Tanzania intra-SADC trade decline by 15 pc

Will Tanzania surpass Kenya as East Africa economic giant?

By Mnaku Mbani

Tanzania economy has been growing at an average rate of 7 per cent annually over the last one decade, the trend which economists predict that the country will become the East Africa economic power house by the year 2022.

Currently, Kenya is being ranked as the regional power economic power house with the Gross Domestic product of US$ 55.2 billion while Tanzania has $45 billion and Uganda becomes the third with the GDP of $ 30 billion.

Tanzania can achieve her vision of accelerated and shared growth through the combination of fiscal prudence, cost-effective reforms in the education sector, and smart policies aimed at promoting the transformation of firms, says the latest World Bank analysis.

According to the assessment, Tanzania economic performance has remained strong. Preliminary estimates suggest that GDP grew by 7 percent in 2015, with activity particularly buoyant in the construction, communication, finance, and transportation sectors.

The strong growth supported by stability in power supply, moderation in oil price and high growth of credit to the private sector. The highest growth rates in 2015 were registered in construction (16.8 percent), information and communication (12.1 percent), finance and insurance (11.8 percent).

The strong performance in construction was attributed to increased real estate development for residential and non-residential purposes and building of road network.

Less than a year after President John Pombe Magufuli took office, Tanzania is already gaining influence among its neighbors and moving away from its reputation as a lone ranger in the region.

But since John Magufuli's surprise election win last October, it seems Kenya could be losing its grip on East African politics as Tanzania increasingly presents itself as a viable alternative for regional cooperation.
President Magufuli's pragmatic, hands-on approach is making this possible. He is changing the way business can be done: in a more efficient and effective way.
One of Magufuli's key policies is cracking down on corruption. What is endearing him to his own people and perhaps what is making sense economically for the region is that business can be done in cheaper ways, business can be done by minimizing corruption.
But it is believed that Tanzania's recent political gains are not only down to Magufuli's leadership style. The country has enjoyed a steady growth rate of 6 - 7 percent over the past decade and is already starting to overtake Kenya economically.
"You can decide to look at Kenya as a powerhouse maybe on the economic side, but you've got to accept that Tanzania is a powerhouse in terms of stabilizing these countries," said Richard Shaba, Program Coordinator at the Konrad Adenauer Foundation in Tanzania, a German political foundation.
Another measure taken by the new government is modernizing agriculture, which employs a large share of the population. The Magufuli government believes that improving the agriculture sector would raise rural incomes and contribute to poverty reduction.

TradeMark East Africa, Chief Executive Officer, Frank Matsaert believes that Tanzania has high potential to become the economic powerhouse in the East African region given her natural wealth and strategic geographical positioning, but there are challenges to overcome before it can realise its potential.

Frank notes that a huge growth potential in land, water bodies, minerals, as well as the strategic positioning of the country were enough to make the country a leading economic giant in the region.

Mr Matsaert said TradeMark East Africa was keen to help Tanzania utilise her great potentials to become the leading economic powerhouse in East African region.

However, Kenya's GDP still accounts for 40 percent of the region's GDP, followed by Tanzania at 28 percent, Uganda at 21 percent, Rwanda at 8 percent, and lastly Burundi at 3 percent.
The World Bank officials believes that vigorous reforms will be needed to foster further structural transformation of the economy and sustain high productivity gains and investment.
It would also free labor resources for other sectors of the economy and could foster the development of certain industries, such as food processing.

Tanzanian economy continues to flourish as the government focuses on industrialization and infrastructure development.

Following a USD 4.0 billion oil-export pipeline agreement with Uganda in mid-April, the country also signed a deal regarding a USD 900 million railway project that will connect Rwanda’s rail links to Tanzania’s main port.

The accord scrapped a previously agreed deal between Rwanda, Kenya and Uganda, which was deemed less cost-efficient.

Simultaneously, the Central Corridor railway project, one of Tanzania’s major infrastructure projects, is set to receive USD 6.8 billion in foreign investment by Chinese authorities in order to implement the first phase of the project, which will establish a railway connection from Dar es Salaam to Mwanza, at the north-west border.

The 2016/2017 budget aims to further increase funding for development projects while addressing the need for fiscal consolidation. If fully implemented, the budget promises to support growth and promote macroeconomic stability.

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