…It opens door for poverty exit
ECONOMISTS have said the significant GDP growth implies the country was moving to higher living standards while scaling up its ability to dedicate more monetary resources to critical developing sectors to improve people’s lives.
The country’s GDP has grown to 85.42 billion US dollars in the year 2023, up from77.06 and 69.94 billion US dollars in the years 2022 and 2021 respectively, the International Monetary Fund (IMF) has revealed.
For the economists, a growing economy creates more opportunities for growth, while creating a wider tax base to improve availability of social services, improve infrastructure and deliver ambitious projects.
The economists further noted that the GDP growth also meant that economic opportunities such as business activities will also increase, thereby, creating more jobs.
Elaborating on this, Alpha Capital Head of Research and Financial Analytics, Mr Imani Muhingo said the 22 per cent growth of the nominal GDP was a big deal for everyone in the country as it represents growth of the country in every sense.
He observed that the country’s room for borrowing grows, especially during these challenging times. Mr Muhingo also said, the pace of growth is an investment attraction by itself, which is speeded by the government’s commitment to improve the business environment.
“If efficiently utilised and distributed, eventually everyone in the society would feel the economic growth from different angles. Growth of employment opportunities, construction and improvement of health centres, better supply of medicine and medical services, more schools built and better quality of education. These are few examples of economic growth results,” asserted Mr Muhingo.
To realise this, he stressed the need for the government to improve tax collection despite people’s perception in the matter, singling out that collection in Tanzania was still relatively too low.
“The average tax to GDP worldwide is around 34 per cent compared to less than 13 per cent for Tanzania. If the government collects taxes equivalent to 25 per cent of our GDP, we would have a budget surplus of about 6tri/- on the proposed 2023/24 budget,” he said.
On the other hand, a seasoned economists-cum-banker, Dr Hildebrand Shayo indicated that the achievement will increase the State’s capacity to supply public goods because growth in the economy increases its capacity to tax and acquire resources needed to provide services.
Dr Shayo said the benefits provided by the State when GDP rises are that inclusive growth brings wider material gains.
According to him, growth creates wealth, some of which goes directly into the pockets of employers and workers, both in the public and private sector that help to improve their wellbeing.
“As people earn higher incomes and spend more money, this enables people to exit poverty and gain improved living standards. This impressive economic growth to Tanzania means an increase in real GDP that translates into an increase in the value of national output, income and expenditure,” said Dr Shayo.
He, however, noted that the rise in GDP did not simply mean an individual person’s standard of living will improve.
He added that “If a country’s population increases, that will push GDP up, because with more people, more money will be spent to deliver services. But individuals might not be getting richer especially if plans and means to deliver those planned goods and services don’t get to targeted areas of the economy.”
Dr Shayo revealed that higher GDP should equate to greater human progress, because it meant more valuable goods and services have been created.
“Scratching a little deeper, however, GDP does not capture this traditional economic value very well if delivering of goods and services are overwhelmed by stealing and corrupt behaviour that sometimes divert off the line designed plans,” asserted the Economist.
He suggested that a well-conceived tax, regulatory, and public investment policies can complement labor force growth and private investment in expanding potential GDP that has been achieved but poorly conceived policies, of course, can impede growth and hurt national economic welfare.
For his part, the Director of Research and Evaluation at MASSA Institute of Social Science Research Ltd (MISSR), Mr Joshua Mwakalikamo viewed that consumption and government spending which are some of the pillars of GDP, when they increase, they attract more businesses because of the assured demand.
The researcher-cum-economists supported the view that an increase of GDP will lead to an improvement of standard of living as the government spending in important sectors such as education, health and transportation will likely increase. Such will lead to an increase of goods and services demanded by the citizens which are essential for their welfare.
“An increase in GDP attracts more business due to the increase in demand for goods and services. When businesses are doing well and the economy is growing, employers may be able to offer higher wages to their workers, which can help improve their financial well-being,” he noted.
In its latest report, the IMF indicates that the improvement in GDP has enabled the economy to feature in a top ten list of biggest Sub- Saharan Africa in 2023.
This growth has come in just two years of President Samia Suluhu Hassan reign in office, as she has made fantastic efforts in attracting business and investment through various policies and guidelines.
The Government Chief Spokesperson who is also the Director of Information Services Gerson Msigwa, hailed President Samia for her proper guidance and determination in building the economy as a result of the achievements that have been recorded.
On several occasions, President Samia has been insisting on the government’s determination to build the economy through creation of a conducive environment for business and investments.
