1. Economic Growth, Rural Growth and Poverty Dr. Donald Mmari REPOA National Poverty Policy Week 2013 1

2. Outline Introduction and context Growth and income poverty reduction Rural growth: agricultural output and productivity Towards improving productivity & competitiveness Conclusion 2

3. Introduction and Context Progress on selected goals and targets of MKUKUTA & various researches Explores the interplay between economic growth, productivity, and rural poverty Examples drawn from selected case studies 3

4. Growth and Income Poverty Reduction The economy (GDP) has grown in the last decade and at a high rate: ◦ Average 7% within target (6-8%) by 2010 (6.4% in 2011, and 6.9% in 2012) ◦ Attributed to improved infrastructure, energy availability, & good weather and efforts to supply inputs ◦ GDP per capita growth17.9% in 2012 (Tshs.1,025,038 compared to Tshs 869,436 in 2011) Growth has also exhibited a strong resilience to external shocks. 4

5. Growth and Income Poverty Reduction-2 Imports increasing faster than exports (with little diversification) Poverty rate declined from 33.4 % to 28.2% in 2012 (5.2 percentage point)-significant but still high Still pervasive in rural areas (33.3% compared to 21.7% in other urban, and 4.1% in Dar es Salaam) Inequality remained stable at a high level at Gini Coefficient of 0.35 (2007 HBS), BUT all expenditure shares increased but dramatic decline in HH consumption (National accounts 2001-2010) 5

6. Growth and Income Poverty Reduction-3 6 Suggests change in income distribution, especially profits and labour incomes HH was highest in the 1990s, averaging 82% (71% in 2012) % share of GDP Composition of GDP20012010Change in % share Gross Investments17.432.0+14.6 Imports21.338.9+17.6 Exports17.027.8+10.8 Government consumption11.916.1+4.2 Household Consumption75.062.6-12.4

7. Growth and Income Poverty Reduction-3 Agricultural sector growth ◦ Growth averaged 4.3% for ten years, against MKUKUTA target of 10% by 2010. ( 4.3 % also in 2012), and below GDP growth rate ◦ Agriculture share 21.6 % (24% in 2010, 29% in 2001), but 74% of labour force ◦ Underemployment rising- 13.1% in 2006, up from 4.3% in 1991 ◦ 68% percent of labour force young, and 31% migrating ◦ Seasonal, informal and casual labour in non-farm sector ◦ Self employment in informal sector (53% on own farm) ◦ Growth rate of non-monetary agriculture grew faster than monetary agriculture- transformation? ◦ Share of traditional agricultural exports to total exports have declined from 56% in 1996 to 15% in 2010 ◦ Replaced by minerals from just 6% to 41% 7

8. Rural growth: output and productivity Index of export volume for traditional export crops 1961-2008 8

9. Rural growth: output and productivity 2 Productivity of smallholders a big problem for both cash and food crops Yield of tea per hectare by type of producer 9

10. Rural growth: output and productivity 3 Comparison of coffee yields –Tanzania and Vietnam 10

11. Rural growth: output and productivity 4 Sugarcane yield differences (TCH) by type of producer, 2000/01 and 2007/08 11 2000/012007/08 EstatesOutgrowersEstatesOutgrowers Kilombero60307740 Mtibwa50476525

12. Rural growth: output and productivity 5 Average yield rates by outgrowers 2009/10 12 LocationFarming typeYield (TCH) DwangwaPivot irrigated140 Furrow irrigated115 Rain fed70 KilomberoRain fed 37 MtibwaRain fed 25

13. Rural growth: output and productivity 6 Yield (Tonnes/ha) by type of producers 13 CropSmallholdersLarge-scale farmers Banana6.915.8 Coffee0.41.5 Mango10.581.54 Pigeon pea0.42.33 Oranges8.632.23 Palm Oil19.735.77 Maize0.734 Sorghum0.432.7

14. Rural growth: output and productivity 7 Quality is also a serious concern Share of high grade coffee(1-5) in coffee export 14

15. Towards improving productivity and competitiveness Low productivity in agriculture directly linked to intensified poverty for agricultural labour force Solution to rural growth and poverty revolves around increased productivity, efficiency & quality Need to intensify present government commitments (eg. FYDP, MKUKUTA, BRN, Kilimo Kwanza, ASDP), paying attention to: ◦ Agricultural support services – skills and training ◦ Rural infrastructure –roads, storage, processing ◦ Essential economic services-finance, inputs, market system ◦ Institutional/organizational arrangements – policy, contract farming, land regime ◦ Coordination- Agriculture vs other sectors 15

16. Conclusion The key message is that growth has continued to be strong but it has not translated into sufficient employment and productivity increase Focused approach to target constraints to agricultural productivity, efficiency, and output quality Supplementary efforts to support growth and employment in labour intensive sectors in rural and urban activities with potential for enhanced linkages 16

17. Conclusion-2 Harnessing of the growth potential of MSMEs to generate productive employment and decent incomes and productivity enhancement, especially those in rural and peri-urban 17

18. Thank you for your attention 18