ECONOMISTS have said Tanzanians are now highly enjoying ‘bigger national cake,’ following robust reforms made by the government, which have seen the country’s Gross Domestic Product (GDP) more than double.
The country’s GDP has more than doubled to 124tri/- in the past five years in comparison to 52.9tri/- in 2015, thanks to major economic reforms, including the consistent plans and bold decisions made by the fifth phase government under President John Magufuli.
According to the National Bureau of Statistics (NBS) Statistical Report on the success of the fifth phase government on economic growth and improvement of livelihood of Tanzanians, the high GDP performance is equal to an average of 6.9 per cent growth in the past five years in comparisons to 6.3 per cent registered in 2015.
In the same period, the average per capita income earned per person in dollar terms rose to 1,063.3 US dollars equivalent to 2.38m/- in comparison to 622 US dollars (979,513/-) in 2015.
Orbit Securities Head of Research and Analytics Imani Muhingo said GDP growth means total national expansionof economic activities thus “a bigger national cake” for everyone.
“As long as GDP growth is faster than population growth, everyone’s share in the economy rises by the balance,” Mr Muhingo told the ‘Daily News’.
He, however, caution that not everyone shall gain equally because of income inequality, but Tanzania has one of the lowest Gni coefficients globally.
Mr Muhingo also said “this shows the government’s focus on infrastructure development that is paying off, because most of the construction sector growth is spearheaded by the government.”
NBS report showed that the construction sector became the major contributor to the robust GDP growth by 25.6 per cent as the government is executing major flagship projects, including the Standard Gauge Railway (SGR), flyovers, bridges, roads, ports and airport expansions.
Generally, rising GDP will translates to a higher standard of living, because diminishing national income causes the standard of living to decline.
An economist-cum-banker, Dr Hildebrand Shayo, said an increase in real GDP, ceteris paribus, will cause an increase in average interest rates in an economy.
“An increase in GDP will raise the demand for money because people will need more cash to make the transactions necessary for purchase. In other words, real money demand rises due to the transactions demand effect,” Dr Shayo said.
Tanzania enters into that bracket of middle-income countries with Gross National Income (GNI) per capita between 1,026 US dollars and 3,995 US dollars.
This new income status for Tanzania implies improved living standards by way of higher quantity and quality of goods and services consumed.
Others are better quantity and quality of social services like health, education and water, lower mortality and morbidity rates, higher literacy rates, lower poverty levels as well as more quantity and quality of economic infrastructure.
The other sectors that made huge contribution to GDP growth are namely agriculture (19.4 per cent), industries (9.8 per cent) as well as works and communication (8.8 per cent).
However, analysts said agriculture’s contribution was still low and also show how the agriculture sector is underutilized and how there’s so much opportunity in the sector.
“This raises the need for further investment in agriculture which would mostly mechanize the sector and raise a new challenge of unemployment. “And this is why we need more factories, especially agricultural processing factories that would absorb unemployed personnel from a mechanized agricultural sector,” Mr Muhingo said.
However, other urged that in the country the development of this sector has been measured via multiple primary measures like income, employment, sales, value added and economic multipliers.
“Infrastructure that could present true picture of this sector contribution is inadequate and there is a need to do more, because this sector hold potential that could contribute more to our economy,” Dr Shayo said.