I, I would say so that agriculture is the sector that really carries a lot of people. Majority of Tanzanians are there. And of course, it has been highly touched by COVID-19, both the first and the second wave actually. Through what I call intersectoral linkages. People might see COVID-19 touching tourism, hotel industry, but really, when you take what I call, you know, the value chain approach, ecosystem approach, you find that agriculture is also being touched a lot, especially. Uh, like the horticulture bit of it, I understand Doctor Kilama and others in the Saggo Center and the Agricultural Council of Tanzania in the in the, in the first wave. We did some studies to see how agriculture, but specifically horticulture, was hit by, you know, COVID-1 in the first wave. But, uh, to come with the responses, broadly speaking, uh I think uh uh policy responses are very important this time around as it was in the first wave. And to me, I will come with two major policies that are extremely important for recovery. First fiscal policy and monetary policy, and I would wish to see more expansionary fiscal policy and expansionary monetary policy kind of driving the recovery because When you look at the impact of the COVID-19, and I've, I've documented a lot of cases, actually almost 150, and that will be my next book coming out, uh, I'm seeing a lot of, uh, a need for, uh, uh, uh, fiscal policy responses in terms of lower tax rates, in terms of tax incentives, in, in terms of, uh, you know, tax exemptions, etc. etc. In the first wave. We saw like East African, uh, within East Africa, uh, East African Business Council requested the governments to lower a value-added tax, for example. Actually, the request was to lower it to around 12%. And, uh, the request was not really accepted. So I'd say Kenya lowered it to around 14% from 16%, Tanzania kept it to 18%, nothing was done. And going back to 2008 when we had a global financial and economic crisis, value-added tax in Tanzania was 20%. It was lowered to 18%. And I think it helped with the recovery. So this time around, I believe, uh, if it was lowered, it could help really pump life into these companies that are struggling. On the monetary policy part of it, the key issue has been around interest rates, actually, the borrowing interest rates. thanked the Bank of Tanzania sometimes in May 2020. They came out with the policy responses to kind of support the recovery from the first wave in terms of lowering, uh, you know, borrowing rates and a lot of other factors. To me it was important, although it came a little bit late actually. I wish it would have come as well as it did in Kenya, as well as it did in Ghana. These countries responded with expressionary fiscal policy and monetary policy much, much earlier than Tanzania, and I think it helped kind of Deliver recovery. So this time around, I think these two policy responses, if fairly structured, they will help a lot in delivering recovery. Thank you, Professor Ngoi. Paul Makanza, as a strong representative of the private sector who have been hit quite hard, um, I'd be curious to hear from you on what your views are on economic recovery. All right, thank you very much, Miranda. I mean, uh, is. The country director mentioned, uh, the global economy was uh hard hit. Uh, we were very fortunate in Tanzania. Uh, I mean, um, we avoided a recession as, uh, as, um, um, everybody has, um, seen. Um. But, um, we did not achieve the sort of growth rates we had anticipated uh pre-COVID, yeah. Uh, and therefore recovery has to be a priority. Now, uh, there are a couple of priority areas we need to focus on. One, I think the safety of people is very key, yeah. Two, we need to ensure business continuity, yeah, uh, whilst ensuring the safety of our employees. Um. But more importantly, we will need to get consumption, investment, and exports going again. And as Professor said, that requires a sound domestic policy measures and from a private sector perspective, that would also include addressing what we call our pain points, issues like the availability of land for investment, issues like raw materials in terms of quality and quantity. Issues like labor in terms of skills and productivity, issues like finance, in terms of access and affordability, and so on. And there are so many, obviously the the the the business environment needs to improve. Currently we are We are ranked at 144 out of a number of countries. I think it's about time we push towards a double-digit figure. OK. Um, that will be very, very key. Now, what sectors need special attention? Obviously, tourism was, you know, was badly hit. I've seen some numbers. Revenues actually fell by 77% versus prior year. And uh uh the industry lost about, uh, you know, 50% of uh uh uh the jobs in the industry, which is very, very worrying. So, tourism and uh manufacturing, uh, those require special attention. In particular, SMEs. I think uh the measures put in place, um, um, last year to deal with uh COVID. Did not go far enough to help SMEs and I think this is something we need to look into in terms of risk for the projected recovery. Again, the pandemic remains a huge risk, and if we do not address it appropriately, then we may erode the gains we've made on the fight against poverty reduction and even a potential slippage back into. Thank you very much Paul. I think ami amidst this recession we had some good news which was Tanzania attaining lower middle income status, something that was celebrated here. Um, and I'm just curious to know what you think the main drivers were for us to achieve this status. And secondly, do you feel that the development objectives as stated in the Tanzania Development Vision 2025 have been achieved? I think Doctor Kilama, I'll come back to you on that. Um, so the main drivers of us attaining lower middle income status. When you put a target, you may reach it when you least expect it, um. And you always celebrate when you reach it. The best thing you can do is always to analyze what does it really entail. My two colleagues have spoken very well. On issues that we need to think about when we're thinking about recovery. The advantage that Tanzania has, has had for quite a while, is we've had a diversified economy. And some of the parts of the economy that have been hit hard, you hurt them. And I think this was the advantage we had as to why we managed to reach the LMIC status. Reaching there is one thing. Staying there. Is something else and understanding how you operate once you're you're there, I think it's also very important. So for me, I think it's the macro, as we heard from the country director, um, the stabilities that we had through that. There's been a lot, a lot of policies that are supportive, that has enhanced our seeing the macro picture. But then I'll flip, I'll bring in my card as a researcher. It's one thing to grow. The question is where are you really growing? So we have the agriculture bits, we have the industry bits and the services bits, and our data currently is showing the growth is coming pretty much in the industry side and in the services. And these are the less um kind of like areas where you have less people engaged. But then importantly on the services side. This is where Paul comes in with the innovation bits that is required. You have a lot of informality. But still we were growing with informality. But once COVID hit us, it's very difficult to reorganize within the informality. The biggest challenge that we are facing now will be how do we go about um to ensure that we have more inclusion of young people, of women, of people who are different. Because that has worked for us before. But the question is now with COVID-19, it looks like it's hitting um Everybody, and importantly the cream. Um, now back to your question. So I'll say just three things that have led to um um uh the growth that we've seen. So yes, we've had the macroeconomic stability brought in by the discipline. To guarantee us the quality that we needed, but then second, we've had a lot of infrastructural investment helping to link up different sectors. And thirdly, lastly but not least, we've been more accountable in following up different interventions that are ongoing. It's something that has been going on for a while. It was good that it happened, but we really need to protect all that for it to continue. Thank you, Doctor Kilama. Now Professor, I saw you nodding in agreement when Doctor Kilama said it's one thing to attain the. Status, but it's another thing to maintain it. What are your views on this? Yeah, you know, essentially when it comes to attaining this level, I take it mainly to be really mainly statistics issues. The reality on the ground is another thing, you know, it's this gross national income divided by the population, and then we should understand as an average, really. And when this news was announced, I received a lot of questions to common people saying, am I really a middle income person? So really, when you average, you'll find that there is a lot of outliers, you know, there are a lot of you know, the low income people who have nothing to do with this, you know, who will never be touched by this status. But broadly speaking, I think we achieved the status through, as Blandina said, decades of investment, decades of reforms. The reforms of the mid 1980s. And early 1990s that changed the business environment that invited the private sector, both local and foreign. That investment that we have seen in business environment broadly speaking, both legal, regulatory and policy framework on infrastructure, roads, sports, airports, all those, those have enabled production of goods and services across all sectors in mining, in industry, in the services sector, all those I think have been major, major drivers of us achieving this status and remember we are 5 years too early, to put it that way. 2 years too, I mean 5 years too early. That's good. That's good news, but really the question is sustainability remaining there. Across history we have over 20 countries that have never remained in the same status that have slipped back, you know, to either low middle income, etc. etc. So the challenge really is remaining there and COVID-19 poses that challenge now. Because it's likely to erode incomes, jobs, and really people are still on precariously balanced in the poverty line. So there is this danger really of remain here. We are not sure 5 years down the line whether we will still be here or we'll have gone down to lower middle income and God forbid, because we want of course to go up. And of course the other thing that was related to this. Is you know on whether Tanzania has achieved what we wanted by 2025 for sure in a number of issues, yes, but then among other things we wanted to have a robust economy, a strong economy, competitive economy, well skilled economy. But really we are not there yet and it's not an issue because this is a journey. We are building Rome and Rome is not built in a day. It's a work in progress. Thank you very much, Professor Paul Makanza. How do we prevent ourselves from slipping backwards? OK, I think my colleagues have actually touched on this on a number of interventions, but I just wanted to emphasize on. The first question, the key driver over the, over the last two decades was actually, you know, massive investment into the economy, uh, both private and the FDI, um, and, and, as well as of recent times, uh, uh, public investment. So the big infrastructure projects, uh, Doctor Blandin. Blandino was talking about. Uh, exports used to be an important driver, but, uh, you know, it's declined, uh, over, over the last couple of years, 2013, 2019, it's been actually declining on average 5%, which is uh also worrying. So, so, so to sustain our, our maker status, we really need to uh drive GNI, uh, the gross national income, um. Faster than the population growth because those two are inversely related, yeah. If, if, if you don't sort of manage your population well and you have a population explosion, then gains tend to be eroded, OK? But let me just focus on, um, have we achieved our development visions? And I, I'd like to particularly focus on industry because that's an area I'm familiar with. Uh, so, so basically, when we set out this vision, uh, TDV 2025, we set ourselves, um, you know, particular targets for, for industry. Specifically, I'm talking manufacturing. So we said, um, we want, you know, the manufacturing sector to grow by 12% come 2025, OK? And we said by 2020, we should have achieved an 11% growth. But when you look at the actual numbers 2019, where we have official figures, it's only 6%, so we are way behind. We would need to double our pace in order to get to that target. If you, if you look at it in terms of share of GDP at current prices again, we set out a target of 18%. We needed to be at 13% by 2020. We are only at 9%. OK. Again, we need to double our effort. Number of exporting firms, you know, we had set a target of over 2000 plus, but you know, the report has highlighted that the number of exporting firms has actually fallen due to a number of issues. So essentially we are not there. But as Professor said, you know, this is a journey, yeah, but it's easing. The government is actually revising. Uh, it's industrialization, um, integrated, uh, industrialization strategy, uh, and, um, I, I'm sure, uh, They will address some of the issues that has impeded, you know, the pace of implementation. And one of the critical issues was the fact that when we had this integrated industrialization strategy, there was a lack of ownership. Was it Ministry of Industries? Was it agriculture? Now industry cuts across. Agriculture, you know, services are supporting, you know. Uh, enablers and so on. So there are a number of issues we would still need to, uh, implement, but we, we, we are very, very hopeful. Thank you, Paul, for that. Uh, Professor Ngoi, I'm gonna come back to you for a moment. I want to switch gears and talk about poverty reduction, and you touched on it a moment ago. Even though Tanzania has been one of the top performers in the region, has recorded relatively high economic growth rates, why has this not translated, um, to poverty reduction in the country? Yeah, thank you. It's true. Uh, Tanzania has been one of those, the fastest growing economy within sub-Saharan Africa, it has been one of the leading, actually above the average. And even now with COVID-19, it has been above, you know, it has been almost one of the very few economies that have still been growing. But as you have said really, it has not reduced poverty. So, we have what we call a non-poverty reducing growth and there are a lot of, a number of reasons here. In the first place, of course, you look at the sectors that are growing. The sectors that have been growing are mainly what we call the capital intensive sectors, sectors that are driven by machines, automation and stuff that really do not employ so much people. They are mainly mechanized. So, uh, like mining, transport, uh, social services, all those, you know, as opposed to agriculture. Agriculture meaning, you know, crops, production, livestock and um and fishing, which has been going around 3%, 4%, and these are mainly labor intensive. So those sectors that are growing, uh, you know, from the theory of factor productivity, you know, the factor production that is used in the sectors that are growing is the one that gets paid, so to say. So it is capital that has been receiving a lot of uh payment than labor in that context. But also we have seen um Poor intersectoral linkages, sectors that have been growing very fast like mining, transportation, financial services, etc. are not so much linked with the sectors that are growing very slowly. You'll find mining in Mwanza, mining in Shinyanga growing very fast, but then consuming. Beef, you name it, from Australia, beef from South Africa, you know, not from Mwanza, not from Shinyanga. So the moment there is no this intersectoral linkages, you miss a trickle down effect. So as a result, really, people who are poor are not really participating so much and enjoying, you know, the fruit of. You know, the fruit of the growth itself. But the other thing is the question of distribution and the redistribution, because what is supposed is, although there are some sectors that are growing faster than others, really proper distribution and redistribution, mainly through taxation, through fiscal policy, through subsidies, for example, they will uplift the people who are poor. I'm not saying that this has not been done in Tanzania. It has been done, but a lot more needs to be done. Maybe the last one is In this context now, it's the question of, you know, is this growth inclusive? You know, who participate in this growth? Normally, for example, the sectors that are growing. They are mainly knowledge-intensive. So people who, who are not highly skilled, not so much linked, uh, you know, really, they do not participate into this growth part. So the moment you're not participating in the growth, you do not also enjoy the part of the cake that has grown. So those are part of really factors that have explained this um. Uh non-poverty reducing growth. And that's why the debate actually has been now, it's not the question of just celebrating, posting impressive growth figures. The question is, is this the, the, the desired growth, growth that is reducing poverty reducing, that is inclusive, uh, but also that is green in terms of, uh, you know, environment. Yes, thank you, Professor. I will come to Doctor Kilama now just to hear your views as well on the correlation between our economic growth and poverty reduction. What Prof was saying in summary is pretty much we're saying there is a lot of room for improvement in the way the structural transformation is happening in Tanzania. When you think about growth, as is likely pointed out, the productivity of any growth is going to come either from capital or from labor. In Asia, we are seeing lots of transformation is coming from the labor bits, and for us we do have a lot of room that would allow to see. Uh, Improvement that are benefiting the labor, um, for instance, the big, I think I said this at the beginning, um, our biggest, um, contributor is mining, but then again, the productivity is coming from, uh, capital and one additional thing because I think uh when the the country director was presenting also touched on informality. Unfortunately, again, if you look into mining, you see a lot of people, including women, engaged in mining informally. And these are some of the areas that we uh we can actually um improve a lot uh in the same stuff when you look into construction, it's the same thing. You see the figures are showing there is a lot of growth, but once you look into the integrated labor force survey data coming from Tanzania, it's already showing you have a lot of people who are engaged in this sector informally. So for us to really um um benefit um and see Uh, poverty reduction, um, and not necessarily just poverty reduction but improvement in livelihoods of people, we will really have to have policies that are touching people at the at the lowest level. And um just to add a little bit um of a complete picture here, we're not saying when you use machines it's bad, but we say you need to build the capacity of people to also produce and earn. Reasonably well. If what we are earning or what we are recording is being earned is by a machine. It means there is room where we can improve and have more and more people and in particular when I say young people always start to pot, it doesn't mean he's young, but like, because he works a lot with young people, uh he works a lot with young people, like we need a lot of young people and in particular for my case then also women to get rewards. And at this particular point, I'll bring in the point about when we talk about having women uh working and getting rewards. Uh, very quickly in this discussion we've had it before with Professor Ngowi, when you're thinking about engaging women, most of the formal work that is done globally only recognize people who work for 8 hours. Women work in the informal sector, not by choice. But it's because they also have this burden of care that they have to undertake to care for their families, to make sure everybody has had a meal. If there is a sick person, we all look into a woman, they're looking at me, yes, and if you want. Anything that has to be sorted out in the household, we look at this woman. So at the end of the day, the woman will never have 8 hours to be recognized and work in the formal sector, so she ends up in the informal sector. And I think one of the debates that is going on now, it's very important to have a universal social safety net, also including women, because we care for everybody else, but our time is never recognized. So I think when you're talking about the poverty and growth, in as much as we look into the numbers and people are being excluded, but if you look at the lens of the women, Then that is different, and I'm sure Paul, if he starts looking at the young people, he will also say they get punished for not having the recognizable experience that is needed for them to really be included and then at the end of the day have this upward mobility where at the end of the day we'll say yes, now we are rising and we should be. Rising better, I think I'll stop there for now. Thank you for sharing your thoughts. We've actually segued nicely now, Paul, for you to share with us how you think Tanzania can sustain and accelerate its economic growth in the medium term, but specifically what do you think the role of the private sector is, the quality of business environment, human capital investment in Tanzania's growth strategy. I think there are 5 things we, uh, there are 5 things we can do to accelerate economic growth in the medium, medium to long term. But, but let me just focus on 3, and I will mention this briefly. One, again, I go back, we need to drive investment, OK? Uh, 2, we need to create access to opportunities for the women, for the young people, for the regions that have been left behind, and so on. Yeah. But again, agree. Cultural transformation is very key because this is, this is where you have uh a lot of people working, OK. But uh poverty is also very, very rampant within um um uh this particular sector and upward mobility is important as Doctor uh um um Blandina has said, OK. And that requires investment in, um, you know, um Human capital, that's very, very key. But you know it's a catch-22. You need the money to invest in, you know, all these other initiatives so you can get your human capital index up. But critically important, upward mobility to, you know. Uh, get away from this, uh, circle of poverty within the agricultural sector. Uh, but again, investment into, uh, uh, a number of areas. Now, what is the role of the private sector? Undoubtedly, I mean, uh, investment, uh, as I said before, uh, it is investment that drove a lot of the, uh, uh, economic growth in, in the last two decades, and, um, 2/3 of that was actually, uh, uh, private investment, OK? Private, so, so you can see, you know, uh, 75%. Of a big chunk of our growth came from investment, private sector investment, especially into mining, and again now we're having huge public sector investment, but that's not sustainable in the long run because then you know you may be putting pressure on the fiscus. So the role is a driver, the key driver of the engine of growth for the economy. Through investment we do need, if I got your second question correctly, you asked about the quality of the business environment. Now there's room for improvement. I mean, there is room for improvement. Ah, fortunately, uh, we are engaging the government as a private sector on a number of occasions. In fact, the level of, uh, you know, interaction has actually increased. Unfortunately, because of the pandemic, you know, we can no longer do face to face. But, but you do see a real commitment to address a number of the issues that we face. And those issues, as I talked about before were the hard sort of pain points, land, you know, availability. Quality of raw material. You may have a factory like Bressa producing, you know, juices, but then again, you know, the fruit farmers can cannot supply the quality or the quantity. So sometimes he has to import, you know, the fine powder. I don't know what you call it. Yeah, concentrate, yeah. So, so basically we have an issue of quality and quantity. Power. We are investing a lot into power generation, but again, we still have an issue of access and reliability. Yeah. We still have ups and downs. And then, most importantly, you need the skills, labor. Yeah. Unfortunately, in Tanzania, we seem to have a dichotomy between what we demand and what we produce. So, so if you look at the numbers, we, we are training, we are training 3 managers for one. You know, um, technician. It should be the other way around. Yeah, yeah. You should have many technicians under one manager, but not the other way, you know, a flip pyramid. And then the regulatory environment, changing the goalpost is something the private sector does not like, you know, in the middle of the game. Finance again, access and cost and this is really hampering. The very creative young people, you know, I work with them. I see what they can do, but they have a constraint in terms of they are never short of ideas, yeah, brilliant ideas, but when it comes to finance, it's a huge struggle, and this is something we really need to look into to unlock the creativity of this young generation. Thank you. So creating a more conducive ecosystem for young people as well. I'm curious to know what policies you think should be implemented, Professor Ngoi, in order to accelerate job creation and poverty reduction. What do we need? I've always believed on the two major policies that I've started with again, both the fiscal and monetary policy really are very important. On the, you know, what Paul is telling us on the youth and the inability of youth accessing capital. You know, I also deal a lot with the youth in terms of entrepreneurship. Really they are full of ideas, but now when it comes to accessing funds, really it's an issue, and it's an issue in various areas now, including on the interest rate, for example. Interest rate that has been charged is relatively high, really, and I understand partly because I sit as a board of directors in one of the banks. I understand why the rates are the way they are, you know, there are issues of cost and stuff, but really. If we have a proper monetary policy that focuses on interest rates that are friendly to youth, or interest rates that can be waived on youth enterprises, for example, this could help a lot of young men and women to establish their own enterprises, to employ themselves, you know, those kind of stuff, because really that's mainly the stumbling block, although at the end of the day. When there is a good business idea, good entrepreneurial idea, money will always be there. But of course, interest rates has been one of those major issues to quite a lot of people. Uh, now the other thing when it comes to, as a, as the question of fiscal policy, issues of taxation, uh, is a lot of people would like to start their enterprises, but really, Uh, when they think of, uh, tax amnesty, normally it is mainly linked to large investors, you know. So this, this become again one of those, uh, uh, stum stumbling blocks, especially for youth. But now, a little, to go a little bit back to what Paul was telling us on the public investment, this is something that I wanted to add my voice on. Uh, yes, there is a lot of public investment that has been going around, building roads, ports, airports, you name it. What I've been missing, or rather that, that could, we could add in order to sustain growth is really local content, local content. You know, all these big infrastructure, quite good, no problem at all. But then when I'm looking the local content in terms of local firms, local companies that are part and parcel of these equations, that actually would retain a lot of money back home. And reinvest the money in the local economy in this way, expanding the growth. I really miss it. But I understand sometimes it's the question of quantity, it's the question of quality, because what I want is the best rail. Whether it's made from Turkey or Tanzania, I want the best rail. If the Turkish are the ones who are making it best, I want it best. So there are now question of capacity building to, to the, to the local firms. And then he, he talked also about investment climate. Our focus has always been attracting investment, and I've written a lot really on that FBI for over 20 years now. But I think now the focus has to be not only attracting but also retaining. You know, there is a danger of what I call flagging out. Investors would come. Because they've attracted them. If the investment does not continue to be good in terms of legal policy, regulatory framework, as he has correctly said, in terms of skills and talent in the labor market, and when it comes to skills, not only hard skills, but also soft skills, infrastructure, not only hard hard infrastructure, but also soft internet, you know, the speed of internet, the safety of internet and all those, they will flag out. So I think there is a need of having Dedicated the effort of retaining investors who are already in this country. Thank you, Professor Doctor Kilama. I will come to you, and I'm just curious to know, to go back to this idea of accelerating job creation and poverty reduction, what role can agriculture, productivity, human capital, or social protection play in this? That's a good question. And I'll just start where they ended. Unfortunately, a lot of times when we speak about agriculture, we tend to look at one actor and in most cases the farmer, and I think in both the uh some of the points that both Profgoi and Paul have raised, I think it's now a high time that whenever we want to look into agriculture, we have to start. are the markets. If we start there, then we're going to be assured the quality is going to be met, the quality that is needed by the market and also the quantity will follow because it's one thing to say farmers are not producing while we know several months when we go to Iringa, suddenly the roads are red because we have all these, you know, tomatoes that are being rotten. So when you think about um really creating jobs and really uh spearheading um um um development of the people in Tanzania, it's very important to start in the middle. And then think about the farmer, but then unfortunately our farmers have been used as a token. I'm going to call it a political token, you know, good for the votes, and then we'll be like, we give you subsidy, but then we don't give subsidies to the manufacturers. They should be the guys who are given the subsidies because they're the ones who are processing. And then with that then integrated into that, then it's very important when we say we want to, we want to provide. Um, Umani, now I need to know this in Kiswahili. We need to extension services. I was having services extension was running away extension services. These extension services should be determined by the manufacturers, not the guys who came from school. Sorry, I love the youth, but when they're like, I want employment, you're like, OK, you can be an extension. No, no, no, no, no. These people have to be experienced. They have to have worked with manufacturers to be given these jobs, and then once they go and tell the farmers, we want um Um, avocado the size of a hand, they should not go like, when I was growing up, I was eating avocado the size of my head. No, that's what the company wants and that's what we produce. That linkage is very important and all the other soft skills that we had and the other skills, the hard skills that are needed to ensure that then agriculture become more meaningful because as long as we continue to say the market is going to be determined by Let's say. The the the the society, um, the primary society or the uh even the corporate society. At the end of the day, we're not giving any economic freedom to the, to the, to the farmer. Once the farmers have an economic freedom, we will never ever ever again hear. You're not allowed to cut off your cashew. You're not allowed to. No, if it's not paying, I'm cutting it off. If it's paying, I'll do it. If I've linked up with the private sector, I'll do it, but if I'm not, it won't happen. I think our farmers are the best. They know everything. If you force them, they stop. It's not, they don't want to do it, they know it doesn't pay. If it pays them, they'll go ahead and do it in the cashew area where I've worked, the years whereby they get a lot of earnings, the next year they attend their farms. The year they don't get enough earnings, the next year they slice up their farm. They just maintain a few, then they can get the earnings. So I think this holistic approach in this. What I'm also hearing from from my colleagues, it's very important. We need to be very predictable with what we are saying, not just to the farmers, but to the facilitators, to the company, to the companies that want to add value. We provide what they want, and then at the end of the day, the government then should simply be the facilitator of ensuring the ecosystem is operating. But not become like also in the middle of that kind of like uh of a, of a, of a, of a, of a, Investing because we understand if you allow more players that innovation is going to come out. If you restrict and you only have one player who is also a regulator, who is going to regulate the regulator. That's very difficult. That's why we want the private sector and we want to enhance the quality of the regulators so that they can follow and make sure whatever is produced is produced at the safety level that not only is safe to us. But also safe to everybody else. It shouldn't be like we're producing for export or the quality that is needed for export, but the safety in Tanzania, hm, who cares? No, no, no. It should be, first, we care about the safety of Tanzanians, then second, we care about when we export, we also meet uh all these other uh qualities. And then the last bit I think I can touch on is the on development funds. They've implied, but I think it's very important, and I think in Tanzania we've tried now, and I think we can continue learning on how to utilize them. This is a fund that can be used when it's leveraged with what is coming out from the private sector. It can do a lot. What's my worry now, what I see a lot is like. When this fund is there, it's like the people who are overseeing it, they also want to be engaged. They'll be like, hey, hands off. Just oversee who is uh who is going to implement this project that are going to touch all these people who are engaged in agriculture through the entire value chain. And I think with that we should be uh in good hands. Thank you Doctor Kilama. You've touched on many things there. I want to move to Paul Makanza now and to basically question you here on, you know, one of the key features of a middle income country is a solid middle class, and I think we also know that the majority of Tanzanians, even though they may have escaped poverty to some degree, are still hovering around. The poverty line and are vulnerable to falling back as well. So from your perspective, what policies do you think can boost and secure the middle class in Tanzania? It's been touched on in the report and I'm sure my colleagues will have a number of interventions as well. You see, uh, the middle class in Tanzania is very small. Yeah. Uh, if, if, if, if, if some of the numbers I've seen, uh, it's less than 10%, you know, in between. Yeah. Um, so, Should we worry about the middle class or should we be worrying about the less fortunate? Yeah, I would actually worry about the less fortunate because they are big in numbers. Yeah. What policies would I put in place? Basically, um, And I'll just focus on our industrialization again. Our government, you know, had a beautiful, uh, you know, uh, strategy for industrialization. Yeah. Um, you had, uh, interesting ideas like um EPZ industrial parks, and so on. What, what, what, what, what sort of products to, um, to focus on, OK? Uh, I, I, I, I love the idea of uh industrial parks, OK, because uh this is where you can actually get A lot of people well organized in order to be able to service them, whether it's to provide the infrastructure or the financing and so on, in particular women. Women, women actually, if you go to a number of these SMEs, exhibitions, it's 90%, 99% are, are, are women. Yeah. Uh, we need to promote, on a practical level, we do need to promote these industrial parks, OK, and provide the infrastructure, provide the access to financing and uh and so on. Uh, so I will just end there, but I, I would love more to focus the middle, the middle class like Uh, Doctor, professor, doctor, and I, we are fine for now. It's, it's, it's, it's the little ones who are, you know, thank you very much. Thank you, Paul. Um, we've all read the report, obviously, uh, part one and part two, looking at the economic outlook, but also at our development agenda, sustaining this growth, maintaining lower middle income status, aspiring to be a middle income country in the future. I now turn to you for your final takeaway, uh, and commentary on what you'd like our listeners to take away from the report, from your perspective. I'll start with you, Professor Ngoi. Uh, thank you. You know, uh, launching this report, uh, with the environment that we are in, uh, with COVID-19, uh, I think, uh, my focus would be, uh, making sure that, um. We address all the economic impacts that we have seen being brought by COVID-19, both the first wave and the second wave, but really learning from the past because it's not the first time that we are coming with an economic crisis like this one. In 2008, we had a global financial economic crisis with issues more or less like this one. So if we are to sustain and remain a Income country we have to address the economic impacts of COVID-19 which are likely to be long term really if not well addressed. So really policy responses to COVID-19 now, but also all other responses health responses, etc. have to be really focused so that we do not fall back into the lower class that we. Just graduated from just last year, you know, so really addressing the economic impact of COVID-19 with the proper policy responses, learning lessons from similar contexts. We had, we had cases like Ebola, it might have been a little bit minor, but learning how it was addressed, learning how other economic crises have been addressed across the world, even going back into history. We had the Great Depression in the 1930s. We know how countries really escaped this. So let's use the knowledge that is around. Thank you, Professor. A message of positivity there and learning from past past experience. Dr. Kilama, your final thoughts. I think just in addition to what said, I think for me the biggest message. Is not to forget the big picture, the interventions that we try to undertake now in as much as they are needed, they should not interfere in the long term perspective that we have. I think that will be very important in ensuring that we are including as many people as possible. The one thing that I touched, and I'm going to say like I know Paul will also touch on it, is this embracing technology in improving efficiency of both capital and labor in particular. I think it's providing us with a great room to see a lot of upward mobility and also including the people who have been excluded. And with that at the end of the day. Improving livelihoods of people, and I think that would be the only word I say. Cod all this is having predictable policies. It's going to be very, very important, as we've heard, the business community, they prefer that when you're not predictable, then they're not sure what to do, and I think those are the two things. Thank you very much, Dr. Kilama Mpumakanza. Final thoughts. My colleagues have covered the issues pretty well, but let me just mention three. I think very critically important is we need to sustain our LIC, you know, status, yeah. So recovery in the short term will be important, OK, and, and, and, and the fiscal monetary policies need to be sound to ensure that recovery. But again, equally important. Quality growth rather than quantity alone, as my colleagues have mentioned before, because we need to include a bigger chunk of our population into this growing pie and as we stabilize, recover, we need to move upward mobility and this is where it gets interesting. We can become very creative, you know, tap into technologies and basically. Uh, again, I go back, we have a number of very creative young people, yeah, and this creativity, what amazes the most is the fact that we can actually Sort of create technologies that actually fit our environment and address some of the constraints we have in some of the big sectors like agriculture and so on. So those are my three points. Thank you very much. Thank you very much to our three esteemed panelists today for sharing your thoughts, your insights on the 15th Tanzania economic update. We do appreciate having you here, Paul Makanza, Dr. Blandina Kilama, Professor Ngoi. Thank you for being here today. Um, I would now like to welcome the World Bank country director to give us her key takeaways and closing remarks on the report as it stands. Welcome back, Mara. On behalf of the World Bank team, I would first of all like to thank Professor Ngoi, Doctor Blandina, and Mr. Makanza for their insightful comments and the vibrant discussion that we have heard today. I'd also like to very much thank our moderator Miranda for leading that discussion so skilfully. As I was listening to the discussion today, there were several things that really came to the fore for me that I would like to highlight. The first of these is that undoubtedly these are challenging times for the world as well as for Tanzania. And while the short term recovery is extremely important, as we have heard today, it's also very important for us to continue to keep the long-term perspective in mind. The quality of growth of Tanzania is going to be particularly important during this recovery period. We've also heard a lot about the importance of focusing on inclusivity and in particular the importance of women and youth, and making sure that as the country moves forward in its economic development, that these groups and other vulnerable groups are fully included in economic activity and able to take full advantage of the economy. We've heard about the important role of the private sector to generate jobs and how crucial that is going to be, especially in the agricultural sector going forward to ensure that Tanzania can have a vibrant economy that will lead it sustainably into a middle income country status. We also talked about embracing technology and the importance that technology can bring in supporting all of these other reforms and economic development. And finally, as we look to the future, we heard the importance of focusing on greater economic security for all Tanzanians, so those who are brought out of poverty do not run the risk of falling back in again if there is another shock. So on that basis, I would like to again thank you all for joining us today and for the vibrant discussion and to all those who have watched and listened to this. Thank you very much.

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