Download PHDR 09 - Growth and Income poverty-19Nov2009

Growth, Income Poverty, and
Economic Wellbeing of
Households
Donald Mmari
REPOA
19th November 2009
National Policy Dialogue
1
Outline
• Progress towards targets
• Implications for Policy
• Implications for monitoring
19th November 2009
National Policy Dialogue
2
Progress towards targets
• High Growth rate over the last decade
– 7.4% (2008) compared to 4.1% (1998)
• Modest structural change (NA 2007)Slide 9
– Dynamism in service sector (48% of GDP)
• Fastest growth in communication
– Manufacturing growth of 8% since 2003 (9.4% of
GDP 2008)
– Agricultural growth 4.4% since 2000, against
MKUKUTA target of 10% by 2010 (24% of GDP)
• Inflation rose sharply (10.3% in 2008)
19th November 2009
National Policy Dialogue
3
Progress towards targets (ctd)
• Limited depth and diversification for
domestic banks
– Inadequate lending for local investments
– High interest rate spread (12.5% in 2008)
• No significant declines in income poverty
reduction over the decade
– Despite impressive macro economic outlook
between 2001 and 2007
– Headcount dropped from 35.7% to 33.6%
19th November 2009
National Policy Dialogue
4
Progress towards targets (ctd)
– Consumption per capita increased by only 5%
(average annual increase of 0.8%)
– Very low nominal hh consumption Slide 10
• 98% less than Shs 58,000 pm
• 80% less than Shs 38,000 pm, or 1,380/day
– Majority still smallholder farmers
• Higher headcount -38% (24% other urban, 16% Dar)
– Generally insignificant change in inequality
– Domestic absorption = C + G+ I Slide 11
• ΔC = -4%, ΔI = +8%, ΔG = 6%. Could these underpin
long-term growth and large ΔC?
19th November 2009
5
National Policy Dialogue
Implications for policy
• Income poverty targets for MKUKUTA and MDG
out of reach (needs annual real consumption per
capita growth of 3.2%) Slide 12
– Redistribution of income may not be effective without
high and sustained growth rate
– Exploit comparative advantages and raise domestic
employment and productivity
• Rural hhs diversifying, but difficult for poorest
hhs
– Interventions to raise agricultural productivity
– Incentives for smallholders to innovate
– Appropriate forms of organizational and institutional
arrangements
19th November 2009
National Policy Dialogue
6
Implications for policy (ctd)
• Investment in human capabilities and physical
capital for sustained growth
• Increased investment in roads, railways and port
facilities to realize TZ comparative advantage as
trade and transport hubs and unlock
manufacturing potentials
• Deepen the local financial sector-addressing
institutional and legal deterrents for credit risks,
esp. for agriculture and SMEs
19th November 2009
National Policy Dialogue
7
Implications for Monitoring
• Monitoring system need to be kept
manageable-practical but sufficient for
strategic planning and national reporting
• Revision of indicators for growth and
income poverty for more reliable evidence
• Other proposed indicators
– Imports and reserves
– Government expenditure
– Exchange rates, monetary & capital market
19th November 2009
National Policy Dialogue
8
100%
Contribution to GDP (%)
80%
45.2
45.5
46.1
47.3
47.8
5.2
5.2
6.1
6.5
8.4
6.7
8.4
8.7
60%
40%
20%
1.4
1.8
1.8
1.7
2.3
9.2
2.7
1.7
9.4
2.6
1.6
1.5
29.6
29
26.9
24.6
24
1998
2001
2004
2007
2008
0%
Agriculture, Hunting, and Forestry
Fishing
Mining and Quarrying
Manufacturing
Construction
Services
19th November 2009
National Policy Dialogue
9
1
.8
.6
.4
.2
0
0
10000
20000
Consumption per adult equivalent
2001
19th November 2009
National Policy Dialogue
30000
2007
10
2000
2007
Economic Activity
Expenditure
GDP Share (%)
Expenditure
77
6,615,765
GDP Share (%)
73
10,021,704
Household consumption
12
1,014,494
18
2,495,962
Government consumption
16
1,421,461
24
3,358,305
Investment
-5
-466,381
-15
-2,074,049
Net exports
100
8,585,339
100
13,801,921
GDP at market prices
19th November 2009
National Policy Dialogue
11
Percentage of population below
the basic needs poverty line
45
40
40.8
38.7
37.6
35
30
28.7
25.8
24.1
25
24
20
15
12.9
10
5
0
1991-92
2000-01
2007
MKUKUTA Target 2010
Years
Urban
19th November 2009
National Policy Dialogue
Rural
12