Did Tanzania enter Middle-income level ahead of schedule?
On July 1st, The World Bank announced that Tanzania become a lower-middle-income economy from the least developed country Level. Her GDP per capita, announced the Bank, has hit the $1080 threshold.
There was a lot of fanfare about this achievement in Tanzania with analysts explaining what the implications of this development are. The government gloated that it had hit that level of development “five years ahead of schedule.” That left Tanzania watchers, I included, wondering how given the country’s shaky investment environment in the last five years.
Then a recent article in Forbes Africa Magazine hit the street. That development was achieved in five years of reformist President John Pombe Magufuli. I sat up. Time to fact check this story!
That Tanzania is a lower middle- income economy is a fact. However, that it was achieved five years ahead of schedule is untrue. Tanzania rebased its economic accounting to 2007 in 2013. This lifted the GDP 28 percent over previous estimates. Its GDP in 2014, was lifted to US$42 billion from the previous US$33 billion.
GDP per capita was lifted to $904 from $784 estimated earlier. The government of Jakaya Mrisho Kikwete, the fourth President, then projected that the country will become a lower-middle-income economy by 2020. It has happened. Right on time, right on target. Perhaps it could have come earlier. As President Kikwete left office late 2014, GDP per capita was just shy of the lower middle -income level.
The article in Forbes Africa-really an advertiser’s announcement- says that Magufuli Policies and management style doubled the country’s GDP from US$25 billion in 2015 to $60 billion in 2020. This is untrue. GDP in Tanzania in 2014, even at the old base 2001, was $34 billion-plus and at the new base it was more than $49.97 billion, reports trading Economics. It was $63.5 billion last year the same source says but will decline this year. Simply put, the Tanzanian GDP grew by more than $13 billion in the last five years, or an average of $2.6 billion a year.
True, Tanzania’s GDP was higher than $60 billion at the end of 2019. It has gotten there through sweat and blood, like all others. Even Magufuli acknowledged this fact in his reaction to the news.
However, to lift the nation’s wealth from$25 billion to $60 billion in five years, the economy will have to have grown at more than 12 percent a year or an average of US$7 billion a year, Economists say. Reliable data shows that Tanzania’s GDP grew on average by around six percent over the last five years. Even the government’s own data agrees. The claim that Tanzania doubled its wealth in five years is, therefore, false!