Zitto na Demokrasia

Zitto na Demokrasia

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

with 24 comments

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

Written by zittokabwe

November 14, 2011 at 10:20 AM

24 Responses

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  1. Interesting prospects…

    I think the key word here is “enabling environment”. Tanzania needs to seriously make an effort to make it easier for entrepreneurs, both from within as well as international ones, to invest and prosper. It is not up to the government to start businesses. It is up to the government to attract people who want to start businesses and ensuring less bureacracy, less corruption, better infrastructure (energy etc.), and less regulation from government. For example, maybe a export ban on maize seems like a good idea for food security but the result is the exact opposite. Because people cant sell maize profitably, they stop producing it. Hence, no food security, nor money (with which food can be bought by the way).

    Good luck
    Marika King, Dar es Salaam

    Marika King

    November 14, 2011 at 10:31 AM

    • yes, i believe african nation’s need to create that enabling environment, infrastructural foundations necessary to ensure increased growth rate and ability to sustain that growth.

      Jovie Onyema

      November 18, 2011 at 10:04 PM

    • I conquer with you Mr Good luck, the so called enabling environment which is free from corruption, less bureaucracy will speed us from the slow pace we are experiencing now in our economic development. Apart from that fact, massive investments attraction is a good thing, but how is it safeguarded from corruptions and tax evasion by the multinational companies in cooperation with our greedy leaders plus our businessmen. To avoid all these problems, accountability should be put forward by enacting non-tolerant laws against any person who will dare to embezzle or sabotage the nation’s economy.

      Mr. Thobias Mwogela

      December 14, 2012 at 4:41 PM

    • I think the key word is adequate education, you can have all the gas and oil and arable land but if the ever increasing youth cannot compete with the ever evolving Kenyan youth who are technically as good as any where in the world TZ will remain natural resource reserve for the rest of the world Kenya included,

      msemakweli

      July 3, 2013 at 1:29 AM

  2. Growth rates are not necessarily indicative of the wealth of a population. A country whose >= 75 percent population is employed in agriculture, it appeals to take this into account as we seek to become the 5th largest economy in Africa. (Read: Unlocking an economy at Vijana FM http://vijana.fm/2011/11/10/economy-we-dare-to-dream-ii/)

    bihemo

    November 14, 2011 at 10:44 AM

  3. Kaka mchango wako mkubwa umeonekana, hususani on Mining and Power Sector…Keep it Up!!

    Baraka Katemba

    November 14, 2011 at 10:59 AM

  4. Kaka mchango wako mkubwa umeonekana, hususani on Mining and Power Sector…Keep it Up!!

  5. Pole sana kaka kwa ugonjwa yote umesema ila umesema political leader ndio kikwazo kwa vyote hivyo wanatafuta uongozi kwa ajili ya kumake dili ndiyo maana wananunua uongozi wewe nishahidi umesha yaona hayo je kwa kigezo hicho tutafika?

    Ally lilangela hamis

    November 14, 2011 at 7:55 PM

  6. Hello Zitto,

    I realy need to contact you and have a Long CHAT with you kuhusu mstakabali wa nchi yetu.

    I am not a good politician (Know nothing about politics) lakini hii hali inavyokwenda, i am not happy at all.

    Ningefurahi kama tungekuwa on Private Chat Room like yahoo/msn/skype.

    Nashukuru sana.

    Prince Sab

    November 15, 2011 at 5:32 PM

  7. Kaka thanks for your article and readiness to share your views with others! As for now am very sure most of Political Leaders can not think beyond 2015. For people who their living and earnings depends on “Politics ” they can only think in 5 years term only.

    Mzee Kirango

    November 17, 2011 at 2:16 PM

  8. I have a problem with the growth rates used to make these forecasts. Kenya was about to start growing at about 10% per year in 2007 before the violence started. If Kenya can keep the peace, we can start hit 10% growth rates sometime soon.
    But I’m very happy to see healthy competition between neighbors. I think Tanzania has enormous potential. If we can compete economically, hopefully our people all over East Africa can all benefit.
    If Tanzania is to beat Kenya in this race, you need to redouble your efforts – Kenya is planting the seeds of much faster growth with Vision 2030 which is on track – please see it at http://www.vision2030.go.ke/. For Tanzania to move past Kenya you need to have a better plan and even better execution. May the race begin. Prosperity for all the people of East Africa, Africa and the world.

    Kaizen Strategy

    November 22, 2011 at 4:30 PM

  9. zitto I real like the ideas, but see..instead of focusing in agriculture why dont we mechanise our agriculture so that only few human resource is utilized in that area. question, where will the rest of man power go..here is the simple idea.take agressive steps of developing manufacturing industries especially labour intesive industries such as textiles and agro-processing industries and then train all those farmers and let them work for these industries…then ban importation of mtumba, make sure cost efficient products are produced to make us more competitive in east Africa..encourage nationalism in purchasing of products made in Tanzania..I assure u if all these things are done systematically and with great care it takes 10 years to change Tanzania economy..simple like that.

    njuga

    March 1, 2012 at 2:07 PM

  10. wow.Tanzania overtaking Kenya??I DOUBT IT.WHY?
    Tanzanians still have a socialist mindset and they ‘protect’their economy from’thieves’.Investing in the Dar Exchange is next to impossible for even East Africans while the NSE treats the EA as locals.Little wonder it is the 4th largest in Africa.
    Tz hates Kenyans yet they worship SA(which has a superiority complex)while Kenya treats all members in the EAC equally,SA and Angola treat the other SADC members like dirt,which the Tzians seem to like.SA dominates Tz’s economy in a way even Kenya hasn’t managed in South Sudan
    Tanzania has Vision 2025 but is doing little to implement it.Kenya has Vision 2030 and is doing A LOT to implement it
    Tanzania wants to concentrate on ‘ukulima’ seriously??

    GERALD MAHINDA

    March 11, 2012 at 9:58 AM

  11. Tanzania wake up and smell the coffee.This is Kenya you are talking about

    EastAfrican

    April 7, 2012 at 3:06 AM

  12. I think its possible for Tanzania to overtake Kenya as the largest economy in the region. In fact,it should be.But there are there are certain factors keeping them below their potential. First,Tanzania has to entrench itself as an important gateway into the region by developing such impressive road and port infrastructure like Kenya,Tanzanians need to develop that keen entrepreneurial skills and be more hardworking like Kenyans and also cease that suspicious outlook they have towards their E.A. neighbors who are only seeking to invest in their country. They have a vast land which is endowed with numerous resources and an intelligent and peace loving population that is capable of driving this nation to greater heights, if only they can also shed off their socialist attitudes.

    Buyondo

    July 17, 2012 at 4:02 PM

  13. Very good analysis i must say. However in the development of societies, economists tend to overlook a very critical issue ” the philosophy of a people” I would refer you to a book titled “The Six Killer Applications: The Rest Vs the West” it may be useful for your analysis.The issue of using growth rates especially for African economies may be erroneous. This is because at different decades, different countries perform differently.

    Ethiopia has been doing very well under Meles Zenawi growing at 10%. Do you expect the same in years to come? Zimbabwe was a fast growing economy before 1998. How about Zambia during the Copper boom? With the recent discoveries of Oil and Gas, how will things change? Angola was always a poor country before they discovered Oil. Today Angola runs an annual budget of USD 45 Billion. Now the rest of Africa is making this discoveries of Oil and other Minerals meaning, natural resources will not be the MOST important factor for good economic performance.I would combine “the philosophy of a people” and “good governance” as the two most important issues that will determine the most successful economies in Africa in the next 20 years.

    With the assumption that most African countries will find either Oil or other forms of Mineral wealth. Then your order may be erroneous( remember Russia is an energy

    Superpower but NOT an economic one). I would have a list as follows for (SubSaharan Countries):-

    1. Nigeria
    2. South Africa
    3. Kenya
    4. Zimbabwe
    5. Ivory Coast
    6. Ethiopia
    7. Tanzania
    8. Mozambique
    9. Uganda
    10. Malawi

    My parameters are:-
    a.Philosophy of Capitalism and Personal Improvement
    b.Extend of democratic Progress
    c. Improvement in Corporate Governance
    d. Educational Performance especially Science and Technology
    e. Population Size

    .

    Benson Kimani

    September 11, 2012 at 11:46 AM

  14. Mheshimiwa,

    How `Tanzanian` is Tanzania`s economy? You previously wrote about the `Paradox` of economic growth without poverty reduction. Isn`t the nature of economy self-explanatory? You are speaking of the Sisal industry creating more than 500 jobs!! Really,can they be called `jobs`?

    mwanamajumui

    September 15, 2012 at 9:03 AM

  15. @Benson
    Let’s wait and see how the economies of Nigeria,Kenya,Zimbabwe and Uganda will turn out after say two decades. The political and social situations in those countries are a bit shaky and worrying, if not intelligently addressed soon they will one day flare up and disrupt those envisaged growth.

    Buyondo Henry

    September 19, 2012 at 11:14 AM

  16. After being lucky enough to tour many African countries , I am very optimistic about our economy in most African countries , in 2030 here is what Africa is to look like = 1 Nigeria 2 = South Africa 3 = Ethiopia 4 = Angola 5= Ghana 6 = Kenya 7 =Tanzania 8 = Sudan 9 = Cameron 10= Cote Ivoire.

    Sam

    October 21, 2012 at 1:35 AM

  17. Am just a standard eight pupil in kenya, East Africas super power and i can tell soon we are taking position 2 as an economic hub in Africa, after either Nigeria or SA!

    obwogi Jonathan

    May 6, 2013 at 4:27 PM

  18. Youths are the Economy drivers through, Advance Talents/skills,drive,energy/hard/smart working.Advanced and improved education systems.Kenyan youths possese this talents the Government can promote, More Suitable Enabling Environment,less bureaucracy,proper infrastructure and security,to make Kenya’s and E.A economies Super big and have a global say @ the world Forums, i.e World Economic forums.

    Antony Mwolo Machio

    May 10, 2014 at 5:20 PM

  19. we’ve got a great job to do kenya they are moving fast bt let’s pray

    dixon from EA

    March 24, 2015 at 11:05 AM

  20. can you say something about the impact general election which will be held on october? Do you think the economic expansion will proceed with the same rate…

    Anold Roman

    April 14, 2015 at 5:00 PM

  21. Growth percentage is not all there is to an economy’s expansion if you are doing a comparison, you have to factor in the inflation rate, the base from which the said economy is growing from, the source of this growth hence transformative effect on the common mwananchi. Tz has averaged above 7% growth rate from the period this article was written to date whereas Kenya was only able to do around 4.5% but the difference between the two increased from 10bn to currently 17bn. Reason to this is the 3 factors I’ve stated above, inflation, base of growth and source of growth. A strongly competitive hence advancing eac is however beneficial to all of us in the long run since our economies are intertwined

    Hempstone Wanjala- economics student at egerton university

    April 5, 2016 at 8:14 AM


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