Tanzania’s 6.5% Growth Outlook Masks Challenge of Creating Better Jobs

Tanzania’s economy is projected to grow by 6.1 percent this year and average 6.5 percent over the medium term, but the expansion is unlikely to translate into substantial reductions in poverty unless the country creates more productive and better-paid jobs, the World Bank said.

The latest Tanzania Economic Update said increased private-sector activity would drive growth, while inflation remains within the Bank of Tanzania’s target range, public debt is sustainable and strong private-sector credit growth points to continued economic expansion.

The World Bank said the outlook depends on maintaining growth-friendly fiscal consolidation and implementing reforms to improve the business environment.

The report’s special focus on employment found that Tanzania’s main labour-market challenge is not a shortage of jobs but the quality of work available to most people. Despite having one of the world’s highest employment rates, much of the workforce remains concentrated in low-productivity activities, particularly agriculture and informal employment.

Workers in these sectors often have limited access to human-capital development and remain vulnerable to economic and other shocks, constraining the extent to which economic growth translates into higher living standards.

“Tanzania’s economy continues to grow despite global uncertainty and climate risks,” said Firas Raad, World Bank division director for Tanzania. “To turn that growth into better jobs, the country needs to make deliberate policy choices and keep investing in education, skills, and health.”

The report identifies two priorities: strengthening the workforce through improved skills development, social protection and labour-market systems, and increasing the number of productive firms capable of creating higher-quality jobs.

“Tanzania’s jobs challenge is ultimately a firm growth challenge,” said Mary-Jean Moyo, International Finance Corporation division director for Tanzania. “By helping productive firms invest, expand, and create more quality jobs, we can make economic growth more inclusive and deliver better opportunities for Tanzanians.”

The findings come as Tanzania pursues Vision 2050, which sets out an ambition for private-sector-led investment to become the dominant source of investment financing.

The World Bank said achieving that goal will require a more predictable and robust business environment capable of attracting private investment and enabling productive firms to expand.

The report therefore links Tanzania’s medium-term growth prospects increasingly to the ability of businesses to expand and absorb workers into more productive activities, rather than simply increasing the number of people employed.

Source: FSX Business News