Kiuchumi hali ya Tanzania- Economic State of Tanzania
ECONOMY
United Nations stated Tanzania’s economy is one of the poorest in the world in statistics for 2009. Almost 36% of Tanzanians live below the international poverty line. Measures have been taken to liberalize Tanzania’s economy dealing with the market and encouraging foreign and domestic private investment. Beginning in 1986, Tanzania’s government launched an adjustment program to demolish state economic controls and encourage more active involvement of the private sector in the economy. This program involved plans to reduce the budget deficit and enhance monetary control, the trade regime, remove most price control, ease restriction on marketing food corps, free interest rates and start restricting of the financial sector.
The economy is depended on international donors. Tanzania’s Gross Domestic Product (GDP) growth has averaged to 6% a year over the past seven years. This is higher than the annual average growth of less than 5% in the late 1990s, but not enough to significantly improve the lives of average Tanzanians. Agriculture is the most important segment of Tanzania’s economy. The agriculture contributes more than two-thirds of the GDP accounting for almost 85% of the total exports and employs nearly 80% of the population. Exports of cloves have suffered due to tourism with a number of new hotels and resorts being built. The total debt service payments in 2008 were 465 million. High food prices have increased due to the inflation. The volume of major corps has increased yet large amounts of produce have never reached the market. Poor pricing and unreliable cash flow of farmers conflict with the growth of the agriculture. Although Tanzania has issues with political stability foreign investments are discourages due to Tanzania’s unappealing investments climate including redrawing tax codes, floating the exchange rate, licensing foreign banks and creating an investment promotion center to cut red tape. Investors, both foreign and domestic complain about hostile bureaucracy and arbitrary court’s inability to enforce contracts.