The United Republic of Tanzania has achieved significant economic growth and poverty reduction since the turn of the millennium. With its political stability, ample natural resources, long coastline, unique wildlife-parks, and long-standing commitment to achieving inclusive human development, Tanzania holds significant potential for achieving the Sustainable Development Goals.
However, despite relatively rapid growth, its poverty-rate remains high, indicating that the benefits of growth have not sufficiently filtered down to the most vulnerable population. Tanzania is also experiencing an increasing level of income inequality, further reducing the power of growth to reach the poorest.
The Sustainable Development Goals recognize the importance not only of eradicating extreme poverty (SDG 1), but also of reducing inequalities within and among countries (SDG 10). The reduction of inequality is important both intrinsically and for instrumental reasons. Excessive levels of inequality can undermine social stability and the effective exercise of equal rights of all citizens. In addition, inequality reduces the power of growth to achieve poverty reduction, slows economic development, and can undermine the broad achievement of better health and educational outcomes.
This paper analyses the trends in poverty and inequality in Tanzania and examines their causes. It further discusses policies and measures that impact the reduction of poverty and inequality and provides recommendations on how to enhance the poverty- and inequality-reducing impact of growth, so as to enable Tanzania to achieve more inclusive prosperity.
While poverty and inequality are affected by both domestic and international factors, this paper focuses on domestic policies, as these are within the control of the government of Tanzania. However, it also briefly considers the impact of Official Development Assistance.
The paper is structured as follows:
- Chapter 2 provides a brief snapshot of the economy of Tanzania and its recent growth performance.
- Chapter 3 analyses the poverty- and inequality- trends in Tanzania.
- Chapter 4 considers different possible explanations for the evolution in poverty and inequality.
- Chapter 5 examines a number of social and economic policies that have a significant impact on poverty and inequality, and makes recommendations for strengthening their effectiveness.
- Chapter 6 addresses the prerequisites for achieving a more inclusive growth-pattern in the longer term.
- Chapter 7 briefly considers the impact of the Covid-19 pandemic and other recent crises in Tanzania.
- Chapter 8 concludes.
