Tanzania - Economic memorandum

Report No. 3086-TA Economic Memorandum on Tanzania January 23, 1981 Eastern Africa FILE COP-Y Country Programs I FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY AND OTHER EQUIVALENTS Currency From October 1975 to January 1979, the Tanzanian shilling was tied to the value of the Special Drawing Rights (SDRs) of the IMF (SDR 1.00 = T. Sh. 9.66), and subsequently has been tied to a basket of currencies. As a result, the US dollar/Tanzanian shilling exchange rate is subject to change. The annual average exchange rates for the last five years, and the spot rate at the end of September 1980, are as follows: T. Sh. per US$1.00 1975 7.4135 1976 8.3793 1977 8.2740 1978 7.6893 1979 8.2502 End September 1980 8.1821 Weights Unless specified otherwise, all weight measures are metric. Fiscal Years The Tanzanian fiscal year runs from July 1 through June 30. Abbreviations used .. = not available n.s. = not significant (blank) not applicable - = nil  FOR OFFICIAL USE ONLY This memorandum is based on the findings of two missions to Tanzania, in March and June of 1980, led by W. Gilmartin (consultant). The principal authors are F. King and M. Baird. Background papers were prepared by S. Chan on Industry, B. Kennedy on Transport, J. Maas on Education, M. Schluter (consultant) on Agriculture, and A. Hone (con- sultant) on Exports. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.   ECONOMIC MEMORANDUM ON TANZANIA Table of Contents Page No. Basic Data Map Summary and Conclusions. . . . . . . . . . . . . . . . . . . . . . i - iv Chapter 1. Overview . . . . . . . . . . . . . . . . . . . . . . . 1 A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . 1 B. National Accounts . . . . . . . . . . . . . . . . . . . . . 3 C. Agriculture .... . . . . . . . . . . . . . . . . . . . . 8 D. Industry. . . . . . . . . . . . . . . . . . . . . . . . . . 16 E. Transport .... . . . . . . . . . . . . . . . . . . . . . 19 F. Education and Manpower. . . . . . . . . . . . . . . . . . . 24 Chapter 2. Fiscal and Monetary Developments . . . . . . . . . . . 29 A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . 29 B. Public Finance. . . . . . . . . . . . . . . . . . . . . . . 30 C. Money and Credit. . . . . . . . . . . . . . . . . . . . . . 37 D. Prices. . . . . . . . . . . . . . . . . . . . . . 40 E. Parastatal Accounts .. . . . . . . . . . . . . .. 42 Chapter 3. Balance of Payments. . . . . . . . . . . . . . . . . . 47 A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . 47 B. Recent Developments . . . . . . . . . . . . . . . . . . . . 47 Chapter 4. Adjustment Policies and Programs . . . . . . . . . . . 59 A. Introduction. . . . . . . . . . . . . . . . . . . . . . . . 59 B. Agriculture .... . . . . . . . . . . . . . . . . . . . . 60 C. Trade Policy. . . . . . . . . . . . . . . . . . . . . . . . 63 D. Public Finance. . . . . . . . . . . . . . . . . . . . . . . 65 E. Transport . . . . . . . . . . . . . . . . . . . . . . . . . 67 F. Prospects .... . . . . . . . . . . . . . . . . . . . . . 68 Statistical Appendix (Including List of Tables). . . . . . . . . . 77  List of Text Tables Page No. Chapter 1 1. 1 GDP Growth Rates (official estimates). . . . . . . . 4 1. 2 Composition of GDP (official estimates). . . . 5 1. 3 Ratios of Gross Investment and Savings to GDP. . . 6 1. 4 Incremental Capital-Output Ratios. . . . . . . . . . 7 1. 5 Marketed Production of Major Crops . . . . . . . . . 10 1. 6 Agricultural Price Indices . . . . . . . . . . . . . 15 1. 7 Value Added in Manufacturing . . . . . . . . . . . . 17 Chapter 2 2. 1 Recurrent Revenues .30 2. 2 Recurrent Expenditure. . . . . . . . . . . . . . . . 32 2. 3 Functional Classification of Government Expenditures 33 2. 4 Maintenance and Upkeep Expenditures. . . . . . . . . 34 2. 5 Development Budget .35 2. 6 Sectoral Breakdown of Development Expenditures . . . 36 2. 7 Monetary Survey. . . . . . . . . . . . . . . . . . . 38 2. 8 Commercial Bank Lending by Sector. . . . . . . . . . 39 2. 9 Consumer Price Indices . . . . . . . . . . . . . . . 41 2.10 GDP Deflator . . . . . . . . . . . . . . . . . . . . 42 2.11 Parastatal Accounts. . . . . . . . . . . . . . . . . 43 2.12 Parastatal Income. . . . . . . . . . . . . . . . . . 44 2.13 Profitability of Financial Parastatals . . . . . . . 45 Chapter 3 3. 1 Balance of Payments. . . . . . . ..48 3. 2 Export Trends: 1973 to 1980 . . . . . . . . . . . . 49 3. 3 Trade Indices. . . . . . . . . . . . . . . . . . . . 54 3. 4 Sources of Foreign Exchange. . . . . . . . . . . . . 56 3. 5 Composition of Imports . . . . . . . .57 Chapter 4 4. 1 Projected GDP Growth Rates . . . . . . . . . . . . . 69 4. 2 Balance of Payments Projections. . . . . . . . . . . 70 4. 3 Government Budget Projections. . . . . . . . . . . . 74 List of Text Graphs Chapter 3 3. 1 Production and Exports of Major Crops. . . . . . . . 51  Page I TANZANIA - SOCIAL INDICATORS DATA SHEET TANZANIA REFERENCE CROUPS (WEIGHTED A ACES LAND AREA (IHOUSAND SQ. KH.) - MOST RECENT ESTIMATE) TOTAL 945. 1 AGRICULTURAL 498.0 MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 M ESTIMATE A AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA GNP PER CAPITA (059) 70.0 130.0 270.0 260.0 868.0 ENERGY CONSUMPTION PER CAPITA (KILOGRAMS OF COAL EQUIVALENT) 41.0 62.0 65.0 80.0 699.4 POPULATION AND VITAL STATISTICS POPULATION, MID-YEAR (MILLIONS) 10.? 13.3 17.4 URBAN POPULATION (PERCENT OF TOTAL) 4.8 6.9 10.8 17.3 28.9 POPULATIOS PROJECTIONS POPULATIOU IN YEAR 2000 (MILLIONS) 32.0 STATIONARY POPULATION (MILLIONS) 92.0 YEAR STATIONARY POPULATION IS REACHED 2145 POPULATION DENSITY PER SQ. EM. 11.0 14.0 18.0 27.4 61.7 PER SQ. 1M. AGRICULTURAL LAND 21.0 26.0 35.0 82.6 126.P POPULATION AGE STRUCTURE (PERCENT) 0-14 YRS. 42.7 44.4 45.7 44.9 45.5 15-64 YRS. 54.3 52.5 51.2 52.2 51.6 65 YRS. AND ABOVE 3.0 3.1 3. 1 2.8 2. 8 POPULATION GROWTH RATE (PERCENT) TOTAL 2. 2 2.7 3.4 2. 7 2.7 URBAN 5.0 6.3 8.9 6.8 4.9 CRUDE BIRTH RATE (PER THOUSAND) 47.0 47.0 48.0 47.4 46.8 CRUDE DEATH RATE (PER THOUSAND) 22.0 19.0 16.0 19.6 16.4 GROSS REPRODUCTION RATE .. 3. 2 3.2 3.2 3.2 FAMILY PLANNING ACCEPTORS, ANNUAL (THOUSANDS) .. .. 93. 6 USERS (PERCENT OF MARRIED WOMEN) .. .. FP0D AND NUTRITION INDEX OP FOOD PRODUCTION PER CAPITA (1969-71-100) 95.0 104.0 91.0 91.8 94.0 PER CAPITA SUPPLY OF CALORIES (PERCENT OF REQUIREKENTS) 85.0 91.0 86.0 90.2 92.7 PROTEINS (GRAMS PER DAY) 44.0 49.0 47.0 53.0 53.0 OF WHICH ANIMAL AND PULSE 17.0 21.0 20.0 18.4 15.6 CHILD (AGES 1-4) 14ORTALITY RATE 32.0 25.0 20.0 27.7 21.3 HEALTH LIFE EXPECTANCY AT BIRTH (YEARS) 42.0 47.0 51.0 45.3 50. 1 INFANT MORTALITY RATE (PER THOUSAND) .. 155. .. ACCESS TO SAFE WATER (PERCENT OF POPULATION) TOTAL .. 13.0 39.0 23.2 31.0 URBAN .. 61.0 88, 0 58.0 66.8 RURAL *- 9.0 36.0 16.8 ACCESS TO EXCRETA DISPOSAL (PERCENT OF POPULATION) TOTAL .. .. 17.0 28.9 URBAN .. .. 88.0 67.0 RURAL .. .. 14.0 POPULATION PER PHYSICIAN 21020.0O/d 24770.0 18160.0 30910.4 14508.2 POPULATION PER NURSING PERSON 10440.O01.e 3830.0 3080.0 5793.2 3279.5 POPULATION PER HOSPITAL BED TOTAL 570.0/d .. 520.0 1198.9 1141.5 URBAN .. .. RURAL .. .. ADMISSIONS PER HOSPITAL BED .. .. HOUSING AVERAGE SIZE OF HOUSEHOLD TOTAL .. 4.4/c URBAN .. 3. ... RURAL .. 4.5/c 5.3 AVERAGE NUMBER OF PERSONS PER ROCM TOTAL .. .. URBAN .. .. RURAL .. .. ACCESS TO ELECTRICITY (PERCENT OP DWELLINGS) TOTAL .. .. URBAN .. .. RURAL .. ..  Faa. 2 TANZANIA - SOCIAL INDICATORS DATA SHEET TANZANIA REFERENCE GROUPS (rWEIGHTID AVFES - MOST RECENT ESTIMATE)A MOST RECENT LOW INCOME MIDDLE INCOME 1960 /b 1970 L ESTIMATE /b AFRICA SOUTH OF SAHARA AFRICA SOUTH OF SAHARA EDUCATION ADJUSTED ENROLL2IENT RATIOS PRIMARY: TOTAL 25.0 38.0 70.0 57. 7 61. 7 MALE 33.0 46.0 79.0 74.2 69.2 FEDIALE 18.0 30.0 60.0 54.1 51.4 SECONDARY: TOTAL 2.0 3.0 3.0 10.0 20.6 MALE 2.0 4.0 5.0 13.7 29.2 FEIALE 1.0 2.0 2.0 7. 1 14. 7 VOCATIONAL ENROL. (X OF SECONDARY) 23.0 .. .. 6. 8 7. 0 PUPIL-TEACHER RATIO PRIMARY 45.0 46.0 50.0 45.0 36.6 SECONDARY 20.0 19.0 20.0 25.2 24.3 ADULT LITERACY RATE (PERCENT) 9. 5/d 28. S/c 66.0 25.5 CONSUMPTION PASSENGER CARS PER THOUSAND POPULATION 3.0 2. 5 2.6 3.6 38.8 RADIO RECEIVERS PER THOUSAND POPULATION 2.0 11.0 19.0 31.5 83.5 TV RECEIVERS PER THOUSAND POPULATION .. 0.3 0.3 1.8 NEWSPAPER ("DAILY GENERAL INTEREST") CIRCULATION PER THOUSAND POPULATION 3.0 5.0 4.5 4.6 24.2 CINEMA ANNUAL ATTENDANCE PER CAPITA 0.5 .. 0. 2 .. 0. 7 LABOR FORCE TOTAL LABOR FORCE (THOUSANDS) 4734.5 5841.7 7342.8 FEMALE (PERCENT) 37.1 36. 6 34.0 33.5 38.1 AGRICULTURE (PERCENT) 89.3 86.0 83.0 80. 7 54.3 INDUSTRY (PERCENT) 3.8 5.0 6.0 8.1 17.8 PARTICIPATION RATE (PERCENT) TOTAL 44. 7 43.5 42.2 42.2 38.8 MfALE 56.9 55.7 54.3 55.1 48.4 FEMALE 32.8 31.5 30.3 29.5 29.4 ECONOMIC DEPENDENCY RATIO 1.0 1.1 1.2 1.2 1.3 INCOME DISTRIBUTION PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 5 PERCENT OF HOUSEHOLDS .. 33.5 HIGHEST 20 PERCENT OF HOUSEHOLDS .. 63.3 LOWEST 20 PERCENT OF HOUSEHOLDS .. 2. 3 LOWEST 40 PERCENT OF HOUSEHOLDS .. 7.8 POVERTY TARGET GROUPS ESTIMATED ABSOLUTE POVERTY INCOME LEVEL (US$ PER CAPITA) URBAN .. .. 147.0 138.2 RURAL .. .. 109.0 86.1 ESTIMATED RELATIVE POVERTY INCOHE LEVEL (US$ PER CAPITA) URBAN .. .. 125.0 107.0 RURAL .. .. 74.0 65.0 ESTIMATED POPULATION BELOW ABSOLUTE POVERTY INCOME LEVEL (PERCENT) URBAN .. .. 10.0 RURAL .. .. 60.0 66. 9 Not available Not applicable. NOTES /a The group averages for each indicator are population-weighted arithmetic means. Coverage of countries among the indicators depends on availability of data and is not uniform. /b Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969 and 1971; and for Most Recent Estimate, between 1974 and 1978. /c 1967; /d 1962; /e Registered, not all practicing in the country. Most recent estimate of GNP per capita is for 1979, population and related estimates have also been revised; all other data are as of April, 1980. October, 1980  lo . . . . . . . .. fr. . . . . . . . . . . . . . 1. I I T!, 1. 1
I1 12 1 9I I I I I II .. A R i w N5. . . . . . . . . . . A II . 2 I T 1- .1 I I 1. 11 1. p. . . . . . . . . . . . E g r . W O . r, 2 .1 .1 IZ 51 9
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41   a/ ECONOMIC DEVELOPMENT DATA - TANZANIA Page 1 of 2 bl GNP PER CAPITA IN ionq: US$271 GROSS DOMESTIC PRODUCT IN 1979 ANNUAL RATE OF GROWTH (%, constant prices) US$million *.1 1967-73 1973-78 1979 GDP at Market Prices 4,564 100.0 5.0 4.7 3.7 Gross Domestic Investment 959 21.0 8.2 5.1 17 9 Gross National Saving 373 8.2 -2.1 -0.3 46.9 Current Account Balance -586 -12.8 4.7 Export of Goods, NFS 629 13.8 - -5.8 -7.2 Import of Goods, NFS 1,234 27.0 4.9 -2.6 -18.4 OUTPUT, '4PLCYMENT AND PRODUCTIVITY IN 1978 Value Added Labor Force V. A. per worker US$million % '000 % US$ ' Agriculture 2,084 53.7 5,839 83.0 357 64.7 Industry 513 13.2 422 6.0 1,216 120.3. Services 1,287 33.1 774 11.0 1,663 201.3 Total/Average 3,884 100.0 7,035 100.0 552 100.0 GOVERNMENT FINANCE Central Government T. Sh. million ' of GDP 1979/80 1979/80 1973/74 Current Receipts 7,271 19.3 21.1 Current Expenditure 9,094 24.2 21.3 Current Surplus -1,823 -4.8 1.8 Capital Expenditure 4,800 12.7 12.5 MONEY, CREDIT, AND PRICES 1974 1975 1976 1977 1978 1979 (T. Sh. million outstanding end period) Money and Quasi Money 4,462 5,553 6.947 8,347 9,396 13,807 Bank Credit to Government 1,449 2,210 3,224 2,887 4,605 7.964 Bank Credit to Other Sectors 2,898 3,350 3,672 4,392 6,051 6,732 (Percentages or Index Numbers) Money and Quasi Money as 7. of GDP 27.9 29.2 29.7 28.5 28.1 36.7 General Price index (1966 - 100) 155.3 177 8 204.7 245.0 265.2 288.2 Annual percentages changes in: General Price Index 18.9 14.5 15.1 19.7 8.2 8.7 Bank Credit to Government 136.5 52.6 45 9 -10.5 59.5 26.9 Bank Credit to Other Sectors 59.2 15.6 9.6 19.6 37.8 11.2 a/ Apart from balance of payments, data are for Mainland only. bt Calculated by the same conversion technique as used in the World Bank Atlas. All other conver- sions to dollars in this table are at the average exchange rate prevailing during the period covered. c/ Trend growth rates calculated by least squares estimation, including one additional year at begin- ning and end of period.  ECON(MIC DI1'VrE.0)lOMlNT l)ATA - TAN/ANTI A Page 2 of 2 BALANCE OF PAYMENTS 1976 1977 1978 1979 MERCHIANDISE EXPORTS (AVERAGE 1977-79) (UtS$ million) EaLalion 7 Exports of Goods, NFS 640 659 612 684 Coffee 180 34.4 Imports of Gonds, NFS -704 -821 -1,246 -1 ,1'4 Cotton 60 11.5 Resource Gpp (deficit=-) -64 -162 -634 -510 Sisal (Fiber, Cord- age and Twine) 48 9.2 Investment Income (net) -18 -21 -6 -9 Cashews (Nuts and Net Transfers a/ -16 12 19 28 Kernels 30 5.7 Balance on Current Account -99 -171 -620 -491 Cloves 24 4.6 Tobacco 24 4.6 Gross Aid Disbursements 225 310 362 460 Tea 21 4.0 -Government Grant Receipts (119) (135) (214) (320) Other 136 26.0 -Gross Loans (106) (175) (148) (140) Total 523 100.0 Amortization -22 -29 -25 -22 EXTERNAL DEBT, DECEMBER 31. 1979 Other Capital (net) )-86 18 -30 15 US$ million Other Items n.e.i. ) Public Debt, incl. Change in Net Reserves (-=increase) -18 -128 313 38 guaranteed 1,248 Non-Guaranteed Private Gross Reserves (end of year) 195 38 187 211 Debt Net Reserves (end of year) b/ 67 195 -118 -156 Total Outstanding and Disbursed 1,248 Petroleum Imports c/ 111 108 129 172 Petroleum Exports