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Economic Growth, Rural Growth and Poverty

Economic Growth, Rural Growth and Poverty. Dr. Donald Mmari REPOA National Poverty Policy Week 2013. Outline. Introduction and context Growth and income p overty r eduction Rural growth: agricultural output and productivity Towards improving productivity & competitiveness Conclusion.

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Economic Growth, Rural Growth and Poverty

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  1. Economic Growth, Rural Growth and Poverty Dr. Donald Mmari REPOA National Poverty Policy Week 2013

  2. Outline • Introduction and context • Growth and income poverty reduction • Rural growth: agricultural output and productivity • Towards improving productivity & competitiveness • Conclusion

  3. Introduction and Context • Progress on selected goals and targets of MKUKUTA & various researches • Explores the interplay between economic growth, productivity, and rural poverty • Examples drawn from selected case studies

  4. Growth and Income Poverty Reduction • The economy (GDP) has grown in the last decade and at a high rate: • Average 7% within target (6-8%) by 2010(6.4% in 2011, and 6.9% in 2012) • Attributed to improved infrastructure, energy availability, & good weather and efforts to supply inputs • GDP per capita growth17.9% in 2012 (Tshs.1,025,038 compared to Tshs 869,436 in 2011) • Growth has also exhibited a strong resilience to external shocks.

  5. Growth and Income Poverty Reduction-2 • Imports increasing faster than exports (with little diversification) • Poverty rate declined from 33.4 % to 28.2% in 2012 (5.2 percentage point)-significant but still high • Still pervasive in rural areas (33.3% compared to 21.7% in other urban, and 4.1% in Dar es Salaam) • Inequality remained stable at a high level at Gini Coefficient of 0.35 (2007 HBS), BUT all expenditure shares increased but dramatic decline in HH consumption (National accounts 2001-2010)

  6. Growth and Income Poverty Reduction-3 • Suggests change in income distribution, especially profits and labour incomes • HH was highest in the 1990s, averaging 82% (71% in 2012)

  7. Growth and Income Poverty Reduction-3 • Agricultural sector growth • Growth averaged 4.3% for ten years, against MKUKUTA target of 10% by 2010. ( 4.3 % also in 2012), and below GDP growth rate • Agriculture share 21.6 % (24% in 2010, 29% in 2001), but 74% of labour force • Underemployment rising- 13.1% in 2006, up from 4.3% in 1991 • 68% percent of labour force young, and 31% migrating • Seasonal, informal and casual labour in non-farm sector • Self employment in informal sector (53% on own farm) • Growth rate of non-monetary agriculture grew faster than monetary agriculture- transformation? • Share of traditional agricultural exports to total exports have declined from 56% in 1996 to 15% in 2010 • Replaced by minerals from just 6% to 41%

  8. Rural growth: output and productivity • Index of export volume for traditional export crops 1961-2008

  9. Rural growth: output and productivity 2 • Productivity of smallholders a big problem for both cash and food crops • Yield of tea per hectare by type of producer

  10. Rural growth: output and productivity 3 • Comparison of coffee yields –Tanzania and Vietnam

  11. Rural growth: output and productivity 4 • Sugarcane yield differences (TCH) by type of producer, 2000/01 and 2007/08

  12. Rural growth: output and productivity 5 • Average yield rates by outgrowers 2009/10

  13. Rural growth: output and productivity 6 • Yield (Tonnes/ha) by type of producers

  14. Rural growth: output and productivity 7 • Quality is also a serious concern • Share of high grade coffee(1-5) in coffee export

  15. Towards improving productivity and competitiveness • Low productivity in agriculture directly linked to intensified poverty for agricultural labour force • Solution to rural growth and poverty revolves around increased productivity, efficiency & quality • Need to intensify present government commitments (eg. FYDP, MKUKUTA, BRN, Kilimo Kwanza, ASDP), paying attention to: • Agricultural support services – skills and training • Rural infrastructure –roads, storage, processing • Essential economic services-finance, inputs, market system • Institutional/organizational arrangements – policy, contract farming, land regime • Coordination- Agriculture vs other sectors

  16. Conclusion • The key message is that growth has continued to be strong but it has not translated into sufficient employment and productivity increase • Focused approach to target constraints to agricultural productivity, efficiency, and output quality • Supplementary efforts to support growth and employment in labour intensive sectors in rural and urban activities with potential for enhanced linkages

  17. Conclusion-2 • Harnessing of the growth potential of MSMEs to generate productive employment and decent incomes and productivity enhancement, especially those in rural and peri-urban

  18. Thank you for your attention

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