Tanzania poverty update Poverty Monitoring Group (PMG) September 4, 2014

Release calendar (tentative) September 2014 → National Bureau of Statistics (NBS) plans to release  Household Budget Survey (HBS) Main Report /12 poverty trend (re-assessment) Comprehensive set of indicators (demographics, housing characteristics and access to services, employment, etc.)  HBS public use / micro data To be released on the NBS website November 2014 (Annual National Policy Dialogue)  Tanzania Poverty Assessment report to be released  Joint product by the World Bank and DANIDA

/12 poverty trend analysis NBS with support from consultants and the World Bank Re-assessment of /12 poverty trend necessary because Poverty estimation methodology was revised in → Poverty estimates cannot be directly compared to 2007 HBS survey instrument was revised in → Particularly non-food recall module Re-assessment proceeded in the following steps (a) Re-analysis of 2007 HBS micro data using a comparable methodology as in the 2011/12 HBS To account for changes in the way the consumption aggregate and poverty line are constructed (b) Cross-triangulation using survey-to-survey imputation methods and other welfare indicators To address changes in the survey instrument and implementation

/12 poverty trend analysis (cont’d) 2011/12 consumption aggregate as closely as possible re- constructed in the 2007 HBS Includes education, health, communication (previously excluded) Somewhat different approach in drawing on the diary vs. recall modules for non-food consumption 2011/12 basic needs poverty line deflated to 2007 using a survey- internal fisher deflator (food and basic non-food items) Re-estimates the 2007 poverty headcount at 34.4% (compared to 33.6% previously) – similarity due to two counteracting effects: Consumption per adult revised upwards by almost one third 2007 basic needs poverty line revised upwards – from Ths. 13,998 to Tsh. 19,201

/12 poverty trend analysis (cont’d) Main results – national level Poverty headcount declined by 18% Extreme poverty headcount declined by 16% The depth and severity of poverty (which measure how far the poor are from the poverty line) have also fallen

/12 poverty trend analysis (cont’d) Main results – by geographic domain Dar es Salaam – poverty headcount declined by 72% Rural areas – poverty headcount declined by 15% Other urban areas – only marginal poverty reduction (by 5%)

Cross-triangulation (a) Survey-to-survey imputation methods Disregard observed consumption in 2007 (on the grounds that it cannot be regarded as comparable) Impute a (counterfactual) consumption distribution in 2007, e.g. the distribution that would have likely existed if the consumption data were collected as in 2011/12 (under certain assumptions) Imputation based on a set of non-monetary variables collected in the same way in both surveys and a relationship between these variables and consumption in 2011/12 (similar to poverty mapping approach) Main specifications indicate a decline in poverty from 32-33% in 2007 to 28.2% in 2011/12 But the results are sensitive to the inclusion of cell phones as a predictor variable in the model If cell phones are excluded only marginal poverty reduction

Cross-triangulation (cont’d) (b) Other indicators of living standards An increasing share of households live in dwellings made of improved materials Increased ownership of modern assets, but declines in traditional assets (+) Cell phones, cooking stoves, mosquito nets, TVs (-) Basic furniture, radios, bicycles

Need to further reconciliate HBS and NPS While poverty has declined in the HBS, poverty in the NPS has increased Potential reasons Differences in how poverty is measured (e.g. deflators) and data are collected (diary vs. recall) Combined with high sensitivity of poverty estimates – an increase in the poverty line by 25% (+Ths 300 per adult per day) increases the poverty headcount by 16 percentage points Time periods do not coincide exactly Overall the decline in poverty in the HBS appears more plausible than the increase in poverty in the NPS More consistent with improvements in other indicators of welfare (shown in both HBS and NPS) 9 Source: HBS 2007, 2011/12 and NPS 1-3. National Panel Survey (NPS)