Economic Growth, Economic Growth, Rural Growth and Rural Growth and

PovertyPoverty

Dr. Donald MmariREPOA

National Poverty Policy Week 2013

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OutlineOutline Introduction and context

Growth and income poverty reduction

Rural growth: agricultural output and productivity

Towards improving productivity & competitiveness

Conclusion

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Introduction and ContextIntroduction and ContextProgress on selected goals and targets

of MKUKUTA & various researches

Explores the interplay between economic growth, productivity, and rural poverty

Examples drawn from selected case studies

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Growth and Income Growth and Income Poverty ReductionPoverty ReductionThe economy (GDP) has grown in the last

decade and at a high rate:◦ Average 7% within target (6-8%) by 2010 (6.4% in

2011, and 6.9% in 2012)◦ Attributed to improved infrastructure, energy

availability, & good weather and efforts to supply inputs

◦ GDP per capita growth17.9% in 2012 (Tshs.1,025,038 compared to Tshs 869,436 in 2011)

Growth has also exhibited a strong resilience to external shocks.

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Growth and Income Poverty Reduction-2Growth and Income Poverty Reduction-2

Imports increasing faster than exports (with little diversification)

Poverty rate declined from 33.4 % to 28.2% in 2012 (5.2 percentage point)-significant but still high

Still pervasive in rural areas (33.3% compared to 21.7% in other urban, and 4.1% in Dar es Salaam)

Inequality remained stable at a high level at Gini Coefficient of 0.35 (2007 HBS), BUT all expenditure shares increased but dramatic decline in HH consumption (National accounts 2001-2010)

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Growth and Income Poverty Reduction-3Growth and Income Poverty Reduction-3

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Suggests change in income distribution, especially profits and labour incomes

HH was highest in the 1990s, averaging 82% (71% in 2012)

  % share of GDP  

Composition of GDP 2001 2010 Change in % share

Gross Investments 17.4 32.0 +14.6

Imports 21.3 38.9 +17.6

Exports 17.0 27.8 +10.8

Government consumption 11.9 16.1 +4.2

Household Consumption 75.0 62.6 -12.4

Growth and Income Poverty Reduction-3Growth and Income Poverty Reduction-3

Agricultural sector growth ◦ Growth averaged 4.3% for ten years, against MKUKUTA

target of 10% by 2010. ( 4.3 % also in 2012), and below GDP growth rate

◦ Agriculture share 21.6 % (24% in 2010, 29% in 2001), but 74% of labour force

◦ Underemployment rising- 13.1% in 2006, up from 4.3% in 1991

◦ 68% percent of labour force young, and 31% migrating

◦ Seasonal, informal and casual labour in non-farm sector

◦ Self employment in informal sector (53% on own farm)

◦ Growth rate of non-monetary agriculture grew faster than monetary agriculture- transformation?

◦ Share of traditional agricultural exports to total exports have declined from 56% in 1996 to 15% in 2010

◦ Replaced by minerals from just 6% to 41% 7

Rural growth: output and Rural growth: output and productivityproductivity

Index of export volume for traditional export crops 1961-2008

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40

60

80

100

120

140

160

exp

ort v

olum

e in

dex

(196

0=10

0)

Rural growth: output and productivity 2Rural growth: output and productivity 2

Productivity of smallholders a big problem for both cash and food crops

Yield of tea per hectare by type of producer

9

0.00

2.00

4.00

6.00

8.00

10.00

12.0019

7719

7819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0120

0220

0320

0420

0520

0620

0720

0820

09

Prod

ucti

on in

tons

/hec

tor

Estates Small scale

Rural growth: output and productivity 3Rural growth: output and productivity 3

Comparison of coffee yields –Tanzania and Vietnam

10

0

500

1,000

1,500

2,000

2,500

3,000

Yiel

d (K

g/ha

)

Tanzania Vietnam

Rural growth: output and productivity Rural growth: output and productivity 44

Sugarcane yield differences (TCH) by type of producer, 2000/01 and 2007/08

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2000/01 2007/08

Estates Outgrowers Estates Outgrowers

Kilombero 60 30 77 40

Mtibwa 50 47 65 25

Rural growth: output and productivity 5Rural growth: output and productivity 5

Average yield rates by outgrowers 2009/10

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Location Farming type Yield (TCH)

Dwangwa Pivot irrigated 140

  Furrow irrigated 115

  Rain fed 70

Kilombero Rain fed 37

Mtibwa Rain fed 25

Rural growth: output and productivity 6Rural growth: output and productivity 6

Yield (Tonnes/ha) by type of producers

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Crop SmallholdersLarge-scale

farmers

Banana 6.9 15.8

Coffee 0.4 1.5

Mango 10.5 81.54

Pigeon pea 0.4 2.33

Oranges 8.6 32.23

Palm Oil 19.7 35.77

Maize 0.73 4Sorghum 0.43 2.7

Rural growth: output and productivity 7Rural growth: output and productivity 7

Quality is also a serious concern Share of high grade coffee(1-5) in coffee export

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Towards improving Towards improving productivity and productivity and competitivenesscompetitivenessLow productivity in agriculture directly linked to

intensified poverty for agricultural labour forceSolution to rural growth and poverty revolves

around increased productivity, efficiency & quality

Need to intensify present government commitments (eg. FYDP, MKUKUTA, BRN, Kilimo Kwanza, ASDP), paying attention to:◦ Agricultural support services – skills and training◦ Rural infrastructure –roads, storage, processing◦ Essential economic services-finance, inputs, market

system◦ Institutional/organizational arrangements – policy,

contract farming, land regime◦ Coordination- Agriculture vs other sectors

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ConclusionConclusionThe key message is that growth has

continued to be strong but it has not translated into sufficient employment and productivity increase

Focused approach to target constraints to agricultural productivity, efficiency, and output quality

Supplementary efforts to support growth and employment in labour intensive sectors in rural and urban activities with potential for enhanced linkages

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Conclusion-2Conclusion-2

Harnessing of the growth potential of MSMEs to generate productive employment and decent incomes and productivity enhancement, especially those in rural and peri-urban

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Thank you for your attention

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