Imagining Tanzania: 5th largest Economy in Africa and largest in EAC by 2025

Zitto Kabwe

Few days ago I received an email from a friend about Standard Chartered Bank forecasts on the African Economies. The Bank listed 10 largest economies in Africa and did a simulation for 2030 using current growth rates. I immediately glanced into the report to find out how big Tanzanian economy would be in 2030 against its neighbours in the region and especially Kenya. Since I’ve recovered from my illness, thoughts about Tanzanian economy and how to address the poverty challenge has been lingering in my mind, so report came at a right time.

The report says Tanzanian economy is 7th in Africa at 64bn USD (PPP GDP) after South Africa (555), Nigeria (415), Angola (116), Ethiopia(95), Ghana (75) and Kenya (72) at top six and before Cameroon (47), Uganda (46) and Ivory Coast (36) making the rest in the top 10.

In their forecast Tanzania will be 6th largest economy by 2030 with a GDP of 230bn USD overtaking Kenya which will have a GDP of 217bn USD. At the top will be Nigeria (1640), South Africa (974), Ethiopia (375), Ghana (323) and Angola (293). This forecast assumes the current rate of growth of 7%.

However using USD GDP terms without equalising them for purchasing power Tanzanian economy is the 9th in Africa with a GDP of 23bn USD while Kenya’s is 5th with 36bn USD and in 2030 Kenyan GDP is forecasted to be 109bn at the same position of 5th and Tanzania will move to 7th position with a GDP of 84bn USD. Currently Kenyan growth rate is 6% while that of Tanzania is 7%.

I am imagining our Tanzanian economy at 5th position and bigger than Kenyan in 2025. Dreaming? No. Tanzanian growth starts at a low base so for it to have a bigger economy than Kenya it has to grow faster than current growth and here i am talking about growth rate of between 8 – 10% over the coming decade. Three sectors of the Tanzanian economy would ensure this growth and these are Agriculture, Mining,Power(Electricity), Oil and Gas.

Agriculture in Tanzania forms 26% of the whole economy while almost 70% of the population depend on it for living. This makes Agriculture a crucial sector for poverty reduction. In various comments I have been making i call Agriculture with its supportive infrastructure as Rural economy. World Development Report 2008 reported that ‘GDP growth originating in agriculture is atleast twice as effective in reducing poverty as GDP growth originating outside agriculture’. For China effectiveness is reported to be 3.5 times (worldBank 2007) and hence in poverty was cut from 33% in 1978 to 15% in 1984 in that country.

My calculations put it that for Tanzanian economy to grow at 8% it requires agriculture to grow at 6% and a double digit growth of 10% requires 8% growth in agricultural sector. All these are achievable. It requires a strong leadership and commitment. Investment into rural economy in rural energy, rural water supply, rural roads and rural social services like education and health would spur growth and integrate rural economy with the rest of the economy (Tanzania is estimated to have an informal economy equal to 58% of its GDP).

I have suggested a motion in Parliament to declare 2012 a Sisal planting year in order to return Tanzania into a number one sisal exporter in th world. Sisal industry alone would generate 500 jobs and 300m USD export earnings if we hit 200,000 tons a year. Another initiative is needed for Cotton, Tea and Coffee. Efforts in food production in products like paddy, maize and sugar as well as beans and others would unleash potentials of the rural economy and reduce food inflation.

Increasing mining activities especially in coal, iron ore and copper and large scale natural gas processing for LNG trains will as well strengthen Tanzanian economy, massively increase its export earnings (by september 2011 Tanzanian import bill stands at 10.3bn USD while export receipts are 6.5bn USD), and make it a electricity surplus country.

If Tanzanian political leaders redirect their efforts towards The Economy and build an enabling environment through necessary reforms, ensure 8 – 10% growth for a coming decade, the country will be 5th largest African economy and 1st largest in East African Community not by 2030 but 2025. Are we taking the challenge? Do we even think of 2025 rather than 2015? I doubt……….

Africa in 2030