Tanzania: officially the United Republic of Tanzania is a country in East Africa bordered by Kenya and Uganda on the north, Rwanda, Burundi and the Democratic Republic of the Congo on the west, and Zambia, Malawi and Mozambique on the south. To the east it borders the Indian Ocean.

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Pam Wright, L.A., USA


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THE DOMESTIC ECONOMY

1. The Gross Domestic Product (GDP) in real terms grew by 6.2 percent in 2002, compared to 5.7 percent in 2001. This growth was mainly attributed to the contribution of the agriculture sector (47.5 percent); trade, hotels and restaurants - including tourism (16.6 percent); and manufacturing (8.4 percent). Other sectors which contributed to this growth were construction (5.0 percent); financial, insurance, real estate and business services (10.0 percent); mining and quarrying (2.7 percent); transport and communication (5.5 percent); public and other services (7.3 percent); and electricity and water (1.6 percent). Despite the decrease in the rate of growth of the agriculture sector in 2002, it continued to contribute the biggest share in the growth of GDP due to its greater share in the overall economy, while the mining and quarrying sector, with highest growth rate of 15.0 percent, did not contribute much (2.7 percent) due to its small share.

2. In 2002 the Gross Domestic Product amounted to shs. 8,620,073 million at current prices or shs. 1,857,159 million at constant 1992 prices. With the population of Tanzania Mainland of 33.6 million people, according to the Population and Housing Census conducted in August 2002, per capita income amounted to shs. 256,490 at current prices, or shs. 55,273 at constant 1992 prices. The real increase of per capita income (at constant 1992 prices) was shs. 2,101, equivalent to an increase of 4.0 percent compared to 2.5 percent in 2001.

3. The agriculture sector grew by 5.0 percent in 2002, compared to 5.5 percent in 2001. The decrease in growth was attributed to the drop in production in the crop - sub sector, whose growth rate in 2002 was 5.3 percent, compared to 5.9 percent in 2001. This was a result of lack of sufficient rains in some parts of the country. Furthermore, the growth of the fishing sub-sector decreased to 6.5 percent in 2002, from 7.0 percent in 2001. The growth rates of forestry and hunting sub-sector also decreased to 3.0 percent in 2002, from 3.6 percent in 2001.

Despite the decrease of the growth rate of the agriculture sector, the growth rate of livestock sub-sector increased to 3.5 percent in 2002 from 3.3 percent in 2001. The growth rates of monetary agriculture decreased to 5.8 percent in 2002, from 6.5 percent in 2001. For the non-monetary agriculture, the growth rate dropped to 3.9 percent from 4.1 percent in 2001. The agriculture sector contributed 47.5 percent to total GDP in 2002, compared to 48.0 percent in 2001.

4. The manufacturing sector grew by 8.0 percent in 2002, compared to 5.0 percent in 2001. This growth was attributed to the increase in the production of industrial products, such as cement and textiles. The contribution of manufacturing sector to total GDP increased to 8.4 percent in 2002, from 8.3 percent in 2001.

5. The growth rate of the mining and quarrying sector was 15.0 percent in 2002, compared to 13.5 percent in 2001. This growth was attributed to the increase in the production of gold and gemstones by 13.2 percent and 17.0 percent, respectively. The contribution of the mining and quarrying sector to GDP increased to 2.7 percent in 2002 from 2.5 percent in 2001.

6. The trade sector, which includes retail and wholesale trade, hotels and restaurants, and tourism grew by 7.0 percent in 2002, compared to 6.7 percent in 2001. The trade sector contributed 16.6 percent to GDP in 2002 compared to 16.5 percent in 2001.

7. The construction sector grew by 11.0 percent in 2002, compared to 8.7 percent in 2001. The increase was mainly accounted for by increased construction of non-residential buildings, including primary school buildings (17.0 percent), road construction (10.0 percent) and land improvement including estate preparation (12.0 percent). The contribution of the construction sector to GDP increased to 5.0 percent in 2002, from 4.8 percent in 2001.

8. Transport and communication sector grew by 6.4 percent in 2002, compared to 6.3 percent in 2001. The growth of the sector was attributed to the increase of communication activities by 7.3 percent due to increased number of cellular phone connections, and also an increase of 5.9 percent in road, air and rail transport. The contribution of transport and communications sector to GDP increased to 5.5 percent in 2002, compared to 5.4 percent in 2001.

9. The electricity and water sector grew by 3.1 percent in 2002, compared to 3.0 percent in 2001. The electricity sub-sector grew by 3.0 percent in 2002 compared to 2.9 percent in 2001, and the growth of the water sub-sector increased to 3.8 percent in 2002, from 3.5 percent in 2001. The contribution of the electricity and water sector to GDP was 1.6 percent in 2002 compared to 1.7 percent in 2001.

10. The sector of finance, insurance and real estate grew by 4.8 percent in 2002, compared to 3.3 percent in 2001. The increase was attributed to the finance and insurance sub-sector which grew by 4.0 percent in 2002, compared to 1.8 percent in 2001. The real estate and business services sub-sectors grew by 5.3 and 5.4 percent, respectively. The contribution of finance, insurance and real estate sector to GDP in 2002, decreased to 10.0 percent from 10.2 percent in 2001.

11. In 2002, public administration and other services grew by 4.1 percent compared to 3.5 percent in 2001. This increase was attributed to the increased growth in the education and health sub-sectors by 8.0 and 6.0 percent, respectively. The administration sub-sector grew by 2.3 percent in 2002, compared to 2.0 percent in 2001. The contribution of public administration and other service sector to GDP dropped to 7.3 percent, from 7.5 percent in 2001.

12. Capital formation increased from shs. 381,679 million in 2001 to shs. 454,214 million in 2002, at constant 1992 prices, equivalent to an increase of 19.0 percent, compared to 13.1 percent in 2001. The ratio of capital formation to real GDP increased from 21.8 percent in 2001 to 24.5 percent in 2002, at constant 1992 prices. Capital formation at current prices increased at a higher rate of 35.4 percent in 2002, compared to 4.2 percent in 2001. The increase was attributed to an increase in construction works (roads, bridges, land improvement) and investments in fixed capital formation.

13. Capital formation from the construction of buildings increased from shs. 119,145 million in 2001 to shs. 137,647 million in 2002. The growth in the construction of buildings decreased from 20.3 percent in 2001, to 15.5 percent in 2002. Capital formation in residential building and rural own account sub-sectors increased to 10.7 and 12.7 percent in 2002, from 10.2 and - 1.3 percent in 2001, respectively. Capital formation in non-residential buildings sub-sectors decreased from 74.9 percent in 2001, to 21.8 percent in 2002.

14. Other construction works (roads, bridges, land improvements and water) increased from shs. 51,353 million in 2001 to shs. 86,471 million in 2002, at constant 1992 prices, equivalent to an increase of 68.4 percent compared to 36.1 percent in 2001. This large increase in capital formation was attributed to construction of primary school buildings, road construction and finishing the construction of Rufiji river bridge. Land improvement increased from shs. 1,467 million in 2001, to shs. 6,049 million in 2002, equivalent to an increase of 312.3 percent from 44.1 percent in 2001.

15. Importation of capital equipment increased from shs. 207,058 million in 2001 to shs. 225,357 million in 2002, an increase of 8.8 percent. The value of transport equipment purchased increased at a higher rate of 14.5 percent in 2002, compared to 7.0 percent in 2001. The procurement of machines and other equipment increased by 4.8 percent in 2002, compared to 4.0 percent in 2001.

16. Investments in fixed capital which include buildings, other construction works, and equipment, increased from shs. 377,556 million in 2001, to shs. 449,475 million in 2002, at constant 1992 prices, equivalent to an increase of 19.0 percent compared to 13.2 percent in 2001. The increase in investments of fixed capital formation contributed to the growth of other construction works especially land improvements and water.

17. Inventories, at constant 1992 prices, increased by 14.9 percent in 2002, compared to 3.0 percent in 2001. The value of inventories was 4,739 million in 2002, compared to shs. 4,123 million in 2001. Inventories at current prices, increased from shs. 15,661 million in 2001, to shs. 17,854 million in 2002, equivalent to an increase of 14.0 compared to 9.0 percent in 2001.

18. Capital formation in the private sector increased from shs. 928,948 million in 2001, to shs. 1,073.938 million in 2002 at current prices, equivalent to an increase of 15.6 percent. Contribution of the private sector to capital formation was 59.4 percent in 2002, compared to 66.1 percent in 2001. Capital formation in the public sector increased from shs. 461,738 million in 2001, to shs. 715,959 million in 2002 at current prices, equivalent to an increase of 55.1 percent. The large increase was attributed to construction of non residential buildings, particularly construction of primary schools buildings.

19. In 2002, inflation decreased by an annual average of 4.5 percent compared to 5.2 percent in 2001. The reduction in inflation was greatly attributed to continued implementation of government policies aimed at controlling its expenditure and increased food crop production and food availability. The Consumer Price Index for many goods and services increased. Nonetheless, they did not affect the average National Consumer Price Index because of their lower weight in the basket of goods and services consumed.

The prices of food and beverages and cigarettes, on average continued to decline from 6.1 and 3.7 percent in 2001, down to 4.1 and 2.7 percent in 2002, respectively. The prices of electricity, kerosene and water; clothing and footwear; and furniture and household utensils, on average rose to 14.5, 6.4, and 3.9 percent in 2002, compared to an average of 2.9, 3.7 and 1.1 percent in 2001, respectively. This increase resulted from increased production costs and oil prices.

20. Compared to the year 2001, during 2002 average prices of other goods and services continued to increase as shown in the brackets: services and other household requirement (-1.7 to 1.4 percent); health services (0.6 to 3.5 percent); recreation and entertainment (1.7 to 1.8 percent); transport (1.4 to 2.1 percent); education (0.6 to 3.7); and other goods and services (1.3 to 4.6 percent). The index of price of house rents continued to decline from 3.8 percent in 2001 to 1.6 percent in 2002.

21. In 2002, the cost of living index of goods and services consumed by different urban dweller groups were as follows: for the minimum wage earners, index of retail prices of goods and services declined to 7.3 percent in 2002 from 8.6 percent in 2001, while the cost of living index of goods and services consumed by middle income earners and high income group continued to rise to 9.9 and 6.7 percent in 2002, from 4.5 and 6.3 percent in 2001, respectively.

22. The cost of living index of goods and services consumed by Dar es salaam city residents in different income categories shows that, for the minimum income earners the relative indices for all commodities consumed continued to decline from 9.4 percent in 2001, down to 7.3 percent in 2002. This decline was due to the improvement in the availability and supply of goods consumed by many people in this category.

For the food items, the index increased to 9.6 percent in 2002, from 7.6 percent in 2001, resulting from increased costs in transportation of various food crops from up country. Moreover, the cost of living index of goods and services consumed by middle income earners continued to rise from 4.5 percent in 2001, to 9.7 percent in 2002, while the price indices of goods and services consumed by high-income group in Dar es Salaam declined by an average of 0.5 percent from 11.7 percent in 2001 to 11.2 percent in 2002.

The increase of price index for middle income class has been caused particularly by increased price of food crops and transport costs. The Consumer Price Index for high-income group continued to decline for almost all commodities except for the prices of electricity, kerosene and water which increased from an average of 7.5 percent in 2001 to 8.3 percent

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