THE UNITED REPUBLIC OF TANZANIA COMPREHENSIVE REVIEW REPORT FOR TANZANIA FIVE YEAR DEVELOPMENT PLAN 2011/ /16

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1 THE UNITED REPUBLIC OF TANZANIA COMPREHENSIVE REVIEW REPORT FOR TANZANIA FIVE YEAR DEVELOPMENT PLAN 2011/ /16 MINISTRY OF FINANCE AND PLANNING JANUARY, 2016

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3 TABLE OF CONTENTS LIST OF ABBREVIATIONS... iv EXECUTIVE SUMMARY... viii CHAPTER ONE: INTRODUCTION Context Objectives Approach Assessing the Progress Made Scope and Limitations Layout of the Report...3 CHAPTER TWO: SUSTAINING HIGH ECONOMIC GROWTH Introduction GDP Growth Inflation Development Fiscal Performance Budget Deficit Government Expenditure Revenue-to-GDP Ratio Tax Exemptions Government External Borrowing Government Domestic Borrowing National Debt Stock Development of Financial Services Access to Finance Interest Rates Domestic Credit Commercial Bank Deposits Financial Reforms Savings Mobilization Trade Tanzania s World Market Share Export of Goods and Services Imports of Goods and Services Regional Trade Trade Performance Indicators Balance of Payments Position Annual Trends in the Trade Balance Foreign Exchange Reserves External Sector Initiatives and Challenges...25 CHAPTER THREE: SECTORAL PERFORMANCE Introduction SECTION I: PERFORMANCE BY UNDERLYING PRE-REQUISITES Good Governance Environment and Climate Change Land, Housing and Human Settlements...33 ii

4 3.3 SECTION II: PERFORMANCE BY FYDP I CORE PRIORITIES Infrastructure Agriculture Industry/Manufacturing Human Capital Development and Social Sectors Tourism...93 CHAPTER FOUR: FINANCING THE FYDP I Introduction Allocation of Funds from Domestic Revenues Traditional Instruments to Finance the Plan Share of Local Financing to Total Development Expenditure Financing Gap of the Plan Innovative Instruments Annual Expenditure Quota Sovereign Borrowing Public-Private Partnerships Challenges in Financing the FYDP I CHAPTER FIVE: IMPLEMENTATION FRAMEWORK Introduction Implementation Arrangements Annual Plan Preparation and Approval Budget Preparation and Approval Annual Plan Execution and Coordination Monitoring and Evaluation (M&E) Reports and Reporting Arrangements Emerging challenges Summary of the Implementation Process CHAPTER SIX: RECOMMENDATIONS Introduction Summary of Observations Macro-economic policy and recommendations Sector-specific issues and recommendations Concluding Remarks iii

5 LIST OF ABBREVIATIONS ADP AfDB AGOA AIDS AMR ASDP ATCL ATM BEST BMUs BOP BOT BRICS BRN BRT CBFM COSTECH COWI CPCS CRR CSO DADPs DHS DNA DOE DRC DSA DSE DSFA DSM DUCE EAC EBA EEZ EIA EPL EPP EPZ ESIA FDI FETA FSSR FYDP GBS GDP HIV Annual Development Plan African Development Bank African Growth and Opportunity Act Acquired Immune Deficiency Syndrome Automatic Meter Reading Agricultural Sector Development Programme Air Tanzania Company Limited Automated Teller Machine Basic Education Statistics in Tanzania Beach Management Units Balance of Payments Bank of Tanzania Brazil, Russia, India, China and South Africa Big Results Now Bus Rapid Transit Community Based Forest Management Commission for Science and Technology Coroware INC Canadian Pacific Consulting Services Comprehensive Review Report Civil Society Organizations Districts Agricultural Development Plans Demographic and Health Survey Designated National Authority Division of Environment Democratic Republic of Congo Debt Sustainability Analysis Dar es Salaam Stock Exchange Deep Sea Fishing Authority Dar es Salaam Dar es Salaam University College of Education East African Community Everything But Arms Exclusive Economic Zone Environmental Impact Assessment English Premier League Emergency Power Producers Export Processing Zone Environmental and Social Impact Assessment Foreign Direct Investment Fisheries Education Training Agency Food Self Sufficiency Ratio Five Year Development Plan General Budget Support Gross Domestic Product Human Immunodeficiency Virus iv

6 HQ HRHIS ICD ICGEB ICT IFMS ILFS ILMIS IPP ISPs JICA JNIA JTSR KDA KIA KLM KPI KV KWh LAN LGAs LTPP M&E MACEMP MAFC MDA MKURABITA MLS MOCLA MOEVT MOF MOT MOU MOW MRV MTA MUCE MUHAS MW NAFORMA NAIC NARCO NCCFP NDC NEMC NFRA NGOs NICTBB Headquarters Human Resources for Health Information System Internal Container Depot International Centre for Genetic Engineering and Biotechnology Information and communications Technology Integrated Financial Management System Integrated Labour Force Survey Integrated Lands Management Information System Independent Power Producer Internet Service Providers Japan International Cooperation Agency Julius Nyerere International Airport Joint Transport Sector Review Kigamboni Development Agency Kilimanjaro International Airport Koninklijke Luchtvaart Maatschappij (Royal Dutch Airline) Key Performance Indicator Kilovolts Kilo Watts hours Local Area Network Local Government Authorities Long Term Perspective Plan Monitoring and Evaluation Marine and Coastal Environment management Project Ministry of Agriculture, Food and Cooperatives Ministries, Department and Agencies Mpango wa Kurasimisha Rasilimali na Biashara za Wanyonge Tanzania Major League Soccer Ministry of Constitutional and Legal Affairs Ministry of Education and Vocational Training Ministry of Finance Ministry of Transport Memorandum of Understanding Ministry of Water Monitoring, Reporting and Valuation Multilateral Trade Agreements Mkwawa University College of Education Muhimbili University of Health and Allied Science Mega Watts National Forest Resource Monitoring Assessment National Artificial Insemination Centre National Ranching Company National Climate Change Food Point National Development Corporation National Environment Management Council National Food Reserve Agency Non Government Organizations National Information and Communication Technology Broadband v

7 NIDA NKRAs NM-AIST NSGRP ODA OSBP PBFP PCCB PFM PPP R&D RAHCO REDD RFSS RITES RTA SAA SACCOS SADC SAGCOT SEZ SGFSR SIDO SMEs SSA SSC STI SUA TAA TACAIDS TADB TAFSIP TAHA TANESCO TAZARA TB TBT TCAA TDHS TDV THMIS TIC TNLP TPA TPDC TRA TRC Backbone National Identification Authority National Key Results Areas Nelson Mandela Arusha Institute of science and Technology National Strategy for Growth and Reduction of Poverty Official Development Assistance One Single Border Post Property and Business formalization Programme Prevention and Combating of Corruption Bureau Participatory Forest Management Public Private Partnership Research and Development Railway Asset Holding Company Reduction of Emissions from Deforestation and Forest Degradation Rural Financial Service Strategy Rail India Technical and Economic Services Regional Trade Agreements South African Airways Saving and Credit Cooperatives Society Southern African Development Community Southern Agricultural Growth Corridor of Tanzania Special Economic Zones Second Generation Financial Sector Reforms Small Industries Development Organisation Small and Medium Enterprises Sub Saharan Africa South South Cooperation Science, Technology and Innovations Sokoine University of Agriculture Tanzania Airport Authority Tanzania Commission for AIDS Tanzania Agricultural Development Bank Tanzania Agriculture Food Security Investment Programme Tanzania Horticultural Association Tanzania Electric Supply Company Limited Tanzania Zambia Railway Authority Tuberculosis Technical Barrier to Trade Tanzania Civil Aviation Authority Tanzania Demographic and Health Survey Tanzania Development Vision Tanzania HIV/AIDS and Malaria Indicator Survey Tanzania Investment Centre Tanzania National Tuberculosis and Leprosy Programme Tanzania Port Authority Tanzania Petroleum Development Corporation Tanzania Revenue Authority Tanzania Railway Corporation vi

8 TRL TSIP TVETDTP UCSAF UNCTAD US USD VAT VETA VPO WGI WSDP WUAs Tanzania Railway Limited Transport Sector Investment Program Technical and Vocational Education and Training Development Programme Universal Communication Services Access Fund United Nations Conference on Trade and Development United States United States Dollar Value Added Tax Vocational Education and Training Authority Vice President s Office Worldwide Governance Indicator Water Sector Development Programme Water User Associations vii

9 EXECUTIVE SUMMARY The National Five Year Development Plan 2011/ /16 (FYDP I) is the first in a series of three Five Year Development Plans (FYDPs) which have been designated as the key medium term economic management tools in a bid to fast-track the implementation of Tanzania s Development Vision 2025 (TDV 2025). The three plans together implement the country s 15-year Long-Term Perspective Plan 2011/ /26 (LTPP) formulated to ensure that national resources were organised in a way that facilitated the realisation of TDV 2025 s targets of attaining a middle-income country status, high levels of industrialization, competitiveness and quality livelihood, rule of law and an educated and learning society. Aiming to tackle the constraints to growth in order to unleash the country s potential, the FYDP I focused on core priorities including (i) infrastructure (ii) agriculture (iii) industry (iv) human capital development and (v) tourism, trade and financial services. It also categorically emphasised supportive policies related to macroeconomic stability, environment and climate change, governance and rule of law and land, housing and human settlement. The review assesses the performance for the major components of the plan, the major initiatives and challenges encountered, the likelihood of realising planned targets and what should be done better for the preparation and implementation of FYDP II. Some areas performed well, others not so well and still for others, precise assessment was limited by data issues. The report further recognises the influence of other related national policy initiatives notably the Big Results Now (BRN) initiative. Highlights on Macroeconomic Performance Overall the FYDP I sought to attain an annual average economic growth of 8 percent between 2010/11 and 2015/16. Since 2010, however, real GDP has been growing at an average rate of around percent, slightly below the target. During the period under review the fastest growing sectors were communications (15.3 percent), construction (13.0 percent), financial intermediation (9.9 percent) and transport and storage (8.8 percent). With regard to macroeconomic stability for sustainable growth: (a) Inflation rate has seen an upward trend, rising to double-digit figures and returning to a single digit following favourable weather. However, the continued strengthening of the US economy which may have adversely affected the import prices through exchange rate, has contributed to the upward trend; (b) Fiscal performance has continued to experience stresses due to failure of domestic resources to cover rising expenditures. Overall, with total revenue to GDP ratio of 12.8 percent in 2012/13 and 13.6 percent in 2013/14, the government will have to increase efforts on tax and non-tax revenue collection to achieve the ambitious, but possible target of 19 percent by 2015/16. Cases of exemptions went above the threshold while the value and base of tax revenue has narrowed down; and (c) External borrowing to GDP ratio shows a mixed trend, reaching 3 percent in 2013/14, below the targeted 6 percent of GDP proposed in the FYDP I. This trend was attributed to shortfalls in disbursements for projects and non-concessional loans. Also, the country s national debt stock has increased mainly due to an increase in borrowing to finance various activities including the provision of social services and development projects. 1 Rebased GDP estimates viii

10 Highlights on the Review of Core Priority Areas Infrastructure The target set and achievements reached during the period under review were as follows: (i) Railway Rehabilitate the central railway line (2,707 km) and be fully operational: 150 km of the railway line with 80 pounds/yard rail were rehabilitated. Locomotives, engines, plants and equipment all be in working order: The activities undertaken were re-manufacturing of eight locomotives, procurement of 274 new freight wagons, 25 new ballast hopper wagons, tamping machine, 13 new locomotives, 34 brake van, and 22 new passengers coaches and rehabilitation of 89 wagons. Feasibility study, Detailed design, secured investment and initial construction of the new railway line Isaka Kigali railway line to be carried out: A consultant (CANARAIL) completed a detailed engineering study. Detailed designs for the Urban Commuter Railway system be finalized: Two routes were introduced, one operated by TAZARA between TAZARA HQ station and Mwakanga and the other by TRL between Ubungo Maziwa to Dar es-salaam Railway Station via Tabata. (ii) Air Transport Annual passenger handling capacities increased from 2.95 million to 3.43 million people: The number of passengers handled increased from 3,437,608 in 2011 to 5,059,739 in The increase was attributed by the coming of FastJet Company to Tanzania, opening of the new Songwe airport in Mbeya, an increase in the number of tourists, the introduction of new domestic routes and the rehabilitation of airports in Kigoma, Arusha, Mpanda, Mafia, Tabora and Bukoba to bitumen standards. (iii) Ports Cargo volume handling improved from 9.9 million tonnes to 18 million tonnes by 2015: Cargo handling increased from 9.9 million tonnes in 2010/11 to 14.6 tonnes in 2014/15. The positive trend was mainly attributed to deployment of new and modern cargo handling equipment, as well as increase of cargo handling time from 12 to 24 hours per day. Decrease total time for container dwell at import from 12.5 days to 7 days by 2015: Container dwell time was improved to 10.3 days in 2014/15 as a result of improvement of customs procedures and the use of modern container handling equipment. Ship turnaround time reduced from 4.4 days to 2.0 days: Overall ship turnaround time in DSM port improved from 7.1 days in 2010/11 to 2.8 days in 2014/15. This performance was the result of operational efficiency at the port. (iv) Roads Construction and rehabilitation of 5,204.7km of ongoing and new roads to bitumen standard on the main roads transport corridors: A total of 2,775 km was rehabilitated to bitumen standard which is an achievement of 53.3 percent. Addressing traffic congestion in Dar es Salaam and other major urban centres: A total of 59.2km were upgraded to bitumen standard by the end of ix

11 (v) (vi) April 2015 to address congestion in DSM Road Corridor 2. In additon, the Dar es Salaam Bus Rapid Transit (BRT) system is at final stages for phase I and the detailed design for the TAZARA flyover is completed. Science, Technology and Innovation (STI) Complete the National ICT Infrastructure Backbone Project and scale up the broadband access connectivity: A total distance of 7,560 kilometres of Optic Fibre Cable (OFC) Backbone covering 24 regions of Tanzania Mainland were covered under phase I & II of the project; and Tanzania s ICT backbone infrastructural capacity for efficient services and regional connectivity to provide 40 percent of the communications services of the land-locked countries enhanced by 2015: Connectivity to submarine cables (EASSy & SEACOM) and cross-border connectivity with neighbouring countries namely Kenya, Uganda, Rwanda, Malawi, Burundi and Zambia has been successfully implemented. Energy Increase electricity generation capacity to 2,780 MW: By June, 2015, installed generation capacity was 1, MW. Though the target was not reached, electricity generation will improve following the completion of Kinyerezi I Power Plant which is expected to generate 150MW. Agriculture The targets and performance achieved during the period under review were as follows:- Average agricultural annual growth of at least 6 percent: Annual growth registered was at an average of 3.4 percent; Improving food self-sufficiency (particularly for grains) from 104 to 120 percent: Food self-sufficiency increased to 125 percent in 2014/15; Expanding areas under irrigation from 345,690 hectares to 1,000,000 hectares: Areas under irrigation expanded to 461,326 hectares in 2014/2015; and Increase average annual agricultural foreign exchange earnings from currently US Dollars 700 million to 1,500 million by 2015/2016: Traditional crops and horticulture export earning present a mixed trend, whereby in 2011 the earnings were USD 722 million increasing to USD 1,007 million in 2012 and dropping to USD 859 million in Industrial Development/ Manufacturing Targets set under the FYDP I for manufacturing sector and achievements reached were as follows: An annual average growth rate of 11 percent: The average growth rate of manufacturing was 6.6 percent; Increasing sector contribution to GDP up to 12.9 percent by 2015/16: The share to GDP ratio averaged at 7.4; Increasing sector share in total country s export up to 19.1 percent by 2015/16: The share of manufacturing export to total exports has been fluctuating over the time despite the fact that the value of manufacturing exports was increasing, its share to total exports was 22 percent in 2011, and 2 Dar es Salaam road corridor is mostly constituted of feeder roads that help to ease congestion e.g. Mbezi - Malamba Mawili - Kinyerezi- Banana, Kimara Kilungule - External Mandela Road and Jet Conner-Vituka-Davis Corner. x

12 dropped to 17 percent in 2012 and thereafter picking to 23 percent in 2014; and Increase sector employment from 120,000 people to 221,000 people by 2015/16: According to the Integrated Labour Force Survey (ILFS) 2014, the level of employment in the manufacturing is 615,323 people. Human Capital Development and Social Sectors There have been improvements in school enrollments, teaching environment, health sector, and provision of clean and safe water in rural and urban areas. Targets set and achievements reached were as follows: (i) Education 133,000 diploma and grade A teachers trained in 34 colleges: From 2011 to 2014, cumulatively, 99,611 teachers were trained in Government colleges constituting 74.9 percent of total target requirements; MUHAS Campus at Mloganzila constructed and Dodoma University completed: For MUHAS, the construction of a 49 storey building for a training hospital is in the fourth floor, basic infrastructures such as tarmac roads, water and electricity have been put in place. Likewise at the University of Dodoma, constructions of laboratories and classrooms with a capacity of 5000 students were completed, basic infrastructures such as data cabling, water and electricity have been put in place; Five (5) higher learning institutions rehabilitated and expanded: Some rehabilitation and expansion work in higher learning institution has been completed and some are at various stages of implementation: - At the University of Dar es Salaam, the construction of seven buildings and main building for School of Business were completed. The reconstruction of three lecture halls with a capacity to accommodate 600 students and a science laboratory were completed at Dar es-salaam University College of Education (DUCE). The construction of a science laboratory, lecture rooms and centre for broadcasting at Mkwawa University College of Education (MUCE) is on going, the construction of Lands Building which has 21 offices that can accommodate 50 academic staff has been completed at Ardhi University. At the Open University of Tanzania, the construction of a computer laboratory in Mtwara and Mara regions, and installations of wireless infrastructures in various regions was also completed. To increase the share of highly qualified working population from 2.7% to 4.3% by 2015: According to the study conducted by Ministry of Education and Vocational Training 2012/13 indicates that, the share of highly qualified working population (professionals) was 2.5 percent of total qualified working population; and To increase the share of medium qualified working population from 13.6% to 17.8% by The share of medium qualified working population (technicians/associate professionals and medium skilled workers) was 14.7 percent in 2012/13. (ii) Health To reduce maternal mortality from 578 to 175 per 100,000 live births and under-five mortality from 112 to 45 per 1,000 live births by 2017: According to Population and Housing Census 2012, maternal mortality rates decline to 432 deaths per 100,000 live births, under-five mortality per 1,000 live births declined from 81 in 2010 to 54 in 2013; and xi

13 To increase percentage of women assisted by skilled attendants during giving birth from 46% of 2004 till 80% by 2015/16:- women attended by skilled attendants during giving birth remain at 51 percent in 2012 as from year (iii) Water Proportion of population in district and small towns provided with water supply services increased from 53 percent to 57 percent in 2015: The proportion of people accessing water has reached 60 per cent which is above the target between 2010 and 2015; Proportion of urban population in regional centres provided water supply services increased from 86 percent to 95 percent by 2015:- proportions of population with access to water supply in regional centres - stands at 86 percent; and Proportion of population in Dar es Salaam provided with water supply services increased from 55 percent in 2010 to 75 percent by 2015: proportions of population with access to water supply in the city of Dar es salaam reached 68 percent. Tourism, Trade and Financial Services The targets and performance achieved during the period under review were as follows: (i) Tourism Number of visitors increased by 40% from 671,886 to 940,640 by June 2016:- The total number of international visitors increased to 1,140,156 visitors in 2014, due to the improvement in infrastructure as well as tourist facilities; Doubling revenue collection from the current level of TShs 49 billion by 2016:- the revenue collection from the tourist sector increased from USD million in 2011 to USD 2, million in 2014 (ii) Financial Services The financial sector experienced further improvements following the financial sector reforms adopted since the early 1990s. The following were the targets and achievements reached during the period under review; Interest rate spread reduced the performance shows that there was a downward trend from 7.78 percent in September 2011 to 2.1 percent in September 2013, later on, experienced an upward trend averaged at 3.5 percent for the rest of the period ending March 2015; Ratio of private credit to GDP is expected to increase from 16% to 28% by the ratio of bank credit to GDP improved steadily from 21.1 percent in 2010 to 24.3 percent in 2013; Financial reforms developed and implemented - Implementation of the Second Generation Financial Sector Reforms-SGFSR- which contributed to an increase in commercial bank credit to private sector, the transformation of Tanzania Investment Bank into a Development Finance Institution and the establishment of a credit reference databank system and private credit reference bureau which serve as sources of information for money lenders. (iii) Trade Increase Tanzania World Market share from percent to 0.1 percent: Tanzania s trade share rose to percent in 2014; Increase Tanzania share in EAC from 28 percent to 40 percent: Tanzania share in EAC Market was 27 percent in For the period of three years the analysis shows that Kenya dominated the intra-trade with an average share of 36 percent while Tanzania was third with 21 percent; and xii

14 Increase Tanzania market share in SADC from 5 percent to 10 percent: Share of Tanzania s SADC intra trade in 2013 was 3.1 percent. According to SADC Statistics Year book 2013, South Africa dominated the intra-trade with an average share of 25.2 percent while Tanzania was in the ninth position with 3.6 percent. Performance Under BRN Initiatives It is important to recognise performance under Big Results Now! (BRN) on its eight national key results areas (NKRAs), namely: Agriculture; Transport; Energy; Water; Education and Resource Mobilisation, Business Environment and Health. BRN is a Government Initiative which aimed at establishing a strong and effective system to oversee, monitor and evaluate the implementation of its development plans (particularly the FYDP I), based on Malaysia's Big Fast Results approach. The initiative, which was established in February 2013 hinges on: prioritization; detailed implementation and monitoring tools; and accountability for performance. This performance has to be assessed both in terms of the quantitative achievements and the contribution of the initiative by way of improvements in how to do things better. In relatively short time, that initiative has been underway, it has made it possible for more water and electricity to be supplied with much more emphasis on rural areas. Through the BRN, DSM port performance has improved while for agriculture, more smallholder farmers have accessed rice irrigation schemes as well as marketing. As a result, more underutilised land has been put to commercial farming. Also under BRN, the education sector has scored improvements in quality delivery. The rest of the sector activities have continued on ordinary budgets and it is important to note that there have been variations in performance, mainly constrained by availability of financing. Challenges Observed During the Implementation of FYDP I In the course of implementing the FYDP I, many challenges have been encountered. These challenges are both technical/operational and financial. There are also constraints that are sector-specific and others that cut across all sectors invariably mentioned as human and financial resources. While the critical element to performance of the plan has been financing (trends in the development budgets - allocated versus actual releases, availability, and timelines of releases), performance on the policy prerequisites (governance, business environment, implementation discipline etc.) have variously affected the speed and magnitude of results (on the targets). Sector-specific issues - Since that all sectors have specific targets; major challenges observed are as follows: Productive sectors (Agriculture & Manufacturing): low levels of technology application; insufficient storage and value addition facilities; high costs of production; poor infrastructure like roads, electricity to support the sector; and availability of inputs and raw materials; Infrastructure sectors: inadequate capacity and capability of the local construction industry; rapid technological changes including security threats; unplanned urbanization; and lack of regular and efficient maintenance mechanisms; and Social services: low quality of the services, limited access. xiii

15 CHAPTER ONE: INTRODUCTION 1.1 Context The Five Year Development Plan 2011/ /16 (FYDP I) is the first in a series of three FYDPs which have been designated as the key medium-term economic management tools in a bid to fast-track the implementation of Tanzania s Development Vision The second and third FYDPs are scheduled for 2016/ /21 and 2021/ /26 respectively. The three plans together implement the country s 15-year Long-Term Perspective Plan 2011/ /26 (LTPP), which in turn, summarizes the strategies for Tanzania to achieve TDV s targets of attaining a middle-income country status, high levels of industrialization, competitiveness, rule of law, and the eradication of poverty. Building on the achievements of the pre-ltpp national growth and poverty reduction strategies since 1999/2000, success of the LTPP towards Vision 2025 targets is predicated on, among other factors, strong leadership, technical and institutional capacities, well-prioritized projects and programmes given the limited, less predictable financial resources, change of mind-set and an effective communication strategy. The FYDPs of the LTPP have been so designed as to feed into each other, with a previous plan providing basic foundations for the successive plan, all going as planned. The FYDP I set to resolve the country s growth constraints (power, especially rural electrification, ports, rural roads, railways, ICT), expanding training infrastructure to address skills needs, and increase country preparedness in terms of local capacities to maximize benefits from the country s geography as transit hub, untapped agricultural potentials, natural resources and tourism. The plan s core priorities (i) Infrastructure, (ii) Agriculture (iii) Industry (iv) Human Development and Social Services, and (v) Tourism, Trade and Financial Services. Targets were set for key indicators around these and what the plan referred to as underlying prerequisites, or basically supportive policy environment. In anticipation that Growth constraints will to a large extent be addressed, the FYDP II designated to focus on transforming the country s resources through the development of the industrial sector, and the FYDP III was designated to focus on improving the competitiveness in all sectors, especially the manufacturing and services ones in a to facilitate export-oriented growth and significantly increase Tanzania s share of regional and international trade. This Comprehensive Review Report (CRR) is a component of the monitoring and evaluation (M&E) framework that assesses the implementation of the FYDP I for the period 2011/12 to 2015/ Objectives The general objective of the CRR is to inform Tanzanians and other stakeholders about the progress made in implementing the FYDP I since it was launched in June More specifically, the review aims at: i. Assessing progress against the plan s priority areas (targets); ii. Generating inputs for budgeting, planning and for academic research; and iii. Stimulating dialogue on key strategic issues that can help the government during the process of preparing the second FYDP and beyond, aiming to attain the targets of Vision Approach Using data and information from implementing sectors, the analyses are organised in the 1

16 following manner: i. The targets set in the FYDP I for the respective area are presented as guiding posts ; ii. Progress made since the adoption of the plan is evaluated based on available quantitative data and information; iii. The main government/policy initiatives implemented during the period under review are presented these could be continuing from previous period or are entirely new; followed by what implementing agencies consider to be major challenges that inhibit or slow down the efforts. These variables are based on the data and information provided by the implementing agencies which mainly report through their sector ministries Departments of Policy and Planning. An attempt is made to track strategic interventions regarding the underlying prerequisites and progress (change) in the major (selected) indicators of the core priorities areas. As far as data could allow, therefore, observations for indicators for the first four or five years are displayed relative to the 2010 baseline values and against the 2015 target(s). First, where annual series of data are available, they are shown in simple terms (tables or graphs/trends, rates of change etc.). Second, the progress-made-so-far (latest observation) is compared with the target value to assess the gap (distance). This gap is expressed as a percentage of the target value. Where the value is 1 or 100 percent (and above), the target has been met. Attainment of the target is described as likely (L), if everything remains the same. Where the value is 50% (or 0.5) or more, this is an optimistic scenario (even if modest), that it may be possible to attain the target (ML), For indicators with values less than 50 percent, this may be viewed as slow progress, as only a small proportion of the target has been attained (less likely or rather not likely LL) and need to be carried forward to the next FYDP. More effort needed refers to interventions needed to addressing the challenges noted (operational, organisational, institutional) as summarised by the reporting implementing agencies. Often a time, these interventions include financial and human resource constraints. However, though not brought in here explicitly, inter-sector linkages, coordination, direct or indirect are important although these are hardly acknowledged (for instance, the importance of transport and communication in access to medical, educational, administrative, financial services, marketing etc.). 1.4 Assessing the Progress Made The report shows that progress is reasonable in some areas; but in quite number areas more efforts are needed, hoping the targets may not have been set too high. Other areas require corrective organisational improvements or change in strategy in the second FYDP. The details differ across the plan s core priorities (areas/sectors) and across the policy prerequisites (macroeconomic stability, environment and climate changes issues, governance and rule of law and lands). It is difficult to pass a precise overall grade as to whether by implementation of FYDP I has surpassed 50% mark or above, and if therefore, the plan is likely at all to be fully implemented by 100% by 2015/16. Yet, to be useful, the report should provide a realistic assessment of the progress made and the impression thereof of the extent to which the plan targets are likely or not likely to be met, and finally, propose measures or interventions to be considered in FYDP II. The areas/sectors that stand out highly include infrastructure, particularly roads, bridges and ferries, railways and airports, energy and water, agriculture (food production and irrigation 2

17 systems with particular attention to smallholder farming) and human capital development. For these areas, recognition is made of the contribution of the Big Results Now (BRN) initiative since 2012, an approach that seeks to instil implementation discipline and effectiveness. However, despite the improvements, which very across areas/sectors, many targets are very likely to be missed. With regard to challenges, the most frequently mentioned problem is lack of adequate financing, with annual funding targets missed in many cases. Only on rare occasions were funding goals achieved mainly for development projects/programmes. Where human capacity is mentioned as a challenge, financing lies behind it lack of adequate financial resources to (i) employ/deploy more staff or (ii) develop or upgrade capacities of existing staff (re-tooling, further training in new areas, techniques) and (iii) procure new working tools/equipment. One of the biggest lessons from the BRN is that even with adequate financing, implementation discipline consciousness to duty and strict enforcement - can make a difference. 1.5 Scope and Limitations This comprehensive review confines itself to indicators of which data and information were available on the targets to the plan s core priorities as well as key policy environment indicators. Timeliness and availability of data varies across variables and sources, most of the observations being annual, except for some financial/monetary data that are available on higher frequencies (monthly, weekly or daily) in contract, for instance, to GDP data but also there some data available after surveys which sometimes are conducted after years. The analyses are therefore mostly on annual (calendar) and flexibly fiscal year. The analyses are rather quantitative, using simple analyse and account of trends, percentage changes and/or annual growth rates. The quality of outputs/results is an aspect that is not easy to exhaustively analyse for lack of precise targets. It is of interest, for instance, to appreciate the fact that the quality of a road is above and beyond the length of the tarmac laid; it is about the engineering attributes (specifications) of completeness including, to the non-expert, durability etc., and in general, the quality of the infrastructure services, the knowledge and technology content of the raw materials, of processed goods, quality of education and education services. Third, due to lack of perfect data, the CRR was only able to assess the funding performance of the public sector and not so much of the private sector although the latter s participation in different sectors is evident in several areas to mention just a few areas - in social service provision of education (schools/colleges), health facilities/centres and hospitals, provision of safe and clean water, various agricultural activities (sisal, sugar, tea estates etc.), manufacturing factories (cement, textiles, metal, household ware, pharmaceutical industries etc. leather and tanneries, tour operators and expansion of tourists hotels, and the whole range of SMEs. Further, highly acknowledged is the contribution of development partners aid (loans and grants) and technical assistance. Issues of modalities of aid delivery are part of the continuing dialogue on development effectiveness and mutual accountability between the government and development partners. 1.6 Layout of the Report Following this introduction (Chapter 1), Chapter 2 provides the macroeconomic review centring on sustaining high economic growth, relating to performance with respect to 3

18 inflation, financial sector performance, trade and debt. Chapter 3 presents sector performance, preceded by a review of policy environment. The narrative covers the core priorities of the plan. Issues concerning financing of the FYDP I are reviewed in Chapter 4 while Chapter 5 provides the implementation framework and Chapter 6 draws recommendations based on the challenges encountered in several areas/economic sectors. 4

19 CHAPTER TWO: SUSTAINING HIGH ECONOMIC GROWTH 2.1 Introduction This chapter evaluates macroeconomic developments in the course of the implementation of the FYDP I relating to conditions for sustained economic growth. It covers issues related to inflation, and domestic balances (fiscal and financial sector development) and external sector performance (trade and balance of payments) - See Annex 1 for selected indicators for both Chapters 2 and 3. These are important areas of macroeconomic environment influencing and being influenced by the plan implementation at the sector/sub-sector levels. 2.2 GDP Growth Tanzania has been doing well in terms of economic growth with GDP growing at an average rate of 6.7 percent between 2006 and 2010 against the targeted 8 percent stipulated by the Tanzania Development Vision (TDV) In terms of progress made in the period under review ( ), real GDP has been fluctuating from percent in 2011 to 5.1 percent in 2012, thereafter rose up to 7.3 percent in 2013 and fall to 7.0 percent in 2014 (Figure 2.1). Figure 2.1 Real GDP Growth Rate ( ) Note: Redline is target Source: Economic Survey 2014 and Financial Programme Report, 2015 During the first phase of FYDP, the fastest growing sectors with annual growth rates of more than 8 percent on average include: communications (15.3 percent), construction (13.0 percent), financial intermediation (9.9 percent) and transport (8.8). The agriculture sector which is the largest employer (around 73 percent of the labour force) in the economy grew by an annual average of 3.2 percent. This is below the Plan s target of achieving 6 percent annual average growth rate by The growth trend in agriculture is far below an annual rate of 7 percent required to provide broad-based growth and reduce levels of poverty. Table 2.1 presents sector and real GDP growth rates for the period under review (2010 as baseline; 2015 is projections). 3 Based on Rebased GDP estimates using 2007 base year 5

20 Table 1.1: Sector and Real GDP Growth ( ) Actual Projection ECONOMIC ACTIVITY Agriculture, Hunting and Forestry Crops Livestock Hunting and Forestry Fishing Mining and quarrying Manufacturing Electricity, gas Water Supply Construction Trade and repairs Hotels and restaurants Transport Communications Financial Intermediation Real estate and business services Professional, scientific and technical* activities Administrative and Support Service Activities Public Administration and Defence* Education Human health and social work activities Arts, entertainment and recreation* Other services Activities of households as employers* GDP (Constant prices) Source: Economic Survey 2014 and Financial Programme Report, 2015 * New economic activities after rebasing The services sector continued to contribute the largest share to GDP, averaging 51 percent annually, followed by agriculture (26 percent) and construction and industry (23 percent). Communications and financial intermediation are sub-sectors that experienced the highest growth rates. However, their shares to GDP have been relatively low, less than 5 percent of overall GDP (Figure 2.2). The Government has undertaken various initiatives to support the ambitious goals on sustaining economic growth. Amongst these include: implementation of the second National Strategy for Growth and Reduction of Poverty (NSGRP II); implementation of Kilimo Kwanza in order to transform agriculture through programmes such as the Southern Agricultural Growth Corridor of Tanzania (SAGCOT); and improvements in the investment climate by easing conditions and costs for doing business. The government has also initiated and implemented the Big Results Now (BRN) approach in order to speed up the implementation of projects identified by FYDP I. 6

21 Figure 2.2: Contribution of sectors to GDP (%) ( ) Note: GDP Share excluding Bank Charges Source: Economic Survey 2014 and Financial Programme Report, 2015 A number of challenges towards accelerating growth remain. The most critical challenges now and in the medium term include: i. Poor quality of infrastructure especially transport network particularly rural feeder roads, railways and sea ports; ii. Scarce irrigation facilities given weather extremes particularly drought; iii. Low technology in many productive sectors in both rural and urban areas; iv. Low quality education and health service; v. Limited access to secure land rights; vi. Lack of access to finance, especially for Small and Medium Enterprises (SMEs) and the agriculture sector; vii. Low domestic value-addition for primary products leading to exports of unprocessed products that fetch low and unstable prices; viii. Uneven impact as the majority of Tanzanians living in rural areas have benefited the least (rural-urban divide); the sectors that are driving economic growth do not employ the majority of the population who mostly depend on agriculture. 2.3 Inflation Development The FYDP I set two targets pertaining to inflation as follows: o Annual inflation rate not exceeding 5 percent o Capacities for monetary and fiscal policies enhanced Progress has been made in combating inflation. Over the past four and half years, inflation has been the subject of great concern as the country witnessed the rate and volatility of inflation increase. Inflation rate ranged from 5.6 percent in 2010 to 19.8 percent in 2011 and 12.1 percent in year Food inflation was at a peak of 20.2 percent in December 2012 before eased to 6.6 in December Non-food inflation continued to decrease steadily to 10.5 percent in December 2012 and 6.0 percent in December 2013 due to steady power supply. Up to December 2014, inflation eased to 4.8 percent compared with 7.9 percent recorded in December During the same period, food inflation eased to 5.7 percent from 8.1 percent, while non food inflation slowed to 3.6 percent from 5.5 percent. The rate of 4.8 percent 7

22 recorded in December 2014 surpasses the medium term target of 5.0 percent. However, in June 2015 the inflation rose to 6.1 while food and non food inflation was 9.9 and 1.4 percent respectively. This small increase of inflation may be due to the continued strengthening of US economy which may adversely affect the import prices through exchange rate. Year-onyear headline inflation remained at single digits consistent with sustained tight monetary policy and the general decline in global commodity prices, especially oil prices. Figure 2.3: Headline, Food and Non-food Inflation (%)( Jan Jun 2015) Source: National Bureau of Statistics, 2015 Main anti-inflation initiatives have revolved around addressing structural (mainly) and monetary factors. Structural factors include those related to supply (production and distribution) of food, measures to improve productivity and infrastructure (such as roads, reliable energy, irrigation facilities) and markets. Specific measures undertaken include: i. National Food Reserve Agency (NFRA) released the stock of grain reserves to the market to stabilize prices especially of maize during the period of shortage (2011); ii. Provision of subsidies for agrochemicals, inorganic fertilizers, improved seeds and improved seedlings; iii. Strengthening supportive infrastructure such as roads and irrigation structures; iv. Supportive monetary policy that maintains money supply growth in line with price level; v. Use of fiscal measures to grant tax relief on importation of goods particularly during shortages; vi. Government granted temporary exemptions on cement, rice and sugar in 2010 and 2012 to ease the price pressure on these commodities; vii. Government through the Tanzania Petroleum Development Corporation (TPDC) has started building up its first strategic petroleum reserve as the country seeks a longterm solution to oil shortages. The reserve will be stored in major storage centres in the country, starting with Dar es Salaam and later in other towns upcountry; and viii. Moderation in global oil prices, which slower rate of prices. 2.4 Fiscal Performance Based on FYDP I the following targets were earmarked: 8

23 o Budget deficit (excluding grant) restricted to 10% of GDP o Increase revenue to GDP ratio to 19% o Government external borrowing restricted to 6% of GDP and domestic borrowing to 1% of GDP o Overall government expenditure not to exceed 28% of GDP o Oversight and regulations strengthened o Expenditure control and accountability enhanced o Reduce tax exemptions to 1% of GDP Progress made on fiscal performance is explained on the basis of indicators of budget deficit, government expenditure, revenue-to-gdp ratio, tax exemptions and government borrowing Budget Deficit Despite the fact that government expenditure has been higher than revenue collection, the budget deficits (excluding grants) are on track. In 2010/11 the deficit was 8.4percent of GDP; it narrowed to 6.7percent of GDP in 2011/12 and thereafter slow down to 6.3 percent of GDP in 2012/13 and it narrowed further to 5.4per cent in 2013/14. During the period under review, over 50 percent of the annual deficit was financed by external sources particularly through grants and concessional loans. Figure 2.4 below shows the deficit trend from 2007/08 to 2013/ Government Expenditure During the period under review, the performance of total expenditure-to-gdp ratio was below the target of 28 percent proposed in the FYDP I from 19.3 percent in 2010/11 to 18.9 percent in 2011/12, raised up to 19.2 percent in 2012/13 and then dropped again to 18.6 per cent in 2013/14. This increase was due to expenditure commitments on national undertakings such as the Constitutional Review process; 2014 Local Government Elections; preparation of 2015 General Elections, issuing of the National Identity cards, the Population and Housing Census 2012; payment of matured domestic and foreign debts; and recruitment of teachers, security and health personnel that expanded the wage bill. Recurrent expenditure accounted for around 70 percent of total expenditure with development expenditure at about 30 percent. Figure 2.4: Budgets Deficit-to-GDP Ratio Excluding Grants (%) (2007/ /15) Source: Ministry of Finance,

24 Figure 2.5: Government Expenditure (TShs. Billion & % of GDP) (2007/ /15p) Source: Ministry of Finance Budget Speech 2014/15 The government maintained commitment to the spending on strategic projects under the priorities of the FYDP I compared to other projects, strengthening the internal controls of revenue and expenditure by issuing specific circulars on internal audit and the execution of audit committees and further strengthening of the capacity of councils and MDA s in the application of the Integrated Financial Management System (IFMS) Revenue-to-GDP Ratio The revenue collection has generally increased over the recent years. Figure 2.6 below proved that revenue to-gdp ratio increased from 12.8 per cent in 2012/13 to 13.6 per cent in 2013/14. Hence, this shows that the targeted 19 per cent had not being attained though the government will have to increase its tax effort (tax and non-tax revenue) in order to achieve the ambitious target of 19 percent by 2015/16. Figure 2.6: Revenue Performances (TShs Billions & % of GDP) (2007/ /15p) Source: Ministry of Finance Budget Speech 2014/15 Main tax measures undertaken include strengthening of existing sources through reduction of tax exemptions, review of VAT Act, establishment of tax service centres in the concentrated business areas in Dar es Salaam to improve tax compliance, recovery of tax arrears, 10

25 enforcement on the use of electronic fiscal devices - EFDs and intensified risk-based and quality tax audits. Efforts still continue of identifying new potential sources of revenue with a view to reduce foreign dependence. As for non-tax revenue, performance was on average around 50 percent of the estimates for the entire period of the review. The underperformance is explained by poor collection systems, lack of enforcement, weak capacity of the implementing bodies and delays in application of the new rates of land rents passed by Parliament. LGAs own sources have been underperforming, persistently at an average of 60 percent against the estimates in the reviewed period. This is due to a combination of either too ambitious revenue targets by some local governments and poor systems of managing and monitoring collections at that level Tax Exemptions Over the medium term, the exemption levels as a percentage of GDP were relatively high, at more than 2.1 percent compared to the stated target of 1 percent. Achieving this target would require drastic measures because as the trend shows the exemptions are increasing over the years. The value of tax exemptions in Tanzania from 2010/ /15 rose from TShs 668 billion in the FY 2009/10 to TShs1.784 billion in FY 2011/12 and decreased to 1,481 billion in FY 2012/13. The decrease was a result of government efforts to reduce the tax exemptions as per policy. In 2010/11 tax exemptions were 18.8percent of domestic revenue and increased to 24.5percent in 2011/12, but dropped to 19.1 percent of domestic revenue in 2012/13 and then dropped more to 18 percent in 2013/14 and 16 percent in 2014/15 (Figure 2.7). Figure 2.7: Value of Tax Exemptions and % of Domestic Revenue, (2007/ /15) Source: TRA Report on Tax Exemption, 2014 Higher levels of tax exemptions were caused by the provision of incentives to investors in the expectation of getting positive returns from anticipated growth. The main beneficiaries of tax incentives and exemptions are a small group of investors, while the losers are the general population as a whole. Case by case analyses should help quantify the actual costs and benefits of the exemptions and devise measures to limit unproductive exemptions. Main initiatives undertaken so far include the review of the VAT law geared at reducing large number of exemptions under the current VAT Act and finalization of the Study on Tax 11

26 Exemptions which assesses the costs and benefits of exemptions. Challenges include the need to plug loopholes in the implementation of fiscal incentives, resolve any conflicts of interest between TRA and various Government institutions with regard to exemptions and address the difficulties in practicing common rates of tax exemption across the EAC member countries because of differences in investment climate across the countries. Additionally, the trend of exemption shows that there is a fall of 51.3 million from 2013/14 to 2014/15 this due to introduction of 15% excise duty on imported vehicles ageing 8 to 10 years. Moreover, one of the qualifications for government employee to be granted exemption on vehicle must be taxed excise duty. Therefore, there will be a dramatic fall of exemption at the end of FY 2015/16 due to implementation of new VAT Act 2014 that pealed out a lot of beneficiaries Government External Borrowing During the period under review, external borrowing-to-gdp ratio shows a mixed trend whereby it reached an average of 4 per cent, which was below the targeted 6 percent of GDP proposed in the FYDP I. In 2010/11, the ratio was 2.4 percent, rising to 3.0 percent in 2011/12 and thereafter dropping to 2.6 percent in 2012/13, rising again in 2013/14 to 3 percent as it has being shown in the Figure 2.8 below. This trend followed significant shortfalls in disbursements of projects and non-concessional loans. Figure 2.8: Government External Borrowing-to-GDP Ratio (2007/8 2014/15p) Source: Ministry of Finance, Financial programming, 2014 In order to correct the problem, Government continued implementation of the Debt Sustainability Analysis (DSA) to assess resilience of the national debt as a result of external and domestic borrowing. Unpredictability of inflows of foreign funds particularly official development assistance (ODA) still stands out as a major challenge Government Domestic Borrowing During the period under review, the government domestic borrowing-to-gdp ratio (bank and non-bank) has generally been above the proposed target of 1 percent except for 2011/12 (Figure 2.9). 12

27 Figure 2.9: Domestic Borrowing (GDP Ratio) (Bank and Non-Bank) (2007/8 2014/15p) Source: Ministry of Finance, Financial programming, 2013 The high ratio is attributed to rising financing needs for infrastructure development, conversion of external debt to domestic debt, inclusion of non-securitized debt in debt stock, issuance of Treasury Bills and bonds for monetary policy implementation as well as domestic debt market development. The shortfalls in external non-concessional loans have necessitated domestic borrowing to cater for expanding government spending (which has risen above the set target of 28 percent of GDP) National Debt Stock During the past five years Tanzania s national debt stock has increased. This is attributed to an increase in borrowing to finance the provision of social services and development projects. In order to ensure that the national debt does not increase rapidly, the FYDP I aimed at maintaining public debt at a sustainable level as one of its goals. The FYDP I targeted reinforcing monitoring and management of national debt in order to ensure government financing needs and debt service obligations are met at the lowest possible cost and risk and, at the same time develop domestic markets for securities. Trend in National Debt Tanzania s national debt has shown a rising trend for the period between 2010 and 2015 as domestic debt, external debt and national debt increased (Figure 2.10). Figure 2.10: Trend of Debt Stock (USD Million)(March 2010 March 2015) Source: BoT Economic Bulletin ( ) 13

28 Domestic debt stock as of the end of March 2015, reached USD 4,204.1 million compared to USD 3,424.9 million in March 2013 and USD 1,938.1 million in March The increase was mainly associated with new borrowing to finance development projects. External debt stock at the end of March 2015 reached USD 14,697.7 million which is higher than USD 11,679.7 million and USD 7,669.7 million recorded in March 2013 and 2010 respectively. At the end of March 2015, out of total external debt stock, 90.0 percent was disbursed outstanding debt and 10.0 percent was interest arrears. The increase in external debt was mainly on account of new disbursements and accumulation of interest arrears. The national debt stock as at end of March 2015 reached USD 18,901.8 million compared to USD 15,104.6 million at end of March 2013, USD 10,964.1 in March 2011 and USD 9,607.8 million in March The rise was mainly on account of new disbursements, accumulation of interest arrears and issuance of domestic debt instruments. The profile of national debt by borrower category indicates that the largest portion of debt amounting to USD 15,963.1 million or 84.5 percent of total national debt as of March 2015 falls under Government debt. This is followed by private sector and public corporations with the debt of USD 2,314.4 million and USD million respectively. The rise in Government debt over the years is attributed to new disbursements and primary fiscal deficits that prompted a relatively large issuance of Government securities. Debt Sustainability Even though national debt has been rising, Tanzania s external debt and total public debt remain sustainable as debt indicators are below relevant thresholds (Table 2.2). Indicators used are present value of debt to GDP ratio, present value of debt to export ratio, present value of debt to revenue ratio, debt service to exports ratio, debt service to revenue ratio and total public debt to GDP ratio. Table 2.2: Debt Indicators and their Relevant Thresholds DEBT INDICATORs p Threshold Public Debt PV of Public Debt to GDP ratio External PV of debt to GDP ratio PV of debt to exports ratio PV of debt to revenue ratio Debt service to export ratio Debt service to revenue ratio Source: Ministry of Finance Debt Sustainability Analysis ( ). In the period under review, the present value of debt-to-gdp ratio was below the threshold of 50. The present value of debt-to-gdp was in 2013 compared to 18.0 in 2012 and 14.9 in However, as a caution, the ratio of present value of debt-to-gdp has been increasing since 2010 reflecting a slow reduction in the ability of the economy to repay as the national debt grows at a higher rate than the rate of growth of goods and services produced in the country. Main initiatives undertaken: In order to reinforce debt monitoring and management since 2010 government took different measures including: i. Development and implementation of the Medium-Term Debt Management Strategy; 14

29 ii. Continuation of National Debt Sustainability Analysis guiding government borrowing; iii. Minimization of short-term debt and avoiding concentration of debt service in a given year; iv. Keeping the debt sustainable by (a) giving first priority to concessional borrowing and (b) promoting the use of other sources for financing that can reduce government debt burden such as Public Private Partnership (PPP) arrangements. Challenges: in implementing these strategic measures, the government has to grapple with: i. Fiscal expansion coupled with inadequate domestic revenue collection which compels the government to borrow in order to meet the budget gap. ii. The changes in global business environment causing most creditors to impose high interest rates on loans and other conditions which in turn increase debt burden on the borrower. iii. Managing currency stability in the face of growing external debt as the country expects to join international financial markets. 2.5 Development of Financial Services Over the past four years, Tanzania has experienced improvements in financial sector as a result of sustained implementation of the financial sector reforms adopted in the early 1990s and new initiatives to deepen financial sector integration in the economy. Tanzania s banking sub-sector is leading in the provision of financial services mainly due to the introduction of tele-banking services. The Bank of Tanzania s Annual Report 2013/14 indicates that there are about 52 banks with a network of 634 branches, 30 insurance companies, 2 re-insurance companies, 76 insurance brokers, 520 insurance agents, and 5 public pension funds. The provision of financial services was guided by the following FYDP I targets: Interest rate spread reduced Attractive saving rate to bolster savings mobilization achieved Financial reforms developed and implemented Ratio of private credit to GDP is expected to increase from 16% to 28% by 2015 Ratio of domestic deposits to GDP is expected to increase from 25% to 35% by 2015 There has been improved performance in the following areas although a few formidable challenges remain (access to finance, interest rates, domestic credit, bank deposits, and savings mobilization) Access to Finance Over the past three years campaigns for more customers and usage of mobile telephones have led to significant improvements in access to bank services. The proportion of the population with access to finance increased from 11.2 percent in 2009 to around 20 percent in 2013, while the usage of informal finance dropped from 35.1 percent to 27.3 percent. Similarly, the proportion of adult population who are near financial facilities was 37.4 percent by December 2013 as per the FinScope 2013 survey. Nevertheless, access to formal financial services in Tanzania remains low due to low incomes, high cost of banking, lengthy procedures and insufficient bank networks. According to the National Financial Inclusion Framework of 2013, only 17 percent of the adult population in Tanzania (3.7 million) had access to bank accounts by However, due to introduction of mobile telephony, the number of people using these services reached 15

30 49.9 percent (nearly 9.8 million) by December In addition, the FinScope 2013 survey showed the percentage of people keeping savings at bank and at a non-bank formal institution rose to 13.0 percent and 25.6 percent compared to 8.6 percent and 7.2 percent in 2009 respectively Interest Rates Interest rates offered by commercial banks (weighted average interest rates), which are market-determined, have continued to increase consistently over the last four years. On average time deposit rates have increased from 5.40 percent in March 2010 to 7.33 percent at the end of March 2015, while saving deposits have marginally increased to 3.38 percent at the end of March 2015 mainly due to an increase in competition among banks. The weighted average lending rates have increased slightly to percent at the end of March 2015 from percent at the end of March The higher lending rate is associated with a lack of security (collateral) and improper borrowers records. Similarly, the lending rate for long term loans (over 5 years) went up to in March 2015 from percent in March Nevertheless, the negotiated lending rate declined marginally from percent in March 2010 to 7.33 percent in March 2015 mainly on account of issues with borrowers profiles and compliance. The differential between deposit and lending rates (12 months) has declined in recent years (Figure 2.11). Figure 2.11 Differentials between Lending and Deposit Rates ( ) Source: Quarterly Economic Bulletin ( ), BoT The bank margin 4 narrowed from 5.84 percent in March 2010 to 3.32 percent in March 2015; but although the bank margin has narrowed, it remains wide by global banking standards Domestic Credit Monthly growth of credit to the economy (domestic claims both central government and private sector) over the past four years has been slow and fluctuating. However, annually, the average growth of domestic credit was 24.3 percent in 2014 compared to 35.5 percent in Commercial bank credit to various economic activities increased significantly (Table 2.3). 4 weighted average lending rate minus deposit rate, percent 16

31 Table 2.3: Composition of Commercial Banks Share of Lending by Economic Activities (%) SECTOR Agriculture, Hunting and Forestry 12.20% 12.60% 10.80% 9.70% 8.60% Fishing 0.90% 1.10% 0.50% 0.30% 0.30% Financial Intermediaries 2.50% 2.40% 2.70% 2.50% 2.30% Mining and Quarrying 0.60% 0.60% 0.60% 1.00% 14% Manufacturing 13.60% 12.50% 11.40% 11.40% 11.30% Building and Construction 3.10% 4.30% 4.70% 5.10% 5.20% Real Estate and Leasing 3.20% 4.10% 4.50% 5.00% 4.40% Transport and Communication 9.20% 7.40% 7.00% 7.20% 7.60% Trade 17.50% 20.60% 21.10% 21.30% 22.90% Tourism 0.60% 0.70% 0.70% 1.10% 1.10% Hotels and Restaurants 4.50% 4.90% 4.20% 3.70% 3.50% Warehousing and Storage 0.00% 0.20% 0.30% 0.20% 0.20% Electricity 2.70% 2.30% 3.90% 4.00% 3.30% Gas 2.10% 2.30% 1.50% 2.10% 1.50% Water 0.00% 0.00% 0.00% 0.00% 0% Education 1.20% 1.50% 2.10% 2.80% 3.20% Health 0.30% 0.20% 0.50% 0.50% 0.70% Personal and Other Services 25.80% 22.40% 23.60% 22.30% 22.30% Source: BoT - Quarterly Report March 2015 In terms of composition, personal loans accounted for the largest share followed by trade, manufacturing, agriculture, transport and communication activities (Figure 2.12). Figure 2.12: Average Annual % change in the Share of Credit to Sectors ( ) Source: BoT - Quarterly Report March 2015 Over the past three years the ratio of bank credit to GDP improved steadily from 21.1 percent in 2010 to 24.7 percent in 2012, dropped to 24.3 percent in 2013 and further dropped to 20.9 percent in In addition, the ratio of lending to deposits reached 69.7 percent by September 2013 compared to 62.3 percent in This reflects an expansion of viable businesses, higher demand for credit, an increase in credit worthiness of borrowers, high securitization of loans, and increased willingness of investors to invest in the economy. 17

32 2.5.4 Commercial Bank Deposits The volume of commercial bank deposits between December 2010 and December 2014 increased to shillings 17,030.1 billion from shillings 10,150.1 billion in 2010, equivalent to an increase of 68 percent. The increase in deposits was mainly due to an increase in the number of banking institutions and branches. The number of registered financial institution grew from 49 in March 2010 to 52 in December 2014, and the number of branches rose from 521 to 634 during the same period. By December, 2014, the composition of commercial bank deposits was characterized by foreign currency deposits (34 percent); transferable deposits (demand deposits 33 percent), and other deposits (savings & time deposits 33 percent). Table 2.4 illustrates the share of time and saving deposits in total commercial bank deposits decreased between 2010 and Table 2.4: Composition of Commercial Banks Deposit 2010 to 2014 Deposit Transferrab Deposit in 3,243, Mil. TShs Share 32% Deposit in 5,113,564.8 Mil. TShs le Others 3,678, % 4,807, Foreign 3,228, % 5,202, Currency Total 10,150, ,123, % 20 Source: BoT- Quarterly Report, December Share Deposit in Mil. Share 35% 5,657, % 30% 5,627, % 35% 5,744, % % 17,030, % Financial Reforms The Government continued to enhance access to financial services and stability of the sector. These measures included implementation of the Second Generation Financial Sector Reforms-SGFSR- which contributed to an increase in commercial bank credit to private sector from about 5.4 percent of GDP in 2001 to about 18.0 percent in , the transformation of Tanzania Investment Bank into a Development Finance Institution and the establishment of a credit reference databank system and private credit reference bureau which serve as sources of information for money lenders. The reforms have paved the way for new innovations - new financial services (products), increased access to financial services (e.g. use of mobile phones), access to non-bank financial institutions, SACCOS, mobile money agents and increased electronic payment (Table 2.5 for selected indicators). Table 2.5: Selected Monetary and Financial Indictors Indicators Credit to GDP ratio N/A Non-Government Sector Credit to GDP N/A Average Deposit Rate (12 months) Overall Treasury Bill rate Average Long term Lending Rate (over 5 yrs.) Number of Banks Number of Bank Branches Number of ATMs 1,906 Number of bureau de change 211 Source: BoT, Monthly Economic Review January The analysis presented based on data of Finscope Survey which is carried after every three years. The last survey was done in

33 2.5.6 Savings Mobilization Economic transformation and take-off require accumulation of capital and its corresponding finance. The process requires increased savings for future investment. In Tanzania saving as a percentage of GDP has been increasing consistently from 16.8 percent in 2006 to 24.1 percent in 2010, thereafter declining to 15.5 percent in 2013 and rose to 17.8 percent in Savings is expected to be 17.7 percent of GDP in Figure 2.13: Trend of Saving in Tanzania from 2006 to 2015 Source: IMF Database, 2015 Improvement in savings mobilization has been facilitated by the establishment of small and medium-sized schemes that encourage people to engage with microfinance institutions and obtain credit or save incomes for future development. There has been an increase in the number of community-based financial institutions that provide savings and credit services. By June 2013 there were 5,559 Savings and Credit Cooperatives Society (SACCOS) and 170 credit institutions (NGOs and companies). There is also a huge number of informal groups that are providing credit services in urban and rural areas. Such an influx of savings and credit institutions has made it easier to mobilize savings in the economy, which is essential for reducing the vulnerability of the poor and increasing their income generation capacity. The improvement of the Dar es Salaam Exchange (DSE) and an increase in the number of people buying shares in different listed companies has also helped to improve the saving rate in Tanzania. The listed companies at DSE increased in tandem with market capitalization. By the end of March 2015, market capitalization increased to TZS 22,743.3 billion equivalents to 28.6 percent of GDP due to appreciation of shares listed by companies. The increase in market capitalization went parallel with an increase in the number of people purchasing shares at the market. The main financial sector initiatives undertaken by government in recent years include: i. A favourable environment and supportive infrastructure that allow opening up of financial institutions including in rural areas where access has historically been very limited. For example, the CRDB Bank Ltd has introduced agency banking known as Fahari Huduma, Joniour Jumbo Account, and Premier Banking, NMB introduced banking services such as Business, Agribusiness Banking and Corporate Banking. Also majority of banks offers mobile banking that involves Tigo Pesa, Mpesa, Airtel money and Ezy Pesa. Morever, the banks launched a joint effort of cash deposits and withdrawal services through mobile phones. 19

34 ii. Restriction of government borrowing from domestic banks at 1 percent of GDP thus allowing banks to extend more credit to the private sector (reducing crowding-out effect) iii. Measures to enhance credit market conditions and reduce non-performing loans to various banks through the establishment of the Credit Reference System, formalization of businesses and properties and the enhancement of creditors and insolvency rights; iv. Development of the Rural Financial Services Strategy (RFSS) to expand access to a wide range of financial services by individuals, households and enterprises in rural areas; v. Legal and regulatory measures to strengthen financial services for example the issuance of Agent Banking Guidelines; preparation of Mobile Financial Services Regulations and the review of the 2002 National Microfinance Policy. While these initiatives are far from perfect, other challenges which government continues to address include further improvement in access to bank services which is around 17 percent of the population is still very low even by Sub-Saharan African (SSA) standards (average above 40 percent) and by EAC standards where Tanzania trails only Burundi s 7 percent; provision of enabling conditions/environment (e.g. infrastructure and policies) which will enable location of banking/financial services closer to where the majority of people live and work and improving chances for poor Tanzanians and potential borrowers assets to be qualify as collateral (e.g. continued propagation of Property and Bussness Formalization (MKURABITA). 2.6 Trade The major objectives of the FYDP I for the trade sector are to ensure that Tanzania is moving up the ladder of comparative advantage in producing goods with high domestic value-added content to maximize domestic income per unit; high skill content to generate domestic learning effects and strong international demand prospects to ensure a growing market. These objectives are essential to ensure Tanzania benefits from its participation in regional and global trade by increasing volume of exportable items; increasing value of export through value-addition chain; and finding new markets. FYDP I targets to be achieved in 2015/16 are as follows: o Increase Tanzania World Market share from percent to 0.1 percent; o Increase Tanzania share in EAC from 28 percent to 40 percent; o Increase Tanzania market share in SADC from 5 percent to 10 percent; and o Increase contribution of Trade to GDP from 16 percent to 20 percent Tanzania s World Market Share The FYDP I targeted Tanzania s foreign trade to increase and reach a world market share of 0.1 percent in Tanzania s trade expanded slowly as its share rose from percent in 2010 to percent in The trend improved to percent in 2012 and remained at the same level in 2013, before improving to percent in 2014 (Table 2.6). Although the trend is positive it remains far below potential. Thus, attaining the world trade share of 0.1 as envisaged under the FYDP I require more efforts. 20

35 Table 2.6: Total Value of Trade (mil USD) and Market Share in the World ( ) Country Value Share Value Share Values Share Value Share Values Share Tanzania 15, , , , , World 1 38,349, ,245, ,629, ,720, Source: UNCTAD statistics 2015; Economic Survey 2014, Ministry of Finance Export of Goods and Services Over the period under review, the value of exports increased by an annual average of 9.5 percent, due to a continuous increase in exports of traditional and non-traditional goods and receipts from services such as tourism and transportation (Figure 2.14). In 2011 the value of export of goods and services increased by 15 percent to USD 7,398.0 million while in 2013, the value of exports of goods and services declined by 1.9 percent to USD 8,519.1 million from USD 8,683.8 million recorded in 2012 due to a decrease in the value of exports, except for manufactured goods. In 2014, the value of goods and services exported increased by 3.7 percent to USD 8,769.3 million. This development was mainly on account of good performance in exports of manufactured goods and travel receipts. Figure: 2.14 Value of Exports (USD Millions) Source: Data compiled from Economic Survey, Ministry of Finance, 2011, 2012, 2013 and Imports of Goods and Services During the period under review, the value of imports increased by an annual average of 11.5 percent. This was attributed to an increase in importation of capital, intermediate as well as consumer goods. In 2010, the value of goods and services imported was USD 8,974.8 million while that of 2012 was USD 12,033.4 million. In 2013 value of imports was USD 13,616.9 million while in 2014 the value of imports marginally increase by 0.8 percent to USD 13,623.2 million (Tables 2.7 and 2.8). Much of the increase in imports originated from the imports of oil due to rising demand of oil for both motor vehicles and thermo-power generation 21

36 Table 2.7: Value of Imports from (USD MILLION) Details p Merchandise Capital goods Intermediate goods Consumer goods Services Total Imports Source: Economic Survey Ministry of Finance 2011, 2012, 2013, 2014 Table 2.8: Import Structure (%) Merchandise Capital goods Intermediate goods Consumer goods Services Total Imports Source: Economic Survey, Ministry of Finance 2011, 2012, 2013, Regional Trade East African Community The medium-term target for Tanzania in the Regional Trade was to increase its share in EAC trade from 28 percent in 2010 to 40 percent in For the period of four years the analysis shows that Kenya dominated the EAC intra-trade with an average share of 36 percent followed by Uganda with 28 percent while Tanzania was third with 21 percent, followed by Rwanda with 11 percent and Burundi was at the bottom with 4 percent. According to EAC Facts and Figures (2015) report, Tanzania s intra-trade share in 2010 was 17 percent and remained at the same level in 2011 before increasing to 20 percent in 2012 and 27 percent in 2013 and then fall to 24 percent in This indicates that, Tanzania s share to the EAC intra-trade for the period under review has been increasing gradually with minor fluctuations. Tanzania s major exports to EAC partner states include textile articles, cement, coffee, tea, mats, worn clothing, electrical machinery equipment and sound recorders. The main imports from EAC partner states are petroleum products, motor vehicles, aluminum, iron and steel. Figure 2.9 depicts Market share in EAC intra-trade. Although the average contribution of Tanzania in the EAC regional trade fall short of the target set by FYDP I, the EAC Facts and Figures statistics indicates that there has been an increase of Tanzania s trade in EAC from USD million in 2010 to USD 1311 million in

37 Figure 2.15:Market Share in the EAC Intra Trade ( ) Source: EAC facts & Figures 2015 Southern African Development Community (SADC) Tanzania s trade performance in the SADC bloc shows an encouraging trend. In 2013, Tanzania completed the liberalization schedule by eliminating all tariffs on imports emanating from SADC member states although it has applied for derogation on sugar and papers which remained with 25 percent import duty respectively. In 2010, the value of goods exported to SADC countries was USD million; increasing by 85.4 percent to USD million in 2011 and USD million in In 2013 the value of exports to SADC decreased to USD and then to USD in South Africa is the leading destination of Tanzania s products (gold, coffee, cashew nuts, cotton, natural precious stone such as tanzanite, spices, and tea) followed by the Democratic Republic of Congo (food and food stuff, manufactured goods and transit trade). During the period under review, the value of goods imported from SADC shows a mixed trend. In 2010, the value of imports was USD million, decreasing by 5.6 percent in 2011 to USD million before bouncing back to USD 1,093.1 million in In 2013, the value of imports decreased by 23.5 percent to USD million before decreasing further to USD million in This development was mainly on account of decreased imports from South Africa. South Africa is a predominant exporter of manufactured goods such as machinery, mechanical appliances, paper, rubber products, vehicles, iron, steel, services and technology to Tanzania. The medium-term target for Tanzania in the SADC intra trade was to increase its share from 5 percent in 2010 to 10 percent in According to SADC Statistics Year book 2013, South Africa dominated the intra-trade with an average share of 25.2 percent followed by Zimbabwe with 12.3 percent and Namibia 11.4 percent. Tanzania was in the ninth position with 3.6 percent while Lesotho was at the bottom with 0.1 percent. Share of Tanzania s SADC intra trade in 2010 was 3.5 percent. The share increased marginally to 3.6 percent in 2011 and then 3.7 percent in 2012 (Table 2.9) before decreasing to 3.1 percent in

38 Table 2.9: Total Value of Trade in goods (USD Mill) and Market Share in the SADC ( ) Value Share Value Share Values Share Values Share Tanzania 1, , SADC 49, , , , Source: SADC Statistical Yearbook Trade Performance Indicators Trade to GDP Ratio Trade accounts for more than fifty percent (50%) of Tanzania GDP and more than 45% (rebased GDP). In 2010, the ratio of foreign trade to GDP was 64 percent while in 2011 the ratio increased to 78 percent before decreasing to 72 percent in 2012.When the ratio of foreign trade to the revised GDP (2007 Base year) was used the results shows variations as indicated in table Table 2.10: Comparative Trade Ratios (% of GDP) ( ) Foreign Trade/GDP(Tanzania) 49.3% 54.8% 54.8% 54.7% 55.3% Trade/GDP (World) 58.8% 63.7% 62.7% 62.6% 61.9% Source: Compiled from UNCTAD Statistic Report (2014) Table 2.11: Foreign Trade as % of Revised GDP) Year Foreign Trade/GDP Source: Economic Survey, Ministry of Finance 2014 Exports to GDP Ratio ( ) The ratio of export to GDP was 19 percent in 2010, 19 percent in 2011, 21 percent in 2012, 20 percent in 2013 and 18 percent in Summary of targets and performance in Trade Target area in FYDP I Target in FYDP I Status in 2010 Status by 2014 (2011/ /16) 1 World Market share 0.1% 0.040% 0.048% 2 Tanzania share in EAC 40% 17% 27%( Tanzania share in SADC 10% 3.5% 3.1% (2013) 4 contribution of Trade (exports 20% 49.2% 46.6% +imports) to GDP 5 contribution of Trade(Exports) to GDP 20.5% 19% 2.7 Balance of Payments Position In a bid to ensure macroeconomic stability, the FYDP I outlines measures to strengthen the Balance of Payments (BoPs) position by 2015/16. Strategic interventions earmarked to facilitate the realisation of this aspiration were the scaling-up of value-addition on primary export goods, particularly in agriculture and minerals, and ensuring that export proceedings, including those from minerals, are handled through banks operating in the country as opposed to having them in foreign or off-shore banks. Success in this endeavour would be measured by the months of import cover that external reserves were capable of providing and the reduction in the share of trade deficit to gross domestic product (GDP). 24

39 In particular, the FYDP I targets were: o To maintain reserves that could, at the minimum, cover five months of imports, and o To have the trade deficit decreased from the 2010 baseline of 15.8% to 12% by 2015/ Annual Trends in the Trade Balance For the whole period under review, Tanzania s trade balance has been negative (Figure 2.16). The trends have been marked by erratic changes in volumes and values of traditional exports and mineral exports, the import bill due to increased importation of capital goods, intermediate goods, notably oil, and variations in non-traditional export goods, particularly gold. The period under review witnessed a significant widening of the trade deficit due decline in total exports, which in turn was on account of declines in gold and traditional exports. Figure 2.16: Yearly Trade Balance (millions US$) ( p) Source: Quarterly Economic Bulletins of the Bank of Tanzania Foreign Exchange Reserves The highest amount of import cover reached has been 4.6 months, slightly below the targeted 5 months. On average, for the reviewed period, reserves have only been able to cover 4.2 months of imports every year. Although the annual average is slightly higher at 4.2 months, the target of 5 months of imports is worth pursuing tenaciously External Sector Initiatives and Challenges Overall, in terms of achieving FYDP I targets relating to foreign exchange reserves, targets remain within reach, but that has to go hand in hand with decreasing the trade deficit to 12 percent of GDP by 2015/16. With regard to trade (export and import trade) a number of initiatives undertaken include those related to export expansion. One of the achievement is the registering a Company (GS1 (Tz) National Limited) responsible for registering Companies and products to use Tanzania Barcodes as from the year More than 14,200 products have already been registered by the company in the country by June The use of Tanzania barcode ensures availability of trade data for policy formation. 25

40 For regional trade, on-going measures include implementation of the cross-border trade initiative through strengthening trade supportive infrastructure such as the construction of the Arusha Namanga Athi River road where the construction of Arusha Namanga road was completed since 2012 remaining with Namanga Athi River road which is to be completed by the Government of Kenya. For the Malindi Lungalunga road and the Tanga Bagamoyo road; The Feasibility Study and Detailed Design were conducted as initial stage of implementation of this project. Up to June 2015, Tanzania managed to complete the construction of all One Stop Border Post except for Kabanga/Kobero (Tanzania - Burundi) which is 85 percent of the construction. Also, Tanzania has to put more efforts in construction of One Stop Border Post along the borders of Zambia and Mozambique. Initiatives for trade with the rest of the world include use of bar codes, continuous implementation of the Export Processing Zones (EPZ) and Special Economic Zones (SEZ), reciprocal and non-reciprocal trade agreements with various countries along with negotiations around market access issues, improvement of tourist attractions and services and continuation of Export Guarantee schemes overseen by the Bank of Tanzania. Other initiatives include establishment of Commodity Exchange Market, construction of Border Markets to facilitate trade across borders and ensure market availability of market information for policy making and establishment of National Business Portal for informing business community on business procedures and regulations that facilitate operations in the country. The challenges to external sector performance emanate from the fact that majority of Tanzania s exports remain unprocessed, with low value-addition. Tanzania remains susceptible to world commodity prices fluctuations for her exports. Reliance on oil for power generation pushes her import bill. On average oil imports accounted for 28.2 percent of the annual import bill for the period under review`. Poor infrastructure remains a constraint to foreign and domestic private sector involvement in production and trade. Other supply-side constrains relate to financing/capital constraints, rudimentary technology and equipment, weather dependent agriculture, and susceptibility of production and distribution to extreme weather conditions floods and drought. The regulatory regime is unfavourable to agricultural trade, especially stringent Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) and Rules of Origin measures which limit market access. There is also inadequate laboratory equipment for testing at TBS and other related institutions that limit accreditation of some laboratories. Some products have to be certified by accredited laboratory in foreign countries; but certifying products in foreign countries is costly. The country further lacks quality packaging materials. The government therefore continues with efforts to develop capacity to implement standards, packaging and manage issues related to accreditation and traceability in order to improve international competitiveness. Summary of Macroeconomic Indicators Target Area in FYDP I Target in FYDP I Status in 2010/11 1 Average annual GDP growth of 8% (This will result from a build up from 7% in 2010 to rates consistently above 10% from 2016 to 2025) 2 Annual inflation rate not exceeding 5% 3 Budget deficit (excluding grant) restricted to 10% of GDP 8% 6.4% 7.0% Not exceeding 5% 5.6% 4.8% 10% 8.4% 4.5% Achivements reached (2014/15) 26

41 Target Area in FYDP I Target in FYDP I Status in 2010/11 4 Increase revenue to GDP ratio to 19% 19% 11.6% 13% 5 Government external borrowing 6% 2.4% 3.6% restricted to 6% of GDP 6 Domestic borrowing to 1% of GDP 1% 1.9% 1% 7 Overall government expenditure not 28% 21.1% 21.5% to exceed 28% of GDP 8 Reduce tax exemptions to 1% of GDP 1% 18.8% 16.6% 9 Interest rate spread reduced The differentials 5.84% 3.32% between lending & deposits rates 10 Attractive saving rate to bolster Savings is expected 24.1% 17.8% savings mobilization achieved to be 17.7% of 11 Financial reforms developed and implemented. 12 Ratio of private credit to GDP is expected to increase from 16% to 28% by Ratio of domestic deposits to GDP is expected to increase from 25% to 35% by 2015 Achivements reached (2014/15) GDP in 2015 Commercial bank 5.4% (2001) 18.0 %(2013) credit to private sector (of GDP) 28% 21.1% 23.7% (2013) 35% 35.5% 24.3% 27

42 CHAPTER THREE: SECTORAL PERFORMANCE 3.1 Introduction This chapter tracks implementation of FYDP I. Apart from identifying the core priorities and recognizing the significance of financial and human resource requirements, the FYDP I upholds the importance of a supportive policy environment (underlying prerequisites) for a successful growth momentum. Basically FYDP I identifies four thematic/policy issues as underlying prerequisites sustained macroeconomic stability, environment and climate change, good governance and lands. These fall under different sector ministries which report on the progress made. Due to their importance, progress on these thematic areas is briefly related to in Section I of this chapter. Since macroeconomic stability has been reported in the preceding chapter, it is not repeated here. Section II, which makes the larger part of the report, relates to progress on the core priorities over the first half of the plan. These are (i) infrastructure (ii) agriculture (iii) industry (manufacturing) (iv) human capital and social services and (v) trade, tourism and financial services. And, since trade and financial services have been reported in the previous chapter under a broad rubric of macroeconomic stability, the reader is requested to take note of the details on trade and financial services in Chapter 2, so that only tourism will appear under core priority (v). In both sections of the chapter, the narrative covers progress, key initiatives and challenges. Details differ across sectors/sub-sectors and the report puts on the table as much information as is available (hardly tampered) on what the sectors have done/are doing. The reader s attention is drawn to the fact that some of the initiatives and challenges may actually be originating from the earlier periods or even earlier or parallel national policies/strategies like the National Strategy for Growth and Reduction of Poverty NSGRP (II). The cross-cutting difficulty is penning down with precision the gap short of the target; but in many cases, performance is still severely constrained by shortage of financial resources as well as of human capital. The institutional capacities and linkages/coordination could also greatly improve performance. 3.2 SECTION I: PERFORMANCE BY UNDERLYING PRE-REQUISITES Good Governance Good governance is important for successful execution of the development agenda. It promotes the collective responsibility and participation of the government, civil society and private sector for improving the lives of all citizens. In the process of development and poverty reduction, the issues of good governance and rule of law are very important. Cognizant of this fact, FYDP I set the following targets to be realised by 2015/16: o The global rank of Tanzania in the World Bank Doing Business survey dropped to below 100 o Tanzania s percentile rank in the Rule of Law and Control of Corruption indicators (both in the World Governance Indicator) increased from their current level of 40 and 40.5 respectively to 60 o 40% of the population having an ID card (i.e million Tanzanians) by June 2016 Progress, key initiatives and challenges are alluded to on doing business ranking, rule of law and anti-corruption, issuance of national ID cards, environment and climate change for 28

43 suitable development as well as land issues. Needless to say, the sectors/sector ministries (or MDAs) that implement these have to be borne in mind. Global Rank of Tanzania in the Doing Business Ranking The World Doing Business Reports for indicate that Tanzania s global rank in doing business has remained above number 130 on average. In 2014 and 2015 Tanzania was ranked 145 th and 131 th out of 189 countries. Although there are some improvements in areas such as starting business and protecting investors, fewer improvements have been done to other areas such as issuing construction permits, getting electricity, registering properties, getting credit, trading across borders, resolving insolvency and paying taxes which leads to bad performance. Among EAC member countries, Tanzania is doing better next from Rwanda. Table 3.1 shows the Doing Business rankings of EAC countries between 2010 and Table 3.1: Trend of Doing Business in Tanzania ranked worldwide Year Tanzania Rwanda Kenya Uganda Burundi Total No. of countries ranked Source: World Bank Doing Business Reports Rule of Law and Control of Corruption In the FYDP I, Tanzania aims at improving the rule of law, good governance and reducing corruption to the level of 60 th percentile in the Rule of Law and Control of Corruption Indicators by the year 2015/16. The 2010 Corruption Index ranked Tanzania number 116 out of 178 countries. Meanwhile the World Bank, Worldwide Governance Indicators (WGI) Report of 2012 indicated that in 2010, corruption control in Tanzania was at the level of the 35 th percentile, but subsequently dropped to the 27 th and 22 nd percentiles in 2011 and 2012 respectively. In the case of rule of law the situation was the same where there was a drop from the 38 th percentile in 2010 to the 35 th in the year 2011 and Table 3.2 summarizes the performance of Rule of Law and Control of Corruption in Tanzania from year 2010 to Table 3.2: Percentile Rank in the Rule of Law and Control of Corruption Indicators ( ) Year Corruption Rule of Law Source: World Bank Policy Research Working Paper No Despite remaining challenges, the Prevention and Combating of Corruption Bureau (PCCB) has tried its best to fight corruption. Table 3.4 below portrays the efforts made in the allegations received, case investigated, conviction cases, total cases prosecuted and money saved and assets recovered. 6 Data produced periodically. Latest data is of

44 Category Allegations received Cases Investigated Ongoing Investigations Closed Investigations File sent to DPP Completed Investigations New Cases filled into courts Ongoing cases into courts Conviction cases recorded Acquitted cases recorded Total Cases prosecuted Saved Money/Asserts recovered Table 3.4: Corruption Cases Statistics , , ,500,600, ,320 1,528 2, , ,301,492, ,235 1,266 1,976 1, , ,580,098, , , , ,203,459, , , , ,132, , , ,123,258, , , ,639,939, ,084 1,178 2, ,667,354, ,456 1,100 2, , ,260,043, , ,004 2, ,406,398, (Jan- March) 1, , ,209,552 TOTAL 56,947 10,265 27,037 4,937 1,639 11,267 2,080 4, ,258 87,754,986,551 Source: PCCB, 2015 New cases filed in the court in 2010, 2011, 2012, 2013 and 2014 were 224, 193, and 256 respectively. Cases prosecuted in 2010, 2011, 2012, 2013 and 2014 were 587, 709, 723, 894 and 923 respectively. The trend portrays the seriousness of the PCCB in fighting corruption. The number of convicted corruption offenders in 2010, 2011, 2012, 2013, 2014 and 2015 (for the period between Jan March, 2015) was 64, 52, 47, 89, 135 and 25 respectively, while acquittals in the same years were 98, 61, 71, 62, 142 and 33 respectively. These efforts enabled Government to recover around TShs billion between 2010 and Table 3.5 summarizes cases and complaints handled by legal organs to strengthen the rule of law. Table 3.5: Cases and Complaints Handled by Legal Organs ( ) Group Details Human Rights Complaints handled 9,029 8,936 8,809 8,639 - and Good Complaints investigated & 1,053 1,672 Governance completed 1,250 1,202 - continued to be investigated 7,971 7,264 7,559 7,437 - Court of Appeal Cases registered* 2,823 2,787 2,786 2, Disposed , Continuing 2,172 2,059 1,743 1, High Court Cases registered* 19,449 20,385 14,935 17, Disposed 8,517 9,669 5,198 5, Continuing 10,932 10,718 9,737 12, Resident Magistrate Cases registered* 38,920 48,352 42,783 25,982 7,415 Disposed 18,664 19,760 17, ,590 Continuing 20,256 28,592 25,002 25,370 1,825 District Courts Cases registered* 55,112 84, , ,897 - Disposed 28,050 47,677 83, ,359 - Continuing 27,062 36,612 31,025 21,538 - Source: MoCLA Budget speech 2013/14 *Figures stand for fresh and previous cases The number of advocates in private practice has steadily increased with the establishment of the Tanzania School of Law which aims at making representation and access to justice in 30

45 Tanzania a reality. The establishment of a Case Flow Management Committee to speed up adjudication of civil and criminal cases has been set to ensure availability of timely and speedy justice for all. Initiative made during this period include establishment of the Judicial Service Commission which is responsible for improving efficiency in judiciary system; reinforcement of the legal sector reform programme through improving infrastructure facilities of law enforcers such as establishing of gender and children's desks in police stations, connection of six regional police stations and three police posts to the national broadband; updating communication systems from analogue radio calls to digital systems and installing an Offender Management Information System and strengthening community policing (Polisi Jamii) through improvement of police mobility and visibility. Further, government is supporting conducive working environment and increasing the number of Judges, Magistrates, Lawyers, Advocates, Police and other important stakeholders as well as building courts and renovating old ones. These initiatives are undertaken amidst challenges posed by inadequate institutional capacity to implement good governance due to corruption and red tape as well as low level of education and awareness of issues of human rights and good governance, rule of law amongst the population. Progress on Issuance of National Identity Cards In 2012, the government operationalized a system of identification and registration of people through the National Identification Authority (NIDA). The aim is to facilitate the provision of social and economic services as well as enabling improved good governance in the country. According to the FYDP I, 40 percent of Tanzania s eligible population is to have identification cards by By 2014 NIDA had already provided identification cards to 2,949,648 residents, whereby 2,357,326 from Tanzania Mainland and 592,322 from Zanzibar. NIDA has also completed the registration of 2,993,591 residents of Lindi (353,442), Coast (369,728), Mtwara (512,827), Morogoro (910,077), and Tanga (847,517). This is about 24 percent of eligible citizens for Mainland Tanzania and more than 80 percent of eligible people in Zanzibar who have been registered. Summary S N Target Area in FYDP I Target in FYDP I Status in 2010 The global rank of Tanzania in the World Bank Doing Business survey dropped to below 100 Tanzania s percentile rank in the Rule of Law and Control of Corruption indicators (both in the World Governance Indicator) increased from their current level of 40 and 40.5 respectively to 60 40% of the population having an ID card (i.e million Tanzanians) by June 2016 Below 100 ranking 40 percentile Rule of Law 40.5 percentile Control of Corruption Status by (2015) 22 (2012) 35 (2012) 40% - 24% Environment and Climate Change Over the last decade, the impact of climate change in Tanzania is already felt in key sectors in several geographic areas. It is projected that future climate change could be more intense, leading to significant economic costs worldwide and for the country. The combined effects of current climate vulnerability and projected future climate change are expected to be large enough to prevent Tanzania from achieving key economic growth, human development and 31

46 poverty reduction targets, and targets for achieving middle income status. To prevent this from happening, FYDP I set the following targets to be realised by 2015/16: o National Climate Change Policy formulated. o Targeted number of government policy makers trained in climate changes issues in all selected government ministries. o Institutional framework to identify, mobilize and monitor global climate finance created. o Environmental impact of all large scale infrastructural and industrial projects monitored. National Climate Change Policy Although the process of formulating a national policy for Climate Change has not yet started, a National Climate Change Strategy was developed and finalized in The strategy proposes ways to deal with the enhancement of climate change adaptation and mitigation as well as crosscutting interventions in the context of sustainable development. The goal of the strategy is to enable the country to effectively adapt to climate change and participate in global efforts to mitigate Climate Change for sustainable development. Specifically, the strategy aims to build the capacity of the country to adapt to the impacts, enhance resilience of ecosystems to the challenges posed by Climate Change, enable accessibility and utilization of the available Climate Change opportunities, enhance participation in Climate Change mitigation activities, public awareness, information management and a better institutional arrangement to adequately address Climate Change and to mobilize resources including finance. Tanzania s response in Vision 2025, the current 5YDP and the National Climate Change Strategy (NCCS) (VPO, 2012) view the urgent need to transform its economies and livelihoods, to learn to grow in a different, climate smart way, to be more carbon neutral and climate resilient, to buffer against the climate shocks that are expected to come. To achieve this, it will need not only financing and support, but requires political attention such that CC is elevated in status and becomes at the fore of national development priorities. Number of Government Policy Makers Trained in Climate Change Issues The level of awareness and understanding is low among Government MDAs, LGAs, CSOs, private sector, media, communities, religious leaders, politicians and development partners. It is for this reason that in 2012 the Government decided to formulate a five year National Climate Change Communication Strategy to facilitate awareness creation all over the country. Given the strategy is in place, training programmes will be implemented to meet the objectives of the strategy. Institutional Framework Created Implementation of climate change issues in the country is undertaken within the context of the National Environmental Policy, 1997, the Environmental Management Act and other related policies and legislations. At national level, the Vice President s Office (VPO), Division of Environment (DoE) is responsible for all climate related activities. DoE is both the National Climate Change Focal Point (NCCFP) and Designated National Authority (DNA) for clean development mechanism under the Kyoto Protocol. 32

47 Monitoring Environmental Impact The Government through the National Environment Management Council (NEMC) continues to monitor large-scale projects. Projects requiring a mandatory Environmental Impact Assessment (EIA) are those projects that are likely to have significant adverse environmental impacts and for which therefore an in-depth study is required to determine the scale, extent and significance of the impacts and to identify appropriate mitigation measures. These are projects likely to have some significant adverse environmental impacts but the magnitude of the impact is not well-known. A preliminary environmental assessment is required to decide whether the project can proceed without a full environmental impact assessment. In 2010, a total of 220 projects were evaluated and certified. In 2011, the number of large-scale projects evaluated was 163, in 2012 the number of evaluated was 213, in 2013 a total of 207 projects were evaluated while in 2014 a total of 298 projects were evaluated. The valuation and monitoring of big projects are required by the Environment Management Act (Cap.191) which, inter alia, requires the investors to adhere to EIA before and after the investment. Other major initiatives in the period under review include the preparation of an integrated financing strategy and investment for sustainable land management as well as the preparation of a national assessment report on sustainable land management and climate change finance in Tanzania. The ever-present challenges include continuous increase of human pressure on biodiversity due to increased population coupled with poverty, limited local affordable alternative energy technologies and renewable energy services, low local capacity to implement Sustainable Land Management practices and enforcement of laws and by-laws relating to management of natural resources, inadequate preparedness to climate variability and climate change as well as inadequate information and technology for weather and climate forecasting. Summary S N Target Area in FYDP I National Climate Change Policy formulated. Targeted number of government policy makers trained in climate changes issues in all selected government ministries. Institutional framework to identify, mobilize and monitor Target in FYDP I Policy availability global climate finance created. - Environmental impact of all large scale infrastructural and industrial projects monitored. Status in 2010 No policy - - Status by 2014 National Climate Change Strategy Training not implemented Institution framework in place A total of 1,101 projects were evaluated ( ) Land, Housing and Human Settlements The Ministry of Lands, Housing and Human Settlements Development is responsible for ensuring the safety of the ownership of land by planning and issuing certificates of occupancy as well as inspecting and verifying the possession of land. Other responsibilities include acquiring land for the public interest and revoke possession for those who violate the terms of possession. The FYDP I targets related to Land, Housing and Human Settlements are: o Proportion of households with certificates (e.g. certificates and customary right of occupancy) increased from 5% in 2009 to 10% by 2015/16 o Proportion of planned land increased from 10 percent currently to 20 percent by 2015/16 33

48 Issuance of Land Certificates During the fiscal year 2011/12, a total of 77,611 title deeds and customary rights and other legal documents were inspected, verified and issued compared with 94,960 recorded during the fiscal year 2014/15, an increase of 22 percent. Table 3.6 displays a summary of issuance of certificates. Table 3.6: Issuance of Land Certificates and Other Legal Documents (2011/ /15) DETAILS 2011/ / / /15 Total Title deeds 27,452 24,421 21,285 24,559 97,717 Customary rights 21,169 32,155 24,945 25, ,166 Other registered legal documents 28,990 28,407 29,307 44, ,208 Combined issuance 77,611 84,983 75,537 94, ,091 Source: MLHHSD 2015 Meanwhile, the Ministry in collaboration with the Cities of Dar es Salaam and Mwanza issued 35,362 residential licences as part of implementation of Business and Formalization Programme. Land Survey in Tanzania During the period under review, the Ministry continued with surveying plots and farms. In 2014/15, a total of 83,792 plots and farms were surveyed compared with 36,218 recorded in 2011/12, an increase of 131 percent. Table 3.7 displays a summary of land survey results. Table 3.7: Land Survey Results (2011/ /15) Details 2011/ / / /15 Total Surveyed plots 34,049 58,393 67,237 83, ,181 Surveyed farms 2, ,670 Total 36,218 59,279 67,562 83, ,851 Source: MLHHSD 2015 Main (and on-going) initiatives undertaken include: i. Continued implementation of the programme of formalization of informal businesses and property rights aimed at increased planned and surveyed areas; ii. Continued modernization and improvement of urban planning and facilities through the establishment of satellite cities such as Kigamboni, Luguruni. The government has established the planning authority namely Kigamboni Development Agency (KDA); iii. Preparations of 12 quick win initiatives under BRN to facilitate citizens access to land and security of tenure in urban and rural areas. iv. The ministry continued with developing an Integrated Lands Management Information System (ILMIS) which aims at creating a stable digitized database sharing between the Ministry of Lands, zonal offices, and districts to enhance decision making and also land rent collection Despite notable achievements during the period under review, the following challenges continued to surface: financial resource constraint multifaceted into absence of an efficient lands administration and registration system (ILMIS), absence of a Land Compensation Fund and increasing land conflicts amongst land users. 34

49 Summary S N Target Area in FYDP I Target in FYDP I Status 2010 in Status by Proportion of households with certificates (e.g. certificates and customary right of occupancy) increased from 5% in 2009 to 10% by 2015/16 Proportion of planned land increased from 10 percent currently to 20 percent by 2015/16 10% 20% There were no database There were no database A total of 324,307 Title deeds and Customary rights ( ) A total of 290,985 plots and farms surveyed ( ) 3.3 SECTION II: PERFORMANCE BY FYDP I CORE PRIORITIES Infrastructure The FYDP I categorizes infrastructure into hard infrastructure which consists of railways, roads, energy, ports and air transport, and soft infrastructure which comprises of science, technology and innovation. Railways The railway subsector could be the key inland transport mode in the country especially in terms of transporting bulk cargo to the neighbouring and landlocked countries. As of 2014, an average of 2.9 percent of the bulky cargo is transported through the railway and the remaining 97.4 percent through other modes. The country s railway systems have a total length of 3,682 km out of which 2,707 km are owned by Railway Asset Holding Company (RAHCO) and are operated by Tanzania Railway Limited (TRL). The Tanzania-Zambia Railway Authority (TAZARA) is co-owned by the governments of Tanzania and Zambia and has a total length of 1,860 km. Out of these, 975 km are operated by Tanzania only (are on the Tanzania side). The two railway systems link more than 14 regions in mainland Tanzania 7. During the initial operations of Tanzania Railway Limited TRL (formerly TRC) and Tanzania and Zambia Railways (TAZARA), the companies were operating at much higher capacities close to 1.5 million tonnes per year each. However, over the last decade the performance of the railways has declined substantially despite the number of opportunities (including: growing economies of the land locked countries; growing domestic economy). The decline in performance was due to inadequate investment in maintenance and rehabilitation as well as lack of enough locomotives and wagons. In view of such background, the FYDP I targets the following under railway subsector: o The central railway line (2,707 km) be rehabilitated and be fully operational o Locomotives, engines, plants and equipment all be in working order o Detailed design, secured investment and initial construction of the new railway line Isaka Kigali railway line to be carried out o Feasibility and detailed designs for the Urban Commuter Railway system be finalized. During the period under review, the number of passengers carried and cargo transported fluctuated yearly but dominated by a downward trend. A total of 1,806,000 passengers and 875,000 tonnes were handled by TRL while TAZARA handled 1,277,000 passengers and moved 1,993,000 tonnes in the same period. Generally, the performance achieved by 7 10-Year Transport Sector Investment Programme (TSIP) [phase 2 (2012/ /17)] 35

50 TAZARA is more convincing than that of TRL. Table 3.8 below demonstrates the performance of both TRL and TAZARA. Performance by TRL indicates that both the passengers-kilometre and tonne-kilometre indicators were fluctuating annually. The tonne-km for 2010 was 251,843,000 which increased to 264,899,000 in 2011 due to deployment of new locomotives by the RITES from India and later decreased sharply to 160,000,000 in 2012 after the RITES Company withdrew from operation. Subsequently the tonnes-km for 2013 went further down to 145,738,009 following termination of the RITES concession. Nevertheless, in 2014 increased up to 200,242,261 due to injection of 8 re - manufactured locomotives and reintroduction of the route from DSM to Kigoma and Mwanza. Similarly, the passengers-km, observed the same pattern of fluctuation as for the tonnes-km. On the other hand, the trend of the tonnes-km for TAZARA has been decreasing annually from 2010 because of inadequate working capital. The passenger-km for the same period has been fluctuating for the same reason. Table 3.9 indicates the trend of tonnes-km and passengers km for TRL and TAZARA. Table 3.8: Average performance in the railway subsector for Company Total TRL Passengers ( 000) ,101 Cargo ( 000 tonnes) ,065 TAZARA Passengers ( 000) , ,397 Cargo ( 000 tonnes) ,860 89,853 TOTAL Passengers ( 000) Cargo ( 000 tonnes) 1, ,918 Source: Performance Reports of TAZARA and TRL, 2014 Table 3.9: Tonne-Km and Passenger-Km Performance ( ) Year TRL TAZARA TONNE-KM 251,843, ,899, ,000, ,738, ,242,261 PASSENGER-KM 149,900, ,500, ,740, ,036, ,186,148 TONNE-KM 818,000, ,000, ,000, ,000,000 67,288,000 PASSENGER-KM 300,000, ,000,000 84,000, ,000, ,831,655 Source: Tanzania Railways Limited, 2014 and TAZARA Planning and Corporate Affairs files & 7th JTSR, 2014 Report Rehabilitation of the Central Railway line During the period under review, the government rehabilitated 136 km with 80 pounds/yard rail. Some of the areas rehabilitated include the railway line between Kilosa and Gulweand between Kaliua and Mpanda. In addition three bridges, two of them between Kilosa and Gulwe and one between Bahi and Kintinku were rehabilitated. The government also constructed Mwanza and Shinyanga Inland Container Depots in order to facilitate cargo handling. Repair works for Mwanza and Shinyanga ICD s are being finalized. Improvement of Rolling Stock During the period under review, the government strived to ensure that TRL resumes its operations effectively. The steps taken include: re-manufacturing of eight locomotives at Morogoro Workshop; procurement of 274 new freight wagons (out of which 197 arrived in May, 2015); 25 new ballast hopper wagons; one tamping machine; 13 new locomotives; 34 brake vans; and 22 new passengers coaches. In addition the rehabilitation of 89 wagons in Morogoro workshop was completed. 36

51 Construction of a New Railway Line (DSM Isaka Keza Kigali/Musongati) In the period under review, a consultant (CANARAIL) completed a detailed engineering study for construction of new railway line which will cover a length of 1,660 km from Dar- Es-salaam-Isaka-Kigali-Keza-Musongati (upgrading to standard gauge). In addition, the government through Reli Assets Holding Company (RAHCO) signed a contract on March, 2015 with Transactional Advisor Rothschild to package the project for sourcing financing. Other Regional Railway Lines/New Railway Lines The Government has signed Memorandum of Understanding (MoU) with the Government of Uganda to upgrade the Tanga to Arusha railway line to a standard gauge and to construct a new railway line running from Arusha to Musoma. A study and design for the rail link and marshalling yard is being done by COWI consultant from Denmark and is expected to be completed by end of 2015 following additional contract to link the line with Kilimanjaro International Airport. Further, the government through RAHCO procured a consultant for undertaking feasibility study and preliminary design on a new railway line from Mtwara to Mbaba Bay via Songea with a branch to the Mchuchuma and Liganga with standard gauge. The assignment commenced on June 2014 and is expected to be completed by end of Urban Commuter Railway System During the period under review, the government introduced commuter train transport in the city of Dar es-salaam. Two routes were introduced in October 2012, one operated by TAZARA between TAZARA HQ station and Mwakanga and the other operated by TRL between Ubungo Maziwa to Dar es-salaam Railway Station via Tabata. In 2012, the number of passengers using the TRL commuter train was 203,009 which increased to 1,343,763 passengers in 2013, however, in 2014 decreased to 1,186,148 due to poor performance of locomotives assigned for this purpose. Morever, an average of 1,460,506 passengers were transported in 2014/15 using the TAZARA section i.e between TAZARA HQ station and Mwakanga. In addition, the Government through RAHCO is in the process of hiring a consultant to carry out a feasibility study for construction of new railway lines to connect the city of Dar es- Salaam with Kibaha, Kisarawe, Mkuranga and Bagamoyo districts. Main Initiatives i. Speeding up the implementation of sector plans and strategies under the Big Results Now (BRN) initiative which has set key performance indicators to monitor the implementation of targets as identified by FYDP I ii. Continued implementation of the 10-Year Transport Sector Investment Programme II (TSIP II). Financing of the FYDP I Railway Targets The FYDP I estimated that a total of TShs 2,097,359 million would be needed to finance various interventions in the railway subsector for the entire period of five years. These resources were to be mobilised from both the government and the private sector. During the period under review, a total of TShs 431, million was set aside by the government. However, as of April, 2014, the actual disbursement of government funds for the period under review was TShs 326, million. The actual releases stated here were meant for the implementation of strategic railway projects. Table 3.10 summarizes the cash flow. 37

52 Table 3.10: Strategic Rail Budget Approved Budget and Disbursements ( ) Year Approved Budget (TShs Millions) Release (TShs Millions) Local Foreign Total Local Foreign Total 2011/ , , , , / , , , , /2014 as of April, , , , , , Total 431, , , , , Source: Ministry of Transport, 2014 Challenges i. Insufficient funds to finance the implementation of development activities in the subsector ii. Climatic changes especially floods during the rainy seasons result in the rail being washed away iii. Human capacity development as to replace specialized staff in the transport sector approaching retirement (more than 40 percent of railway staff are eligible for retirement in the next 5 years) iv. Poor track and wagon conditions v. Lack of regular maintenance and efficient maintenance mechanisms Below is a summary of the targets and key achievements reached by 2015/16: Target area in 2015 Achievements Reached (2014/15) The central railway line (2,707 km) be rehabilitated and be fully operational Relaid 89 km between Kitaraka and Malongwe stations with an 80 pounds/yard rail were relaid Rehabilitated railway line between Kilosa and Gulwea nd between Kaliua and Mpanda. Rehabilitated two bridges between Kilosa and Gulwe and one between Bahi and Kintinku were rehabilitated. Locomotives, engines, plants and equipment all be in working order Detailed design, secured investment and initial construction of the new railway line Isaka Kigali railway line to be carried out Feasibility and detailed designs for the Urban Commuter Railway system be finalized Constructed Mwanza and Shinyanga Inland Container Depots in order to facilitate cargo handling. Repair works for Mwanza Remanufactured eight locomotive at Morogoro Workshop Procured 274 new freight wagons (out of which 197 arrived in May, 2015) 25 new ballast hopper wagons; one tamping machine; 13 new locomotives 34 brake vans; and 22 new passengers coaches. Completed rehabilitation of 89 wagons in Morogoro workshop. Consultant (CANARAIL) completed a detailed engineering study for construction of new railway line 1,660 km from Dar-Es-salaam-Isaka- Kigali-Keza-Musongati (upgrading to standard gauge) has been completed The government through Reli Assets Holding Company (RAHCO) signed a contract on March, 2015 with Transactional Advisor Rothschild to package the project for sourcing financing. The Government through RAHCO is in the process of hiring a consultant to carry out a feasibility study for construction of new railway lines to connect the city of Dar es-salaam with Kibaha, Kisarawe, Mkuranga and Bagamoyo districts. 38

53 Air Transport Tanzania has three main international airports, namely Julius Nyerere, Kilimanjaro and Abeid Amani Karume located in Dar-es-salaam, Kilimanjaro and Zanzibar respectively. Currently, at least every regional headquarter has an airport. There are about 541 airports/aerodromes/air strips in total. The medium term operational objectives in this subsector are to expand both air cargo and passenger freight handling capacities in view of making the country become the regional and international trade gateway. In the FYDP I, the airports sub sector has the following targets: o o o Expanding Tanzania s air cargo from 22,461 tonnes to 35,000 tonnes Annual passenger handling capacities increased from 2.95 million to 3.43 million people Revival of the National Flag Carrier Expanding Tanzania s Air Cargo and Passenger Handling Capacity Air transport has an important role in boosting the Tanzania s economy (especially in the tourism sector and horticulture subsector). With an effective and efficient air transport system, tourists are likely to fly to Tanzania to enjoy the country s natural beauty. Air transport services have improved recently as a result of the increase in the number of licensed service operators/providers from 54 in 2011 to 64 in 2014, an increase of 18.5 percent. From 2010 to 2014 cargo freight had a positive trend. The total domestic and international cargo freight was 28,861 tonnes in 2010, rising to 39,601 tonnes in 2011, equivalent to an increase of 37.2 percent and increased further to 52,790 tonnes in 2012, an increase of 33.3 percent. However, in 2013 there was a sudden decrease to 28,448 tonnes, equivalent to a decrease of 46.1 percent as a result of decline in both imports of exploration machines/equipment to the Mtwara region and aircraft movements by KLM and British Airways. In 2014 cargo freight uplifted from 28,448 tonnes in 2013 to 31,862 tonnes equivalent to an increase of 6.7 percent. In 2010 the number of passengers handled was 3,027,512 then increased to 3,437,608 passengers in 2011 equivalent to 13.5 percent increase. The number grew to 4,068,982 passengers in 2012 and further reached 4,670,380 passengers in In 2014 there was an increase in both domestic and international passengers to 5,059,739 equivalent of 14.2 percent (Table 3.11). The increase was attributed by the coming of FastJet Company to Tanzania, opening of the new Songwe airport in Mbeya, an increase in the number of tourists, the introduction of new domestic routes and the rehabilitation of airports in Kigoma, Arusha, Mpanda, Mafia, Tabora and Bukoba to bitumen standards. Table 3.11: Tanzania's Air Traffic Movements (Movement, Passengers and Tonnes of Cargo) Nature of Movement/ Year Total Aircraft movement Domestic 143, , , , , ,528 1,077,824 International 23,611 28,941 37,102 35,978 39,258 41, ,125 Sub total 167, , , , , ,763 1,283,949 Passenger Traffic Domestic 1,492,139 1,642,657 1,833,460 2,197,250 2,794,069 2,808,270 12,767,845 International 1,262,216 1,384,855 1,604,148 1,871,732 1,876,311 2,251,469 10,245,731 Sub Total 2,754,355 3,027,512 3,437,608 4,068,982 4,670,380 5,059,739 23,013,576 Cargo Domestic 2,532 3,024 2,517 6,810 1,924 2,612 19,419 39

54 freight (Tonnes) Nature of Movement/ Year Total International 24,705 25,837 37,084 45,980 26,524 29, ,380 Sub Total 27,237 28,861 39,601 52,790 28,448 31, ,799 Source: Ministry of Transport 2014 Air Traffic Movements and Projections Tanzania Airports Authority (TAA) has been mandated by the Government to manage, operate and develop aerodromes in Tanzania Mainland. Currently TAA manages and operates 58 aerodromes. The performance of airports under the jurisdiction of Tanzania Airports Authority (TAA) in terms of traffic data indicates that with an exception of Cargo Tonnage, there is a positive growth of aircraft movements and number of passengers from the financial year 2011/12 to 2013/14. This has been summarized in Table Table 3.12: Traffic Movements Performance for Aerodromes Managed by TAA Traffic Movement Aircraft Movements Passengers movement Cargo Tonnage Source: TAA, 2014 Category 2011/ / /14 Domestic 139, , ,896 International 27,335 32,020 31,243 Sub Total 1 166, , ,139 % Change Domestic 1,754,210 2,168,357 2,338,381 International 1,560,074 1,749,965 1,814,095 Sub Total 2 3,314,284 3,918,322 4,152,476 % Change Domestic 3,515 2,739 3,128 International 28,404 27,047 25,039 Sub Total 3 31,919 29,786 28,167 % Change The aviation sub sector continued to grow; the number of passengers grew from 2,754,355 in 2009 to 4,670,380 in 2013 which is an equivalent of 69 percent. The number of international passengers reached 1,876,311 in 2013 compared to 1,262,216 in 2009 an increase of 48 percent. However, domestic passengers grew from 1,492,139 passengers in 2009 to 2,794,069 passengers in 2013 which is an equivalent of 87 percent. On the other side aircraft movements increased by 42 percent from 167,610 movements in 2009 to 238,384 movements in 2013, out of these, international movements increased from 23,611 movements in 2009 to 39,258 movements in 2013 an equivalent to 66 percent. Domestic movements on the other side are expected to increase by 38 percent, increasing from 143,999 movements in 2009 to 199,126 movements in On the other side cargo uplift recorded an increase from 27,237 tonnes in 2009 to 28,448 tonnes in However, cargo decreased to 24,342 tonnes in 2012/13. The decrease in cargo is due to decline in imports due to suspension of service by British Airways and most of cargo originating from China is being consolidated and shipped by sea at the moment. Generally, the increase in the number of passengers and aircraft movements is due to reopening of airports of Kigoma, Tabora and Arusha which were closed for rehabilitation works. Other reasons include operational (aircraft size and frequencies), expansion of Fly 540 Tanzania trading as Fastjet, opening of the new Songwe airport and introduction of new 40

55 regional routes by Precision Air Services Plc, Dar-Lubumbashi-Lusaka-Dar and Dar-Hahaya- Dar. Increased mining and gas exploration activities were also reasons for the growth. Revival of the National Flag Carrier Since 2006 Air Tanzanian Company Limited (ATCL), the national flag carrier has been fully government-owned after the partnership with South African Airways (SAA) was terminated. For years ATCL has been experiencing administrative, financial and operational problems as well as low competitiveness as depicted by rising expenses and falling income per passenger (Table 3.13). The government is working to alleviate the carrier s financial troubles through waving its debts and improving management. Table 3.13: Passengers, Income and Expenditure Statistics YEAR NO. OF INCOME EXPENSES INCOME PER EXPENSES PER ENDED JUNE PASSENGERS TSHS 000 TSHS 000 PESSENGER,'000 PESSENGER ' ,200 10,585,341 19,830, ,041 7,253,325 19,105, ,351 4,838,512 7,752, ,628 8,084,504 6,741, ,155 12,353,447 8,957, Source: Ministry of Transport, 2015 Financing of the FYDP I Air Transport Targets The FYDP I proposed a total of TShs 1,154,423 million to finance various interventions in the air transport subsector for the entire period of five years. These resources were expected to be mobilised from both the government and the private sector. During the period under review, a total of TShs 608,640 million was set aside by the Government. As of April, 2014, the actual budget allocation for the period under review was TShs 123, million for the implementation of strategic airport projects. Table 3.14 summarizes the cash flow. Table 3.14: Strategic Airport-Budget Approved Budget and Disbursements (TShs millions) Year Approved Budget Disbursements (Disbursed/Approve d)% Local Foreign Total Local Foreign Total 2011/12 43, , , , , /13 35, , , , , , /14* 38, , , , , , /15 54, , , , , , Total 117, , , , , , *as of April 2014 Source: Ministry of Transport - Policy and Planning Department (Third Quarter Performance Report ) In summary, the main air transport sub-sector initiatives undertaken include: i. Purchase of four radars to be installed at four airports - Mwanza, Songwe, KIA and JNIA to support monitoring and safety during take-off and landing of aircrafts ii. Rehabilitation and expansion of airport facilities and infrastructure, e.g. the extension of the Mwanza airport runway by 500m, Terminal III at JNIA, etc. iii. iv. Expansion of the number carriers such as Fastjet Introduction of new flight routes domestically, regionally and internationally like Dar Lubumbashi Lusaka Dar or Dar Johannesburg Dar 41

56 The main problems facing the sub-sector include the following: i. Inadequate transport facilities and services including carriers and airport services that meet domestic and international air transport needs ii. Fundamental issues of management, resources and capacity within the national flag carrier (ATCL) iii. iv. Inadequate financing of FYDP I air transport interventions Poor condition of infrastructure (pavements, constrained terminal buildings, lack of navigational aids) caused by insufficient funds to finance rehabilitation and maintenance projects v. Competition among other modes of transport for short trips linked with paved roads vi. vii. Lack of a strong and fully enabled national airline to open up and sustain domestic, regional and international routes Rapid technological changes including security threats. Below is a summary of the target area, status in 2011 and key achievements reached by 2015/16: Target area in 2015 Status in 2010/11 Achievements reached to (2014/15) Expanding Tanzania s air cargo to 35,000 tonnes Annual passenger handling capacities increased from 2.95 million to 3.43 million people The total domestic and international cargo freight was 28,861 tonnes The number of passengers handled was 2.95 million Cargo freight increased to 39,601 tonnes in 2011 and further increased to 52,790 tonnes in However, in 2013 there was a sudden decrease to 28,448 tonnes, and then uplifted from 31,862 tonnes in The number of passengers handled increased to million in 2014 equivalent percentage Ports Tanzania has the advantage of having both sea and lake ports. It has got three main seaports (Dar es Salaam, Tanga and Mtwara) and two main lake ports located in Mwanza on Lake Victoria and Kigoma on Lake Tanganyika. Dar es Salaam port handles 90 percent of the Tanzania s international trade which amounts to approximately US$ 15 billion of merchandise annually (equivalent to 6.8 percent of Tanzania s GDP in 2014). In addition the port provides vital access to Tanzanian s six landlocked neighbours namely Malawi, Zambia, Burundi, Rwanda, Uganda and Democratic Republic of Congo. The port of Tanga and Mtwara handle the remaining 10 percent of Tanzania s international trade. Recently, the exploration of gas from Mtwara has increased the importance of the Mtwara port. The FYDP I acknowledge the role played by DSM port in the economic growth to both Tanzania and its neighbouring countries. For this reason it stipulated operational targets which aim at eliminating the inefficiency of port operations by 2015/16. The following are operational targets set for port subsector as stated in the FYDP I: o Cargo volume handling improved from 7.13 million tonnes to 9.87 million tonnes by 2015 o Decrease total time for container dwell at import from 12.5 days to 7 days by 2015 o Ship turnaround time reduced from 4.4 days to 2.0 days Cargo Volume Handling The FYDP I set a target of 9.87 million tonnes by However, the target was surpassed by the actual throughput handled by Dar es-salaam port which was already 13.7 million 42

57 tonnes. Based on this fact the target was revised to 18 million tonnes by The cargo handled by Dar es Salaam port in 2010/11 was 9.9 million tonnes compared with 10.8 million tonnes in 2011/12. The trend continued upwards to 12.5 million tonnes in 2012/13 before getting to 14.4 tonnes in 2014/15. The positive trend was mainly attributed to deployment of new and modern cargo handling equipment, as well as increase of cargo handling time from 12 to 24 hours per day. Despite of the positive trend shown by DSM port, the cargo handling situation in other ports (Tanga, Mwanza, Kigoma, Kyela, Kilwa, Lindi and Mafia) was different. For the past five consecutive years (2010/ /15) aforementioned ports failed to meet target. The failure to meet target was attributed to poor ports infrastructures. Table 3.15 below depicts the cargo handling trend in various ports. Container Dwell Time During the period under review, the container handling has demonstrated a positive trend. In 2010 the container dwell time was 13.3 days. It improved to 10.3 days in 2014/15 owing to initiatives such as the improvement of customs procedures and the use of modern container handling equipment. Despite these improvements efficiency is still below both the internationally acceptable standard of maximum 3 days and the target of 7 days in the FYDP I. (Figure 3.1). Table 3.15: Total Cargo Volume Handling Performance (Tonnes 000 ) 2010/ / / / /15 Major Sea Ports Target Actual Target Actual Target Actual Actual Actual Dar es Salaam 9, , , , , , ,335,827 14,585,246 Tanga , ,851 Mtwara , ,577 Minor Sea Ports Kilwa, Lindi and Mafia ,201 31,219 Lake Ports Mwanza , ,290 Kigoma ,386 99,386 Kyela ,319 1,867 Total 15,427,371 15,786,436 Source: Ministry of Transport, 2014 (Blue Print for Development of Central Corridor) Table 3.16: Container Dwell time for 2010/11 to 2014/15 DSM Port Year 2010/ / / / /15 No. of Days Revised during Transport Lab as part of the BRN initiative in March

58 Figure 3.1: Container Dwell Time of DSM Port (2009/ /15) Source: TPA Statistics, 2014 Ship Turnaround Time During the period under review, DSM port experienced a mixed performance. In 2010/11 the overall ship turnaround time was 7.1 days while in 2014/15 the time decreased to 2.8 days. This performance was the result of Operational efficiency at the port. (Figure 3.2) has the trend for each category of ship. Table 3.17: Performance on Ship turnaround time for 2010/11 to 2014/15 DSM Port Year 2010/ / / / /15 OVERALL Figure 3.2: Ship Turnaround Time of DSM Port (2010/ /15) Source: TPA Statistics, 2014 Initiatives were under taken to improve shipping performance: i. The TPA took various steps to decrease dwell time including: procuring more equipment such as forklifts, trailers, tugs, pilot boats, mooring boats, and the use of private ICDs which support them to reduce number of days 44

59 ii. Implementations of the proposed projects to enhance operational efficiency, upgrade existing port facilities and construct new port facilities as proposed by the BRN Transport Lab iii. Instituting 24/7 working hours by all port stakeholders iv. Implementation of the single window port community system through computerization of all port related activities into one platform to allow timely sharing/exchange of information among all stakeholders v. Strengthening institutional administration by enhancing professionalism, information transparency and capacity building and workforce enhancement vi. Preparation of the Ports Master Plan, with the aim of increasing efficiency in all ports in terms of transporting cargo to the neighbouring countries and increasing its contribution to GDP. Challenges which the authorities are working on include: i. Inadequate capacity to handle cargo/container ii. Inefficient intermodal cargo flow on network of rail and road transport iii. Bureaucratic cargo clearing system iv. Lack of enough and modern cargo handling equipment. Below is a summary of the target area, status in 2011 and key achievements reached by 2015/16: Target area in 2015 Status in 2010/11 Achievements reached to 2015/16 Cargo volume handling Cargo volume handling was Cargo volume handling increased to 14.4 improved from 7.13 million tonnes to 9.87 million tonnes by million tonnes by 2010 million tonnes in 2014/15 equivalent percentage Decrease total time for container dwell at import from 12.5 days to 7 days by 2015 Ship turnaround time reduced from 4.4 days to 2.0 days Container dwell at import was 12.5 days Ship turnaround time was 4.4 Container dwell at import decreased to 10.3 days in 2014/15 equivalent to 82.4 percentage Ship turnaround time reduced to 2.8 days. This performance was the result of Operational efficiency at the port Road Transport Tanzania s road network 9 consists of 86,472 km of which 12,303 km (14.23 percent) are trunk roads, 22,130 km (25.59 percent) are regional roads and 52,039 km (60.18 percent) are district, urban and feeder roads. The assessment of the overall condition of the road network as of December 2014 indicates substantial improvements, in which 35 percent were judged to be in good, 54 percent in fair and 11 percent in poor condition. In comparison 56 percent of the road network was in good condition, 33 percent in fair and 11 percent in poor condition in Road Condition by December, 2014 Type Road Condition Total km Good Fair Poor Total Km % Km % Km % Km % Trunk Paved 4, , , Regional Paved , Trunk Unpaved , , Regional 5, , , , Unpaved 9 The road lengths of 31,931 km were surveyed. The kilometres which were not surveyed were either under construction for upgrading to bitumen standard or were impassable during the exercise. 45

60 Type Road Condition Total km Good Fair Poor Total Km % Km % Km % Km % Total 11, , , , Source: Tanroads, 2014 These achievements were a result of effective supervision of road projects by TANROADS; increased Government investment from Tsh 177 billion in 2010 to Tsh 314 billion in the fiscal year 2014/15 (in the road fund) in construction, rehabilitation and maintenance of road network; and increase in funding by donors on the road development projects aiming at increasing mobility and accessibility of rural areas so as to accelerate economic activities and regional integration. In an attempt to improve the road conditions in the country, the Government of Tanzania set a number of targets in the FYDP I to be achieved by 2015/16: o Construction and rehabilitation of 5,204.7km of ongoing and new roads to bitumen standard on the main roads transport corridors as per Schedule 1 o Addressing traffic congestion in Dar es Salaam and other major urban centres o Effective systems for financing and management of district and feeder roads put in place o Local governments and communities actively involved in investment initiatives and in improving feeder roads Construction and Rehabilitation In the period under review, a total of 2,775km (out of planned 5,204.7km) was rehabilitated to bitumen standard which is an achievement of 53.3 percent. On the other side, a total of 3,420 km have been rehabilitated to gravel standard. Despite these achievements, there still challenges of inadequate and delay in disbursements of road projects funds. Addressing Traffic Congestion in Dar es Salaam During the period under review, the government has embarked on the construction of 96 km of the Dar es Salaam Road Corridor, 10 the construction of flyovers in major road junctions and the adoption of the Bus Rapid Transit (BRT) system. In the construction of Dar road corridors a number of achievements have been realized: completion of 6.4 km of Ubungo Terminal - Kigogo/Kawawa roundabout road; 2km (out of 2.7) of Kawawa round-about - Msimbazi Valley - Jangwani/Twiga junction; Ubungo Maziwa- External section; surfacing 6.9 km (out of 10.3km) Jet Corner-Vituka-Davis Corner road; and 9.7 km (out of 17km); of Mwenge-Tegeta (New Bagamoyo) road into dual carriage way. The procurement of a contractor for the expansion of Kawawa/(Morocco junction) to Mwenge is at an advanced stage. Similarly, procurement process for construction of Selander Bridge and widening of Gerezani road 1.3 km are in progress. Up to the end of April 2015, a total of 59.2km were upgraded to bitumen standard. The Ubungo and TAZARA junctions have been earmarked for construction of interchange and flyover respectively in which the detailed design for the latter is completed and 10 Dar es Salaam road corridor is mostly constituted of feeder roads that help to ease congestion e.g. Mbezi - Malamba Mawili - Kinyerezi- Banana, Kimara Kilungule - External Mandela Road and Jet Conner-Vituka-Davis Corner. 46

61 procurement of the contractor and the consultant (to supervise the project) are on going. Phase 1 of BRT system is at an advanced stage (compeleted by 85%) and it is estimated that by September 2015 the project will be fully completed and operational. In short, the main road sub-sector initiatives during the period include the programme to ease Dar es Salaam traffic congestion through construction of feeder and ring roads, including the implementation of Dar es Salaam Bus Rapid Transit (BRT) system; continuing with construction of roads linking to areas with great economic potentials as well as facilitating trade with neighbouring countries and roads that connect regions and districts headquarters. Major challenges may be listed as follows: i. Inadequate financing for road development projects which have resulted into delays in completion of planned activities, outstanding debts, stopping and or slowing down of works. ii. Insufficient funds for maintenance and expanding road network; iii. iv. Inadequate capacity and capability of the local construction industry Unstable road network due to high percentage of unpaved roads which are highly vulnerable to rain v. Vehicles overloading which leads to early deterioration of roads vi. Theft of road signs and other equipment, especially metal road signs have been targeted because of the booming and improperly controlled scrap metal business vii. Inadequate integration between the road network, markets and productive areas viii. Unplanned urbanization and traffic congestion in urban areas ix. Insufficient funds for construction and maintenance of roads x. Institutional weaknesses in management of district and feeder roads xi. Unstable road network due to a high percentage of unpaved roads which are highly vulnerable to rain. xii. Roads congestion in major cities of Dar es Salaam, Arusha, Mwanza and Mbeya. xiii. Encroachment of roads reserve xiv. Misuse of road infrastructure by violent drivers and other road users xv. Use of roads by different people who have different means of transport example bicycles, trolley, animal carts, motor circles and motor vehicles contributes to the roads congestion; and xvi. Poor performance of other means of transport complementing the roads sector such as water and railways Below is a summary of the target area, status in 2011 and key achievements reached by 2015/16: Target area in 2015 Status in 2010/11 Achievements reached (2014/15) Construction and In 2010, Tanzania had a total of a total of 2,775km was constructed and rehabilitation of 5,204.7km of ongoing and new roads to bitumen standard on the 91,049 km of road network. a total of 8, km of trunk roads were in good condition; rehabilitated to bitumen standard which is an achievement of 53.3 percent main roads transport 3, km in fair condition; corridors and in poor condition. Addressing traffic congestion in Dar es Salaam and other major urban centres 59.2km DSM Road was upgraded to bitumen standard by the end of April Dar es Salaam Bus Rapid Transit (BRT) system is at final stages for phase I and the detailed design for the TAZARA flyover is completed 47

62 Science, Technology and Innovation (STI) Science, technology and innovation are key facilitators of development through their augmenting effects on the productivity in all sectors. Particularly Information and Communications Technology (ICT) has been a major game changer in Tanzania s economy with communication sector not only acting as one of key drivers of economic growth observed in the past decade 11 but also enhancing access to information transmission across the country and bringing basic financial services to remote areas through mobile banking. The opportunities of biotechnology are also vast, especially for Tanzanian agriculture which has been identified as the driver of initial growth to prepare the ground for industrialization. Higher yields, better breeds, improved seeds can all substantially accelerate the development process. Furthermore; science, technology and innovation (STI) constitute critical inputs to the development processes, especially in an increasingly globalized and knowledge-driven economy. The development of STI is a crucial component in the country s socioeconomic development, especially to increase the value and sophistication of the country s production (namely through an improved value-chain). Besides, research and development (R&D) is crucial in increasing the sectoral productivity and general competitiveness of the country s goods. Given those tremendous opportunities the targets of the FYDP I regarding STI were as follows: o Complete the National ICT Infrastructure Backbone Project and scale up the broadband access connectivity o Tanzania s ICT backbone infrastructural capacity for efficient services and regional connectivity to provide 40 percent of the communications services of the land-locked countries enhanced by 2015 o At least 50 MSc and PhD research outputs linked with the productive sector produced by the NM-AIST o A well-functioning Biotechnology Centre at Sokoine University of Agriculture (SUA), addressing problems related to crop, livestock and fisheries production o One food irradiator established at a strategic location in Tanzania National ICT Backbone and Broadband Connectivity During the period under review, a total distance of 7,560 kilometres of Optic Fibre Cable (OFC) Backbone covering 24 regions of Tanzania Mainland were covered under phase I & II of the project. Connectivity to submarine cables (EASSy & SEACOM) and cross-border connectivity with neighbouring countries namely Kenya, Uganda, Rwanda, Malawi, Burundi and Zambia has been successfully implemented. The total investments for these two phases were US$ 170 Million and Billion Tanzania Shillings (Local Component). Currently the MCST is implementing the NICTBB phase III sub phase I. The project was effectively started since 12 December, 2013 when the MCST and the Contractor China International Telecommunication Construction Corporation (CITCC) started preparing project requirements which included specifications and details design of the project components. The three key components are: (i) National Broadband Backbone Transmission Network Expansion; (ii) IP Backbone Network Construction; and (iii) Internet Data Centre Construction in Dar es Salaam. National Broadband Backbone Transmission Network Expansion With respect to broadband connectivity in Tanzania, the government has managed to scale up broadband connectivity through the creation of multipurpose community tele-centres in some 11 While the overall economy has been growing at an average of 6%, the communication subsector grew at around 20% 48

63 wards and districts with the intention of establishing tele-centres in all wards. Fourteen telecentres have been established so far in Kilolo, Mrijochini, Isaka, Ikungi, Namtumbo, Hai, Masasi, Karagwe, Rorya, Ludewa, Bagamoyo, Tegeta, Wete and Mpanda. The government will continue to equip these tele-centres with needed facilities such as Local Area Network (LAN). Furthermore the guideline for managing tele-centres has been finalized. Construction of the Internet Data Centre The Internet Data Centre (IDC) provides the platform for hosting Internet based applications and contents. The IDC is an ideal, effective and indispensable ICT vehicle for the dissemination of information to businesses and the general public to support e-government stakeholders such as Educational Research Network (ERNET also known as HERInet), e- Schools Network under the Tanzania Beyond Tomorrow (TBT) project, e-health Network (Health Net), and Community or Citizen Information /Knowledge Centres. The data centre is located on Dar es Salaam at TTCL Kijitonyama PLOT NO. 1, BLOCK D, Mikocheni area. Construction is ongoing and expected to be completed December, Figure 3.1: The Model View of the Internet Data Centre (IDC). Research Coordination and Promotion During the period under review, R&D activities are coordinated by COSTECH. There are covering 76 registered R&D institutions under different sub-sectors including agriculture (7), livestock and fisheries (3), energy and industry (6), natural resources (2), health (4), socioeconomic (2) and higher education, universities and colleges (52) (Table 3.18 below). COSTECH is looking ahead to put efforts in place so as to manage an effective national innovation system that closely link the R&D institutions and tailoring their respective mission to the national development vision 2025 and many years beyond. Table 3.18: R&D Institutions Registered by COSTECH S/N Sector / Stakeholder Institution 1. Agriculture DRD, TPRI, Kizimbani (ZNZ), IITA-TZ, TORITA, TACRI,TRIT 2. Livestock and Fisheries TAFIRI, TALIRI,TVLA 3. Energy and Industry NHBRA,TATC, TEMDO, CAMARTEC, TIRDO and 49

64 SIDO 4. Natural Resources TAWIRI, TAFORI 5. Health NIMR, TFNC, KCRI, and IHI 6. Higher Education (Universities and Colleges) 7 Social Economic REPOA, ESRF Source: COSTECH UDSM, SUA, MUHAS, OUT, UDOM, ARU, NMAIST, SUZA and OTHER UNIVERSITIES (Registered to TCU) The Nelson Mandela African Institute of Science and Technology (NM-AIST) Research Outputs NM-AIST was established in During the period under review, the institute offers 8 approved masters and PhD programmes in different areas of STI ranging from life sciences, bio-engineering, ICT to environmental sciences. Five other programmes are being developed. There are two cohorts of students, the 2011/12 cohort with about 53 Masters and 30 PhDs and the 2012/13 cohort with 89 Masters and 46 PhDs. Efforts are being carried out to continue expanding the institute s infrastructure and other relevant facilities. During the period under review, there has been a number of achivements attained by NM- AIST. These include: 219 published papers in international peer reviewed journals and produced 18 innovations; 135 Master s and 13 PhD NM-AIST Graduates are affiliated to different organizations as follows: 1) In industries (40.5%), 2) Higher learning institutions (43.9%) 3) Research and development institutions (8.1%), 4) Graduates on PhD studies (4.1%) and 5) Those located in unknown places (3.4%). Biotechnology Centre at SUA The International Centre for Genetic Engineering and Biotechnology (ICGEB) has already issued an approval for SUA to establish a Centre of Excellence in Agricultural Biotechnology. So far, the study programmes and a business plan have been prepared by the team of experts from SUA. Food Irradiator at Tanzania Atomic Energy Commission (TAEC) The objective of the project is to establish an irradiation facility in Tanzania so as to improve the shelf life of agricultural produce. The following are the specific objectives: (i) To analyse the products and production locations and the location where by it will be feasible to establish this facility, (ii) carry out a technical analysis to identify the appropriate technology and vendor (iii) mobilize resources for establishing the facility and (iv) acquisition, erection and operation of irradiation facility and build the capacity of farmers and new and existing small businesses to participate in the supply chain of the selected fruit and vegetable products. Realigning the STI s Policy, Legal, Regulatory and institutional frameworks In realization of tremendous contribution and potentials STI has in propelling the socioeconomic development as well as the importance of having a comprehensive and relevant policy, legal, regulatory and institutional frameworks for STI development. The Government embarked on in depth review of the policies, legislations, regulations and institutional mechanisms governing the STI sector with the view of (i) assessing their adequacy and relevance given the dynamic nature of the sector and recent developments in the global STI landscape, (ii)develop a more holistic approach towards STI development; developing an overarching policy and legislation for the sector, (iii) increase harmonisation of policies and laws governing different STI subsectors and (iv)strengthening the STI institutional mechanism. 50

65 Challenges facing the STI sub-sector One of the main initiatives undertaken is to ensure right conditions for the provision of mobile communication services to hard-to-reach areas sound through the Universal Communication Services Access Fund (UCSAF). However, the challenges which the subsector continues to grapple with include: i. Inadequate funding for most of the STI initiatives has led delays in their implementation ii. Weak coordination among MDAs which has resulted in operational bottlenecks and delays in implementing initiatives that require participation of several MDAs; examples are the NICTBB and Postal code initiatives. iii. Underutilization of the NICTBB due to: a. an observed reluctance of Internet Service Providers (ISPs) and other telecom operators to connect to the NICTBB due to higher expected future returns on scalable wireless networks which have fewer fixed and sunk costs than the fibre optic cable b. Very limited public awareness on NICTBB. iv. Skills gap in the STI sector due to improper succession plans which has led to an ageing workforce in most R&D coupled with a decreasing number of students pursuing an education in sciences v. Slow adaptation of the policy, legal and regulatory environment to local and global STI developments. For example despite t vi. The tremendous growth of using mobile banking and other corresponding technologies a National Payment System Law that fully consider such developments is yet to be enacted. vii. Data collection and availability on STI key indicators has been unsatisfactory and not well-coordinated viii. There is no explicit national policy on STI resulting in an unclear national STI agenda Below is a summary of the target areas and key achievements reached by 2015/16: Target area in 2015 Achievements reached (2014/15) Complete the National ICT Infrastructure Backbone Project and scale up the broadband access connectivity Complete the National ICT Infrastructure Backbone Project and scale up the broadband access connectivity Tanzania s ICT backbone infrastructural capacity for efficient services and regional connectivity to provide 40 percent of the communications services of the landlocked countries enhanced by 2015 a total distance of 7,560 kilometres of Optic Fibre Cable (OFC) Backbone covering 24 regions of Tanzania Mainland were covered under phase I & II of the project a total distance of 7,560 kilometres of Optic Fibre Cable (OFC) Backbone covering 24 regions of Tanzania Mainland were covered under phase I & II of the project Connectivity to submarine cables (EASSy & SEACOM) and cross-border connectivity with neighbouring countries namely Kenya, Uganda, Rwanda, Malawi, Burundi and Zambia has been successfully implemented. Energy Sub-Sector Tanzania is endowed with diverse forms of energy resources including hydro, natural gas, coal, geothermal, solar, wind and uranium. As of June 2015, Tanzania s total installed capacity was 1, MW generated by TANESCO, Independent Power Producers (IPP) and Emergency Power Producers (EPP). Installed generation capacity consists of hydro and thermal based generation. Hydro contributes 45 percent, gas 35 percent and oil 20 percent of total power generation. In terms of shares in electricity generation, TANESCO generates Taarifa ya Mafanikio ya Serikali ya Awamu ya Nne katika kipindi cha 2005/2006 hadi 2014/15, Toleo la Julai,

66 percent, while IPPs and EPPs on average generate 23 percent and 6 percent respectively. The transmission system is comprised of forty three (43) grid substations interconnected by a transmission line network totaling 4,866 km by December, The main targets of the FYDP I were: o Increase electricity generation capacity to 2,780 MW o Tanzania s regional trade share enhanced by connecting to at least 50% of grids of its riparian countries o Other potential sources of energy, e.g. geothermal, solar, wind, coal increasingly used Achievements and progress made: i. Two new power plants were commissioned, Ubungo II 105 MW Power Plant was commissioned in 2011 where as Nyakato 60MW Power Plant in Completion of the power plants has improved power supply efficiency and reliability despite decommissioning of a number of Emergency Power Plants. Construction of Kinyerezi I 150 MW Power Plant is 90 percent completed and is expected to be commissioned in September, 2015; ii. Publication of Electricity Supply Industry (ESI) reform Strategy and Roadmap in June 2014 aims at improving electricity sub-sector efficiency and governance; iii. 550,177customers connected with electricity between 2010 and June, 2015; iv. Substantive quantities of natural gas discoveries have been made which makes Tanzania s estimated natural gas reserve be TCF. Launch of the Fourth Petroleum Licensing Round for oil exploration in October 2013 for seven blocks in deep sea and one block in northern part of Lake Tanganyika was carried out; v. Construction of the Natural Gas Pipeline from Mtwara and Songo Songo to Dar es Salaam was completed whilst construction of the two natural gas processing plants at Madimba and Songo Songo were completed by 99 percent and 97 percent respectively as of June 2015; and vi. Tanzania Geothermal Development Company (TGDC) was established and became operational in July, The Company is responsible to carry out effective surface and subsurface geothermal resource assessment as well as drilling geothermal wells. Electricity Generation Capacity By June, 2015, installed generation capacity was 1, MW while electricity consumption was 136kWh per person per annum. The average national electricity connection rate was 30 percent of households and the system losses in transmission and distribution network amounted 18 percent of total electricity output. The decrease of generation capacity of 2014/15 compared to 2013/14 was due to phasing out of about 247 MW of Emergency Power Plants (EPPs) that were running on oil. Table below indicates trend of installed generation capacity in Tanzania. Electricity Generation Capacity in MW 2010/ / / / /15 Target 2015/16 1,100 1,376 1, ,328 2,780 Source: Ministry of Energy and Minerals, Budget Speeches 2014/15 Electricity Consumption Trend Increase in electricity consumption per person per annum has been slow, this depends on the available electricity supply to the customers and the country s total population. The 52

67 population increase between 2002 and 2012 was about 2.9 percent whilst the projection beyond 2012 shall be approximately 2.6 percent. In 2010/1, electricity consumption was low due to shortage supply of electricity from hydropower plants. However, in subsequent years the emergency plan added extra power in the grid and improved powe supply. This made more electricity available to customers making an increase in electricity consumption of 15 percent per person between 2010/11 and 2012/13. The consumption of electricity between 2012/13 and 2014/15 has increased further to 136 kwh per person per annum due the fact that new plants contributed additional power and reduced power loss in the national grid have made more energy available to customers. The target for electricity consumption in 2015/16 is 236 kwh/capita. Table 3.19 gives the annual performance and overall trend since 2010/11 until 2014/15. Table 3.19: Electricity consumption per in kwh/capita from 2010/11 to 2014/ / / / / /15 Target 2015/ Source: TANESCO, 2015 Household Connection to Electricity There has been a significant progress in electricity connection rate in Tanzania. The Table 3.20shows the annual performance and the overall trend between 2010/11 and 2013/14. The Government has been implementing various initiatives including Rural Electrification under Rural Energy Agency (REA) to ensure that more households and economic/social centres in both rural and urban areas are connected to electricity. As of June 2015, percentage of the population witha ccess to electricity reached 40 percent while the connection level is at 30 percent. Table 3.20: Household Connected to Electricity (% of total population) 2010/ / / / / /14 Target 2015/ Source: Ministry of Energy and Minerals Budget Speeches ( ) Transmission and Distribution Losses There has been generally a consistent reduction in electricity losses over the years. The reduction was about 1 percent in each subsequent year between 2010/11 and in 2014/15. The electricity losses in the national grid is currently at 18 percent compared to 23 percent in 2010/11, this is equivalent to a decrease of nearly 22 percent. The government has taken measures to upgrade electricity networks, replacing conventional meters by digital ones and increase utilization of Automatic Meter Reading (AMR). The target for transmission and distribution losses in 2015/16 is set to be 15 percent. The Table 3.21 gives the annual performance and the overall trend between 2010/11 and 2014/15. There is a gap of 3 percent to be achieved during the remainder of the FYDP implementation period. Table 3.21: Trends on Transmission and Distribution Losses from 2010/11 to 2014/ / / / / /15 Target 2015/ Source: TANESCO Statistics ( ) Regional Interconnectedness With regards to Tanzania s regional interconnectedness, cross-border power interconnection projects include Zambia Tanzania Kenya (ZTK) electrification project which involves 53

68 construction of 400kV transmission line from Zambia through Tanzania to Kenya and substations. In the part of Tanzania, the Government is currently constructing 400kV transmission line of 414 km from Singida through Arusha to Namanga. The 400kV Singida Arusha Namanga transmission project will be co-financed by the AfDB and JICA. Other initiatives include the Rusumo power project (80 MW) financed by a loan from AfDB. Other Potential Sources of Energy The utilization of renewable and alternative sources of energy is at different stages of implementation. Solar energy generation is still in small-scale and mostly used in rural health centres, households and schools where there is no grid connectivity. There is potential for wind power, which is not yet developed although there is plan to implement a wind power project in Singida through PPP arrangement with generation capacity of 50MW. With regards to geothermal energy sources, Tanzania Geothermal Development Company (TGDC) was established for development of geothermal resources. The Government has been looking for a potential partner to develop the coal mines and a coal plant of 200MW at Kiwira. Main Initiatives Undertaken i. Fast-tracking of increasing power generation capacity, transmission and distribution projects through the BRN initiative ii. Fast-tracking of the construction of the new gas pipeline from Mtwara to Dar es salaam iii. Fast tracking the implementation of rural electrification projects iv. Reduction of electricity connection fee by 30 77% for all single phase customers in urban and rural areas v. Loss reduction programme of electricity in transmission and Distribution networks vi. Preparation of the Natural Gas Policy, 2013 vii. Preparation of the Petroleum Act, 2015 viii. Preparation of the Local Content Policy, 2015 Challenges faced (i) Financial resource constraints and untimely disbursements of funds for implementation of development projects; (ii) Attracting more private investment in the energy sector especially in power generation; (iii) Transmission and distribution losses of electricity; (iv) High operating costs of heavy fuel power plants; and (v) Drought which affected hydro power generation. Priority areas in the Energy Sector (i) Continue with implementation of projects under BRN initiative; (ii) Strengthening existing power generation plants, transmission lines, distribution networks and promoting rural electrification; (iii) Continue with implementation of electricity projects indentified in the Power System Master Plan (PSMP); (iv) Enhancing conducive environment for encouraging private sector participation in the electricity sub-sector; (v) Facilitating establishment of natural gas distribution networks as well as development of LNG; 54

69 (vi) (vii) Promoting investments in renewable energy sources and developing coal resources as well as strengthening Tanzania Geothermal Development Company (TGDC); and Continue with implementation of the Electricity Supply Industry (ESI) Strategy and Roadmap. Below is a summary of the target areas and key achievements reached by 2015/16: Target area in 2015 Achievements reached (2014/15) Increase electricity generation By June, 2015, installed generation capacity was 1, MW, Despite not capacity to 2,780 MW reaching the target, electricity generation will improve following the completion of Kinyerezi I Power Plant which is expected to generate 150MW. Other potential sources of energy, e.g. geothermal, solar, wind, coal increasingly used Tanzania Geothermal Development Company (TGDC) was established and became operational in July, The Company is responsible to carry out effective surface and subsurface geothermal resource assessment as well as drilling geothermal wells Agriculture The agriculture sector is composed of a number of sub-sectors - crops, livestock, forestry and fishery products. Tanzania is endowed with about 44 million hectares of arable land, of which only 24 percent is currently under cultivation and rich water bodies to permit irrigation. Among the 29.4 million hectares potential for irrigation, only 461,326 hectares are currently under irrigation. In regard to forest cover, it has about 38.8 million hectares of forests which is about 41 percent of the total land area. The majority of Tanzanians remain dependent on agriculture for their economic and livelihood. Currently, the sector absorbs over 74 percent of the national labour force. The overall agricultural objective which is stipulated in FYDP is to increase the average sectoral annual growth rate from 4.4 percent of the base year of FYDP (2010/11) to above 6 percent by 2015/16. On the basis of the above, the government places the agriculture sector among the key activities requiring special attention during implementation of FYDP I which had set the following targets: o Average agricultural annual growth of at least 6 percent. o Improving food self-sufficiency (particularly for grains) from 104 to 120 percent; o Expanding areas under irrigation from 345,690 hectares to 1,000,000 hectares; o Increasing agricultural labour productivity from an average of TShs 212,671 to TShs 345,724 o Diversifying agriculture portfolio by increasing production of high value crops; o Increase value addition for local agricultural produces from the current 30 percent to 50 percent by 2015/16; and o Increase average annual agricultural foreign exchange earnings from currently US Dollars 700 million to 1,500 million by 2015/2016. Growth and Share of Agriculture to GDP During the period under review the agriculture sector registered slight growth. The annual growth rate was 2.7 percent in 2010 as compared to 3.5 in 2011 and sligtly declined while maintaining a constant growth at 3.2 percent in year 2012 and 2013 respectively. It increased to 3.4 in 2014, this indicates only a slight increase of growth, and it is below the FYDP growth target of greater than 6 percent by 2015/16. However, crops being the major component of the agricultural sector registered a slightly higher growth rate from 2010 to 2014 compared to livestock, hunting and forestry although it was volatile. During the period under review, the share of agriculture to GDP has almost remained constant at an average of 55

70 24.6 percent. The share of agriculture to GDP was 26.3 percent in 2010 and decreased to 25.2 percent in 2011 and decreased further to 24.8 percent in The agriculture share to GDP has continued to decrease in 2013 and 2014 to 23.8 and 23.0 percents respectively (Table 3.22). Table 3.22: Agricultural Growth and Share to GDP in percentage ( ) Activities Agriculture Crops Livestock Hunting and Forestry Fishing Agriculture Share to GDP Source: Economic Survey 2014 In 2010/11 there was a decrease of cash crop production especially tobacco and sugar while production of tea, pyrethrum, sisal and cashew nut increased. The decline in tobacco production was due to decrease of rainfall in production areas. In 2011/12 production of sugar increased while tobacco, pyrethrum and cashew nut remained the same. The increase in sugar production was due to contineous supply of electricity in processing industries, good climatic condition and the use of improved seeds of sugarcane. During 2012/13 there was an increase in production of sugar, tea, pyrethrum, and sisal while producton of tobacco and cashew nut decreased. In 2013/14, there was an increase in production of almost all cash crops including pyrethrum, sisal, tobacco, cashew nut, sugar and tea as best contributors to growth compared to 2012/13 (Table 3.23). The increase in production was due to presence of enough rainfall in areas where these crops were cultvated. Table 3.23: Change in Cash Crops Production Trend (Tonne) 2010/ /14. Crops 2010/ / / /14 Tobacco 126, , , ,881 Sugar 260, , , ,230 Tea 33,000 32,810 33,500 35,500 Pyrethrum 5,700 5,700 7,000 7,600 Sisal 33,406 25,690 37,291 40,000 Cashew nut 160, , , ,000 Cotton 225, , , ,313 Source: Economic Survey 2014 With respect to food crops, there was an increase in production of maize, rice, cassava, legumes, potatoes, millets, sorghum and banana in 2013 compared to This increase was due to presence of enough rainfall in different areas where these crops were cultivated. From 2012/13 to 2013/14 there was an increase in production of maize, rice, millets, sorghum and wheat while food crops like cassava, banana, legumes and potatoes there was a decrease in production. This decrease in production was due to presence of pests which affected the production of crops especially potatoes and cassava (Table 3.24). 56

71 Table 3.24: Food Crops Production Trend (Tonne 000) 2012/ /14 Crops Maize 5,104 5,288 6,734 Rice 1,170 1,342 1,681 Wheat Sorghum 1,052 1,073 1,246 Cassava 1,821 1,878 1,664 Legumes 1,827 1,871 1,697 Banana 842 1,317 1,064 Potato 1,418 1,808 1,761 Source: Economic Survey 2014 Food Self Sufficiency Over the period under review the food self-sufficiency ratio (FSSR) has been increasing as indicated in Table The FSSR increased from 111 percent in 2010/11 to 112 percent in 2011/12 and 113 percent in 2012/13 before it accelerated to 120 percent in 2013/14 and attain 125 percent in 2014/15 which is above the target by 5 percent. The 2015/16 SSR has not been established pending the preliminary forecast assessment for 2014/15 crop season. Table 3.25: Food Self Sufficiency Level (2010/ /15) Financial Year Food Self-Sufficiency Ratio 2010/ / / / / Source: MAFC Statistics 2013 and Budget speech 2014/15 Food production reached a total of million tonnes in 2013/14 crop season compared to million tones in 2010/11. The 2014/15 status of the FSSR indicates that Tanzania has achieved over and above FYDP I target of 120 percent before year 2015/16. The high achievement was due to increase in crop production coupled with a varying increase in National Food Reserve Agency (NFRA) stock as indicated in Table 3.26 below. Over the same period, the National Food Reserve Agency increased its stock in cereals from 1,444,310 tones in 2013 to 3,025,006 tones in Improvement in Irrigation There has been progress in increasing the area under irrigation from year 2010 to 2015 (Table 3.27). During 2009/10 the area under irrigation was 331,490 hectares. In 2010/11 the irrigated area expanded to 345,690 hectares while in 2014/15 it reached 461,326 hectares due to the increase in irrigation schemes under the District Agricultural Developments Plans (DADPs). Table 3.26: National Food Reserve Agency (NFRA) Stock between 2009 and June, 2015 (tonnes) Period January 128,919 66, , ,796 72, ,561 February 125,430 64, , ,906 60, , ,592 57

72 Period March 124,252 60, , ,312 46, , ,054 April 122,849 53, , ,245 36, , ,547 May 109,876 50, ,419 78,125 26, , ,846 June 94,699 48, ,216 65,985 27, , ,814* July 88,841 47, ,404 61,469 71, ,200 August 93,231 90, ,348 75, , ,791 September 110, , ,053 91, , ,592 October 107, , ,090 98, , ,000 November 86, , , , , ,295 December 77, , ,488 89, , ,584 Total 1,269,738 1,209,604 2,300,053 1,204,577 1,444,310 3,025,006 Source: NFRA Statistics 2014/15. Table 3.27: Cumulative Developed Irrigated Area from 2009/10 to 2014/15 Financial Year Cumulative Area Developed 2009/10 331,490 (Ha) 2010/11 345, /12 354, /13 363, /14 450, /15 461,326 Source: MAFSC, 2014 Cumulatively up to June 2015, a total of 461,326 hectares had improved irrigation infrastructure compared to 345,690 hectares in 2010/11. Of the total area under irrigation, the actual utilization is merely 20.1, 9.6, and 2.1 percent of the areas assessed to be of high, medium and low potentials for irrigation agriculture respectively. Households with access to improved irrigation schemes increased by 20.9 percent, reaching 620,205 in June 2015 compared to 530,012 in Further, registered irrigation groups (IOs) increased to 442 in June 2015 compared to 250 in Application of Agricultural Technology Tanzania s level of farm mechanization still remains low as 62 percent of land is cultivated using basic manual tools. Small size of farm holdings cultivated by households, low disposable incomes generated by farmers, difficult borrowing conditions from financial institutions leading to low profitability of heavy machinery and low investment capacity could be explained to the reasons to why agriculture performance still remains poor. However, the Government has put some efforts to ensure that the use of agricultural technology is improved. Through this the Government has increased the number of tractors from 8,466 in 2010/11 to 11,276 in 2013/14. The Government has also negotiated successfully a line of credit for importation of agricultural machinery from Government of India. This has enabled the importation of 2,114 tractors through SUMA JKT which were sold or loaned to farmers on smart subsidy basis through the AGITF or guaranteed by LGAs. During the period when ASDP I ended in 2013, the number of single axel imported tractors importation decreased significantly. For example the number of power tillers imported by the private sector was 393 in 2014 compared to 828 in

73 The government continue to improve input application for fertilizers and improved seeds through subsidy program. From 2010/11 to 2014/15, a total of 2.5 million households from 161 Districts in 24 regions benefited from input subsidies including fertilizers, seeds for maize and paddy. The beneficiaries of input subsidy managed to use 791,000 tonnes of fertilizer and 70,000 tonnes of improved seeds for maize and paddy. Because of that, the beneficiaries increased their production and productivity. Famers producing maize increased production from 5 bags per acre to an average of 15 bags per acre and paddy production increased from 4 bags per acre to an average of 20 bags per acre. As a result of input subsidy program, food availability in the country increased from 103 percent in 2009/10 to 118 percent in 2013/14. The government provided subsidy for agrochemicals to farmers producing cashew nut and cotton. Up to 2013/14, a total of 8,600 tonnes and 980,000 litres of agrochemical were distributed to farmers producing cashew nut in Mtwara, Lindi, Ruvuma (Tunduru), Tanga, Pwani and Iringa regions. Also, 576,710 farmers producing cotton were provided with agrochemical and applied in 1,537,500 acres of cotton field. In addition to cotton agrochemical, 576,710 farmers received cotton seeds under subsidy program. Also the government provided subsidy to increase production of seedlings for tea and coffee crops. Up to year 2013/14, production of seedling for tea and coffee crops reached 30 and 40 million seedlings respectively. The number of household benefiting from use of agricultural input use system since 2009/10 to 2013/14 is shown in Table Table 3.28: Number of household in use of Inputs 2009/10 to 2013/14 Years Number of Household 2009/10 1,500, /11 2,011, /12 1,780, /13 940, /14 932,100 Source: MAFSC Budget Speech 2014/15 Labour Productivity Comprehensive models on the sources of growth in agricultural labour productivity are quite diverse. During the period under review, the agricultural labour productivity was estimated at TShs 212,671 per annum in The FYDP I set a growth target to TShs 345,724 by 2015/16. The 2012/13 national census noted an increase in agricultural labour productivity to TShs 255,205 per annum per person, a cumulative increase of about 20 percent from the base year. The increase in labour productivity was attributed to a number of factors but notably technological dynamism as a result of increase in labour, human skills and capital inputs as well as use of mechanical facilities. Value-Addition During the period under review, the government in collaboration with other stakeholders implemented several interventions to improve value addition and reduce post-harvest losses (PHL). In 2011/12 the Government constructed a strategic Pack House in Lushoto DC which intended to promote value addition and reduce postharvest losses of fruits and vegetables which is estimated to stand at 50 percent and above. Under this project about 200 farmers 59

74 from Lushoto and Korogwe were sought to benefit. Other similar intervention includes construction of six (6) centres for storage of vegetables and fruits at Midawe (Arusha), Kikas, Rundugai, Kawaya (Hai), Makiba (Arumeru) and Mabilioni (Same). From 2013/14 under BRN initiative, the Government started implementing strategic project which intends to address pos-tharvest challenges and promote market access for cereal grains. Hence, in this project the Government intended to construct 49 and rehabilitate 226 warehouses in the selected 12 Districts in the SAGCOT region. Currently it is estimated that the PHL for cereal stands to 30 percent. The FYDP I target is to reduce post-harvest losses by 50 percent by 2015/16. Problems still remain with availability and capacity of agro processing facilities. Processing for value-addition has also been undertaken for other cereal crops such as maize and rice through various local companies and other stakeholders like NAFAKA in the SAGCOT area, Kiteto (Manyara), Kongwa (Dodoma), Kilombero and Mvomero (Morogoro). Production of High value Crops Production of high value crops has generally been increasing because of availability of (i) markets, (ii) National Horticultural Development Strategy (iii) availability of collection centres, (iv) improved seeds and (v) improved farming practices and water use efficiency. This has resulted in an increase in production of fruits from 4,199,138 tonnes in 2009/10 to 4,574,240 tonnes in 2014/15, vegetable increased from 770,093 tonnes to 1,041,375 tonnes in 2014/15, flowers from 8,670 tonnes to 11,380 tonnes and spices from 7,871 tonnes to 8,609 tonnes in 2014/15. Further to the increased in production, sales of high value crops also increased from Tanzania Shillings billion in 2013 to Tanzania Shillings billion in Table 3.29 shows the production trend of high value crops. Table 3.29: Production Trend of High Value crops production 2011 to 2015(Tones) Crop 2009/ / / / / /15 Fruits 4,199,138 4,748,176 3,938,730 4,096,280 4,416,690 4,574,240 Vegetables 770, , , ,750 1,005,305 1,041,375 Flowers 8,670 9,100 9,850 10,200 10,790 11,380 Spices 7,871 9,889 7,370 8,125 8,377 8,609 Source: MAFSC Budget speech 2014/15 Earnings from Agricultural Exports During the period of review, most of the agricultural exports were dominated by traditional agricultural commodities such as coffee, tea, tobacco, cashew nuts and cotton. From 2010 to 2014, the foreign exchange earnings from export of agriculture commodities present a mixed trend as indicated in Table 3.30 below. In 2011, the value of traditional exports increased by17.5 percent to USD million from USD million recorded in 2010, largely due to an increase in the export volumes of coffee, tobacco and cloves. In 2012 the value of exports has increased to USD million which is 39.5 percent increase from the value recorded in 2011 and compared to USD million registered in In 2014 the value of export decreased by 4.6 percent from USD million in 2013 to USD million. The decline was due to a decrease in export volumes for cotton, sisal and tobacco, coupled with a fall in export unit prices of most traditional crops except those for cotton, cashew-nuts and tobacco. During 2010 the foreign currency earnings from export of horticulture products was USD 30.8 million while in 2011 the value increased to USD 36.4 million and USD 51.3 million in In 2014 the value of export increased by 7.9 percent from USD 28.1 million in

75 to USD 30.5 million. The increase in the value of export was mainly due to the increase in global demand. (Table 3.30). Table 3.30: Export Earnings by Crop Product (USD Millions) Traditional Crops Horticultural Crops * 30.5 Source: Economic Survey 2014, *Vegetables and flowers. During the period under review, the implementation of the FYDP I a number of interventions were undertaken including: i. Establishment of the Southern Agricultural Growth Corridor (SAGCOT) as an approach for accelerating agriculture development across a number of regions which are rich in agricultural resources. These regions are Morogoro, Iringa, Njombe, Mbeya Ruvuma, and Rukwa. ii. Development of five farms for the production of paddy, maize and sugarcane in the Kilombero and Rufiji valleys (phase one) under the Big Results Now (BRN) initiative with a potential of about 43,130 hectares. iii. Establishment of the Tanzania Agricultural Development Bank (TADB) iv. Continue with the implementation of the Tanzania Agriculture Food Security Investment Programme (TAFSIP) aimed at attracting more investment funds v. Initiation of pilot contract farming for cotton production in the lake Victoria Basin (Mara Region) for the implementation of the Cotton Strategy so as to benefit 500,000 farmers and improve crop productivity to 1,000 kilograms per acre by vi. Awareness creation to various stakeholders of post-harvest handling technologies and the construction of horticultural storage centres such as the awareness to Tanzania Horticultural Association (TAHA) in Lushoto. Financing of the Agricultural Sector Since FYDP I tenure, the agricultural development budget has portrayed a mixed picture. There is a big discrepancy between budget requirements, approved budget and actual release. For example, in the past three years, out of the total planned budget of TShs 2, billion the approved budget including two additional years was only TShs billion (13.71 percent of required amount as per FYDP I budget) and actual released budget was only TShs billion, equal to 9.23 percent of the requirement (Table 3.31). The most affected activities were irrigation, research, mechanisation and food security. For this reason it will be difficult to achieve overall objective of sector annual growth rate of 6 percent by 2015/16 as stipulated in the FYDP I. Table 3.31: Trend of the Agricultural Development Budget 2009/ /15 (Billions TShs) Years FYDP Planned Budget. Approved Budget Actual Released % of Actual against Approved. 2009/ / / / / / Total 2, Source: MAFSC 2014 and MOF Volume IV Development Budget

76 While there has been insufficient budget funding for agricultural development, the crop development subsector has been receiving a larger share of funding as compared to others (Table 3.32). Table 3.32: Core Sub-sector Budget and Percentage in Total Approved Budget 2009/ /15 (TShs billions) Years Irrigation Crop Development (Including Mechanization) Research Mechanization National Food Security Budget % Budget % Budget % Budget % Budget % 2009/ / / / / / Total Source: MAFSC As initially observed, the above financing trend indicates that the approved budget has been very low compared to the FYDP I planned budget, the exception being 2011/12 when actual released funds were above the initially approved budget. Despite the fluctuations in the budget, there is a need to have a significant increase in the level of resources devoted to irrigation, research, mechanization and national food security. Persistent implementation challenges remain, notably: i. Inadequate financial resources to meet the FYDP I agriculture targets ii. Poor infrastructure iii. Low levels of agro-processing, storage and value addition facilities for the acceleration of agricultural development iv. Less application of agricultural technology including mechanization and agricultural inputs due to low profitability in smallholder farming and issues in accessing necessary financial capital v. Delays and reduction in the provision of subsidies for agricultural inputs to rural farmers. Summary Target Area in FYDP I Target in FYDP I Status in 2010 Status by Average agricultural annual growth rate At least 6 percent Food self-sufficiency in grains improved From 104 to percent 3 Areas under irrigation expanded From 345,690 to 354, ,326 1,000,000 hectares; 4 Agricultural labour productivity increased Average of TShs 255,205 (2013) 306, ,671 to 345,724 5 Production of high value crops increased (Fruits, Vegetables, Flowers and Spices) 5,629,840 5,635,604 6 Value addition for local agricultural From 30 to 50 percent produces increased 7 Agricultural foreign exchange earnings From USD 700 to increased 1,500 million 8 Agriculture Share to GDP Forestry 62

77 Tanzania has about 38.8 million hectares of forests which is about 41 percent of the total land area. Currently, a total of 2.1 million hectares are under Community-Based Forest Management (CBFM) while 4.2 million hectares are gazetted as village forest reserves. Forestry resources are under enormous pressure from human settlements and activities such as illegal harvesting, fires and mining, leading to massive deforestation which is estimated to be 91,000 hectares per annum. 13 The country is also endowed with enormous potentials in beekeeping, with an estimated potential production of about 138,000 tonnes of honey and 9,200 tonnes of beeswax per annum, but only 3.5 percent of the potential is produced. The forestry resources play an important role in the livelihoods of Tanzanians and it is estimated that more than 90 percent of the population uses wood for domestic energy and various nonwood products. Also they are important for water catchment. The FYDP identified the following targets: o Growth of hunting and forestry sector increased from 1.6% in 2009 to 5.9% by 2015 o Increased number of villages (from 2,328 to 2,500) and villagers participating in forest management and forum of collaboration o 50% of the forest industry using appropriate technology o Five percent reduced degradation and loss of forest biodiversity o Area of forest resources and biodiversity under effective management increased by 10% o Comprehensive REDD baseline information and future projection available, regularly updated and applied in forest management o Timely provision of forest resource assessment reports, including forest stocks and maps o Diversified and improved quality and quantity of bee products by 10% Growth of the Hunting and Forest Subsector In 2010 the hunting and forest subsector grew by 4.1 percent, slightly higher than the following year (2011) when the subsector grew by 3.5 percent and the main reason behind this fall was due to reduction in sales of forest products. In 2012, the subsector grew by 2.4 percent before picking up to 3.3 percent in 2013; this was due to improved management against poaching and illegal harvesting of forest products. Overall the subsector dropped by 0.8 percentage point from 2010 to In 2014 however, forestry and hunting subsector grew by 5.1 percent compared with 4.7 percent growth in This increase was due to increased tourist hunting. The sub-sector is said to account for 3.1 percent in GDP and the situation has been the same since The growth levels that the sector has achieved so far are below the required target of 5.9 percent growth set in by Improvement of Forest Activities During the period under review, over 902 out of 10,000 villages within the Participatory Forest Management (PFM) are practicing in Tanzania and over 441,881 hectares are under community management. In 2010, a total of 10.3 million trees were planted while in 2011 a total of 10.1 million trees were planted and the number increased to 13.3 million trees in 2012 before climbing up to 14.3 million trees in The huge boost of planting trees was due to increased campaign on tree plantation. Cumulatively by 2013, a total number of million trees were planted in 17 regions of mainland Tanzania and about 74.5 percent survived. Through PFM, a forest area of about 7.7 million acres in 2,285 villages from 77 districts and 21 regions of mainland Tanzania have been conserved by 2012/13 against the target of 2, In 2005, Africa had million hectares area of forests, about 21 percent of the continent s land area and 16 percent of the world s forests. From 1990 to 2005, the continent had lost over 4 million hectares of forests annually, which is more than three times the world s average. 63

78 villages by In 2014 number of villages participating in forest management increased from 2,285 to 2,420. This achievement indicates that still the number of required villages is yet to be attained during the period of the FYDP I. In addition management supervision for a total of 28 reserve forests and 44 game reserves, and rehabilitation of road infrastructure were undertaken to ensure better conservation of forestry resources during the period under review. Some of the villages are also harvesting and accrue money which are dished back to propel development projects like construction of schools rooms, roads, village offices and others. Beekeeping During year 2010, an average of 9,380 tonnes of honey worth TShs billion was produced which made about 7 percent of honey production capacity in the country. In the same year, an average of 625 tonnes of beeswax worth TShs 4.5 billion was produced. However the average production of honey declined to 9,000 tonnes in 2011 and 2012 consecutively but increased to 15,000 tonnes in The decline from 2011 to 2012 happened because of forest clearances due to charcoal demand, logging operations and uncontrolled fire outbreaks. The production of honey in 2013 was worth TShs 36.0 billion compared to TShs 27 billion in 2012 while production of beeswax for export in 2013 reached 384 tonnes and worth TShs 4.7 billion. This value is against tonnes of 2012 that worth TShs 2.6 billion shillings compared to exported 534 tonnes worth TShs 3.9 billion shillings in The decline was due to the increased demand in local markets. In 2014 the production of honey increased to about 34,000 tonnes and increased export sale for about million compared to million in The increase in sales was due to increased demand for honey in Arabic countries especially Dubai market which consists of concessional honey imports compared to the markets of European countries. In addition, approximately tonnes of beeswax worth million were exported compared to 4,659.9 tonnes worth million shillings in This was due to a decrease in wax demand corresponding to the drop of prices to the external market. The amount of honey and beeswax produced locally sold in Germany, Oman, China, Japan, Yemen, India, Belgium, Botswana, Kenya, and the United States. Table 3.33 indicates the trend of export sales for bees product (honey and beeswax) for five year from 2010 to 2014 Table 3.33: Trend of Export sales for Bees Product from 2010 to 2013 Years Honey Bees Wax Weight (Kgs) value (TShs) Weight (Kgs) Value (TShs) ,825 1,271,121, ,260 3,731,939, ,020 2,181,319, ,000 3,898,239, , ,043, ,400 2,582,805, , ,300, ,000 4,659,900, , ,927, ,000 3,849,466,035 Source: Economic Survey 2013 and 2014, Table 12.1 Forest Degradation and Biodiversity Addressing deforestation caused by humans requires collaborative efforts with various stakeholders as deforestation leads to a decline of biodiversity and causes the extinction of many species. A programme of Reduction of Emissions from Deforestation and Forest Degradation (REDD) continued during the period The FYDP I target was to ensure that an area of forest resources and biodiversity under effective management grows by 10 percent by The deforestation rate in 2010 was 403,000 hectares per year as compared to 372,000 hectares reached in 2014 while the area of forest and biodiversity under effective management was 1.6 million hectares compared to 2.5 million hectares by These achievements made reduction of deforestation by 7.7 percent and increase the area of 64

79 forest and biodiversity under effective management by 56.3 percent as a result of improved awareness and management against illegal deforestation of forests. Application of Technology to Forest Industries The application of technologies to forest industries has been undertaken to ensure that forest resources and biodiversity are under effective management. During the period under review, out of 400 enterprises only 80 enterprises applied appropriate technology within the industries. This achievement is 20 percent of existing industries against the target of 50 percent of industries by 2015/16. The technology included quantified emission reductions or removal enhancements, evolving technologies in remote sensing, methods for measuring and estimating carbon stocks in key pools. Further, a Tier Two (2) level monitoring to estimate net emissions from gross deforestation and promotion of Tier Three (3) reporting consistency with respect to the inclusion of diverse forest carbon pools in monitoring, reporting and valuation (MRV) have been used. This intervention has long way to go to reach the target of 50% by 2015/16. Management of Forest Information During the period under review, baseline information in regard of Reduction of Emissions from Deforestation and Forest Degradation (REDD) as well as sustainable management of forests, and enhancement of forest carbon stocks in Tanzania continued to be compiled through NAFORMA. REDD is intended to address climate change by reducing overall rates of deforestation and forest degradation in the country. Baseline information projections and update was undertaken on emission reductions or removal enhancements by using technologies of remote sensing, measuring and projecting carbon stocks in key pools. National REDD framework, strategy and its action plan has been developed, National carbon monitoring centre has been established, National Forest Resources Management and Assessment and 11 REDD pilot projects were carried out for Tanzania mainland. Timely Provision of Reports, including Forest Stocks and Maps During the period under review, monitoring of REDD+ activities for provision of forestry resource assessment reports was undertaken. This was done through the formulation of an initial forest area map that represents the point from which each future change in forest area will be determined. The initial forest area map (benchmark map) was linked to a benchmark year against which all future REDD+ activities will be monitored and reported. Procedures and protocols for measurement, reporting and verification as part of requirements for the REDD+ Strategy, Framework and Safeguards are in place. Furthermore, 24 staffs have been trained and are capable of undertaking survey and inventory, using inventory tools and equipment, GIS and data processing. The NAFORMA report is yet in place. Diversified and Improved Quality and Quantity of Bees Products During the period under review, an intervention geared at enhancing the quality and quantity of bees products was undertaken by reviewing the guidelines to ensure increased production of bees products, value addition, improvement in supervision of harnessing the products and processing to penetrate domestic and international markets. In 2012 the government sent 54 samples of honey to the European market for analysis of its quality and safety levels compared to 70 samples sent in In 2014, a total of 60 samples of honey from the Northern region, East, South and West sent for analysis of quality and safety in order to be sold in the European market compared with 70 samples analysed in The results of the analysis indicated that honey from Tanzania meets required standards of international markets. This progress has been a result of training 2,157 beekeeper farmers from

80 groups, and 50 commercial bees products dealers from 20 mainland districts on better guidelines/procedures for improvement of bee s products up to 2013/14. In adittion, a total of 8,339 bee hives have been manufactured and distributed to farmers residing near forest reserve areas. In 2014/15, a total of 921 beekeeping groups in 242 villages from 30 districts comprised of 7,320 beekeeper farmers were mobilized and provided with 14,076 beehives compared to 8, 339 beehives in 2013/14 so as to accelerate attainment of the target by Financing of the Forestry and Beekeeping Subsector Since FYDP I tenure the forestry and beekeeping development budget has indicated a mixed outlook. A mismatch has been earmarked between planned budget requirements, allocation and actual fund releases. Table 3.34 demonstrates the trend of the forestry and beekeeping development budget. Table 3.34: Planned Budget and Financing of Forestry 2010/ /15(billions TShs). Years FYDP Planned Budget. Approved Budget % of Approved to Planned. Actual funds Released 2010/ / / / / Subtotal from 2010/ Source: FYDP and Ministry of Natural Resources and Tourism (Volume IV Development Budget) Out of the designated total budget of TShs billion for the four consecutive years the actual funding for the subsector was only TShs billion (57.13 percent of required FYDP I budget for four years). The funds released for 2011/12 and 2014/15 were only and 2.24 percent of target respectively. In 2012/13 the total billions were released while in 2013/14 and 2014/ billion and billions were released respectively. This trend indicates a minimal level of forestry and beekeeping development funding at the first half of implementation of FYDP I compared to the actual requirement. Main Initiatives Undertaken i. Continuation of the Participatory Forest Management (PFM) programme aimed at improving rural livelihoods and protecting the environment as well as promoting equitable distribution of benefits. ii. Promotion of Public Private Partnership in wildlife, forestry and beekeeping subsectors. iii. Review of the mid-1998 and early 2000 natural resource based policies (Forestry Policy 1998 and Bee Policy of 1999). iv. Introduction of Community-Based Forest Management (CBFM) and development of National Forest Resource Monitoring Assessment (NAFORMA). v. Strengthen or reintroduce indigenous knowledge and practices in managing and protecting forests and beekeeping through awareness creation under the PFM Programme. vi. Review of Tanzania Chemical Residue Monitoring Plan to meet the criteria for exporting honey to EU market. 66

81 Challenges i. Inadequate financial allocation to effectively manage and develop natural forestry resources. ii. iii. Rapid depletion of forestry natural resources due to unsustainable utilization. Insufficient manpower at Central and Local Government level to carry out forestry and beeking activities. Summary Target Area in FYDP I Target in FYDP I Status in 2010 Achievement reached Hunting and forestry sector growth increased 1.6% to 5.9% 4.1% 5.1% 2 Number of villages participating in forest management and forum of collaboration increased 3 Use of appropriate technology in Forestry 4 Degradation and loss of forest biodiversity reduced respectively 2,328 to 2,500 villages The target of 50 percent 5 percent reduced degradation and loss of forest biodiversity 2,285 2,420 20% 7.7 percent reduction rate and biodiversity increased by 56.3 percent Livestock Subsector Tanzania has Africa s third largest livestock population, with an estimated 25.8 million cattle, 16.7 million goats and 8.7 million sheep; 37 million local chicken; and 2.4 million pigs in This means the livelihood of a vast majority of people is highly dependent on livestock as it generates considerable amount of income and determines the household economic and social status in many communities. Despite the large number of livestock in the country, the subsector s contribution to the economy is very small. A number of reasons could be sited to this small contribution. Firstly, most of the livestock are indigenous low yield breeds. Secondly, most livestock producers in Tanzania are nomadic or semi - normadic and therefore access to markets and all extension services is a major issue. Because of its little contribution to the economy, the Five Year Development Plan comes in with the intention of transforming, modernizing and commercializing the subsector so as to attain the substantial improvements relevant to its potentials. More specifically, the FYDP I targets the following: o Overall livestock sector growth improved from 2.7% per annum in 2010 to 5% per annum by 2016; o Overall livestock contribution to the GDP increased from its 4.7% equivalent to US$ 789 million (TShs 947 billion) in 2008 to 7% worth US$ 1.27 billion (TShs 1, billion) o Calf mortality in the traditional sector decreased from the current 30-45% due to TBD to less than 10% o Mortality among free-range chicken reduced from current level of more than 60% to less than 30% o The traditional cattle herd increased by 3.5% per annum to 21.5 million, 10% of which will be improved beef breeds or Tanzania Shorthorn Zebu finished in commercialised feedlots o Cattle off-take from the traditional smallholder sector improved from 8-10% to 12-15% leading to meat production increasing from 422,230 MT to 809,000 MT o Improving the genetic potential of existing stock o Increase egg production by 10% per annum from 2.8 billion in 2010 to 4.7 billion 67

82 o Increase milk production per annum from 5%-6% in 2010 to 7% per annum to reach 2.25 billion litres o Production of hides and skins increased by 12% per annum from 5 million pieces worth shilling 21 billion in 2008 to 9.8 million worth shilling 40 billion. Share and Growth of Livestock Sub-sector Since the inception of the FYDP I the subsector have been growing at fluctuating annual rates, but overall it recorded an average growth rate of 1.5 percent. The livestock sub - sector contribution to GDP has decreased from 9.2 percent in 2010 to 7.6 percent in 2014 (Table 3.35). The decrease in the livestock contribution could be due to decrease in the population amongst livestock traded, traditional livestock husbandry which pays main attention to quantity rather than quality and hence reduce the number of cattle sold, low diversification of animals and low investment in the sector in term of value-addition. Table 3.35: Annual Livestock growth rates and GDP contribution from Actual Target Year Annual Growth Rate (%) Contribution to GDP (%) Source: Economic Survey, 2014 Improved Genetic Potential During the period under review, there were improvements in increasing the genetic potential of cattle. The number of cattle inseminated increased from 76,800 in 2010/11 to 105,000 in 2014/15, an increase of 14.5 percent. This increase was due to strengthening supportive infrastructure such as the rehabilitation of the National Artificial Insemination Centre (NAIC) - Usa River (producing a total number of 490,000 doses of semen), Zonal Artificial Insemination Centres (Mwanza, Mbeya, Lindi, Kibaha, Katavi and Dodoma) which improved access to insemination. In addition, an average of10,731 improved heifers was produced annually by the Livestock Multiplication Units, National Ranching Company (NARCO) and Heifer Project Tanzania and distributed to smallholder farmers. As a result, milk production increased from 1.85 billion litres in 2011/12 to 2.06 billion litres in 2014/15, an increase of 13.5 percent. Production of Livestock Products Meat, Milk and Eggs During the period under review, the main livestock products meat, milk and eggs have been increasing substantially. The growth momentum is sufficient for the FYDP I target on livestock products to be achieved. Meat, milk and eggs have increased from 503,496 tonnes, 1.7 billion litres and 3.3 billion respectively in 2010/2011, to 597,757 tonnes of meat, 2.06 billion litres of milk and 4.15 billion eggs by 2014/15 (Table 3.36). Achievement of these targets was attributed to the training of 60,000 livestock farmers on commercial livestock production and an increased number of extension officers from 2,581 in 2010/2011 to 8,541 in 2014/15. The trend of production of livestock products is indicated in Table 3.36 Table 3.36: Production of Livestock Products (2010/ /15) Type of product 2009/ / / / / /15 Meat Production (Tonnes) Beef 243, , , , , ,112 68

83 Type of product 2009/ / / / / /15 Lamb/Mutton 86, , , , , ,745 Pork 38,180 43,647 47,246 50,814 79,174 54,360 Chicken 80,916 93,534 84,524 87,408 54,360 99,540 Total 449, , , , , ,757 Milk Production ('000' litres) Indigenous cattle 997,261 1,135,422 1,255,938 1,297,775 1,339,613 1,381,451 Improved cattle 652, , , , , ,275 Total 1,649,857 1,713,384 1,853,098 1,921,640 1,990,183 2,058,726 Eggs Production('000') 2,917,875 3,339,566 3,494,584 3,725,200 3,899,568 4,153,800 Source: Economic Survey, 2014 and Ministry of Livestock and Fisheries Development Hides and Skins The production of hides and skins has witnessed a positive trend, whereby in 2010/2011, the quantity and value of hides and skins produced were 4.55 million pieces worth TShs 8.19 billion compared to 6.45 million pieces worth TShs 76.3 billion in 2014/2015 respectively. Exports of hides and skin also increased, whereby in 2010/2011 the exports were 2.83 million pieces compared to 3.98 million pieces in 2014/2015, although there was a drop of 1.5 million pieces exported when compared to 2012/2013 mainly due to the newly introduced export tariff (Table 3.37). Most of the skin and hides exported were raw or semi-processed (wet blue) hence attain low value compared to the fully processed products. The export of wet blue was due to low investment in leather manufacturing industries which averaged to 70 percent of the total production. Table 3.37 summarizes the trend of production and exports of hides and skins. Table 3.37: Skin and Hides Production and Export (2010/ /2015) YEAR 2010/ / / / /2015 Production (pieces-mil) Exports (pieces-mil) Values (TShs billion) Source: Economic Survey, 2014 and Ministry of Livestock and Fisheries Development 2014/2015 Main Initiatives Undertaken i. Agricultural Sector Development Programme on Water and Health Components (ASDP I): This is a six years programme ( ) aimed at ensuring availability and accessibility of water and health infrastructures for livestock and humans in sampled livestock districts of Kondoa, Chamwino, Bahi and Kiteto. A total of 30 bore holes for livestock have been drilled, and four dams and a number of rainwater harvesting tanks have been built. The infrastructure development has improved water availability and health conditions for livestock in the project areas. ii. Eastern Africa Agricultural Productivity Programme (EAAPP): This is a five year programme ( ) aimed at improving the livelihood of dairy cattle farmers in the sample areas of whose prosperity is to be scaled up in other areas. The targets under the programme which implements the FYDP I targets include improving genetic potentials of indigenous cattle, value addition in milk, control of animal diseases and community awareness/training. iii. Agricultural Sector Development Programme (ASDP): This entails a seven year programme ( ) intended to improve livestock keepers livelihoods by 69

84 providing various training pertaining to modern livestock husbandry, extension services, health and water facilities and market infrastructure. iv. Livestock Disease Control Project: This is a five year project ( ) having zero extension of one year. The Project is aiming to prevent human rabies through control of canine rabies. Geographic location of the project is in Ulanga, Kilombero, Morogoro urban, Morogoro rural, Ilala, Kinondoni, Temeke, Kibaha rural, Kibaha urban, Kisarawe, Mkuranga, Rufiji, Kilwa, Lindi rural, Lindi urban, Ruangwa, Nachingwea, Liwale, Masasi, Newala, Nanyumbu, Tandahimba, Mtwara rural, Mtwara urban and Pemba. v. Preparation of Agricultural Sector Development Programme II (ASDP II) is at final stages of commencement. Financing the Livestock Subsector A total of TShs 1,337,479 million was proposed to finance various interventions in the livestock subsector for the five years period. These resources were anticipated to be mobilised from both the government and the private sector. During the period under review, a total of TShs84, million was set aside by the government. However, the actual budget allocation for the reviewed period was TShs 31, million as of 2014/2015. In 2015/2016 the government approved a total budget of TShs of 15,250,458,000 for livestock sector. Table 3.38 summarizes the trend in the cash flow. Table 3.38: Summary of the Development Budget for Livestock (2010/ /15) YEAR 2010/ / / / /15 Approved 14,991,821,700 16,142,604,000 11,962,942,400 26,756,983,600 14,562,568,000 Released 8,102,369,125 7,149,678,576 8,776,797,800 3,051,376,828. 4,042,447,682 % Released Source: Ministry of Finance Volume IV Development Budget 2011/ /15 Challenges The policy-related challenges include;- Iinadequate size and allocation of financial resources; Low investment in the livestock sub-sector (particularly for value-addition); Poor land use planning including for grazing livestock; Low capacity o control existing and newly emerging livestock diseass; Low adoption of improved technologies to increase production and productivity to satisfy market requirement in terms of volume, quality and sanitary needs; Changing livestock farmers from traditional to commercial livestock farming; Providing sufficient infrastructure, technologies, human and financial capacity fot sustainable management and utilization of livestock resources. Summary Target Area in FYDP I Target in FYDP I 1 Livestock sector growth improved From 2.7% to 5% per annum 2 Livestock contribution to the GDP From 4.7% (US$ 789 increased million) to 7% (US$ 1.27 billion) 3 Calf mortality in the traditional From 30-45% due to TBD sector decreased 4 Mortality among free-range chicken reduced to less than 10% From more than 60% to less than 30% Status in 2010/ % 2.2% 9.2% 7.6% 40% 30% 65% 5-10% Achievement reached 2014/

85 Target Area in FYDP I Target in FYDP I Status in 2010/2011 Achievement reached 2014/ Diversified and improved quality 10% 7% 6-8% and quantity of bee products 6 The traditional cattle herd increased By 3.5% per annum to million million million, 10% of which will be improved beef breeds or Tanzania Shorthorn Zebu finished in commercialised feedlots 7 Cattle off-take from the traditional smallholder sector improved 10% 12% From 8-10% to 12-15% leading to meat production increasing from 422,230 MT to 809,000 MT 8 The genetic potential of existing stock improved 9 Egg production increased by 10% per annum from 2.8 billion in to 4.7 billion 10 Milk production increased From 5%-6% to 7% 2.25 billion litres 11 Production of hides and skins By 12% from 5 million increased pieces 9.8 million pieces 76,800 cattles inseminated 3.34 billion eggs 1.7 billion litres 4.55 million pieces 105,000 cattles inseminated 4.15 billion eggs 2.06 billion litres 6.45 million pieces Fisheries Tanzania is endowed with fishery resources both marine and inland fisheries potential. The marine water covers 64,000 square kilometres and a coastal line of 1,424 kilometres. The Exclusive Economic Zone (EEZ) is up to 200 nautical miles covering an area of 223,000 sq. km providing the country with additional marine area and fisheries resources. Fresh water fisheries which cover 62,000 square kilometres include the shared waters of the great lakes, namely Lake Victoria, Tanganyika and Nyasa. The country has also other small natural lakes, man-made lakes, river systems and many wetlands with fish potential. Despite of having diverse fisheries potentials most of them are untapped. The industry has been dominated by freshwater fish farming in which small-scale farmers practice both extensive and semiintensive fish farming. The Exclusive Economic Zone is yet to be utilized. The fishery sector is an area which once effectively utilized, will improve the economy in an enormous way. The Five Year Development Plan intervention is very crucial for improving the situation as the contribution of the sector to GDP has stagnated between percent for a long time. The FYDP I intended to achieve the following targets: o To increase the annual growth rate from 4.5% to 7%; o To increase contribution to GDP from 1.2% to 5%; o To increase fisheries production from 350,300 metric tonnes to 450,000 metric tonnes; o Full time employment increased from 170,038 fishers in 2010 to 200,000 by 2015/16; o Aquaculture fish production increased from 1,200 tonnes in 2010 to 10,000 tonnes in 2015/16 o Incidences of illegal fishing reduced by 80% by 2015/16. o Increase centre of fish seed production from 8 to 20 o Increase seaweed production from 8000 to 12,000 tonnes o Increase fisheries establishment from the present 24 to 50 o Involvement of national fishing fleet in the EEZ fishery 71

86 o Increase fisheries related employment from 4,000,000 to 4,200,000 o Increase fisheries exports from 51,426 tonnes to 62,850 tonnes o Increase annual government collection from TShs 6.58 billion to TShs 12 billion Annual Growth Rate and Contribution to GDP The annual growth rate of the fisheries sector has been fluctuating annually. In 2010, the annual growth rate was 0.9 percent, and increased to 2.7 percent in 2011 before increased further to 2.9 percent in In 2014 fisheries economy grew at a rate of 2.0 percent compared to growth of 5.5 percent in The contribution of fishing activities to GDP has almost remained constant with a slightly change of 0.1 percent. In 2010 the share of fishing activities was 1.5 percent before decreased to 1.4 in 2011 and 2012; it further decreased to 1.3 percent in 2013 and The decline in growth was attributed to decrease in catches as a result of destruction of fishing grounds, increased use of illegal fishing practices, environmental degradation, utilization of poor and illegal fishing gears, habitat destruction (ecosystem) and lack of modern fishing vessels to fish in mid or deeper waters. Table 3.39 Table 3.39: Annual growth rates and GDP contribution from Actual Target Year Annual Growth Rate (%) Share to GDP (%) Source: Economic Survey, 2014 Increasing Fisheries Production Fish production increased from 347,157 tonnes in 2010 to 375,158 tonnes in 2013 due to improvements in fishing supportive infrastructure such as construction of landing sites (3 in marine waters and 4 in Lake Tanganyika), inspection of fish and fishery products, curbing illegal fishing by increasing man day patrols, increased fish farming and aquaculture and establishment of 739 Beach Management Units which strengthen community participation in fisheries activities. In 2014 fish production decreased to 369,827tonnes from 375,158 tonnes as reported in the previous year. The decline is attributed mainly by climatic changes, increased illegal fishing practices, utilization of poor and illegal fishing gears and destruction of fishing grounds. However, fish and fish product export increased from 40, tonnes in 2010 to 43, tonnes in 2014 worth Tshs 1,406 billion compared to Tshs billion in In addition, increased extension services and commercial fish farming technologies, especially restocking of natural waters also contributed to the increase in production of fish and fish exports. (Table 3.40) Table 3.40: Fish Production and Export ( ) Year Production (in metric tonnes) 347, , , , ,827 Export in metric tonnes) 40, , , , , Export value in billion (TShs) ,406 Source: Economic Surveys 2014 Increase in Fisheries-Related Employment The fisheries sector plays a significant role in social and economic development by contributing to employment creation, revenue generation and food security of the population in the coastal regions and regions with inland waters. During 2013 the sector supported a total 72

87 of 202,564 people directly as fishers/farmers deriving their livelihood from various fishery resources in the country. Out of these, 19,223 were fish farmers while 183,341 were full time fishers. Full-time fishers have increased by 0.33 percent compared to 2012 where there were only 182,741 fishers. In 2014 the number of fisher increased by 0.25 percent to 183,800. The sector supports more than 4.2 million people engaged in related fisheries activities to include, processing, trading, fish transporting, net making, gear mending, fishing vessel manufacturing, and boat building. Aquaculture and Fish Farm Promotion Aquaculture has been picking up substantially due to the tireless promotion by retooling, rehabilitating and establishing hatchery centres. As a result, the number of inland fishponds has increased from 19,039 in 2010/11 producing 1,522 tonnes per year to 20,235 fishponds in 2013/14 with an average production of 2,131 tonnes per year. Six Government Hatchery Centres and Aquaculture Development Centres (i.e. Ruhila Ruvuma, Mtama Lindi, Mwamapuli Igunga, Nyamilembe Chato, Machui Tanga, and Mbegani Bagamoyo) and seven privately-owned hatcheries for Tilapia and catfish production at Luhanga village (Bukoba rural), Eden Agri-Aqua Limited (Pugu-Dar es salaam), Faith Aquaculture Services (Kibamba-Dar es Salaam), Luchelele facility (Mwanza), Alpha (Mafia), Safina Aquaculture (Kigamboni) and H. Enterprise Co. Ltd (Bagamoyo) were established. In 2014/15 rainbow trout production has been stopped since the investor is cleaning the ponds that have been shown to have spoilage bacteria in fish. Table 3.41 shows the production trend in freshwater aquaculture. Table 3.41: Fish Production from Freshwater Aquaculture ( ) (tonnes) Type of Species 2010/ / / / /15 Tilapia(Tonnes) 2, , , ,000 3,118 Catfish (Tonnes) Rainbow trout (Tonnes) Source: Ministry of Livestock and Fisheries Development, Fisheries Development Table 3.42 shows figures for marine aquaculture. In 2013/14 and 2014/15 there is no production of crabs and pearls took place because farmers stopped to produce after the project ended. Table 3.42: Fish Production from Marine Water Aquaculture from ( ) (tonnes) Type of Species 2010/ / / / /15 Seaweed Prawns Milkfish Crabs Pearls (pieces) 2,105 1,221 1, Source: Fishery Development Division, Ministry of Livestock and Fisheries Development Statistics Table 3.43 presents export figures for farmed shrimps and prawns of tonnes registered in 2010/11. In 2012/13 that number dropped to 270 tonnes due to increased demand in local markets. In 2014/15 the figures raised to 391 tonnes due to increase in production from 142 tonnes in 2010/11. 73

88 Table 3.43: Export of Farmed Shrimps/Prawns (tonnes) (2010/ /15) Year Tonnes exported Value in billion TShs 2010/ / / / / Source: Ministry of Livestock and Fisheries Development, Fishery Development Division Statistics 2014 Curbing Illegal Fishing During the period under review, the Fisheries Division established 26 patrol centres (20 inland, 6 marine) to curb illegal fishing. These have been equipped with patrol boats in Kasanga (2), Kigoma (2), Ikola (1), Mbambabay (1), Buhingu (1) and Kipili (2), Kanyigo (1), Kasumulo (1), Sota (1), DSM (2), Tanga (2), Mtwara (2), Mafia (1) and Kilwa (1) and trained personnel. Furthermore, community participation in fisheries activities was strengthened by the establishment of 739 Beach Management Unit which focus on involving fishers in decision making as far as the management of fishery resources is concerned. National and regional patrols (in collaboration with the neighbouring countries of Kenya and Uganda) were conducted from 2010 to 2014 with a total of 29,395man days of fisheries patrols. In addition, various illegal gears were confiscated including among others under-sized and unrecompensed gears (356,960), fishing goggles (192), unlawfully traded fish (405,461kg) and transportation vessels including cars (228).A total of 3,044 culprits were apprehended and 431 cases have been established in court. In 2014, a total of 5,628 patrols were conducted with working day patrols across the country compared with 6,792 in During the patrols illegal nets and various fishing tools were seized. Combating illegal fishing has shown a substantial improvement in fisheries production (harvest) due to the fact that the rate of breeding sites destruction, fishing of immature and breeding age fish has been controlled. Involvement of National Fishing Fleet in the EEZ Fishery During the period under review, the Deep Sea Fishing Authority (DSFA) in collaboration with Mbegani Fisheries and the Fisheries Education Training Agency (FETA) designed a training programme to train fishermen from Mainland Tanzania and Zanzibar on fishing techniques including long-line and purse seine fishing, and familiarising them with fisheries laws. As a foundation for Tanzanian fishermen to participate in deep sea fishing operations, a total of fifty (50) fishermen have been trained on the technique of which 25 came from Tanzania Mainland and 25 from Zanzibar. Increase in Annual Government Collection from TShs 6.58 billion to TShs 12 billion Due to increased production and export values, during the period under review the government collected a substantial amount of revenue from the fisheries sector. The collection generated from fishing and export licence, Export royalty, import royalty, EEZ licence, compound fees and sale of laboratory services and inspection. The trend of collection shows an annual increment, indicating that the target can be attained if the same pace is maintained. The Table 3.44 shows the amount of revenue collected from the fisheries sector by the Central Government between 2010/11 and 2013/14. 74

89 Table 3.44: Revenue collection from 2010/ /14 Year Revenue collected (TShs) 2010/11 8,652,335, /12 9,462,982, /13 9,838,244, /14 10,760,759, Source: Fisheries Development Division Main initiative undertaken was the Marine and Coastal Environmental Management Project (MACEMP) project. This project championed the establishment of the Deep Sea Fishing Authority (DSFA) which is mandated to sustainably manage deep sea fishing resources by promoting, regulating and controlling fishing in the EEZ as well as regulating the licensing of persons and ships intending to fish in the EEZ. It also facilitated the establishment of Beach Management Units (BMUs) which aim at strengthening community participation in fisheries management and the promotion of fish farming and aquaculture as well as measures against illegal fishing. Financing of the Fishing Sector The FYDP estimated to mobilize a total of TShs 321,880 million to finance various interventions in the fisheries sector for five years. However, the government through its budget has set aside a total of TShs 25,405,837,200 for four years. The actual released amount for 2010/11and 2011/12 were TShs billions and billions respectively. However, the released amount keeps on decreased to billions in 20122/13 and 830 millions in 2013/14. It decreased further to 700 million in 2014/15. Table 3.45 summarizes the trend of cash flow. Table 3.45: Summary of the Development budget for Fisheries (2010/ /15) (TShs) Year 2010/ / / / /15 Approved budget 9,759,559,300 4,711,079,000 2,288,855,600 8,646,343,300 7,241,837,000 Released 5,866,247,208. 3,429,331,056 1,108,406, ,000, ,000,000 % Released 60.1% 72.8% 48.4% 9.6% 10% Source: Ministry of Finance Volume IV Development Budget 2011/ /15 The budget allocation for the fisheries sector is very small and keeps on decreasing year after year, from TShs 9.76 billion in 2010/11 to TShs 2.28 billion in 2012/13 and a slight increase to TShs 8.65 billion in 2013/14 and dropped by 1.4 billion in 2014/15. For the reviewed period the total budget allocated for implementing fisheries interventions was only percent of the approved development budget. This tremendous fall in budget allocation and poor release of funds subsequently stunt the sector s growth and hence affect the communities livelihoods and the economy. Challenges i. Insufficient resources allocation to the sector ii. Low capacity of fishermen iii. Uncontrolled open access to near-shore fishery iv. Inadequate fishing facilities, e.g. lack of trawler v. Lack of modern vessels to take advantage of the potential available in deep sea fishing. 75

90 Summary Target Area in FYDP I Target in FYDP I Status in 2010 Achievement reached Annual growth rate increased From 4.5% to 7% 0.9% 2.0% 2 Contribution to GDP increaseed From 1.2% to 5% 1.5% 1.3% 3 Fisheries production increased From 350,300 to 347, , ,000 metric tonnes 4 Full time employment increased From 170,038 to 182,741 fishers 183,800 fishers 200,000 fishers 5 Aquaculture fish production From 1,200 to increased 10,000 tonnes 6 Incidences of illegal fishing Reduction by 80% reduced 7 Increase centre of fish seed From 8 to 20 centers production 8 Increase seaweed production From 8000 to 12,000 tonnes 9 Fisheries establishment increased From 24 to 50 fisheries 10 Fisheries exports increased From 51,426 to 62,850 tonnes 2, tonnes 3,126 tonnes tonnes tonnes 40,498.5 tonnes 43, tonnes 11 Annual government collection increased From TShs 6.58 to 12 billion 8,652,335, ,760,759, Industry/Manufacturing Tanzania has persistently continued to promote the industrial sector by providing enabling environment for investment in basic industries, Export Processing Zones and Small and Medium Enterprises. However, the sector s growth has is not promising as it relies on imports of raw materials and intermediate inputs. Essential manufacturing industries in Tanzania include agro- and food-processing, beverages, edible oil refineries, simple medicaments, detergents, textiles and cement. The sector s growth has decreased recently where manufacturing grew by 6.8 percent in 2014 compared to 8.9 percent in 2010 using the 2007 prices. The sector is vital for transforming the economy into a more competitive one and for employment creation. Targets set under the FYDP I for manufacturing sector include: o An annual average growth rate of 11 percent o Increasing sector contribution to GDP up to 12.9 percent by 2015/16 o Increasing sector share in total country s export up to 19.1 percent by 2015/16 o Increase sector employment from 120,000 people to 221,000 people by 2015/16 Share and Growth of Manufacturing to GDP The growth of the manufacturing sector has been fluctuating over time, owing to the global financial turmoil in 2008/09, and power shortages in the country. In 2010, manufacturing grew by 8.9 percent, but thereafter dropped slightly to 6.9 percent in The sector drastically dropped to 4.1 percent in 2012 due to decreased demand, partly attributed to competition over imports. In 2013, manufacturing rose to 6.5 percent and in 2014 the growth rate increased to 6.8 percent. The upturn from 2013 was mainly due to improvements in production of some industrial products precisely textiles, plastic products, rubber, furniture, printing, drinks and agro processing. The share of manufacturing to GDP has been gradually decreasing over time since Manufacturing contributed 7.54 percent to GDP in 2010, before decreasing to 7.47 and 7.40 percent in 2011 and 2012 respectively. In 2013 and

91 its share to GDP decreased marginally to 7.35 and 7.34 percent respectively. Table 3.46 indicates trend of growth and share of manufacturing from Table 3.46: Manufacturing Growth and GDP Share (%) Year Target 2015 Growth Share Source: Economic Survey 2014 Production of Manufacturing Goods The manufacturing sector has exhibited recovery in production of most goods after the global economic depression of 2008/09. Cement production has maintained consistent growth in production from 2010 to 2014, due to new cement plants opening up, and increased production in existing cement factories. This was attributed to increased demand for cement in the country as a result of growth in the construction sector. Domestic consumption of cement increased from 2,689,562 tonnes in 2010 to 4,082,681 tonnes in 2014, an increase of 52 percent. Likewise, the production of iron and steel increased consistently from 33,384 tonnes in 2010 to 56,752 tonnes in 2014, owing to growth in the construction sector as well (Table 3.47). Table 3.47: Production of Selected Manufactured Goods from 2010 to 2014 Product Wheat flour (tonnes) 444, , , , Beer (000 litres) 242, , , , ,913 Cigarettes (million) 6,181 6,630 7,558 7,710 8,028 Textile (000 sq m) 103, ,820 83,592 97, ,458 Pyrethrum Pesticides Paints(000 litres) 28,201 31,211 34,868 36,623 38,308 Iron and steel (tonnes) 33,384 39,955 46,690 48,500 56,752 Cement (000 tonnes) 2,313 2,409 2,581 2,369,819 2,795,687 Aluminium (tonnes) Battery (Million) Source: Economic Survey, 2014 Manufacturing Exports Manufacturing export has continued to register an upward trend. The exports value from manufacturing in 2010 to 2011 declined by 10.6 percent. In 2012, export values picked up to USD 1,047.3 million before reaching USD 1,247.0 million in The major contributors of manufacturing export include: edible oil, textile, plastic goods, fertilizers and paper products. Despite an increase in value of manufacturing exports, its share to total exports has been fluctuating over time due to lack of consistent markets and low price offered. Table 3.48 below indicates value, growth and share of manufacturing to total exports of goods. Table 3.48: Manufacturing Exports, Growth and Contribution ( ) Year Value (in million USD) Growth of manufacturing exports Contribution to total exports Source: Economic Survey

92 Employment in Manufacturing During the period under review, jobs in the manufacturing sector have been on the increasing trend. The latest Intergrated Labour Force Survey (ILFS) indicates that in 2014 the number of people employed in the Manufacturin sector is 615,323 up from 434,206 in 2006 when thelast ILFS was conducted. Main interventions undertaken i. Promotion of agro-processing industries through the implementation of the SME strategy and the Integrated Industrial Development Strategy ii. Implementation of the Cotton Strategy, which focuses on the development of textile industry. In 2011 the Textile Development Unit was formed within the Ministry of Industry and Trade to work on the existing challenges to develop the textile sector iii. Development of technology for small entrepreneurs through SIDO, under which various activities are implemented including innovation of simple machines and commercialisation of small entrepreneurs iv. Improvement of access to finance by entrepreneurs through establishment of SME windows in financial institutions v. Increased accessibility to market information through SIDO by giving training to entrepreneurs and conducting trade fairs and exhibitions. vi. Continue with the implementation of Special Economic Zones and Export Processing Zones. Development on Mchuchuma/Liganga coal and iron, the biolarvicides factory and new leather industry establishments Financing of the Manufacturing Sector The amount earmarked by the FYDP I to implement manufacturing sector interventions was TShs 1,913,880 million which was to be mobilised by the government, the private sector, joint ventures and Public Private Partnerships. The total amount required to finance the sector for the four years was estimated at TShs 959,140 million. However, during the period under review, the government has allocated TShs 237,893.6 million to support the promotion of industrialisation. Looking at the budget trend, there is a disparity between the amount approved and the amount released for each year. Table 3.50 summarises the development budget for industry and trade. Table 3.50: Development Budget for Industry and Trade (2010/ /15) (TShs millions) Year 2011/ / / /15 Total Approved budget 27, , , , , Amount released 27, , , , , %released 99% 41% 64% 56% 55% Source: Ministry of Finance, 2015 and Ministry of Industry and Trade, 2015 Challenges The following are some of the major challenges that need coordinated interventions from other ministries/sectors and institutions that facilitate trade: i. High costs of production, due to poor transportation infrastructure, and availability of raw materials; ii. Lack of land bank for building manufacturing plants; and 78

93 Unreliable and inadequate power supply combined with expensive supplementary power generation. Summary Target Area in FYDP I Target in FYDP I Status in 2010 Achievement reached Annual average growth rate Annual average 8.9% 6.8% growth rate of 11 percent 2 Sector contribution to GDP Increased up to % 7.34% increased percent 3 Sector share in total country s Increase up to export 4 Sector employment contribution increased percent From 120,000 people to 221, , ,231 Mining Sub-sector Tanzania is one of the most mineral and resource rich countries in Africa, with diverse mineral deposits. These can be classified into precious minerals (gold, diamonds, tanzanite, and rubies), industrial minerals (iron, tin, copper, phosphate, limestone, and gypsum) and fuels (coal and natural gas). The sector continues to play an important role in the Tanzanian economy, providing jobs, investments, supplier contracts and especially foreign earnings. The increase in mining activities in the economy is mainly attributed to an increase in mineral prospecting, exploration, and processing activities. The mining subsector has a great potential to contribute more to the economy, given the country s mineral endowment. To facilitate this, the targets set under the FYDP I are as follows: o Attain average annual growth rate of 5% o Mineral sector Share to GDP accounting for 3.7% by 2015/16 o At least 10% of produced basic minerals are processed locally for beneficiation and value addition. o Employment in large scale mining increased from 14,000 in 2010 to 18,000 in 2015 Growth and Share of the Mining Subsector The growth of the mining subsector has experienced fluctuations over the period under review. This was mainly due to the effect of a decrease in investment following the global economic crisis which occurred in 2009/10, and the prolonged debt crisis in the Euro zone between 2011 and The subsector grew by 7.3 percent in 2010, dropped to 6.3 percent in 2011, went up to 6.7 percent in 2012, dropped again to 3.9 percent in 2013 and sharply went up to 9.4 percent in This incensement has been caused by increase in diamond production in Williamson Diamonds Limited (WDL). Production of diamonds increased from 28, carats in 2011 to 252, carats in 2014, equivalent to percent. The increase led to a rise in diamond exports. The value of diamond exports climbed to USD million in 2014 from USD 7.5 million in In 2014, the mining sector grew by 9.4 percent which is above the 2013 record. This increase was attributed to high production due to the completion of renovation of Williamson Diamonds Limited mine. The share of mining to GDP was 3.4 percent in 2010 decreased to 3.3 in However, in 2012, the share increased slightly by 0.1 percentage points reaching a growth rate of

94 percent, before turning back to 3.3 percent in 2013 and increased up to 3.4 percent in 2014 (Table 3.51).The FYDP I target of 3.7 percent contribution to GDP is likely to be attained. Table 3.51: Mining Growth and GDP Share Actual Projection Target 2015 Year Growth Share Source: Economic Survey 2014 and Financial Programming Report 2014 Mineral Beneficiation and Value Addition A large part of Tanzanian minerals is exported unprocessed. The government has been implementing a number of initiatives to attract investments in mineral processing in order to increase the value of minerals exported, and to increase employment in the mineral sector. Between 2010 and 2014, the mineral processing activities included 94 mineral processing plants, 13 elusion licences, three smelting and refinery centres, 20 faceting machines, 4 trimming machine, 4 stone carving machine, 6 bead making machine, 3 cabochon machines and the establishment of about 131 gemstone cutting centres. In 2014 the government accomplish the renovation of Tanzania Gemological Centre building at Arusha. Employment in the Mining Subsector According to the 2014 Employment and Earnings Survey and Labour Force Survey, from 2010 to 2014 jobs in mining sector have been increasing gradually. In 2010, there were 12,125 people employed in the mining sector, in 2011 the number of people employed in mining sector slightly decreased to 11,291. In 2012, employment increased by 36.6 percent or an addition of 4,110 people in the mining sector. Cumulatively the number of people employed in mining by 2012 reached 15,401 people. In 2013, the number of people working in mining went up to 17,351 people, an increase of 12 percent from In 2014, the number of people employed in this sector reached 24,519, an increase of 7,168 people, equivalent to 41.3 percent from Table 3.52: Employment in the Mining Sub Sector Years Employments 12,125 11,291 15,401 17,351 24,519 additional % Source: NBS, 2014 Building on the past efforts (policies and strategies), the main initiatives undertaken during the period under review include: i. Review of the legal framework, which among others is aimed at improving mineral beneficiation, local participation and licensing processes, ii. Strengthening of mineral sector supervision and monitoring through the establishment of regional offices, mineral inspection centres at airports, and enhancing the capacity of the Mineral Audit Agency and the Geological Survey of Tanzania through infrastructure development and staff training; iii. Building local capacity to process minerals domestically: The decision to ban trading in and the export of raw and uncut gemstones is meant to set the stage for the growth of a lapidary industry in which the country could attract and develop the requisite skills which are currently lacking; 80

95 iv. Provision of credit and grants to small scale miners to improve efficiency and productivity v. Continue enhancing the Arusha Gemstone Show, which is conducted each October and aims at promoting markets for minerals for small scale miners vi. Increasing Government revenue collection from mineral sector by enhancing capacity of Zonal Mines Offices, Resident Mines Offices and the Mineral Rights Licensing Section at MEM s Headquarter; vii. Upgrading of geo-scientific, mineral occurrence information and monitoring of Geohazards; viii. Strengthening Geological Survey of Tanzania (GST), Mineral Resources Institute (MRI) and Tanzania Mineral Audit Agency (TMAA) to perform their roles and functions effectively. Financing of the Mining Subsector Mining is one of the sectors which depend heavily on private investors; but FYDP I estimated TShs 1,383,014 million as resources for implementing the interventions. The government allocated TShs 174,742.8 million for investment in the subsector in the past four years; however, only TShs 79,198.1 million was released (Table 3.54). Table 3.53: Development Budget for Mining (2010/ /15, millions) Year 2011/ / / /15 TOTAL Approved Budget 19, ,240 46,460 37, ,742.8 Amount Released 6, , ,800 15, ,198.1 % Released 35% 60% 29.7% 42.2% 45.3% Source: Ministry of Finance Volume IV Development Budget 2015 The sub-sector has to grapple with perennial constraints including: i. Unreliable and inadequate power supply combined with expensive supplementary power generation; ii. Weak linkage between the minerals sector and other sectors of the economy; iii. Low capacity of production of small scale (artisanal) miners; iv. Low levels of value-addition; v. Volatile growth of the sector triggered by global commodity price fluctuations in the aftermath of the global financial crisis; and vi. Minerals smuggling due to illegal mining activities by the small-scale miners; and lack of capacity on the side of the Government to deal with this problem. vii. Budget constrains to implement the identified development projects Summary Target Area in FYDP I Target in FYDP I Status in 2010 Achievement reached Annual average growth rate Annual growth rate of 7.3% 9.4% 5 percent 2 Mineral Sector contribution to GDP increased Increased by 3.7% 3.4% 3.4% 3 Basic minerals processed locally for At least 10% of beneficiation and value addition 4 Employment large scale mining increased produced From 14,000 in 2010 to 18,000 81

96 3.3.4 Human Capital Development and Social Sectors Higher Education Human capital development has proven to be a key ingredient in the overall socio-economic development of nations and is one of the key considerations for investors when selecting locations for potential investment. The FYDP I defines human capital to be the stock of skills, competencies, knowledge and personality attributes which enhance the efficiency of labour. Tanzania s labour force has remained large compared to total population. In 2011 the government of Tanzania through the FYDP I stated the following clear targets to be achieved by 2015/16: o Tertiary enrolment rate increased from 1.5% to 4% (marginally above the EAC average enrolment rate, which is 3.2%) o 133,000 diploma and grade A teachers trained in 34 colleges o MUHAS Campus at Mloganzila constructed and Dodoma University completed o Five (5) higher learning institutions rehabilitated and expanded o To have 635,000 VETA- qualified workers by 2015 o To increase the share of highly qualified working population from 2.7% to 4.3% by 2015 o To increase the share of medium qualified working population from 13.6% to 17.8% by 2015 Tertiary Education Tertiary institutions comprise colleges that provide certificates, ordinary diplomas, advanced diplomas, bachelor, postgraduate, Master s and doctoral degrees. In Tanzania, institutions that provide such kind of courses are teachers training colleges, technical institutions and universities. In 2012/13 Tanzania had 117 registered teachers training colleges, 323 technical education institutions and 52 registered universities and university colleges. The total enrolment in tertiary institutions increased from 262,376 (1.5 percent of eligible youths) in 2010/11 to 302,532 (an increase of 15.3 percent) in 2011/12, again to 336,205 (an increase of 11.1 percent) in 2012/13, and again to 362,880 (an increase of 7.9 percent) in 2013/14. Table 3.54 summarizes this analysis, while Table 3.55 gives a picture of enrolment at higher learning institutions by gender. Table 3.54: Total Enrolment in Tertiary Institutions in Tanzania from 2010/ /14 Year 2010/ / / /2014 Total non Degree Courses Total degree courses Total non Degree Courses Total degree courses Total non Degree Courses Total degree courses Total non Degree Courses Total degree courses Teachers college 37,698-43,258-35,645-34,826 - Technical Institution 68,506 16,534 78,823 13,967 95,436 23,944 99,697 16,463 University and its colleges 18, ,204 23, ,390 26, ,012 46, ,009 Total 124, , , , , , , ,472 Source: Ministry of Education and Vocational Training, Basic Education Statistics in Tanzania (BEST) , 82

97 Table 3.55: Enrolment of Student s in Higher Learning Institution (2009/ /14) Programme group 2009/ / / / /14 Female Male Total Female Male Total Female Male Total Female Male Total Female Male Total Agriculture Business and Management 2,104 3,631 5,735 3,148 5,549 8,697 2,818 4,816 7,634 3,493 5,046 8,539 4,544 5,857 10,401 Art Education 6,068 9,311 15,379 7,441 11,054 18,495 6,840 10,456 17,296 6,444 11,388 17,832 6,476 11,939 18,415 Science Education 504 1,745 2, ,827 2, ,426 1, ,110 2,711 1,161 3,173 4,334 Engineering Science , ,126 1, ,307 1, ,158 2, ,640 3,198 Law and Social Science 4,245 5,708 9,953 6,279 8,339 14,618 3,864 6,068 9,932 2,301 3,236 5,537 2,843 3,399 6,242 Pharmaceutical Science , ,209 2, ,152 1, ,404 2,141 1,029 1,670 2,699 Natural Science ICT 810 2,690 3,500 1,239 3,339 4,578 1,206 3,343 4,549 1,054 2,806 3,860 1,677 3,554 5,231 Total: 14,618 25,861 40,479 19,824 33,495 53,319 16,279 29,319 45,598 15,388 29,327 44,715 18,769 33,581 52,350 Source: Ministry of Education and Vocational Training, Basic Education Statistics in Tanzania (BEST)

98 Teachers Education Tanzania has 126 registered Colleges for Teachers Education of which 34 are governmentowned colleges and 92 are non-government-owned Colleges. From 2011 to 2014, cumulatively, 99,611 teachers were trained in government colleges constituting 74.9 percent of total target requirements. Meanwhile enrolment in non-government teachers colleges was 51,816 between 2011 and Therefore, total enrolment in government and nongovernment teachers colleges for four years was 151,427 students (Table 3.56). Table 3.56: Enrolment in Teachers Colleges from 2007 to 2014 Year Government 19,640 16,700 21,723 25,814 24,243 26,626 24,072 24,670 Non-Government 3,763 5,188 13,648 10,834 13,455 16,632 11,573 10,156 Total 23,403 21,888 35,371 36,648 37,698 43,258 35,645 34,826 Source: MOEVT, Basic Education Statistics in Tanzania (BEST) Construction of Mloganzila Campus and Dodoma University Compensation was paid to citizens who were occupying plots and farms in Mloganzila. The mobilization of facilities and equipment for the construction of training hospital and basic infrastructure already has been done. Construction of a 49 storey building for a training hospital is in the fourth floor, basic infrastructures such as tarmac roads, water and electricity have been put in place. It is important to continue with the work by putting in place administrative blocks and other key hospital infrastructure for the campus to be fully operational. At the University of Dodoma constructions of laboratories and classrooms with a capacity of 5000 students were completed, basic infrastructures such as data cabling, water and electricity have been put in place. Improvements in Education Infrastructure Infrastructure improvement to support higher learning institutions to deliver quality education and fill the gap that exists in the labour market in terms of skills required involved the following institutions: At the University of Dar es Salaam construction of seven buildings and main building for School of Business were completed. The reconstruction of three lecture halls with a capacity to accommodate 600 students and a science laboratory were completed at Dar es-salaam University College of Education (DUCE). The construction of science laboratory, lecture rooms and centre for broadcasting at Mkwawa University College of Education (MUCE) are still going on. Construction of 4 buildings for science and technology completed; and construction of laboratory for faculty of science and lecture rooms going on but at final stage. Construction of Lands Building which have 21 offices which can accommodate 50 academic staff have been completed at Ardhi University. At the Open University of Tanzania, completed construction of computer laboratory in Mtwara and Mara regions, completed installation of wireless infrastructures in Dodoma, Lindi, Mtwara, Njombe, Mara and Tabora region, completed architectectural design for Science Multipurpose lab and lecture rooms at Head Quarter in Bungo, Kibaha, also rehabilitated various buidings in region offices. In additioni, in implementing the plan for improving learning and teaching environment in CDTIs and FDCs, three staff quarters were rehabilitated at Misungwi CDTI; two dormitories, toilets and sewage system at Kilwa Masoko FDC; three staff houses, sewage and installation of electricity at Mwanhala FDC; administration block, two staff houses and dormitories at 84

99 Tarime FDC; administration block and two staff houses at Sofi FDC; two administration offices, three classrooms, dining hall, kitchen and four staff residential houses at Muhukuru FDC. Also, offices, staff houses, dormitories, classrooms and other infrastructures (water and electricity installation) were rehabilitated at Msaginya, Nandembo, Bigwa, Same, Gera, and Mto wa Mbu FDCs and Mabughai and Mlale CDTIs. Classrooms were renovated at Tengeru Institute of Community Development (TICD). Five workshops for carpentry, electricity installation, agriculture equipment and vehicle maintenance were constructed at Ikwiriri, Nzega, Mbinga, Kisangwa and Handeni FDCs. In addition, one girl s dormitory, two toilets, dining hall and two staff houses were constructed at Mputa FDC; and construction of pit latrines and classrooms was carried out at Sofi FDC. Solar power system was installed at Msaginya FDC and electricity was installed at Rungemba CDTI. Skills Development In 2012, the Ministry of Education and Vocational Training through the Technical and Vocational Educational and Training Development Programme (TVETDP), conducted a study to produce the status and future projections of human skills in the economy. Table 3.57 displays the current status as of 2012/13, while Table 3.58 displays the projections for 2015/16 and Table 3.59 compares the two periods i.e. 2012/13 and 2015/16 in summary. Table 3.57: Summary of Skills Levels in Year 2012/13 Broad Field of Study Engineering, Manufacturing & Construction Professionals Technicians/ Associate Professionals Medium Skilled Workers Low Skilled Workers Total 14,196 26, , , ,081 Science 16,049 11, ,073 28,897 Agriculture 3,717 8,549 33,200 16,312,000 16,357,466 Health & Welfare 48,215 63, ,135 Social Science, Business and Law 291, , ,200 18,050 1,468,560 (SBL) Humanities and Arts 8,738 12,631 22, ,057 Education (TVET) facilitation) 4,135 1,215 5,027-10,377 Services 105, , ,800 67,784 1,382,075 Total 491, ,016 2,171,414 16,536,465 19,955,648 Contribution 2.5% 3.8% 10.9% 82.9% 100.0% Source: Ministry of Education and Vocational Training, Technical and Vocational Education and Training Development Programme (TVETDP) 2013 Table 3.58: Projected Skills /16 Broad Field of Study Engineering, Manufacturing, & Construction Professio nals Technicians/As sociate Professionals Medium Skilled Workers Low Skilled Workers Total 17,600 70, , , ,000 Science 20,920 31,080 1,040 1,360 54,400 Agriculture 4,175 19,650 48,500 16,000,000 16,072,325 Health & Welfare 64,000 82,000 2,000 2, ,100 Social Science, Business and 329, ,000 1,028,600 22,200 2,035,800 Law (SBL) Humanities and Arts 9,870 19,680 30, ,080 Education (TVET) facilitation) 4,223 20,863 25,086-50,172 85

100 Broad Field of Study Professio nals Technicians/As sociate Professionals Medium Skilled Workers Low Skilled Workers Services 119, ,800 1,241, ,200 1,695,600 Total 568,988 1,128,473 2,817,486 16,423,530 20,938,477 Contribution 2.7% 5.4% 13.5% 78.4% 100.0% Source: Ministry of Education and Vocational Training, Technical and Vocational Education and Training Development Programme (TVETDP) 2013 Table 3.59: Skills Status in the Short and Medium Terms Category 2012/ /16 Number Share (%) Number Share (%) Professionals 491, % 568, % Medium Skilled Workers 2,927, % 3,945, % Low Skilled Workers 16,536, % 16,423, % Total 19,955, % 20,938, % Source: Ministry of Education and Vocational Training, Technical and Vocational Education and Training Development Programme (TVETDP) Using the results of the aforementioned study, the implementation status indicates that the share of highly qualified working population (professionals) was 2.5 percent of total qualified working population. The share of medium qualified working population (technicians/associate professionals and medium skilled workers) was 14.7 percent. The comparison of those results with the FYDP I target shows that the percentage of highly qualified workers remains below target. Training more medium qualified workers has been evidently more successful so that it is likely that the target for 2015/16 can be achieved, for three years , a total 316,363 graduated from falk and vocation training centres. A note of caution is warranted as the FYDP I targets the increase of highly qualified labour which may come at the expense of medium qualified workers as the latter advances leave an unfilled skills gap. This can be partially attributed to the transformation of some of the colleges which were producing medium cadre such as Dar es Salaam Teachers College, Mkwawa Teachers Collage, Mbeya Technical College, Arusha Technical College and Dar es salaam Technical College to producing high skill levels. Main Initiatives Undertaken i. Efforts to increase the number of women pursuing academic education, particularly sciences, to increase the pool of highly qualified labour ii. BRN initiatives aiming to raise the quality of education in primary and secondary schools iii. iv. Total Efforts by the private sector to expand the universities in Tanzania The Government through Ministry of Education and Vocation Training has established National Applied Sciences, Engineering and Technology (NASET) which aim to coordinate the availability of a highly skilled and technically qualified human resource base Challenges i. Capacity constraint in terms of quality and quantity of manpower and facilities ii. Shortage of specialized teachers; iii. The large number of teachers at all levels not joining their field after graduating costs a lot of money and time resources to train more teachers; and 86

101 iv. Low absorption of the number of graduates at different levels of education (Primary and Secondary) into vocational training colleges in order to prepare them for selfemployment. Summary SN Target Area in FYDP I Tertiary enrolment rate increased from 1.5% to 4% (marginally above the EAC average enrolment rate, which is 3.2%) 133,000 diploma and grade A teachers trained in 34 colleges MUHAS Campus at Mloganzila constructed and Dodoma University completed Five (5) higher learning institutions rehabilitated and expanded To increase the share of highly qualified working population from 2.7% to 4.3% by 2015 To increase the share of medium qualified working population from 13.6% to 17.8% by 2015 Target in FYDP I Status in 2010 Status by % 1.5% 5.7% (2012/13) 133,000 - Construction at Mloganzila and Dodoma 4.3% 17.8% - 2.5% (2013) 14.7% (2013) 67,996 ( ) Construction ongoing Rehabilitation and expansion done 2.7% (2015/16) projected 18.8% (2015/16) projected Health The FYD I emphasizes interventions addressing the challenges facing the health sector. This implies: increasing equal access to health services taking gender into consideration, improving the quality of health services, strengthening the management of the health system, and developing policies and regulations on human resources for health and social welfare coherent with Government policies. Recent data indicate that there are insufficient medical personnel attending patients at different levels. Table 3.60 shows the current number of health staff in Tanzania as per Human Resources for Health Information System. Table 3.60: Human Resource Trend in Health Sector by Cadre S/N Profession Years Medical Doctor 1, ,225 2,283 2,325 2 Assistant Medical Officers 1, ,789 1,913 1,914 3 Nursing Officers 18,447 19,361 20,034 20,800 22,942 Source: Ministry of Health and Social Welfare Based on such background, the FYDP I set the following targets for the health sector to be achieved by 2015/16: o To reduce the burden of Malaria by 80% by the end of 2015/16 from current levels o To increase and strengthen services for care and treatment of people living with HIV/AIDS to reach 800,000 by 2015/16 o To reduce prevalence and death rates associated with Tuberculosis by 50% by 2015/16 o To reduce maternal mortality from 578 to 175 per 100,000 live births and under-five mortality from 112 to 45 per 1,000 live births by

102 o To increase percentage of women assisted by skilled attendants during giving birth from 46% of 2004 till 80% by 2015/16 Fighting Pandemic Diseases Over 95 percent of Tanzanians are at risk for malaria infection. The disease is responsible for more than one-third of deaths among children under the age of 5 years and for up to one-fifth of deaths among pregnant women. In terms of hospital admissions, malaria accounts for 33.4 percent of children under the age of 5 years and 42.1 percent in children aged 5 years and above. Generally, 2.14 US dollars are spent on malaria control per person per year which accounts for 39 percent of the country s health expenditure and 1.1 percent of its GDP. Malaria accounts for over 30 percent of the national disease burden, making it a top health priority for allocation of resources for its prevention and control. Likewise Malaria is accountable for the decline of learning capacity in children, students, and trainees (5 25 years) and in loss of economic productivity in the labour force (15 55 years). According to a HIV/AIDS and Malaria survey in 2011/12, the rate of malaria has declined from 18 percent in 2007/08 to 9 percent in 2011/12. In 2011, a total of 319,610 mosquito nets were distributed to pregnant women and children under Hati Punguzo Programme in that period. Similarly, the spraying of pesticides for destroying mosquito breeding sites (Biolarvicide) was conducted in 17 wards of Dar es Salaam. In 2012, a total of 785,084 pregnant women and 750,783 infants received nets through the Program. Similarly, the process of spraying pesticides in the households in Kagera, Mara and Mwanza region continued where a total of 838,000 households were reached. In 2013, the Government did a pilot study in Lindi, Mtwara and Ruvuma regions, distributed treated nets to 4,481teachers of primary and secondary schoolsand426ward education officers. In addition, 179,359 treated nets were distributed to primary and secondary schools students in Ruvuma region. In response to the HIV/AIDS pandemic, the Government of Tanzania has made substantial valuable progress in nearly all areas of HIV/AIDS prevention, care, and treatment. Progress has also been made in terms of impact mitigation through communication, advocacy, and community participation through a multi-sectoral response, as a basis for the consolidation and expansion of the national response. In 2010, the HIV counselling and testing centres increased by 24.5 percent from 1,743 in 2009 to 2,170 centres, in 2011 increased by 2.9 percent to 2,200 centres. The Tanzania National Tuberculosis and Leprosy Program (TNLP) is one of the most successful TB programs in the world. In 2010, the notification rate of tuberculosis (all forms) was 147 cases per 100,000 people. In the same year, notification rate of new smear positive tuberculosis cases was 57 cases per 100,000. The TB treatment success rate, is defined as the number of patients who successfully completed treatment as a proportion of the total tuberculosis cases diagnosed. By 2008 we had reached 84.8 percent, the program will surpass the global target of 85 percent by TB coverage indicators have been maintained at high levels. Maternal and Infant Mortality Reduction of maternal, new-born and child deaths is a high priority for all, given the persistently high maternal, new-born and child mortality rates over the past two decades in African countries, Tanzania included. Table 3.61 shows the indicators based on available data. Modest progress has been recorded in the area of maternal health. The 2010 DHS results show that the maternal mortality ratio during the ten-year period is 454 maternal deaths per 100,000 live births, under-five mortality rate 81 per 1000 live births and women attended by skilled attendants during giving birth was 51 percent. However, in the Population 88

103 and Housing Census 2012, only maternal mortality rates recorded a positive progress declining to 432 deaths 100,000 per live births; other indicators remained constant. Table 3.61: Summary of Health Indicators Details Target 2015/16 Number of people with HIV/ AIDS receiving care and treatment Maternal mortality per 100,000 live births Under-five mortality per 1,000 live births Percentage of women attended by skilled attendant during giving birth 313, , ,57 4 Source: TDHS 2010, THMIS & PHC 2012 N/A 850, ,000 people 454 N/A 432 N/A N/A 175 per 100,000 live births 81 N/A N/A 45 per 1,000 live births 51% N/A 51% N/A N/A 80% Main Initiatives Undertaken i. Increase enrolment of students in health-related courses at health training institutes through the implementation of the Basic Health Development Programme ( ). ii. The establishment of the Tanzania Commission for AIDS (TACAIDS) under the Prime Minister s Office mandated to provide strategic leadership and coordination of national responses to HIV and AIDS through the development and implementation of iii. a strategic framework and national guidelines for HIV and AIDS. Revision of the National HIV Policy 2011 and the National Multi-sectoral Strategic Framework ( ) as guiding tools for the implementation of HIV/AIDS activities. iv. Dissemination of the National Multi-sectoral Strategic Framework ( ) to 15 regions out of which 10 regions are the most HIV prevalence. v. Formulation of guidelines on the provision of quality HIV and AIDS related services. vi. TACAIDS Act under review to enable establishment of AIDS Fund. vii. Improvement of 4,500 MCH clinics in order to provide ARVs to HIV infected pregnant women. viii. HIV test to 1.5 million pregnant women of which 75,866 women equivalent to 77.5% of pregnant women living with HIV received ARVs. ix. Registration of 2,216,676 people living with HIV (PLWH) in the Treatment and Care Program of which 850,274 PLWH were enrolled into ARVs program in all health centres in the country. x. Implementation of male circumcision program to 12 regions with lowest number of circumcised men. xi. Implementation of anti-aids campaigns via media including: Tuko wangapi? Tulizana; Kijana shika hatamu; and Mchepuko siyo dili epuka UKIMWI. xii. Formulation and implementation of Operational Plan for Year 1 and Year 2 of the third Health Sector HIV and AIDS Strategic Plan (HSHSP III) Challenges i. Capacity constraints in terms of budget, manpower and facilities ii. Timely compilation of data from routine THMIS and other programs iii. Epidemics such as HIV/AIDS, tuberculosis (TB), and malaria continue iv. Limited access to health facilities and to health professionals due to poor infrastructure 89

104 v. Continued inefficiencies of the healthcare system vi. Decline of donor funding for health services Summary SN Target Area in FYDP I Target in FYDP I 1 To reduce the burden of Malaria by 80% by the end of 2015/16 from current levels To increase and strengthen services for care and treatment of people living with HIV/AIDS to reach 800,000 by 2015/16 To reduce maternal mortality from 578 to 175 per 100,000 live births and under-five mortality from 112 to 45 per 1,000 live births by 2017 To increase percentage of women assisted by skilled attendants during giving birth from 46% of 2004 till 80% by 2015/16 Status in 2010 Status by % (2007/08) 9% (2011/12) 800, , , per 100,000 maternal mortality 45 per 1,000 under five mortality 80% 51% 454 per 100,000 maternal mortality 81 per 1,000 under five mortality 432 per 100,000 maternal mortality(2012) 54 per 1,000 under five mortality (2013) Data not ready (depends on TDHS survey) Water Adequate supply of water is essential to national development. Availability of adequate, clean, safe and affordable water supply and sanitation services in a country facilitates improving the standards of living of the population. According to the FYDP I, the sector has the following targets: o Water resources availability for both productive use and environmental sustainability assured by 2015 o Proportion of population in rural settlements provided with water supply services increased from 57.8 per cent in 2010 to 65 per cent by 2015 o Proportion of population in district and small towns provided with water supply services increased from 53 percent to 57 percent in 2015 o Proportion of urban population in regional centres provided water supply services increased from 86 percent to 95 percent by 2015 o Proportion of population in Dar es Salaam provided with water supply services increased from 55 percent in 2010 to 75 percent by 2015 o Basin level integrated water resources management plans prepared in all basins o Rehabilitate 45 dams and build 3 major new dams o Increase number of monitoring stations regularly producing reliable data from 83 to 438 o Institute participatory climate change adaptation measures at catchment/water user association level o National sanitation campaign and school WASH Water Supply The water supply sector has been growing at annual average of 5.15 per cent over the past three years. The highest growth was observed in 2010 whereby the sector grew by 6.3 percent while in the following years it grew by 4.0 percent and 4.9 per cent in 2011 and The trend indicates towards improvements in the provision of water to the people although the growth rate for these two years was below that of Water supply and sanitation services on economic activities grew at 3.7 percent in 2014 as compared to 2.7 percent in 2013 and this was made possible through the Big Results Now (BRN) initiatives though a lot has to be 90

105 done to restore the dilapidated water infrastructure that requires rehabilitation so as to improve water supply to the people. Assessment on water supply indicates signs of progress in both rural and urban areas. As for rural water supply, the original FYDP I (2011/ /6) target was invalidated as a new survey by the Big Results Now (BRN) initiative showed that the initial proportion of rural population with access to water in June 2013 was 40 percent. The detailed lab data analysis of water point data, found that due to degraded infrastructure, the actual baseline coverage was about 40 percent with 5.3 million rural residents having lost supply to water because of inadequate maintenance of infrastructure. Since then there has been slight improvement in rural water supply reaching a population proportion of 55.9 percent by April Similarly, in an effort to further increase access of water supply in rural areas through the rural water project of ten villages in each Council aimed at creating 1,473 rural water infrastructures to benefit 8,068,500 million people, Councils had started construction of water infrastructure by May, Likewise, up to June 2015 a total of 975 water projects have completed the construction of infrastructure in 1,206 villages, hence increase rural population with access to clean and safe water to 20,957,855. There was an improvement in water supply for people in district and small towns. The proportion of people accessing water has reached 60 per cent which is above the target between 2010 and On the other hand, proportions of population with access to water supply in regional centres and the city of Dar es-salaam stands at 86 percent and 68 percent respectively. In all instances the inability to increase the share of population with access to water supply shows that water supply growth did not exceed population growth due to low investment/inadequate funding in water infrastructure. Despite the aforesaid stagnation in water supply services, average water production in regional urban centres increased to litres 385 million up to April The recent water project from Bagamoyo to Dar es Salaam (Lower Ruvu project) is expected to improve water accessibility to Dar es Salaam City and surrounding areas. The project is on the last stage whereby laying of pipes at Lower Ruvu from Bagamoyo to Dar es Salaam has been completed by out of kilometres equivalent to 97 percent and on the Upper Ruvu, expansion of the catchment area at Ruvu Darajani and construction of water treatment plants at Mlandizi are ongoing. These projects and others will increase the current water capacity for the future of Dar es Salaam water demand. Water Resources Management In 2010, the survey for searching water sources in seven basins were carried out in which five watershed areas and 1,216 water wells were identified for effective coordination of proper use of ground water sources, 155 sites for drilling borehole were identified in those seven basins. In 2011, 24 new water sources were identified in eight water basins. The survey identified a total of 254 areas with underground water in all eight basins which are suitable for drilling water boreholes for domestic uses and irrigation. Several measures were taken to control contamination of water and its sources, including disputes resolution under the guidance of the Water Resources Management Act No. 11 of In 2012, three instruments for studying water movement beneath the earth and one instrument for measuring amount of rainfall were installed in Wami/Ruvu basin. In addition, four stations for recording weather features were renovated and three instruments for measuring air pressure were installed in Lake Victoria basin. 91

106 Efforts done by water user association to educate people on the effects of climate change allowed water sector development in Tanzania to achieve milestones in a positive way. Water User Associations (WUAs) are an important input for accomplishing the Water Resources Management institutional structure, and observed to be effective for ensuring sustainable water resources management especially conflicts management and water allocation as well as the willingness to pay a water use fee. Also, WUAs are a basic input in forming subcatchment committees. The government has instituted a number of climate change adaptation measures at the catchment/water user association level that showed a sign of improvement between 2010 and 2013 (MoW, 2013). The Ministry of Water in collaboration with other stakeholders have taken a number of actions to ban water distortion in the catchment areas of Makutopora (Dodoma), Kimbiji/Mpera (Dar es Salaam) and the Kawa dam watershed (Rukwa) by gazetting them as protected areas. National Sanitation Campaign and School WASH The National Sanitation Campaign and School WASH has gained momentum with a number of students having their mind-sets changed on how to improve their daily way of life. The target was behaviour change and improvement of infrastructure for households and schools respectively. The introduction of the National Sanitation Campaign has managed to reach at least 1.52 million households with improved sanitation and hand washing points as well as 812 schools with fully furnished WASH facilities. Major activities undertaken through the National Sanitation Campaign and school WASH include: development of messages and concepts for awareness creation; engagement of households through community-led total sanitation; involvement of masons and hardware owners; development of training and promotional materials. During the period understudy we witnessed the construction of 359,805 improved household latrines and 234,723 hand washing points. In addition, 3,161 villages have acquired sanitation service providers mainly the masons and hardware stalls where sanitation and hygiene products are sold. Also, 8,687 sub-villages signed declaration to stop Open Defecation (OD) and progressively improve their toilets facilities. On the other hand, the cumulative achievement for household sanitation has increased to 384,709 improved toilets, 254,947 hand washing points. Nevertheless, 3,699 villages have access to sanitation service providers meanwhile 10,031 sub-villages have signed declarations to end OD across the country. This has managed to reduce mortality rate to children under 5, die each year from diarrhoea nearly 90 percent of which is directly attributed to poor access to water, sanitation and hygiene services. Prominent among the initiative undertaken include implementation of Big Results Now (BRN) which focuses on improving water accessibility in rural areas. Other on-going initiatives include: i. Construction of a plant to purify water in Lower Ruvu and Upper Ruvu; ii. Implementation of the National Water Sector Development Programme (WSDP) of which centred on commercial service provision including private sector participation in urban areas and community ownership and management in rural areas; iii. Basin level integrated water resources management plans in all basins were prepared by December, 2013 and 92

107 iv. Formation of Water User Associations, Catchment and Sub-catchment committee. The water sub-sector and sanitation have to grapple with the following challenges: i. Inadequate numbers of qualified and skilled staff at all levels; ii. Budget allocation has not been consistent with FYDP I; iii. Sewerage coverage and water supply services do not cope with the high population increase in urban areas; iv. Inadequate working water facilities; v. Climate change and variability affecting water sources; and vi. Limited number of water monitoring networks. Summary SN Target Area in FYDP I Target in FYDP I Proportion of population in rural settlements provided 1 with water supply services increased from 57.8 per 65% cent in 2010 to 65 per cent by 2015 Proportion of population in district and small towns 2 provided with water supply services increased from 53 percent to 57 percent in 2015 Proportion of urban population in regional centres 3 provided water supply services increased from 86 percent to 95 percent by 2015 Proportion of population in Dar es Salaam provided 4 with water supply services increased from 55 percent in 2010 to 75 percent by Basin level integrated water resources management plans prepared in all basins National sanitation campaign and school WASH 6 57% 53% 95% 86% 75% 55% Status in 2010 Status % (2015) 60% (2015) 86% (2015) 68% (2015) Plans prepared 1.52 million household reached by Tourism Tanzania s tourism industry is among the fastest growing sectors in the economy. The sub sector has been the key foreign exchange earner since the end of The country is also recognized as one of the best tourist destinations and was ranked 4th globally by the World Economic Forum s Tourism and Travel Index (2012) in terms of natural resources. The tourism industry continued to grow in 2012, after the dismal performance that followed the global financial crisis in The sector grew by 6.1 percent in 2010, while in 2011 it dropped to 4.6 percent before bouncing back to 6.3 percent in The FYDP I earmarked the following targets: o Number of visitors increased by 40% from 671,886 to 940,640 by June 2016 o Increased average length of stay of a tourist from 11 to 18 nights in the country side and 3 to 7 nights in big cities by 2015/16 o Doubling revenue collection from the current level of TShs 49 billion by 2016 o Students enrolled at National Colleges of Tourism increased to 1,000 by 2016 o Increased number of tourists visiting cultural sites, and number of tourists visiting the Southern circuit increased o Infrastructure (including roads, water access, museums, theme parks, information centres, cultural heritage sites) improved 93

108 Tourists Visiting In promoting tourism in the traditional markets, efforts were placed to increase the number of tourists from Europe, America and the emerging markets of Brazil, Russia, India, China and South Africa. The total number of international visitors in 2012 increased to about 1.1million compared to 0.9 million in 2011, equivalent to an increase of 13.1 percent. It is worth noting that, in a 2012, Tanzania reached a milestone of one million tourists. In 2013, the total number of international visitors increased by 5.5 percent to 1.14 million and remained the same in The increase in the number of tourists was due to the improvement in infrastructure as well as tourist facilities. Table 3.62 illustrates the number of visitors by origin from Table 3.62: Number of Visitors from the Regions Year Africa Americas East Asia & the Pacific Europe Middle East South Asia ,748 80,699 29, ,964 11,180 16, ,053 87,835 32, ,873 10,377 20, ,283 67,896 31, ,292 11,121 21, ,137 70,558 42, ,828 10,521 24, ,782 92,503 39, ,940 15,281 20, , ,064 77, ,207 21,348 56, ,876 98,306 57, ,192 18,000 36, , ,218 70, ,382 21,805 34,827 Source: Ministry of Natural Resources and Tourism, Tourism Statistical Bulletin 2012 and Economic Survey 2013 & 2014 Ministry of Finance. Length of Stay of a Tourist The average length of stay in the hotel was expected to increase from 11 to 18 nights in the country by 2015/16. According to the Ministry of Tourism and Natural Resource, Tourism Statistic Bulletin of 2014, the past four years the average length of stay has remained of not more than 11 days. This was mainly attributed by type of visitors coming to Tanzania whereby most of them were business visitors rather than other categories of visitors like Adventure, Cultural, Leisure and Eco Tourists. This has been a big challenge. Table 3.63 illustrates the numbers of tourists, the average length of stay and the receipts per tourists between 2007 and Table 3.63: Tourists and Average Number of Days per Tourist Description Number of Tourists 719, , , , ,994 1,077,058 1,095,884 1,140,156 Number of Tourists in the Hotels Revenue ( USD million) Average days of stay in the Hotel Average Tourism expenditure per day (USD) Package Tour Non Package Tour 673, , , , , ,448 1,021,766 1,054,338 1, , , , , , , , Source: Ministry of Tourism and Natural Resources, Tourism Statistic Bulletin 2014 Receipts from Tourism Tourism already contributes substantially to national income and job creation in Tanzania. It is the leading foreign exchange earner. Earnings from the sector in 2014 topped USD 2.0 billion from USD 1.8 billion in This is a big increase when compared with USD 1.7 billion in 2012 and USD 1.4 billion in 2011.The earnings on the sector grew by 8.3 percent 94

109 compared to 8.2 percent recorded in 2013 (Table 3.64). The recorded revenue was accounted mainly by Tourism Licence Fee which is paid by Tour Operator, Travel Agents and Hotels. Moreover, the Ministry undertook monitoring efforts in the revenue accounted from Tourism Licence Fee. These efforts have resulted in a significant increase in these collections. Table 3.64: Revenue Generated by the Tourism Sector Year Number of Tourists Percentage increase per year (%) Revenue (USD) Million Percentage increase per year (%) , , , , , , ,077, , ,095, ,140, , Source: Ministry of Natural Resources and Tourism, Tourism Statistics Bulletin 2014 Enrolment in Tourism Colleges The enrolment at the National College of Tourism decreased from 237 students in 2010/11 to 218 students in 2014/15 (Table 65). Table 3.65: Enrolment at the National College of Tourism Year 2010/ / / / /15 No. enrolled Source: Ministry of natural Resources and Tourism However, enrolment is expected to increase gradually due to high demand in the labour market. The demand for tourism experts has continued to grow rapidly while the supply is small. The Government of Tanzania in collaboration with the French Development Agency has completed building a new campus, Bustani Campus in DSM which can enrol up to 500 students. The new campus will cater for the need. Visits to Cultural Sites The number of registered visitors to the historical sites (museums) increased to 182,338 in 2014 from 115,503 in 2012 and 103,777 in The most visited historical sites were Kilwa-Kisiwani, Songomnara, Mbozi-meteorate, Isimila and Kalenga Museum. Improving Tourism Infrastructure The infrastructure in the tourism industry is varied, but the most critical are airports/airstrips, serviced land for investment in hotels, beach resorts, campsites, airport hotels, and roads to access protected areas. The Government has taken serious measures to develop new airports and rehabilitate several airstrips. For instance, the government is rehabilitating Kigoma and Tabora airports; proceeding with the construction of Songwe, Mwanza and Bukoba Airports, completion of the construction of Mafia Airport; and starting the construction of Terminal III Julius Nyerere International Airport building. 95

110 Main Initiatives Undertaken i. Promoting Tanzania s tourism through sports by venturing into new ways such as undertaking promotion in the English Premier League(EPL) and Major League Soccer(MLS) in the United States of America ii. Continuing to attract tourists from emerging markets such as China, Brazil, Russia, India and South Africa iii. Improvement of infrastructure in tourism information centres such as Ujiji in Kigoma and a Zonal Office in Iringa (to cater for the southern part of Tanzania). iv. The Tourism Private Sector with support from ILO has introduced a Pilot Apprenticeship Program for the Hospitality Sector starting in DSM this year. Once successful it will be introduced in Arusha. This program is in addition to the training done in Colleges and Institutions. Challenges i. Inadequate infrastructure facilities that support growth of the sub-sector ii. Skills gap and restrictive labour laws iii. Business seasonality iv. Limited number of direct international flights from source markets v. Lack of reliable national courier Summary Target area in FYDP I Target in FYDP I Status in 2010 Status by 2014 (2011/ /16) Number of visitors increased 40% 784,709 1,142,2170 Average length of stay of tourist 18 days Revenue collection from tourists Increase by 100% USD Million Students enrolled at National Colleges of Tourism Number of tourists visiting cultural sites To , ,338 USD 2, million Increase by 62.5% 96

111 CHAPTER FOUR: FINANCING THE FYDP I 4.1 Introduction One of the salient features of the FYDP I was the shift from needs-based planning based on available resources to opportunity-based planning which requires thinking beyond resource constraints. Since Independence (1961), the implementation of various plans and other development programmes had relied on two main sources of revenue to finance recurrent and public investment expenditures: domestic revenue and foreign assistance. However, in line with the paradigm shift explained above, in crafting the FYDP I, the government decided to come up with innovative ways/sources of financing so as to overcome the challenge of insufficient resources. For FYDP I it was estimated that a total of TShs 44.5 trillion would be required, equivalent to TShs 8.9 trillion each year out of which TShs 2.9 trillion would be mobilised by the government and TShs 6.0 trillion would be financed by the private sector and development partners. This chapter concentrates on assessing the various FYDP I financing strategies that were earmarked for ensuring its implementation. The actual financing of most priority areas has been discussed in the respective sections. 4.2 Allocation of Funds from Domestic Revenues Key sources of finance that were anticipated in the FYDP I were categorized into traditional and innovative instruments as follows: i. Conventional/Traditional sources include tax and non-tax revenue (natural resources and tourist charges, Road Fund, road licenses, goods, motor vehicle licenses and vehicle inspection fees, domestic borrowing, privatisation and sale of non-core public assets, foreign grants and concessional loans, bolstering skills development financing, user and service charges). ii. Innovative instruments include Annual expenditure Quota Infrastructure and Savings Bonds (Diaspora Bonds, Foreign Market Bonds); Pension and Social Security Funds; Strategic Partners Grants and Donations; Government Guarantee (Public institutions, Private Sector (PPPs)); Sovereign Borrowing; Regional Economic Arrangements and South-South Cooperation (SSC); Taxation on Financial Transactions; National Climate Fund; The Debt to Health Initiative; Voluntary Based Initiatives; Sub-Sovereign Bonds; and Super Profit Tax on Minerals. So far, during the period under review, the government continued to apply more traditional instruments in comparison to innovative ones of which only one, the Annual Expenditure Quota, was attempted. 4.3 Traditional Instruments to Finance the Plan Traditional instrument for financing the plan were tax and non-tax revenue collection. In the period under review, substantially more revenue was collected through taxes with the average performance of non-tax being about 10 percent of the total domestic revenue collected. Tax revenue collected was TShs 5.3 trillion in 2010/11, TShs 6.5 trillion in 2011/12, TShs 7.7 trillion in 2012/13, TShs 10.4 trillion in 2013/14, TShs 10.2 trillion in 2014/15and estimated further to increase to 12.4 trillion in 2015/16. Non tax revenue collected was TShs 443 billion in 2010/11, TShs 741 billion in 2011/12, TShs 713 billion in 2012/13, TShs 115 billion in 2013/14, TShs 117billion in 2014/15 and estimated further to 163 billion in 2015/16. Non-tax revenue performance has been 97

112 unsatisfactory throughout the reviewed period due to limited capacity in collection, lack of expertise, poor facilities and weak revenue collection systems. Some government institutions and agencies are not contributing adequately to the Government Consolidated Fund. Further, several government departments that used to contribute to the Government Consolidated Fund were transformed into agencies making them relatively independent from their respective ministries subsequently reducing their contribution. The government implemented several revenue policies aiming at increasing domestic revenue in order to increase its ability to provide public services and reduce budget dependence on foreign aid. The policies targeted improvements in procedures for assessing and collecting revenues, improvement in tax laws and administration, application of electronic systems in tax collection, minimising tax exemptions and harmonising tax rates and levies Share of Local Financing to Total Development Expenditure With regard to the share of local financing and foreign financing in total investments, the trend shows there is an improvement in the share of local financing from 36 percent in 2010/11 to 72 percent in 2015/16. (Figure: 4.1) below shows the share of local financing to total development expenditure Figure 4.1 Share of Local Financing in Total Financing of Development Projects Source: Ministry of Finance, Budget Speech 2015/ Financing Gap of the Plan The analysis from Figure 4.1 and Table 4.1 gives a general picture of the financing situation for the plan between 2010/11 and 2014/15. It shows there was underperformance in financing throughout the entire period of review. For the actual development expenditure from 2011/12 to 2013/14 there was a financing gap amounting to TShs 18 trillion, although gap shows the decreasing trend. This underperformance calls for more involvement of PPPs in the implementation of the plan although PPPs alone cannot fill the gap. The general assessment indicates that the financing of the FYDP I was not achieved. 98

113 Table 4.1 Financing Gap for the Plan (2010/ /16) Year Local (TShs Mill.) (1) Foreign (TShs Mill) (2) Total Expenditure (TShs Millions) (3) FYDP I Estimates (TShs Mil) (4) Gap (TShs Million) (3) (4) Actual 2010/11 984,555 1,764,482 2,749,037 Expenditure 2011/12 1,872,312 1,902,410 3,774,722 8,473,812-4,699, /13 2,314,718 2,184,977 4,499,695 11,878,988-7,379, / ,917,372-5,991,330 Out turn 2014/15 2,985,591 1,649,741 4,635,332 7,901,872-3,266,540 Estimates Expenditure 2015/16 4,256,873 1,662,181 5, ,314, ,690 Source: Budget Speech 2015/ Innovative Instruments As mentioned earlier the performance under this source of finding was not satisfactory compared to the tradition sources. The use of these instruments in raising fund for the FYDP is at different stages of application as elaborated below: Annual Expenditure Quota The FYDP I proposed that the government should allocate at least 35 percent of the national budget in development expenditure. Even though the financing of the plan increased over the time, funding was less than the annual estimate for the entire period under review. On average, investment spending was around 30 percent of the total expenditure. This shows that recurrent expenditure continues to constitute a major share of the national budget. Figure 4.2 shows the share of development expenditure in total expenditure from 2010/ /16, whereby on average the share of actual development expenditure from 2010/11 to 2013/14 was 28 percent of the total expenditure. Furthermore, the share of development expenditure to total expenditure was estimated at 26 percent for the year 2014/15. Likewise, in 2015/16 the expectation is to increase the share of development expenditure to total expenditure to reach 26 percent Sovereign Borrowing The FYDP I proposed that the government should issue commercial debt (Sovereign Eurobonds) on international capital markets to finance infrastructure projects. Implementation is at an advanced stage as the Government has finalized the discussion with Moody and Fitch Rating Agency that will conduct rating to determine credit worth of Tanzania to borrow from international financial markets. 99

114 Figure 4.2 Share of Actual Development in Total Expenditure (2010/ /16) Source:Ministry of Finance Budget speech 2015/ Public-Private Partnerships The FYDP I strongly encourages the private sector to play a significant role in financing the plan in order to reduce pressure on government, thus allowing government resources to be channelled to more strategic public investments. To implement this arrangement, the Government has identified and appraised various projects which are in different stage of implementation under PPP arrangement. By April 2015 the following project were indentified and appraised prior to their approval to and technical guidance for improvement. The project includes Dar es salaam Rapid Transit (DART); construction of Dar es salaam to Chalinze toll road; construction from Kinyerezi III power generation plant; construction of 100

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