Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized THE WORLD BANK GROUP AFRICA REGION MACROECONOMICS, TRADE AND INVESTMENT GLOBAL PRACTICE JANUARY 2019 ISSUE 11 Educating Girls and Ending Child Marriage in Tanzania THE POWER OF INVESTING IN GIRLS: TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION PAGE ii The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table of Contents Abbreviations and Acronyms..................................................................iv Acknowledgements...................................................................................v Overview.................................................................................................... 1 Part One: The State of the Economy....................................................... 7 ......................................................................................... 8 1.1 Recent Economic Developments. 1.2 Macroeconomic Outlook and Risks...................................................................................22 Part Two: The Power of Investing in Girls............................................ 27 2.1 Child Marriage is Still Prevalent, and Girls’ Educational Attainment is on Average Low............................................................................................29 2.2 Relationship of Child Marriage, Early Childbearing, and Girls’ Education..................34 2.3 Impacts on Other Development Outcomes.....................................................................37 2.4 Economic Costs and Benefits: The Case of Child Marriage..........................................43 ....................................47 2.5 Policy Options to Improve Opportunities for Adolescent Girls. 2.6 Investing In Girls: A Smart Investment In Tanzania’s Development............................55 Statistical Annexes.................................................................................57 References............................................................................................... 68 PAGE i TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION List of Boxes Box 1: Nascent Industrialization In Tanzania’s Agriculture Sector.........................................................................11 Box 2: Framework for Analyzing Impacts and Costs or Benefits.......................................................................... 30 Box 3: Gaps In Learning and The Gender Gap......................................................................................................... 32 Box 4: Changing Social Norms: The Case of Female Genital Mutilation............................................................. 33 Box 5: Drivers of Child Marriage.................................................................................................................................. 35 Box 6. What Is Meant by “Impacts” and Associated Economic Costs?............................................................... 39 Box 7. Other Impacts of The Limited Education of Girls......................................................................................... 42 Box 8: Potential General Equilibrium Effects and Cost Estimates......................................................................... 44 ............................................................... 46 Box 9: Why Are Some Impacts and Costs Large and Others Smaller?. Box 10: Selected Efforts Already Underway to Invest In Adolescent Girls........................................................... 48 ...................................................................... 51 Box 11: Improving Educational Attainment and Learning for Girls. Box 12: Theories of Change for Interventions Targeting Adolescent Girls.......................................................... 53 List of Figures Figure 1: Global GDP Growth Moderates.....................................................................................................................8 Figure 2: Energy Prices Diverge From Metals..............................................................................................................8 Figure 3: GDP Growth by Sector, 2016 and 2017, Percent........................................................................................9 Figure 4: Low Inflation, Much Higher Energy Prices, 2017–18, Percent...............................................................11 Figure 5: Growth In Private Sector Credit, 2017-18, Percent...................................................................................12 Figure 6: NPL Ratios by Sector, 2014Q4: 2017Q4, Percent.....................................................................................12 Figure 7: Current Account Deficit, 2015–18, Percent of GDP..................................................................................13 Figure 8: Imports and Exports, 2015–18, Percent ....................................................................................................13 Figure 9: Stability of The Tanzanian Shilling, 2017–18.............................................................................................14 Figure 10: Domestic Payment Arrears, 2014–18, Percent of GDP..........................................................................15 Figure 11: Execution of The Development Budget, 2017/18, Percent of GDP.....................................................15 Figure 12: Domestic Revenue, 2017/18, Percent of GDP.........................................................................................16 Figure 13: Aid and Loans, 2017/18, Percent of GDP.................................................................................................16 ...................................................................................................................17 Figure 14: Public Debt, 2015–18, Percent. Figure 15: Ease of Doing Business: Tanzania and East African Peers, Rank and Score.....................................18 Figure 16: Distances to The Frontiers, Score..............................................................................................................18 Figure 17: FDI Performance Index................................................................................................................................19 Figure 18: Poverty Rate and Absolute Number of Poor, 2007–16......................................................................... 20 Figure 19: International Poverty Headcount Ratio At $1.90 a Day by GDP Per Capita..................................... 20 Figure 20: Indicators for Human Development and Living Conditions............................................................... 21 Figure 21: Lack of Skills as a Constraint on Tanzanian Firms, Percent................................................................ 25 PAGE ii The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 22. Conceptual Framework.............................................................................................................................. 30 Figure 23. Primary School Completion, Girls by Age, Percent............................................................................... 33 Figure 24. Lower Secondary Completion, Girls by Age, Percent........................................................................... 33 Figure 25: Upper Secondary Completion, Girls by Age, Eastern and Southern African Counties, Percent.. 33 Figure 26: Prevalence of Child Marriage by Age, Eastern and Southern African Countries, Percent............ 33 Figure 27: Relationship Between Educational Attainment and Child Marriage, East and Southern African Countries, Percent.................................................................................... 34 List of Tables Table 1: Education Completion Rates, Child Marriage, and Early Childbearing by Age Group, Percent....... 29 Table 2. Adolescent Girls and Relationships Between Child Marriage and Early Childbearing, Percent....... 36 Table 3, Relationships Between Child Marriage, Early Childbearing, and Girls’ Education.............................. 37 Table 4. Early Marriage and Childbearing, Fertility, and Population Growth...................................................... 38 Table 5, Impacts on Health, Nutrition, and Violence............................................................................................... 40 Table 6, Impacts on Work, Earnings, and Poverty.................................................................................................... 41 Table 7. Impacts on Decision-Making, Agency, and Other Areas......................................................................... 41 Table 8. Statistically Significant Estimated Impacts by Domain........................................................................... 43 Table 9: Order of Magnitude, Selected Benefits From Ending Child Marriage (US$ PPP Unless Noted)..... 45 PAGE iii TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Abbreviations and Acronyms BoT Bank of Tanzania CAD Current account deficit CSEE Certificate of Secondary Education DAC Development Assistance Committee DHS Demographic Health Survey EAC East African Community EMDEs Emerging markets and developing economies FDI Foreign direct investment FGM Female genital mutilation FYDP Five-Year Development Plan GDP Gross domestic product HBS Household Budget Survey IMF International Monetary Fund LFP Labor force participation LGA Local government authorities MSMEs Micro, Small, and Medium Enterprises NBS National Bureau of Statistics NPL Nonperforming loans ODA Official development assistance PPP Purchasing power parity PSLE Primary School Leaving Examination SACMEQ Southern Africa Consortium for Monitoring Educational Quality SGR Standard gauge railway SRH Sexual and reproductive health SSA Sub-Saharan Africa TIN Taxpayer Identification Number TRA Tanzania Revenue Authority TZS Tanzanian shillings US United States VAT Value added tax WDI World Development Indicators PAGE iv The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Acknowledgments The eleventh edition of the Tanzania Adugna (Practice Manager for MTI, Economic Update series was prepared Africa), and Preeti Arora (Country Program by a joint World Bank team of the Coordinator) provided guidance and Education (GED), Poverty (GPV) and leadership throughout the preparation of Macroeconomics, Trade and Investment the report. (MTI) Global Practices. The team included Quentin Wodon, Cornelia Jesse, Nadia Anne Grant provided editorial assistance, Belhaj, Pancras Mayengo, Yutaka Yoshino, while Faustina Chande, Lydie Ahodehou, and Emmanuel Mungunasi. William Abdulaziz Muhile, and Loy Nabeta Battaile provided overall supervision. managed the design and printing process. Habib Rab, Salman Asim, and the IMF Tanzania team also provided useful The analysis of girls’ education, child insights. marriage and early childbearing benefited from support provided by the Children’s Bella Bird (Country Director for Tanzania, Investment Fund Foundation and the Burundi, Malawi, and Somalia), Abebe Global Partnership for Education. PAGE v The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Overview PAGE 1 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Overview Economic performance in 2018 has been payment arrears and delayed refunds mixed. The data that are available suggest of value-added tax. The 2017/18 budget some areas of softening in the economy.1 deficit after grants of 1.3 percent of GDP Foreign direct investment declined to 2 suggests effective spending management percent of GDP in 2017, down from about 5 but does not factor in payment arrears, with percent in 2014. The current account deficit an estimated stock of over 3 percent of GDP. has increased to 3.8 percent of GDP in the Government is paying down roughly TZS year ending September 2018, from 2.2 in 1 trillion of verified arrears per fiscal year. the preceeding 12 months. Recent Bank The low deficit is the result of controlled of Tanzania data confirm lower cashew recurrent expenditures and under execution exports and 2017 decline in non-traditional of the development budget by more than exports has continued into 2018, which 40 percent. Contributing factors include raises concerns on prospects for longer term shortfalls in domestic revenue and external growth. The Tanzania Revenue Authority financing for large projects. Public debt is is reporting that many large tax payers are currently sustainable, but there is need for unable to meet their tax obligations on time. the Government to consider cost-effective Nonperforming loans have declined recently financing options and manage associated to 9.7 percent in September 2018 from 12.5 risks to support public investments. The percent in September 2017, but remain 2018/19 budget targets public investment almost double the 5 percent statutory to consume 45 percent of total spending, threshold. Banks have limited lending to equivalent to 9.1 percent of GDP compared businesses and interest rates are high to 5.5 a year prior. (18 percent for one-year loans in August 2018), though some banks have lowered Despite lower poverty rates, the number benchmark lending rates. On a positive of poor has stagnated due to high note, credit to the private sector has been population growth. In the past decade edging up, reaching 4.9 percent in the 12 the poverty rate began to decline steadily. months ending September 2018. The national poverty rate had declined from 34.4 percent in 2007 to 28.2 percent in The fiscal deficit is still low, not counting 2012 and then to 26.8 percent in 2016. The next Household Budget Survey (HBS) for 1 Because GDP is still being rebased, the National Bureau of Statistics did not release quarterly GDP data in 2018. PAGE 2 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Tanzania mainland is under implementation ranking, falling twelve spots in the last two and results are expected to be available in years to 144th out of 190 economies. early 2019. From 2007 to 2012 poverty fell somewhat faster than the Tanzanian The growth outlook is uncertain, but population increased, so that the number of the downside risks are largely within poor was reduced by one million; however, government control. GDP growth between 2012 and 2016 the number of poor projections are awaiting the forthcoming returned to the level in 2007. 2  Overall, about rebased GDP series. On the domestic 16 percent of Tanzanians escaped poverty in front, key risks include delays in reforms the past five years, but 13 percent fell into to stimulate private investment and delays it. The Government has taken measures in execution of major public infrastructure by increasing public expenditure in health, projects. Also, fiscal space may narrow due education, energy and water which are to pressures for spending on social services expected to further reduce income poverty. for a growing population, planned scale-up in infrastructure projects and increasing The business environment is challenged debt service. In addition, the external by high regulatory compliance costs and environment presents risks related to rising late payments to government suppliers energy prices and tightening financial and contractors. There is a multiplicity of markets. Increases in the cost of oil import required licenses, taxes and permits that have the potential to widen the current deter business growth and competitiveness. account deficit and put pressure on the In addition, government has a large stock exchange rate and inflation. of outstanding obligations to private sector firms, some over two years old. While many For Tanzania to mitigate such downside firms are penalized by such red tape and risks and accelerate growth, the delayed payments, the smaller the business, Government can consider the following the heavier the burden. Actions to address action plan for short and medium-term these factors are imperative. In May 2018 priorities. Reforms, particularly focused on the Cabinet formally endorsed a Blueprint fostering private investment and improving for Regulatory Streamlining to address the fiscal policy design and implementation, excess of red tape. In the same month, the are vital if Tanzania is to achieve higher Ministry of Finance and Planning issued an economic growth and create more, and Arrears Management Strategy designed more productive, jobs. Below are key actions to clear the existing stock of arrears and for government consideration, with further prevent new accumulations. A more positive specifics in the main text. business environment requires urgent implementation of these plans. Tanzania has lost ground in the latest Doing Business 2 An update on the number poor will be determined after the release of 2017/18 Household Budget Survey. PAGE 3 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Measures to be undertaken in the short ● Coordinating monetary and fiscal term: policies. Ensure a coordinated approach to monetary and fiscal management ● Addressing payment arrears/VAT of domestic and external imbalances refunds delays. Clear the backlog of to provide a low inflation and stable verified payment arrears to private environment for economic growth. firms and minimize new accumulation through implementation of the Arrears ● Promoting private investment. Align Management Strategy. Also, priority investment policies toward attracting should be given to clearing delinquent more private investments, including VAT refunds. The government should full implementation of the Blueprint consider embracing a risk-based for Regulatory Streamlining to reduce approach to analyze and audit VAT the cost to businesses of regulatory refunds, with targeting differentiated by compliance. sector. The Power of Investing in Girls ● Improving development budget Child marriage, early childbearing, and execution. Prepare more credible limited access to education have signifi- borrowing plans to improve planning cant negative effects on girls, their fami- of the annual public investment lies, and the country. This report’s special program by securing external financing topic discusses trends in girls’ education, to execute planned capital spending child marriage, and early childbearing, and without jeopardizing debt sustainability. analyzes how they affect a wide range of ● Maintaining short-term macro- development outcomes. It then offers rec- stability. Ensure prudent monetary ommendations for policies and programs and fiscal policies that impact on near that could improve opportunities for adoles- term movements on the exchange cent girls. The analysis builds on World Bank rate, consumer prices and interest work on the cost of not investing in girls and rates, including money growth, policy on a previous global study of the economic rates, and government borrowing from impacts of child marriage conducted by the domestic markets. World Bank in partnership with the Interna- tional Center for Research on Women. Measures to be undertaken over the medium term: Compared to 14 other East and Southern African countries, adolescent girls in Tan- ● Investing in human capital and zania continue to have relatively high rates infrastructure. Support needed of child marriage and early childbearing infrastructure investments alongside and low educational attainment. Almost resources devoted to improving one in three Tanzanian girls marry as chil- human capital over the medium term dren and almost one in four have their first (especially for girls, which is the special child before the age of 18. As a result, just topic in Part 2 of this report). over one in four girls completes her second- PAGE 4 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region ary education. While some gains have been through generations. For example, children made over the past few decades, the rate of young mothers are at higher risk of dying of progress is still much too slow to enable before age 5, suffering stunting, and doing Tanzania to achieve the related Sustainable poorly in school. Development Goals. The economic costs of these burdens on Girls’ educational attainment, child mar- girls are very high in Tanzania. In the case riage, and early childbearing are close- of child marriage: ly related. After puberty, girls must often ● Ending child marriage could within choose between getting married or continu- 15 years generate US$ 5 billion in ing with school. Once a girl is married, it is annual benefits (in purchasing power very difficult for her to remain in school. In- parity, PPP), by reducing fertility rates deed, less than 1 percent of girls aged 15-19 and population growth. By reducing are both in school and married. Conversely, population growth, ending child keeping girls in school is probably the best marriage increases GDP per capita. way to reduce child marriage and, indirect- These estimates, which are related to ly, early childbearing, since child marriage is the “demographic dividend,” may even the likely cause of about two thirds of all in- underestimate the full magnitude of the stances of early childbearing. potential gains. Girls’ education, child marriage, and early ● The loss in earnings for adult women childbearing also have significant impacts working today due to their marrying as on other development outcomes. Ending children in the past stands at US$ 637 child marriage and early childbearing would enable girls to spend more time in school. million (PPP). It is estimated that their Conversely, more education for girls would earnings would be that much higher help to reduce child marriage and early today if they had been able to avoid early childbearing. Limited education and early marriage and childbearing and attained marriage and pregnancy affect girls’ life tra- more education. jectories in numerous ways. Girls who marry ● Ending child marriage could save the or drop out of school early are more likely to education budget up to US$ 311 million have poor health, larger families, and earn by 2030 and generate additional less as adults. All of these factors make it benefits associated with lower rates more likely that their households will suffer of under-5 mortality and stunting. poverty. Other problems are a higher risk of The education budget savings could intimate partner violence and a lack of de- be achieved because the Government cision-making power (agency) within the would be providing services to fewer new household. Fundamentally, girls who marry students. The savings could be invested or have children at an early age or who drop out of school early are disempowered in in improving the quality of education, ways that deprive them of their basic rights. which could then enhance human capital In turn, this has a negative impact on their and thereby to generate additional children, creating a cycle that spirals down economic benefits. PAGE 5 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Both general conditions and targeted the risk of violence and sexual harass- interventions are needed to facilitate re- ment either at or on the way to school. It ductions in child marriage and early child- is also essential to ensure that secondary bearing. Efforts to change social norms and education is affordable and that schools ensure that the minimum age for marriage endow girls with skills that enable them is set at 18 without exception are essential to generate livelihoods. to expanding opportunities for adolescent � Target interventions to improve girls’ girls. However, this is not sufficient. In Tan- skills, knowledge, and economic op- zania, although 18 is already the minimum portunities, especially through mea- age for marriage, child marriage is still sures to ensure that girls remain in common. This report therefore emphasizes school: Interventions should also expand proven interventions to delay marriage and economic opportunities for adolescent childbearing. girls who have dropped out and are un- Enabling girls to remain in school is vi- likely to be able to return. Ensuring that tal to eliminate child marriage and early adolescent girls have adequate life skills childbearing. Thus, improving the edu- and knowledge of reproductive health is cation system should be a top priority. also important, whether girls are in school Much can be achieved by: (1) reducing the or out. This can be done effectively by disadvantages confronting girls in remote safe space clubs where girls may discuss communities, in part due to poor target- with female mentors’ issues of sexual and ing of government resources; (2) creating a reproductive health and other relevant more inclusive school culture that encour- topics. However, the most effective inter- ages girls to remain in school; (3) providing ventions to delay marriage and childbear- girls with role models, as through deploying ing are those that enable girls to remain in more female teachers; and (4) increasing school. the returns on girls’ completing secondary � Provide community-based interven- school by improving opportunities for local tions to address social norms that ad- employment. More generally, it is essential versely affect girls: Child marriage, early to improve the basic conditions for access childbearing, and low educational attain- to education; studies suggest that the fol- ment for girls are rooted in social norms lowing targeted interventions may produce that perpetuate gender inequality. Com- significant benefits. munity-based interventions that involve � Improve general conditions for girls in all members of the community—men school: Access should be improved by and community leaders as well as wom- constructing secondary schools close to en—may be an effective way to change areas where unserved girls reside, or pro- these norms. viding them with transportation to enable them to attend school. Providing ade- quate water, sanitation, and hygiene facil- ities for girls is important, as is addressing PAGE 6 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 1 The State of the Economy PAGE 7 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION 1.1 Recent Economic Developments Regional growth is on an upward trajectory, though varying significantly Global growth is moderating by country. Sub-Saharan Africa (SSA) Global GDP growth was expected to continues to recover, though slowly, from moderate in the near term as investment the 2016 nadir in GDP growth. In 2018, and trade lose momentum. The global growth in SSA is expected to average economy was expected to grow by 3.1 2.7 percent, up from 2.3 percent in 2017, percent in 2018, as it did in 2017, as a result supported by higher oil prices and more of slower growth in industrial economies like favorable agricultural conditions. The main China, though not the United States (Figure deterrent for average growth in the region 1). 3 Commodity-exporting emerging is sluggish expansion of activities in SSA’s markets and developing economies (EMDEs) largest economies, Angola, Nigeria, and are expected to continue recovering from South Africa; average GDP growth in the the drop in commodity prices in 2014–15, rest of SSA is over 4 percent. though with significant variation given a Volatile commodity prices and tighter growing divergence between energy and global financing conditions are weighing metals prices. In 2019–20 global growth on Tanzania’s economy. The rise of oil is expected to stay just below 3 percent. prices from US$55 a barrel in October 2017 Among moderating factors are the rising to US$77 in October 2018 pushed up the cost of borrowing and trade stagnation as import bill and the current account deficit protectionism rises. (Figure 2). Oil imports account for about a Figure 1: Global GDP Growth Moderates Figure 2: Energy and Metal Prices Source: World Bank Africa Pulse, October 2018. Source: World Bank Commodity Price Data (The Pink Sheet). Note: p = projection, 3 World Bank African Pulse, October 2018. PAGE 8 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region quarter of the total value of the country’s estimated 3.6 percent, 1.5 percentage points imports; mineral exports, especially gold, (pp) higher than in the first three quarters and agricultural raw materials account for of 2016 (Figure 3). The increase was mainly nearly a third of the total value of its exports. due to favorable rainfall and availability of This negative impact has been partly offset fertilizers that enhanced production of such by higher gold prices and value of gold major crops as maize, paddy rice, beans, and exports. Higher global borrowing costs have potatoes, which went up by 6 to 35 percent. led to more cautious external borrowing However, agriculture, which employs the in Tanzania, resulting in slower progress majority of Tanzanians, continues to record than planned on its large public investment the lowest growth of all major sectors. program. In the current environment of high In 2017, official data report that borrowing cost, ambitious plans for external industrial output grew at 12.1 percent, financing of 1.5 to 3.0 percent of GDP up slightly from 10.7 percent output in annually to finance strategic infrastructure 2016, primarily because mining, water, projects in transport and energy could put and construction activities expanded. In elevated stress on the Government’s fiscal 2017, mining and quarrying grew by 17.5 and debt sustainability. percent, water by about 17 percent, and The limited information available on the construction by 14 percent. At 7 percent Tanzanian economy is giving mixed signals expansion, manufacturing was down from about 8 percent in 2016. Growth in mining According to official statistics from NBS, was primarily driven by significantly higher real GDP grew at 7.1 percent in 2017.4 coal and natural gas production. Operators Agriculture grew (from a low base) by an have complained about abrupt legislative Figure 3: GDP Growth by Sector, 2016 and 2017, Percent Source: Tanzania National Bureau of Statistics (NBS). 4 The official statistics on 2017 growth are drawn from the Tanzania National Bureau of Statistics, Gross Domestic Report 2017 (March 2018). The outcome of the ongoing GDP rebasing can be expected to affect both the levels and growth rates of GDP. PAGE 9 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION changes in 2017,5 but growth was not difficulties in collecting taxes because many immediately impacted due to commitments large tax payers are unable to meet their to existing capital expenditure contracts. obligations on time. Finally, the private sector The investment impact will only be seen in is having difficulty in securing affordable post-2017 growth rates. In manufacturing, credit because the ratio of nonperforming growth was mainly due to higher production loans (NPLs) remains high (9.7 percent of food stuffs, cement, textiles, chemicals, in September 2018). Although growth in and pharmaceuticals. credit to the private sector has been edging up recently, by September 2018 it had only In 2017, despite notable expansion in reached 4.9 percent. The marginal increase transport, storage, and information mainly consisted of personal loans; lending activities, services grew by only 6.6 to building & construction and agriculture percent, down about 1 pp from 2016. declined. Transport and storage activities, however, grew by 17 percent, well up from about 12 Energy prices have increased, though percent in 2016, and information activities lower food prices have kept headline went up from 13 percent in 2016 to about inflation in check. The drop in food prices 15 percent. The general deceleration in the has more than offset the impact of easing growth of services was largely due to a monetary policy and the pick-up in energy contraction in public administration of 1.3 prices (Figure 4). Headline inflation, at 3.2 percent, driven by government measures to percent in October 2018, was kept down control public consumption. In financial and by low domestic food prices and a shilling insurance activities, growth of 2 percent that stayed relatively stable as global energy was far below the 11 percent recorded in prices increased. However, core inflation has 2016. The growth rate for real estate held risen slightly, from 1.7 percent in October steady at a low 2.4 percent. 2017 to 2.3 percent in October 2018, partly due to an easing of monetary policy. Food The expected growth performance for inflation moved down to 2.5 percent in 2018 and beyond is uncertain pending the October, down from 8.8 percent a year forthcoming rebased GDP series. However, earlier, since most parts of the country have recent BoT data confirm that last year’s adequate food supplies. decline in exports has continued into 2018, which is alarming because of the effect on prospects for longer-term growth. The Tanzania Revenue Authority (TRA) reports 5 The Finance Act 2017 increased the royalty rate from 4 to 6 percent and introduced a clearing fee of 1 percent (as a new requirement) on the value of all minerals exported outside Tanzania. The Written Laws (Miscellaneous Amendments) Act 2017 requires all Mining Licensees or Special Mining License holders to give the Government at least a 16 percent free carried interest in the capital of their companies, and the right to acquire up to 50 percent of the shares in a mining company. The Mining Act has also been amended by including provisions relating to local content, including use of goods which are produced in Tanzania or the services that are rendered by local companies or citizens. PAGE 10 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 4: Low Inflation, Much Higher Energy Prices, 2017–18, Percent Source: NBS. Box 1: Nascent Industrialization in Tanzania’s Agriculture Sector Agriculture in Tanzania is showing positive signs of agricultural transformation. For example, between 2001 and 2015 farm production grew rapidly at about 5 percent annually, driven mainly by a striking expansion of the area under cultivation (increasing from about 8.3 to about 13 million hectares). Labor productivity in agriculture is rising but crop yields are low and grow slowly; this remains a major challenge. However, agricultural input and factor markets are growing. Farmers are increasingly likely to hire agricultural labor, use mechanization services, sow improved seed varieties, specialize in one type of farm product, and produce for the market. The average share of crop production value that farm households sold rose from 49 to 55 percent. Land sales and the rental market have become more active, with signs that land is becoming increasingly consolidated. Along with these changes, people are diversifying out of farming into off-farm productive jobs, many of which are downstream in agricultural value chains. Medium-scale commercial farms are rising in prominence, with positive spillover effects for smaller-scale farmers. Since 2008, medium-scale farms increased their share of the country’s total farmland (from 23 percent in 2008 to 33 percent in 2014, the most recent available data); enlarged their share of the total value of agricultural production from 17 to 28 percent; and recorded an even larger increase in the share of the value of agricultural products marketed, from 19 to 31 percent). These farms employ labor, invest in their farm operations, attract input suppliers and commodity buyers into their local area, are mainly commercialized operations, inject needed cash into the local non-farm economy, and can be a source of tax revenue. In these ways, medium-scale farms exhibit positive spillover effects for their small- scale neighbors. Thus, when small-scale farms are near medium-scale farms, they are more likely to adopt improved seed and fertilizer and access agricultural extension and credit. Medium-scale farms are poised to feed Tanzania’s growing urban population as they rapidly claim an increasingly prominent place in the agricultural landscape. Further reforms can unlock additional gains. In agricultural policy, predictability and implementation are critical for generating private investments and growth. The occasional ad hoc export bans and export taxes on crops need to be minimized, and changes in food import tariffs need to be more predictable. These steps will help to minimize distortions in agriculture markets. More efforts should also be directed to creating a predictable policy environment for the private sector, especially in medium-sized farms and the value chains they serve. This could be done by (1) ensuring more certainty in policies; (2) reducing regulatory costs for businesses; (3) reducing the state’s direct role in marketing to create space for the private sector; (4) removing barriers to international trade (such as export bans and weak sanitary and phytosanitary compliance). The Government has moved to address some of agriculture’s challenges, such as reducing agricultural produce cess from 5 percent to 3 and abolishing over 100 “nuisance taxes” and fees on various commodities. PAGE 11 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Bank lending to the private sector 9.7 percent in September 2018, NPLs were remains sluggish down only slightly from 12.5 percent in September 2017. Growth in credit to the private sector remains low, with a recent slight increase Although the financial sector is generally in lending to households. Despite BoT sound, certain structural features measures to increase private sector liquidity generate serious stability challenges. and improve credit conditions, there Tanzania’s bank-dominated financial sector has been little growth in private sector is small, concentrated, and at a relatively credit; the BoT had reduced the statutory nascent stage of development. It thus has minimum reserve requirement ratio from vulnerabilities that could amplify the impact 10 to 8 percent of private sector deposits of external and domestic shocks, such as and the discount rate from 16 to 9 percent. tighter global financial conditions, lower The BoT has also injected liquidity into the growth in trading partners, prolongation of economy through reverse repo operations, domestic uncertainties, and delays in budget purchase of foreign currency from the execution and infrastructure spending. domestic market, and inward foreign Asset quality is a concern, reflected in a exchange swaps. As a result, credit to the high ratio of NPLs, which since 2014 almost private sector did edge up in recent months doubled from 6.4 to 11.5 percent through but was still just 4.9 percent for the 12 2017 (Figure 6). The deterioration is most months ending September 2018, though up obvious manufacturing, trade, tourism, from 0.8 percent in September 2017. Mainly and transport and communications. The responsible for the marginal increase were current vulnerabilities in the financial personal loans and manufacturing, even as sector underscore the importance of strong lending to productive sectors like agriculture, financial system oversight and regulation to trade and construction slipped (Figure 5). At preserve financial stability. Figure 5: Growth in Private Sector Credit, Figure 6: NPL Ratios by Sector, 2014Q4: 2017-18, Percent 2017Q4, Percent Source: BoT, Source: Tanzania Financial System Stability Assessment (World Bank and IMF 2018). PAGE 12 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region On the development side, the top to 3.8 percent a year later, largely because priorities are increasing access to formal of higher imports (Figure 7). Detailed financial services and providing long- trade data available for the 12 months term financing for a larger proportion of ending September 2018 show that imports businesses, particularly micro-, small- increased in value by about 10 percent and medium-sized enterprises (MSMEs). while exports fell by about one percent Measures that could help increase access (Figure 8). The rise in imports of goods is and lower costs include addressing financial largely because of a rise in the oil import infrastructure gaps, bringing providers bill resulting from higher global oil prices, in of nonbank credit to smaller firms under addition to an increase in importation costs the regulatory and supervisory umbrella, of construction and transport equipment beefing up consumer protection, and raising as implementation of capital investment financial literacy across the population. projects gathered pace. Oil imports, which Pension fund investment allocations should account for about a quarter of the import be revisited with a view to having these bill, increased by about 8 percent. The entities contribute centrally to meeting decline in the value of nontraditional goods the long-term financing needs of the exports, including manufacturing, more private sector. Simultaneously, measures to than offset the 33 percent increase in the increase the supply of liquid securities could value of traditional goods exported. be identified. FDI inflows have fallen off in recent years, Increasing current account deficit reflects resulting in less private investment in the stagnant exports and import surge economy. In 2017, FDI was about 2 percent Surging imports and poor export of GDP, which is less than half of the level performance have recently pushed up recorded in 2014 of about 5 percent. During the current account deficit (CAD). The the same period, official loans fell slightly CAD increased from 2.2 percent of GDP in from 1.8 percent to 1.7 percent, and other the 12 months ending in September 2017 capital flows fell from 2 percent to 0.3 Figure 7: Current Account Deficit, Figure 8: Imports and Exports, 2015–18, 2015–18, Percent of GDP Percent Source: BoT. Source: BoT. PAGE 13 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION percent of GDP. The current slight decline Indian rupee, and Chinese yuan (Figure in disbursements of long-term loans is 9). The stability of the shilling has been partly due to delays in the government’s supported by sustained prudent monetary preparation of projects and its cautious policies, especially active BoT participation approach to borrowing in the foreign market in the Interbank Foreign Exchange Market because of the high costs. Despite the to manage liquidity and smooth out major decline, however, FDI and the disbursement exchange rate fluctuations. of loans have been more than enough to finance the current account deficit. The fiscal deficit remains low, but budget execution problems persist Gross official reserves have gone up The low fiscal deficits achieved in recent significantly, reaching US$5.4 billion years does not take arrears into account in September 2018. Disbursement of and mask challenges in budget credibility external nonconcessional loans and BoT and financing. For the past two fiscal purchases of foreign currency from the years, the fiscal deficit has averaged below domestic market to inject liquidity into the 2 percent of GDP, thanks to a combination financial system have helped to build up the of control of recurrent expenditures, reserves. The current value is equivalent to accumulation of arrears, and postponement 5.3 months of import cover (excluding FDI- of some capital projects. Since 2016/17, related imports). recurrent expenditures have been reduced Despite a slight depreciation in recent to an average of 11 percent of GDP, down months, the Tanzanian shilling has been from about 14 percent in 2015/16; in relatively steady against the U.S. dollar December 2017 the unverified value of and currencies of major trading partners. expenditure arrears was 3 percent of GDP The rising import bill heightened demand (Figure 10). However, high government for the dollar, causing the Tanzanian shilling arrears imply ‘financing’ not reported in to depreciate, but since April the shilling the official deficit, which in turn suggests has slightly appreciated against the euro, significant underestimation. Moreover, Figure 9: Stability of the Tanzanian Shilling, 2017–18 Source: OANDA Corporation. PAGE 14 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 10: Domestic Payment Arrears, 2014–18, Percent of GDP Source: MoFP, TANESCO, and World Bank Figure 11: Execution of the Development Budget, 2017/18, Percent of GDP Source: MoFP. budget credibility is questionable given earlier, can be attributed to both difficulties that one-third of the 2017/18 development of large tax payers to meet their obligations budget was not executed (Figure 11). and the decline in imports. All categories of tax collection underperformed. The Domestic revenue and external financing decline in external financing is due to shortfalls have remained a major tightening global financial conditions, higher challenge in Tanzania. For the past three commercial borrowing costs, and delays in years, collection of domestic revenue has project preparation. Such systemic issues fallen below ambitious targets. Domestic may continue to affect budget financing revenue collected constituted 14.8 percent throughout the near term. of GDP in 2017/18, missing the target by 1.7 pp (Figure 12), and external financing (grants and loans) was 2.2 percent of GDP against a target of 2.4 percent (Figure 13). The shortfall in domestic revenue, as noted PAGE 15 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Figure 12: Domestic Revenue, 2017/18, Percent of GDP Source: MoFP. Note: LGA = Local government authorities. Figure 13: Aid and Loans, 2017/18, Percent of GDP Source: MoFP. The government has moved to clear a more realistic fiscal deficit after grants domestic payment arrears but progress of 3.2 percent of GDP. The goal is much on prevention has been slow. It has lower than the ambitious 4.5 percent in the recently adopted a strategy to clear verified 2017/18 budget but slightly higher than arrears by, e.g., allocating funds in the the actual deficit in 2017/18. The budget annual budget for direct payment by the continues to support the ambitious Second Five Year Development Plan's (FYDP-II) Treasury.6 In 2017/18, the government paid public investment orientation, with the down TZS 1.2 trillion of verified arrears and development budget projected to consume has allocated a similar amount for 2018/19. 45 percent of public spending (equivalent Clearance, and importantly prevention, is to 9.1 percent of GDP). Recurrent spending urgently needed to restore the credibility of has been allocated about 11 percent of the government and improve supplier cash GDP, higher by about 0.3 percent than the flows. previous allocation. The domestic revenue target of 15.8 percent of GDP is more realistic To help improve budget credibility, in than last year’s 16.6 percent but will require 2018/19 the authorities have also targeted significantly higher VAT collections than in 6 Treasury Circular No. 1 of 2018/19 on Strategy to Control Government Arrears. PAGE 16 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 2017/18. The government is targeting more Managing the cost and composition of nonconcessional loans, both foreign and borrowing is a growing concern. The domestic, to finance the deficit; they are Tanzanian authorities currently plan to rely expected to cover almost three-quarters of on commercial loans, especially from foreign total deficit financing. markets, to finance major capital projects. Public debt is currently manageable, but Such loans generally have shorter maturities its cost and composition are growing and higher costs. Currency and maturity concerns mismatches could result if completion of the Public debt is currently sustainable, but major capital projects is delayed. Delays may the liquidity risks presented by rising also cause repayment schedules to precede external borrowing must be carefully expected benefits, especially if concessional managed. The World Bank’s most recent financing is not fully leveraged. And only Debt Sustainability Assessment (December a few projects can be expected to directly 2017) confirmed that current levels are generate the foreign currency needed to manageable, but public debt is on the service external loans. rise. External public debt grew by 7.7 percent in FY2017/18, and domestic debt The business environment remains grew by 10.5 percent. Servicing this debt challenging currently consumes the equivalent of 45 percent of domestic revenue collections Tanzania’s business environment (Figure 14). Recent higher domestic and continues to underperform its EAC peers. nonconcessional external borrowing imply In the World Bank 2019 Doing Business higher interest costs and shorter maturities, Report (October 2018), Tanzania ranks 144th which heighten liquidity pressures. With the planned scale-up in public investment to out of 190 economies on the ease of doing address infrastructure gaps, as is necessary business, lower than the previous report to build up output growth and reduce (Doing Business 2018) where Tanzania poverty, new borrowing will need to be ranked 137th (Figure 15). In 2017/18, well-managed to meet medium-term debt Tanzania implemented one reform to make strategy objectives. starting a business easier by launching Figure 14: Public Debt, 2015–18, Percent Source: MoFP and World Bank. PAGE 17 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Figure 15: Ease of Doing Business: Tanzania and East Figure 16: Distances to the Frontiers, Rank African Peers, Rank and Score Source: Doing Business 2019: Training for Reform, World Bank, Source: Doing Business 2019: Training for Reform, World Bank, October 2018. October 2018. online company registration. Therefore, in cumbersome procedures, and complicated the absolute metric, (Ease of Doing Business documentation requirements all burden score), Tanzania’s performance improved to cross-border trade. The lack of clarity 53.63, compared to 53.29 (Doing Business about the tax laws and the administrative 2018 as adjusted).7 The drop in the Doing burden on businesses in complying with Business ranking is mostly due to the fact tax obligations also contribute to the that other economies have improved their country’s poor ranking in the paying taxes scores more by undertaking more reforms area. Reportedly, tax collectors and other than Tanzania. For example, seven reforms government fiscal agents have been overly were undertaken by Rwanda, six reforms by aggressive; for example, it has been reported that newly registered companies are being Djibouti and Togo, and five reforms by Cote required to pay taxes on estimated revenues d’Ivoire, Gabon, Guinea, Kenya, Mauritius even before commencing operations. and Sudan. The decline in FDI inflows bodes poorly Tanzania continues to rank low on trading for future growth. In 2017, FDI declined to across borders, starting a business, and 2.3 percent of GDP, down from 3.9 percent paying taxes. While Tanzania has been in 2016. Although the impact of the recent performing relatively well in the areas of decline in FDI inflows has not yet become getting credit and enforcing contracts, apparent in the GDP figures, it will be a its performance is significantly weak in determinant of medium-term growth. The the areas of trading across borders, as worsening FDI performance is also reflected well as starting a business and paying in the FDI performance index, which provides taxes (Figure 16). The financial costs, a measure of Tanzania’s share of global FDI 7 Some data revisions were required to Doing Business 2018 (both ranking and score) for Tanzania due to the issues that existed during 2016/17 but were only identified at the time of the Doing Business 2019 assessment. These include a more cumbersome process for the VAT refund claim submission and an increase in cost/time to start a business (cost to obtain a business license, time for tax registration/TIN certificate). This has resulted in ex-post downward revisions in the rank (from 137 to 139) and in the score (from 54.04 to 53.29) for Doing Business 2018. PAGE 18 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 17: FDI Performance Index Source: UNCTAD data. relative to its share in global GDP (Figure Poverty reduction is vulnerable to a 17). Investors cite concerns around hiring surging population and lack of inclusive workers, reduced profits due to tax policies, growth increased local content requirements, regulatory instability and mandatory IPOs Poverty began to decline persistently over in mining and telecom industries among the past decade but did not decline as fast their key concerns (Bureau of Economic as the population grew; the result was an and Business Affairs, US State Department, increase in the absolute number of poor. 2018). The national poverty rate dropped from 34.4 percent in 2007 to 28.2 percent in 2012 and Delays in processing VAT refunds and then to an estimated 26.8 percent in 2016 payment arrears to contractors and other (the estimate is based on HBS 2012 data as suppliers continue to undermine private imputed in the Demographic Health Survey sector growth and investments. The [DHS] of 2016, using the small area poverty delays in VAT refunds are partly attributable mapping technique).8 Thus poverty fell by to the lengthy verification process—a about 3.6 percent annually for 2007–12, consequence of the anticorruption drive. when the population went up by 2.8 percent, However, when VAT refunds and payments and 1.2 percent annually for 2012–16, with to contractors and suppliers are delayed, a population rise of 3.3 percent. While the businesses suffer from cash flow shortages reduction in poverty slightly outpaced the and have less incentive to be compliant. Moreover, delays in the payment of VAT population increase in 2007–12, reducing refunds and arrears to contractors and other the number of poor by 1 million people, the suppliers have reduced the growth of credit opposite was true thereafter, pushing the to private sector. Banks have complained number of poor back up to its 2007 level that they cannot take on the additional (Figure 18). This reinforces the point made risk of new lending due to the high level of in Part Two of this report, that if population NPLs and to a lack of bankable high-return projects. 8 The imputation approach was discussed with and validated by the NBS. PAGE 19 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION growth and fertility rates are reduced, country averages and with expectations. poverty could be reduced much more rapidly. Tanzania seems also to perform well in Despite its improved poverty rate, Tanzania terms of immunization. Tanzania spends ranks low compared with countries of similar more on public health than the average for income. Its international poverty rate ($1.9 a its income peers and one result has been a day in 2011 PPP) is 2 pp higher than the low- lower than average incidence of malaria, but income-country average and 7 pp higher deaths from communicable diseases and than the average for SSA (Figure 19). maternal, prenatal, and nutrition conditions are higher than in peer countries. Tanzania’s human development outcomes are below expectations. Given its GDP Mobility into and out of poverty is high, per capita, its achievements in poverty and alternately raising hopes and concerns. living conditions fall below what could be In the past five years, about 16 percent expected. Tanzania underperforms on most of Tanzanians escaped poverty, but 13 dimensions, ranking in the bottom half of percent fell into it. Close to 12 percent are low- and lower-middle-income countries. Its trapped in chronic poverty with only a 40 poverty level is about 24 pp higher than might percent chance of escaping. The chronically be expected, as are access to basic services poor mainly live in rural areas and work in (e.g., electricity, water, and sanitation) and agriculture, which continues to record low enrollment in tertiary education. Completion growth and productivity. They also have of primary education completion, maternal large families and more dependents, less mortality, and chronic malnutrition education, and few if any productive assets. (stunting) also fall far short of averages for People engaged in nonfarm activities have countries of similar income, although acute been better able to improve their standard malnutrition (wasting), child mortality, and of living. life expectancy at birth are on par with peer Figure 18: Poverty Rate and Absolute Figure 19: International Poverty Headcount Ratio at Number of Poor, 2007–16 $1.90 a Day by GDP per Capita Sources: HBS 2007, 2012, DHS 2016 and WDI 2018, PAGE 20 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 20: Indicators for Human Development and Living Conditions Sources: WDI 2018, Note: Figure 20 compares Tanzania’s achievement to expected performance on each human development outcome given its GDP per capita. Expected outcomes are estimated using panel data generalized by the estimating equation and assuming a Gamma distribution of dependent variables. Data include a sample of 110 non-high-income countries for the period 1998-2017. The figure also compares Tanzania’s rank to the sample of 70 low-income and lower-middle-income countries and shows how the country ranks on each dimension. Ranking ranges from 1 (best) to 70 (worst). All outcomes except life expectancy at birth and mortality rates are in percentages. PAGE 21 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION 1.2 Macroeconomic Outlook and economy has largely been driven by the Risks public sector, since private and business conditions have been weak. The status The growth outlook is uncertain quo growth model raises concerns about The expected growth performance for long-term sustainability because it may fail 2018 and beyond is uncertain pending to attract adequate private investment. To the forthcoming rebased GDP series. avoid this risk, the government should move A favorable growth outlook will depend promptly to execute the reforms identified on positive performance from agriculture in the Blueprint for Regulatory Streamlining and gradual improvement in the business and the Arrears Management Strategy environment and budget execution, that were adopted in May 2018. The especially for development projects. The Government could execute such quick-win macroeconomic environment is expected reforms as accelerating clearance of verified to be stable, with favorable domestic food payment arrears, speeding up delinquent conditions helping keep inflation low. The VAT refunds, reducing the cost of regulatory CAD is projected to gradually increase as compliance, making tax administration capital investments progress, particularly more predictable, and ensuring that tax the investments in transport and energy collectors and fiscal agents collect taxes in infrastructure, which require significant a manner that does not constrain growth imports. Higher oil prices in future could or the continuity of businesses and private also put upward pressure on the current sector operations. account deficit, depreciation and inflation. Delays in execution of infrastructure Tanzania is expected to achieve modest projects and high domestic payment progress in reducing poverty in the arrears continue to cloud the growth medium term. It is projected that the outlook. The government has embarked incidence of poverty will fall by only about 2 on a major public investment program led pp between 2018 and 2020 and the number by strategic capital investment projects of poor will remain relatively constant as in transport and energy infrastructure. population growth continues its high pace. These projects are designed to support and The economic prospects for the poor—who accelerate growth over the medium to long mainly work in low-productivity farming term, but the development budget, which or urban informal service sectors—are limited; is directed to supporting these projects, growth continues to be concentrated in capital- has been under-executed by more than 30 intensive sectors and in large urban areas. percent, which suggests that the projects will not be completed on schedule. In Key downside risks remain addition, high arrears to contractors have Delays in reforms to stimulate the private reduced the credibility of the government sector present significant risks to the and its contractors and suppliers and growth outlook. In recent years, the jeopardized the cash flow plans of the latter. PAGE 22 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Fiscal space may narrow due to pressures transformation. FYDP II envisions the state for spending on social services for a playing a role in economic governance, rapidly growing population, the planned particularly in enabling infrastructure scale-up in infrastructure projects, investments to improve connectivity and and increasing debt service. Tanzania is market access. These reforms are vital to spending about 80 percent of its domestic attract more private investment, heighten revenue on delivery of education and health economic growth, and create more and on debt service. Wages and debt productive jobs. While Tanzania has the service each consume about 6 percent of potential to achieve higher growth, though GDP. Increased borrowing to finance major perhaps over a longer timeframe, creating capital projects will worsen debt service a more favorable investment climate can needs, especially if current plans to rely drive expansion of the private sector and heavily on nonconcessional creditors are increase competitiveness. This will lead to followed. It would not be surprising to see higher fiscal yields, export earnings, and recurrent expenditures consume more than job creation. The challenges are generally domestic revenue brings in at a time when surmountable and within government control. external grants are also falling. If severe, Continued macro stability is a necessary this situation may cause delayed payment ingredient for strong growth. Government of wages and external debt service and should continue to implement measures to exacerbate the problem of arrears. ensure macroeconomic stability. The track Among external risks are exchange rate record has been positive, but continued volatility, higher global energy prices, vigilance is needed to maintain stability and tighter global financing conditions, in the short and medium terms. Prudent especially considering that the government monetary and fiscal policies will form the expects to finance major capital projects foundation for any effort to boost growth with nonconcessional loans. Rising global and to create productive jobs. Short term energy prices could also increase the import actions related to the money supply, bill and widen the CAD at the time when FDI policy rates and government borrowing is eroding. in the domestic market should support a conducive environment for the private What will be required for Tanzania to sector. Maintaining exchange rate flexibility realize its growth potential? will help manage external shocks, and If Tanzania is to become a middle-income foreign investment will remain critical to country by 2025, its goal, the government managing Tanzania’s external balance. must ensure reform efforts for a stronger Over the medium term, it is important to private sector and more effective coordinate monetary and fiscal policies to fiscal policy implementation facilitate ensure a low and stable inflation environment achievement of that goal. Tanzania’s FYDP II and fostering investment, while containing emphasizes industrialization of the economy financial risks. and the private sector driving economic PAGE 23 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Government needs to urgently implement opportunities for Tanzanian firms to develop measures to foster greater private sector such value chains, its activation has been participation in the economy. Recent slow—at least partly due to the continued difficulties and constraints for a flourishing prevalence of nontariff barriers (NTBs), private sector have been noted. There are as discussed in the World Bank’s recent a number of specific actions government Diagnostic Trade Integration Study 2017/18. could undertake to address these issues. The lack of regional quality standards also constrains expansion of regional cross- Short term – improve liquidity in the econ- border trade. Additional measures to omy ● Prioritize the payment of verified do- reduce or eliminate NTBs and to establish mestic arrears to private sector con- robust quality standards, both national tractors and suppliers. and regional, could help support trade and ● Speed up the release of VAT refunds to growth in Tanzania. improve liquidity in the economy. ● Ensure tax collection efforts do not Government should also intensify efforts unfairly burden businesses. to improve fiscal policy design and Medium term - continue reforms to address implementation, which is a key lever for structural constraints on private investment reaching the country’s development goals. ● Reduce the high cost of regulatory The Five-Year Development Plan II rightly compliance through full implementa- aims to facilitate an ambitious increase in tion of the recently endorsed Blueprint investment in human and physical capital. for Regulatory Streamlining. However, the national budget has been ● Address deficiencies in infrastructure significantly under-executed over the services and skills. past few years, delaying important public Significant benefits to the private sector investments and contributing to softened could also be derived by improving the growth. Short and medium terms actions competitiveness of agribusiness and to improve fiscal policy implementation leveraging regional markets. Recent include the following. analytics indicate that there are significant Short term – improve budget credibility opportunities for Tanzania’s agribusinesses ● Prepare and implement credible bor- to become more competitive through rowing plans. greater involvement in value chains, ● Tighten expenditure controls to stem including regional cross-border value new payment arrears. chains. This would enable them to better ● Introduce risk-based VAT auditing. market and source their inputs, which Medium term – deliver a balance of invest- could do much to facilitate progress on ments in human capital and infrastructure Tanzania’s industrialization and job creation services agenda. While the East African Community ● Intensify mobilization of domestic Common Market Protocol creates significant revenue as a key financing source for investment. PAGE 24 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region ● Effective public investment manage- development projects, including in the ment to deliver high return projects. energy, transport, education and health ● Balance of investment in infrastructure sectors. However, these projects will need and human capital. to be appropriately prioritized to ensure that they are fully funded and completed Tanzania needs to accelerate investments on time to drive future growth. Part Two of to address gaps in human capital this economic update sheds light a critical (especially for girls, as highlighted in the aspect of human capital development - the next section) and public infrastructure. importance of investing in girl’s education in Tanzania has huge gaps in human skills driving economic growth in future. and infrastructure that have constrained industrial development and growth, and Part Two of this report shows a key as explained in the next section girls are component of the long term economic particularly at a disadvantage in reaching planning should be to fully leverage their potential. Tanzania needs to increase the potential of women in the economy. the number of engineers, technicians This potential is severely curtailed by and doctors. Moreover, improved skills in child marriage and early childbearing. education, languages, IT, communication, The economic benefit of ending child technical and work ethics will require marriage in terms of welfare gains from massive improvements to education lower population growth is large. By 2030 and training systems to support future it could reach US$5.0 billion in purchasing growth through increased industrialization power parity. This is due to many factors and services. Figure 21 notes the major including reduced child marriage increases constraints that have been reported by high expected earnings throughout a woman’s and low skills firm in Tanzania. To close the life. In addition, over time there would also gaps in human skills and infrastructure in be budget savings due to reduced demand the country, the Government has increased for public services as population growth is public expenditures on capital and human reduced. Figure 21: Lack of Skills as a Constraint on Tanzanian Firms, Percent Source: World Bank, Tanzania Enterprise Skills Survey, 2015. PAGE 25 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION PAGE 26 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 2 The Power of Investing in Girls PAGE 27 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION The Power of Investing in Girls9 There has been major progress in Tanzania in improving education for girls over the last two decades, and some progress in reducing the prevalence of child marriage. However, rates of secondary school completion for girls remain low, and the shares of girls marrying before the age of 1810 or having a child before that age11 remain high. The progress made, although substantial, has been too slow for Tanzania to achieve the Sustainable Development Goals. Further progress on child marriage, early childbearing, and the low educational attainment of girls can yield large positive impacts on other development outcomes and deliver high economic benefits. Globally, the World Development Report on Gender (World Bank 2012) and other studies (e.g., World Bank 2001) have previously called for investing in adolescent girls. In Tanzania, the Ministry of Health, Community Development, Gender, Elderly, and Children (Ministry 2017) conducted an in-depth study of the drivers and consequences of child marriage which outlines in its conclusions priority actions to end child marriage. Other recent studies on Tanzania have dealt with gender equity in education (World Bank 2018a) and demographic challenges and opportunities (Schneidman et al. 2018). This chapter highlights the gains that can be achieved from investing in improved oppor- tunities for girls, by documenting the negative effects and economic costs of failing to do more. Acknowledging these costs, a range of important measures have already been taken by the government to reduce child marriage and early childbearing and improve education for girls. Tanzania has proven in the past that it can succeed in improving life for girls and women and change social norms, as demonstrated by the decline in female genital mutilation as just one example. Expanding investments in girls further is one of the best investments Tanzania could make to improve development outcomes. It is hoped that the analysis in this chapter will help in strengthening the case for invest- ments in girls. This analysis is based in part on global World Bank work on those issues.12 9 This section relies in part on results from World Bank global studies on (1) the economic impacts of child marriage (jointly with the International Center for Research on Women); (2) the cost of not educating girls; and (3) the cost of gender inequality. The work was supported by the Children’s Investment Fund Foundation and the Global Partnership for Education. 10 Defined as living in a formal or informal union before the age of 18. 11 Defined as having a first child before the age of 18. 12 On the economic impacts of child marriage, see Wodon et al. (2017a); on the cost in earnings of gender inequality, see Wodon and de la Brière (2018). Finally, on the cost of failing to provide educational opportunities for girls, see Wodon et al. (2018). More details on methodology and findings are available upon request. PAGE 28 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 2.1 Child marriage is still prevalent, and have children, thus compromising their and girls’ educational attainment is opportunities to complete upper secondary on average low school. This may also have a range of other negative impacts, because many are In many low-income countries, despite marrying or having children before they are substantial progress over the past two physically and emotionally ready. Giving decades, girls have on average less girls more educational opportunities and secondary education than boys. In reducing or eliminating child marriage and Tanzania, girls tend to do better than boys early childbearing are essential to ensure in terms of gross enrollment and completion that girls have agency not only as future rates at the primary and lower secondary wives and mothers but in a vast range education levels. But they do less well than of other roles. Making such changes are boys at the upper secondary level. Often, one essential for any country working to reach of the reasons for this gap is that before they its full development potential. are 18, a significant proportion of girls marry Table 1: Education Completion Rates, Child Marriage, and Early Childbearing by Age Group, Percent  Primary Completed   15-18 19-22 23-30 31-40 41-49   East & Southern   64.4 65.2 55.9 48.2 42.9   Kenya    87.9 90.5 84.8 81.5 75.6   Mozambique   54.7 55.5 40.7 22.8 15.2   Rwanda   55.0 58.7 39.1 40.3 40.2   Tanzania   82.2 83.5 74.3 70.4 71.1   Uganda 58.7 73.8 68.4 46.1 38.0 Zambia   79.8 82.2 68.4 61.4 58.9   Lower Secondary Completed Upper Secondary Completed   (standardized at primary + 3 years) (standardized at primary + 6 years)   18-20 21-24 25-30 31-40 41-49 21-24 25-30 31-40 41-49 East & Southern 28.8 32.7 25.6 19.5 15.8 18.7 15.6 11.4 8.6 Kenya 60.2 53.7 43.3 36.7 33.3 39.1 34.0 28.2 23.3 Mozambique 22.7 25.8 16.8 10.7 5.8 10.1 7.2 5.0 2.6 Rwanda 26.6 27.7 16.9 9.4 5.9 15.1 12.9 6.6 3.4 Tanzania 34.2 32.0 20.9 11.9 9.9 26.8 17.6 9.7 7.6 Uganda 24.7 34.8 30.1 17.8 12.2 14.7 15.4 9.8 6.2 Zambia 45.2 47.9 35.3 29.8 22.4 22.6 18.9 13.0 8.3   Child Marriage Early Childbearing     18-22 23-30 31-40 41-49 18-22 23-30 31-40 41-49 East & Southern 28.1 32.3 33.2 35.7 20.4 24.2 24.2 24.1 Kenya 20.5 27.7 26.8 31.2 22.1 25.0 22.8 27.7 Mozambique 51.5 46.5 39.3 42.0 39.0 39.6 31.7 33.8 Rwanda 5.6 8.8 14.6 18.1 5.9 6.2 6.4 8.3 Tanzania 31.8 32.4 35.3 40.5 22.4 24.1 26.0 28.2 Uganda 32.5 36.6 45.5 46.5 26.0 31.8 37.3 35.6 Zambia 28.5 39.5 44.4 51.5 29.5 33.1 33.8 37.6 Source: DHS data. Note: The regional average is not weighted by country populations. PAGE 29 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Despite progress over the last two are based on data from the most recent decades, Tanzania remains confronted Demographic and Health Surveys for the by massive challenges related to child various countries. Therefore, in the case marriage, early childbearing, and low of educational attainment, the estimates educational attainment for girls. Table 1 in Table 1 do not correspond exactly to illustrates trends in educational attainment administrative estimates from the Ministry and child marriage for girls in Tanzania, of Education, but trends over time should Mozambique, and Zambia and regionally be broadly consistent. Regional data are in East and Southern Africa. The estimates based on estimates for 15 countries, with Box 2: Framework for Analyzing Impacts and Costs or Benefits A simple framework guides the analysis. As shown in Figure 22, it is recognized that there is a close relationship between girls’ educational attainment, child marriage, and early childbearing. Ensuring that girls remain in school is one of the best ways to delay marriage and childbearing, with beneficial effects on Tanzania’s development indicators. By contrast, marrying early or becoming pregnant leads girls to drop out of school. Furthermore, child marriage is one of the main drivers of early childbearing. These relationships are acknowledged in the top part of Figure 22. Figure 22. Conceptual Framework In turn, both girls’ educational attainment and child marriage and early childbearing matter for other development outcomes. Four main outcomes are considered: (1) fertility; (2) health, including nutrition and the risk of exposure to intimate partner violence; (3) work, including labor force participation and earnings; and (4) agency, including decision-making and other impacts. While some impacts are estimated for the girls marrying or dropping out of school early, others are estimated for their children. The chapter then estimates selected economic costs or benefits associated with the impacts of girls’ education and child marriage or early childbearing. Examples of benefits from offering girls better educational opportunities, ending child marriage, and preventing early childbearing include (i) increased growth in GDP per capita as a result of reduced population growth; (2) higher labor earnings for women in adulthood; (3) increased labor earnings for children in adulthood due to reductions in stunting; (4) valuation of the benefits associated with children’s lives saved; and (5) reduced budget needs as the rate of population growth falls. Though far from exhaustive, this list identifies those with the largest expected economic benefits. Finally, the chapter recognizes that the benefits derived from providing girls with improved educational opportunities and eliminating child marriage at the individual and household levels have broader implications nationally and even globally. By raising standards of living (through higher GDP per capita. lower population growth, and higher earnings for women), educating girls and ending child marriage will reduce both poverty and inequality. PAGE 30 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region all countries weighted equally, which The standardized primary completion rates does not account for the differences in have been historically high in Tanzania, but population. In addition to Tanzania, the they increased by 11.1 percentage points regional estimates are based on data for over the last three decades. Gains for lower Burundi, Comoros, Ethiopia, Kenya, Lesotho, secondary were at 18 points, and for upper Malawi, Mozambique, Namibia, Rwanda, secondary at 19 points. However, still only Somalia, South Sudan, Uganda, Zambia, slightly more than one in four girls complete and Zimbabwe. The estimates for Tanzania secondary education. are standardized based on DHS surveys so that they can be applied to all countries Numerous factors suppress the equally. They may differ slightly from educational attainment of girls. Though estimates based on the 7-4-2 structure the focus here is on the interactions between of Tanzania’s education system in which, educational attainment, child marriage, after one year of preprimary schooling, and early childbearing, inadequate learning basic education consists of seven years of while in school also plays a role. For example, primary and four years of lower secondary. more boys than girls transition from primary After that an additional two years of upper to lower secondary and from lower to upper secondary education can be completed.. secondary. This is in part because of higher For comparisons across countries, the learning as measured by standardized tests standardized estimates are used; the (Box 3). But it is also related to social norms: differences from 7-4-2 estimates tend to be for some girls, completion of primary school too small and thus do not affect the findings is seen as a signal that they may be ready for much. marriage. The following quote from a recent report by the Ministry of Health, Community Development, Gender, Elderly, and Children: Primary completion rates, historically high in Tanzania, in the last three “But this happens many times when a girl decades have gone up by 11 percentage finishes primary schooling, and to us, we points. For upper secondary completion, see it is a normal thing because she has gains were 9 points—above the average already finished her primary schooling. This gain in East and Southern Africa. happens and we have not viewed this as a problem because she has finished primary Though Tanzania’s secondary completion school so she can leave to get married” rate has risen substantially over time, (Ministry 2017). it remains low (Table 1). Educational attainment is determined by three measures: the proportions of girls of various ages who complete primary, lower secondary, and upper secondary education. The age groups are defined to allow girls a few more years beyond the normal age to complete a level, to account for possible late entry or repetition. PAGE 31 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Box 3: Gaps in Learning and the Gender Gap Girls have lower pass rates than boys on the Primary School Leaving Examination (PSLE): in 2016, 74 percent of boys passed but only 68 percent of girls. Entry into lower secondary depends on national exam scores, with priority given to the best-performing candidates. Since girls tend to perform less well on the PSLE, fewer are eligible to go on to lower secondary. Gender gaps in primary learning outcomes are also larger in Tanzania than elsewhere in the region. Of 12 countries participating in the Southern Africa Consortium for Monitoring Educational Quality (SACMEQ) assessment for primary schools in 2007 (the last year that Tanzania participated), mainland Tanzania had the largest gender gaps in learning achievement in mathematics and reading. The same pattern applies to the lower secondary national exam (CSSE) in which the proportion of girls passing and the quality of their scores is lower than boys in all subjects except Kiswahili, which again lessens their eligibility for a place in upper secondary school. Among factors undermining the performance of girls in school are (1) more household demands on the time of girls than boys, leaving them with less time for schoolwork (see Blackden and Wodon 2006 on time use); (2) poor-quality conditions for managing menstrual hygiene and lack of school water and sanitation facilities for girls, leading them to miss more school days (only 44 percent of secondary schools in Tanzania have adequate numbers of toilets for girls and 54 percent have no regular water supply throughout the year); (3) lower teacher expectations of girls, reducing the attention they receive from teachers; and (4) a higher propensity for teachers to assign girls to chores like fetching water and cleaning classrooms, which reinforces gender stereotypes as well as taking time away from learning (UNICEF 2003). Less frequent attendance and missed instruction can substantially affect the learning achievement and exam performance of girls (see, for example, Sommer 2010 and Sperling and Winthrop 2016). While Tanzania has reduced both child On average, in 15 East and Southern marriage and early childbearing, and African countries, over 25 years the increased educational attainment for girls, prevalence of child marriage decreased at current rates of progress the country by 7.6 points. Progress in Tanzania was will not achieve the SDGs. The trends slightly higher, but the prevalence of in education completion rates and child child marriage there still exceeds the marriage are illustrated in Figures 23 to 25.13 regional average. For education, completion rates for women aged 41–-49 are shown on the horizontal Among comparator countries, over 25 axis, and for the youngest age group on the years the prevalence of child marriage vertical axis. Similarly, Figure 26 presents decreased by an average of 7.6 percentage the results for child marriage, with women points, while in Tanzania the reduction aged 41-49 shown on the horizontal axis, was at 8.7 points. In other words, for the and women in the youngest age group on region the prevalence of child marriage the vertical axis. In the case of educational among women aged 18–22 is 7.6 points attainment, the fact that all countries lower than for women aged 41–49. For are above the diagonal indicates positive Tanzania, the reduction was slightly larger progress in each case, with the vertical at 8.7points, but child marriage is still above distance from the diagonal representing the regional average. For early childbearing, progress in percentage points. For child the reduction over time for Tanzania at 5.9 marriage, positive progress is indicated points is again larger than for the region, but when the countries are below the diagonal. the prevalence rate is also higher than the average for East and Southern Africa. 13 For Somalia, two estimates are included in the Figures due to the implementation of two surveys for different parts of the country. PAGE 32 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Figure 23. Primary School Completion, Girls by Figure 24. Lower Secondary Completion, Girls by Age, Percent Age, Percent East and Southern African Countries East and Southern African Countries Figure 25: Upper Secondary Completion, Girls Figure 26: Prevalence of Child Marriage by Age, by Age, Eastern and Southern African Counties, Eastern and Southern African Countries, Percent Percent Box 4: Changing Social Norms: The Case of Female Genital Mutilation In 2014, the World Bank released a study on Voice and Agency: Empowering Women and Girls for Shared Prosperity (Klugman et al, 2014). It notes that constraints faced by women and girls stem from their limited endowments and economic opportunities. Social norms about gender roles are also limiting. But these norms can change with appropriate programs and policies. One example is female genital mutilation (FGM), a practice transmitted across generations (Onagoruwa and Wodon 2018b). In Tanzania, as noted in a study by the Ministry of Health, Community Development, Gender, Elderly, and Children Ministry (2017), FGM is practiced among the Tindiga and Hadzabe of Manyara, the Gogo and Sandawe of Dodoma, and Kuria, and the Simbiti, Rieny, Ugu, Bakabwa, Kine, Nata, Zanaki, Kiroba and Tatiros of Mara. FGM marks girls’ transition into womanhood; the rites are meant in part to ensure their marriageability. Quotes from the Ministry report are illustrative: “If you have been circumcised, you are ready for marriage as long as you are not in school. Otherwise you have already grown up.” “There are times when you may get a girl who is 15 years of age, but she has a big body structure, which may make one think that she is already a grown-up, even though she is not yet of the right age.” “When a girl is ready for initiation, she is ready for marriage. Things are not as they were before, when girls who were going into initiation were those who were adults. But these days they bring even young girls. And if they are not in school, it’s so hard to wait for them to reach the age of 18.” The good news is that the prevalence of the practice is rapidly decreasing. In 1996, 18 percent of women aged 15–49 in Tanzania had been circumcised. By 2015–16, the proportion was down to about 10 percent. The decline is much more rapid for young girls than for the overall sample of women in the survey who underwent FGM some time back. Today, less than 1 percent of girls under age 15 undergo FGM (but some girls older than 15 may still be circumcised, so the prevalence is higher). PAGE 33 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION 2.2 Relationship of child marriage, educational attainment is also illustrated early childbearing, and girls’ by a simple typology of adolescent girls education by marriage and schooling status. Table 2 provides data on the share of girls in various The relationships between child marriage, categories. The results suggest that after a early childbearing and girls’ education certain age, girls must often choose between are complex, with a multitude of drivers. marriage and schooling. In addition, once a These relationships are discussed in a girl is married, it is very difficult for her to stay recent study by the Ministry of Health, in school. For many girls the only options are Community Development, Gender, Elderly, either to continue school or to marry; doing and Children (Ministry 2017). A cursory both is not an option. Child marriage thus look at the data makes the relationships reduces girls’ educational prospects; more clear. Figure 27 shows the lower secondary education (and employment) opportunities completion rate on the horizontal axis, and for girls reduces the likelihood that they the prevalence rate for child marriage on will marry early. Thus, early interventions the vertical axis. The trend line through the are called for. While a full discussion of the scatter plot accounts for almost 30 percent related issues is beyond the scope of this of the variance between countries in the chapter, later we draw on the literature to prevalence of child marriage (Male and recommend some policy options to delay Wodon 2018 note that in West and Central marriage and childbearing. Africa the relationship is even stronger). The figure suggests that keeping girls in secondary school is an important factor Countries show a clear relationship in ending child marriage—a conclusion between educational attainment overwhelmingly supported by the literature. and child marriage, but there are also substantial differences between The close relationship between the countries. prevalence of child marriage and girls’ Figure 27: Relationship between Educational Attainment and Child Marriage, East and Southern African Countries, Percent PAGE 34 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Box 5: Drivers of Child Marriage As noted in a Ministry (2017) study, drivers of child marriage vary by region and ethnic group. Among them are poverty; social norms on marriage, agency, and choice; adolescent fertility; gender inequality and control of female sexuality; and tenuous legal and policy frameworks. Families suffering from poverty may be unable to pay school fees and related costs. The poor struggle to take care of their children and send them to school. They may marry girls off in order to “protect” them. When bride price is thought of as a way to reduce poverty, marrying off girls can bring families much-needed income in cattle or cash. Quotes from the Ministry report illustrate this: “I think that most pastoralist societies engage more in child marriage, so they can get extra wealth… To them extra cows means extra wealth. The Sukuma, Maasai, Kurya and even Zanaki tribes are the communities which have high rates of child marriage, and all of them engage in pastoralism.” “… For many poor families, [marriage] is a source of income, which is why the girl child, as I had said, is sent to school, because she is a resource. They will be given cows, 12, 15, 20, up to 30 in these areas. This is no small amount….” Specific sociocultural norms and practices are also found to drive child marriage. For example, traditional dances and initiation rites of unyago are prevalent among the Makonde, Yao, and Makua of Lindi and Mtwara and among the Zaramos of Dar es Salaam and Pwani. These initiate girls into womanhood and train them from as young as 9 on sexual and marital issues. Similarly, samba and chagulaga are common among the Sukuma and Nyamwezi of Shinyanga and Tabora, as the following quote from the report explains: “Here is this practice called ‘samba’, when a girl reaches the adolescent age. From 12 years old her parents take her to a traditional healer so that she can get traditional medicine (kuchanjwa chale) so that she can attract a male. If a girl is to be married, there is 10 days for a wedding ceremony, so this is the only time where a girl is celebrated.” In areas where many girls marry as children, peer pressure can contribute to the persistence of the practice. A few quotes from the Ministry’s report are illustrative of the pressures: “…when she sees that her friend has gotten married, she will see children, success and the good things that will be happening there. It may be that she is married within the neighborhood, so it may be that she sees the good things happening and she thinks that, ‘If I am married, I will be like that.” “When so and so’s daughter goes out, she is well dressed; her dress has been ironed well. And when she goes to school it may be that she goes in tattered clothes. And when it comes to shoes maybe she has never worn shoes that are as good as what her married friends wear... So she feels bad and thinks that if she marries the elderly man, as he has money, she will get something out of it.” “All my friend were getting married, and I was the only one who could remain single. So I decided to marry so that I could do and talk about the same things with my friends, about families and children…” Source: Ministry 2017. In addition, child marriage is closely marriage. In some cases, early childbearing correlated with (and likely to be the may precede child marriage, but this is less cause of ) almost two-thirds of all cases likely in Tanzania than the reverse. of early childbearing 14 and childbirth. 15 Table 3 shows that a high proportion of Keeping girls in school significantly instances of early childbearing (girls having reduces the risks of child marriage and their first child before the age of 18) and early childbearing. When asked in surveys early childbirths (children born of mothers why their daughters dropped out of school, younger than 18) can be attributed to child or when data are collected through education marriage. The analysis is based on the management information systems and timing of child marriage and births. While include such information, parents often this is an imperfect way to identify causality, attribute their daughters dropping out the data suggests that in Tanzania in most of school to marriage and pregnancies. cases early childbearing is likely due to child (Truancy is the most frequent reason given 14 A girl having her first child before she is 18. 15 A child being born of a mother younger than 18 PAGE 35 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Table 2. Adolescent Girls and Relationships between Child Marriage and Early Childbearing, Percent Malawi Mozambique Tanzania Zambia Girls aged 15–19 by schooling and marriage status, Percent In school, not married, ages 15–16 31.4 23.2 19.7 31.0 In school, not married, ages 17–19 21.3 15.3 14.6 24.0 Out of school, not married, ages 15–16 7.3 11.0 17.7 8.3 Married, not in school, any age 25.2 36.6 24.2 17.2 Out of school, not married 17–19 years 13.4 9.9 23.6 18.9 Married and in school, any age 1.5 3.9 0.2 0.7 Total 100.0 100.0 100.0 100.0 Early childbearing likely due to child marriage, Percent Mothers having a child before 18 63.9 63.9 64.9 39.4 Children born of mothers younger than 18 70.1 59.5 65.1 40.0 Source: DHS data. Note: The regional average is not weighted by country population. for girls dropping out in some surveys but levels of education or no education at all that may be a catch-all category that could are themselves significantly more likely to include other factors.). Most pregnant girls acquire less education. Table 3 summarizes who drop out are in public schools. While estimates for the various relationships. many pregnancies are due to early marriage, The importance of keeping girls in school some are the result of sexual violence and in order to end child marriage is discussed coercion. Additional regression analysis also further below when reviewing interventions suggests that the causality between child that may help delay marriage. marriage and early childbearing on the one hand and girls’ educational attainment on Given the close correlation between the other, is both strong and bidirectional educational attainment, child marriage, (see, e.g., Field and Ambrus 2008; Nguyen and early childbearing, the most effective and Wodon 2014; and Wodon et al. 2016). interventions to reduce the prevalence The effect of each additional year of of child marriage and early childbearing secondary education on reducing the risk of would seem to be incentives for girls to child marriage is especially high in Tanzania remain in or go back to school. In particular, (this estimate is an outlier in comparison universal secondary completion for girls to other countries that may overstate the could dramatically reduce the prevalence relationships, but there is clearly an effect). of child marriage and early childbearing. Finally, across generations, by reducing While eliminating child marriage and early the educational attainment of girls, child childbearing would help to improve girls’ marriage and early childbearing reduce the average educational attainment, however, opportunities available to their children: that alone would not be sufficient to children born to young mothers with low ensure achievement of universal secondary completion. PAGE 36 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 3, Relationships between Child Marriage, Early Childbearing, and Girls’ Education Relationship between child marriage and early child-bearing Child marriage is likely the cause for close to two thirds of girls having children before the age of 18 Child marriage is the probable cause of close to two-thirds of births of children to mothers younger than 18. Ending child marriage could substantially reduce early child-bearing for girls and early births of children. Impacts of child marriage and early childbearing on girls’ education According to parents, early pregnancies and marriages are major reasons for girls dropping out of school. Each year of early marriage raises the risk of not completing secondary school by 6 percentage points. Once a girl is married, statistics suggest that it is very difficult for her to remain in school, whatever her age Child marriage at least indirectly affects the education of the children born to girls who married early. Impacts of girls’ education on child marriage and early childbearing Each year of secondary education reduces the risk of marrying as a child by up to 17 percentage points.(*) Each year of secondary education reduces the risk of early childbearing by 9 percentage points Source: Authors’ estimation. Note: * Because Tanzania is an outlier for this estimate among other countries, the estimate may overstate effects that are typically in the 4–8 percentage point range. 2.3 Impacts on other develop- bear (total fertility) by 11 to 24 percent ment outcomes in Tanzania. As a result, eliminating child marriage could reduce the national fertility Fertility and Population Growth rate by 6 percent—and universal completion of secondary education would reduce Child marriage, early childbearing, and the rate by 21 percent. While ending child girls’ education have a significant impact marriage could increase the use of modern on how many children women bear, and contraceptives slightly, in Tanzania more thus on population growth. According to a education for girls does not appear to have model adopted from Onagoruwa and Wodon a systematic and statistically significant (2018), the earlier women in Tanzania and impact on contraceptive use (primary elsewhere marry, the more likely they are to education is associated with increased bear children earlier and ultimately to have a use of contraception, but not secondary larger number of children. Depending on the education). age of marriage, child marriage increases the average number of children women PAGE 37 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION The elimination of child marriage and early specifically, Schneidman et al. 2018). The childbearing in Tanzania could reduce reduction in population growth and fertility the annual rate of population growth rates also has implications for poverty by 0.17 percentage point—a reduction reduction because poverty is estimated in the annual rate of population growth on the basis of household consumption of about 5.5 percent from the base value per capita or per equivalent adult. As (population growth rate of 3.1 percent)16. households shrink when fertility rates drop, This estimate is similar in magnitude to the the risk of being poor or falling into poverty estimated reduction in total fertility (see is accordingly reduced. As mentioned in Part Box 3 on what is mean by such impacts). One, the incidence of poverty is projected to Even greater reductions could be achieved fall only slowly in Tanzania and the number if all girls completed secondary education, of poor will remain relatively constant if the but the effects are not computed here. high pace of population growth continues. These effects have major implications for If population growth and fertility rates fall, Tanzania’s ability to reap the benefits from poverty could be reduced much more the demographic dividend (for a detailed rapidly. Table 4 summarizes the findings. discussion of the dividend, see Canning et al. 2015; World Bank 2015, and on Tanzania Table 4. Early Marriage and Childbearing, Fertility, and Population Growth Impacts of child marriage and early Impacts of girls’ educational attainment childbearing Depending on the girl’s age at marriage, child Completion of secondary school could marriage increases total fertility by 11% to reduce total fertility rates for women by 24%. about 20%/ Achieving universal secondary completion Ending child marriage could reduce total could reduce total fertility nationally by fertility nationally by 6% from the base value. 21%. Marrying as a child has a small but statistically More education does not have a significant impact on modern contraceptive systematically statistically significant use. effect on contraceptive use. Ending child marriage could increase use of Achieving universal completion modern contraceptives by 0.7 percentage of secondary education may not point. substantially affect use of modern contraceptives. Ending child marriage and early childbearing While the impact of universal secondary could reduce population growth by 0.17 completion on population growth is not percentage point. estimated, it should be large. Source: Authors’ estimation 16 The estimates for Tanzania are based on an extrapolation of results for 22 countries where simulations were conducted using demographic projection tools. Comparison with impacts on fertility rates suggest that the estimates are as expected. PAGE 38 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Box 6. What Is Meant by “Impacts” and Associated Economic Costs? The objective of this chapter is to estimate the impacts of child marriage, early childbearing, and educational attainment for girls on a wide range of development outcomes and the economic costs associated with some of these impacts. The term “impact” is used for simplicity’s sake but caution is called for in inferring causality. Estimates of impacts in this study are typically obtained through regression analysis to estimate the potential impacts of child marriage, early childbearing, or educational attainment on various outcomes, controlling for other factors that may also affect the outcomes. In the literature, this approach is known as an association study. Only statistical associations are measured, not necessarily what impacts that could be observed with a randomized control trial. Based on measures of likely impacts, the costs associated with some of them are computed. These are estimated on the basis of several debatable assumptions, including in some cases discount rates. It should therefore be recognized that the cost estimates are not precise—they simply represent an order of magnitude of potential costs. Health, Nutrition, and Violence Early childbearing can significantly mothers younger than 18 have substantially undermine the health of both young higher risks of dying before they reach the mothers and their children. For the young age of 5, but the impact on stunting is mothers, physical immaturity may increase not statistically significant. However, the the likelihood of complications during reductions in under-5 mortality that could pregnancy and childbirth, exacerbating result from preventing early childbearing maternal mortality and morbidity risks, nationally are small because relatively few although those risks are not measured here children are born of mothers younger than (for estimates of maternal mortality, see for 18. Still, many children would be affected. example Nove et al. 2014). The impact of educational attainment for girls on both under-5 mortality and Being born to a very young mother may stunting is for most levels of education not also affect the health of the child at a time statistically significant. Separately, although that is critical for the child’s development; the impact of child marriage on intimate the evidence is overwhelming that partner violence was not estimated for children’s health during their first two Tanzania, based on data for other countries years has a lifelong impact. These impacts in the region the impact is expected to be are reviewed by Black et al. (2017) and for statistically significant though relatively child marriage in particular by Wodon (2016). small (Savadogo and Wodon 2018a). The For example, stunting in early childhood is impact for educational attainment may associated with lower lifelong earnings and be larger. Table 5 summarizes the main consumption for both individuals and their findings. households (Hoddinott et al., 2013) and with losses in national GDP (Horton and Steckel 2013). In Tanzania, children born of PAGE 39 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Table 5, Impacts on Health, Nutrition, and Violence Impacts of child marriage and early Impacts of girls’ education childbearing Being born of a mother younger than 18 The mother’s educational attainment is raises the risk of under-5 mortality by 2 mostly not associated with a reduction in percentage points. under-5 mortality. Ending all early childbirths would reduce Universal secondary education might not national under-5 mortality by 0.13 percentage lead to a national decline statistically in point. under-5 mortality. Being born of a mother younger than 18 The educational attainment of the mother does not statistically raise the risk of under-5 is mostly not associated with a reduction stunting. in under-5 stunting. Ending all early childbirths would not Universal secondary education might not significantly reduce under-5 stunting lead to a national decline in under-five nationally. stunting statistically Child marriage is likely to have a small impact The educational attainment of women is on intimate partner violence when girls marry likely to be associated with less intimate very early partner violence. Source: Authors’ estimation. Work, Earnings, and Poverty The elimination of child marriage could lead to higher household consumption. The affect labor force participation (LFP) impacts on earnings and poverty of universal because of its impacts on girls’ education secondary education would be even more and total fertility, although the impacts significant. As mentioned earlier, under are likely to be small. However, the impact current conditions poverty rates are not of the elimination of child marriage on the likely to be reduced substantially in coming earnings of adult women could be more years (see Part One for a discussion). Ending significant. Women who married early child marriage and early childbearing and could have earned more if they had married educating girls could dramatically change later, mostly because of the impact of child these conditions, with higher earnings marriage on their education. Nationally, this ultimately pushing down poverty rates. could raise the population’s total earnings Table 6 summarizes the estimated impacts. by 0.9 percentage points17. Through its impact on earnings, the elimination of child marriage and early childbearing would also have positive effects on welfare and poverty, since higher earnings for women would 17 The estimates for Tanzania are based on an extrapolation of results for 15 countries where simulations were conducted using labor force surveys. PAGE 40 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 6, Impacts on Work, Earnings, and Poverty Impacts of child marriage and early Impacts of girls’ education childbearing Ending child marriage should not affect More education is associated with somewhat women’s labor force participation (LFP) much. higher LFP. Ending child marriage could increase the More education for girls is associated with sub- earnings of adult women substantially. stantial increases in their earnings as adults. Ending child marriage could increase earnings The impact on national earnings of universal and productivity nationally by up to 0.9 percent. secondary education for girls could be very large. Ending child marriage could have large positive Universal primary or secondary education could effects on welfare and reduce poverty have large positive effects on welfare and reduce poverty Agency and Other Impacts A woman’s capacity for choice depends for the household, including seeking medical on her degree of agency, which refers care when they need to. Some outcomes to her capacity to act within her may also result of a lack of agency, such as environment. This may be influenced by whether mothers register their children soon how much access she has to resources and after birth. While such indicators cannot her degree of confidence, based among comprehensively describe women’s agency, others on her past achievements and those data on them are at least available in recent of her peers and role models. Child marriage surveys. The direct impacts of child marriage clearly affects girls’ access to resources. on such indicators are typically not large and Among other factors, access to resources often not statistically significant, but since may be impacted by low earnings due to child marriage and early childbearing reduce less education and the limits placed on girls’ how much education girls get, they are likely confidence if they have not had access to to have negative impacts on agency, and at certain types of employment. Thus, child times the impacts may be large, as is the marriage clearly affects agency for girls and case in Tanzania. Table 7 summarizes the women. While agency can be measured in impacts. terms of a wide range of indicators, one is whether women are able to make decisions Table 7. Impacts on Decision-making, Agency, and Other Areas Impacts of child marriage and early childbearing Impacts of girls’ educational attainment Child marriage often does not directly affect Universal secondary education could decision-making, but it matters indirectly through increase women’s decision-making ability education. by 22%. Child marriage does not directly affect women’s Universal secondary education could ability to seek care, but it matters through its effects increase women’s ability to seek care by on education. 17%. Early childbearing is not associated with a reduction More education for women is associated in birth registration rates for children. with a large increase in birth registration rates for children. PAGE 41 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Summary of the Impacts and low levels of education are strong. For all indicators except birth registration, (2) All three issues have negative impacts either child marriage/early childbearing or individually or collectively on a wide range completion of secondary education has a statistically significant impact. This shows of other outcomes. In addition, some of the how pervasive and widespread are the effects are not only statistically significant impacts of a lack of opportunities for girls. but also large. Finally, in addition to the effects identified in Table 8 girls’ low level of education can be shown to have other The negative impacts of child marriage, negative effects that are not discussed in early childbearing, and low educational this study. These effects are documented attainment for girls are large. Table 10 separately (Box 7). summarizes the estimates qualitatively; two conclusions emerge: (1) The correlations between child marriage, early childbearing, Box 7. Other Impacts of the Limited Education of Girls The World Bank recently released a study on the cost of not educating girls (Wodon et al.,2018). Apart from the impact of educational attainment on the development outcomes considered in this study, Wodon et al. consider a range of other outcomes. For example, women with secondary education may expect to earn almost twice as much, and those with tertiary education almost three times as much, as those with no education. Women with secondary and tertiary education report higher standards of living than those who at most completed only primary education. For example, they are less likely to state that they do not have enough money to buy food. Women’s psychological well-being could also improve with more education. Women with secondary education report less satisfaction with basic services than women with no education, which may reflect a more realistic assessment of service quality. Achieving universal secondary education could also enable more women to display altruistic behaviors, such as volunteering, donating to charity, and helping strangers, since a tendency to participate in these activities is also correlated with higher levels of education. Secondary education is also associated with a greater likelihood that women will report being able to rely on friends when in need. PAGE 42 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Table 8. Statistically Significant Estimated Impacts by Domain Domains and Indicators Child Marriage or Completion of Either One Early Childbearing Secondary Education of the Two Mutual relationships Child marriage/Early childbearing - Yes Yes Educational attainment Yes - - Fertility and population growth Fertility Yes Yes Yes Population growth Yes Yes Yes Modern contraceptive use Yes No Yes Health and nutrition Under-5 mortality Yes No Yes Under-5 stunting No Mostly No No Demand for health care No Yes Yes Intimate partner violence Likely Likely Likely Work and productivity Labor force participation Yes Yes Yes Women’s earnings Yes Yes Yes Household welfare Yes Yes Yes Women’s agency Decision-making ability Yes Ye Yes Knowledge of HIV/AIDS No Yes Yes Birth registration No Yes Yes 2.4 Economic Costs and Benefits: and longer-term gains are estimated up The Case of Child Marriage to 2030. This accounts for the cumulative Putting numbers to all the costs nature of some of the benefits of ending associated with child marriage, early child marriage, especially for population childbearing, and girls’ limited education growth. It also allows valuations to adjust is beyond the scope of this study, but for increases in standards of living (GDP per the costs for some of the largest impacts capita) over time. can be estimated. Here the focus is on the The economic benefit of ending child costs of child marriage and the benefits of marriage in terms of welfare gains from eliminating it. Of particular interest are the lower population growth is large: by 2030 benefits associated with a reduction in the it could reach US$5 billion in purchasing population growth rate; gains in educational power parity. attainment and thereby earnings; and reductions in under-5 mortality and stunting. In most cases, both immediate PAGE 43 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Box 8: Potential General Equilibrium Effects and Cost Estimates Estimating the costs of child marriage in terms of unrealized potential earnings implicitly assumes that labor markets would be able to absorb a larger supply of better-educated women. Specifically, the assumption is that the higher educational attainment resulting from eliminating child marriage would not decrease the returns to education. However, if eliminating child marriage were to substantially increase the average level of women’s education, that assumption might be questionable, especially in a country where a very large proportion of women currently have minimal education. The estimation also does not factor in possible effects on men’s earnings if on average women acquire more education; If more women achieve higher levels of educational attainment and have access to the same employment opportunities as men, that would reduce the occupational segregation by gender that has traditionally led to relatively higher earnings for men. There is evidence from other countries that over time, the labor market premiums associated with more education may decline when the proportion of workers with these higher levels increases. For example, Angrist (1995) showed that expansion of access to education in the Palestinian territories reduced the skills premium. Acemoglu et al. (2004) noted that during World War II, higher labor force participation by women depressed wages for low- skilled workers. Duflo (2004) suggested similar effects in Indonesia after a large school construction program. These are just a few examples of studies that document general equilibrium effects, which, as noted by Acemoglu (2010), can be large. In a World Bank study on the cost of not educating girls globally (Wodon et al, 2018), this was taken into account by providing a variety of estimates, with and without general equilibrium effects. This seems less necessary when looking at the impacts of child marriage in Tanzania because only a subset of women marrying early are assumed to complete secondary education without marrying as a child, given other constraints, such as cost or the distance to schools. Changes in earnings due to elimination of child marriage generally average about 1 percent of aggregate wages. This means that the impact on the labor market remains limited, so that it is less likely to observe large general equilibrium effects. Still, if general equilibrium effects occur, the estimates provided may be overstating the cost of child marriage in terms of lost earnings. However, other factors could lead to larger costs than reported: First, the estimation does not factor in possible effects of ending child marriage on labor force participation or hours worked. Also, through multiplier effects, increasing women’s earnings through better educational opportunities could generate larger gains for both men and women than are suggested here. Finally, intergenerational benefits from higher earnings for women, such as better education for their children, are also not factored in. In the long run, gains from ending child marriage could thus be larger than suggested by earnings regressions that capture current conditions. Ending child marriage and early These estimates should not be considered childbearing in 2015 could have as precise because they depend on (a) generated immediate annual benefits econometric estimates of impacts that of US$150 million in purchasing power have themselves standard errors; and (b) parity (PPP), which could rise to US$5.0 a range of debatable assumptions about billion by 2030. Thus, the welfare benefits costing (Box 8). Still, they provide an order derived from reducing population growth of magnitude of the costs that may result by eliminating child marriage and early from the prevalence of child marriage and childbearing are extremely significant. the benefits of its elimination. The estimates PAGE 44 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region of costs here are based on annual losses in than if child marriage were not ended. The GDP per capita or components thereof, such resulting savings could be valued at up to as labor earnings. If lifetime losses were US$311 million (current dollars) if Tanzania computed, based for example on estimates were able to achieve universal completion of of the changing wealth of nations (Lange et secondary education by 2030 (see Wodon al. 2018), the estimates of costs would be 2018 for more details on the methodology). substantially larger than those reported here These estimates for education budget (see, e.g., Wodon and de la Brière 2018, and savings are an upper bound; if Tanzania Wodon et al., 2018). Table 9 gives Illustrative were not to meet the SDG targets, actual estimates of annual costs. savings would be lower. The benefits from reducing under-5 mortality by 2030 are Over time there would also be budget valued at US$219 million (PPP). Estimates savings due to reduced demand for public of stunting impacts were not statistically services as population growth is reduced. significant and are thus not valued (see Box Based on a model developed by Wils (2015), 9 on why some estimates of the economic the impact of the elimination of child costs of child marriage tend to be larger marriage and early childbirths on savings than others). for the national education budget can be computed. By 2030, new cohorts of children in school could be about 5 percent smaller Table 9: Order of Magnitude, Selected Benefits from Ending Child Marriage (US PPP Unless Noted) Annual Benefit in 2015 Annual Benefit in 2030 (1) Welfare benefit from reduced $150 million $5.0 billion population growth (2) Benefit from reduced under-5 $117 million $219 million mortality (3) Benefit from reduced under-five Not statistically significant Not statistically significant stunting (4) Education budget savings None Up to $311 million (current US$) Source: For details on how estimates were obtained, see Wodon 2018. Note: Estimates for education budget savings are an upper bound; actual savings are likely to be lower. PAGE 45 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Box 9: Why Are Some Impacts and Costs Large and Others Smaller? In economic terms, the fact that reducing child marriage or early childbirth may lead to only relatively small reductions in national measures for some outcomes does not imply that the associated economic costs are small. For example, in many countries, child marriage tends to reduce earnings nationally by an average of about 1 percent. A single percent may not seem to be much, but the associated economic cost is very large, and for the women affected, the losses in earnings are much greater. Some of the most significant economic costs associated with child marriage are related to fertility and population growth; education and earnings; and the health of the children born of young mothers. These impacts are closely related. Particularly when use of modern contraception is low, child marriage is closely correlated with early childbirths, which in turn is closely correlated with greater health risks for young mothers and the children they bear and leads to higher fertility rates. Child marriage and early childbirths make it very difficult for girls to continue their education, which cuts women’s earnings potential. All those effects are at work at the time of marriage (in the case of educational attainment) or soon after (in the case of childbearing). By contrast, impacts in other domains, such as risk of domestic violence, labor force participation, and decision-making, can be observed throughout a woman’s life. They may also depend on many factors apart from whether and when girls marry. For example, intimate partner violence and a lack of decision-making ability are at least partially the result of widespread gender inequality. While child marriage tends to perpetuate gender inequality, delaying marriage by a few years may not be enough alone to fundamentally change gender roles and social norms. Thus, in these domains, while the elimination of child marriage may have a significant role, the impact tends to be relatively small compared to that of higher levels of girls’ educational attainment, for example. In Tanzania, the total value of potential earnings lost due to early marriages in Another large economic benefit from 2015 was US$637 million (PPP). Because ending child marriage is higher potential child marriage reduces girls’ educational earnings for women in adulthood, attainment, early marriage also affects estimated at $637 million (PPP) for women’s earnings in terms of how much Tanzania in 2015. more women who married early would have earned if they had been able to educational attainment and child marriage marry later and spend more time in school. on monetary poverty, but a global study There is a significant literature on the by UNESCO (2017) suggests that these potential impact of educational attainment effects on poverty are likely to be large. on earnings, regardless of gender (see This is important given expectations that in Psacharopoulos and Patrinos 2018, for Tanzania under current conditions poverty a recent review). Because of the cost in may not decrease substantially in the terms of girls’ education, child marriage near future. If child marriage were ended, reduces earnings throughout a woman’s poverty reduction would be accelerated life (Savadogo and Wodon, 2018b). Due to substantially. data and time limitations, this study does not attempt to determine the impact of low PAGE 46 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region The estimates of the cost of child If a girl completes secondary education marriage are substantial. To illustrate the and avoids early marriage, the benefits magnitude of the benefits from ending endure throughout her life. (2) The cost of child marriage, comparisons with net official interventions for girls in adolescence or even development assistance (ODA) may be earlier tends to be lower than the cost of useful. ODA consists of disbursements of interventions later in women’s life cycles. (3) loans made on concessional terms (net of Interventions targeted at girls at a formative principal repayments) and grants by official age may be more successful in influencing agencies, whether or not they are members values and behaviors, not only for the girls of the Development Assistance Committee directly targeted but for the community. (DAC), multilateral institutions, and non- If women are targeted later in life, returns DAC countries. Net ODA includes loans of on the investment may be lower, as it will which grant elements constitute at least become increasingly difficult for them 25 percent of the value. In Tanzania, for the to fully benefit from new opportunities. past decade net ODA has fluctuated around While interventions for women at a later 5 percent of gross national income. While point in the life cycle may also be justified, the benefits from eliminating child marriage adolescence is a critical development period are smaller, they are nevertheless large as a when investments are likely to generate the proportion of GDP, especially for gains from highest returns. To eliminate child marriage lower fertility and population growth, which and early childbearing and to enable all girls are cumulative over time. to complete their secondary education, some general conditions must be met and 2.5 Policy Options to Improve a number of specific interventions also have Opportunities for Adolescent Girls promise. The following sections discuss these general conditions and specific As discussed, eliminating child marriage interventions, acknowledging that major and improving educational opportunities efforts are already underway (Box 10). for girls could generate substantial economic benefits for Tanzania, providing a strong economic rationale for investments to achieve these ends. There are three main reasons why investing in opportunities for adolescent girls is often highly cost-effective: (1) Earlier investments tend to have a persistent positive impact throughout women’s lives. PAGE 47 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Box 10: Selected Efforts Already Underway to Invest in Adolescent Girls As recognized in the analysis that follows, the Government has already taken important steps to improve educational opportunities for girls and end child marriage and early childbearing. The Ministry (2017) study on child marriage represents a major effort to understand the root causes of the practice and propose concrete steps to prevent it. In the education sector, by making schooling affordable, the Fee-Free Basic Education Policy (FBEP) recently introduced could be a game changer if implemented well. A strategy is also being prepared on school construction. Its implementation could make it easier for girls to go to school in areas where schools are currently far away. Tanzania already has a conditional cash transfer program through the TASAF (Tanzania Social Action Fund) program with one of the conditions being girls’ school attendance. This type of interventions could be expanded to benefit more vulnerable girls. A number of pilot programs implemented by nonprofits have shown promise and could be replicated or scaled up. Finally, Tanzania has demonstrated in the past its ability to change social norms, as demonstrated by the reduction in the prevalence of female genital mutilation. Acknowledging these efforts and past successes, the objective of this section is to share results from the international evidence on what works especially to end child marriage so that Government efforts can be further enhanced and scaled up. General Conditions young mothers to re-enter the formal education system and improving access to Multiple interventions are needed to comprehensive education on sexual and provide opportunities to girls and ensure reproductive health and services. that their needs are met.18 Some of these interventions have been discussed in recent Given that one of the best ways to end World Bank studies such as a study on child marriage and early childbearing is to gender and education (World Bank 2018a) keep adolescent girls in school, measures and another on demographic challenges are also needed to improve education in and opportunities (Schneidman et al. Tanzania. Multiple entry points are often 2018). Policy options are also discussed needed to eliminate child marriage and in the study by the Ministry of Health, achieve universal secondary education for Community Development, Gender, Elderly, girls; among them are (1) reducing the and Children (Ministry 2017). Numerous disadvantages confronting girls in remote policies are already in place to improve communities, at times due to poor targeting outcomes for adolescent girls. The Fee-Free of government resources; (2) creating a Basic Education Policy (FBEP) introduced in more inclusive school culture for girls; (3) 2016 aims to expand equitable access to providing girls with role models, such as basic education. But getting the most out of female teachers; and (4) raising the returns FBEP will require a tight focus on narrowing to secondary school completion for women gender disparities in education outcomes. through local employment opportunities This would require among others allowing (see Box 11 on lessons from the literature). 18 It is beyond the scope of this study to provide a comprehensive analysis of what needs to be done to eventually end child marriage and early childbearing and ensure that all girls complete secondary education, but some pointers can be provided. PAGE 48 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region More generally, Tanzania, in common with et al. 1998). The Government is now many other lower- and lower-middle- preparing a school infrastructure strategy income countries, needs to improve basic that should help establish clear priorities general conditions in its education system in this area. so that all girls remain in school. Several such conditions are worth emphasizing here: • The need to ensure that the education system delivers effective learning • The need for an adequate schooling outcomes: In many countries in Africa infrastructure: Secondary education (Bashir et al. 2018), and more generally in completion rates are low in some areas the developing world (World Bank 2018b), in part because there are just not enough student learning outcomes, as measured secondary schools to facilitate universal by national and international student completion. The development of a school assessments, are poor. Tanzania is no construction strategy is underway to bring exception. This needs to be addressed schools closer to children’s homes and through investments to ensure not just reduce the distance to travel to school, greater access but also improved quality. which in turn would help with ensuring As noted by the World Bank (2018a), girls’ safety on the way to school. Schools priorities in this area include increasing also need to provide access to water, teacher numbers in line with standards latrines, and hygienic facilities, which may and emphasizing subject areas with be particularly important for adolescent acute shortages (e.g., mathematics and girls – this is also an area where the science). A stronger system of in-service government has placed an emphasis in teacher training should be institutionalized recent years. Where schools cannot be and a teacher awards program could help constructed in locations that meet the encourage reductions in gender gaps in needs of specific communities, it may be school performance. Providing in-service necessary to provide transportation to teacher training to challenge gender enable girls to attend school. Finally, it is differences in teacher expectations and essential to ensure that girls do not suffer establishing teacher mentors to support physical, sexual, or other harassment girls could also help. As noted in World either at school or while travelling to and Bank (2018), a pilot program in Tanzanian from school; see, for example, Abramsky secondary schools found that non- et al. (2014) on gender-based violence monetary awards for teachers based on and how to reduce it, as well as the student performance were successful at guardian program in primary schools in improving learning outcomes (Filmer et Tanzania in which female teachers were al. 2017). Combining teacher incentives elected by their colleagues and trained with additional resources to improve the as guardians for female students (Mgalla learning environment has also been a PAGE 49 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION successful strategy to improve outcomes raised student learning at the secondary in Tanzania (Mbiti et al. 2015). The level (Alcott et al. 2017), while also being government is also preparing a teacher more cost-effective than conditional cash deployment strategy to ensure more transfer programs (Sabates et al. 2018). gender-balanced staffing in schools (i.e. sufficient numbers of female teachers to In addition to reforms to policies related provide role models for girls and create a directly to education, broader efforts more supportive learning environment). are required to change social norms that perpetuate gender inequality. In its • The need to ensure the participation of study on the drivers and consequences of girls: Schooling must be affordable for child marriage, Ministry (2017) outlines their families. Affordability refers not a comprehensive approach to tackle the just to the direct costs of participation issue of child marriage, including through in secondary education, but also to communications campaigns that have the opportunity costs. In Tanzania, as in potential to change social norms. Although neighboring low-income countries, these extensive discussion of such issues is costs remain especially high for the poor. beyond the scope of this study, it must The FFBEP policy is a major step forward, indeed be recognized that child marriage, yet providing secondary education free of early childbearing, and low educational tuition and other direct costs may not be attainment for girls are part of deep-seated enough to ensure the participation of all patterns of gender inequality (Klugman school-age children, particularly girls (see at al. 2014). As recognized by Ministry Koski et al. 2018). Tanzania already has (2017), broad reforms are needed to change a conditional cash transfer program, but these social norms and address other this program could be expanded to provide constraints that limit opportunities for girls. greater coverage of poor households, The Convention on the Rights of the Child cover more of the secondary school costs emphasizes the need for full and informed for girls, and open non-formal pathways consent to marriage, noting that children to return to school or pursue education. do not have the capability to provide such Also of interest is the program by Camfed consent. This is one of the reasons why in Tanzania, which covers the direct and 18 is recommended as the minimum age indirect costs of schooling for girls while for marriage. Yet while enforcing laws to also supporting community-led initiatives this effect is an important step in the right to engage parents and train teacher direction, as noted by Wodon et al. (2017) mentors, staff, and parents to improve most child marriages take place below the educational quality through low-cost national legal minimum age, demonstrating educational resources. The program has that simply passing laws is not enough. helped narrow gender inequalities and PAGE 50 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Box 11: Improving Educational Attainment and Learning for Girls As a range of factors may contribute to gender gaps in educational attainment and learning, a wide range of interventions may be necessary tonarrow the gaps. Among them might be reducing the distance to schools, either by constructing new ones in remote areas or by providing transportation for students; providing scholarships to girls; recruiting more female teachers; constructing separate toilet blocks for girls and boys; designing programs to understand and change specific cultural practices; or targeting specific pedagogical interventions for girls. Which interventions are chosen depends to a large extent on the immediate country or community context. However, reviews of previous efforts may help in determining appropriate interventions. One such review was reported by Unterhalter et al. (2014), who assessed the impact of interventions promoting girls’ education, especially those that (1) provided resources (such as cash transfers) and infrastructure; (2) changed institutions to make them more responsive to student needs; and (3) changed social norms, especially for those affecting the most marginalized. The review summarized the impact of different types of interventions on three outcomes: participation; learning; and empowerment. For each type of intervention and outcome, the evidence on the likelihood of impact was classified as strong, promising, limited, or weak. For participation, the evidence for the impact of conditional cash transfers, information about the potential employment returns to education, and the provision of additional schools in underserved and unsafe areas was found to be strong. This was also true for a range of interventions related to teacher training, group learning, measures to promote girl-friendly schools, and learning outside the classroom, such as through tutoring. Group learning, programs for learning outside the classroom, and scholarships linked to student performance were also found to have impacts on learning. The evidence for the impact of interventions on empowerment was generally weaker. Source: Unterhalter et al. 2014. Specific Interventions interventions for adolescent girls: (1) While it is essential that countries programs that provide girls with life skills promulgate appropriate laws to facilitate and reproductive health knowledge; (2) the elimination of child marriage, also programs that expand girls’ economic required are specific strategies and opportunities; and (3) programs designed interventions to empower girls. In to ensure that girls remain in school or particular, interventions are required to that enable them to return to school. This ensure that girls have appropriate life skills is again an area where the Ministry of and knowledge of reproductive health. Education has started work in collaboration Economic incentives may also be needed with NGOs such as Camfed. The Ministry is so that girls can afford to remain in school, implementing girl-mentorship and life skills return to school if they dropped out, or programs on a pilot basis. There is evidence expand their livelihood opportunities if they that these programs can, under certain cannot return. circumstances and in certain contexts, have positive impacts. Each type of program To facilitate selection of interventions, is however based on a different theory of this section summarizes international change (Box 12). The summary of findings evidence related to three types of provided here is based on a review of almost PAGE 51 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION 40 interventions by Botea et al. (2017). To a range of issues under the guidance of qualify for review, interventions had to (1) the mentors, including those related to target girls aged 10–19, either exclusively or SRH. The clubs facilitate the delivery of life as part of a larger group; (2) equip girls with skills, including “soft” or socio-emotional life skills and sexual and reproductive health skills such as critical thinking and problem (SRH) knowledge, economic opportunities, solving, negotiation, and communication or educational opportunities; (3) (for example within a girl’s household). demonstrate results in terms of improving One of the objectives is often to boost the the health of young women, especially self-awareness and self-esteem of girls so SRH, or delaying marriage or childbearing; that they can explore and fulfill their own and (4) have been tested in a developing aspirations. Often, safe space clubs are also country, usually in Sub-Saharan Africa but used to facilitate the delivery of such “hard” also in other low-income settings such skills as basic literacy and numeracy, or as Bangladesh or parts of India (see also basic business skills. Kalamar et al., 2016, for another review of the international evidence). These programs have helped to improve girls’ knowledge of SRH and behaviors. Empowering Girls Outcomes have included increases in girls undergoing HIV testing or counseling; Without other interventions, safe space greater use of modern contraception programs may not delay marriage and or other methods of family planning; a childbearing or improve schooling. Still, they have had important reduction in the desire for FGM for daughters intermediary outcomes related among in countries where the practice is prevalent; others to aspirations and self-esteem, a reduced risk of intimate partner violence confidence, and information about when a program also reaches out to men; sexual and reproductive health. higher self-esteem; and gains in specific The first category of interventions skills taught in safe space sessions, such as emphasizes empowerment of girls by financial and basic literacy and numeracy. providing them with life skills and SRH knowledge. One typical intervention is to However, without additional supportive provide a “safe space club” for adolescent interventions to enable girls to participate girls. These clubs convene girls under the in schooling or employment or otherwise guidance of a trusted adult mentor at a improve their livelihood options, it is not specific time and place. The approach clear that safe spaces alone can delay was pioneered by BRAC in South Asia and marriage and childbearing (perhaps by the Population Council in Africa and because that may not have been a primary Latin America. The clubs have proven goal for a club). Therefore, it is important to effective when they are implemented well. consider programs where safe spaces have By combining opportunities to socialize been combined with measures to improve and have fun with access to mentors, livelihood opportunities or offer incentives the clubs are attractive to girls and offer a to remain in school, which are usually platform for other services. Clubs can be more effective in delaying marriage and held in a variety of settings, often schools or childbearing. community centers. Girls are able to discuss PAGE 52 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Box 12: Theories of Change for Interventions Targeting Adolescent Girls Life skills and SRH knowledge: By increasing their knowledge, life skills can raise girls’ awareness of the risks associated with becoming pregnant at an early age and increase their desire and ability to avoid early pregnancies through family planning. Through such channels, life skills may lead to better health outcomes for the girls and their children. By increasing girls’ confidence and self-esteem, life skills may also help expand their aspirations, which may heighten their motivation to delay marriage and childbearing. Finally, life skills can increase the communication and decision-making skills of young women and increase their abilities to negotiate their marriage and childbearing preferences. However, while life skills and SRH knowledge may empower girls, they may not be sufficient to delay marriage and childbearing if social norms curtailing the agency of girls are not also addressed. Life skills and economic opportunities: Programs to increase young women’s earnings potential may increase their ability to plan and improve their marriage and childbearing decisions in three ways: (1) Improvement in a woman’s ability to make an economic contribution expands her role beyond that of sex and reproduction. This can increase a girl’s desire to delay marriage or childbearing. The transformation of girls from economic liabilities into assets in the eyes of their communities and families can also alleviate the external pressures on them to marry or have children early. (2) The loss in earnings associated with childrearing is an opportunity cost that may increase women’s desire to limit or space births and to exercise reproductive control. (3) Increased earnings may supplement a young woman’s bargaining power within the household and allow her to effectively exercise reproductive control by negotiating delays in sexual debut or marriage, and to better negotiate the terms of sex, such as use of contraceptives. Creating income-generating opportunities for women can therefore in addition to the direct economic benefit also contribute to female empowerment by widening a woman’s personal choice and control over SRH outcomes. Incentives for girls to participate in schooling or delay marriage: In many communities, the economic, cultural, and social environment does not offer adolescent girls viable alternatives to marriage. Once girls drop out of school, possibly because of the school’s poor quality or high cost, parents may find it difficult to identify any option other than marrying off their daughters. In such communities, providing better-quality and affordable primary and secondary education may be one of the best ways to delay marriage and childbearing. Programs to keep girls in school may also lead to tipping points in communities that make it easier for more and more girls to stay in school and thus delay marriage. A few interventions have also aimed to delay marriage by providing financial incentives conditional on not marrying early, with additional schooling often a benefit. Source: Botea et al. 2017. Providing Employment Opportunities interventions to improve financial literacy The second category of programs and access to financial services. Impacts in emphasizes both empowering girls, terms of delaying marriage and childbearing often through safe spaces, and providing generally (though not always) tend to be livelihood opportunities. These programs larger than for the life skills/SRH knowledge are particularly appropriate for girls who programs alone. are not in school and would otherwise These programs often have some success have no income-generating skills. Two in terms of increasing the earnings, groups of interventions are distinguished: employment, or savings of girls. Several (1) livelihood interventions and (2) programs have also resulted in increased PAGE 53 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Providing Incentives to Keep Girls in Interventions combining an emphasis School on empowering girls, often through safe space clubs, with livelihood The third set of programs focuses on opportunities may improve reproductive specific interventions to ensure that girls health outcomes and delay marriage or remain in school, enable them to return if childbearing. That has been the case they have dropped out, or directly delay in Uganda, for example, though not marriage. There have been numerous systematically so in other countries. interventions to keep girls in school and Since these are often the only option delay marriage (Kalamar et al. 2016). In a available for out-of-school girls, more few cases, evaluations also demonstrate research is needed to determine what that programs that provide incentives for works and what does not. girls to remain in school often succeed in delaying marriage or childbearing. While most of these programs are designed to use of modern contraceptives and improved keep girls in school, some are also designed SRH knowledge, which may help to delay to enable girls who dropped out to return to childbearing. Some have also succeeded in school. delaying age at marriage and in reducing teen pregnancies. For example, the BRAC Of the three types of interventions Uganda Empowerment and Livelihoods this study reviewed, those promoting for Adolescent Girls proved to have the education by, e.g., reducing out-of- following impacts: (1) The likelihood of girls pocket and opportunity costs for engaging in income-generating activities schooling, are the most likely to delay went up by 32 percent; (2) Among girls marriage and childbearing. sexually active, self-reported routine condom use went up by 50 percent; (3) Fertility rates went down by 26 percent.; Also effective may be conditional cash and (4) Reporting of unwanted sex plunged transfers to incentivize girls’ schooling, by 76 percent. There were also reductions promote health, and support families in teenage pregnancies and child marriage, during shocks. These incentives are and a shift in community gender dynamics often conditional on children’s attendance (Bandiera et al. 2014 and Buehren et al. at school or participation in preventive 2016). Clearly, adding a livelihood dimension medicine programs. A significant body of to life skills and SRH knowledge programs research shows that such transfers have may help delay marriage and childbearing. been effective in promoting participation in The focus on economic opportunities may schooling by children in developing countries. also help to ensure the regular participation The programs have been introduced in of girls in the programs. more than 29 low-income countries. Cash transfers without conditions and income PAGE 54 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region support programs have also had numerous measures to boost girls’ agency, for example positive outcomes, such as reduced child through building soft skills and promoting labor, expanding schooling, and enhancing learning about nutrition and reproductive childhood nutrition (for Tanzania, see, e.g., health (World Bank 2012). Bastagli et al. 2016). While not all programs succeed everywhere, the evidence is quite 2.6 Investing in Girls: A Smart In- convincing that in comparison to the other vestment in Tanzania’s Develop- two types of programs reviewed above, ment those focusing directly on schooling for girls, Finally, investments to eliminate child or in some cases using financial incentives marriage and early childbearing and to delay marriage, may be more successful promote education for girls should not be in delaying marriage and childbearing. based solely on economic considerations. Summary for Targeted Interventions These are in any case important goals in terms of equity and social justice. The primary The three types of interventions described motivation for eliminating child marriage and are not intended to be an exhaustive list. early childbearing and promoting education To improve girls’ educational attainment, for girls should be to address the substantial additional interventions may also be risks and suffering that confront adolescent needed. The three types of interventions girls and their children. However, this study were selected because there is evidence demonstrates that in addition to these that they help improve SRH knowledge and benefits, the economic benefits to Tanzania delay child marriage and early childbearing. from such investments would be extremely The programs and interventions are also not significant—and the costs of failing to mutually exclusive; implemented together, address related issues are proportionately they can complement each other. While high. Demonstrating the magnitude of some programs are better than others these costs provides additional justification in achieving the desired goals, all three for investments in adolescent girls. While categories of programs may have significant further work is needed to identify the best benefits of many kinds. With different policy options for Tanzanian investments interventions targeting different groups to improve opportunities for adolescent of girls (e.g., those in school or with the girls, useful lessons can be learned from potential to return to school, and those who international experience. Ending child dropped out and may not be able to return), marriage, preventing early childbearing, and all three categories should be considered improving education opportunities for girls when formulating a strategy to improve is not only the right thing to do from a moral opportunities for adolescent girls. Another and ethical standpoint, it is also a smart example is associating cash transfers with investment in Tanzania’s development. PAGE 55 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION PAGE 56 Macroeconomics, and The World Bank Group Macroeconomics Fiscal Trade and Management Investment Global Global Practice, Practice, Africa Africa Region Region 3 Statistical Annexes PAGE 57 58 PAGE Statistical Annexes Annex 1, Key Macroeconomic Indicators 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 National Acciounts and Prices GDP at constant market price (% change) 5.6 5.4 6.4 7.9 5.1 7.3 7.1 7.0 7.0 7.1 Agriculture 7.5 5.1 2.7 3.5 3.2 3.2 3.4 2.3 2.1 3.6 Industry 6.6 3.3 9.1 12.0 4.0 9.5 10.3 11.3 10.7 12.6 Service 4.2 5.8 7.8 8.4 7.2 7.1 7.2 6.9 7.6 6.6 Inflation (e.o.p) 9.3 10.7 7.2 10.9 17.4 7.6 6.4 6.8 5.0 4.0 Per capita (in US$) 661.2 681.4 726.0 765.0 870.0 969.0 1000.0 912.4 917.9 910.4 TA N Z A N I A E C O N O M I C U P D AT E Money and Credit M3 (% change) 18.1 18.5 25.1 22.0 10.9 14.5 13.7 10.8 7.2 1.1 Credit to private sector (% change) 38.6 32.8 17.5 24.3 18.6 17.1 21.4 21.0 19.1 1.2 External sector (US$ million unless otherwise) Exports (goods and services) 2,916 3,268 3,805 4,896 5,562 5,619 5,194 5,402 5,697 5,672 Imports (goods and services) 6,021 6,220 6,596 8,012 10,609 11,347 13,587 12,513 10,605 10,228 Gross official reserves 2,660 2,930 3,482 3,610 3,797 4,638 4,377 4,094 4,326 4,906 (months of imports) 4.5 5.2 4.2 3.3 3.5 4.2 4.2 4.5 4.8 5.2 Current Account Balance (% of GDP) -8.5 -7.8 -7.1 -7.9 -13.1 -10.3 -11.1 -9.0 -4.2 -2.2 Exchange rate(Tsh/US$; e.o.p) 1,181 1,314 1,379 1,572 1,569 1,580 1,653 1,991 2,177 2,363 Debt Stock and Service Total public debt (% of GDP) 19.9 23.2 25.1 28.5 27.4 30.8 31.4 35.4 36.2 41.1 External debt (public sector, % of GDP) 14.8 16.8 18.3 21.5 20.7 23.1 23.7 27.6 27.2 26.9 Domestic public debt (% of GDP) 5.1 6.3 6.8 6.9 6.6 7.7 7.7 7.8 9.0 14.2 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Fiscal (% of GDP) Revenue and grants 15.8 15.1 13.6 14.0 15.5 15.6 14.0 14.8 16.4 0.0 JANUARY 2019, 11TH EDITION Tax and nontax revenue 12.2 11.8 11.8 12.6 12.8 13.5 12.9 14.2 15.6 15.1 Grants 3.6 3.3 3.3 3.2 2.6 2.1 1.2 0.5 1.4 0.8 Expenditure and net lending 19.6 20.4 19.4 18.9 20.5 18.6 17.1 18.2 18.1 17.2 Overall balance (including Grants) -3.4 -4.8 -4.8 -3.6 -5.0 -3.3 -3.3 -3.5 -1.1 -1.3 Financing 3.4 4.8 4.8 3.6 5.0 3.3 3.3 3.5 1.1 1.3 Foreign financing (net) 2.7 3.4 2.2 3.0 3.9 3.0 3.1 1.1 0.3 0.4 Domestic financing (net) 0.7 1.4 2.6 0.6 1.1 0.3 0.2 2.4 0.8 0.9 Source: Tanzania authorities, IMF, and World Bank. Annex 2. Annual Real GDP Growth Rates (Percent Change) Economic Activity 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Agriculture and Fishing 7.5 5.1 2.7 3.5 3.2 3.2 3.4 2.3 2.1 3.6 Crops 7.8 5.5 3.7 4.8 4.2 3.5 4.0 2.2 1.4 3.7 Livestock 8.1 5.3 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 Forestry and Hunting 3.8 5.1 3.4 3.3 3.5 4.7 5.1 2.6 3.4 6.3 Fishing 7.2 0.5 0.9 2.6 2.9 5.5 2.0 2.5 4.2 2.7 Industry and construction 6.6 3.3 9.1 12.0 4.0 9.5 10.3 11.3 10.7 12.1 Mining and quarrying -9.5 18.7 7.3 6.3 6.7 3.9 9.4 9.1 11.5 17.5 Manufacturing 11.4 4.7 8.9 6.9 4.1 6.5 6.8 6.5 7.8 7.1 Electricity 8.1 4.3 13.4 -4.3 3.3 13.0 9.3 5.8 8.3 2.2 Water 2.3 4.6 2.2 -1.2 2.8 2.7 3.7 0.1 4.3 16.7 Construction 9.7 -3.8 10.3 22.9 3.2 14.6 14.1 16.8 13.0 14.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Services 4.2 5.8 7.8 8.4 7.2 7.1 7.2 6.9 7.6 6.6 Wholesale and Retail Trade,Repairs 6.8 2.7 10.0 11.3 3.8 4.5 10.0 7.8 6.7 6.0 Transport and storage 3.3 6.9 10.7 4.4 4.2 12.2 12.5 7.9 11.8 16.6 Accomodation and Food Services 1.8 1.0 3.7 4.1 6.7 2.8 2.2 2.3 3.7 3.2 Information and communication 11.9 26.6 24.4 8.6 22.2 13.3 8.0 12.1 13.0 14.7 Financial and insurance activities 18.1 18.4 12.6 14.8 5.1 6.2 10.8 11.8 10.7 1.9 Real estate 1.7 1.8 1.8 1.9 2.0 2.1 2.2 2.2 2.3 2.4 Professional,scientific and technical activities 30.6 15.8 29.9 4.8 -5.8 5.4 0.5 6.8 6.3 6.0 Administrative and support service activities -1.8 0.4 8.6 5.1 23.8 12.2 6.0 4.7 2.1 3.7 Public administration and Defence -6.3 -0.7 -5.0 15.9 9.1 7.8 3.9 4.6 6.7 -1.3 Education 9.5 9.2 6.4 5.6 7.4 4.3 4.8 6.3 8.1 8.5 Human Health and social work activities 5.5 7.4 3.3 5.3 11.4 8.8 8.1 4.7 5.2 5.9 Arts, entertainment and recreation 6.4 3.0 7.3 7.7 11.0 5.7 5.7 6.2 8.8 7.6 Other social and personal services 5.1 5.9 6.0 6.2 6.4 6.5 6.7 6.9 7.2 7.3 Activities of households as employers 2.6 2.7 2.7 2.7 2.7 2.7 2.7 2.7 3.0 2.7 0.0 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region FISIM 6.8 20.0 7.9 22.6 1.2 0.1 9.7 11.7 16.3 18.5 Net taxes 5.0 12.8 3.8 12.1 0.4 14.2 7.7 9.6 7.8 0.5 0.0 Total GDP 5.6 5.4 6.4 7.9 5.1 7.3 7.0 7.0 7.0 7.1 Source: National Bureau of Statistics. 59 PAGE Annex 3. Share of Economic Activities in GDP (current market prices) 60 PAGE Economic Activity 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Agr icultur e and Fishing 28.8 30.2 29.9 29.4 31.1 31.2 28.8 29.0 29.2 30.1 Crops 15.3 16.0 16.6 16.5 18.0 17.5 16.1 15.6 15.6 17.0 Livestock 9.3 9.7 9.1 8.7 8.5 8.2 7.3 7.9 7.7 6.9 Forestry and Hunting 2.3 2.3 2.2 2.2 2.5 3.1 3.1 3.5 3.9 4.0 Fishing 1.8 2.2 2.1 2.1 2.2 2.4 2.2 2.1 2.0 2.2 -1.00 0.00 0.00 0.00 0.00 0.00 0.00 I ndustr y and constr uction 20.4 18.6 20.3 22.8 21.8 22.7 23.2 24.3 24.9 26.4 Mining and quarrying 3.0 2.8 4.1 5.1 4.9 4.2 3.7 4.0 4.8 4.8 Manufacturing 7.0 6.9 6.9 7.6 7.5 6.4 5.6 5.2 4.9 5.5 Electricity and water 1.7 1.6 1.5 1.0 1.3 1.2 1.6 1.4 1.2 1.0 TA N Z A N I A E C O N O M I C U P D AT E Electricity 0.9 0.9 0.9 0.6 0.9 0.8 1.1 1.0 0.8 0.5 Water 0.8 0.7 0.6 0.5 0.4 0.5 0.5 0.4 0.4 0.5 Construction 8.8 7.2 7.8 9.0 8.1 10.8 12.4 13.6 14.0 15.0 0.00 0.00 0.00 0.00 0.00 0.00 Ser vices 45.1 45.5 44.2 42.7 41.9 41.0 40.9 40.0 39.1 37.5 Wholesale and Retail Trade,Repairs 9.7 9.9 10.1 10.6 10.4 10.2 10.5 10.7 10.8 11.0 Transport and storage 6.0 6.2 5.8 5.2 4.4 4.2 4.3 4.3 4.3 4.3 Accomodation and Food Services 1.7 1.8 1.6 1.4 1.4 1.3 1.1 1.1 0.9 0.9 Information and communication 2.2 2.4 2.6 2.4 2.4 2.3 2.1 2.0 2.0 2.0 Financial and insurance activities 2.9 3.1 3.2 3.4 3.4 3.3 3.4 3.6 3.6 3.3 Real estate 5.2 5.1 4.6 4.3 4.3 3.8 3.7 3.2 3.0 2.7 Professional,scientific and technical activities 1.4 1.5 1.7 1.5 1.3 1.3 1.3 1.2 1.2 1.1 Administrative and support service activities 2.6 2.4 2.2 2.1 2.3 2.4 2.5 2.4 2.2 2.1 Public administration and Defence 7.0 6.7 6.1 6.3 6.5 7.0 6.6 6.4 6.3 5.4 Education 3.1 3.2 3.1 2.8 2.6 2.7 2.7 2.5 2.4 2.2 Human Health and social work activities 1.6 1.8 1.7 1.6 1.5 1.4 1.4 1.4 1.4 1.4 Arts, entertainment and recreation 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Other social and personal services 0.9 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7 JANUARY 2019, 11TH EDITION Activities of households as employers 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 -1.00 0.00 0.00 0.00 0.00 0.00 0.00 FISIM -0.9 -0.9 -0.9 -1.1 -1.0 -1.2 -1.0 -1.1 -1.0 -0.9 Net taxes 6.6 6.6 6.4 6.2 6.3 6.3 8.1 7.8 7.7 6.9 T otal GDP 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: National Bureau of Statistics. Annex 4. Quarterly Real GDP Growth Rates (Percent Change) Year Quarter Agricultu Mining Manufa Electrici Water Constru Trade Accom Transpo Informa Financia Year Public Professi Adminis Real Educati Health Other FISIM All Taxes GDP at re and c-turing ty c-tion and modati rt and tion l& admi- onal, trative estate on services indust. on market quarryi Repair on & storage and insuran nistrati Scientifi & at basic product prices ng restaur commu ce on c& Support prices s ant nication Technic services al act. 1 3.5 7.5 3.6 -6.3 2.6 7.5 9.2 4.3 4.3 34.6 5.7 10.6 1.0 36.9 2.0 5.7 9.9 6.0 5.6 7.0 6.6 7.0 2 3.4 7.8 3.6 -1.5 2.8 -6.9 3.8 3.8 4.2 21.5 2.9 0.4 2.5 24.2 2.0 5.7 12.1 5.9 0.7 3.8 -1.7 3.4 2012 3 3.0 4.3 3.7 12.5 5.6 3.7 1.4 9.7 -0.3 23.5 4.5 15.3 5.5 35.1 2.0 9.0 12.4 7.5 -1.5 6.3 -2.8 5.5 4 3.0 7.2 5.5 8.7 0.3 8.1 1.1 8.6 9.2 12.5 7.5 10.6 -31.9 4.3 2.0 9.0 11.0 7.2 0.5 5.0 0.3 4.7 1 3.6 -6.3 4.5 16.0 1.1 7.8 1.9 6.6 12.4 2.6 5.9 10.0 24.3 25.0 2.0 5.1 9.6 6.7 -3.1 6.0 18.1 6.8 2 2.8 3.4 6.0 14.2 0.9 13.0 4.3 3.6 -3.0 17.9 4.0 7.6 -8.0 23.5 2.1 5.1 8.9 6.0 -2.3 5.5 17.8 6.3 2013 3 1.9 3.3 10.4 10.3 -6.9 16.3 6.7 -0.4 19.3 8.4 6.8 3.8 -10.5 4.2 2.1 3.5 8.5 4.7 2.0 6.4 17.7 7.2 4 4.3 14.6 4.9 12.1 15.7 19.9 5.1 1.9 19.1 23.7 7.9 10.1 27.5 -0.2 2.1 3.5 8.4 5.3 3.4 9.1 4.2 8.7 1 3.6 19.7 8.2 17.5 0.7 21.4 10.6 3.4 14.7 17.1 11.2 -2.1 -0.3 12.7 2.1 5.4 8.4 6.1 9.4 8.3 2.4 7.8 2 4.4 6.4 10.1 -1.4 5.1 37.5 12.3 3.0 9.6 18.4 14.2 4.9 7.2 13.3 2.1 5.4 8.3 6.0 11.6 10.2 4.4 9.8 2014 3 4.0 5.2 6.3 13.2 12.7 -0.7 12.6 0.2 13.2 12.9 10.1 10.3 -10.6 -17.1 2.2 4.1 8.1 5.0 9.0 5.5 8.8 5.7 4 0.8 7.6 3.0 8.6 -2.3 5.2 4.6 2.5 11.7 -11.4 8.0 2.5 5.6 17.3 2.2 4.1 7.8 6.0 8.8 3.6 15.1 4.4 1 1.4 0.6 9.9 10.6 7.6 23.2 7.1 -1.0 14.5 12.8 11.5 -0.9 3.3 5.6 2.2 7.4 5.8 5.1 13.0 6.9 1.2 6.5 2 0.7 11.2 5.2 18.9 -3.9 13.2 10.0 1.0 9.4 11.8 10.1 0.2 11.9 8.3 2.2 7.4 4.9 5.7 4.1 6.2 10.2 6.5 2015 3 3.3 8.0 2.1 -1.1 0.1 17.6 5.3 6.2 6.7 13.4 12.9 4.2 4.1 4.4 2.2 5.3 4.3 7.1 7.4 6.4 11.6 6.8 4 5.3 15.7 9.5 -2.5 -2.7 13.8 8.7 2.6 1.4 10.2 12.7 14.4 7.3 0.5 2.3 5.3 3.8 6.1 21.9 7.6 14.8 8.2 1 2.7 6.5 7.4 4.4 -2.5 8.9 6.0 -1.3 7.9 13.3 13.5 23.5 6.0 -2.6 2.3 8.6 5.3 6.3 18.8 6.6 10.6 6.9 2 2.6 13.4 9.1 5.0 4.3 11.1 4.7 2.5 30.6 11.6 12.4 17.7 5.9 3.2 2.4 8.6 5.7 6.4 28.0 8.2 12.0 8.5 2016 3 1.9 10.4 4.5 9.5 14.5 20.6 6.1 5.5 10.2 13.8 7.4 -1.8 4.4 8.3 2.4 7.5 5.4 6.9 19.8 6.8 8.5 7.0 4 0.9 14.8 10.2 15.3 0.6 12.0 9.9 7.6 2.3 13.3 9.7 -7.7 8.9 1.5 2.4 7.5 4.5 7.7 1.8 5.9 1.2 5.5 1 2.6 35.3 7.8 4.4 2.0 8.4 6.8 3.0 4.1 13.8 8.1 -4.2 1.9 1.1 2.3 5.2 6.4 6.4 -1.8 5.8 4.5 5.7 2017 2 3.7 18.0 9.3 0.2 7.0 8.8 5.4 3.7 19.8 12.3 8.2 -3.4 5.4 5.0 2.3 5.2 8.4 7.0 -5.2 7.1 17.0 7.8 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 3 3.6 20.8 12.4 5.8 19.1 11.1 5.9 3.1 13.0 13.4 4.5 -2.8 7.9 6.8 2.3 7.2 5.1 5.9 -7.6 7.7 -3.1 6.8 Source: National Bureau of Statistics. 61 PAGE TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Annex 5. Inflation Rates (Percent Change) Month Headline Food & Non Transport Housing, Furnishing, Clothing & Restaurants Miscel. Goods Alcoholic and Communi- Education Recreation & Health Overall Index Alcoholic Water,Electrici Housing Footwear and Hotels and Services Tobacco cation & Culture Beverages ty,Gas & Other Equipment & Entertainment (Exclude Food Fuel Routine consumed at Maintenance Restaurants) of House Weight (%) 100.0 47.8 9.5 9.2 6.7 6.72 6.4 4.5 3.3 2.1 1.7 1.3 0.9 Jan 2017 5.2 7.6 0.6 9.5 3.3 3.4 3.9 2.3 5.0 -0.9 1.8 0.7 4.8 Feb 2017 5.5 8.7 0.6 8.7 3.8 3.2 3.9 1.9 5.2 -1.5 0.8 1.4 3.3 Mar 2017 6.4 11.0 1.6 6.8 3.9 3.4 3.6 3.6 5.2 -0.1 0.8 1.2 3.0 Apr 2017 6.4 11.8 1.9 5.8 3.1 3.9 0.8 4.3 3.5 -0.5 0.8 1.3 2.5 May 2017 6.1 11.6 1.3 4.6 3.2 3.7 0.9 4.0 3.0 -0.8 0.7 1.2 2.9 Jun 2017 5.4 9.6 0.4 7.1 3.2 3.8 0.7 3.7 3.0 -1.0 0.8 0.8 2.2 Jul 2017 5.2 8.9 0.1 7.1 3.3 3.8 0.8 4.0 2.4 -1.0 0.9 1.0 2.4 Aug 2017 5.0 8.6 -0.6 8.9 2.7 3.4 -0.3 3.7 2.5 -1.1 0.8 1.3 2.0 Sep 2017 5.3 9.3 -0.3 8.8 2.6 3.4 -0.3 3.4 2.5 -1.0 0.8 1.9 1.9 Oct 2017 5.1 8.8 0.2 7.6 2.8 3.4 0.6 3.0 2.6 -0.9 0.8 1.9 2.1 Nov 2017 4.4 7.4 0.1 7.8 1.8 3.1 0.3 2.6 2.5 -1.0 0.8 1.6 2.0 Dec 2017 4.0 6.2 0.0 8.3 1.3 2.9 0.3 2.5 2.6 -1.0 0.8 0.9 2.0 Jan 2018 4.0 6.3 0.3 7.1 1.8 2.7 0.8 2.6 2.6 -1.0 2.5 2.0 1.6 Feb 2018 4.1 5.4 1.6 8.6 1.6 3.3 0.9 2.7 2.3 -0.2 2.5 1.5 1.6 Mar 2018 4.0 4.7 1.4 10.4 1.9 3.2 0.8 1.2 2.0 -0.2 2.4 1.1 1.6 Apr 2018 3.8 3.6 1.8 13.1 2.0 2.6 0.8 0.9 1.6 0.1 2.4 1.2 1.6 May 2018 3.6 2.6 1.9 15.0 2.3 2.4 1.0 1.2 1.3 0.1 2.3 0.7 1.2 Jun 2018 3.4 3.4 1.7 12.0 2.4 2.2 0.7 1.4 0.3 -2.6 2.6 0.5 1.4 Jul 2018 3.3 2.8 2.5 12.3 2.6 2.4 0.8 1.2 0.8 -2.7 2.5 0.4 0.7 Aug 2018 3.3 2.2 3.4 12.3 3.1 2.7 1.1 1.2 1.2 -2.6 2.5 -0.2 1.7 Sep 2018 3.4 2.0 2.8 13.1 3.0 3.2 1.9 1.3 1.9 -2.6 2.5 -0.2 1.3 Source: National Bureau of Statistics. Annex 6. Food Crop Prices (Regional Averages, TZS per 100Kg) Maize Rice Wheat Beans Sorghum Month Year Arusha Dar es Mbeya Arusha Dar es Mbeya Arusha Dar es Mbeya Arusha Dar es Mbeya Arusha Dar es Mbeya Salaam Salaam Salaam Salaam Salaam Jan 2017 97,833 98,298 79,031 165,000 172,443 146,500 76,667 117,413 116,241 176,875 194,732 140,583 73,500 106,424 - Feb 2017 118,286 104,402 95,263 173,155 181,770 153,000 75,834 119,660 113,981 197,798 201,385 144,767 81,738 113,777 - Mar 2017 99,136 107,325 90,769 162,955 188,293 174,885 80,200 124,741 118,800 186,250 207,774 162,692 81,750 125,833 - Apr 2017 117,500 124,854 84,542 195,000 185,868 179,375 77,500 136,111 117,188 213,333 209,826 156,800 87,500 142,458 - May 2017 93,833 103,190 81,556 182,000 191,025 178,889 78,500 138,182 118,958 165,500 203,121 155,000 78,083 137,587 - Jun 2017 89,125 82,530 75,583 178,269 183,198 170,000 76,458 126,573 107,179 168,056 200,042 154,042 78,250 139,042 - Jul 2017 62,500 73,429 72,214 188,333 183,750 174,286 72,167 118,643 105,833 158,333 205,357 155,286 74,167 122,500 - Aug 2017 52,286 52,880 66,313 183,571 177,220 157,100 64,500 124,065 98,611 162,500 197,494 154,444 66,333 98,042 - Sep 2017 54,100 53,491 64,000 180,111 182,180 181,375 68,450 129,583 133,333 161,071 200,835 181,464 57,389 98,393 - Oct 2017 53,714 54,207 200,313 191,389 66,214 121,404 166,875 194,681 62,357 95,148 - Nov 2017 51,417 52,288 50,333 177,000 188,054 181,667 69,000 118,167 134,167 197,500 201,736 210,833 59,500 89,885 - Dec 2017 52,625 52,083 53,000 201,563 189,306 188,750 67,071 113,722 192,000 175,000 200,000 200,000 66,222 83,000 - Jan 2018 51,750 47,828 49,000 210,000 189,643 185,833 73,900 110,889 125,000 160,000 207,917 207,500 62,833 86,917 - Feb 2018 48,417 49,427 203,000 196,563 72,778 114,115 160,313 197,135 58,429 79,690 - Mar 2018 48,091 54,958 179,708 194,750 69,850 126,538 145,000 193,281 55,278 79,091 - Apr 2018 46,333 46,375 216,667 210,000 70,625 128,750 199,375 56,500 101,250 May 2018 46,500 49,333 35,000 190,000 170,000 195,000 72,500 130,000 141,000 155,000 206,667 147,000 61,000 85,000 Jun 2018 44,300 49,286 35,000 185,000 171,071 186,667 65,600 126,429 136,833 149,500 185,000 151,583 48,100 92,857 Jul 2018 43,833 42,167 35,000 185,000 145,000 190,000 63,167 125,833 136,000 137,500 186,667 152,500 46,333 85,000 Aug 2018 37,250 45,483 181,875 164,188 63,188 127,500 118,750 191,875 44,688 88,083 Sep 2018 35,182 40,855 180,000 164,394 63,591 119,377 118,409 190,269 47,727 80,758 Source: Ministry of Industry, Trade, and Marketing. PAGE 62 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Annex 7, Food Crops Prices (National Average, TZS per 100Kg.) Month-Year Beans Maize Rice Round Sorghum Potatoes Jan-17 175,602.4 93,356.3 162,745.3 83,467.5 94,899.7 Feb-17 179,461.8 101,552.9 173,216.4 87,508.7 85,254.4 Mar-17 180,705.0 103,143.0 171,760.0 78,960.0 117,288.0 Apr-17 182,930.0 106,077.0 177,932.0 81,556.0 133,440.0 May-17 176,695.0 94,915.0 177,830.0 84,572.0 123,913.0 Jun-17 171,701.0 81,938.0 175,283.0 82,145.0 117,939.0 Jul-17 165,057.0 69,693.0 170,895.0 77,478.0 101,856.0 Aug-17 168,027.0 57,629.0 170,855.0 70,653.0 95,879.0 Sep-17 172,795.0 56,401.0 179,845.0 68,494.0 88,864.0 Oct-17 164,917.2 54,389.2 187,153.5 67,159.4 88,897.5 Nov-17 178,768.9 50,818.8 184,648.0 67,465.8 74,250.8 Dec-17 175,312.5 61,402.9 192,401.4 70,613.5 74,915.7 Jan-18 177,044.3 49,880.4 194,293.5 76,225.9 76,809.1 Feb-18 178,078.5 48,530.1 199,294.9 70,096.2 72,134.7 Mar-18 166,248.2 45,876.4 180,224.3 69,900.9 78,401.5 Apr-18 170,814.2 42,662.3 195,545.6 69,903.5 76,636.7 May-18 174,586.7 41,850.4 170,952.5 70,983.6 91,327.2 Jun-18 165,420.6 42,721.9 160,080.8 74,153.3 87,824.4 Jul-18 161,234.1 41,282.9 153,053.2 77,358.1 68,168.0 Aug-18 153,880.6 40,520.1 146,181.4 79,721.3 80,448.4 Sep-18 154,304.0 39,908.0 247,492.0 81,736.0 76,052.0 Source: Ministry of Industry, Trade, and Marketing. Annex 8. Balance of Payments (Percent of GDP, except where noted otherwise) 2009 2010 2011 2012 2013 2014 2015 2016 2017 1. CA balance (including transfers) -6.3 -7.0 -12.9 -9.6 -11.2 -11.1 -9.0 -4.2 -2.2 Exports of Goods 15.3 18.7 21.2 15.1 11.8 10.8 11.6 11.9 10.0 o/w Gold 5.7 6.6 9.2 5.4 3.7 2.7 2.6 3.0 3.0 Import of Goods -27.0 -31.0 -40.8 -26.4 -24.8 -22.6 -21.5 -17.8 -14.7 Services ( net) 0.6 0.7 0.4 1.1 1.6 1.5 1.6 2.9 3.2 Trade balance -11.1 -11.6 -19.2 -10.2 -11.4 -10.4 -8.3 -3.0 -1.5 Income ( net) -1.4 -1.4 -1.1 -1.5 -1.6 -0.7 -0.8 -2.3 -2.5 Current transfers ( net) 4.1 4.5 3.7 2.1 1.7 1.0 1.0 0.8 0.8 2. Capital and financial account 11.2 15.6 16.7 11.9 12.8 7.9 7.3 5.5 5.3 Capital account 2.0 2.3 2.5 2.0 1.5 1.1 0.8 0.9 0.7 Financial account 9.2 13.3 14.2 9.9 11.3 6.8 6.5 4.7 4.6 o/w Direct investment 4.4 7.8 5.1 4.6 4.7 3.0 3.6 2.9 2.4 3. Net errors and omission -1.2 -5.5 -1.0 -1.5 -0.4 1.6 0.3 -0.3 0.5 4. Overall balance 1.7 1.6 -0.8 0.8 1.1 -0.5 -0.4 0.6 2.7 5. Reserves and related items -1.7 -1.6 0.8 0.8 1.1 -0.5 -0.4 0.6 3.4 Reserves assets -3.1 -1.7 0.9 0.8 1.4 -0.6 -0.6 0.5 3.2 Use of Fund credit and loans 1.4 0.1 0.0 0.0 -0.3 0.1 0.2 0.2 0.1 Source: Bank of Tanzania, IMF, and World Bank. PAGE 63 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION Annex 9. Fiscal Framework (Percent of GDP) 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/8 2018/19 Prel. actual actual actual actual Actual Actual Actual Budget Actual (in TZS billion) Domestic revenue 5,739 7,221 8,443 10,182 10,958 13,785 16,640 17,971 20,895 o/w LGAs 196 221 315 360 426 512 542 736 Total expenditure 9,439 10,765 13,543 13,959 14,603 17,760 19,783 20,165 26,756 Recurrent expenditure 6,690 6,990 9,445 10,299 10,893 13,420 12,510 13,622 14,748 Interest payment 353 436 767 977 1,261 1,460 1,599 1,990 2,653 Wages and salaries 2,346 2,722 3,350 3,969 4,618 6,553 6,367 6,338 7,410 Goods and services 3,991 3,831 5,328 5,352 5,015 5,407 4,544 5,294 4,686 Development expenditure 2,749 3,775 4,098 3,660 3,710 4,340 7,273 6,543 12,007 Locally financed 985 1,872 1,913 1,855 2,265 2,905 5,141 5,069 9,876 Foreign financed 1,764 1,902 2,185 1,805 1,446 1,435 2,131 1,474 2,131 Grants 1,627 1,855 1,728 1,588 1,024 487 1,492 931 1,592 Overall balance after grants -2,321 -2,070 -3,284 -2,498 -2,807 -3,488 -1,650 -1,264 -4,269 Financing 2,321 2,070 3,284 2,498 2,807 3,488 1,650 1,264 4,269 Foreign (net) 1,077 1,735 2,579 2,271 2,634 1,188 350 395 3,076 Domestic (net) 1,244 335 705 227 173 2,299 1,300 869 1,194 (in percent of GDP) Domestic revenue 11.8 12.6 12.8 13.5 12.9 14.2 15.6 15.1 15.8 o/w LGAs 0.0 0.3 0.3 0.4 0.4 0.4 0.5 0.5 0.6 Total expenditure 19.4 18.9 20.5 18.6 17.1 18.3 18.1 17.2 20.2 Recurrent expenditure 13.8 12.2 14.3 13.7 12.8 13.8 11.7 11.5 11.1 Interest payment 0.7 0.8 1.2 1.3 1.5 1.5 1.5 1.7 2.0 Wages and salaries 4.8 4.8 5.1 5.3 5.4 6.7 6.0 5.3 5.6 Goods and services 8.2 6.7 8.0 7.1 5.9 5.6 4.3 4.5 3.5 Development expenditure 5.7 6.6 6.2 4.9 4.4 4.5 6.8 5.5 9.1 Locally financed 2.0 3.3 2.9 2.5 2.7 3.0 4.8 4.3 7.4 Foreign financed 3.6 3.3 3.3 2.4 1.7 1.5 2.0 1.2 1.6 Grants 3.3 3.2 2.6 2.1 1.2 0.5 1.4 0.8 1.2 Overall balance after grants -4.8 -3.6 -5.0 -3.3 -3.3 -3.6 -1.1 -1.3 -3.2 Financing 4.8 3.6 5.0 3.3 3.3 3.6 1.1 1.3 3.2 Foreign (net) 2.2 3.0 3.9 3.0 3.1 1.2 0.3 0.4 2.3 Domestic(net) 2.6 0.6 1.1 0.3 0.2 2.4 0.8 0.9 0.9 Source: Tanzania authorities, IMF, and World Bank. Annex 10. Monetary Aggregates (Percent of GDP, except where noted otherwise) 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Monetary aggregates M3 as % of GDP 22.3 29.6 24.0 23.2 23.2 23.1 21.8 22.7 20.9 22.0 M2 as % of GDP 16.3 16.4 17.9 18.0 17.2 17.0 17.6 16.3 17.9 16.3 M3 growth rate (%) 18.1 18.5 25.4 18.2 12.5 10.0 15.6 18.8 12.5 6.3 M2 growth rate (%) 26.5 19.5 21.8 15.0 16.0 10.9 17.0 13.4 1.9 10.4 Domestic credit Total Domestic credit (% of GDP) 11.4 13.7 15.3 17.6 17.0 17.8 21.3 23.9 23.8 18.4 Total domestic credit growth ( %) 21.1 42.5 29.2 36.0 14.8 21.1 25.4 26.8 13.1 -3.0 Private Sector credit ( % of GDP) 10.8 11.6 13.5 14.2 14.2 14.4 16.5 18.2 18.5 15.6 Private Sector credit growth ( %) 38.6 32.8 17.6 24.3 18.6 17.1 21.4 21.0 19.1 1.2 Interest rates structure Overall Tbills rate ( period average, %) 9.7 10.0 3.9 4.5 10.6 11.9 12.7 10.3 16.2 11.1 Average lending rate (%) 15.4 15.1 14.7 14.8 15.1 15.8 16.2 16.0 16.0 17.6 Average deposit rate( %) 7.8 6.6 6.3 5.8 7.2 8.8 8.7 8.4 9.1 10.0 Source: Bank of Tanzania. PAGE 64 Annex 11. Interest Rates Structure (Percent) Item (Percent) 2017 2018 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul A: Domestic Currency 1. Interbank Cash Market Rates Overnight 4.4 4.4 3.9 3.4 3.2 3.0 2.7 1.8 1.5 1.3 1.5 1.7 2.0 2 to 7 days 5.1 5.1 4.6 4.2 3.7 3.4 3.2 2.1 2.0 1.7 2.0 2.1 2.3 8 to 14 days 5.8 7.1 4.9 4.1 3.8 4.0 4.1 2.6 1.9 1.7 2.0 2.2 2.3 15 to 30 days 6.2 7.7 6.3 6.3 4.0 5.4 4.2 3.9 3.5 3.5 3.5 3.3 1.5 31 to 60 days 9.0 7.5 6.5 6.5 9.0 9.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 61 to 90 days 16.8 16.8 9.0 9.0 9.0 9.0 8.5 8.5 3.3 3.3 3.3 3.3 2.5 91 to 180 days 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 181 and above 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 Overall Interbank cash market rate 4.9 4.9 4.9 3.7 3.5 3.3 3.0 2.0 1.7 1.5 1.7 1.9 2.1 2. Lombard Rate 7.2 7.2 7.2 6.9 6.8 6.8 5.1 3.9 3.0 3.0 3.7 3.7 3.6 3. REPO Rate 2.2 2.2 2.2 2.2 2.2 2.2 2.2 1.1 1.0 1.2 2.5 2.5 2.4 4. Reverse REPO Rate 4.9 6.6 4.9 4.0 5.0 4.6 5.2 5.2 5.2 2.3 4.0 3.3 3.8 5.Treasury Bills Rates 35 days 4.8 4.8 4.8 4.6 4.5 4.5 3.4 2.6 2.0 2.0 2.0 2.0 2.3 91 days 4.9 4.1 4.1 4.0 4.0 4.0 3.8 3.5 2.5 2.1 1.9 2.7 2.9 182 days 8.5 9.4 8.9 7.5 7.2 5.9 4.3 3.9 3.4 3.1 2.7 2.7 3.8 364 days 9.8 11.4 11.4 10.5 9.6 8.7 7.5 6.6 5.5 4.7 4.8 6.3 7.6 Overall Treasury bills rate 9.1 10.6 10.6 9.4 8.9 8.2 6.5 5.5 4.7 4.0 4.3 5.6 7.5 6.Treasury Bonds Rates 2-years 12.5 12.5 11.8 11.8 11.8 11.1 11.1 9.2 9.2 8.5 8.5 8.5 8.5 5-years 13.1 14.0 14.0 14.0 13.6 13.6 12.2 12.2 11.1 11.1 11.1 11.3 11.3 7-years 16.5 14.3 14.3 15.0 15.0 14.0 14.0 13.0 13.0 13.0 12.2 12.2 12.2 10-years 14.8 15.8 15.8 15.9 15.9 15.9 15.1 15.1 13.9 13.9 13.9 13.9 14.4 15-years 16.2 16.2 16.7 16.7 15.9 15.9 14.7 14.7 14.7 14.2 14.2 14.5 14.8 7. Discount Rate or Bank Rate 12.0 12.0 12.0 12.0 12.0 12.0 12.0 9.0 9.0 9.0 9.0 9.0 9.0 8. Savings Deposit Rate 3.1 3.2 2.9 2.8 2.8 2.8 2.9 2.8 2.8 2.2 2.1 2.1 2.3 9. Overall Time Deposits Rate 10.6 10.2 9.8 9.8 9.6 9.6 9.5 8.9 8.6 8.6 8.1 8.4 7.8 1 month 11.2 11.2 10.7 9.2 9.7 10.3 10.4 10.3 9.5 9.2 8.9 9.2 8.0 2 months 11.8 11.5 9.8 11.7 10.7 11.2 11.2 10.1 8.7 9.1 8.8 8.4 8.6 3 months 11.3 9.5 11.6 10.5 10.9 11.0 10.0 8.4 8.9 8.5 7.7 9.1 7.6 6 months 11.5 11.3 11.4 11.2 10.5 10.2 9.8 9.3 9.0 9.0 9.1 9.1 8.4 12 months 11.9 11.7 11.7 11.3 11.3 10.9 10.8 10.1 9.9 9.2 8.7 8.9 8.4 24 months 12.8 12.3 11.2 12.2 12.1 11.8 12.4 12.2 12.1 13.5 11.8 11.9 12.0 10. Negotiated Deposit Rate 12.5 11.8 11.6 10.8 11.1 11.0 10.9 10.4 10.2 9.9 9.4 9.4 9.4 11. Overall Lending rate 17.6 17.8 18.5 17.5 17.4 18.4 18.2 17.3 17.5 17.5 17.5 17.3 17.3 Short-term (up to 1year) 18.9 18.9 18.7 18.7 18.0 18.2 18.3 18.0 18.5 18.2 18.1 17.6 18.0 Medium-term (1-2 years) 18.9 19.5 19.4 18.4 18.6 19.9 19.8 18.9 19.4 19.5 18.8 18.7 18.4 Medium-term (2-3 years) 17.2 17.4 18.8 17.2 16.9 18.6 18.7 16.7 16.6 16.7 17.3 17.0 16.9 Long-term (3-5 years) 17.8 17.9 19.4 17.9 17.9 19.1 18.8 18.0 17.9 17.9 17.9 17.5 17.6 Term Loans (over 5 years) 15.4 15.6 15.9 15.3 15.7 16.3 15.3 14.8 15.0 15.3 15.6 16.0 15.5 12. Negotiated Lending Rate 17.3 17.4 17.9 17.7 17.1 16.8 15.9 16.2 16.5 16.2 16.0 16.2 16.2 B: Foreign Currency Savings Deposits Rate 0.3 0.3 0.3 0.3 0.3 0.2 0.7 1.2 0.8 0.8 1.1 1.0 0.8 Overall Time Deposits Rate 3.7 3.3 3.4 3.7 3.8 3.4 4.1 4.1 3.9 4.0 3.7 3.5 3.4 1-months 4.1 2.2 2.0 3.2 3.8 2.5 3.7 4.0 4.2 3.8 4.2 3.8 3.3 2-months 3.6 3.3 3.4 4.0 3.8 2.9 4.3 4.4 3.7 4.4 3.8 3.4 3.6 The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region 3-months 3.6 3.7 3.8 3.3 3.0 3.9 4.6 3.7 4.4 5.2 3.5 3.7 3.7 6-months 3.7 3.5 3.5 3.7 4.1 4.0 4.7 4.7 3.9 3.8 3.7 3.7 3.5 12-months 3.7 3.8 4.4 4.2 4.2 3.7 3.4 3.7 3.4 3.0 3.1 2.8 2.9 Overall Lending Rate 8.4 8.1 8.6 7.9 8.1 7.8 8.0 8.4 8.0 8.3 8.3 8.4 8.3 Short-term (up to 1year) 9.5 8.9 9.1 8.2 8.7 7.8 8.5 8.8 8.3 8.3 8.5 8.6 9.0 Medium-term (1-2 years) 8.2 7.4 9.0 7.4 7.4 7.3 7.3 7.9 8.3 8.4 8.0 8.2 8.9 Medium-term (2-3 years) 8.3 8.4 8.4 8.4 8.4 8.3 8.3 8.3 7.7 8.3 8.4 8.4 7.4 Long-term (3-5 years) 8.2 8.2 8.3 8.1 8.1 8.1 8.0 8.0 8.2 8.2 8.2 8.5 8.3 Term Loans (over 5 years) 7.7 7.8 8.1 7.6 7.6 7.6 7.7 8.9 7.6 8.4 8.4 8.3 8.0 Source: Bank of Tanzania. 65 PAGE Annex 12. National Debt Developments (Million US$) USD mn 66 2017/18 PAGE Item July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 1. Overal Total Debt Committed/2 26,340.2 26,516.9 26,455.2 26,232.1 26,284.5 26,665.7 26,887.4 27,210.8 27,181.5 27,010.9 28,218.4 28,063.1 26,863.7 Disbursed outstanding debt 17,468.5 17,744.1 17,775.9 17,603.0 17,660.4 17,629.4 17,861.3 18,445.4 18,467.5 18,384.6 18,825.3 18,765.1 18,137.1 Undisbursed debt 8,871.7 8,772.8 8,679.3 8,629.1 8,624.1 9,036.3 9,026.1 8,765.4 8,714.0 8,626.3 9,393.1 9,298.0 8,726.6 2. Disbursed Debt by Creditor Category/2 17,468.5 17,744.1 17,775.9 17,603.0 17,660.4 17,629.4 17,861.3 18,445.4 18,467.5 18,384.6 18,825.3 18,765.1 18,137.1 Bilateral debt 1,159.1 1,179.8 1,166.4 973.6 970.8 971.7 996.8 1,019.1 1,030.8 1,013.4 991.3 981.7 946.4 Multilateral debt 8,909.0 9,035.1 9,084.5 9,061.6 9,115.3 9,091.9 9,120.7 9,584.7 9,705.0 9,622.1 9,541.3 9,509.2 9,319.5 Commercial debt 5,890.2 6,016.0 5,912.9 5,962.1 5,950.0 5,794.0 5,958.8 5,981.9 5,851.3 5,865.7 6,519.4 6,498.5 6,097.1 Export credits 1,510.2 1,513.2 1,612.1 1,605.7 1,624.3 1,771.8 1,785.0 1,859.7 1,880.4 1,883.4 1,773.3 1,775.7 1,774.2 3. Disbursded Debt by Borrower Category/2 17,468.5 17,744.1 17,775.9 17,603.1 17,660.4 17,629.4 17,861.3 18,445.4 18,467.5 18,384.6 18,825.3 18,765.1 18,137.1 Central Government 14,143.8 14,382.8 14,328.2 14,157.1 14,176.3 14,189.6 14,467.9 14,722.4 14,725.8 14,638.2 15,015.6 14,978.8 14,373.1 Parastatal Companies 278.4 288.6 286.6 285.0 287.7 220.5 203.5 207.4 208.1 215.3 212.4 180.4 181.7 Private Sector 3,046.2 3,072.7 3,161.1 3,161.0 3,196.4 3,219.3 3,189.9 3,515.6 3,533.6 3,531.1 3,597.3 3,605.9 3,582.3 4. Disbursed Debt by Use of Funds/2 17,468.6 17,744.2 17,775.9 17,603.0 17,660.5 17,629.4 17,861.3 18,445.4 18,467.5 18,384.6 18,825.3 18,765.1 18,137.1 BOP & Budget Support 2,962.5 3,085.6 3,076.9 2,877.0 2,874.4 2,812.9 2,915.4 2,845.5 2,850.3 2,820.4 2,772.7 2,723.7 2,715.9 Transport & Telecommunication 3,957.2 4,011.8 3,967.4 3,968.0 3,965.2 4,000.9 4,031.4 4,102.0 4,344.0 4,343.0 4,041.0 4,077.0 4,272.5 Agriculture 1,177.4 1,194.1 1,186.9 1,182.0 1,187.3 1,188.7 1,185.5 1,219.0 1,226.0 1,208.0 1,196.0 1,207.0 1,169.7 TA N Z A N I A E C O N O M I C U P D AT E Energy & Mining 2,863.8 2,881.9 2,871.8 2,905.0 2,916.0 2,927.4 2,929.3 2,993.0 3,024.0 3,012.0 2,986.0 2,970.0 2,697.7 Industries 444.4 458.8 531.5 537.0 541.0 542.4 540.0 585.0 587.0 605.0 617.0 605.0 604.0 Social Welfare & Education 2,576.5 2,613.1 2,650.9 2,641.0 2,662.5 2,697.7 2,795.7 2,902.0 3,018.2 2,987.0 2,972.0 2,999.0 2,778.8 Finance and Insurance 903.0 905.9 911.1 913.0 915.7 924.0 921.0 1,004.0 1,015.0 1,023.0 1,024.0 1,049.0 1,009.6 Tourism 67.4 67.2 67.4 67.0 67.2 67.6 66.6 67.0 68.0 68.0 68.0 68.0 68.2 Real Estate and Construction 802.9 801.7 804.4 803.4 816.1 816.4 811.0 1,079.0 883.0 839.0 1,092.0 1,096.0 841.5 Others 1,713.5 1,724.1 1,707.6 1,709.6 1,715.1 1,651.4 1,665.4 1,648.9 1,502.0 1,479.2 2,056.6 1,970.4 1,979.2 5. Total Amount of Loan Contracted/1 0.5 1.0 72.3 0.0 0.4 24.0 32.3 11.0 76.7 7.1 30.5 1.5 2.1 Government 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Parastatal Companies 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Private 0.5 1.0 72.3 0.0 0.4 24.0 32.3 11.0 76.7 7.1 30.5 1.5 2.1 6. Disbursements/1 125.8 121.1 166.3 42.1 4.6 47.2 112.2 118.3 153.4 51.5 531.8 76.0 6.1 Government 124.1 119.5 94.0 42.1 4.5 43.0 67.2 94.1 112.4 51.1 531.6 67.0 4.0 Parastatal Companies 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Private 0.7 1.6 72.3 0.0 0.1 4.2 45.0 24.2 41.0 0.4 0.2 8.8 2.1 7. Actual Debt Service/1 1.0 46.0 147.5 26.1 75.0 159.1 200.0 19.5 184.6 43.2 61.9 109.4 26.1 Principal 0.0 16.6 99.7 14.2 62.5 122.2 135.0 15.0 143.1 29.7 55.8 66.9 25.0 Interest 0.0 29.4 47.8 11.9 12.5 36.9 65.0 4.5 41.5 13.5 6.1 42.5 1.1 Others 1.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 8. Net Flows on debt/1 136.6 137.9 68.7 30.5 -57.9 -75.0 -22.8 103.4 10.3 21.8 476.0 9.1 -18.9 9. Net transfers on debt 1 124.8 104.5 66.6 27.9 -70.4 -111.9 -87.8 98.9 -31.2 8.3 469.9 -33.4 -20.0 10.Arrears by Creditors Category/2 2,461.6 3,292.3 3,367.5 3,365.0 3,428.7 3,589.5 3,604.8 3,918.6 4,041.8 4,026.8 4,152.1 4,279.5 4,306.8 Principal 1,011.8 1,844.5 1,903.4 1,893.7 1,951.2 2,038.7 2,048.0 2,254.1 2,352.7 2,383.7 2,451.2 2,541.6 2,560.2 Bilateral 348.1 350.5 349.4 302.6 305.1 312.6 319.9 320.0 319.6 317.9 327.0 326.0 325.7 Multilateral 15.0 75.7 93.3 91.1 92.0 87.1 88.9 87.4 90.1 98.7 97.3 100.7 101.3 Commercial 398.4 794.3 816.5 833.9 849.4 723.2 725.0 810.2 764.3 769.2 776.6 807.3 823.4 JANUARY 2019, 11TH EDITION Export Credits 250.3 624.0 644.2 666.1 704.7 915.8 914.2 1,036.5 1,178.7 1,197.9 1,250.3 1,307.6 1,309.8 Interest 1,449.8 1,447.8 1,464.1 1,471.3 1,477.5 1,550.8 1,556.8 1,664.5 1,689.1 1,643.1 1,700.9 1,737.9 1,746.5 Bilateral 791.7 799.8 799.7 790.8 794.0 827.5 839.4 841.9 846.4 842.9 839.5 840.9 842.3 Multilateral 15.0 16.2 17.0 21.7 22.2 23.3 22.5 24.5 26.0 28.4 28.1 29.4 29.4 Commercial 401.2 388.4 397.1 405.6 401.5 331.1 330.2 343.0 351.2 300.5 351.7 359.9 361.7 Export Credits 241.9 243.4 250.3 253.2 259.8 368.9 364.7 455.1 465.5 471.3 481.6 507.7 513.1 11. External Debt Stock 18,918.3 19,191.9 19,239.9 19,074.4 19,137.9 19,180.2 19,418.1 20,109.9 20,156.6 20,027.7 20,526.2 20,503.0 19,883.6 12. Domestic Debt Stock 5,596.5 5,457.0 5,530.8 5,614.2 5,687.8 6,013.8 6,206.2 6,279.7 6,265.4 6,273.9 6,082.3 6,725.2 6,317.3 13. Total Debt Stock 24,514.8 24,648.9 24,770.7 24,688.6 24,825.7 25,194.0 25,624.3 26,389.6 26,422.0 26,301.5 26,608.5 27,228.2 26,200.9 End Period Exchange Rate 2,231.6 2,234.9 2,237.8 2,237.8 2,233.1 2,230.1 2,250.8 2,255.9 2,259.8 2,273.6 2,276.8 2,277.7 2,282.6 Source: Ministry of Finance and Bank of Tanzania. Note: 1During the period. 2Position at the end of the period. The World Bank Group Macroeconomics, Trade and Investment Global Practice, Africa Region Annex 13. Poverty by Geographical Region Poverty Distribution of Distribution of the Headcount the Poor Population HBS 2011/12 HBS 2011/12 HBS 2011/12 Basic Needs Poverty Line 1 = TSh 36,482 Urban 15.5 15.9 28.8 Rural 33.3 84.1 71.2 Regions Urban 21.7 14.4 18.7 Rural 33.3 84.1 71.2 Dar es Salaam 4.1 1.5 10.1 Total 28.2 100.0 100.0 Food Poverty Line 1 = TSh 26,085 Urban 6.0 17.7 28.8 Rural 11.3 82.3 71.2 Regions Urban 8.7 16.7 18.7 Rural 11.3 82.3 71.2 Dar es Salaam 1.0 1.0 10.1 Total 9.7 100.0 100.0 Source: National Bureau of Statistics. Note: 1 Monthly expenditure per adult. PAGE 67 TA N Z A N I A E C O N O M I C U P D AT E JANUARY 2019, 11TH EDITION References Buehren, N. 2015. “The Cost of the Gender Gap in Agricultural Productivity in Tanzania Abramsky, T., et al. 2014. “Findings from and Uganda.” Photocopy Washington, D.C.: the SASA! Study: A Cluster Randomized The World Bank Controlled Trial to Assess the Impact of Canning, D., S. Raja, and A. S. 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